Box v. Ameritrust Texas, NA

• Decision Date: 29 December 1992
• Docket Number: No. 2:92cv0089.,2:92cv0089.
• Citation: 810 F. Supp. 776
• Parties: Cloyce K. BOX and Thomas D. Box, Plaintiffs, v. AMERITRUST TEXAS, N.A.; Bank One Texas, N.A.; The Bank of New York; Lloyds Bank, PLC; National Bank of Canada; Banque Worms; and Bank of America National Trust and Savings Association, Defendants.
• Court: U.S. District Court — Eastern District of Texas

810 F. Supp. 776

Cloyce K. BOX and Thomas D. Box, Plaintiffs, v. AMERITRUST TEXAS, N.A.; Bank One Texas, N.A.; The Bank of New York; Lloyds Bank, PLC; National Bank of Canada; Banque Worms; and Bank of America National Trust and Savings Association, Defendants.

No. 2:92cv0089.

United States District Court, E.D. Texas, Marshall Division.

December 29, 1992.

Carl R. Roth of Jones, Jones, Curry & Roth, Marshall, TX, William Maston Boyd of Boyd, Veigel & Hance, McKinney, TX, for plaintiffs.

George H. Tarpley, Samuel M. Stricklin, and Robert J. Taylor of Sheinfeld, Maley & Kay, P.C., Dallas, TX, for defendants.

ORDER

HALL, District Judge.

CAME ON TO BE HEARD THIS DAY the Motion to Transfer Venue of Defendants Ameritrust Texas, N.A., Bank One Texas, N.A., The Bank of New York, Lloyds Bank, PLC, National Bank of Canada, Banque Worms, and Bank of America National Trust and Savings Association, (the "Bank Group"). This Court, after reviewing the Motion, finds that it is not well taken.

I. BACKGROUND

This case arises out of a loan agreement between Box-Crow Cement Company, L.P. ("Box-Crow") and the Bank Group whereby the Bank Group committed to loan approximately $100 million for the construction of a cement plant in Midlothian, Texas. As part of the loan transaction, the Bank sought and was granted by Plaintiff Cloyce K. Box a lien upon 329 acres of real property in Collin County, Texas as collateral to secure repayment of Box-Crow's debt. Cloyce Box also entered into a Collateral Purchase Agreement whereby he agreed to purchase, on demand by the Bank Group, the Bank Group's lien upon the Collin County realty for $25 million, such amount to be applied to Box-Crow's debt to the Bank Group.

Plaintiffs assert that the Bank Group's actions in requiring Cloyce Box to enter into the Collateral Purchase Agreement to guarantee Box-Crow's loan violate the Bank Tying Act, 12 U.S.C. § 1971 et seq. Plaintiffs seek injunctive relief to prevent the Bank Group from enforcing the agreements, and money damages for injuries Cloyce Box has sustained to his business and property as a result of the actions of the Bank Group. Defendants now ask the Court to transfer this case to the Dallas Division of the United States District Court for the Northern District of Texas.

II. DISCUSSION

Plaintiffs assert that venue is mandatory in the Eastern District of Texas under the common law "local action" doctrine. Defendants assert that a transfer is appropriate because the parties executed a forum selection clause providing for venue in Dallas, and because a transfer of this action is appropriate under 28 U.S.C. § 1404(a). The Court will address each of these issues in turn.

A. "Local Action" Doctrine

Plaintiffs assert that venue is mandatory in this district under the "local action" doctrine because the suit instituted by Plaintiffs against the Bank Group seeks the removal of a deed of trust lien as an encumbrance on real estate located within the Eastern District of Texas. Under the local action doctrine, an action involving real property, as opposed to a transitory action, must be brought within the territorial boundaries of the state in which the land is located. Hayes v. Gulf Oil Corp., 821 F.2d 285, 287 (5th Cir.1987); see also 15 Wright, Miller & Cooper, Federal Practice & Procedure; Jurisdiction and Related Matters 2d § 3822 at 202-204.

The distinction between local actions and transitory actions finds its American roots in Livingston v. Jefferson, Fed.Cas. No. 8,411 (C.C.D.Va.1811). This case arose during the presidency of Thomas Jefferson when United States marshals, acting on President Jefferson's instructions, forcibly ejected Edward Livingston, a Louisiana landowner, from land along the Mississippi River in New Orleans. Livingston sued the by-then former president in a federal court in Virginia for an alleged trespass to his land. See 4 Beveridge, Life of John Marshall, pp. 100-116 (1919).

A distinguished panel composed of District Judge John Tyler, father of the future President of the same name, and Chief Justice John Marshall, namesake of this Division of the Eastern District, dismissed the action. Chief Justice Marshall wrote that "actions are deemed transitory, where transactions on which they are founded, might have taken place anywhere ... but are local where their cause is in its nature necessarily local." Id. at 664. Accordingly, the Chief Justice, sitting as a circuit judge, found that an action for trespass to land in Louisiana was local, and could not be heard in a Virginia court.

