Von Graffenreid v. Craig
| Decision Date | 14 February 2003 |
| Docket Number | No. 3-02-CV-1393-BD.,3-02-CV-1393-BD. |
| Citation | 246 F.Supp.2d 553 |
| Parties | VON GRAFFENREID, Von Burg, Kaufmann, Winzeler Asset Management, Ltd., Zurich, AG Plaintiff, v. Kevin CRAIG, as Chief Executive Officer, Chairman of the Board and Indemnitor Defendant. |
| Court | U.S. District Court — Northern District of Texas |
Robert Lee Wright, Frederick W. Reynolds, Gardere Wynne Sewell, Dallas, TX, for Plaintiff.
Philip R. Rudd, Kutak Rock, Scottsdale, AZ, for Defendants.
Defendant Kevin Craig has filed a motion to dismiss for improper venue or, in the alternative, to transfer venue to the United States District Court for the District of Arizona. For the reasons stated herein, the motion to dismiss is denied but the motion to transfer is granted.
This case arises out of a $10 million loan made to Aperian, Inc. ("Aperian"), a Delaware corporation headquartered in Phoenix, Arizona, by Pictet & Cie, a Swiss bank, and guaranteed by Plaintiff von Graffenreid, von Burg, Kaufmann, Winzeler Asset Management, Ltd., AG ("von Graffenreid"), a Swiss corporation, as agent for Karl Nicklaus, a citizen of Switzerland. The Guaranty Agreement contains certain representations made by Defendant Kevin Craig ("Craig"), an Arizona resident, both in his individual capacity and as Chairman and CEO of Aperian. More particularly, Craig represented that:
7.1.8. Each of Kevin Craig, in his individual capacity, and [Aperian], hereby severally represent, warrant and covenant to [von Graffenreid and Nicklaus] that: (i) [Aperian] and each Subsidiary has good and insurable, title to or valid and subsisting leasehold estate in, as applicable, all of its respective real Property, and good title to all of the Collateral and all of its other Property, in each case, free and clear of all Liens except for Permitted Liens and for Liens being contested in the manner provided for in Section 7.1.15; (ii) [Aperian] and each Subsidiary has paid or discharged all lawful claims that, if unpaid, might become a Lien against any of [Aperian's] or [Aperian's] Subsidiaries' Properties that is not a Permitted Lien, unless any such claim is being contested in the manner provided for in Section 7.1.15; and (iii) the Liens granted to [von Graffenreid] for the ratable benefit of [Nicklaus] under Section 5 hereof are first priority Liens, subject only to Permitted Liens.
* * * * * *
7.1.22.... Each of Kevin Craig, in his individual capacity, and [Aperian], hereby severally represent, warrant and covenant to [von Graffenreid and Nicklaus] that [Aperian] is not in default, and no event has occurred and no condition exists which constitutes, or which with the passage of time or the giving of notice or both would constitute, a default under any equipment lease, instrument or any other agreement between [Aperian] and [Hewlett-Packard] or to which [Aperian] and [Hewlett-Packard] are parties.
7.1.23. Each of Kevin Craig, in his individual capacity, and [Aperian], hereby severally represent, warrant and covenant to [von Graffenreid and Nicklaus] that: (i) Exhibit K is a complete listing of all capitalized leases of [Aperian] and its Subsidiaries; (ii) Exhibit L sets forth a complete listing of all operating leases of [Aperian] and its Subsidiaries; and (iii) that [Aperian] and its Subsidiaries are in full compliance with all of the terms of each of their respective capitalized and operating leases ...
(Def. Mot., Craig Aff., Exh. B at 14 & 17, §§ 7.1.8, 7.1.22 & 7.1.23) (emphases omitted). The Guaranty Agreement also contains an addendum whereby Craig agreed to indemnify von Graffenreid and Nicklaus against all claims, demands, lawsuits, proceedings, losses, and damages resulting from:
(a) the untruth, breach, or failure of any representation or warranty, whether oral or written, made by Craig to [von Graffenreid] or any Guarantor regarding any lien of record (including, without limitation, any liens filed of record in Delaware) against [Aperian] or any Subsidiary of [Aperian], or the status thereof;
(b) the untruth, breach, or failure of any representation, warranty or covenant made by Craig in his individual capacity that is set forth in the Agreement;
(c) the Permitted Liens, as defined in the Agreement from time to time; and
(d) any lien against [Aperian] or any Subsidiary of [Aperian] in favor of Hewlett-Packard Credit Corporation or Hewlett-Packard Company.
