PACCHIANA v. PACCHIANA

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

GREGG J. PACCHIANA, )

)

Plaintiff, )

)

v. ) 1:20cv859

)

GLENN PACCHIANA, )

)

Defendant. )

MEMORANDUM OPINION AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

This case comes before the undersigned United States

Magistrate Judge for a recommendation on “Defendant’s Motion to

Dismiss” (Docket Entry 10) (the “Defendant’s Motion”). For the

reasons that follow, the Court should deny Defendant’s Motion.

BACKGROUND

Asserting breach of contract and unjust enrichment, Gregg J.

Pacchiana (the “Plaintiff”) initiated this action against Glenn

Pacchiana (the “Defendant”). (Docket Entry 1 (the “Complaint”),

¶¶ 1–3, 42–70.) In particular, the Complaint alleges:

“This dispute arises out of Defendant’s breach of a

contractual agreement to pay moneys owed by Defendant to Plaintiff

in connection with multiple loans made by Plaintiff to Defendant

and/or services provided by Plaintiff to Defendant.” (Id., ¶ 1.)

The origins of the dispute date back to 2006, when “Defendant

recommended that Plaintiff and Defendant invest in a company that

would be named T-Bird Partners, LLC (‘T-Bird Partners’)” (id.,

¶ 7). Plaintiff and Defendant planned to form the entity in order

“to purchase two existing golf courses located in Saratoga, New

York, and to develop a new 18-hole golf course with housing, a club

house and a catering hall.” (Id., ¶ 8.) Given Defendant’s then-

ongoing divorce and resulting financial situation, Plaintiff loaned

Defendant part of the initial capital investment for T-Bird

Partners. (See id., ¶¶ 10–13.) In connection with such loan,

Defendant agreed “to . . . pay interest on the principal balance of

the loan at the customary family interest rate, and . . . to pay

off the principal balance of the loan, plus interest once

Defendant’s divorce settlement was finalized and Defendant was in

a financial position to pay.” (Id., ¶ 13.)

Plaintiff and Defendant signed the operating agreement for T-

Bird Partners (the “Operating Agreement”) on September 27, 2006,

establishing the entity as a North Carolina limited liability

company based in Chapel Hill. (Id., ¶¶ 14–15.) Thereafter,

Plaintiff loaned Defendant additional funds, for a total of

$339,545.02, “to cover Defendant’s capital and investment

contribution obligations for the T-Bird Partners development due to

Defendant’s financial inability to make any such payments at that

point in time.” (Id., ¶ 16.) In exchange for the additional loan,

Defendant agreed to a modification of his original repayment

obligation, insofar as he promised “to pay off the principal

balance of the loan, plus interest via profits once T-Bird Partners

became a success, or in the alternative; . . . if T-Bird Partners

was not successful, to pay off the principal balance of the loan,

plus interest upon demand by Plaintiff.” (Id., ¶ 17.) Such

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agreement, together with the original loan, constitutes the “T-Bird

Contract.” (Id.)

“T-Bird Partners ultimately never became a profitable venture

and was administratively dissolved on January 14, 2016.” (Id.,

¶ 18.) “On May 16, 2019, pursuant to the T-Bird Contract,

Plaintiff demanded that Defendant repay the full amount owed on the

T-Bird Contract, which amounted to $339,545.02 in principal plus

interest . . . .” (Id., ¶ 21.) After Defendant failed to comply

(id., ¶ 22), Plaintiff and Defendant exchanged email correspondence

in August 2019, at which time “Defendant made a new promise [(the

‘2019 Contract’)] to pay his existing debt to Plaintiff” (id.,

¶ 23). More specifically, “Defendant agreed to pay

Plaintiff . . . $330,143.49 in order to resolve the dispute

concerning the outstanding debt owed under the T-Bird Contract and

in consideration for Plaintiff’s agreement to attend and provide

valuable services at an upcoming meeting [(the ‘Meeting’)] in New

York on August 28-29, 2019 concerning unrelated family business

matters . . . .” (Id., ¶ 24.) The Meeting involved “review [of

the] financial information of Thalle Industries, a company which is

co-owned by [] Defendant, [] Pla[i]ntiff and their sister for a

possible buy back of her shares in the business by the company.”

(Id., ¶ 25.) “Defendant . . . expressly agreed to Plaintiff’s

condition that the $330,143.49 amount [would] be paid via check

before Plaintiff’s departure from New York so that it could be

deposited when Plaintiff returned to North Carolina on or around

August 30, 2019.” (Id., ¶ 30.)

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Plaintiff participated in the Meeting (see id., WI 32-34),

which resulted in “a transaction to Defendant’s benefit in excess

of $15 million” (id., 7 34). After the Meeting, Plaintiff met with

Defendant, who proposed an alternate means of repaying part of the

amount owed under the 2019 Contract. (See id., 35-37.)

Plaintiff refused (id., @ 38), and Defendant then agreed to “write

[a] personal check for the $330,143.49 amount and... overnight

[the] same to Plaintiff no later than the following Monday,

September 2, 2019” (id., 7 39). Plaintiff acceded (id., {7 39), but

despite “numerous demands . . ., Defendant failed and refused to

make payment” (id., 7 41).

In connection with the foregoing, the Complaint alleges breach

of the 2019 Contract (id., TI 42-48) and the following claims in

the alternative: breach of the T-Bird Contract as modified in 2019

(id., 41 49-57), breach of the T-Bird Contract (id., II 58-65), and

quantum meruit/unjust enrichment (id., II 66-70). Plaintiff

attached as exhibits to the Complaint copies of the August 2019

email correspondence relating to the 2019 Contract. (See Docket

Entries 1-1, 1-2.)

