Carteret Sav. Bank, FA v. Shushan
| Decision Date | 19 November 1990 |
| Docket Number | 89-5883,Nos. 89-5908,s. 89-5908 |
| Citation | 919 F.2d 225 |
| Parties | , 18 Fed.R.Serv.3d 841 CARTERET SAVINGS BANK, FA, Appellant, v. Louis G. SHUSHAN, Donald A. Meyer, Rader Jackson, Jacqueline McPherson, Mitchell W. Herzog and Shushan, Meyer, Jackson, McPherson and Herzog. CARTERET SAVINGS BANK, FA, Petitioner, v. Louis G. SHUSHAN, Donald A. Meyer, Rader Jackson, Jacqueline McPherson, Mitchell W. Herzog and Shushan, Meyer, Jackson, McPherson and Herzog, Respondents. Honorable Nicholas H. Politan, United States District Judge for the District of New Jersey, Nominal Respondent. |
| Court | U.S. Court of Appeals — Third Circuit |
Gerald A. Liloia, Anthony J. Sylvester (argued), Andrew M. Lankler, Riker, Danzig, Scherer & Hyland, Morristown, N.J., for appellant/petitioner.
Francis X. Crahay (argued), Joseph K. Cobuzio, Tompkins, McGuire & Wachenfeld, Newark, N.J., for appellees/respondents.
Before MANSMANN, GREENBERG and SEITZ, Circuit Judges.
Plaintiff Carteret Savings Bank seeks review of the transfer of this action by the United States District Court for the District of New Jersey pursuant to 28 U.S.C. Sec. 1406(a) to the Eastern District of Louisiana. The district court transferred the case because it concluded that it did not have personal jurisdiction over the defendants. Carteret now appeals from the order of transfer and from the denial of its motion for reargument, modification or certification of the transfer order for appeal under 28 U.S.C. Sec. 1292(b). Alternatively, Carteret has filed a petition for a writ of mandamus under 28 U.S.C. Sec. 1651 asking us to direct the district court to vacate the transfer order and "reverse" the district court's jurisdictional determination. We will dismiss the appeal and partially grant the petition.
The circumstances leading to the current proceedings are as follows. Carteret, which has its principal place of business in Morristown, New Jersey, engaged Louis Shushan of the New Orleans law firm of Shushan, Meyer, Jackson, McPherson and Herzog to represent it by preparing documents for a loan by Carteret to Three Lakeway Center Partnership for construction of a large project in Louisiana. Under the terms of the loan, Lakeway assigned Carteret its rights and interests in its construction contract with Algernon Blair, Inc., the general contractor, as security. In one of the loan documents, a "Contractor's Consent and Certification" to the assignment, Carteret guaranteed obligations of Lakeway to Algernon Blair.
Lakeway declared bankruptcy and did not meet its obligations to Algernon Blair. In litigation in the United States District Court for the Eastern District of Louisiana Algernon Blair obtained a judgment against Carteret for almost $1,500,000 on Carteret's guarantee. 1
As a response to the Louisiana litigation Carteret brought the diversity action now on appeal against the Shushan firm and the individual defendants (collectively referred to as "Shushan") in the District of New Jersey. 2 The complaint alleged that Shushan breached its fiduciary duties by failing to advise Carteret that Algernon Blair had been Shushan's prior client and remained such during the negotiations relating to the Lakeway loan. Carteret charged that Shushan failed to protect Carteret's interest in the terms of the consent and certification and that if Shushan had not breached its duty Carteret would not have executed the guarantee in the form presented and thus would not have been liable in the underlying Louisiana action to Algernon Blair. Carteret sought to recover its losses from Shushan. 3
Undoubtedly, Shushan did much of its work on the loan in Louisiana. Thus, it filed an answer to Carteret's complaint which, in addition to denying any wrongdoing, asserted that the court lacked jurisdiction over it "by reason of insufficiency of minimal contact." Shushan then filed a motion to dismiss the complaint on that ground. At a hearing on this motion on May 22, 1989, the district court invited Shushan to move for a transfer of venue to Louisiana and thus did not rule on the motion to dismiss. While the court did not specify whether it contemplated that venue might be transferred under 28 U.S.C. Sec. 1404(a), providing for transfers for the convenience of parties or witnesses, or 28 U.S.C. Sec. 1406(a), authorizing transfers when venue is mislaid, it did indicate that it wanted "the essential information about forum non conveniens " and in particular mentioned the location of witnesses and documents and the situs for discovery, thereby implying that the court contemplated a transfer under the former section.
In response to the court's suggestion, though Shushan still primarily sought to have the complaint dismissed for lack of in personam jurisdiction, it filed a motion for transfer of venue. Shushan did not cite the statutory basis for the change of venue in its motion but at a hearing on the motions to dismiss and to transfer venue on June 28, 1989, Shushan said it was seeking the transfer on the grounds of forum non conveniens. During the hearing the district court indicated that it lacked in personam jurisdiction over Shushan. When Carteret then suggested that the action would be time-barred in Louisiana, the court said that it would exercise its supervisory powers and transfer the case to the Eastern District of Louisiana under section 1406(a) which provides:
The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.
