MEMORANDUM OPINION AND ORDER
MB Financial Bank (“the Bank”) has sued Roy Walker to recover $3.7 million for breach of a subordination agreement and a collateral assignment and for tortious interference with the Bank’s $19 million credit agreement with WES Construction Company (“WES”). Mr. Walker was the president and majority shareholder of WES. (Complaint, ¶¶ 1-9). The purpose of the credit agreement, in part, was to finance a leveraged employee stock ownership plan buyout of WES stock from its individual shareholders and to provide some working capital for WES. In order to facilitate the credit agreement, Mr. Walker entered into the subordination and collateral assignment agreement with the Bank. He received two subordinated promissory notes from WES, totaling a little over $5 million. On behalf of himself and WES, he agreed to subordinate all debts owed to him by WES and he assigned his interest in the promissory notes to the Bank. (Complaint, ¶¶ 1-9, 22-26, 27-29). The Bank claims that he then orchestrated a series of self-dealing transactions through his various companies, including having WES satisfy its $5 million debt to him while owing the Bank over $7 million. (Complaint, ¶¶8, 16-17, 31-33, 35, 37-40, 44-46, 50-51, 53-55).
Mr. Walker, who is from Nevada, has moved to dismiss the Bank’s complaint for improper venue under Fed.R.Civ.P. 12(b)(3) and 28 U.S.C. § 1391. He points out that WES is a Nevada company doing business in Nevada, the agreements relate to loans the Bank made to WES in Nevada for use in Nevada, all of the alleged self-dealing and payments occurred in Nevada, and that “every event alleged in Plaintiffs complaint took place in Nevada.” Walker’s Memorandum, at 9). The Bank’s Complaint alleges eonclusorily that “[v]enue is proper in this district pursuant to 28 U.S.C. § 1391(a)(2) because a substantial part of the events giving rise to this litigation occurred or otherwise arose in this district.” (Complaint, ¶ 14).
The Complaint states that Mr. Walker is a Nevada citizen, and that all his companies, including WES, are Nevada corporations. (Complaint, ¶¶ 3, 12). It concludes that Mr. Walker “transacted business in the State of Illinois and the contracts giving rise to this litigation are substantially connected with the State of Illinois.” (Complaint, ¶¶ 13). At the same time, the Complaint indicates that all of the activities making up the breach and tortious interference claims occurred between 2005 and 2008 in Nevada. (Complaint, ¶¶ 31-55, 62-66, 72-74, 79-83).
In its response to Mr. Walker’s motion, the Bank claims that Mr. Walker acknowl *914 edged in his memorandum in support of his motion to dismiss that all of the agreements were negotiated and executed in Illinois. That overstates the matter somewhat. While it was conceded that Mr. Walker signed the agreements at the Bank’s offices in Illinois, there was no concession that the contracts were negotiated here. In fact, the Memorandum is silent on the question of the locus of those negotiations. (MB Financial Bank’s Response, at 4; Walker’s Memorandum, at 11).
The Bank also submits that the credit agreement it has with WES contains a provision that states that all disputes relating to the loan documents, which specifically include the subordination and collateral assignment agreements, must be resolved in Illinois if the Bank chooses. {MB Financial Bank’s Response, at 5-6). The credit agreement does include a provision stating that:
[t]he Borrower ... (b) waives any and all personal rights under the law of any jurisdiction to object on any basis (including, without limitation, inconvenience of forum) to jurisdiction or venues within the State of Illinois for the purpose of litigation to enforce this Agreement, the Notes or the other Loan Documents, ....
However, “[t]he Borrower” was WES, not Mr. Walker. While Mr. Walker signed the agreement, he did so on behalf of WES as its president, not personally. This is no mere quiddity, but rather a fact of critical analytical significance. It is basic that one who signs a contract in a purely representative capacity is not personally bound by its terms. It is also true, however, that the fact that a person signs in what appears to be a representative capacity does not inevitably preclude a finding that the intent was to be personally bound as well.
See e.g., Whitney National Bank v. Air Ambulance by B & C Flight Mgmt., Inc.,
It is not that there is not an argument that could perhaps be made.
See e.g., Frietsch v. Refco, Inc.,
The arguments under § 1391(a)(2) are more substantially developed. To those issues we now turn. Section 1391(a)(2) provides that “[a] civil action wherein jurisdiction is founded only on diversity of citizenship may, ... be brought only in ... a judicial district in which a substantial part of the events or omissions giving rise to the claims occurred, or a substantial part of the property that is the subject of the action is situated.” 1 The Bank claims that a substantial part of the events that gave rise to its lawsuit did, indeed, occur in this district. (Complaint, ¶ 14). Beyond that, however, there is little elaboration.
