Brown v. Emery Fed. Credit Union

Decision Date31 March 2022
Docket NumberDLB-21-591
PartiesANGELIA BROWN, et al., Plaintiffs, v. EMERY FEDERAL CREDIT UNION, Defendant.
CourtU.S. District Court — Southern District of Ohio


Angelia Brown, Michael and Sharlene Ellis, Joseph Taylor, and Angelia (Miller) Mincey, all of whom received residential home mortgage loans originated or brokered by defendant Emery Federal Credit Union (“Emery” or “Credit Union”), bring the instant action in which they allege violations of the Real Estate Settlement Procedures Act (“RESPA”) and the Racketeer Influence Corrupt Organizations Act (RICO). ECF 1. Emery has moved to transfer the case to the Southern District of Ohio pursuant to 28 U.S.C. § 1404. ECF 18. It argues a forum-selection clause in a contract to which plaintiffs are bound requires transfer of this case to Hamilton County Ohio, where a federal court in the Southern District of Ohio is located. ECF 18. The motion is ripe for disposition. ECF 27 & 29. The Court finds that the mandatory forum-selection clause covers the claims at issue in this case and that it would not be unreasonable to enforce it. Because the clause provides that plaintiffs' claims must be brought in Hamilton County, Ohio, the motion to transfer is granted.[1] I Background

This case involves an allegedly illegal kickback agreement between Emery and All Star Title, Inc. (“All Star”), for which plaintiffs claim to have paid the price. For the purposes of the pending motion to transfer, the underlying dispute is relevant to the extent it implicates a forum-selection clause Emery argues prevents this Court from adjudicating this case. Indeed, this case is predicated on another case filed in and dismissed without prejudice by the Southern District of Ohio. See Solis v. Emery Fed. Credit Union, 459 F.Supp.3d 981, 996 (S.D. Ohio 2020).

Plaintiffs refinanced mortgage loans with Emery's assistance. Emery, in turn, referred plaintiffs to All Star for settlement services. Plaintiffs allege they paid illegitimate and inflated fees for those services, unwittingly and unwillingly funding an illegal kickback agreement whereby All Star defrayed Emery's marketing costs in exchange for the referrals. In support of these allegations, plaintiffs attached numerous documents to their complaint, most of which apparently evidence emails between All Star and representatives from a variety of lenders and Emery. According to plaintiffs, these emails and other documents showing the details of the plaintiffs' loans and closing costs establish Emery's liability under RESPA and RICO. But that issue is not before the Court today. Nor does the pending motion to transfer more than tangentially touch upon the merits of those claims. Rather, the motion to transfer primarily presents two questions: whether the contract containing the forum-selection clause is valid and, if so, whether it should be enforced.

Attached to Emery's motion to transfer are “Membership Application and Ownership Information” forms that the plaintiffs filled out and signed.[2] According to Troy Cyrus, Emery's compliance manager, [i]n order to obtain a mortgage loan from Emery FCU, a borrower who is not already a member of Emery FCU must sign up to join the credit union.” ECF 18-2, ¶ 6. Each plaintiff who filled out an application signed an agreement that states:

By signing below, I/we agree to the terms and conditions of the Membership and Account Agreement, Truth-in-Savings Disclosure, Funds Availability Policy Disclosure, if applicable, and to any amendment the Credit Union makes from time to time which are incorporated herein. I/We acknowledge receipt of a copy of the agreements and disclosures applicable to the accounts and services requested herein. If an access card or EFT service is requested and provided, I/we agree to the terms of and acknowledge receipt of the Electronic Fund Transfers Agreement and Disclosure.

ECF 18-3 - 18-6. While plaintiffs uniformly affirm they do not recall signing the applications, they also unanimously identify the signatures on the applications as their own. ECF 27-1 - 27-4.

Also attached to Emery's motion to transfer is a copy of the Membership and Account Agreement (“MAA”) in effect at the time the plaintiffs signed the applications. ECF 18-7. It begins, “This Agreement covers your rights and responsibilities concerning your accounts and the rights and responsibilities of the Credit Union providing this Agreement.” ECF 18-7, at 2. The MAA contains a forum-selection clause: “As permitted by applicable law, you agree that any legal action regarding this Agreement shall be brought in the county in which the Credit Union is located.” ECF 18-7, ¶ 34. Plaintiffs concede Emery is incorporated and has its principal place of business in Hamilton County, Ohio. ECF 9, ¶ 14. The MAA contains another clause relevant to the pending motion. It provides that [a]ny conflict regarding what you and our employees say or write will be resolved by reference to this agreement.” ECF 18-7, ¶ 17.

