IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

MC ASSET RECOVERY, LLC, §

§

Plaintiff, §

§

VS. § NO. 4:05-CV-479-A

§

THE SOUTHERN COMPANY, §

§

Defendant. §

MEMORANDUM OPINION

and

ORDER

In the memorandum opinion and order the court signed in the

above-captioned action on January 10, 2006, the court made known

its tentative conclusion that the motion of defendant, The

Southern Company, ("Southern") to transfer this action to the

United States District Court for the Northern District of Georgia

should be granted. Upon further consideration, the court has

decided to grant the motion.

As the court noted in the January 10 memorandum opinion (at

page 8 n.5), MC Asset Recovery, LLC ("MC") filed a motion on

January 6, 2006, seeking substitution as plaintiff in this

proceeding, alleging that, pursuant to the confirmed plan of

reorganization, it was the successor-in-interest to the then

plaintiffs for further prosecution of this action. By order

signed January 26, 2006, the court granted the motion. MC now is

the sole plaintiff in the action, and the style of the action has

been changed to that appearing in the caption. MC has filed an

amended complaint identifying itself as the plaintiff and

 

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alleging the facts that it asserts give it standing to prosecute

this action.

The reasons why the court tentatively had concluded that the

motion to transfer should be granted are set forth in the January

10 memorandum opinion at pages 34-37. The court is satisfied

that such a transfer would be consistent with pertinent

principles announced by the Supreme Court and the United States

Court of Appeals for the Fifth Circuit.

In VanDusen v. Barrack, the Supreme Court explained the goal

of 28 U.S.C. § 1404(a) as follows:

Section 1404(a) reflects an increased desire to

have federal civil suits tried in the federal system at

the place called for in the particular case by

considerations of convenience and justice. Thus, as

the Court recognized in Continental Grain Co. v. Barge

F.B.L.-585, 364 U.S. 19, 26, 27, 80 S.Ct. 1470, 1474,

1475, 4 L.Ed.2d 1540, the purpose of the section is to

prevent the waste "of time, energy and money" and "to

protect litigants, witnesses and the public against

unnecessary inconvenience and expense * * *." To this

end it empowers a district court to transfer "any civil

action" to another district court if the transfer is

warranted by the convenience of parties and witnesses

and promotes the interest of justice.

376 U.S. 612, 616 (1964) (footnotes omitted).

The threshold determination to be made in applying the

provisions of § 1404(a) is whether the judicial district to which

the transfer is sought is a district in which the claims could

have been filed. See In re Volkswagen AG, 371 F.3d 201, 203 (5th

Cir. 2004). See also VanDusen, 376 U.S. at 616-17. As an action

 

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Second Am. Compl. at 5, ¶ 12; App. to Mem. of Law in Supp. of

The Southern Company's Mot. to Transfer, filed Aug. 8, 2005, tab C at

2, tab E at 2. 

2

App. to Mem. of Law in Supp. of The Southern Company's Mot. to

Transfer, filed Aug. 8, 2005, tab C at 3-4.

3

involving claims arising in or related to a case under title 11,

this action could have been commenced 

[I]n the district court for the district where the

. . . Federal court sits in which, under applicable

nonbankruptcy venue provisions, the debtor or

creditors, as the case may be, may have commenced an

action on which such proceeding is based if the case

under title 11 had not been commenced." 

28 U.S.C. § 1409(c). For venue purposes, because Southern

resides in Atlanta, Georgia,1

 the Northern District of Georgia

would have been proper venue under 28 U.S.C. § 1391(b). 

Undoubtedly, venue would be proper in that district for the

further reason that it is "a judicial district in which a

substantial part of the events or omissions giving rise to the

claim occurred."2

 28 U.S.C. § 1391(b).

Having made the threshold determination, the court looks to

the language of § 1404(a) that the transfer of a civil action

"[f]or the convenience of the parties and witnesses, in the

interest of justice" is authorized. "The determination of

'convenience' turns on a number of private and public interest

factors, none of which are given dispositive weight." In re

Volkswagen AG, 371 F.3d at 203. The Fifth circuit listed these

factors in Volkswagen as follows:

The private concerns include: (1) the relative ease of

access to sources of proof; (2) the availability of

compulsory process to secure the attendance of

 

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App. to Mem. of Law in Supp. of The Southern Company's Mot. to

Transfer, filed August 8, 2005, tab C at 2-11.

4

witnesses; (3) the cost of attendance for willing

witnesses; and (4) all other practical problems that

make trial of a case easy, expeditious and inexpensive. 

