United States District Court, D. Arizona
JAMES A. TEILBORG, Senior District Judge.
Defendants Nivisys, LLC ("Nivisys") and WWWT Enterprises, LLC ("WWWT") present the question of whether this case should be litigated in the District of Arizona or out in the West Texas town of El Paso. In addition to this motion for a change of venue (Doc. 45), the parties have filed numerous other motions. The Court now rules on the pending motions.
Plaintiff Airbus DS Optronics GmbH ("Airbus") filed this lawsuit for declaratory relief against Defendants Nivisys, LLC ("Nivisys") and WWWT Enterprises, LLC ("WWWT"), seeking a declaration that Nivisys and WWWT are liable to Airbus on a judgment against their alleged predecessor, Nivisys Industries, LLC ("Nivisys Industries").
II. Motion to Change Venue
WWWT moves for a change of venue, asking the Court to transfer this case to the Western District of Texas, El Paso Division. (Doc. 45 at 2). Nivisys joins in WWWT's motion. (Doc. 46).
Nivisys Industries is a now-defunct limited liability company organized under the laws of the state of Arizona. (Doc. 55 at 2). Its corporate history is somewhat complex, but the following facts suffice for purposes of deciding the pending motion. Airbus and Nivisys Industries entered into a contract, which the latter breached around October 2011. (Doc. 28 at 3). By this same time, Nivisys Industries had defaulted on a credit agreement with a third party and ceased business operations. (Doc. 41-1 at 3). In November 2011, First Texas Holdings Corporation ("First Texas"), a Delaware corporation with its principal place of business in El Paso County, Texas, (Doc. 55 at 2), lent money to Nivisys Industries to restart its operations, (Doc. 41-1 at 4). Following additional loans to Nivisys Industries, First Texas exercised an option to purchase Nivisys Industries' prior credit agreement. (Doc. 41-1 at 4). First Texas then became the senior secured creditor of Nivisys Industries. ( Id. ) First Texas assigned its rights and security interests to Nivisys, who demanded that Nivisys Industries cure its default. ( Id. at 5). Nivisys then filed a receivership action against Nivisys Industries in Maricopa County Superior Court, seeking damages and requesting appointment of a receiver. (Doc. 51-1 at 39).
In March 2012, Nivisys assigned its rights and security interests to WWWT, who became Nivisys Industries' senior secured creditor. ( Id. ) After Nivisys Industries threatened to file bankruptcy, it entered into a settlement agreement with WWWT in which Nivisys Holdings, LLC ("Nivisys Holdings") (Nivisys Industries' parent company) surrendered its ownership interests in Nivisys Industries to WWWT in exchange for a release from the credit agreement. ( Id. ) Nivisys Industries, however, still owed WWWT under the credit agreement and eventually agreed to surrender most of its assets to WWWT as partial satisfaction of its debt owed. ( Id. at 6). Nivisys Industries also sold most of its personal property to Nivisys, except for certain government contracts. ( Id. ) After the government contracts were fulfilled, Nivisys Industries (then called N.I. Liquidation, LLC) was dissolved. ( Id. )
After WWWT acquired its ownership interests in Nivisys Industries and Nivisys Industries sold most of its personal property to Nivisys, most of Nivisys' operations moved to Texas. ( Id. at 7). All of Nivisys' operations are currently in Texas, including manufacturing, engineering, and administration, with the exception of four employees who remain in Arizona. ( Id. )
According to Defendants, many of the transactions involving Defendants took place in Texas. Defendants allege that the negotiations relating to the loan from First Texas occurred in Texas, Virginia, and Maryland. (Doc. 41-1 at 7). They also allege that the assignment from Nivisys to WWWT occurred in Texas, the surrender agreement between Nivisys Holdings and WWWT was negotiated and executed in Texas, and a bill of sale from WWWT to Nivisys was executed in Texas. ( Id. ) Airbus disputes some of these assertions, claiming that the signatories to some of these agreements were Arizona residents. (Doc. 60 at 6). Airbus points out that Joe Walsh, the President of Nivisys, is an Arizona resident. ( Id. ) Airbus also alleges that parties to the various agreements involving Nivisys, Nivisys Industries, WWWT, and First Texas were represented by Arizona counsel. ( Id. )
Airbus first sued Nivisys Industries in a foreign court, and then obtained a judgment against Nivisys Industries in Maricopa County Superior Court. (Doc. 51-1 at 21-22). Airbus seeks in the present action to collect on this judgment against Defendants.
B. Legal Standard
"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought...." 28 U.S.C. § 1404(a). The purpose of the change of venue statute is to "prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (citation and internal quotation marks omitted).
"When determining whether a transfer is proper, a court must employ a two-step analysis. A court must first consider the threshold question of whether the case could have been brought in the forum to which the moving party seeks to transfer the case." Park v. Dole Fresh Vegetables, Inc., 964 F.Supp.2d 1088, 1093 (N.D. Cal. 2013). "In order that the case might have been brought' in the proposed transferee district, the court there must have subject matter jurisdiction and proper venue, and the defendant must be amenable to service of process issued by that court." Kachal, Inc. v. Menzie, 738 F.Supp. 371, 372-73 (D. Nev. 1990).
