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2006 Frank Calandra, Jr. Irrevocable Trust v. Signature Bank Corp.

September 30, 2009


The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge


Presently before the Court are the MOTION TO TRANSFER VENUE TO THE SOUTHERN DISTRICT OF NEW YORK (Document No. 11), with brief in support, filed by Defendant Signature Bank Corporation ("Signature") and DEFENDANT CUSHNER & GARVEY, LLP'S MOTION PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12 OR, ALTERNATIVELY, 28 U.S.C. § 1404(a) (Document No. 16). The motions have been fully briefed (Document Nos. 12, 17, 21, 22, 27, 28), and are ripe for disposition.*fn1

Procedural Background

On July 17, 2009, Plaintiffs filed suit in the Court of Common Pleas of Allegheny County against Defendants, a New York bank and a New York law firm. The gravamen of the complaint is that Signature negligently permitted Edward Stein (a non-party investment advisor located in New York) to steal money from the 2006 Frank Calandra, Jr. Irrevocable Trust ("Trust") bank account and that the Cushner & Garvey law firm received some of the pilfered proceeds. On August 6, 2009, the case was removed to this Court based on diversity of citizenship.

Factual Background

The Trust was created by a resident of Allegheny County, Pennsylvania for the benefit of his children and grandchildren, most of whom are also residents of Pennsylvania. Edward Stein, an investment advisor located in New York, and two of Calandra's children served as trustees. Stein assisted the Trust in opening a bank account at the Signature Bank branch office in White Plains, New York for deposit of the Trust's funds. The bank mailed account statements to an address in Pennsylvania, at least until Stein executed a change of address form. Allegedly, between August and October 2007, Stein stole approximately $750,000 from the Trust via a series of wire transfers. One of the unauthorized wire transfers initiated by Stein from the Trust's account was made to a New York law firm, Cushner & Garvey. The law firm had never performed any services for the Calandra Trust or its trustees, yet it accepted the proceeds to satisfy a debt owed by Stein and has refused to return the money. In April 2009, the Securities and Exchange Commission ("SEC") charged Stein with securities fraud involving a $55 million Ponzi scheme and Plaintiffs believe that their money has been lost. .

Standard of Review

"The court may examine facts outside the complaint to determine proper venue, but must draw all reasonable inferences and resolve all factual conflicts in the plaintiff's favor." Fellner v. Philadelphia Toboggan Coasters, Inc., 2005 WL 2660351, at *1 (E.D. Pa. Oct.18, 2005); accord Heft v. AAI Corp., 355 F. Supp.2d 757, 762 (M.D. Pa.2005) ("Whatever the nature of the parties' submissions, the court is bound to view the facts in the light most favorable to the plaintiff."). The United States Court of Appeals for the Third Circuit has held that the movant (the defendant) bears the burden of demonstrating that venue is not proper. Myers v. American Dental Ass'n, 695 F.2d 716, 724 (3d Cir.1982). The defendant also bears the burden of establishing that a venue transfer is warranted. Furthermore, "in ruling on defendant's [transfer] motion the plaintiff's choice of venue should not be lightly disturbed." Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.1995).

Questions of venue are governed by either 28 U.S.C. § 1404(a) or 28 U.S.C. § 1406. See Jumara, 55 F.3d at 878. The standards for transfer of an action differ depending on whether venue has been properly laid. Ordinarily, the Court must first determine whether venue is proper in the Western District of Pennsylvania before deciding whether transfer would be appropriate in accordance with the factors enunciated by the applicable standard, § 1404(a) or § 1406. However, in this case, Signature concedes that venue would be appropriate in this Court and merely seeks a transfer of venue pursuant to § 1404. Cushner & Garvey has moved for dismissal on jurisdictional grounds but has also joined in the motion to transfer venue. Accordingly, the Court will proceed directly to the analysis of whether transfer is appropriate under § 1404. Section 1404(a) provides that transfer to another proper venue is appropriate "[f]or the convenience of parties and witnesses, in the interest of justice." Id. The burden of establishing the need for transfer under § 1404(a) rests with the moving party. See In re United States, 273 F.3d 380, 388 (3d Cir. 2001).


Defendants contend that this case should be transferred to the Southern District of New York because (i) Defendants are residents of New York and do not regularly conduct business in Pennsylvania; (ii) all of the events or omissions giving rise to the claim are alleged to have occurred in New York; (iii) the Trust's bank account is governed by New York law; (iv) all of the witnesses and records regarding the alleged transactions are located in New York; (v) the Trust intentionally opened the bank account in New York; (vi) this Court may lack personal jurisdiction over Cushner & Garvey; (vii) any judgment would have to be enforced in New York; (viii) the Trust consented in the Funds Transfer agreement that litigation relating to the account would be commenced in New York; and (ix) New York has preeminent interest in the activities of banks created under New York law, while Pennsylvania has no discernible interest in this litigation. Accordingly, Defendants contend that the lawsuit should be transferred to the United States District Court for the Southern District of New York.

Plaintiffs argue that their choice of their home forum should be given presumptive weight and that Defendants have failed to provide compelling reasons for a transfer of venue. Plaintiffs contend that Signature knowingly accepted funds from a Pennsylvania-based trust Section 1404(a) provides for the transfer of a case to another district where it might have been brought in the "interest of justice" and "for the convenience of parties and witnesses." The purpose of § 1404(a) is "to prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Van Dusen v. Barrack, 376 U.S. 612, 616 (1964). When ruling on a motion to transfer, "a court should consider all relevant factors to determine whether on balance the litigation would more conveniently proceed and the interest of justice be better served by the transfer to a different forum." Jumara, 55 F.3d at 879. When considering whether to transfer an action under § 1404(a), a court should not solely limit its consideration to § 1404(a)'s enumerated factors of convenience of the parties, convenience of the witnesses, or interests of justice, but should consider all relevant factors, including both private and public factors. Jumara, 55 F.3d at 879.

The private factors relevant to a transfer ...

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