McKinney Capital & Advisory, LLC v. Silver Arch Capital Partners, LLC ( 2020 )

2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 MCKINNEY CAPITAL & Case No.: 3:20-cv-00043 BEN (WVG) ADVISORY GROUP, LLC, a 11 California limited liability company, ORDER (1) GRANTING MOTION TO 12 TRANSFER VENUE AND (2) TRANSFERRING CASE TO Plaintiff, 13 SOUTHERN DISTRICT OF NEW YORK 14 v. 15 SILVER ARCH CAPITAL 16 PARTNERS LLC, a New Jersey limited liability company, 17 18 Defendants. 19 Presently before the Court is Defendant Silver Arch Capital Partners LLC’s 20 (“Silver Arch”) Motion to Transfer Venue pursuant to 28 U.S.C. § 1404(a) to the 21 Southern District of New York, or, in the alternative dismiss this action pursuant to the 22 doctrine of forum non conveniens. Plaintiff McKinney Capital & Advisory Group 23 LLC (“McKinney”) filed an opposition and Silver Arch filed a reply in support of the 24 motion. Having reviewed the parties’ arguments and the law, the Court GRANTS 25 26 Silver Arch’s Motion and TRANSFERS this case to the United States District Court 27 for the Southern District of New York. 28 /// 2 This case concerns the refinancing of a loan on real property. The facts at issue 3 in this motion are not in dispute and are taken from McKinney’s Complaint. 4 In 2019, McKinney contacted Silver Arch to refinance a loan on real property 5 located in Oakland, California. Compl., ECF No. 1-3, ¶ 8. On March 1, 2019, Silver 6 Arch provided McKinney a Term Sheet for the proposed refinancing loan. Id. at ¶ 9. 7 McKinney, through an authorized agent, signed the Term Sheet and returned it to 8 Silver Arch on March 6, 2019. Id. at ¶ 11. The Term Sheet contained several 9 provisions, some of which were binding and some of which were non-binding. Id. at ¶ 10 14. Silver Arch then sent McKinney a Commitment Letter on March 26, 2019, which 11 McKinney signed and returned to Silver Arch. Id. at ¶ 15. McKinney alleges the 12 Commitment Letter “made the entire Term Sheet binding on the parties as the 13 commitment was ‘based on the term’s [sic] conditions, and requirements of the Term 14 Sheet.’” Id. 15 At issue here is a forum selection clause contained in the Term Sheet. Silver 16 Arch seeks to invoke the forum selection clause to transfer this case to the Southern 17 District of New York. Mot., ECF No. 5-1, 3. McKinney argues the forum selection 18 clause is non-binding, that it never assented to the forum selection clause, and that 19 private interest factors weigh against enforcing the forum selection clause. Opp’n., 20 ECF No. 8, 4-9. 21 II. Discussion 22 A court may transfer a case “to any other district or division where it might have 23 been brought or to any district or division to which all parties have consented.” 28 24 U.S.C. § 1404(a). Consent may be evidenced through agreement to a forum selection 25 clause in a contract. Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for Western 26 Dist. of Texas, 571 U.S. 49, 59 (2013). The Court applies federal law to determine the 27 enforceability of a forum selection clause. See Doe 1 v. AOL LLC, 552 F.3d 1077, 28 1083 (9th Cir. 2009) (citing Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 2 specific federal district to hear their disputes, § 1404(a) facilitates enforcement of the 3 forum selection clause by transfer to the agreed-upon venue.” Rahimi v. Mid Atlantic 4 Professionals, Inc., No. 18-CV-00278-CAB-KSC, 2018 WL 3207382, at *2 (S.D. Cal. 5 Jun. 29, 2018) (citing Atlantic Marine, 571 U.S. at 59). 6 Silver Arch argues the forum selection clause is valid and binding on the parties 7 because McKinney executed the Term Sheet on March 6, 2019, assenting to its terms 8 including the forum selection clause. Mot., ECF No. 5-1, 2. McKinney avers, arguing 9 that the forum selection clause in the Term Sheet was non-binding. Opp’n., ECF No. 10 8, 4. Silver Arch counters that even if the forum selection clause was initially non- 11 binding, McKinney later made the term binding by acknowledging the Commitment 12 Letter on March 26, 2019. Reply, ECF No. 9, 2-3. 