Instead of answering the Complaint, Defendant filed a motion

to dismiss pursuant to Federal Rule of Civil Procedure 12 (b) (2)

(“Rule 12(b) (2)"), or, alternatively, to transfer this action to

the United States District Court for the Southern District of New

York pursuant to 28 U.S.C. § 1404(a) (“Section 1404(a)”). (Docket

Entry 10 at 1-2; see also Docket Entries 10-1 (declaration), 11

(supporting memorandum) .) Plaintiff responded in opposition,

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contending that “Defendant waived his right to contest the

existence of personal jurisdiction by executing a North Carolina

forum[-]selection clause” (Docket Entry 15 at 6 (emphasis omitted

and standard capitalization applied)) and attaching as an exhibit

the Operating Agreement containing such clause (see Docket Entry

15-1, ¶ 12.6). Furthermore, Plaintiff has insisted that

Defendant’s contacts with North Carolina “warrant the exercise of

specific personal jurisdiction over [him].” (Docket Entry 15 at

8.) As concerns the alternative request to transfer, Plaintiff has

asserted that the Operating Agreement’s forum-selection clause

likewise defeats such effort and that Defendant has failed to

demonstrate the propriety of transfer. (See id. at 18–23.)

Plaintiff also tendered a sworn declaration in support of the

foregoing assertions. (See Docket Entry 15-2 (“Plaintiff’s

Declaration”).) Defendant replied, attaching additional

declarations. (See Docket Entries 19, 20, 20-2, 20-3.)

DISCUSSION

I. Personal Jurisdiction

A. Relevant Standards

When a defendant challenges the existence of personal

jurisdiction under Rule 12(b)(2), “the plaintiff ultimately [must]

prove the existence of a ground for jurisdiction by a preponderance

of the evidence.” Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.

1989). “If a court considers a pretrial personal jurisdiction

challenge without conducting an evidentiary hearing, though, the

plaintiff need only ‘mak[e] a prima facie showing in support of

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[the] assertion of jurisdiction.’” Wolfe Fin. Inc. v. Rodgers, No.

1:17cv896, 2019 WL 203183, at *4 (M.D.N.C. Jan. 15, 2019)

(unpublished) (quoting Universal Leather, LLC v. Koro AR, S.A., 773

F.3d 553, 558 (4th Cir. 2014)). In deciding whether the plaintiff

has made such showing, “the court must construe all relevant

pleading allegations in the light most favorable to the plaintiff,

assume credibility, and draw the most favorable inferences for the

existence of jurisdiction.” Combs, 886 F.2d at 676. Under such

circumstances, “a court may consider matters outside the

pleadings . . ., although the court must continue to draw all

reasonable inferences in the light most favorable to the

plaintiff,” IHFC Props., LLC v. APA Mktg., 850 F. Supp. 2d 604, 616

(M.D.N.C. 2012).

“A federal court sitting in diversity has personal

jurisdiction over a non-resident defendant if (1) an applicable

state long-arm statute confers jurisdiction and (2) the assertion

of that jurisdiction is consistent with constitutional due

process.” Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1199 (4th

Cir. 1993). Moreover,

[t]he North Carolina Supreme Court has held that [North

Carolina General Statute Section] 1-75.4(1)(d) permits

the exercise of personal jurisdiction over a defendant to

the outer limits allowable under federal due process.

See Dillon v. Numismatic Funding Corp., 291 N.C. 674,

676, 231 S.E.2d 629, 630 (1977) (“[I]t is apparent that

the [North Carolina] General Assembly intended to make

available to the North Carolina courts the full

jurisdictional powers permissible under federal due

process.”); see also Combs, 886 F.2d at 676 n.3 (same).

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Universal Leather, 773 F.3d at 558 (footnote omitted) (second and

third sets of brackets in original). “Accordingly, if a plaintiff

asserts jurisdiction under Section 1-75.4(1)(d), the United States

Court of Appeals for the Fourth Circuit has held that the

‘two-prong test merges into the single question whether [the

plaintiff] has made a prima facie showing that [the defendant] had

sufficient contacts with North Carolina to satisfy constitutional

due process.’” Wolfe Fin., 2019 WL 203183, at *5 (quoting

Universal Leather, 773 F.3d at 558–59).1

Turning to due-process requirements,

a court may assert jurisdiction over a non[-]resident

defendant through either of two independent avenues.

First, a court may find specific jurisdiction based on

conduct connected to the suit. If the defendant’s

contacts with the State are also the basis for the suit,

those contacts may establish specific jurisdiction.

Second, a court may exercise personal jurisdiction under

the theory of general jurisdiction, which requires a more

demanding showing of “continuous and systematic”

activities in the forum state.

Tire Eng’g & Distrib., LLC v. Shandong Linglong Rubber Co., 682

F.3d 292, 302 (4th Cir. 2012) (internal citation and quotation

marks omitted). Notably,

[the Fourth Circuit] ha[s] synthesized the due[-]process

requirements for asserting specific personal jurisdiction

into a three-prong test: “(1) the extent to which the

defendant purposefully availed itself of the privilege of

conducting activities in the State; (2) whether the

plaintiff[’]s[] claims arise out of those activities

1 Plaintiff impliedly invoked Section 1-75.4(1)(d), by

relying on the proposition that “North Carolina’s long-arm statute

is intended to assert personal jurisdiction to the full extent

permitted by the Due Process Clause” (Docket Entry 15 at 9 (quoting

IHFC Props., 850 F. Supp. 2d at 616 (discussing N.C. Gen. Stat.

§ 1-75.4(1)(d)))).

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directed at the State; and (3) whether the exercise of

personal jurisdiction would be constitutionally

reasonable.”

UMG Recordings, Inc. v. Kurbanov, 963 F.3d 344, 351–52 (4th Cir.

