919 F. Supp. 2d 993

Richard “Bud” STEEN and Lloydene Steen, Plaintiffs, v. Robert MURRAY; Lamson, Dugan & Murray, LLP; and Ryan Boe, Defendants.

No. 1:12-cv-00021.

United States District Court, S.D. Iowa, Western Division.

Jan. 15, 2013.

*994Andre R. Barry, James M. Bausch, Cline Williams Wright Johnson & Oldfather LLP, Omaha, NE, Peter J. Leo, James W. Redmond, Heidman Law Firm, Sioux City, IA, for Defendants.

Marc S. Harding, Harding Law Office, PC, Des Moines, IA, for Plaintiffs.

ORDER

ROBERT W. PRATT, District Judge.

Before the Court is a Motion to Transfer for Improper Venue (“Defendants’ Motion”), filed by Robert Murray (“Murray”), Lamson, Dugan & Murray, L.L.P. (“LDM”), and Ryan Boe (“Boe”) (collectively “Defendants”) on October 4, 2012. Clerk’s No. 25. On October 18, 2012, Richard Steen and Lloydene Steen (collectively “Plaintiffs”) filed a resistance. Clerk’s No. 28. Defendants replied to Plaintiffs’ resistance on October 19, 2012. Clerk’s No. 29. The matter is fully submitted.

I. FACTUAL AND PROCEDURAL BACKGROUND

In early 2003, Plaintiffs’ past due debt to their lender — Farm Credit Services of America (“Farm Credit”) — forced them to sell a portion of their farm in Emerson, Iowa to avoid a foreclosure proceeding by Farm Credit. See Murray Aff. (Clerk’s No. 25-2) ¶¶ 5-6, Ex. A; Boe Aff. (Clerk’s No. 25-3) ¶¶ 4-5; Richard “Bud” Steen Aff. (Clerk’s No. 28-3) ¶¶ 5-6. Plaintiffs allege that they “retained1 Defendants to represent them in various negotiations and drafting involving [the sale of their] real estate.” See Third Am. Compl. (Clerk’s No. 32) ¶ 10. Pursuant to their agreement with Plaintiffs, Defendants were to draft a real estate purchase agreement (the “Agreement”) and “a first option to purchase or a first right of refusal” (the “Option”). See id. ¶ 13. Instead, Defendants drafted “an unrestricted option in favor of the purchaser,” whom Defendants also al*995legedly represented, thus favoring that purchaser over Plaintiffs. See id. ¶¶ 14-16. On July 20, 2012, Plaintiffs filed this lawsuit2 in the Southern District of Iowa, claiming that, by representing both parties to the Agreement and by failing to disclose that fact to Plaintiffs, Defendants breached their contract with and their ethical duties to Plaintiffs.3 See id. ¶¶ 19, 22-27. Defendants now claim that venue in this District is improper and seek to transfer this case to the District of Nebraska pursuant to 28 U.S.C. § 1406. See Defs.’ Mot. at 1.

II. LAW AND ANALYSIS

The relevant venue statute, 28 U.S.C. § 1391(b) provides:

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 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 plaintiff files a case in the wrong district, the district court “shall dismiss, or if it be in the interest of justice, transfer such case to any district •... in which it could have been brought.” 28 U.S.C. § 1406(a).

Defendants argue that the Southern District of Iowa is an improper venue for this lawsuit because “none of [§ 1391 (b)’s] sub[ ]sections provides a basis for venue in ... [this District].” See Defs.’ Br. in Supp. of Their Mot. to Transfer for Improper Venue (“Defs.’ Br.”) (Clerk’s No. 25-1) at 4. Instead, Defendants claim that the District of Nebraska is the proper venue. See id. § III.D. Plaintiffs disagree, arguing that § 1391(b) provides a proper basis for venue in this District because “[a] substantial part of the events giving rise to [Plaintiffs’] claim[s] occurred here in Iowa.”4 See Pls.’ Br. Resisting *996Defs.’ Mot. (“Pls.’ Resistance Br.”) (Clerk’s No. 28-1) at 3.

Thus, the issue before the Court is whether § 1391(b)(2) provides a basis for venue in this District.5 The venue provisions protect a defendant from the inconvenience of defending a lawsuit in a federal district court “that is either remote from the defendant’s residence or from the place where the acts underlying the controversy occurred.” VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1576 (Fed.Cir.1990) (internal citations omitted). Where, as here, a defendant challenges venue, the plaintiff bears the burden of establishing that the chosen venue is proper. See Saferstein v. Paul, Mardinly, Durham, James, Flandreau & Rodger, P.C., 927 F.Supp. 731, 735 (S.D.N.Y.1996) (internal citation omitted).