It is not well-settled which party bears the burden of proof once venue is challenged. The
Wright Miller
treatise calls the rule that plaintiff bears the burden the “better rule” and the rule that “represents the weight of judicial authority.” 14D Wright Miller & Cooper, Federal Practice
&
Procedure, § 3826, at 555-62 (2007). Moore’s Federal Practice treatise calls the rule that defendant bears the burden the “correct one.” 17 Moore’s Federal Practice, § 110.01[5][c] (2004). Moore’s assessment runs contrary to the weight of authority and appears to be based on the fact that improper venue is an affirmative defense, meaning that the defendant has the burden of proof. But so too is personal jurisdiction an affirmative defense,
see e360 Insight v. The Spamhaus Project,
Moore’s also notes that the defendant must put venue in issue or waive it. The same, though, is true of personal jurisdiction,
Ruhrgas AG v. Marathon Oil Co.,
The courts in this district have held that once venue is challenged, the plaintiff bears the burden of establishing it filed its case in the proper district.
See e.g., Johnson-Ester v. Schwarzenegger,
Most of these cases have been based on the Seventh Circuit’s decision in
Grantham v. Challenge-Cook Bros., Inc.,
Originally, in its response brief to Mr. Walker’s motion, the Bank asserted that Mr. Walker negotiated and executed the collateral assignment and subordination agreements in Illinois after soliciting the Bank’s assistance in providing WES with a line of credit.
(MBFinancial Bank’s Response,
at 5). It argued that as a consequence, venue was proper in Illinois under § 1391(a)(2).
(MBFinancial Bank’s Response,
at 5). As already noted, the Bank did not cite to anything in support of these assertions and, thus provided no evidence of its claims. Unsupported statements in briefs are not evidence and do not count.
See Woolard v. Woolard,
Along with his reply brief, Mr. Walker submitted evidence in the form of his affidavit. According to Mr. Walker, WES went through Morgan Stanley in Reno, Nevada, to obtain financing for the leveraged buyout. (Walker Aff. ¶ 2). One of the proposals came from MB Financial *917 Bank, and in late September or early October 2005, a representative from the Bank, Gary Karsh, went to Reno to talk with individuals from WES and solicit a loan application. (Walker Aff. ¶ 3). Toward the end of October, Mr. Karsh returned to Reno to negotiate the terms of the loan. (Walker Aff. ¶ 4). There were no negotiations regarding the collateral assignment or subordination agreements. (Walker Aff. ¶ 4). On October 31, 2005, Mr. Walker went to Chicago for the sole purpose of signing the loan agreement, the collateral assignment agreement, and the subordination agreement. (Walker Aff. ¶ 6). Then, of course, all of the purported wrongdoing of which the Bank complains took place in Nevada among WES and Mr. Walker’s other companies.
Because Mr. Walker did not submit his affidavit until his reply brief, by sua sponte minute order, I afforded the Bank an opportunity to respond to the affidavit. (See Minute Order of 8/3/10 [Docket No. 40]). The Bank thereafter submitted Mr. Kosminskas’s affidavit, in which he said that Mr. Walker executed the credit agreement on behalf of WES, but did not say where. (Kominskas Aff. ¶ 5). He explained that Gary Karch (presumably the same individual as the Gary “Karsh” of Mr. Walker’s affidavit) was formerly a senior vice president with the Bank in Chicago and, Mr. Kominskas believed, still resided there. (Kominskas Aff. ¶ 6). Finally, Mr. Komiskas says that Mr. Walker traveled to Chicago to execute the collateral assignment and subordination agreements. (Kominskas Aff. ¶ 8). When carefully read, Mr. Kominskas’ affidavit does not contradict Mr. Walker’s affidavit in any meaningful way. For the purposes of venue, it really doesn’t matter where Mr. Karch lives or where his office is. The critical question is where the contract was negotiated. On this point, Mr. Walker’s affidavit is unrebutted. 4
In determining whether a substantial part of the events or omissions giving rise to the plaintiffs contract claim occurred or did not occur in a particular district, “the factors that the courts tend to focus on include: where the contract was negotiated or executed, where the contract was to be performed, and where the alleged breach occurred.” 14D Wright Miller & Cooper, Federal Practice & Procedure, § 3806.1, at 205-12 (2007);
Gulf Insurance Co. v. Glasbrenner,
It will not do to say, “Well, after all, the contract that was breached was an Illinois contract” ..... That argument could have force if this lawsuit had instead charged (say) fraud or other misconduct in connection with the negotiation or execution of the Agreement. But the entry into the Agreement is no more “a substantial part of the events or omissions giving rise to the claim” than, for example, the fact of a person’s get *918 ting aboard a Metra train in Highland Park would fit that description if a claim were to be based on an accident sustained by that same commuter passenger who, after leaving the train and beginning to walk to the office, were to be hit by a speeding taxi that runs a red light on Wacker Drive. That is, the hypothesized accident would certainly not have happened “but for” the train ride that preceded it, in the same sense that the asserted fraud and breach of contract in this case would not have happened “but for” the contract signing that preceded them (in this instance by years, not by minutes or hours). Just as in other areas of law a mere “but for” relationship does not automatically equate to proximate cause, here such a “but for” relationship does not cause the years-earlier signing of the Agreement to constitute “a substantial part of the events or omissions giving rise to the claimfs]” that arose much later.