2020) (quoting Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d

273, 278 (4th Cir. 2009)).

As concerns the first prong, “purposeful availment,” the Court

weighs the following factors:

(1) whether the defendant maintained offices or agents in

the State; (2) whether the defendant maintained property

in the State; (3) whether the defendant reached into the

State to solicit or initiate business; (4) whether the

defendant deliberately engaged in significant or

long-term business activities in the State; (5) whether

a choice of law clause selects the law of the State;

(6) whether the defendant made in-person contact with a

resident of the State regarding the business

relationship; (7) whether the relevant contracts required

performance of duties in the State; and (8) the nature,

quality, and extent of the parties’ communications about

the business being transacted.

Sneha Media & Ent., LLC v. Associated Broad. Co. P., 911 F.3d 192,

198-99 (4th Cir. 2018). Under the second prong, “the defendant’s

contacts with the forum state [must] form the basis of the suit.”

Consulting Eng’rs, 561 F.3d at 278–79. Finally, factors relevant

to the third prong

include: (1) the burden on the defendant of litigating in

the forum; (2) the interest of the forum state in

adjudicating the dispute; (3) the plaintiff’s interest in

obtaining convenient and effective relief; (4) the shared

interest of the states in obtaining efficient resolution

of disputes; and (5) the interests of the states in

furthering substantive social policies.

Id. at 279.

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B. Analysis

According to Defendant, neither general nor specific personal

Jurisdiction exists under the circumstances. (See Docket Entry 11

at 4-12.) In that regard, Defendant has contended that his status

as a New York domiciliary and his lack of connections with North

Carolina render general jurisdiction inapplicable. (See id. at

4-5.) As far as specific jurisdiction, Defendant has argued that

his limited or unrelated business dealings in North Carolina do not

constitute purposeful availment for purposes of this action. (See

id. at 5-8.) Relatedly, to the extent Defendant has transacted in

North Carolina at all, he has maintained that such activities do

not form the basis of Plaintiff’s claim. (See id. at 6-9.) Per

Defendant, the exercise of personal jurisdiction qualifies as

constitutionally unreasonable because (i) litigating in North

Carolina would burden Defendant and his witnesses (see id. at

9-11), (ii) North Carolina possesses little interest in this matter

(see id. at 11), (4111) Plaintiff may obtain convenient and

effective relief in New York, where he regularly travels (see id.),

(iv) both North Carolina and New York share an interest in

efficient resolution (see id. at 11-12), and (v) “no substantive

policy of either North Carolina or New York . . . would be

furthered by litigating this case in North Carolina” (id. at 12).

In response, Plaintiff has relied on the Operating Agreement,

which contains a North Carolina choice-of-law clause and provides

for arbitration in Durham County, North Carolina in the event of a

“dispute arising out of or in connection with [the Operating]

□□□

Agreement or the breach thereof” (Docket Entry 15 at 3 (quoting

Docket Entry 15-1, @ 12.6)). (See id. at 6-8.) According to

Plaintiff, the Operating Agreement dooms any challenge by Defendant

to personal jurisdiction in this action. (See id.) In any event,

Plaintiff has argued that Defendant possesses sufficient minimum

contacts with North Carolina because (i) Defendant possessed an

ownership interest in a North Carolina limited liability company

when Plaintiff loaned money to Defendant (id. at 10-11),

Defendant initiated the formation of T-Bird Partners and

discussed the business with Plaintiff while present in North

Carolina (id. at 11), (iii) Defendant requested loans from

Plaintiff, which Plaintiff funded from North Carolina bank accounts

(id.), (iv) North Carolina law applies to the dispute, given the

choice-of-law provision in the Operating Agreement (id. at 12-13),

and (v) the T-Bird Contract and the 2019 Contract involved

performance in North Carolina (id. at 13).

Regarding the second due-process prong, Plaintiff has

maintained that this dispute arises from Defendant’s contacts with

North Carolina, including the formation and breach of the T-Bird

Contract, as well as Defendant’s efforts to enlist Plaintiff’s

services at the Meeting. (See id. at 14-15.) Finally, per

Plaintiff, the exercise of specific personal jurisdiction passes

constitutional standards because Defendant failed to repay loans

from a North Carolina citizen to capitalize T-Bird Partners (id. at

17-18) and because Defendant “induc[ed] Plaintiff to leave North

Carolina to provide valuable services at the . . . Meeting in

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exchange for Defendant’s promise to finally pay off his North

Carolina loans” (id. at 18).

As an initial matter, the Court should decline to conclude

that Defendant waived any objection to personal jurisdiction based

on the forum-selection clause in the Operating Agreement. That

clause states, in full, as follows:

This Agreement is made in Durham County, North Carolina

and the rights and obligations of the Members hereunder

shall be interpreted, construed and enforced in

accordance with the laws of the State of North Carolina.

Any dispute arising out of or in connection with this

Agreement or the breach thereof shall be decided by

arbitration to be conducted in Durham County, North

Carolina in accordance with the then prevailing

commercial arbitration rules of the American Arbitration

Association, and judgment thereof may be entered in any

court having jurisdiction thereof.

