Opinion
Civ. No. 3:99CV-344-S
March 9, 2000.
MEMORANDUM OPINION
This matter is before the Court on motion of the defendants, Facility Pharmacy Corporation ("FPC"), Optima Healthcare Management, Inc. ("Optima"), Loyalhanna Care Center ("Loyalhanna"), Daniel J. Wukich ("Wukich"), and Nancy Amorose ("Amorose"), to dismiss for lack of personal jurisdiction. Alternatively, the defendants have moved for transfer of this action to the United States District Court for the Western District of Pennsylvania. For the reasons set forth below, the defendants' motion to transfer will be granted.
FACTS
In 1997, the plaintiff, APS, LLC ("APS"), a Kentucky corporation, contacted Optima, a Pennsylvania corporation, regarding collaboration in the establishment and management of nursing homes in Pennsylvania, Ohio, and West Virginia. APS and Optima entered into a "Preincorporation Agreement" whereby they would eventually incorporate FPC under Pennsylvania law. An APS executive signed this agreement in Pennsylvania. FPC's function was to operate and manage Loyalhanna, a skilled nursing home facility located in Pennsylvania. The defendants, Wukich and Amorose, both residents of Pennsylvania, were named directors of FPC. FPC entered into a Management Services Agreement with APS and a Marketing Services Management Agreement with Optima. FPC also entered into a Pharmaceutical Services Agreement and a Consultant Pharmacy Agreement with Loyalhanna. All of the these agreements contained Pennsylvania choice of law provisions.
After FPC began operating, the parties began having disputes. FPC apparently never showed a profit and the relationship between APS and Optima broke down in Spring 1999 giving rise to this litigation. APS alleges breach of contract and conversion on the part of FPC, and fraud on the part of Optima, Loyalhanna, Wukich, and Amorose. APS has also brought RICO claims against Wukich, Amorose, Optima, and Loyalhanna.
DISCUSSION
The defendants argue that venue is improper in this case and that the Court should transfer the action to the United States District Court for the Western District of Pennsylvania pursuant to 28 U.S.C. § 1406(a). The plaintiff claims two statutory grounds on which to establish that venue is proper in this Court. First, venue might be proper in this Court based on the venue provisions found in the RICO statutes, 18 U.S.C. § 1965(a) and (b). Subsection (a) states:
Any civil action or proceeding under this chapter against any person may be instituted in the district court of the United States for any district in which such person resides, is found, has an agent, or transacts his affairs.18 U.S.C. § 1965(a).
On review, we conclude that venue in this district is not supported by § 1965(a). Optima, Loyalhanna, and FPC are all corporations with their principal place of business in Pennsylvania. None of them have a certificate of authority to do business in Kentucky. They have no officers, agents, employees or other representatives located in Kentucky nor do they own or lease any real property in this state. They do not advertise for or solicit business in Kentucky. Furthermore, all the agreements in this case were executed in Pennsylvania and were to be performed in Pennsylvania. Wukich and Amorose are both Pennsylvania residents, and neither owns or leases any real property in Kentucky.
APS argues that venue is proper in this district because the defendants have transacted business in Kentucky. As evidence of these transactions, APS points to correspondence, telephone calls, and two visits to Kentucky by Wukich and Amorose. The defendants do not dispute that there were telephone calls and letters exchanged between the parties. They argue, however, that there were never any substantive negotiations in Kentucky and that phone calls and letters do not alone constitute the transaction of business. With respect to the visits by Wukich and Amorose to Kentucky, the defendants respond that those visits were for the sole purpose of discussing a business opportunity in Wisconsin which was wholly unrelated to the matters in this case.
This Court agrees with the defendants that the two visits on unrelated matters and the correspondence do not constitute the transaction of business in Kentucky. See Dody v. Brown, 659 F. Supp. 541, 545 (W.D.Mo. 1987) ("[A] person transacts his affairs within a particular district when he regularly conducts business of a substantial and continuous character within that district.");Hodgdon v. Needham-Skyles Oil Co., 556 F. Supp. 75, 78 (D.D.C. 1982) (finding that in order for venue to be proper under the RICO venue provision, a defendant must regularly carry on business of a substantial and continuous character within the district). In conclusion, because none of the defendants reside, are found, or transact affairs in Kentucky, subsection (a) of § 1965 is inapplicable.
