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Lehman Brothers Holding, Inc. v. Gateway Business Bank

United States District Court, D. Colorado

March 31, 2014



R. BROOKE JACKSON, District Judge.

This matter is before the Court on the defendants' motion either to dismiss this case on statute of limitations or personal jurisdiction grounds or, alternatively, to transfer the case to the Central District of California. Because this Court concludes that the case should be resolved in the California court, the motion to transfer is granted.


This case arises out mortgage loans made by Gateway Business Bank (a California bank) to Steven Brooks (a California resident) and Gerardo Pena Ruiz (a California resident) in 2004. The loans were secured by property in Red Bluff, California and Orland, California, respectively. Gateway then sold the loans to Lehman Brothers Bank pursuant to agreements that, among other things, warranted that if any statements in the borrowers' loan applications turned out to be false, Gateway would repurchase the loans and hold Lehman Brothers Bank harmless.

Lehman Brothers Bank resold the loans to its parent company, Lehman Brothers Holdings, Inc. ("LBH"), a Delaware corporation with its principal place of business in New York. LBH, the plaintiff in this case, resold the Brooks loan to Fannie Mae and the Ruiz loan to CitiMortgage. Brooks and Ruiz eventually defaulted. Upon determining that the loan applications on the two loans contained "defects, " CitiMortgage required LBH to repurchase the Ruiz loan. Fannie Mae similarly demanded and obtained compensation from LBH on the Brooks loan. LBH now seeks to enforce the original agreements against Gateway Business Bank's successor by merger, First PacTrust Bancorp, Inc. (a California bank) and its holding company, Bank of California, Inc. (a Maryland corporation headquartered in California).

The only connection of these transactions to Colorado that I can find is that LBH has apparently authorized a subsidiary, "LAMCO, LLC, " which is based in Denver, to enforce its rights and collect funds owed to it. See letter from John Baker of LAMCO to Ron Tarbell of Gateway Business Bank, December 9, 2010 [Doc. #13-3].


"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). Section 1404(a) gives "discretion [to] the district court to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (internal quotation marks and citation omitted). The statute was drafted to revise the common law forum non conveniens doctrine to give courts "greater discretion to transfer a cause pursuant to § 1404(a) than to dismiss the action based upon forum non conveniens. " Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1515 (10th Cir. 1991) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253 (1981)).

The Tenth Circuit has held that the moving party bears the burden of proving that "(1) the action could have been brought in the alternate forum, (2) the current forum is inconvenient, and (3) the interests of justice are better served in the alternate forum." Wolf v. Gerhard Interiors, Ltd., 399 F.Supp.2d 1164, 1166 (D. Colo. 2005) (citing Chrysler Credit, 928 F.2d at 1515).

In determining whether a case should be transferred for convenience of the parties and in the interests of justice, the Court balances the factors outlined in Chrysler Credit. Those factors include, but are not limited to:

the plaintiff's choice of forum; the accessibility of witnesses and other sources of proof, including the availability of compulsory process to insure attendance of witnesses; the cost of making the necessary proof; questions as to the enforceability of a judgment if one is obtained; relative advantages and obstacles to a fair trial; difficulties that may arise from congested dockets; the possibility of the existence of questions arising in the area of conflict of laws; the advantage of having a local court determine questions of local law; and, all other considerations of a practical nature that make a trial easy, expeditious and economical.

Chrysler Credit, 928 F.2d at 1516 (citation omitted).



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