(Docket Entry 15-1, 97 12.6 (emphasis added)

“[A] valid forum[-]selection clause .. . may act as a waiver

to objections to personal jurisdiction.” Consulting Eng’rs, 561

F.3d at 281 n.11. However, courts generally have discerned no such

waiver when parties merely agreed to arbitrate, rather than

litigate, in a particular forum. See Krones, Inc. v. Bomatic,

Inc., No. 13-C-935, 2014 WL 4338718, at *6-7 (E.D. Wis. Aug. 29,

2014) (unpublished) (noting lack of controlling authority

“addressing whether an arbitration clause can be construed as

impliedly consenting to personal jurisdiction” before rejecting

such construction); United Fin. Mortg. Corp. v. Bayshores Funding

Corp., 245 F. Supp. 2d 884, 892-93 (N.D. Ill. 2002) (deeming forum-

selection clause pertaining to arbitration insufficient to confer

personal jurisdiction and collecting cases); see also Traton News,

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LLC v. Traton Corp., 528 F. App’x 525, 528 (6th Cir. 2013) (“A

forum[-]selection clause confers personal jurisdiction on a court

over only those disputes that the parties agreed to litigate in

that forum.”). “[Plaintiff] has not brought an arbitration

proceeding, and [the Operating Agreement] could have included a

forum[-]selection clause for litigation but did not,” Krones, Inc.,

2014 WL 4338718, at *7.2 Moreover, the Operating Agreement’s

choice-of-law clause selecting North Carolina law (alone, at least)

fails to establish Plaintiff’s consent to this Court’s

jurisdiction. See Consulting Eng’rs, 561 F.3d at 281 (“The

inclusion of a choice[-]of[-]law clause is one factor that a court

may take into account in determining whether the exercise of

personal jurisdiction is justified, but it is no more than that.”).

Turning to whether Plaintiff has made a prima facie showing of

personal jurisdiction, the Court should conclude that due process

authorizes the exercise specific personal jurisdiction over

Defendant.3 Beginning with purposeful availment, sufficient

2 To the extent Defendant has suggested that the forum-

selection clause operates to “deprive the Court of jurisdiction to

hear [matters within the scope of that clause, to include] this

action” (Docket Entry 19 at 3), the Fourth Circuit has held

otherwise (albeit in an unpublished opinion), see Schwartz v.

Coleman, 833 F.2d 310 (table), 1987 WL 38184, at *2 (4th Cir. Nov.

3, 1987) (unpublished) (“Despite the strong federal policy favoring

arbitration, the Federal Arbitration Act, 9 U.S.C. §§ 1-13, does

not deprive federal courts of otherwise possessed subject[-]matter

jurisdiction over disputes that are subject to binding agreements

to arbitrate, and that may indeed be in arbitration.”).

3 Plaintiff has not argued that general personal jurisdiction

exists under the circumstances (see Docket Entry 15 at 8–18

(discussing only specific personal jurisdiction)), and Defendant

(continued...)

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minimum contacts exist between Defendant and North Carolina based

on Defendant’s initiation of business activity in the forum, to

include Defendant’s promise to repay Plaintiff under the T-Bird

Contract. Although “a contract in and of itself does not

automatically constitute sufficient minimum contacts to support

personal jurisdiction,” Ellicott Mach. Corp. v. John Holland Party,

Ltd., 995 F.2d 474, 478 (4th Cir. 1993), such Jurisdiction remains

appropriate here in light of Defendant’s actions before the T-Bird

Contract, his obligations under that agreement, and the nature of

the transaction, see FRS, Inc. v. Carim, LLC, No. 3:05CV521, 2006

WL 1967387, at *4 (W.D.N.C. July 12, 2006) (unpublished) (finding

purposeful availment when litigant received loan, promised to

repay, and conducted marketing activities in relevant forum).

In that regard, Plaintiff has averred that Defendant solicited

Plaintiff’s involvement in forming a North Carolina limited

liability company, the funding of which occurred, in part, via

loans from Plaintiff’s North Carolina bank accounts. (See Docket

Entry 15-2, (I 3-5, 7-9.) Defendant thus promised to perform

(i.e., to repay) in the forum state in connection with his

obligations as a part-owner of T-Bird Partners, a company based in

°(...continued)

correctly has noted that his domicile in New York forecloses the

exercise of general personal jurisdiction by another forum (see

Docket Entry 11 at 4-5 (citing Pandit v. Pandit, 808 F. App’x 179,

181-84 (4th Cir. 2020))). See also Pandit, 808 F. App’x at 184

(rejecting general personal jurisdiction based on “home away from

home” theory); Reddy v. Buttar, No. 3:18-cv-172, 2019 WL 2106082,

at *4 & n.3 (W.D.N.C. May 14, 2019) (unpublished) (concluding that

domicile constitutes sole basis for asserting general personal

jurisdiction over individual).

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North Carolina for approximately a decade (see id., 13).

Additionally, Plaintiff has sworn that Defendant “made in-person

contact with [Plaintiff] regarding the business relationship,”

Sneha Media & Ent., LLC, 911 F.3d at 198-99, on at least one

occasion (id., 7 15) and that, in August 2019, the parties spoke by

telephone twice to discuss Defendant’s plan for repaying his debt

(id., 1 17, 19).*

Next, considering whether “[P]laintiff’s claims arise out of

the activities [Defendant] directed at the forum,” Consulting

Eng’rs, 561 F.3d at 278, the Court should determine that the

requisite relationship exists. “[E]ven one isolated contact may

give rise to jurisdiction if that contact is related to the cause

of action and is sufficiently purposeful in its aim at the forum

state,” Occidental Fire & Cas. Co. v. Continental Till. Nat’l Bank

& Tr. Co., 689 F. Supp. 564, 568 (E.D.N.C. 1988); see also Akeva

L.L.C. v. Mizuno Corp., 199 F. Supp. 2d 336, 339 (M.D.N.C. 2002)

(“Specific jurisdiction can arise out of even a single contact with

the forum state if the claim ‘arises out of’ that contact.”).