(Id., Craig Aff., Exh. B at 41). Craig signed the Guaranty Agreement in his individual capacity and as Chairman and CEO of Aperian. (Id., Craig Aff., Exh. B at 43 & 45). However, his personal liability is expressly limited to "Sections 7.1.8, 7.1.22 and 7.1.23 of the Agreement, and the Indemnification Addendum ..." [Id., Craig Aff., Exh. B at 45) (emphasis omitted).
Aperian, which later changed its name to Fourthstage Technologies, Inc. ("Fourthstage"), used the loan proceeds to pay off more than $30 million in existing debt in an attempt to keep its business afloat. Despite its best efforts to reduce operating expenses, Fourthstage continued to experience financial difficulties and failed to repay the $10 million loan. This required von Graffenreid and Nicklaus to perform under their guaranty with the bank. On December 31, 2001, Fourthstage filed a Chapter 11 bankruptcy proceeding in the District of Arizona. Shortly before this bankruptcy filing, von Graffenreid and Nicklaus released Craig from liability under the Indemnification Addendum in consideration for the issuance of certain warrants by Fourthstage.
On July 1, 2002, von Graffenreid sued Craig in Dallas federal court for breach of contract, negligent misrepresentation, and recission of the release.1 Craig has filed a motion to dismiss for improper venue or, in the alternative, to transfer venue to the District of Arizona. In response to the motion, von Graffenreid points to a forum selection clause in the Guaranty Agreement, which provides, in relevant part:
As part of the consideration, and regardless of any present or future domicile or principal place of business of Borrower or any Loan Party, Agent or any Guarantor, Borrower and each other Loan Party hereby consents and agrees that the district court of Dallas County, Texas, or, at Agent's option, the United States District Court for the Northern District of Texas, Dallas Division, shall have jurisdiction to hear and determine any claims or disputes between Borrower and/or any other Loan Party and Agent and/or Guarantors pertaining to this Agreement or to any matter arising out of or related to this Agreement. Borrower and each of the other Loan Parties expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower and each other Loan Party hereby waives any objection which Borrower and such Loan Party may have based upon lack of personal jurisdiction, improper venue or forum non conveniens [sic] and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court.
(Id., Craig Aff., Exh. B at 38, § 12.14) (capitalization omitted). The term "Loan Parties" is defined as "collectively, Borrower and each other Person (other than Lender, Agent and each Guarantor) which is at any time a party to any Guaranty Documents ..." ). The "Guaranty Documents" include "the Agreement, the Other Agreements and the Security Documents." (Id.). Because Craig is a "Loan Party" who agreed to be bound by the Indemnification Addendum, which unquestionably is a "Guaranty Document," von Graffenreid argues that he has consented to jurisdiction and venue in this district. The motion has been fully briefed and argued by the parties and is ripe for determination.2
A civil action where jurisdiction is founded only on diversity of citizenship must be brought in the judicial district where: (1) any defendant resides, if all defendants reside in the same state; (2) a substantial part of the events or omissions giving rise to the claim occurred; or (3) any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought. 28 U.S.C. § 1391(a). A plaintiff has the initial burden of proving that his chosen venue is proper. See Seariver Maritime Financial Holdings, Inc. v. Pena, 952 F.Supp. 455, 458 (S.D.Tex.1996).
In its complaint, von Graffenreid states that venue is proper in the Northern District of Texas because "a substantial part of the events giving rise to the claims arose in Dallas, Texas." (Plf. Orig. Compl. at 2). However, no facts are alleged in support of that assertion. Nor has von Graffenreid presented any evidence of events or omissions that occurred in this district. Instead, it now claims that venue is proper in Dallas under the forum selection clause of the Guaranty Agreement. (See Plf. Resp. at 6).3
The threshold issue before the court is whether Craig agreed to be bound by the forum selection clause in his individual capacity. Craig argues that "[w]hen he signed the agreement as an individual, he specifically and unambiguously `[ajffirmed and [a]greed' only `with respect to Sections 7.1.8, 7.1.22 and 7.1.23 of the [Guaranty] Agreement [ ] and the Indemnification Addendum thereby intending to exclude all other provisions of the Guaranty Agreement. (Def. Reply at 4) (emphasis in original). Von Graffenreid counters that the Indemnification Addendum is part of the Guaranty Agreement and subject to its general provisions, including the forum selection clause. (Plf. Resp. at 9, 113).
The Guaranty Agreement provides, and neither party contests, that it is to be construed according to Texas law. (Def. Mot., Craig Aff., Exh. B at 38, § 12.14). See also Harris v. Parker College of Chiropractic, 286 F.3d 790, 793 (5th Cir.2002) (...
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