Bank of America, N.A. v. Wilmington Trust FSB

943 F. Supp. 2d 417, 2013 WL 1890239, 2013 U.S. Dist. LEXIS 65157
CourtDistrict Court, S.D. New York
DecidedMay 3, 2013
DocketNo. 12 Civ. 8730(VM)
StatusPublished
Cited by170 cases

This text of 943 F. Supp. 2d 417 (Bank of America, N.A. v. Wilmington Trust FSB) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bank of America, N.A. v. Wilmington Trust FSB, 943 F. Supp. 2d 417, 2013 WL 1890239, 2013 U.S. Dist. LEXIS 65157 (S.D.N.Y. 2013).

Opinion

DECISION AND ORDER

VICTOR MARRERO, District Judge.

Plaintiff Bank of America, N.A., (“Bank of America”) filed a complaint (the “Complaint”) against defendants Wilmington Trust FSB (“Wilmington Trust”), Commonwealth Land Title Insurance Co. (“Commonwealth”), Fidelity-National Title Insurance Co. (“Fidelity”), and First American Title Insurance Co. (“First American,” with Commonwealth and First American, the “Title Insurers,” and collectively, “Defendants”). Bank of America seeks a declaratory judgment resolving its duties to provide certain information to Defendants in connection with multiple lawsuits brought in the wake of the failed Fontainebleau Las Vegas project (the “Fontainebleau Project”). On January 31, 2013, Defendants moved to dismiss, arguing in their supporting memorandum of law that venue was improper pursuant to Federal Rule of Civil Procedure 12(b)(3) (“Rule 12(b)(3)”). On February 14, 2013, Bank of America submitted a response in opposition to dismissal, and on February 21, 2013, Defendants submitted their reply in support. For the reasons discussed below, Defendants’ motion is DENIED and the case is transferred to the United States District Court for the Southern District of Florida.

[420]*420I. BACKGROUND1

This dispute arises out the failed Fontainebleau Project to develop a resort located on the north end of the Las Vegas Strip. Bank of America acted as Administrative Agent under a June 6, 2007 Credit Agreement and as Disbursement Agent under a June 6, 2007 Master Disbursement Agreement. Further, Bank of America, in its capacity as Administrative Agent, was the insured party named on a title insurance policy (the “Title Policy”) issued by the Title Insurers, which was written to protect the priority of the mortgage funding the Fontainebleau Project.

The Fontainebleau Project was financed in part by a credit agreement under which the borrower obtained funds by first submitting notices of borrowing, which required lenders to transfer funds into a designated bank account, and then submitting requests to the Disbursement Agent to obtain access to the funds in the account. Bank of America disbursed funds for the Fontainebleau Project through March 2009, after which the borrower stopped requesting funds and filed for bankruptcy.

Bank of America resigned as Administrative Agent and Disbursement Agent for the Fontainebleau Project in May 2009, and Wilmington Trust was appointed as the Successor Administrative Agent and Successor Disbursement Agent under a Successor Administrative Agent Agreement and a Successor Disbursement Agent Agreement, both dated December 1, 2009. The Successor Administrative Agent Agreement and Successor Disbursement Agent Agreement outline Bank of America’s contractual obligations to Wilmington Trust, which include facilitating the transfer of information to Wilmington Trust. In addition, Wilmington Trust is also now the insured party named on the Title Policy-

The failure of the Fontainebleau Project triggered four separate litigations involving hundreds of millions of dollars in mechanics liens (the “Mechanics Lien Litigation”), all of which are proceeding in the United States Bankruptcy Court for the Southern District of Florida. Both the Title Insurers and Wilmington Trust have become enmeshed in these cases pursuant to the terms of the Title Policy. The Title Insurers are obligated to defend against covered third-party claims and have appointed counsel to defend Wilmington Trust and lenders, and Wilmington Trust, in its role as insured party, is obligated to cooperate with the Title Insurers in the investigation of the claims. As part of this defense, both the Title Insurers and Wilmington Trust have requested information from Bank of America regarding the administration of Fontainebleau Project funds. ■ These requests are the subject of the Complaint.

Specifically, Bank of America objects to the broad scope and burdensome nature of the requests for information, and to the Title Insurers’ “conflict of interest” based on the fact that they have adopted the position that the Mechanics Lien Litigation would not be a covered claim under the Title Policy if the funds were administered incorrectly. Due to this alleged conflict, the information requested of Bank of America would relate both to the defense of the Mechanics Lien Litigation and to [421]*421the Title Insurers’ defense of coverage of that litigation. As a result, Bank of America seeks a declaratory judgment that would 1) clarify Bank of America’s obligation to provide information to the Title Insurers and Wilmington Trust under the Successor Administrative Agent Agreement and the Successor Disbursement Agent Agreement, 2) clarify that Bank of America has no obligation under the Title Policy to provide information to the Title Insurers (and that the Title Insurers are responsible for costs if Bank of America does provide them with information), and 3) clarify the scope of Wilmington Trust’s obligation to provide information to the Title Insurers in light of the Title Insurers’ apparent conflict of interest.

Defendants moved to dismiss for improper venue under Rule 12(b)(3), arguing that the court handling the bankruptcy of the borrowers in the Fontainebleau Project (the “Bankraptcy Court”) has exclusive jxirisdiction over the first and third counts in the complaint, and that venue is otherwise improper under 28 U.S.C. § 1391 (“Section 1391”). (See Dkt. No. 18.) Wilmington Trust is a financial holding company organized under Delaware law with its main offices in Wilmington, Delaware. Fidelity is organized under California law with its main offices in Jacksonville, Florida. Commonwealth is organized under Nebraska law with its main offices in Jacksonville, Florida. First American is organized under Delaware law with its main offices in Santa Ana, California.

II. LEGAL STANDARD

A. VENUE UNDER SECTION 1391

On a motion to dismiss for improper venue under Rule 12(b)(3), “Once an objection to venue has been raised, the plaintiff bears the burden of establishing that venue is proper.” French Transit, Ltd. v. Modern Coupon Sys., Inc., 858 F.Supp. 22, 25 (S.D.N.Y.1994); see also Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir.2005) (“If the court chooses to rely on pleadings and affidavits, the plaintiff need only make a prima facie showing of [venue].”) (quoting CutCo Indus. v. Naughton, 806 F.2d 361, 364-65 (2d Cir.1986)).

Section 1391 provides that civil actions may be properly 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

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943 F. Supp. 2d 417, 2013 WL 1890239, 2013 U.S. Dist. LEXIS 65157, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bank-of-america-na-v-wilmington-trust-fsb-nysd-2013.