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Colorado Ranchers, Inc. v. Jana Food Service, Inc.

United States District Court, District of Colorado

June 5, 2017

COLORADO RANCHERS, INC., a Colorado corporation, Plaintiff,
v.
JANA FOOD SERVICE, INC., a Texas corporation, EL CAMPESINO FOOD, LLC, a Texas limited liability company, and NADER AHMAD, an individual, Defendants.

          ORDER

          Scott T. Varholak, United States Magistrate Judge

         Magistrate Judge Scott T. Varholak This matter comes before the Court on Defendants' Motion to Dismiss for Lack of Personal Jurisdiction or, in the Alternative, to Transfer Proceeding to the Northern District of Texas (the "Motion"), filed February 28, 2017. [#8] This Court has carefully considered the Motion and related briefing, the entire case file, and the applicable case law, and has determined that oral argument would not materially assist in the disposition of the instant Motion. For the following reasons, the Motion is GRANTED to the extent it seeks transfer to the Northern District of Texas.[1]

         I. Background

         As alleged in the Complaint, Plaintiff is a Colorado corporation specializing in the production and wholesale distribution of specialty cheeses and preserved meats. [#4, ¶ 1] Defendant Jana Food Services, Inc. ("Jana") is a Texas corporation with its principal place of business in Texas, El Campesino Food, LLC ("ECF") is a Texas limited liability company, and Nader Ahmad is a Texas resident. [Id. at ¶¶ 2-4] Defendant Ahmed is the owner and principal officer/manager of both JANA and ECF.[2] [Id. at ¶ 4] Jana and ECF are distributors of food products to retail outlets. [Id. at ¶¶ 2-4]

         The instant dispute arises out of a Distributor Agreement (the "Agreement") originally entered into by Plaintiff and Jana. [Id. at ¶ 9] Pursuant to the Agreement, Jana was granted the "exclusive and non-assignable right" to sell Plaintiffs products "in the Dallas-Fort Worth metroplex" for a term of two years. [Id. at ¶ 10] Mr. Ahmad signed a Personal Guarantee ("Personal Guarantee One") whereby he guaranteed payment of any sums Jana owed Plaintiff. [Id. at ¶ 16]

         Within a few weeks of signing the Agreement, Mr. Ahmad approached Plaintiff with a request that he be allowed to operate as a distributor through a different company that he had recently established, ECF, without having to sign a new Agreement. [Id. at ¶ 19] Plaintiff agreed, but required Mr. Ahmad to sign a second Personal Guarantee for the debts of ECF. [Id. at ¶ 21(b)] Mr. Ahmad agreed and signed a Personal Guarantee of any sums ECF owed Plaintiff ("Personal Guarantee Two"). [Id. at ¶ 22]

         On January 10, 2017, Plaintiff filed its Complaint in Denver District Court, alleging that Jana and ECF currently owe Plaintiff $125, 202.96 pursuant to the Agreement. [Id. at ¶ 35] The Complaint brings actions for breach of the Agreement, breach of the Personal Guarantees, breach of implied obligations and covenants of good faith and fair dealing, alter ego, fraud and unjust enrichment. [#4] On February 21, 2017, Defendants removed the action to this Court. [#1] One week later, Defendants filed the instant Motion seeking dismissal for lack of personal jurisdiction or, in the alternative, transfer of the proceedings to the Northern District of Texas. [#8]

         In support of the Motion, Defendants submitted a Declaration of Nader Ahmad. [#8-1] In it, Mr. Ahmad explains that Jana and ECF operate exclusively in Texas and have never sold any products to any customers in Colorado. [Id. at ¶¶ 2-3] Mr. Ahmad further declares that neither Jana nor ECF has any employees or offices in Colorado, and that none of Defendants owns any property in Colorado. [Id. at ¶¶ 4-5] Aside from distributing products for Plaintiff, all of which is distributed in Texas, neither Jana nor ECF have ever conducted business in Colorado. [Id. at ¶¶ 6, 8] As part of Defendants' dealings with Plaintiff, Mr. Ahmad traveled to Colorado on one occasion, to sign the Agreement. [Id. at ¶ 9]

         In contrast to Defendants' limited contacts with Colorado, Mr. Ahmad declares that Plaintiff employs personnel in Texas to conduct demonstrations of Plaintiff's products at retail outlets. [Id. at ¶ 12] Jana and ECF "routinely coordinated their marketing efforts in Texas outlets with these Texas-based representatives." [Id. at ¶¶ 12-13] Mr. Ahmad also has often met with Plaintiff's representatives in Texas. [Id. at ¶ 11] Mr. Ahmad asserts that one of the areas of dispute between Plaintiff and Defendants involves Plaintiff's alleged attempts to sell directly to retailers in the Dallas-Fort Worth area, contrary to the exclusive distribution rights set forth in the Agreement. [Id. at ¶¶ 16-17] According to Mr. Ahmad, these exclusive distribution disputes are the reason why Defendants have not paid Plaintiff the amounts allegedly due. [Id. at ¶ 19]

         On March 28, 2017, Plaintiff filed its Opposition to the Motion. [#17] In support of its Opposition, Plaintiff submitted an Affidavit of Gabriel Robles, Plaintiffs President and majority owner. [#17-1] Mr. Robles explains that in September 2014, he was contacted by a Jana representative about Jana becoming a distributor for Plaintiff.[3][#17-1 at ¶ 7] From September 2014 through December 2014, Jana representatives made numerous calls to Plaintiff and "mounted a campaign" to convince Plaintiff to work through Jana in the Dallas-Fort Worth market. [Id. at ¶ 9] Mr. Robles traveled to Texas to meet with Mr. Ahmad. [Id. at ¶ 11] During the week of February 22, 2015, Mr. Ahmad came to Denver, received training and ultimately signed the Agreement.[4] [Id. at 14] According to Mr. Robles, "[h]ad Mr. Ahmad not made the repeated attempts to convince [Plaintiff] to allow it to be a distributor, with what we now know to be false representations and promises, [Plaintiff] would never have entered into any business relationship with Mr. Ahmad or his companies." [Id. at ¶ 22]

         Defendants filed their Reply in Support of Defendants' Motion on April 21, 2017. [#20] This Court had previously entered a Scheduling Order on March 28, 2017. [#16] Pursuant to that Scheduling Order, the discovery cut-off is November 13, 2017, and the dispositive motions deadline is November 20, 2017. [Id. at 10] Trial has not yet been set.

         II. Analysis

         "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 quotations and citations omitted). The statute was intended to revise the forum non conveniens doctrine and "[c]ourts therefore enjoy 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). Nonetheless, Section 1404 "does not allow a court to transfer a suit to a district which lacks personal jurisdiction over the defendants, even if they consent to suit there." Id. The party moving to transfer a case pursuant to Section 1404 bears the burden of establishing that the existing forum is inconvenient. Id.

         Here, there is no dispute that the case could have been brought in the Northern District of Texas as that district has personal jurisdiction over all Defendants. As a result, the only issue is whether Defendants have met their burden of showing that the existing forum is inconvenient such that the interests of justice support transferring the case to the ...


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