Section 1391(b)(2) provides that a lawsuit may be brought in any judicial district where “a substantial part of the events or omissions giving rise to the claim occurred.” Thus, venue may be proper in more than one district. See Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir.2004). Accordingly, venue in the Southern District of Iowa will be proper even if another district has a closer connection to the claims in this lawsuit because § 1391(b)(2) only requires that a substantial part of the events or omissions giving rise to the claims in this lawsuit occurred in this District. See Setco Enters. Corp. v. Robbins, 19 F.3d 1278, 1281 (8th Cir.1994) (“[W]e ask whether the district the plaintiff chose had a substantial connection to the claim, whether or not other forums had greater contacts.”); Advanced Logistics Consulting, Inc. v. C. Enyeart, L.L.C., No. 09-cv-720, 2009 WL 1684428, at *3, 2009 U.S. Dist. LEXIS 50603, at *9 (D.Minn. June 16, 2009) (“[T]he Court need not decide that it is the ‘best’ venue or the one having the most significant connection to the claims at issue.”).

The inquiry into this substantiality requirement is more of a qualitative than a quantitative nature. See Cold Spring Harbor Lab. v. Ropes & Gray, L.L.P., 762 F.Supp.2d 543, 553 (E.D.N.Y.2011) (internal citation and quotation marks omitted); In re Tex. Prison Litig., No. 98-7110,1999 U.S. Dist. LEXIS 11120, at *4 (W.D.Mo. Feb. 17, 1999) (“In analyzing whether substantial events or omissions occurred in Missouri, the court con *997siders not merely the number of events or omissions, but how significant they were to the genesis of the dispute.”). To conduct this inquiry, the Court must: (1) consider the nature of Plaintiffs’ claims and the acts or omissions underlying those claims; and (2) determine whether substantial events or omissions material to those claims occurred in this District. See Catipovic v. Turley, No. C 11-3074, 2012 WL 2089552, at *17-18, 2012 U.S. Dist. LEXIS 79824, at *52-55 (N.D.Iowa June 8, 2012). Under controlling Eighth Circuit case law, in deciding whether a substantial part of the events or omissions giving rise to Plaintiffs’ claims occurred in this District, the Court must focus only on Defendants’ alleged wrongful activities. See Woodke v. Dahm, 70 F.3d 983, 985-86 (8th Cir.1995); Catipovic, 2012 WL 2089552, at *17-18, 2012 U.S. Dist. LEXIS 79824, at *52-53 (citing Woodke, 70 F.3d at 985).

Applying this framework to the present ease, the Court concludes that venue in this District is improper. Plaintiffs maintain that the following alleged wrongful conduct underlies both of their claims: (1) Defendants drafted the Option in a way that favored the purchaser, see Third Am. Compl. ¶ 23 (“Defendants in their conduct ... favored the purchaser.”), ¶ 26 (“Defendants were, in fact, representing and favoring the purchaser.”); and (2) “Defendants ... failed to disclose to Plaintiffs their divided loyalties,” id. ¶ 19; see also id. ¶ 25 (“Plaintiffs believed at all times that they were being represented by the Defendants, that their sole loyalties were to them.”). For reasons that follow, the Court has determined that both of the alleged wrongdoings occurred in the District of Nebraska.

A. Failure To Disclose Dual Representation

It is axiomatic that Defendants’ failure to inform Plaintiffs of their alleged dual representation forms a substantial part of the events or omissions giving rise to the claims in this case. This alleged wrongdoing presents an interesting dilemma because Defendants’ failure to disclose their “divided loyalties” is an omission, i.e. an event that did not occur. The Court concludes, however, that to the extent that this omission could be said to have occurred anywhere, it occurred in Nebraska because Defendants’ duty to disclose the fact of the alleged dual representation arose when Murray learned in a telephone call, while in his office in Omaha, Nebraska, that Plaintiffs and the purchaser of their land had reached an agreement. See Murray Aff. ¶ 6.