Here, Plaintiff’s claims derive from the loans he issued after

Defendant secured Plaintiff’s agreement to participate in a

business venture based in North Carolina. Plaintiff has alleged

The Court should decline to rely on the choice-of-law

provision in the Operating Agreement for purposes of personal

jurisdiction, as Plaintiff’s claims stem from the alleged breach of

separate agreements between Plaintiff and Defendant. (See Docket

Entry 1, 4% 10-19 (describing T-Bird Contract); id., II 24-41

(referencing 2019 Contract); id., 42-70 (lodging four claims

based on foregoing contracts and omitting any mention of Operating

Agreement) .)

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(and supported via Plaintiff’s Declaration) relatively few

communications by Defendant, but the promises that Plaintiff has

sought to enforce arise out of those contacts.

Lastly, as concerns the third-prong factors, “such an analysis

ensures that litigation is not so gravely difficult and

inconvenient as to place the defendant at a severe disadvantage in

comparison to his opponent,” CFA Inst. v. Institute of Chartered

Fin. Analysts of India, 551 F.3d 285, 296 (4th Cir. 2009) (internal

quotation marks omitted). Here, Defendant faces no such “severe

disadvantage” given his relative proximity to North Carolina. See

Fallon Luminous Prods. Corp. v. Multi Media Elecs., Inc., 343 F.

Supp. 2d 502, 508 (D.S.C. 2004) (deeming exercise of personal

jurisdiction consistent with due process when plaintiff initiated

lawsuit in South Carolina against defendant based in New York).

Additionally, “[North Carolina] has a paternal interest [in this

action],” Lee v. Walworth Valve Co., 482 F.2d 297, 299 (4th Cir.

1973), because Plaintiff (a North Carolina citizen) has lodged

common-law claims (see Docket Entry 1, ¶¶ 42–70) concerning

Plaintiff’s alleged right to repayment from Defendant.5 Although

5 North Carolina would possess an even stronger interest in

this action if North Carolina law applies, an issue that the

parties have disputed. (See Docket Entry 11 at 15 (“At this point,

it is uncertain which State’s law will apply to this matter.”);

Docket Entry 15 at 16–17 & n.1 (asserting that North Carolina

substantive law governs Plaintiff’s claims).) “[F]ederal courts in

diversity of citizenship cases are governed by the conflict of laws

rules of the courts of the states in which they sit.” Griffin v.

McCoach, 313 U.S. 498, 503 (1941). “Under North Carolina common

law, the rule of lex loci contractus controls. That rule focuses

on the state where the contract was entered into or the state where

(continued...)

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Plaintiff likely could obtain relief in New York, where some

purportedly relevant events took place (to include Plaintiff’s

performance of the 2019 Contract and Defendant’s failure to tender

payment in accordance with that agreement), nothing in the record

renders this Court’s exercise of jurisdiction constitutionally

unreasonable. As Plaintiff has contended, “Defendant cannot

reasonably argue that he could not have anticipated being sued in

North Carolina if he failed to repay business loans provided to him

from a North Carolina resident to capitalize a North Carolina

[limited liability company]” (Docket Entry 15 at 17).

In sum, applying standards applicable at this juncture, the

exercise of specific personal jurisdiction over Defendant by this

Court comports with due-process principles.

II. Transfer

A. Relevant Standards

“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,” 28

5(...continued)

the contract was to be performed.” In re Nantahala Village, Inc.,

976 F.2d 876, 881 n.7 (4th Cir. 1992) (internal citations omitted).

Here, the Court should apply North Carolina choice-of-law

principles because Plaintiff has invoked the Court’s diversity

jurisdiction. (See Docket Entry 1, ¶ 5.) The record fails to

establish where Plaintiff and Defendant “made” the pertinent

agreements (the T-Bird Contract and the 2019 Contract), but

performance of the T-Bird Contract occurred (or should have

occurred) in North Carolina, whereas the 2019 Contract appears to

bear a closer relationship to New York. In any event, because the

source of governing law does not constitute a determinative factor

in the personal-jurisdiction analysis, the Court need not resolve

such question at this stage.

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U.S.C. § 1404(a). “Upon consideration of [a] motion to transfer

venue, th[e] Court must make two inquiries: (1) whether [the

plaintiff’s] claims might have been brought in the [transferee

court], and (2) whether the interest of justice and the convenience

of the parties [and witnesses] justify transfer to [such]

district[].” LG Elecs. v. Advance Creative Comput. Corp., 131 F.

Supp. 2d 804, 809 (E.D. Va. 2001). “The phrase ‘where it might

have been brought’ in [S]ection 1404(a) refers to a forum where

venue originally would have been proper for the claim and where a

defendant originally would have been subject to personal

jurisdiction.” Kotsonis v. Superior Motor Express, 539 F. Supp.

642, 645 (M.D.N.C. 1982).6

To assess convenience of the parties and witnesses, as well as

the interest of justice, the Court considers the following

discretionary factors:

(1) the plaintiff’s initial choice of forum; (2) relative

ease of access to sources of proof; (3) availability of

compulsory process for attendance of unwilling witnesses,

and the cost of obtaining attendance of willing and

unwilling witnesses; (4) possibility of a view of the

premises, if appropriate; (5) enforceability of a

judgment, if one is obtained; (6) relative advantage and

6 No party has addressed whether the Southern District of

New York qualifies as a venue where this action “might have been

brought,” Kotsonis, 539 F. Supp. at 645 (quoting 28 U.S.C.

§ 1404(a)). (See Docket Entry 11 at 12–16; Docket Entry 15 at

18–23; Docket Entry 19 at 8–10.) The applicable statute provides,

in relevant part, that “[a] civil action may be brought in . . . a

judicial district in which any defendant resides,” 28 U.S.C.

§ 1391(b)(1). The Southern District of New York encompasses

Westchester County, 28 U.S.C. § 112(b), where Defendant resides

(Docket Entry 10-1, ¶ 6), thus rendering such venue proper.

