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EMC Mortgage LLC v. American Bancshares Mortgage LLC

United States District Court, N.D. Texas, Dallas Division

January 2, 2020

EMC MORTGAGE, LLC, Plaintiff,
v.
AMERICAN BANCSHARES MORTGAGE, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          BRANTLEY STARR UNITED STATES DISTRICT JUDGE

         On June 27, 2019, the plaintiff EMC Mortgage, LLC (EMC) filed a complaint for indemnity against American Bancshares Mortgage, LLC (American Bancshares). The Court concludes that the Northern District of Texas is not the proper venue for this action, or that even if the Northern District of Texas is a proper venue it is not the best venue for this case. Barring any objections, the Court TRANSFERS this case to the U.S. District Court for the Southern District of Florida. The Court GRANTS LEAVE to the parties to file briefing stating their objections, if any, by Friday, January 10, 2020.

         I.

         The Court finds that the Northern District of Texas is not a proper venue for this case, and that the Southern District of Florida is. Therefore, the Court transfers venue under 28 U.S.C. § 1406(a).

         A.

         If a district court is not a proper venue for a civil action, it is authorized to sua sponte transfer a civil action to a district court that is a proper venue. Under 28 U.S.C. § 1406(a), a federal district court is authorized to transfer a “case laying venue in the wrong division” to “any district or division in which it could have been brought” if the court finds it is “in the interest of justice” to transfer the case.[1] A district court may raise the issue of venue sua sponte and has broad discretion in determining whether to transfer a case under section 1406(a).[2]

         B.

         To determine that this Court is not a proper venue for this case, the Court analyzes EMC's failure to plead venue properly under 28 U.S.C. § 1391.

         i.

         Unless a plaintiff pleads venue specifically under another federal statute, 28 U.S.C. § 1391 is the statute that governs “the venue of all civil actions brought in district courts of the United States.”[3] Under Section 1391(b), a judicial district is a proper venue in only three instances. First, a judicial district is a proper venue if within it “any defendant resides, if all defendants are residents of the State in which the district is located.”[4] Second, a district is a proper venue if it is where “a substantial part of the events or omissions giving rise to the claim occurred” or if it is where “a substantial part of the property that is the subject of the action is situated.”[5]Third, a district is a proper venue if “any defendant is subject to the court's personal jurisdiction” regarding the civil action there and “there is no district in which an action may otherwise be brought as provided in this section.”[6]

         ii.

         EMC pleads venue under Section 1391. Specifically, EMC alleges that venue “is proper in the Northern District of Texas pursuant to 28 U.S.C. § 1391 because Defendant conducts business within this District.”[7] But under Section 1391, the conduct of business is not a factor courts use to determine the propriety of venue. Instead, the statute requires the Court to look first to the residency of the defendant or the location of the actions giving rise to the claim (or, if applicable, the location of the property that is the subject of the claim).

         Under the Section 1391 analysis, the Court concludes that the Northern District of Texas is not a proper venue for this civil action. First, EMC pleads no facts that demonstrate American Bancshares is a resident of Texas, specifically within the jurisdiction of the Northern District of Texas. Instead, according to its complaint, American Bancshares is a limited liability company whose members reside in and are citizens of the state of Florida. Second, EMC pleads no facts demonstrating that any alleged events or omissions of American Bancshares giving rise to EMC's claims occurred within the Northern District of Texas. Instead, according to American Bancshares' pending motion to dismiss, the real property that secured the loan that American Bancshares sold to EMC is in Pinecrest, Florida. Additionally, that property's foreclosure sale (resulting from the loan borrower's default, which American Bancshares allegedly promised EMC to indemnify) occurred in Miami-Dade County, Florida. Pinecrest is in Miami-Dade County, which is within the Southern District of Florida.

         Because American Bancshares appears to reside in Florida, and because a substantial amount of the actions giving rise to this litigation occurred in (and the property that originally secured the loan that is the subject of this litigation is in) Miami-Day County, Florida, the Court concludes that the Southern District of Florida is a proper venue for this action. Even if the Northern District of Texas may have personal jurisdiction over American Bancshares (a fact that EMC has asserted but has not demonstrated), the Court cannot base venue on Section 1391(b)(3) if ...


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