Thus, on June 28, 1989, the district court executed an order, entered on June 29, 1989, reciting that:
(1) This court has no jurisdiction over the defendants in connection with the within complaint; and
(2) Under the provision of [28 U.S.C. Sec. 1406(a) ] the within matter is transferred to the United States District Court for the Eastern District of Louisiana. 4
Carteret promptly filed its motion for reargument. Alternatively it sought an order amending the order of June 29, 1989, to delete paragraph 2 providing for the change in venue and, as a second alternative, it asked for entry of an order pursuant to 28 U.S.C. Sec. 1292(b) certifying the order of June 29, 1989, "as appropriate for immediate appeal."
The district court ruled on Carteret's motion in an opinion and order of October 10, 1989. Carteret Savings Bank v. Shushan, 721 F.Supp. 705 (D.N.J.1989). 5 After reviewing the background of the case the court concluded that Shushan does "not have sufficient contacts with New Jersey for this court to exercise general jurisdiction" over it. Id. at 708. It then found that Carteret could not demonstrate that the court "can exercise specific jurisdiction by showing that [its] cause of action directly relates to [Shushan's] contacts with New Jersey and that [Shushan] voluntarily and purposefully established such contacts with New Jersey." Id. Thus, the court concluded that it could not exercise jurisdiction over Shushan.
The court next dealt with Carteret's argument that it was powerless to transfer the case under section 1406(a) authorizing transfers "in the interest of justice" if the plaintiff lays venue "in the wrong division or district." Carteret asserted that section 1406(a) was not applicable as venue was proper in the District of New Jersey under 28 U.S.C. Sec. 1391(a).
The court concluded that section 1406(a) "vests this Court with sufficient power to transfer this case, whether venue is characterized as correct or incorrect under Sec. 1391(a)." 721 F.Supp. at 709. The court explained that section 1406(a) refers to transfers if a case is filed in the wrong division or district and not wrong venue and it pointed out that in Goldlawr, Inc. v. Heiman, 369 U.S. 463, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962), the Supreme Court upheld application of section 1406(a) in a case of improper venue in which the transferring court lacked personal jurisdiction over the defendants. 721 F.Supp. at 709. The district court indicated that the Supreme Court "evidenced a clear intention to avoid 'time consuming and justice defeating technicalities' " and that the Supreme Court further concluded "that under certain circumstances it would be inequitable to dismiss a lawsuit solely because the plaintiff made a miscalculation on an uncertain and 'elusive fact of the kind upon which venue provisions often turn.' " Id. The district court then noted that the Supreme Court found that the " 'interest of justice' required transfer particularly when if the matter was dismissed the plaintiff would lose a substantial part of his cause of action due to the statute of limitations." Id. Ultimately the district court concluded that:
This Court finds that the same analysis must be applied to a plaintiff who has made a proper calculation as to the question of venue, but who has made a reasonable miscalculation on the similarly elusive question of personal jurisdiction. Fundamental concepts of fair play and substantial justice require this result. A litigant who has commenced a timely action within the federal system should not be penalized with the loss of that cause of action solely because he has made a reasonable error as to the existence of personal jurisdiction.
It is thus clear that the district court was concerned with the possibility that a new action by Carteret in Louisiana would be barred by the statute of limitations. While the district court did not address Carteret's request for certification for appeal under 28 U.S.C. Sec. 1292(b), Carteret's brief includes the cryptic explanation that "the District Court has advised that it was denied" and in fact the district court did not certify the case under 28 U.S.C. Sec. 1292(b).
Carteret then appealed from the orders of June 29, 1989, and ...
To continue reading
Request your trial
-
Database America v. Bellsouth Advertising & Pub.
...its original decision fails to carry the moving party's burden.'" G-69 v. Degnan, 748 F.Supp. 274, 275 (D.N.J.1990) (quoting Carteret Savings Bank, F.A. v. Shushan, 721 F.Supp. 705, 709 (D.N.J.1989), appeal dismissed, 919 F.2d 225 (3d Cir.1990), vacated on other grounds, 954 F.2d 141 (3d Ci......
-
Trans Penn Wax Corp. v. McCandless
...circumstances where the party seeking it demonstrates a clear and indisputable right to the writ. Carteret Sav. Bank, FA v. Shushan, 919 F.2d 225, 232 (3d Cir.1990), cert. denied, --- U.S. ----, 113 S.Ct. 61, 121 L.Ed.2d 29 (1992). This stringent standard governs our Ordinarily, a case is n......
-
In re Howmedica Osteonics Corp
...mandamus relief is appropriate? Wright , 776 F.3d at 146 ; see In re United States , 273 F.3d at 385-90 ; Carteret Sav. Bank, FA v. Shushan , 919 F.2d 225, 230-33 (3d Cir. 1990). We will apply this standard of review, turning now to the merits of the parties' dispute.C. Application of Atlan......
-
Terra Intern., Inc. v. Mississippi Chemical Corp.
...30 (3d Cir.1993) ("Generally, `orders transferring venue are not immediately appealable,'" quoting Carteret Sav. Bank, FA v. Shushan, 919 F.2d 225, 228 (3d Cir.1990)). However, some courts have found that an order transferring a case may be reviewed by a petition for a writ of mandamus. See......