WDVA Judge Grants Motion to Change Venue to EDVA

Judge Norman K. Moon recently issued an opinion regarding a motion to change venue in Greenberry’s Franchising Corp. v. Alice Y. Park et al.  Plaintiff Greenberry’s Franchising Corporation (“Greenberry’s”) brought an action against Defendants Alice Y. Park, Brian T. Park, GNT Enterprises, Inc. (“GNT”), Anthony D. Han, and Han Holding, Inc. (“Han Holding”) (collectively “Defendants”) for trademark infringement in violation of the Lanham Act, 15 U.S.C. §§ 1051 et seq. and various Virginia state law and common law claims.  Greenberry’s filed suit in the United States District Court for the Western District of Virginia, Charlottesville Division, on August 12, 2010.  The matter before the Court was the Motion of Defendants Alice Y. Park, Brian T. Park and GNT to Change Venue, the Motion of Defendants Anthony D. Han and Han Holding, Inc. to Adopt and Conform, and the Motion of Defendant Han Holding, Inc. to Dismiss All Claims Against Han Holding, Inc. for Failure to State a Claim Upon Which Relief May be Granted.  Judge Moon granted the motion to change venue and the motion to adopt and conform, but did not decide the motion to dismiss because the matter will be transferred to the United States District Court for the Eastern District of Virginia, Alexandria Division.

Greenberry’s first entered into a franchise agreement to operate a Greenberry’s coffee shop in Leesburg, Virginia with MHG Leesburg, LLC (“MHG”), which is not a party to this action.  MHG transferred the Leesburg Franchise to Alice Park with Greenberry’s consent.  Pursuant to that transfer, Greenberry’s, Alice Park and MHG entered into a Transfer and Release Agreement (“Transfer Agreement”), thereby transferring all right, title and interest of MHG in the franchise to Alice Park.  The Transfer Agreement also contained a forum selection clause that selected “a court of competent jurisdiction within the City of Charlottesville or County of Albemarle, Virginia.”  Greenberry’s and Alice Park also executed a new Franchise Agreement which did not contain a forum selection clause.

Greenberry’s alleged that, without authorization from Greenberry’s, Alice Park transferred her Leesburg Franchise to either or both of Han and Han Holding, giving it or them access to and use of the Greenberry’s proprietary system relating to the establishment, development, and operation of a coffee shop and café.  The complaint stated ten counts, all arising from Alice Park’s transfer of the Leesburg Franchise.  Defendants moved to transfer the venue to the Eastern District of Virginia, Alexandria Division, pursuant to 28 U.S.C. § 1391(b) or 28 U.S.C. § 1404.

Venue in a civil action wherein jurisdiction is not founded solely on diversity of citizenship is governed by 28 U.S.C. § 1391(b), which provides in pertinent part that venue is proper only “in a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred….”  When venue is challenged, the burden is on the plaintiff to prove that venue is proper in the chosen forum for each defendant.  Furthermore, even where venue is proper, “a district court may transfer any civil action to any other district or division where it might have been brought” if such transfer is for the convenience of the parties and witnesses and in the interests of justice.  28 U.S.C. § 1404(a).

The Court held that, with one exception, Greenberry’s failed to show that the Western District of Virginia is the proper venue to bring these claims.  The Leesburg Franchise, which is at the center of the controversy, was located in the Eastern District of Virginia.  As a result, the allegations of wrongful conduct (i.e., the alleged breach of contract, the allegedly tortious interference with contract and business relations and expectancy, the alleged conspiracy, the alleged conversion of assets, the alleged computer fraud or trespass, and the alleged infringement on the trademarks) occurred, if at all, in the Eastern District of Virginia.  Greenberry’s maintained that Alice Park committed numerous contract breaches within the Western District of Virginia.  But the Court held that each of those alleged breaches related to the manner in which Alice Park operated the Leesburg Franchise in the Eastern District of Virginia and only had a tangential nexus to Greenberry’s place of business in the Western District, despite the fact that the Franchise Agreement and the Transfer Agreement were negotiated and executed at least in part in the Western District.  Greenberry’s did not meet the burden of alleging that a substantial part of the events giving rise to the breach of contract claim occurred in the Western District.  Furthermore, the fact that the proprietary system, confidential information, and trademarks that allegedly were misappropriated in the Eastern District were “created and developed” in the Western District at some point in the past for general use in franchising the Greenberry’s system was held to be too remote an event to render venue proper.

Although the Court found that venue was not proper in the Western District of Virginia for counts two through ten, count one stated a cause of action for breach of the Franchise Agreement and the Transfer Agreement.  The Transfer Agreement contained the forum selection clause indicated above.  As a result, the Eastern District of Virginia was not an appropriate venue for the breach of the Transfer Agreement complaint against Alice Park because it was not a court selected in the forum selection clause.  However, the Court found that, in the interests of convenience, efficiency, and justice, the breach of the Transfer Agreement claim should nevertheless be heard with the other claims in the Eastern District and, therefore, transferred it to the Eastern District pursuant to 28 U.S.C. § 1404(a).  Having transferred the entire case to the Eastern District of Virginia, Judge Moon did not rule on the motion to dismiss.