Defendant’s averment as to his New York domicile (id.) also renders

him subject to personal jurisdiction in such forum.

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obstacles to a fair trial; (7) other practical problems

that make a trial easy, expeditious, and inexpensive;

(8) administrative difficulties of court congestion;

(9 local interest in having localized controversies

settled at home; (10) appropriateness in having a trial

of a diversity case in a forum that is at home with the

state law that must govern the action; and (11) avoidance

of unnecessary problems with conflicts of law.

Speed Trac Techs., Inc. v. Estes Express Lines, Inc., 567 F. Supp.

2d 799, 802-03 (M.D.N.C. 2008) (quoting Plant Genetic Sys., N.V. v.

Ciba Seeds, 933 F. Supp. 519, 527 (M.D.N.C. 1996)). The movant

must prove that the balance of factors favors transfer. See id. at

803.

B. Analysis

Defendant has argued, as an alternative to dismissal, that the

Court should transfer this action to the Southern District of New

York pursuant to Section 1404(a). (See Docket Entry 11 at 12.) In

particular, Defendant has emphasized that Plaintiff’s initial

choice of forum merits less weight when the action bears little

relation to the forum. (Id. at 13.) Additionally, according to

Defendant, all of his anticipated witnesses reside in New York,

“beyond the subpoena power of this Court,” (id. at 14). Defendant

also has contended that “[t]he issue of enforceability of a

judgment favors transfer” (id.), that North Carolina possesses

little interest in the operative events (id.), and that other

public-interest factors render New York a more suitable forum (see

id. at 14-16).

Plaintiff has opposed transfer, asserting that the Operating

Agreement’s forum-selection clause defeats such request. (See

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Docket Entry 15 at 18.) Furthermore, Plaintiff has maintained that

Defendant failed to carry his burden to establish the

appropriateness of transfer, insofar as (i) Plaintiff filed suit in

his home forum, a choice entitled to deference (id. at 19–20),

(ii) this action relates to Defendant’s contacts with North

Carolina (id. at 20), and (iii) North Carolina possesses a

substantial interest in a dispute “involv[ing] a contractual

agreement formed in North Carolina and governed by North Carolina

law whose purpose and effect was to capitalize a North Carolina

[entity with an in-state] principal office” (id. at 20–21). In

addition, Plaintiff has identified four potential witnesses that

reside in North Carolina and another who “travels to North Carolina

multiple times a year and would not be inconvenienced if called as

a witness.” (Id. at 21–22.) As concerns court congestion and

other practical factors, Plaintiff has argued that the backlog of

cases and impact of the COVID-19 pandemic favor retention and that

transfer would merely shift party and witness inconvenience from

Defendant to Plaintiff. (Id. at 22.)

At the threshold, the Court should decline to view the

Operating Agreement’s forum-selection clause as effecting a waiver

of Defendant’s right to request a Section 1404(a) transfer. As a

general matter, “[w]hen parties agree to a forum-selection clause,

they waive the right to challenge the preselected forum as

inconvenient or less convenient for themselves or their witnesses,

or for their pursuit of the litigation.” Atlantic Marine Constr.

Co. v. United States Dist. Ct., 571 U.S. 49, 64 (2013). When such

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waiver occurs, courts “consider arguments about public-interest

factors only.” Id. A litigant also may “waive[] its right to

arbitrate when it initially pursues litigation and then reverses

course and attempts to arbitrate,” Gulf Guar. Life Ins. Co. v.

Connecticut Gen. Life Ins. Co., 304 F.3d 476, 484 (5th Cir. 2002)

(internal quotation marks omitted).

Here, by maintaining that the Operating Agreement’s forum-

selection clause constitutes a waiver by Defendant, Plaintiff has

implicitly asserted that (i) the Operating Agreement applies to

Plaintiff’s claims,7 and (ii) Plaintiff may decline to arbitrate

but nonetheless elect to enforce only the part of the Operating

Agreement selecting Durham, North Carolina as the arbitration

locale. (See Docket Entry 15 at 18.) Because Plaintiff has failed

to develop an argument in support of such selective enforcement

(see id.) and has initiated litigation, not arbitration, the Court

should decline to find waiver by Defendant and instead should

consider both the private and public-interest factors under Section

1404(a).

However, based on the below assessment of such factors, the

Court should retain jurisdiction over this action.

7 The applicability of the Operating Agreement remains

uncertain, especially because (i) Plaintiff has attempted to

enforce separate agreements between Plaintiff and Defendant, and

(ii) T-Bird Partners dissolved and no longer exists.

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1. Party Convenience®

“Generally, a plaintiff’s choice of forum is entitled to

substantial weight.” Acterna, L.L.C. v. Adtech, Inc., 129 F. Supp.

2d 936, 938 (E.D. Va. 2001). Courts should not disturb such choice

“unless the balance is strongly in favor of the defendant.”

Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984)

(internal quotation marks omitted). However, “[t]he weight given

[to] the plaintiff’s choice varies in proportion to the connection

between the forum and the cause of action. Thus, a plaintiff’s

choice of its home forum is given more weight than its choice of a

foreign forum.” GTE Wireless, Inc. v. Qualcomm, Inc., 71 F. Supp.

2d 517, 519 (E.D. Va. 2001). Courts also look to whether the

“operative facts have [a] material connection with the chosen

forum.” Acterna, 129 F. Supp. 2d at 938. As a general matter,

“when plaintiffs file suit in their home forum, convenience to

parties rarely, if ever, operates to justify transfer.” Board of

Trs. v. Baylor Heating & Air Conditioning, Inc., 702 F. Supp. 1253,

1259 (E.D. Va. 1988); see also Intranexus, Inc. v. Siemens Med.

