finding “the fact that a plaintiff residing in a given judicial district feels the effects of a defendant's conduct in that district does not mean that the events or omissions occurred in that district”
How later courts described this case
- finding “the fact that a plaintiff residing in a given judicial district feels the effects of a defendant's conduct in that district does not mean that the events or omissions occurred in that district”
Written by the judges who cited it.
The opinion
IN THE UNITED STATES DISTRICT COURTN ovember 29, 2021
Nathan Ochsner, Clerk
FOR THE SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
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No. 3:21-cv-165
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MICHAEL RUSSO, PLAINTIFF,
v.
SPENCER BARNARD, DEFENDANT.
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MEMORANDUM OPINION AND ORDER
═══════════════════════════════
JEFFREY VINCENT BROWN, UNITED STATES DISTRICT JUDGE:
Before the court is the defendant’s Amended Motion to Dismiss or
Transfer the Plaintiff’s Complaint for Improper Venue under Rule 12(b)(3).
Dkt. 12. Having considered the parties’ arguments, the pleadings, and the
applicable law, the court grants the motion to transfer.
I. BACKGROUND
The plaintiff, Michael Russo, alleges he was induced to move to Illinois
by his brother-in-law, Spencer Barnard, in order to “assist with operations of
his business(es), inclusive of but not limited to a company named
Featherstone.” Dkt. 10 ¶ 9. As compensation for uprooting his family and
suspending his legal practice to move from Texas to Illinois, Russo alleges he
was promised by Barnard a salary of $10,000 per month and the conveyance
of a home located in Frankfurt, Illinois. Id. ¶ 16. Russo alleges Barnard
purchased the home in February of 2016 and then turned it over to Russo
and his family a week later. Id. ¶ 17–18. Subsequent to this alleged property
transfer, Barnard and his wife Stacey—Russo’s sister—relocated to Florida
where they established a residence. Id. ¶ 20.
After moving to Florida, Barnard and Stacey allegedly “experienced
martial [sic] disharmony for which they have filed for divorce and/or
dissolution of their marriage” in Palm Beach, Florida. Id. ¶ 22; Dkt. 12-4 at
2. Following this marital disharmony, Barnard allegedly terminated Russo’s
employment in Illinois. Dkt. 10 ¶ 25. Barnard also represented that he would
“revoke the real property part of the compensation agreement and/or gift to
[Russo] for the time, labor effort [sic] and/or services provided in the past
and/or into the future.” Id. Barnard allegedly made a subsequent offer to
continue Russo’s salary through August 1, 2019, which Russo alleges Barnard
did not honor. Id. ¶ 26–27.
Russo, seeking relief for his claims against Barnard, filed a 14-count
petition as an intervenor in the Barnards’ divorce proceedings in Palm Beach
County Court. Dkt. 12-4 (Verified Original Petition and Complaint in
Intervention). The court denied Russo’s petition, finding the proposed
intervention was “more properly brought in the Courts of Illinois.” Dkt. 12-5
at 3. Russo, having now returned to Texas, brings his suit in this court. Russo
alleges 14 causes of action: (1) gift, (2) conversion, (3) reformation, (4)
promissory estoppel, (5) equitable estoppel, (6) unjust enrichment, (7)
breach of written/express contract, (8) breach of oral and/or contract
implied-in-fact, (9) fraud, (10) fraud in the inducement, (11) fraudulent
misrepresentation, (12) negligent misrepresentation, (13) constructive trust,
and/or (14) resulting trust. Dkt. 10 ¶ 2.
II. LEGAL STANDARD
Rule 12(b)(3) establishes a defense of improper venue. Fed. R. Civ. P.
12(b)(3). “Once a defendant files a Rule 12(b)(3) motion challenging venue,
the burden of sustaining venue lies with the plaintiff.” Fernandez v. Soberon,
No. CIV.A. H-13-0325, 2013 WL 2483345, at *2 (S.D. Tex. June 10, 2013).
“In deciding whether the venue is proper, the court may look at evidence in
the record beyond those facts alleged in the complaint and its admissible
attachments.” AllChem Performance Prod., Inc. v. Aqualine Warehouse,
LLC, 878 F. Supp. 2d 779, 788 (S.D. Tex. 2012). “The court must accept as
true all the allegations in the complaint and resolve all factual conflicts in
favor of the plaintiff.” Id.