Subsection (b) of § 1965, the second venue provision in the RICO statute, provides:
In any action under section 1964 of this chapter in any district court of the United States in which it is shown that the ends of justice require that other parties residing in any other district be brought before the court, the court may cause such parties to be summoned, and process for that purpose may be served in any judicial district of the United States by the marshal thereof.18 U.S.C. § 1965(b)
Subsection (b) can only be used in multi-defendant cases when at least one defendant is subject to venue in the forum under either § 1965(a) or the general venue statute, 28 U.S.C. § 1391(b).See Butcher's Union Local No. 498 v. SDC Inv., Inc., 788 F.2d 535, 539 (9th Cir. 1986); See also Southmark Prime Plus, L.P. v. Falzone, 768 F. Supp. 487, 491 (D.Del. 1991) ("[I]f there is a district where venue is proper as to every RICO defendant, without resort to § 1965(b), under normal circumstances, a court in a different district will not further the ends of justice if it exercises its discretion under § 1965(b) to bring the same litigants into a district where venue would otherwise not have been proper. On the other hand, if no district is a proper venue as to all defendants without resort to § 1965(b), and at least one defendant is subject to venue in the district pursuant to § 1965(a) or § 1391, then the interests of justice weigh heavily in favor of the court bringing the other defendants before it under § 1965(b)"). The key to § 1965(b) is that it can be used only when the "ends of justice" so require.
In order to invoke the venue provision in § 1965(b), APS would have to show that venue was proper as to at least one of the defendants under the general venue statute found in 28 U.S.C. § 1391(b), and that the "ends of justice" require bringing in the remaining defendants. Section 1391(b) provides that civil actions may be brought where a defendant resides or where a substantial part of the events or property is located:
A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.28 U.S.C. § 1391(b).
After considering both the Complaint and the undisputed facts in this case, we conclude that APS has not demonstrated that venue would be proper in this Court as to any of the defendants under § 1391(b). As mentioned above, none of the defendants reside in Kentucky. All of the alleged events or omissions which gave rise to the claims occurred in Pennsylvania. Finally, none of the defendants may be found in Kentucky. Additionally, even if venue was proper as to one of the defendants, the "ends of justice" would not be furthered by bringing all the defendants before this Court, especially because all five are clearly subject to suit in Pennsylvania.
When venue is improper, the Court may dismiss or transfer to the appropriate district. 28 U.S.C. § 1406(a). The facts indicate that this case could have been brought in the Western District of Pennsylvania. Furthermore, the interests of justice would be served by litigating the case in the district where all relevant events occurred and where almost all the parties, witnesses and relevant documents are located. See In re B.L. Peregoy, 885 F.2d 349, 352 (6th Cir. 1989) (transferring case from Ohio to Texas after finding that Texas law would apply, all of the title information was in Texas, and that key witnesses were in Texas).
For the reasons set forth above, we find that venue is not appropriate in the Western District of Kentucky. Pursuant to 28 U.S.C. § 1406(a), this action will be transferred to the Western District of Pennsylvania. A separate order will be entered herein this date in accordance with this opinion.
This 9th day of March, 2000.
ORDER
Motion having been made by the defendants, Facility Pharmacy Corporation, et al., to dismiss, or, alternatively, to transfer the case to the United States District Court for the Western District of Pennsylvania, and for the reason set forth in the memorandum opinion entered herein this date, and the Court being otherwise sufficiently advised, IT IS HEREBY ORDERED AND ADJUDGED that the defendants' motion to transfer is GRANTED and this action is TRANSFERRED to the United States District Court for the Western District of Pennsylvania.
IT IS SO ORDERED this 9th day of March, 2000.