Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-04343/USCOURTS-cand-5_06-cv-04343-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

For the Northern District of California

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ORDER DENYING MOTION TO CHANGE VENUE AND ASSIGNING CASE TO MAGISTRATE JUDGE FOR ALL

PURPOSES—06-04343 RMW

SPT

United States District Court

For the Northern District of California

E-FILED on 12/18/06 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FIRST FRANKLIN FINANCIAL

CORPORATION, a Delaware Corporation,

Plaintiff,

vs.

MORTGAGE ACADEMY, INC., et al. Defendants.

No. C-06-04343 RMW

ORDER DENYING MOTION TO CHANGE

VENUE AND ASSIGNING CASE TO

MAGISTRATE JUDGE FOR ALL

PURPOSES

[Re Docket No. 12]

Mortgage Academy, Inc. ("Mortgage") moves, pursuant to 28 U.S.C. § 1404(a), for change

of venue to the Eastern District of Michigan. First Franklin Financial Corporation ("FFFC")

opposes Mortgage's motion. The court has read the moving and responding papers and considered

the arguments of counsel. For the reasons set forth below, the court DENIES without prejudice

defendant's motion for change of venue to the Eastern District of Michigan.

Case 5:06-cv-04343-PVT Document 28 Filed 12/18/06 Page 1 of 8
United States District Court

For the Northern District of California

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ORDER DENYING MOTION TO CHANGE VENUE AND ASSIGNING CASE TO MAGISTRATE JUDGE FOR ALL

PURPOSES—06-04343 RMW

SPT 2

I. BACKGROUND

On October 5, 2006 this court denied FFFC's motion to remand this action to Santa Clara

County Superior Court on the basis that the forum selection clause in the relevant contract between

the parties, as then argued by defendant Mortgage, only limited the action to courts located in Santa

Clara County, whether federal or state. Having successfully resisted remand, Mortgage now asserts

the action should be transferred to the Eastern District of Michigan. 

The present action arises out of loans by FFFC, a citizen of California, to Tamika Brown

("Brown") totaling approximately $700,000. Compl. ¶ 6. Defendant Mortgage, a citizen of

Michigan, "brokered" the transaction pursuant to a mortgage broker agreement (the "MBA")

between Mortgage and FFFC. Id. ¶ 3. The loan was secured by a deed of trust on real property

located in Michigan. Id. ¶ 7. 

Although not alleged in the complaint, Mortgage submits that Brown defaulted on the loan

and filed for voluntary bankruptcy pursuant to Chapter 7 of the United States Bankruptcy Code. 

Brown was forced to surrender the property to FFFC. After foreclosure proceedings on the property,

FFFC filed the present action against Mortgage seeking the deficiency between the amount received

in foreclosure and the outstanding balance of the loan. 

FFFC's action is premised on its allegations that the loan package submitted by Mortgage on

behalf of Brown contains several misrepresentations in breach of the MBA. FFFC's complaint

alleges breach of the MBA, intentional and negligent misrepresentation, and indemnity. A forum

selection clause in the MBA between the parties reads as follows:

This Agreement shall be governed by the internal laws and not the laws regarding

conflicts of laws of the state of California. Venue for any judicial proceeding under the

Agreement shall be in Santa Clara County, California.

Compl., Ex. A at ¶ 1.08; Order Denying Motion to Remand Dated October 5, 2006 at 2. 

On October 11, 2006 Brown was dismissed from this action pursuant to FFFC's notice of

voluntary dismissal of Brown without prejudice. See Docket No. 16. FFFC submits that one of the

reasons it dismissed Brown is that she cannot be located for service. Brian H. Gunn Decl. Supp.

Opp. Mot. Tfr., ¶¶ 3-6.

Case 5:06-cv-04343-PVT Document 28 Filed 12/18/06 Page 2 of 8
United States District Court

For the Northern District of California

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ORDER DENYING MOTION TO CHANGE VENUE AND ASSIGNING CASE TO MAGISTRATE JUDGE FOR ALL

PURPOSES—06-04343 RMW

SPT 3

II. ANALYSIS

Mortgage argues that transfer is warranted because all defendants are in Michigan, the real

property securing the loans is in Michigan, witnesses are in Michigan, and the bankruptcy court

which administered Brown's bankruptcy proceedings, including the surrender of the property to

FFFC, are located in Michigan. In opposition, FFFC argues (1) that the action is limited to a

contractual matter that does not involved the Michigan citizens referred to in Mortgage's motion,

other than Mortgage; (2) that Mortgage has not made a sufficient showing to overcome the

presumption of appropriate venue that attaches to a forum selection clause; and (3) that the action is

based on a breach of the MBA, which provides that the agreement "shall be governed by the internal

laws and not the laws regarding conflicts of laws of the state of California." 

"[Section] 1404(a), governs the decision whether to give effect to the parties' forum-selection

clause." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 23 (1988). Section 1404(a) provides: "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). 

