Opinion ID: 3063859
Heading Depth: 2
Heading Rank: 1

Heading: Whether Arizona law applies

Text: 5 It is well established that a transfer under § 1404(a) is generally “but a change of courtrooms.” Van Dusen v. Barrack, 376 U.S. 641, 639, 84 S. Ct. 805, 821 (1964). The transferee court is “obligated to apply the state law that would have been applied if there had been no change of venue.” Id. This rule is based on two rationales. First, the Supreme Court was concerned “that the principles underlying Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L.Ed. 1188 (1938), would be violated if a change of venue could result in a disposition that could not have been achieved if the action were initially brought in state court.” Roofing & Sheet Metal Serv., Inc. v. La Quinta Motor Inns, Inc., 689 F.2d 982, 991 (11th Cir. 1982) (citing Van Dusen, 376 U.S. at 637-38, 58 S. Ct. at 81920). Second, the Court determined that Congress did not intend for § 1404(a) “to defeat the state-law advantages that might accrue from the exercise of [the plaintiff’s] venue privilege.” Van Dusen, 376 U.S. at 635, 58 S. Ct. at 819. However, there is a relevant exception. “Van Dusen does not govern cases in which the transferor court lacked personal jurisdiction of the defendant.” Roofing & Sheet Metal Serv. Inc., 689 F.2d at 991. When the transferor court lacked personal jurisdiction over the defendant, the transferee court must apply the law of the state in which it sits. Id. at 992. To hold otherwise “would defeat the goal of uniformity articulated in Erie and elaborated in Van Dusen, by producing 6 different outcomes, depending on whether the action is initially brought in state or federal court.” Id. It would also encourage forum shopping by allowing a plaintiff “to ‘capture’ the law of an impermissible forum.” Id. This dispute can be resolved by straightforward application of these principles. JV argues that the Arizona district court lacked personal jurisdiction over Timco. Therefore, the Florida district court should have applied Florida’s choice of law. The Florida district court noted that there had been no judicial determination that the Arizona district court lacked personal jurisdiction over Timco. After the transfer, Timco formally waived its defense of lack of personal jurisdiction.2 As the district court properly noted, lack of personal jurisdiction is a 2 JV argues that Timco is judicially estopped from arguing that the Arizona court has personal jurisdiction. We disagree. Judicial estoppel is an equitable doctrine invoked at the court’s discretion. Stephens v. Tolbert, 471 F.3d 1173, 1177 (11th Cir. 2006). Courts have traditionally looked to three factors: “(1) whether a later position asserted by a party was clearly inconsistent with an earlier position; (2) whether a party succeeded in persuading a court to accept an earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled; and (3) whether the party with an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” Id. (internal quotations omitted). Timco filed a motion to dismiss for lack of personal jurisdiction in the Arizona district court. However, the court never ruled on the motion to dismiss. Instead, the parties stipulated to a transfer to the Southern District of Florida pursuant to 28 U.S.C. § 1404(a). Neither the stipulation itself nor section 1404(a) makes any reference to lack of personal jurisdiction. Section 1404(a) states: “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.” Therefore, Timco never persuaded the Arizona court to accept its position that the court lacked personal jurisdiction. Furthermore, Timco is not asserting an inconsistent position. Timco is merely waiving its defense. Finally, we cannot perceive any injustice to JV in applying the law of the state in which it brought suit. 7 waivable defect. See Lipofsky v. N.Y. State Workers Comp. Bd., 861 F.2d 1257, 1258 (1988). Accordingly, the district court applied the law of Arizona (the transferor court) as required by Van Dusen. We discern no error.3 B. Whether JV’s Claims are Barred by the Arizona Statute of Limitations Under Arizona law, there is a three year statute of limitations for breach of an oral contract of indebtedness. Az. Stat. § 12-543. JV filed suit on October 25, 2005. The LOCs were drawn on or before October 18, 2001. Furthermore, all parties agree that Kellstrom was in default on its obligation to repay the LOC Lenders when the Loan matured on December 1, 2001. Therefore, the district court determined that regardless of whether Timco’s obligation to indemnify the LOC Lenders arose when the LOCs were drawn or when the Loan matured, the 3 The district court’s resolution of this issue conforms not only with the letter of the law articulated in Van Dusen and Roofing & Sheet Metal, but also the rationale behind the law. First, both opinions expressed concern that a change of venue might produce an outcome that could not have been obtained if the action had originally been brought in state court – creating a result inconsistent with Erie principles. See Van Dusen, 376 U.S. at 637-38, 58 S. Ct. at 819-20; Roofing & Sheet Metal Serv. Inc., 689 F.2d at 992. Here, if the action had originally been brought in Arizona state court, Timco would have been permitted to waive its defense of lack of personal jurisdiction and submit to Arizona law. See Matter of Duryea, 563 P.2d 885, 885 n.1 (Ariz. 1977). Second, Van Dusen sought to prevent defendants from defeating the state-law advantages accompanying the plaintiff’s privilege to select, from among permissible venues, where to bring suit. See Van Dusen, 376 U.S. at 635, 58 S. Ct. at 819. Here, Timco does not seek to defeat JV’s venue privilege. JV chose to bring suit in Arizona, and Arizona law is being applied to resolve the case. Finally, Roofing & Sheet Metal sought to prevent impermissible forum shopping by the plaintiff. See 689 F.2d at 992. Here, JV is not attempting to “capture” the law of an impermissible forum. Rather, JV is attempting to avoid the law of a permissible forum – that JV itself invoked. 8 filing of this suit in October of 2005 was barred by Arizona’s three year statute of limitations. JV asserts that a cause of action does not arise on a promise to indemnify until the plaintiff suffers damage. See HSL Linda Gardens Prop. v. Freeman, 859 P.2d 1339, 1340-41 (Ariz. Ct. App. 1993). Assuming this is true, JV’s argument still fails. JV argues that the statute of limitations did not begin to run until Danro (its assignee) acquired and then resold the Kellstrom Building. At this point, JV claims that its loss was “liquidated.”4 However, the district court cited ample evidence to support the conclusion that JV suffered damage, at the latest, when Kellstrom defaulted on its obligation to repay the Loan. The court noted that Robert Alpert, a General Partner who brought suit on JV’s behalf, testified that Timco was obligated to indemnify the LOC Lenders when the LOCs were drawn. JV’s expert witness also calculated JV’s damages from the time the LOCs were drawn. Accordingly, we discern no error in the district court’s conclusion that JV’s claims are barred by the Arizona statute of limitations.