Neither of the two cases the Bank points to support venue in Illinois involved a contract that was merely signed in Illinois.
{MB Financial Bank’s Response,
at 6). In
Vandeveld v. Christoph,
Failing all this, the Bank contends that it suffered the economic injury from Mr. Walker’s alleged tortious interference with its relationship with WES at “home” in Illinois, and contends that the place of injury is the most important thing a court can consider for venue in a tortious interference claim.
{MB Financial Bank’s Response,
at 6). At first blush, this appears to be an inaccurate statement of the law. If the situs of a plaintiffs economic injury were dispositive, §§ 1391(a)(1) and 1391(a)(3) would be superfluous.
Financial Management Services, supra,
The Bank has relied on
Medline Industries Inc. v. Maersk Medical Ltd.,
Medline Industries
is not a venue case, but a conflict of laws case, with its different standards. Indeed, the word “venue” appears nowhere in the opinion. Citing
Klaxon Co. v. Stentor Elec. Mfg. Co.,
In short, merely because the Bank suffered economic harm in Illinois by virtue of its being situated here, does not mean that venue is proper in this district. The question thus becomes: what to do? 28 U.S.C. § 1406(a) gives the district court an option:
The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.
“[T]he interests of justice” is one of those phrases that eludes easy definition. It is “not a definite standard, departure from which an appellate court can readily discern and correct.”
Cote v. Wadel,
In any event, the presumption generally runs in favor of transfer.
See Davis v. American Society of Civil Engineers,
Often, courts are concerned with whether dismissal will endanger the plaintiffs claims under the applicable statute of limitations.
See Goldlawr, Inc. v. Heiman,
Depending upon how a court resolves issues of applicable law and when the Bank should have become aware of its claims, the Bank could possibly be running up against these deadlines. Moreover, without even suggesting a view on the merits, the Bank’s Complaint does not appear frivolous or implausible. In short, in light of these and the other factors discussed earlier, it is in the interests of justice to transfer this case to the District of Nevada.
CONCLUSION
The Defendant’s Motion To Dismiss Based Upon Improper Venue Or In the Alternative To Transfer The Case To The District of Nevada [# 19] is GRANTED. Although it certainly appears that a transfer pursuant to 28 U.S.C. 1404(a) — which is the alternative relief sought by ¶¶ 17-22 of Mr. Walker’s Motion — would be appropriate, transfer of the case is not pursuant to that section of the United States Code, but rather to 28 U.S.C. § 1406(a). That transfer is in the interests of justice and Mr. Walker is subject to personal jurisdiction there and venue is proper there. The case will be transferred to the United States District Court 'for the District of Nevada.
Notes
. The only other options for venue would be "a judicial district where any defendant resides” under § 1391(a)(1) — here, that would be Nevada — because § 1391(a)(3) is inapplicable since Mr. Walker clearly could have been sued in Nevada.
. There is a Seventh Circuit opinion that suggests the opposite. In
Matter of Peachtree Lane Assocs.,
. In fact, the Complaint indicates that all of the activities making up the breach and tortious interference claims occurred between 2005 and 2008 in Nevada. (Complaint, ¶¶ 31-55, 62-66, 72-74, 79-83).
. Thus, whether or not conflicts in affidavits must be resolved in favor of the plaintiff as the Seventh Circuit held in
John Walker & Sons, Ltd. v. DeMert & Dougherty, Inc.,
. There appears to be a single case from this district where the court rested its venue decision on where the plaintiff sustained economic injury. But
Celozzi v. Boot,