The public concerns include: (1) the administrative

difficulties flowing from court congestion; (2) the

local interest in having localized interests decided at

home; (3) the familiarity of the forum with the law

that will govern the case; and (4) the avoidance of

unnecessary problems of conflict of laws of the

application of foreign law.

Id. at 203 (citation omitted). 

At pages 35-37 of the January 10 memorandum opinion and

order, the court enumerated facts that weigh heavily in favor of

grant of the motion to transfer. The court is satisfied that the

sources of proof will be more readily available in the Northern

District of Georgia, that compulsory process to secure the

attendance of witnesses will be more available there, and the

cost of attendance for willing witnesses will be significantly

less there.3

 This case will be more easily tried in the Northern

District of Georgia than in this district, and a trial there

would be more expeditious and less expensive. 

A consideration of the public concerns tend to favor a

transfer. The court has no reason to think that there will be

administrative difficulties flowing from court congestion if the

transfer occurs. In all probability there will be legal issues

related to the interpretation and application of Georgia law,

with which the district court in the Northern District of Georgia

will have greater familiarity than this court. The court does

not anticipate that Texas law will have a significant role in the

 

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outcome of any of the claims made in this case. To the extent

that laws of the other states, such as New York, will apply

because of the connection of another or other states to

transactions involved in this action, the Georgia court will be

at least as familiar with those laws as this court is. And, the

Georgia court can resolve conflict-of-laws issues at least as

readily as this court.

While a plaintiff's choice of forum is a factor to be

considered, In re Horseshoe Entm't, 337 F.3d 429, 434 (5th Cir.

2003), it is neither conclusive nor determinative, id. Indeed,

there is a question as to whether plaintiff's choice of forum is

a relevant factor when the only justification for venue in Texas

is the pendency of the chapter 11 case. There is no indication

that this action could have been brought in this district had it

not been for the existence of the bankruptcy case here. While

the court recognizes that the bankruptcy court in this district

has continuing jurisdiction over the plan of reorganization, that

fact "does not militate for keeping this adversary proceeding

here." C.I.S. of Pine Bluff v. Alltel Cellular Assocs., 175 B.R.

834, 839 (S.D.N.Y. 1994). 

Though not as significant as other factors the court has

mentioned, a factor that weighs in favor of transfer to the

Northern District of Georgia is the pendency there of somewhat

related litigation. The complaint on the first-filed of these

(No. 1:02-CV-1427 on the docket of the United States District

Court for the Northern District of Georgia, Atlanta Division) is

 

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No. 1:02-CV-1467 appears to have been assigned to Judge Story on

September 23, 2003, upon recusal by the then-presiding judge. Docket

entry 102, dated Sept. 23, 2003, in No. 1:02-CV-1467. On November 25,

2003, No. 1:03-CV-1027 was reassigned to Judge Story, because it was

related to No. 1:02-CV-1467. Docket entry 56 dated Nov. 25, 2003, in

No. 1:03-CV-1027. On October 29, 2004, the third case, 1:04-CV-1912,

was transferred to Judge Story. Docket entry 14 dated Oct. 29, 2004,

in No. 1:04-CV-1912. The October 29, 2004, order accomplishing the

transfer recites that the transfer to Judge Story was because Nos.

1:04-CV-1912, 1:02-CV-1467, and 1:04-CV-1027 are related cases. On

June 28, 2005, a motion was filed in No. 1:04-CV-1912, which was

accompanied with a copy of the complaint by which the instant

adversary action was instituted on June 16, 2005, noting the close

relationship between the claims asserted in the instant action and

issues raised in the action pending in the Northern District of

Georgia. Docket entry 58 dated June 28, 2005, in No. 1:04-CV-1912.

6

at page App. 3 of Volume I of the Appendix of Exhibits in Support

of Plaintiffs' Memorandum of Law in Opposition to Motion of The

Southern Company to Transfer Venue, filed September 12, 2005. 

The complaint in the second-filed (No. 1:03-CV-1027 on the docket

of the United States District Court for the Northern District of

Georgia, Atlanta Division) is at page App. 216 of Volume II of

the same appendix. The complaint in the third (No. 1:04-CV-1912

on the docket of the United States District Court for the

Northern District of Georgia, Atlanta Division) is at page App.