"A motion to transfer under § 1404(a) . . . calls on the district court to weigh in the balance a number

of case-specific factors." Stewart, 487 U.S. at 29. The existence of a forum selection clause is a

significant factor in the court's § 1404(a) analysis. Id. Under Ninth Circuit law, there are a number

of additional factors relevant to a district court's exercise of discretion under § 1404(a):

Under § 1404(a), the district court has discretion to adjudicate motions for transfer

according to an individualized, case-by-case consideration of convenience and fairness.

A motion to transfer venue under § 1404(a) requires the court to weigh multiple factors

in its determination whether transfer is appropriate in a particular case. For example, the

court may consider: (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. . . . We also conclude that the relevant public policy of the forum state, if any, is

at least as significant a factor in the § 1404(a) balancing.

Jones v. GNC Franchising, Inc., 211 F.3d at 498-99. A plaintiff's choice of forum is given

substantial weight. See Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir.

1986). The court considers these factors in light of the present action.

Case 5:06-cv-04343-PVT Document 28 Filed 12/18/06 Page 3 of 8
United States District Court

For the Northern District of California

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ORDER DENYING MOTION TO CHANGE VENUE AND ASSIGNING CASE TO MAGISTRATE JUDGE FOR ALL

PURPOSES—06-04343 RMW

SPT 4

As an initial matter, the existence of the forum selection clause weighs strongly in favor of

FFFC. Further, all of FFFC's claims are state law claims. Since the contract expressly provides that

the laws of California shall govern, California's interest in providing a forum for adjudicating tort

and contract claims arising from a contract subject to its laws and involving a local resident weighs

in favor of FFFC. Cf. Jones, 211 F.3d at 499 (noting "California's strong public policy to provide a

protective local forum for local franchisees").

The first factor in Jones appears neutral as the parties do not argue whether the actual

negotiations and execution of the MBA took place in either California or Michigan (or both). The

second and third factors set forth in Jones weigh strongly in favor of FFFC. As noted above, all of

FFFC's claims are state law claims. This court is more familiar with the laws of the state of

California, which govern the MBA, than the Eastern District of Michigan. Plaintiff choice of forum

is California as it filed the present action in California. 

The fourth and fifth factors, on balance, do not weigh heavily in favor of either party. The

MBA signed between the parties states that FFFC's principal place of business is in San Jose,

California. Compl., Ex. A at ¶ 1.09(f). Although Mortgage argues that FFFC has a Michigan office,

as FFFC notes, a provision in the MBA directs that notices to FFFC be made to the attention of

FFFC's offices in San Jose, California. Mortgage entered into the agreement knowing that it was

dealing with a California company. The central subject matter of the action appears to be

Mortgage's alleged breach of the MBA which is also at least one source of Mortgage's contacts with

California. Because the MBA provides that the laws of California shall govern the agreement, the

subject matter of the litigation has a strong relationship to California. Although neither party has

argued that Mortgage has other contacts with California, whether or not related to the present action,

it is Mortgage's burden to show that the balance weighs in its favor. See Decker Coal Co., 805 F.2d

at 843 (noting that a defendant seeking transfer must make a showing that the factors weigh in favor

of transfer upsetting plaintiff's choice of forum). Mortgage has pointed out that appraisal testimony

will be involved in the case, and the appraisers will undoubtedly be from Michigan and basing their

testimony on land values and economic considerations in Michigan. However, this fact is not

enough to upset plaintiff's choice or the forum selection clause. 

Case 5:06-cv-04343-PVT Document 28 Filed 12/18/06 Page 4 of 8
United States District Court

For the Northern District of California

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ORDER DENYING MOTION TO CHANGE VENUE AND ASSIGNING CASE TO MAGISTRATE JUDGE FOR ALL

PURPOSES—06-04343 RMW

SPT 5

Similarly, the court concludes that defendant has not shown that the sixth or seventh factor

weigh significantly in its favor. The arguments presented by defendant, namely that Brown is a

citizen of Michigan, the foreclosed property is located in Michigan, Brown's bankruptcy proceeding

took place in Michigan, and Mortgage is a citizen of Michigan and is a "small, local business" do

not suffice to outweigh the forum selection clause and the other factors that weigh in favor of FFFC. 

Although Mortgage may be a local business, that fact did not preclude it from entering into an

agreement with a California company, or executing an agreement with a provision designating the

governing laws to be those of the state of California and venue to be in Santa Clara County. 

