Missouri Housing Development Com'n v. Brice
| Decision Date | 26 November 1990 |
| Docket Number | 89-1941,Nos. 89-1764,s. 89-1764 |
| Parties | MISSOURI HOUSING DEVELOPMENT COMMISSION, Appellee, v. Edward W. BRICE, Jr., Paul Goodrich, Joseph Timilty, Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Thomas E. Wack, St. Louis, Mo., for appellants.
Richard P. Sher, St. Louis, Mo., for appellee.
Before McMILLIAN, Circuit Judge, HEANEY, Senior Circuit Judge, and FAGG, Circuit Judge.
Edward W. Brice, Jr., Paul Goodrich, and Joseph Timilty (collectively referred to as "defendants") appeal a judgment of the United States District Court 1 for the Eastern District of Missouri. See Missouri Housing Development Corp. v. Brice, No. 86-1574(C)(5) (E.D.Mo. Apr. 28, 1989). On appeal, defendants argue that the district court erred in (1) denying their motion to dismiss, (2) granting summary judgment in favor of plaintiff and denying their motion for summary judgment, and (3) denying Timilty's motion to amend the judgment. For the reasons stated below, we affirm all three orders.
In 1981, Tower Village Nursing Care Center, Inc. ("Tower Village"), sought to renovate a hospital in St. Louis, Missouri, and operate it as a nursing home. After Tower Village ran into financial difficulties, its general contractor, SPCM, sued Tower Village and various state and federal government agencies which provided financing for the renovation. SPCM's lawsuit was settled after extensive negotiations, and a Memorandum of Agreement was executed on March 13, 1985 (Separate Appendix for Appellee at 27-32). Under the agreement, Lexington Management Co. ("Lexington") was to lease the nursing home from Tower Village, the Missouri Housing Development Commission ("plaintiff") was to make a loan to Tower Village, Tower Village was to execute a note to plaintiff, and Lexington's principals, Edward W. Brice, Jr., Paul Goodrich, and Joseph Timilty, all Massachusetts residents, were to guaranty the note. The SPCM lawsuit was filed in St. Louis, and the agreement resolving the suit was negotiated there.
Pursuant to the agreement, Tower Village executed a note to plaintiff for $1.95 million in principal plus 11% interest on any unpaid balance. Defendants' guaranty covered all interest and $950,000 of the principal. The guaranty agreement also provided that all payments were to be made in Kansas City, Missouri, and contained a forum selection clause providing that if defendants were sued based on the guaranty agreement, the suit was to be in Missouri. Kansas City is in the Western District of Missouri, while St. Louis is in the Eastern District of Missouri.
Tower Village quickly defaulted on the note, and plaintiff filed this action to enforce the guaranty in federal district court in the Eastern District of Missouri. Defendants moved to dismiss on the ground that the Western District of Missouri was the only appropriate venue. The district court denied the motion, on the basis that the Eastern District had "the greater weight of contacts" with this case. Missouri Housing Development Corp. v. Brice, slip op. at 3-4 (Jan. 12, 1987) () (Brice I ). Defendants then filed an answer, in which they admitted having executed the guaranty.
Plaintiff then moved for summary judgment. After defendants responded to plaintiff's motion, Lexington's lease was terminated as part of an agreement between Lexington and the U.S. Department of Housing and Urban Development. Missouri Housing Development Corp. v. Brice, slip op. at 2-3, 1988 WL 142978 (Feb. 22, 1988) (Brice II ). Defendants then filed a cross-motion for summary judgment, which alleged that the guaranty agreement was no longer binding on defendants because the agreement stated that defendants' liability would cease if the lease was terminated by HUD. The district court granted plaintiff's motion for summary judgment and denied defendants' cross-motion. The district court held, inter alia, 2 that (1) under the plain language of the lease, defendants were liable, and (2) HUD did not terminate the lease, but merely "consented to Lexington's termination of its tenancy in the premises." Id. at 3.
While the cross-motions for summary judgment were pending, Timilty denied signing the guaranty in his answers to plaintiff's request for admission and interrogatories and during his deposition. On the other hand, defendants' own memorandum in support of their motion for summary judgment continued to assert that they had signed the guaranty (Separate Appendix for Appellee at 85).
After the district court granted plaintiff's motion for summary judgment, defendants moved to amend the order of judgment to delete Timilty's name, on the ground that Timilty had not signed the guaranty agreement. The district court denied this motion based on defendants' admission in their answer that they had signed the guaranty. The district court later entered a separate order setting plaintiff's damages at slightly over $1.57 million.
On appeal, Brice and Goodrich argue that (1) venue in the Eastern District of Missouri was improper and (2) they are not liable under the guaranty agreement because HUD rather than defendants terminated Lexington's lease. Timilty appeals separately on the ground that he did not sign the guaranty agreement.
Under 28 U.S.C. Sec. 1391(a) (1988), venue in diversity cases lies "in the judicial district where all plaintiffs or all defendants reside, or in which the claim arose." Defendants reside in Massachusetts, while plaintiff is located in Jefferson City, Missouri, a city in the Western District of Missouri. Thus, plaintiff may establish venue in the Eastern District of Missouri only if the claim arose in that district.