Sols. Health Servs. Corp., 227 F. Supp. 2d 581, 585 (E.D. Va. 2002)

8 Apart from references to availability of witnesses

(addressed in the next subsection), neither party has discussed the

“relative ease of access to sources of proof,” Speed Trac Techs.,

567 F. Supp. 2d at 803, or the “possibility of a view of the

premises,” id., two factors that may affect party convenience.

(See Docket Entry 11 at 12-16; Docket Entry 15 at 18-23; Docket

Entry 19 at 8-10.) Neither consideration carries weight under the

circumstances. To the extent Plaintiff’s claims depend on any

documentary evidence, such materials lend themselves Lo

portability; coordinately, no view of any premises appears

necessary.

-?1-

(“A mere shifting of the burden neither weighs in favor of

retaining nor of transferring venue.”).

Here, Plaintiff’s initial choice of forum deserves substantial

weight because Plaintiff has chosen his home forum9 and because the

“operative facts,” id., show that North Carolina bears a material

connection to the T-Bird Contract and the 2019 Contract, the bases

for Plaintiff’s claims. At a minimum, both agreements relate to

Defendant’s debt to Plaintiff arising from the capitalization of a

North Carolina company in which Defendant possessed an ownership

interest. Moreover, because transfer would merely shift burdens

from Defendant to Plaintiff, factors related to Defendant’s

convenience cannot overcome Plaintiff’s initial choice of forum.

2. Witness Convenience

“When considering the ease of access to sources of proof,

courts consider the availability of witnesses and other evidence

for trial.” IHFC Props., 850 F. Supp. 2d at 623. “The party

asserting witness inconvenience has the burden to proffer, by

affidavit or otherwise, sufficient details respecting the witnesses

and their potential testimony to enable the court to assess the

materiality of evidence and the degree of inconvenience.” Koh v.

Microtek Int’l, Inc., 250 F. Supp. 2d 627, 636 (E.D. Va. 2003).10

9 Plaintiff has averred that his residence lies in Orange

County (Docket Entry 15-2, ¶ 2), within the Middle District of

North Carolina, 28 U.S.C. § 113(b).

10 “Although the moving party bears the ultimate burden of

establishing the propriety of transfer, courts have imposed the

burden of proffering details about witnesses and potential

(continued...)

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Additionally, “[t]o support [a] request for transfer under

[SJection 1404(a), a moving party must demonstrate (through

affidavits or otherwise) . . . whether [a non-resident] witness is

willing to travel to a foreign jurisdiction.” Thayer/Patricof

Educ. Funding, L.L.C. v. Pryor Res., 196 F. Supp. 2d 21, 33 (D.D.C.

2002). “Merely stating that potential witnesses reside beyond a

forum’s subpoena power does little to assist the court in weighing

the convenience of the witness and the necessity of compulsory

process.” Samsung Elecs. Co. v. Rambus Inc., 386 F. Supp. 2d 708,

719 (E.D. Va. 2005).

Here, Defendant has averred that all five of his potential

witnesses reside in New York. (See Docket Entry 10-1, 10-11.)

In similar fashion, Plaintiff’s Declaration identifies seven

potential witnesses, four of whom live in North Carolina. (See

Docket Entry 15-2, II 26-27.) Of the remaining three individuals

who may testify for Plaintiff (each of whom Defendant also has

identified as a potential witness), one (Plaintiff’s and

Defendant’s father) visits North Carolina frequently, and two

travel to North Carolina occasionally. (See id.) However, because

neither affidavit offers details about the materiality of such

witness testimony, the degree of inconvenience, or any witness’s

willingness to travel to a foreign forum (see id.; Docket Entry 10-

1, I7 10-11), the Court cannot meaningfully compare the suitability

(...continued)

testimony to non-moving parties who oppose transfer on the ground

of witness inconvenience.” D2L Ltd. v. Blackboard, Inc., 671 F.

Supp. 2d 768, 780 n.17 (D. Md. 2009).

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of the two fora on this front. As a result, this factor remains

neutral.

3. Interest of Justice’

The “interest of justice” inquiry “encompass[es] those factors

unrelated to witness and party convenience.” Acterna, 129 F. Supp.

2d at 939-40. As mentioned previously, Defendant has focused on

the “enforceability of a judgment” (Docket Entry 11 at 14), “local

interest” (id.), “court congestion” (id.), source of governing law

(id. at 15), and “other practical problems” (id.). More

specifically, Defendant has asserted that (i) he lacks assets in

North Carolina, such that a court in this forum could not enforce

a judgment against him (id. at 14), (11) New York possesses an

interest in Defendant’s alleged payment obligation arising from the

Meeting (id.), (iii) court congestion fails to clearly favor either

transfer or retention of this action (id. at 14-15), (iv) the

source of governing law remains undetermined but no complex or

novel legal issues would impede adjudication in either New York or

North Carolina (id. at 15), and (v) a North Carolina trial would

cause Defendant and his witnesses to incur more expenses than would

Plaintiff in a New York trial (id. at 15-16).

Turning first to the enforceability of a potential judgment

against Defendant, Plaintiff has suggested that “it will not be

‘lt Neither party has suggested that any “obstacles to a fair

trial,” Speed Trac Techs., 567 F. Supp. 2d at 803, exist in either

forum. (See Docket Entry 11 at 12-16; Docket Entry 15 at 18-23;

Docket Entry 19 at 8-10.) Thus, the Court need not dwell on that

factor.

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difficult to domesticate a North Carolina judgment against

Defendant in Wyoming or New York” (Docket Entry 15 at 21).12

Indeed, “[a] judgment in an action for the recovery of money or

property entered in any . . . district court . . . may be

registered by filing a certified copy of the judgment in any other

district . . . when the judgment has become final by appeal or

expiration of the time for appeal or when ordered by the court that

entered the judgment for good cause shown.” 28 U.S.C. § 1963.

