Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-00358/USCOURTS-casd-3_11-cv-00358-0/pdf.json

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

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Proper venue is based on the most "convenient" or "fair" forum. as established by various 

statutory criteria such as the defendant's residence or where the cause of action arose. See Ne irbo 

Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 167-68 (1939); see also Sec. Investor Prot. 

Corp. v. Vigman, 764F.2d 1309, 1313-14 (9thCir. 1985). The general rule is that a plaintiffs 

forum choice is afforded substantial weight. Decker Coal Co. v. Commonwealth Edison Co., 805 

F.2d 834, 843 (9th Cir. 1986); Tuazon v. R.J Reynolds Tobacco Co., 433 F.3d 1163, 1177 (9th 

Cir. 2006) (asserting "the plaintiffs choice of forum is entitled to deference"). The defendant must 

prove a strong showing of inconvenience to warrant upsetting a plaintiff s forum choice. Decker 

Coal Co., 805 F.2d at 843. The Court finds Defendants have failed to provide any facts or reasons 

to show the Southern District of California is an inconvenient or unfair forum. 

Defendants further argue that Plaintiff submitted to the jurisdiction ofthe San Benito 

Superior Court when Plaintiff filed an unlawful detainer action against Defendants in February 

2011. (Mot.. ~ 2.) Under California law, "[t]he proper location for trial of [an unlawful detainer] 

proceeding ... is the location where the court tries that type of proceeding that is the nearest and 

most accessible to where the real property that is the subject of the action, or some part thereof, is 

situated." Cal. Civ. Proc. Code § 392(b). The Court finds Defendants' argument unpersuasive 

because under this section, Plaintiff was required to file its claim in the San Benito Superior Court, 

as the real property subject to the claim was located there. (Mot., Ex. B.) Additionally, an unlawful 

detainer proceeding is a limited proceeding that cannot be used for any other purpose, including to 

adjudicate a breach of contract claim. Superior Motels, Inc. v. Rinn Motor Hotels, Inc., 195 Cal. 

App. 3d 1032, 1070-71 (1987). Accordingly, Plaintiff s initiation of an unlawful detainer 

proceeding in San Benito Superior Court did not waive Plaintiffs right to bring this action in this 

Court. 

Defendants next claim that the Guaranty was cancelled by the United States Bankruptcy 

Court for the Northern District of California pursuant to a court order in Case Nos. 08-3220, 09­

30788, and 09-30802. (Mot., ~ 3.) The Court rejects this claim because, as Plaintiff points out, the 

court order specifically states that the reconveyance ofthe liens was made "according to the terms 

of the Memorandum of Understanding." (Opp., p. 9; Mot., Ex. C, p. 2.) Loans 06-057 and 06-058 

- 4- ll-cv-0358 

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: 

are the only loans cited in the Memorandum ofUnderstanding. (RJN, Ex. E, Recital A, p. 55.) 

Here, however, the Guaranty is listed as Loan 06-056. (Compl., Ex. C, p. 45.) Therefore, the 

Guaranty has not been cancelled by court order. 

Defendants lastly argue that the transactions upon which this lawsuit is based are also being 

litigated in the United States Bankruptcy Court for the Southern District of California, Case No. 

08-12840 PBll under Adversary Proceeding No. 11-90064. (Mot., ~ 4.) The Court rejects this 

argument because Defendants are not named in that action. On April 13, 2011, the Honorable 

Peter Bowie ofthe United States Bankruptcy Court for the Southern District ofCalifornia also 

dismissed without prejudice the Adversary Proceeding. (Bankr. S.D. Cal. Adv. Proc. 11-90064). 

Accordingly, Defendants' request to dismiss this action on the grounds ofimproper venue is 

denied. 

B. FAILURE TO STATE A CLAIM 

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint may be dismissed for 

failure to state a claim upon which relief can be granted. A complaint should be dismissed if a 

plaintiff fails to plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 569 (2007). This plausibility standard means the complaint must 

state enough facts to raise a reasonable expectation that discovery will reveal evidence of the 

claim. Id at 556. The court must accept as true all material allegations in the complaint, as well as 

reasonable inferences to be drawn from them. See Pareto v. FDIC, 139 F.3d 696,699 (9th Cir. 

1998). The complaint must be read in the light most favorable to the plaintiff. See id 

Defendants fail to cite any case law or other legal authority supporting their argument that a 

12(b)(6) dismissal is appropriate in this case, nor could the Court find any. Accordingly, 

Defendants' request to dismiss the action under Rule 12(b)(6) is denied. 

III 

III 

III 

III 

III. CONCLUSION 

- 5 - 11-cv-0358 

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