Smith v. Alder Branch Realty Ltd.

• Decision Date: 21 November 1996
• Docket Number: No. 94-CV-1476.,94-CV-1476.
• Citation: 684 A.2d 1284
• Parties: Robert H. SMITH, et al., Appellants, v. ALDER BRANCH REALTY LIMITED PARTNERSHIP, Appellee.
• Court: D.C. Court of Appeals

684 A.2d 1284

Robert H. SMITH, et al., Appellants, v. ALDER BRANCH REALTY LIMITED PARTNERSHIP, Appellee.

No. 94-CV-1476.

District of Columbia Court of Appeals.

Argued November 16, 1995.

Decided November 21, 1996.

Jeffrey B. Coopersmith, with whom Eugene D. Gulland, Washington, DC, for appellants Robert H. Smith and Charles E. Smith Management, Inc., and William O. Bittman and Alexander P. Starr for appellant Arthur A. Birney, were on the joint brief, for appellants.

Paul E. Kalb, with whom Thomas C. Green and Mark D. Hopson were on the brief, Washington, DC, for appellee.

Before TERRY, KING and RUIZ, Associate Judges.

RUIZ, Associate Judge:

This is an appeal from a denial of a motion to dismiss for forum non conveniens. The principal issue is whether in determining that this is not a "foreign litigation" the trial court erred in taking into account defendants-appellants' substantial connection with the District of Columbia and the residence in the District of the general partner of plaintiff-appellee, Alder Branch Realty Limited Partnership, which is organized under Maryland law. We hold that on the basis of the record in this case, the trial court did not err in considering the appellants' contacts with the District of Columbia as well as the residence of Alder Branch's general partner when it exercised its discretion in refusing to dismiss for forum non conveniens. Furthermore, we hold that the trial court did not abuse its broad discretion in its analysis of the public and private factors to be considered in evaluating a motion to dismiss for forum non conveniens. Therefore, we affirm.

I.

This is an action for breach of fiduciary duties against appellants Robert H. Smith (Smith) and Arthur A. Birney as general partners of Plaza Associates Limited Partnership, and against appellant Charles E. Smith Management, Inc. as the provider of management and maintenance services in buildings owned by Plaza Associates. The buildings owned by Plaza Associates are part of the Crystal City complex, a residential, commercial and retail development located in Virginia, just across the Potomac River from the District of Columbia. Appellee, Alder Branch, plaintiff in the trial court, owns an 8.28% limited partnership interest in Plaza Associates. According to the complaint, the stock of Smith Management is owned by Smith, his brother-in-law and their spouses.

In its complaint, Alder Branch alleges that Smith and Birney caused Plaza Associates to favor several business entities in a manner which benefited Smith, his family and associates, to the detriment of Plaza Associates and its limited partners. In particular, Alder Branch contends that the fees paid to Smith Management are excessive, that Plaza Associates has provided below-market loans to other limited partnerships controlled by Smith, and that Plaza Associates bought out a limited partnership interest owned by the Smith Trust, of which Smith is a beneficiary, at an excessive price.

About three weeks after Alder Branch's complaint had been served on them, appellants moved to dismiss for forum non conveniens. In the motion, they contended that public interest required the courts of the District of Columbia to abstain from hearing the case. To support their contention, they pointed to the facts that Plaza Associates is a Virginia limited partnership governed by Virginia law, that Alder Branch is a Maryland limited partnership that is not registered to do business in the District of Columbia, and that litigation between at least some of the parties was already pending in Virginia, particularly in light of the alleged "congestion" in the District of Columbia courts.

In opposition, Alder Branch contended that its general partner, Joseph Henderson, resides and works in the District of Columbia, that on the other side Birney resides and maintains offices in the District and Smith Management is incorporated in the District and has its principal place of business in the District. Alder Branch also alleged that each of the appellants conducts extensive business in the District of Columbia, that some of the funds wrongfully diverted from Plaza Associates went to Smith-controlled or related entities in the District, that some of the transactions involved in establishing and operating Plaza Associates occurred in the District, and that evidence to be obtained from third-parties existed in the District.¹

The trial court denied appellants' motion to dismiss for forum non conveniens. It found that the only private interest factor present was Alder Branch's choice of forum, which, because Alder Branch's "most interested limited partner sic . . . resides in this jurisdiction. . . may ... be, to some extent, diluted and less compelling than if plaintiff were fully and unequivocally a District of Columbia resident." On the public interest side, however, the trial court found that the action could not be considered a

"foreign litigation" because principals and parties reside here, important aspects of the challenged business activity either occurred here or had appreciable consequence here . . . . In addition, this litigation holds considerable significance for the District of Columbia ... inasmuch as defendants' extensive business operations permeate this community and extend to commerce, banking, commercial real estate, and residential real estate.