669 of Volume IV of the same appendix. These three cases are

being treated as related cases in the Northern District of

Georgia, with the result that all have been assigned to the same

judge, the Honorable Robert W. Story.4

 The court is transferring

this action to the Atlanta Division. Presumably consideration

will be given to an assignment of the action to Judge Story.

Also relevant to the motion to transfer is the conduct of

Mirant Corporation in seeking a transfer in November 2002 of a

case against it from the United States District Court for the

 

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App. to Mem. of Law in Supp. of The Southern Company's Mot.

to Transfer, filed Aug. 8, 2005, tab E at 115-16. 

7

Northern District of California to the Northern District of

Georgia. Mirant's motion to transfer emphasized that its

principle place of business is in Atlanta, Georgia, that its

corporate finance department and energy trading operations for

the United States are located in Atlanta, that witnesses and

documents relevant to the action are, for the most part, located

in Atlanta, and that its financial statements and filings with

the Securities and Exchange Commission were all prepared in

Atlanta.5

 There is no doubt that the activities of which

complaint is made in this action were centered in Atlanta, and

that the citizens of the Northern District of Georgia have the

greatest interest in the litigation's outcome. The relationship

between the claims asserted in this litigation and this Texas

community is so slight, if there is any, that the burden upon the

people of this community in supporting and participating in its

prosecution is one that "ought not to be imposed." In re

Volkswagen, 371 F.3d at 206. 

A reason why the court's conclusion relative to grant of the

motion to transfer was only tentative when the court signed the

January 10, 2006, memorandum opinion and order was the court's

uncertainty as to whether before a transfer was accomplished

there should also be a withdrawal of the reference of the

objections to Southern's proofs of claim. That question arises

because of the inclusion in the complaint of a count that

constitutes objections by plaintiff to all claims in bankruptcy

 

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filed by Southern in the jointly administered chapter 11 case. 

Second Am. Compl. at 24, ¶¶ 10-15. 

By order signed December 29, 2005, the court directed the

parties to comment on whether there should be a withdrawal of the

reference as to the objections of the debtors to Southern's

proofs of claim if the court were to conclude that the reference

of this adversary proceeding should be withdrawn. The response

of the debtors, who at that time were plaintiffs in this

adversary proceeding, was that "if the Court decides to withdraw

the reference of the Adversary Proceeding, the Debtors submit

that it would not make sense to have the Bankruptcy Court

adjudicate the objections of the Southern Claims." Debtors' Mem.

in Resp. filed Jan. 9, 2006, at 2. Southern responded that it

did not believe that a withdrawal of the reference of the

objections to its claims in bankruptcy would be necessary,

explaining that:

The plaintiffs have objected to Southern's proofs of

claim in the Adversary Proceeding in a manner that

effectively incorporates the Debtors' separate claims

objections into the Adversary Proceeding. In

particular, count V of the Amended Complaint asserts,

among other grounds for objecting to Southern's claims,

that "no amounts are due and owing Southern." While

the plaintiffs have offered no specific basis for this

generalized objection, the objection is sufficiently

broad to include any conceivable ground for objecting

to Southern's claims, including the grounds asserted in

the Debtors' separate claims objections. As a result,

the adjudication of the Adversary Proceeding will

resolve all issues with respect to Southern's claims

and moot the separately-filed claims objections.

Statement of The Southern Company Regarding Withdrawal of the

Reference of the Debtors' Objections to the Proofs of Claim Filed

 

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by The Southern Company, filed Jan. 9, 2006, at 2 (footnote

omitted). 

The court agrees with both assessments. After reviewing the

objections made by Mirant Corporation and its affiliated debtors

to Southern's proofs of claim, the court is satisfied that the

parties are correct in concluding that an adjudication of the

issues raised in this adversary proceeding will resolve all

issues raised by the objections of the debtors to Southern's

claims. Presumably the bankruptcy court will withhold ruling on

Southern's claims and the objections thereto until those issues

have been resolved in this action.

Having considered the goal of § 1404(a), as the Supreme

Court explained it in VanDusen, supra at 2, and the governing

principles announced by the Fifth Circuit, supra at 2-5, the

court concludes that the convenience of the parties and

witnesses, and the interest of justice, will best be served by a

transfer of this action to the United States District Court for

the Northern District of Georgia, Atlanta Division. Therefore,

 

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The court ORDERS that the above-captioned action be, and is

hereby, transferred to the United States District Court for the

Northern District of Georgia, Atlanta Division.

SIGNED February 15, 2006.

 /s/ John McBryde 

JOHN McBRYDE

United States District Judge

 

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