YYY Corp. v. Timothy Flynn, et al.

• Court: District Court, D. New Hampshire
• Decided: March 18, 1997
• Docket: CV-96-390-B
• Status: Published

Opinion

YYY Corp. v . Timothy Flynn, et a l . CV-96-390-B 03/18/97

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE YYY Corporation

v. C-96-390-B

Timothy J. Flynn, Jr., et a l .

O R D E R

Plaintiff YYY Corporation originally brought a four count

diversity of citizenship complaint against defendants Timothy J.

Flynn, J r . and Ruth S . Flynn, and Great Works Properties, Inc.

(“Great Works”), a corporation owned by Flynn family members.

YYY Corporation was later permitted to file an amended complaint

dropping Counts I I , III and IV. The sole remaining count alleges

that the Flynns owe amounts due to the plaintiff on two

commercial promissory notes and two lines of credit. Before me

are: (1) the Flynns’ motion to dismiss for lack of subject

matter jurisdiction; (2) the Flynns’ motion to dismiss for lack

of venue; and (3) the Flynns’ and Great Works’ motions to set

aside the magistrate judge’s order of attachment.1

1 Because Great Works is no longer a party, its motion to dismiss (document n o . 6 ) is moot. I. Diversity Jurisdiction

The Flynns argue that the entire case should be dismissed

because diversity jurisdiction did not exist when Great Works was

still in the case. I reject this argument. It is well settled

that Federal Rule of Civil Procedure 21 “invests district courts

with authority to allow a dispensable nondiverse party to be

dropped at any time.” Newman-Green, Inc. v . Alfonzo-Larrain, 490

U.S. 826, 832 (1989). 2 As the court plainly has diversity

jurisdiction over the claims against the remaining defendants, I

see no reason why these claims should be dismissed.

II. Venue

When jurisdiction is founded on diversity, venue lies in (1)

the judicial district where any defendant resides, if all

defendants reside in the same state, (2) the district in which a

substantial part of the events or omissions giving rise to the

claim occurred or a substantial part of the property that is the

subject of this action is situated, or (3) the district in which

any defendant is subject to personal jurisdiction at the time the

2 Fed. R. Civ. P. 21 states: “Misjoinder of parties is not ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just. Any claim against a party may be severed and proceeded with separately.”

2 action is commenced, if there is no district in which the action

may otherwise be brought. 28 U.S.C.A. § 1391(a) (West Supp.

1996).

The burden of establishing proper venue rests with the

plaintiff. Ferrofluidics Corp. v . Advanced Vacuum Components,

Inc., 789 F. Supp. 1201, 1206 (D.N.H.), aff’d, 968 F.2d 1463 (1st

Cir. 1992). While the First Circuit has not specified the

standard that a district court should use in resolving venue

disputes, it has determined the standard in the related context

of a challenge to personal jurisdiction. See Boit v . Gar-Tec

Products, Inc., 967 F.2d 6 7 1 , 675-77 (1st Cir. 1992). In cases

where no hearing is held, the court makes only a prima facie

determination of jurisdiction. Id. Accordingly, the court does

not find facts, but rather accepts the truth of the plaintiff’s

factual averments to the extent that they are supported by

evidence of specific facts set forth in the record. Id. Since

at least one other circuit requires district courts to use a

similar standard in venue disputes, see Home Ins. C o . v . Thomas

Indus., Inc., 896 F.2d 1352, 1354-55 (11th Cir. 1990), and the

parties have not drawn my attention to any precedents suggesting

a different approach, I will determine the venue question under

the prima facie standard outlined in Boit.

The Flynns contend that YYY Corporation has failed to meet

3 its burden, having alleged in its complaint that venue exists

because “the property for which these claims were incurred (sic)

is situated in this district, and that the plaintiff (sic) is

subject to personal jurisdiction in this district.” The Flynns

go on to refute these allegations. The Flynns have failed to

point out, however, that the complaint asserts a third ground for

venue. Paragraph 6 of the complaint reads, in its entirety:

6. Venue lies in this district by virtue of 28 U.S.C. Section 1391 because the events or admissions giving rise to the claims occurred within this district and that the property for which these claims were incurred [sic] is situated in this district, and the plaintiff [sic] is subject to personal jurisdiction in this district.

(emphasis added).

The Flynns’ argument that the property securing the notes

claimed in Count I is outside of this district is not grounds for

dismissal for improper venue. YYY Corporation has shown that a

substantial part of the events giving rise to their claim

occurred in New Hampshire. Count I alleges the non-payment of

four notes. Each of the notes appears on its face to have been

executed in New Hampshire. All the notes were payable to the

order of the former New Hampshire Savings Bank, a bank organized

under the laws of New Hampshire with its principal place of

business in New Hampshire. Two notes contain a choice of law

provision stating that the “agreement . . . shall be deemed to be

4 a contract made under the laws of the State of New Hampshire and

shall be construed in accordance therewith.” Finally, one of the

notes was secured with real estate located in New Hampshire and

by bank accounts maintained in New Hampshire.3 Together, these

factors demonstrate that the events giving rise to YYY

Corporation’s action occurred in New Hampshire and venue in this

district is proper. See Banque de la Mediterranee-France, S.A.

v . Thergen, Inc., 780 F. Supp. 9 2 , 94 (D.R.I. 1992); Maryland

Nat’l Bank v . M/V Tanicorp I , 796 F. Supp. 1 8 8 , 190-91 (D. Md.

1992).

III. Writ of Attachment

Great Works and the Flynns both move to vacate the

magistrate judge’s attachment order of September 1 2 , 1996.

Because Great Works was a non-diverse party, the magistrate judge

had no jurisdiction to attach property belonging to i t , and the

order must now be modified so as to release Great Works from its

provisions. The attachment order, however, will not be vacated

in its entirety, because the court has jurisdiction over the

claims contained in the amended complaint and the amendment

relates back to the time of the filing of the original complaint.

3 Another note is secured by real estate located in Maine, but this note was executed in New Hampshire and contains a New Hampshire choice of law provision.

5 Berkshire Fashions, Inc. v . M . V . Hakusan I I , 954 F.2d 8 7 4 , 887

(3d Cir. 1992) (amended complaint dropping claims against non-

diverse party to establish diversity jurisdiction relates back to

the time the original complaint was filed).

IV. Conclusion

For the foregoing reasons, the Flynns’ motion to dismiss for

lack of subject matter jurisdiction (document n o . 5 ) is denied;

the Flynns’ motion to dismiss for improper venue (document n o .

5.1) is denied; and the Flynns’ and Great Works’ motions to set

aside the magistrate judge’s order of attachment (document nos. 8

& 9 ) are granted in part. The order of attachment issued by the

magistrate judge on September 1 2 , 1996 and the writ of attachment

of September 2 0 , 1996 are modified so as to release Great Works

from their terms.

SO ORDERED.

Paul Barbadoro United States District Judge

March 1 8 , 1997

cc: John F. O’Connell, Esq. John A . Rachel, Esq. Jamie N . Hage, Esq.