13 The Court first addresses whether the forum selection clause contained in the 14 Term Sheet was binding when McKinney signed the document on March 6, 2019. It 15 was not. The Term Sheet explicitly states: “This Term Sheet shall be non-binding with 16 the exception of the Break-up Fee, indemnification against expenses, and Due 17 Diligence charges above.” The Term Sheet provided by Silver Arch is distinguishable 18 from the term sheet provided in the parties’ cited case, Stearns v. Catalus Capital, 19 LLC, No. 13-CV-2514-WJM-KMT, 2015 U.S. Dist. LEXIS 96188, ECF No. 48-1. In 20 Stearns, the term sheet expressly stated a governing law provision was excluded from 21 the non-binding provisions. Id. at 4. Here, Silver Arch did not list the governing law 22 or forum selection clauses of the Term Sheet as being binding. Silver Arch argues that 23 interpreting the Term Sheet as making most of its terms non-binding would render 24 many of its sections “superfluous.” Reply, ECF No. 9, at 2. That may be true. Silver 25 Arch could easily correct this deficiency in future term sheets by indicating, as the 26 lender in Stearns did, that the governing law and forum selection clauses were binding. 27 28 2 binding when McKinney signed the Commitment Letter on March 26, 2019. 3 McKinney’s own Complaint supports this conclusion: 4 5 14. The Disclosure section of the Term Sheet states that “[t]his Term Sheet shall be non-binding with the exception of the Break-up Fee, 6 indemnification against expenses, and Due Diligence charges above. 7 15. Consequently, the Term Sheet’s clauses concerning the Break-up 8 Fee, indemnification against expenses, and Due Diligence charges 9 became binding on the Parties when they signed the sheet. Further, the Commitment Letter made the entire Term Sheet binding on the 10 parties as the commitment was “based on the term’s [sic] conditions, 11 and requirements of the Term Sheet.” 12 Compl., ECF No. 1-3, ¶¶ 14-15 (emphasis added). Little more need be said. 13 McKinney’s Complaint alleges all the Term Sheet’s conditions, which included the 14 forum selection clause, were binding on the parties upon the signing of the 15 Commitment Letter on March 26, 2019. McKinney cannot now try to argue those 16 terms were not binding or procured by fraud. Accordingly, the Court finds the forum 17 selection clause became binding on the parties when McKinney signed the 18 Commitment Letter. 19 Typically, a court must weigh convenience of the parties and public interest 20 considerations in determining whether transferring a case is appropriate. Atlantic 21 Marine, 571 U.S. at 62. The presence of a valid forum selection clause changes the 22 Court’s analysis in three ways. Id. at 63. “First, the plaintiff’s choice of forum merits 23 no weight.” Id. “Second, a court evaluating a defendant’s § 1404(a) motion forum 24 selection clause should not consider arguments about the parties’ private interests.” Id. 25 at 64. “Third, when a party bound by a forum selection clause flouts its contractual 26 obligation and files suit in a different forum, a § 1404(a) transfer of venue will not 27 carry with it the original venue’s choice-of-law rules.” Id. Considering these factors, 28 1 ||McKinney’s arguments about choice of forum and its private interests in litigating this 2 || case in California must be given no weight. 3 McKinney acknowledges that it “bears the burden of showing why the court 4 || should not transfer the case to the forum to which the parties agreed.” Jd.; Opp’n., 5 || ECF No. 8, 3-4. It has not met that burden here. Accordingly, transfer of this case to 6 || enforce the valid forum selection clause is appropriate. 7 Ill. Conclusion 8 For the foregoing reasons, Silver Arch’s Motion to Transfer Venue is 9 1|GRANTED. This action is TRANSFERRED to the United States District Court for 10 || the Southern District of New York for further proceedings pursuant to 28 U.S.C. § 11 |} 1404(a). 12 IT IS SO ORDERED. 13 ||Dated: July 29, 2020 14 Hon. Roger T. Benitez Is United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28