The district court initially noted that both the Eastern and Western Districts were proper venues, because "there will be occasions when more than one district may serve as a proper venue," Brice I, slip op. at 3, citing Leroy v. Great Western United Corp., 443 U.S. 173, 185, 99 S.Ct. 2710, 2717, 61 L.Ed.2d 464 (1979) (Leroy ) (). The district court admitted that Leroy "does not make clear whether a particular forum must have a preponderance of weighty contacts or merely a substantial connection in order to be" a proper venue, but held that even under the more stringent "weight of the contacts" test, plaintiff's claim arose in the Eastern District and not the Western District. Brice I, slip op. at 3. The district court reasoned that although performance of the agreement was to occur in the Western District, the guaranty "had its genesis as a condition to settlement of litigation that was pending in the United States District Court for the Eastern District of Missouri and negotiation of the guaranty took place primarily in St. Louis ... ultimately the claim arose from a lawsuit in the Eastern District of Missouri." Id.
On appeal, defendants argue that (1) in contract cases, all claims arose at the place of performance regardless of the weight of plaintiff's other contacts, and (2) in the present case, the weight of the contacts was clearly in the Western District. 3
1. What Test Applies?
The first question the court must address is what test should be used in determining where plaintiff's claim arose. The Supreme Court has stated that:
the broadest interpretation of the language of Sec. 1391(b) that is even arguably acceptable is that in the unusual case in which it is not clear that the claim arose in only one specific district, a plaintiff may choose between those two (or conceivably more) districts that with approximately equal plausibility--in terms of the availability of witnesses, the accessibility of other relevant evidence, and the convenience of the defendant (but not of the plaintiff)--may be assigned as the locus of the claim.
Leroy, 443 U.S. at 185, 99 S.Ct. at 2717 (emphasis in original). The Court failed to state, however, whether these factors were exclusive, or how the courts should decide whether it is in fact clear that a claim arose in one district. As a result, the courts have adopted a bewildering variety of tests to ascertain where claims arose under Sec. 1391. See, e.g., Broadcasting Co. of Carolinas v. Flair Broadcasting Corp., 892 F.2d 372, 375-76 (4th Cir.1989) (Broadcasting ) (); Miceli v. Stromer, 675 F.Supp. 1559, 1564 (D.Colo.1987) (); Dody v. Brown, 659 F.Supp. 541, 550 (W.D.Mo.1987) (Dody ) (); see generally Broadcasting, 892 F.2d at 375-77 (); Dody, 659 F.Supp. at 548-50 (same).
Plaintiff argues that we should apply the "weight of the contacts" test enunciated in Broadcasting. Defendants argue, by contrast, that none of the post-Leroy tests are applicable in breach of contract actions and that contract claims always arise at the place of performance. Thus, we must consider (1) whether Leroy and later cases are applicable to contract actions and (2) if so, which of the various tests should be adopted.
Defendants argue that under Eighth Circuit precedent, "the jurisdiction where performance of a contract is expected is a place in which contractual claims arise." In re Nine Mile Ltd., 692 F.2d 56, 60 (8th Cir.1982) (per curiam) (Nine Mile ); see Gardner Engineering Corp. v. Page Engineering Co., 484 F.2d 27, 33 (8th Cir.1973) (Gardner ). We believe that defendants have misconstrued both cases.
In Nine Mile, the plaintiffs filed suit in Iowa for breach of contract and the district court transferred the case to South...
To continue reading
Request your trial
-
Electric Mobility Corp. v. Bourns Sensors/Controls
...are binding on the parties and may support summary judgment against the party making such admissions." Missouri Housing Dev. Comm'n v. Brice, 919 F.2d 1306, 1315 (8th Cir.1990). In Davis v. A.G. Edwards and Sons, Inc., 823 F.2d 105 (5th Cir.1987), the plaintiffs conceded in their complaint,......
-
Breyer v. Meissner
...by client; such admissions are statements by client's agent acting within scope of employment); see also Missouri Housing Development Comm'n v. Brice, 919 F.2d 1306, 1314 (8th Cir.1990) (admissions in pleadings binding upon parties unless withdrawn or amended); O'Neil v. Four States Builder......
-
Hanson v. Hancock County Memorial Hosp.
...Id. at 289. In accord with the decisions already discussed is that of the Eighth Circuit Court of Appeals in Missouri Housing Dev. Comm'n v. Brice, 919 F.2d 1306 (8th Cir.1990), which cited with approval the If the amendment substantially changes the theory on which the case had been procee......
-
Hammann v. 1-800 Ideas.Com, Inc.
...re Nine Mile Ltd., 692 F.2d 56, 61 (8th Cir. 1982) (per curiam), abrogation on other grounds recognized by, Mo. Housing Dev. Comm'n v. Brice, 919 F.2d 1306, 1311 (8th Cir.1990). In ruling on a motion to transfer, courts consider three general factors: (1) convenience of the parties; (2) con......