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Family Financial Centers LLC v. Cox

United States District Court, E.D. Pennsylvania

February 25, 2015

FAMILY FINANCIAL CENTERS LLC, Plaintiff,
v.
JAY COX AND MARY COX, Defendants.

MEMORANDUM

RONALD BUCKWALTER, Senior District Judge.

Currently pending before the Court is Defendants Jay Cox and Mary Cox[1] ("Defendants")'s Motion to Dismiss, or Alternatively, to Decline Jurisdiction and to Transfer Venue to the Worcester Division of the United States District Court for the District of Massachusetts pursuant to 28 U.S.C. § 1404. For the following reasons, the Motion is granted in part[2] and the case is transferred to the United States District Court for the District of Massachusetts.

I. FACTUAL AND PROCEDURAL HISTORY

Family Financial Centers, LLC ("Plaintiff"), a Delaware limited liability company, is a franchisor engaged in the business of selling rights to open franchise stores that provide the general public with financial services, including check cashing, bill payment, money orders, and debit cards. (Compl. ¶ 1.) Plaintiff's principal place of business is in Doylestown, Pennsylvania. (Id. at ¶ 2.) Defendants Jay and Mary Cox live in Westborough, Massachusetts. (Id. at ¶ 3.) Defendant Jay Cox is the president of Commonwealth Mortgage Lending, a company that works with mortgage lenders to provide financing for residential and commercial loans. (Id. at ¶ 4.)

On or about October 28, 2013, Plaintiff and Defendants entered into a contract that required Defendants to "identify and acquire a site for the Financial Center within 180 days after the Effective Date" of the contract. (Id. at ¶¶ 6-7.) Plaintiff presented several possible sites, but Defendants failed to acquire a site within 180 days of the effective date of the contract. (Id. at ¶ 8.) The terms of the contract did not place geographic restraints on where the Defendants' store could be located. (Id. at ¶ 19.) The contact summary pages, however, list the "Site Selection Area" as "Worcester County, TBD." (Compl. Ex. A, Family Financial Centers LLC Agreement at Summary Pages.) The Franchise Agreement states that "[t]he site must be located within the Site Selection Area identified in the Summary Pages, must meet FFC's Standards for the Financial Center size and location, and must otherwise be mutually acceptable to you and to FFC." (Id. at Section 3.A, Development Procedures: Site Selection.)

In December 2013, Plaintiff presented Defendants with a possible site near a property Defendants owned in Worcester, Massachusetts (the "Ace Conversion Site"), which was run by Ace Cash Express. (Compl. ¶ 11.) Plaintiff suggested the site because it met Plaintiff's standards ("FFC Standards") for a store site and had a good location, clean operation, good customer base, and a profitable history. (Id.) Defendants rejected the Ace Conversion Site because they believed there would be low profitability for a high purchase price, and asked Plaintiff to find a higher volume site with higher profitability. (Id. at ¶ 12.) Defendants refused to listen to a proposal that Plaintiff was willing to negotiate that would have effectively lowered the purchase price of the Ace Conversion Site. (Id. at ¶ 13.) Plaintiff alleges that Defendants' rejection of the Ace Conversion Site cost Plaintiff "a projected minimum of $195, 000 in lost profits over the 15-year term of the contract."[3] (Id. at ¶ 14.)

During March 2014, Defendants told Plaintiff that they were in no rush to select a site for their franchise store, and that Plaintiff and Defendants should keep looking for a site. (Id. at ¶ 15.) On or about April 24, 2014, Plaintiff proposed a higher-volume, more profitable site (the "High-Volume Site") in Worcester, Massachusetts, as per the Defendants' request. (Id. at ¶ 16.) Defendants rejected the High-Volume Site, citing the purchase price, but without assessing the financial records of the site. (Id.) On or about April 24, 2014, Plaintiff presented Defendants with two other site options in Springfield, Massachusetts, about fifty miles away from Defendants' residence. (Id. at ¶ 17.) Defendants were not willing to look at the financial information for either site, and rejected both Springfield sites. (Id. at ¶ 18.) Defendants' reason for rejecting the sites was the distance they would have to travel, even though they did not plan to personally operate the stores on a daily basis. (Id.)

On May 16, 2014, Defendant requested the return of the franchise fee, which according to the Complaint is non-refundable, even though Plaintiff believes it met the terms of the Franchise Agreement Addendum. (Id. at ¶ 20.) The Franchise Agreement Addendum states that "FFC and Franchisee agree to make best efforts to identify as quickly as possible an acquisition opportunity in the markets of Franchisee's interest. If, by May 15, 2014, we are unable to identify an acquisition that meets FFC standards, Franchisee shall have the option of applying this agreement to an acquisition in another market area, a new store, or receive a refund of their franchise fee... in one lump sum payment." (Compl., Ex. B, Franchise Agreement Addendum ¶ 10.) At no point during the site selection process did Defendants present Plaintiff with store site proposals, even though the contract obligated them to identify and acquire a site. (Compl. ¶ 21.) On or about May 30, 2014, Defendants informed Plaintiff of their intention to abandon their obligation under the contract, and have not opened a franchise location. (Id. at ¶ 9.)