The trial court also rejected appellants' contention that the court should not hear the case because of the possibility that it may have to apply the law of Virginia, recognizing that the courts of the District of Columbia have substantial experience with the law of neighboring jurisdictions.

II.

This court permits interlocutory appeals from orders denying a motion to dismiss for forum non conveniens. Frost v. Peoples Drug Store, 327 A.2d 810, 812-13 (D.C.1974); see also Jenkins v. Smith, 499 A.2d 128, 128 (D.C.1985) (en banc) (per curiam) (declining to overrule Frost). We have articulated the following standard for reviewing the trial court's exercise of discretion in deciding motions to dismiss for forum non conveniens:

Trial court rulings on forum non conveniens motions are entitled to receive considerable deference . . . . We will not reverse ... unless presented with clear evidence that the trial court abused its broad discretion.

. . . Unlike our review of most acts of judicial discretion, however, our review of rulings on forum non conveniens motions includes an independent evaluation of the pertinent factors . . . .

. . . .

It should come as no surprise, given the trial court's broad discretion, that only rarely have we reversed rulings either way. . ., even though such rulings receive closer scrutiny than most exercises of trial court discretion.

Jenkins v. Smith, 535 A.2d 1367, 1369-70 (D.C.1987) (en banc) (per curiam) (emphasis added) (citations omitted); accord, e.g., Kaiser Found. Health Plan of Mid-Atlantic States, Inc. v. Rose, 583 A.2d 156, 158 (D.C. 1990); Dunkwu v. Neville, 575 A.2d 293, 294 (D.C.1990).

We interpret the standard of review to mean that, first, we apply "close scrutiny" to the specific factors identified and evaluated by the trial court; once we are satisfied that the trial court took the proper factors into account, we adopt a deferential approach in determining whether the trial court's decision fell within the "broad discretion" committed to it. Given that standard of review, we pay particular attention to the reasons articulated by the trial court for its decision. See also Beard v. South Main Bank, 615 A.2d 203, 205-06 (D.C.1992) (remanding where trial court failed to give reasons for its denial of motion to dismiss for forum non conveniens).

Although the authority to dismiss for forum non conveniens is conferred by statute,² this court has adopted the forum non conveniens analysis articulated by the Supreme Court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). E.g., Ussery v. Kaiser Found. Health Plan of Mid-Atlantic States, Inc., 647 A.2d 778, 779-80 (D.C.1994). Under Gulf Oil, the factors to be considered in deciding whether to dismiss for forum non conveniens comprise two categories, "the private interest of the litigants" and the "public interest" of the forum. 330 U.S. at 508, 67 S.Ct. at 843. The private factors emphasize the burden and benefits accruing to the parties of litigating in the plaintiff's chosen forum, as compared to other potential fora. See id. (listing access to proof, compulsory process, view of premises, and enforceability of judgment). The public factors emphasize the burden imposed on the forum in relation to its interest in the litigation, as well as the interest of other potential fora in addressing the dispute locally. See Gulf Oil, 330 U.S. at 508-09, 67 S.Ct. at 843 (listing congestion of courts, jury duty by people of community having no relation to dispute, desirability of "cases which touch the affairs of many persons being tried in their view and reach rather than in remote parts of the country where they can learn of it by report only," and the "appropriateness. . . of trying the case in a forum that is at home with the state law that must govern").

On appeal, appellants contend that the trial court gave too much weight to their presence in and contacts with the District of Columbia, as well as to Alder Branch's choice of forum. They contend that because there were no significant private interests, the public interest should be decisive. According to appellants, because the buildings owned by Plaza Associates are located in Virginia, Plaza Associates is organized under the law of Virginia, which would apply to the claims at issue, and the courts of Virginia are allegedly less congested than District courts, the public interest required that the complaint be dismissed.

We disagree that the trial court had no discretion but to dismiss for forum non conveniens. The trial court considered all the relevant private...