“[Defendants’] duty of good faith [owed] to ... [Plaintiffs] requirefd] ... [Defendants] to make the disclosure [concerning ‘their divided loyalties’] in sufficient time to enable ... [Plaintiffs] to determine whether to proceed with the transaction....” Restatement (Third) of Agency § 8.06 cmt. d(1). Plaintiffs’ motive for entering the Agreement was to generate funds and avoid an otherwise imminent foreclosure proceeding by Farm Credit. See Murray Aff. ¶¶ 5-6; Boe Aff. ¶¶ 4-5, Ex. A at 4 (showing that the Agreement was executed on March 9, 2003, a mere six days after Plaintiffs reached an agreement with the purchaser of their land); Richard “Bud” Steen Aff. ¶¶ 5-6. In light of the fact that Plaintiffs apparently needed these funds quickly, Defendants’ duty of good faith demanded that they inform Plaintiffs of the alleged dual representation immediately upon learning the identity of the purchaser, so that Plaintiffs could consider whether to hire different counsel or whether to proceed with the transaction at all.' See Restatement (Third) of Agency § "8.06 cmt. d(l). Therefore, Defendants should have informed Plaintiffs of the alleged dual representation on March 3, 2003 when Murray, while in his Omaha, *998Nebraska office, spoke to Plaintiffs via telephone. Accordingly, Defendants’ omission occurred in the District of Nebraska, rendering venue in this District improper.

B. Drafting the Option

As with Defendants’ failure to disclose, the Court concludes that Defendants’ work in drafting the Option also constitutes a substantial part of the events or omissions giving rise to Plaintiffs’ two claims. See Mitrano, 377 F.3d at 405-06 (stating that the plaintiffs “work under the contract constituted ‘a substantial part of the events [and] omissions giving rise to [his] claim’ for breach of contract” because it was such work that “allegedly created his entitlement to the payment” he sought by filing the lawsuit). Accordingly, venue in this District will be proper if Defendants completed such portion of the drafting of the Option in Iowa that is “sufficient to justify venue” here.6 See id. at 406. Defendants assert, however, that the entire process of drafting the Agreement and the Option took place at their offices in Omaha, Nebraska. See Defs.’ Br. at 1 (“[A]ll of Defendants’ alleged misconduct occurred at their office in Omaha, Nebraska, where the Option and the ... Agreement were drafted.”), 3 (“No one from LDM traveled to Iowa in the course of drafting the ... Agreement or the Option .... All of the legal work described in Plaintiffs’ factual allegations was performed in Nebraska, and not in the Southern District of Iowa.”), Murray Aff. ¶¶ 8-10, Boe Aff. ¶¶ 10-11. By not disputing this assertion, Plaintiffs apparently concede that Defendants did not do any work in connection with the drafting of the Agreement or the Option in Iowa.7 See generally Pls.’ Resistance Br. Instead, they argue that Defendants’ “minimum contacts” with Iowa are sufficient to justify venue in this District. See id. at 2 (“Murray has a long history of Iowa farm dealings. [He] stated under oath ‘I did an awful lot of work in the Montgomery County area’ in Iowa in the 1980’s.... ”), 4 (“Murray and Boe purposefully directed their actions toward Iowa residents, and to Iowa property.”), 5 (stating, among other things, that “Defendants knew that they were dealing with two parties that were both located in Iowa, that they were dealing with Iowa land, ... with Iowa law, ... with the release of an Iowa mortgage held by an Iowa mortgagor, ... [and] with Iowa drafting for Iowa purposes, to be filed in an Iowa courthouse,” which establishes that Defendants have “more than minimum contacts with Iowa”). “The test *999for determining venue[, however,] is not the defendant’s ‘contacts’ with a particular district, but rather the location of those ‘events or omissions giving rise to the claim....’”8 Cottman Transmission Sys. v. Martino, 36 F.3d 291, 294 (3d Cir.1994). “It would be [an] error ... to treat the venue statute’s ‘substantial part’ test as mirroring the minimum contacts test employed in personal jurisdiction inquiries.” Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 357 (2d Cir.2005); accord United States ex rel. Rudick v. Laird, 412 F.2d 16, 20 (2d Cir.1969) (“The concepts of personal jurisdiction and venue are closely related but nonetheless distinct.”). Therefore, Plaintiffs’ recitation of facts establishing Defendants’ minimum contacts with- Iowa is irrelevant to the Court’s venue analysis. Accordingly, the Court finds that Plaintiffs have failed to meet their burden of establishing that venue in this District is proper.

III. CONCLUSION

For the reasons above, Defendants’ Motion (Clerk’s No. 25) is hereby GRANTED. The Clerk of Court shall transfer this case to the United States District Court for the District of Nebraska.

IT IS SO ORDERED.

Steen v. Murray
919 F. Supp. 2d 993

Case Details

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Steen v. Murray
Decision Date
Jan 15, 2013
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919 F. Supp. 2d 993

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United States

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