Mortgage's argument that it would be cost prohibitive for witnesses residing in Michigan to testify in

California is not persuasive based upon Mortgage's showing to date, and does not overcome the

factors that weigh in favor of keeping the action in California. It appears that there will be witnesses

from both Michigan and California. Brown cannot be located and, therefore, her status as a witness

is doubtful. As noted above, FFFC has dismissed Brown as a defendant because it has not been able

to locate her. Thus, it appears that the ability to compel Brown to testify, should her testimony be

relevant, is no different whether the case is tried in Michigan or California. In addition, based on the

nature of the present action—allegations of breach of a contract between FFFC and Mortgage and

alleged misrepresentations by Mortgage—it is not clear that Brown's testimony will be critical even

if she is located, or that her bankruptcy proceedings in Michigan are relevant other than the

apparently undisputed fact that the real property at issue was surrendered to FFFC in the proceeding. 

Mortgage's argument that whether Brown made misrepresentations to it is relevant to whether FFFC

can prevail on its claims may or may not prove to be the case. Mortgage's argument that the claims

of the present action necessarily depend upon the bankruptcy court's finding of fraud on Brown's

part is not dispositive since the present action is against Mortgage and arises out of the contract with

Mortgage, not Brown.

To the extent any planned expert witness, including those knowledgeable of the real estate

market in Michigan, is a resident of Michigan and has to travel to California to testify, such a factor

is not given great weight in this analysis. See AV Media, Pte, Ltd. v. OmniMount Sys., Inc., 2006

WL 2850054, *4 (N.D. Cal. 2006) (JSW) ("The convenience of expert witnesses, however, is given

Case 5:06-cv-04343-PVT Document 28 Filed 12/18/06 Page 5 of 8
United States District Court

For the Northern District of California

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1

 Mortgage also asserts that the forum selection clause is "ambiguous and unclear" and

contained in "a boiler-plate adhesion agreement" but provides no facts to support such a claim.

ORDER DENYING MOTION TO CHANGE VENUE AND ASSIGNING CASE TO MAGISTRATE JUDGE FOR ALL

PURPOSES—06-04343 RMW

SPT 6

little weight when determining venue.") (citation and quotations omitted). Similarly, any argument

by Mortgage that it would be inconvenient for its employees to travel to California to testify is given

little weight. See id. at *3 (The convenience of [defendant]'s party witnesses is entitled to little

weight because the witnesses are employees of the party seeking transfer, and [defendant] will be

able to compel their testimony at trial."). In any event, neither party has informed the court that

there are unwilling witnesses whose testimony is necessary in this action.

The eighth factor, access to evidence, weighs somewhat in favor of transfer. Mortgage

argues that Brown's loan application was made in Michigan. Presumably, Brown's loan files are

located at Mortgage's offices in Michigan. These files are likely relevant to issues raised by FFFC's

action, including, for example, its assertion of intentional misrepresentation. Nevertheless, this is

not enough to justify transfer. On balance, the court finds that the relevant factors weigh in favor of

denying Mortgage's motion for change in venue.1

 The denial is without prejudice to a later showing

that most, if not all, necessary witnesses and evidence for trial is located in Michigan and can only

be effectively presented if trial is held in Michigan. 

III. ASSIGNMENT TO MAGISTRATE JUDGE

In their Joint Case Management Statement, the parties stated that they "have already

consented to assignment of this case to a United States Magistrate Judge for trial." ¶ 7 of Joint Case

Management Statement dated October 27, 2006 [Docket No. 21]. Therefore, the case is assigned to

Magistrate Judge Patricia Trumbull and the parties are directed to forthwith contact her chambers to

set a date and time for the initial case management conference. The parties are to sign the court's

form order consenting to trial by the magistrate judge if they have not already done so.

Case 5:06-cv-04343-PVT Document 28 Filed 12/18/06 Page 6 of 8
United States District Court

For the Northern District of California

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ORDER DENYING MOTION TO CHANGE VENUE AND ASSIGNING CASE TO MAGISTRATE JUDGE FOR ALL

PURPOSES—06-04343 RMW

SPT 7

IV. ORDER

For the foregoing reasons, the court DENIES without prejudice defendant's motion for

change of venue to the Eastern District of Michigan. The court also assigns the case for all purposes

to Magistrate Judge Patricia Trumbull. 

DATED: 12/18/06

RONALD M. WHYTE

United States District Judge

Case 5:06-cv-04343-PVT Document 28 Filed 12/18/06 Page 7 of 8
United States District Court

For the Northern District of California

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ORDER DENYING MOTION TO CHANGE VENUE AND ASSIGNING CASE TO MAGISTRATE JUDGE FOR ALL

PURPOSES—06-04343 RMW

SPT 8

Notice of this document has been electronically sent to:

Counsel for Plaintiffs:

Brian H. Gunn bhgunn@wolfewyman.com 

Eric M. Schiffer emschiffer@wolfewyman.com 

Counsel for Defendants:

Ronald D. Rosengarten 

Rosengarten & Leven, LLP 

23801 Calabasas Road 

Suite 1015 

Calabasas, CA 91302 

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 12/18/06 SPT

Chambers of Judge Whyte

Case 5:06-cv-04343-PVT Document 28 Filed 12/18/06 Page 8 of 8