Since Livingston, the common law local action doctrine has become ingrained in American jurisprudence, with state and federal courts alike recognizing and applying the rule. See, e.g., Louisville & N.R. Co. v. Western Union Telegraph Co., 234 U.S. 369, 34 S.Ct. 810, 58 L.Ed. 1356 (1914); Miller v. Miller, 715 S.W.2d 786, 788 (Tex. App. — Austin 1986, writ ref'd n.r.e.).

The United States Court of Appeals for the Fifth Circuit maintains what it recently termed a "questionable distinction" between the local action doctrine and other matters of federal jurisdiction and venue by holding that the law of the state in which the property is located must govern in the determination of what constitutes "local action." See, e.g., Trust Company Bank v. United States Gypsum Company, 950 F.2d 1144 (5th Cir.1992). This is in contrast to the usual rule, which is that federal law, not state law, controls the outcome of subject matter jurisdiction and venue disputes. See Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction and Related Matters 2d § 3822 at 207. Commentators and the Fifth Circuit itself attribute the difference to its adherence to Chateau Lafayette Apartments, Inc. v. Meadow Brook National Bank, 416 F.2d 301 (5th Cir.1969), in which the Fifth Circuit relied on the Supreme Court's opinion in Huntington v. Attrill, 146 U.S. 657, 669-670, 13 S.Ct. 224, 228-29, 36 L.Ed. 1123 (1892), which apparently misread Chief Justice Marshall to have stated that state law should control the determination of what actions are local, when in fact he stated just the opposite. Id. at 208 and n. 25; Trust Company Bank, supra, 950 F.2d at 1149-1150. Fortunately the difference is not of great practical importance for in most instances state law has developed in accordance with the federal decisions. Id. at 208-209; 950 F.2d at 1149.

The relevant local action statute, therefore, is Tex.Civ.Prac. & Rem.Code, § 15.011, which provides:

Actions for recovery of real property or an estate or interest in real property, for partition of real property, to remove encumbrances from the title to real property, or to quiet title to real property shall be brought in the county in which all or a part of the property is located.

Texas courts have held that this section must be strictly construed, and that it only applies where suit is clearly within one of the categories set out therein. Scarth v. First Bank & Trust Co., 711 S.W.2d 140 (Tex.App. — Amarillo 1986, no writ). Further, courts have held that this section does not govern "where title to land was involved only incidentally or secondarily, but only where the title to the land is the `dominant purpose' of the lawsuit." Id.; Stiba v. Bowers, 756 S.W.2d 835, 839 (Tex.App. — Corpus Christi 1988, no writ). The dominant purposes of the lawsuit is a question of law for the court. Evans v. Speed, 339 S.W.2d 257 (Tex.Civ.App. — Fort Worth 1960, writ dism'd w.o.j.). The Court must ascertain the dominant purpose solely from the face of the plaintiff's complaint, including the facts alleged, the rights asserted, and the relief requested therein. Stiba, 756 S.W.2d at 839.

In National Advertising Co. v. American Bank of Waco, 622 S.W.2d 483 (Tex. App. — Waco 1981, writ dism'd w.o.j.), the bank sued the defendant in McLennan County to recover on a promissory note payable in that county, and to foreclose liens on real property that secured the note. Defendant filed a plea of privilege to be sued in Harris County, where the real property was located. The appellate court affirmed the trial court's denial of the plea, holding that the dominant purpose of the bank's suit, to secure judgment on the note and foreclose on the security, was not sufficiently related to the real property to compel application of the statute. Id. at 485. See generally, Dickerson & Jordan, Mandatory Venue Under Section 15.011 of the Texas Civil Practice and Remedies Code: Boundaries and Procedures, 54 Tex.B.J. 162 (1991).

In this case, Plaintiffs claim that § 15.011 is applicable because the dominant purpose of the lawsuit is to remove the encumbrance on the Collin County real estate. After carefully examining the Plaintiffs' complaint, the Court is not persuaded that removal of the encumbrance is the "dominant purpose" of the lawsuit. The dominant purpose of this lawsuit is to recover under the provisions of the Bank Tying Act, and to prevent the enforcement of the Collateral Purchase Agreement, neither of which are sufficiently related to the property in Collin County to compel application of the statute. Nor does this suit fall within the equitable rights or bad faith and fraud exceptions to § 15.011. 54 Tex.B.J. at 162. The Court therefore holds that venue in the Eastern District may not properly be predicated on the "local action" doctrine codified in Tex.Civ.Prac. & Rem.Code § 15.011.

B. Forum Selection Clause

Defendants assert that a transfer of this action is appropriate because the parties executed as part of the First Amendment to the Collateral Purchase Agreement a forum selection clause which provides that venue for any dispute shall be in the county or judicial district of the Agent's principal place of business. The Agent at the time the First Amendment was executed was the Deposit Insurance Bridge Bank, N.A. (successor to MBank Dallas, N.A.), which maintained its principal place of business in Dallas, Texas, and the Agent...