Moreover, “[a] judgment so registered shall have the same effect as

a judgment of the district court of the district where registered

and may be enforced in like manner.” Id. As a result, Defendant’s

non-specific comments about enforceability provide little if any

support for transfer.

Regarding New York’s interest in this matter, as a general

proposition, “[c]ourts have determined that litigation should take

place in the federal judicial district or division with the closest

relationship to the operative events,” Speed Trac Techs., 567 F.

Supp. 2d at 804. Although New York bears a closer connection to

some of the more recent events and communications (including the

2019 Contract and the Meeting), Plaintiff’s claims originated in

North Carolina, to the extent that Defendant’s plan to create a

North Carolina entity required a loan from Plaintiff, a North

12 Defendant has averred to “splitting [his] time” between his

home in New York and Jackson, Wyoming, due to the COVID-19

pandemic. (Docket Entry 10-1, ¶ 6.)

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Carolina citizen. Therefore, such consideration supports retaining

this action.

Next, although “[t]he relative docket conditions are

considered in weighing the interest of justice, [they] are not

given great force.” Samsung Elecs. Co., 386 F. Supp. 2d at 723.

Defendant has highlighted statistics reflecting median time from

filing to disposition, caseload per judge, and cases over three

years old. (See Docket Entry 11 at 14–15.) Only the first of

those factors favors transfer, insofar as cases in the Southern

District of New York boast a median disposition time three months

faster than cases in the Middle District of North Carolina. (See

id. at 15.) However, judges in the Southern District of New York

must handle more cases (on a per-judge basis), and thousands of

their cases have remained on those dockets for longer than three

years (as compared to a figure in the hundreds in the Middle

District of North Carolina). (See id.) Accordingly, relative

docket conditions afford meager support for Defendant’s transfer

request.

As concerns the source of governing law, Defendant has

declined to indicate which forum’s substantive law applies. (See

id. at 15.) For his part, Plaintiff has maintained that North

Carolina substantive law governs because “the last act to form a

binding contract under all of Plaintiff’s alternative claims for

relief occurred in North Carolina” (Docket Entry 15 at 16). As

mentioned in a footnote above, North Carolina choice-of-law rules

apply to this diversity action. See Griffin v. McCoach, 313 U.S.

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498, 503 (1941). “[U]nder North Carolina law, substantive

questions of contract construction and interpretation are governed

by the law of the state where the contract was made.” Piedmont

Hawthorne Aviation, Inc. v. Tritech Env’t Health & Safety, Inc.,

402 F. Supp. 2d 609, 617 (M.D.N.C. 2005). “[T]he place at which

the last act was done by either of the parties essential to a

meeting of the minds determines the place where the contract was

made.” Suitt Constr. Co. v. Seaman’s Bank for Sav., 30 N.C. App.

155, 159, 226 S.E.2d 408, 410 (1976). “[T]he acceptance by one

party of the other party’s offer is usually the ‘last act’ to

formation of a contract, and courts have generally identified the

location of this acceptance as the location of contract formation.”

State ex rel. Cooper v. Western Sky Fin., LLC, No. 13CVS16487, 2015

WL 5091229, at *8 (N.C. Super. Ct. Aug. 27, 2015) (unpublished).

Here, some uncertainty remains about where the parties “made”

the relevant contracts (i.e., their respective locations at the

time of the “last act” or acceptance). (See, e.g., Docket Entry

15-2, I9 7-9 (describing loans without discussing mechanics of

offer and acceptance).) Plaintiff has averred as to his physical

presence in North Carolina when he loaned the funds under the T-

Bird Contract (id., {I 3) and when he purchased his plane ticket for

the Meeting (id., @ 21) in connection with the 2019 Contract.

However, such actions may constitute Plaintiff’s performance of his

contractual obligations rather than his acceptance of the same.

See Prentzas v. Prentzas, 260 N.C. 101, 104, 131 S.E.2d 678, 681

(1963) (“Agreements are reached by an offer by one party and an

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acceptance by the other.”). The record further fails to clarify

which party qualifies as promisee and promissor, see Restatement

(Second) of Contracts § 2 (Am. L. Inst. 1981). In any event, the

Court need not decide the choice-of-law question because, even if

New York substantive law governs all pertinent agreements in this

action, such factor cannot overcome the countervailing

considerations disfavoring transfer.

Finally, with respect to the relative time and expense of

travel, which Defendant has characterized as “[an]other practical

problem[]” (Docket Entry 11 at 15), Defendant has failed to

demonstrate the superior suitability of New York, other than to

suggest that “[Plaintiff] travels to New York regularly in

connection with the numerous other family business ventures located

in New York and to visit New York-based relatives” (id. at 16).

Requiring Plaintiff to make additional trips to New York for

litigation still constitutes a form of shifting the burden from

Defendant to Plaintiff, which (as discussed in connection with

party convenience) cannot justify transfer under the circumstances.

For the foregoing reasons, Defendant has failed to carry his

burden in support of the transfer request. Accordingly, this

action should remain in the Middle District of North Carolina.

CONCLUSION

Under pretrial review standards, the Court may exercise

specific personal jurisdiction over Defendant consistent with due-

process principles. The balance of factors under Section 1404(a)

weighs against transfer, particularly in light of the deference

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owed to Plaintiff’s initial choice of forum and the connection

between Plaintiff’s claims and North Carolina.

IT IS THEREFORE RECOMMENDED that Defendant’s Motion (Docket

Entry 10) be DENIED.

/s/ L. Patrick Auld

L. Patrick Auld

United States Magistrate Judge

June 7, 2021

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