“The general venue statute, 28 U.S.C. § 1391, governs a plaintiff’s
choice of venue.” Id. Under § 1391(b), a civil action may be brought 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 the 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.
“If a case falls within one of § 1391(b)'s districts, venue is proper; if it does
not, venue is improper, and the case must be dismissed or transferred under
§ 1406(a).” Atl. Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 571
U.S. 49, 50 (2013).
III. ANALYSIS
The parties disagree on whether venue is proper in this district.
Because Barnard has challenged the plaintiff on this point, the burden of
sustaining venue now lies with Russo. Russo argues that venue is proper in
this district because a substantial part of the events or omissions giving rise
to the claim occurred in the Southern District. Principally, Russo hangs his
hat on the alleged fact that subsequent additional discussions occurred
between Russo and Bernard while Russo was a resident of Texas. Russo was
living in the district when Bernard extended him the job offer that resulted
in Russo and his family eventually moving to Illinois. Dkt. 15 at 6. Russo was
in Texas when the eventual employment agreement of February 9, 2016, and
the conveyance of the real property was executed. Finally, Russo’s allegations
that he substantially and materially performed his end of the bargain by
selling his home, suspending/reducing his legal practice,
cancelling/transferring educational opportunities for his children, and
finally relocating to Illinois all transpired in Texas. Id. at 7–8.
But, Russo’s focus on his activities is misguided as “[t]he venue
determination focuses on the relevant activities of [Bernard], not of the
Plaintiff.” Brush Creek Trading Co. v. Zoes, No. CIV.A.SA-05-CA1169XR,
2006 WL 1169577, at *2 (W.D. Tex. Apr. 13, 2006). “Allow[ing] [Russo] to
establish venue on the basis of his whereabouts when relevant events
occurred would render the venue statute all but meaningless.” Lalla v. G&H
Towing Co., No. CV SA-19-CA-0542-FB, 2019 WL 11626516, at *4 (W.D. Tex.
July 26, 2019) (internal quotation omitted).
That Russo felt the effects of Barnard’s actions in Texas is likewise
irrelevant to venue determination. Bigham v. Envirocare of Utah, Inc., 123
F. Supp. 2d 1046, 1048 (S.D. Tex. 2000) (finding “the fact that a plaintiff
residing in a given judicial district feels the effects of a defendant's conduct
in that district does not mean that the events or omissions occurred in that
district”). “In determining whether or not venue is proper, the Court looks to
the defendant's conduct, and where that conduct took place.” Id.
Accordingly, “§ 1391(b)(2) requires courts to focus on the defendant’s
conduct alone.” Gault v. Yamunaji, L.L.C., No. A-09-CA-078-SS, 2009 WL
10699952, at *5 (W.D. Tex. Apr. 17, 2009).
Looking at Barnard’s alleged conduct, it is clear that not only is venue
improper in Texas but that the events or omissions giving rise to the claim
occurred substantially in Illinois. Barnard allegedly met with the Russos in
Illinois to extend the offer of employment. Id. ¶ 9. It was also in Illinois that
Barnard allegedly purchased and then conveyed the Frankfort home. Id. ¶¶
16–18. So too was Illinois the location of Barnard’s alleged promise to pay
Russo $10,000 a month. Id. ¶ 16. Russo remained in Barnard’s employment
in Illinois when Barnard, then living in Florida, allegedly terminated Russo’s
employment and attempted to rescind ownership of the Frankfort, Illinois,
home. Id. ¶¶ 25, 28.
This revelation is not news to Russo or his counsel. In the Florida
intervention attempt, Russo’s counsel not only stated that “[t]he actions
material to this event occurred and were based in Illinois regarding the offer
and acceptance, not only of employment, but of the house,” but that if
intervention was denied, “[Russo] would then have to file a separate action
in another court, either the civil court in Florida or Illinois.” Dkt. 12-3 at 6,
10 (Hearing Transcript). Russo’s intervention was subsequently denied, the
court stating his suit was “more properly brought in the Courts of Illinois.”
Dkt. 12-5 at 3. The learned Florida court was correct: this case belongs in
Illinois.
* * *
For these reasons, the court grants Barnard’s motion to dismiss or
transfer under 12(b)(3), Dkt. 12, and orders that this case be transferred to
the United States District Court for the Northern District of Illinois, Eastern
Division.
Signed on Galveston Island this 29th day of November, 2021.
___________________________
JEFFREY VINCENT BROWN
UNITED STATES DISTRICT JUDGE