Second, a court must consider whether the proposed transferee district is a more suitable choice of venue based upon the convenience of the parties and witnesses and the interests of justice. See Park, 964 F.Supp.2d at 1093. The Ninth Circuit Court of Appeals has enumerated factors that a court may consider in making this determination:
(1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof.
Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). No single factor is dispositive. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988).
The party seeking a change of venue bears the burden of establishing that a transfer of the case is proper. Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270, 279 (9th Cir. 1979).
Airbus does not challenge the motion to change venue on the basis that the Western District of Texas is not a proper venue for this lawsuit. Accordingly, the Court confines its analysis to the dispute at issue: whether the convenience of the parties and witnesses and the interests of justice justify a change of venue.
Defendants argue that several factors cause the Western District of Texas to be the better venue for this case. The Court will address each factor in turn.
1. Location Where the Relevant Agreements were Negotiated and Executed
Defendants argue that a transfer of venue to the Western District of Texas is appropriate because the agreements relevant to Airbus's claims were executed and negotiated outside of Arizona, mostly in Texas. (Doc. 45 at 5). They contend that the relevant agreements that are the subject of this lawsuit are those that allegedly give rise to Nivisys' liability as the successor to Nivisys Industries. ( Id. ); see also (Doc. 29 at 4). Defendants assert that the negotiations concerning the purchase of the credit agreement, the assignment of rights, and the surrender agreement between WWWT and Nivisys Holdings, among other agreements, were all primarily negotiated in Texas. (Doc. 45 at 5).
Airbus argues that the agreements upon which its lawsuit is based are not the agreements between Nivisys Industries, WWWT, First Texas, and others, but rather the original contract and purchase order between Airbus and Nivisys Industries as well as the judgment that Airbus obtained against Nivisys Industries in an Arizona court. (Doc. 60 at 5). Thus, Airbus contends, the relevant agreements were negotiated and executed in Arizona. The Court disagrees. Airbus' First Amended Complaint purports to state a cause of action for successor liability based upon the dealings between Nivisys Industries, Nivisys, and WWWT. See (Doc. 29 at 4). Moreover, Airbus identifies itself as a creditor of Nivisys Industries. ( Id. at 5). Once Airbus reduced its claim against Nivisys Industries to a final judgment, the underlying cause of action giving rise to the judgment is irrelevant for purposes of collecting on that judgment.
Airbus also alleges, however, that the agreements between Nivisys Industries, Nivisys, WWWT, and First Texas were not primarily negotiated in Texas. Airbus points out that out of six signatories to the settlement agreement between WWWT, Nivisys Industries, and Nivisys Holdings, all but four were and are residents of Arizona. (Doc. 60 at 6). Thomas Walsh, the president of WWWT, resides in Texas. (Doc. 41-1 at 8). The remaining signatory resides in Virginia. (Doc. 45 at 7). The Court finds that the extent to which the various agreements at issue were negotiated by companies based in Texas, this does not overcome the Arizona connections such that this factor supports Texas venue.
2. The State Most Familiar with the Governing Law
Defendants argue that the governing law in this case is that of Texas, and as such Texas is most familiar with the governing law. ( Id. at 5). Airbus contends that Arizona law applies. (Doc. 60 at 8). Because the Court has not yet determined which state's law applies, this factor does not weigh in favor of either venue.
3. Plaintiff's Choice of Forum
Defendants argue that Airbus's choice of forum is entitled to less deference than it would otherwise be afforded because Airbus does not reside in Arizona. (Doc. 45 at 6). Generally, a plaintiff's choice of forum is entitled to substantial consideration; however, "the degree of deference is substantially diminished" when the chosen forum is not plaintiff's residence, the conduct at issue occurred in a different forum, or plaintiff's choice of forum was its second choice. Park, 964 F.Supp.2d at 1094. Here, Airbus is entitled to some deference because although it does not reside in Arizona, some of the conduct at issue occurred in Arizona. Some of the signatories to the various transactions involving Nivisys Industries resided in Arizona, and Nivisys Industries continued to operate in Arizona for at least a short while after Defendants became involved as a lender (and later owner). Accordingly, this factor weighs slightly in favor of Arizona.
4. The Respective Parties' Contacts with the Forum
Defendants contend that neither party has substantial contacts with Arizona. (Doc. 45 at 6). They contend that virtually all of the witnesses and records are in Texas. ( Id. ) But as the Court has explained, most of the witnesses to the agreements allegedly giving rise to successor liability reside in Arizona. The convenience of witnesses "is often the most important factor in resolving a motion to transfer." Park, 964 F.Supp.2d at 1095 (citation omitted). Airbus also correctly points out that Nivisys has substantial contacts with Arizona ...