Plaintiff initiated the current litigation, alleging breach of contract and breach of the implied covenants of good faith and fair dealing, by filing a Complaint in the Court of Common Pleas of Bucks County, Pennsylvania on September 5, 2014.[4] Defendants removed the case to federal court on September 17, 2014. Defendants filed an Answer and Counterclaim on October 1, 2014, alleging counterclaims for breach of contract, breach of the implied covenants of good faith and fair dealing, unjust enrichment, and violation of Massachusetts General Laws Chapter 93A. (Defs.' Answer and Countercl. ¶¶ 18-36.). Plaintiff filed an Answer to Defendants' Counterclaim and Affirmative Defenses on October 17, 2014. Plaintiff filed a Motion for Judgment on the Pleadings on October 17, 2014, which Defendants answered on October 31, 2014.[5]

Defendants filed the present Motion to Dismiss or to Transfer Venue to the District of Massachusetts on October 22, 2014. Plaintiff responded on November 4, 2014, and Defendants submitted a Reply Brief on November 11, 2014. The Court now turns to a discussion of this Motion with respect to Defendants' request to transfer venue.

II. DISCUSSION

Pursuant to 28 U.S.C. § 1404(a), a district court may transfer an action to any other district "where it might have been brought" if this transfer is "for the convenience of parties and witnesses" and "in the interest of justice." 28 U.S.C. § 1404(a); see also Connors v. UUU Prods., No. Civ.A.03-6420, 2004 WL 834726, at *6 (E.D. Pa. Mar. 5, 2004). The determination of whether to transfer venue pursuant to § 1404(a) is governed by federal law. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 877-878 (3d Cir. 1995) (federal law applies because questions of venue are procedural, rather than substantive).

Analysis of a request for a § 1404(a) transfer has two components. First, both the original venue and the requested venue must be proper. Jumara, 55 F.3d at 879. In a diversity case, venue is proper in "(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action." 28 U.S.C. § 1391.

Second, because the purpose of allowing § 1404(a) transfers is "to prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense, '" Pro Spice, Inc. v. Omni Trade Grp., Inc., 173 F.Supp.2d 336, 339 (E.D. Pa. 2001) (quoting Van Dusen v. Barrack, 376 U.S. 612, 616 (1964)), the Court is required to undertake a balancing test in deciding whether the "interests of justice [would] be better served by a transfer to a different forum." Jumara, 55 F.3d at 879. The Third Circuit has outlined a non-exhaustive list of pertinent public and private interest factors to be weighed in this balancing test. The private interests include: (1) the plaintiff's forum preference as manifested in the original choice; (2) the defendant's forum preference; (3) whether the claim arose elsewhere; (4) the convenience of the parties as indicated by their relative physical and financial condition; (5) the convenience of the witnesses; and (6) the location of books and records. Id. at 879 (citation omitted). The public interests include: (1) the enforceability of the judgment; (2) practical considerations that could make the trial easy, expeditious, or inexpensive; (3) the relative administrative difficulty in the two fora resulting from court congestion; (4) the local interest in deciding controversies at home; (5) the public policies of the fora; and (6) the familiarity of the trial judge with the applicable state law in diversity cases. Id. at 879-80 (citation omitted). The burden falls on the moving defendant to show the desirability of transferring venue and to present evidence upon which the court may rely in justifying transfer. Fellner ex rel. Estate of Fellner v. Phila. Toboggan Coasters, Inc., No. Civ.A.05-1052, 2005 WL 2660351, at *4 (E.D. Pa. Oct. 18, 2005).[6] Notably, analyses of transfers under § 1404(a) are "flexible and must be made on the unique facts of each case."[7] Job Haines Home for the Aged v. Young, 936 F.Supp. 223, 227 (D.N.J. 1996) (internal quotations omitted).

Plaintiff does not dispute that the case "might have been brought" in Defendants' requested venue of the District of Massachusetts, and argues only that the facts of the case support venue and jurisdiction in Pennsylvania. (Pl.'s Resp. Opp'n Mot. Dismiss and Transfer Venue 4.). The Complaint at issue clearly alleges that Defendants are Massachusetts residents, thereby satisfying the requirements for venue in the District of Massachusetts. (Compl. ¶ 3.) Accordingly, the Court turns to the second part of the inquiry: whether the convenience of the parties and witnesses, as well as the interests of justice, would be served by transferring this case ...


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