II. Discussion

Emery moves to transfer this case to the Southern District of Ohio pursuant to 28 U.S.C. § 1404(a). That statute provides: “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) “permits transfer to any district where venue is also proper . . . or to any other district to which the parties have agree by contract or stipulation. Section 1404(a) therefore provides a mechanism for enforcement of forum-selection clauses that point to a particular federal district.” Atl. Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas, 571 U.S. 49, 59 (2013). [A] proper application of § 1404(a) requires that a forum-selection clause be ‘given controlling weight in all but the most exceptional cases.” Id. at 59-60 (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring)); see also BAE Sys. Tech. Sol. & Servs., Inc. v. Republic of Korea Def. Acquisition Program Admin., 884 F.3d 463, 471 (4th Cir. 2018).

When deciding whether to grant a motion to transfer venue under § 1404(a), courts “ordinarily” weigh several factors, including convenience to the parties and witnesses and the plaintiffs' choice of forum. Atl. Marine Const. Co., 571 U.S. at 62-63. But [t]he calculus changes . . . when the parties' contract contains a valid forum-selection clause, which represents the parties' agreement as to the most proper forum.' Id. (quoting Stewart 487 U.S. at 31). In such circumstances, the plaintiff's “choice of forum merits no weight, ” and the Court “should not consider arguments about the parties' private interests.” Id. at 63-64. The Court may consider only public-interest factors. Id.

Additionally, “a federal court interpreting a forum selection clause must apply federal law in doing so.” Albemarle Corp. v. AstraZeneca UK Ltd., 628 F.3d 643, 650 (4th Cir. 2010). Federal law generally favors enforcement of forum-selection clauses. Id. at 649. Valid forum-selection clauses are presumptively enforceable when (1) the clause is “mandatory rather than permissive, ” BAE Sys. Tech. Sol. & Servs., 884 F.3d at 470, and (2) “the claims fall within the scope of the forum-selection clause, ” Evans v. Cantor Ins. Grp., No. GJH-21-617, 2021 WL 4951917, at *3 (D. Md. Oct. 25, 2021) (citing Open Text Corp. v. Grimes, 262 F.Supp.3d 278, 287 (D. Md. 2017); Olawole v. Actionet, Inc., No. PX-16-3506, 2017 WL 1230821, at *2 (D. Md. Apr. 4, 2017)). A plaintiff may overcome the presumption of enforceability by demonstrating enforcement of the clause would be unreasonable. Albemarle Corp., 628 F.3d at 649; BAE Sys. Tech. Sol. & Serv., 884 F.3d at 471.

Courts outside the Fourth Circuit deciding a motion to transfer under § 1404(a) have considered “evidence external to the complaint.” Anderson v. TransUnion, LLC, No. 17-1813, 2018 WL 334495, at *3 n.2 (E.D. Pa. Jan. 9, 2018); Panaserve, LLC v. Trion Sols., Inc., No. 19-cv-16496-NLH, 2021 WL 2644122, at *2 n.3 (D.N.J. June 29, 2021). The parties ask the Court to do so here.

A. Validity of the Contract

Before the Court considers whether the forum-selection clause should be enforced, the Court first addresses the threshold question of whether the MAA, the contract containing the clause, is valid. Plaintiffs argue the forum-selection clause should not be enforced because the contract is invalid for lack of consideration and mutual assent. Defendant disagrees, arguing that the MAA was supported by valid consideration and that the plaintiffs agreed to be bound by its terms. The parties do not squarely address whether the Court should look to Maryland or Ohio law to resolve these issues. Plaintiffs cite Maryland law; defendant cites Ohio law. Because there is no meaningful difference between the states' laws on consideration and mutual assent, the Court cites and applies the law of both states.

The Court first addresses mutual assent. Plaintiffs argue that they did not assent to the terms of the MAA because they did not sign the MAA. ECF 27, at 18-22. “Manifestation of mutual assent requires that each party make a promise or begin to render performance.” Costner Consulting Co. v. U.S. Bancorp, 960 N.E.2d 1005, 1010 (Ohio Ct. App. 2011); see Cochran v. Norkunas, 919 A.2d 700, 708 (Md. 2007) (“Manifestation of mutual assent includes two issues: (1) intent to be bound, and (2) definiteness of terms.”).

In their applications to become members of the Credit Union, the plaintiffs signed a statement that directly referenced the MAA and indicated their agreement to its terms...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT