Free Response to Motion - District Court of Colorado - Colorado

Case 1:01-cv-02313-JLK

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil action No. 1-01-cv-2313-JLK

GLN COMPLIANCE GROUP, INC., Plaintiff, v. JONATHAN ROSS Defendant. _____________________________________________________________________________ PLAINTIFF'S RESPONSE TO DEFENDANT'S MOTION TO DISMISS FOR IMPROPER VENUE, OR ALTERNATIVELY TO TRANSFER VENUE AND MOTION TO DISMISS OUTRAGEOUS CONDUCT CLAIM ______________________________________________________________________________ Plaintiff, GLN Compliance Group, Inc. ("GLN"), submits the following response in opposition to Defendant Jonathan Ross's ("Ross") Motion to Dismiss and for Transfer of Venue. As grounds, GLN states the following: INTRODUCTION Defendants' Motion represents another attempt to delay this case and illustrates Ross's "anywhere but here" attitude towards this Court. Ross has already filed a Motion to Dismiss in this case pursuant to Rule 12. The Court denied that Motion. Ross has already requested that venue be transferred to bankruptcy court in Illinois. The Court denied that request. Now, in spite of the Court's clear directives in its October 16 Order that "GLN's claims against Ross shall proceed in this Court" and that "Ross shall have to November 1, 2007, in which to file his

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Answer," Defendant now seeks yet another bite at the apple. All three parts of Defendant's Motion should be denied. Specifically, Defendant waived the defenses of improper venue and failure to state a claim upon which relief may be granted by neglecting to raise those issues in his first Rule 12 Motion to Dismiss filed more than five years ago. Additionally, Defendant has failed to meet his burden of establishing the propriety of a transfer of venue pursuant to 28 U.S.C. § 1404(a) under the facts of this case. The Defendant's only real justification for a transfer is that doing so would be more convenient for him; an argument that the Tenth Circuit has rejected. The Clerk of this Court should enter default against Ross because of his failure to Answer GLN's First Amended Complaint. At minimum, however, the Court should deny Ross's Motion and allow GLN to pursue its claims against Ross here in Colorado. RELEVANT PROCEDURAL HISTORY GLN filed its original Verified Complaint in Arapahoe County District Court, Colorado on October 17, 2001. In lieu of filing an Answer, Ross's prior counsel filed a Notice of Removal shortly thereafter. Importantly, Ross's prior counsel specifically alleged that "[v]enue is proper in this district under 28 U.S.C. § 1441(a)" and that "[a]ll defendants consent to the removal of this case to federal court." See Doc. 1, ¶¶ 4,12. After removing the case to this Court, Ross again avoided filing an Answer by filing a Motion to Dismiss pursuant to F.R.C.P. 12(b)(5) for insufficient service of process (Doc. 16). The Court denied that Motion after a hearing on July 29, 2002. About two months later, Ross filed a Waiver and Acceptance of Service with the Court (Doc. 36) but did not file an Answer. 2

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Again, in lieu of filing an Answer to GLN's Complaint, Ross then filed a Motion for Extension of Time (Doc. 42) requesting until November 4, 2002, to answer or otherwise respond to GLN's Complaint. However, Ross never filed an Answer. Instead, the case was stayed on December 17, 2002, upon the filing of a Suggestion of Bankruptcy by United Airlines, Ross's co-defendant at the time. Almost five years later, on October 16, 2007, the Court granted GLN's Renewed Motion to Lift Stay (Doc. 87). In its Order, the Court found that "the time has come to lift, the stay, sever the claims and allow GLN to proceed, in Colorado, on its claims against Defendant Ross." (emphasis supplied) The Court denied Ross's request that the case be transferred to bankruptcy court in Illinois and Ordered that "GLN's claims against Ross shall proceed in this Court." (emphasis supplied) The Court also ruled that "no motion for default judgment will be entertained at this time. Ross shall have to November 1, 2007, in which to file his Answer to GLN's Complaint." (emphasis supplied) In spite of the Court's October 16 Order, Ross failed to file his Answer to GLN's Complaint by November 1. Instead, Ross filed another Rule 12 Motion to Dismiss and again requested a transfer of venue ­ this time to the Southern District of New York. In light of Ross's disregard of the Court's Order directing him to file an Answer by November 1, 2007, GLN has filed an Application for Entry of Default contemporaneously with this response.

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ARGUMENT A. Ross Waived the Defenses of Improper Venue and Failure to State a Claim Upon Which Relief May be Granted. Defendant's motion to dismiss for improper venue pursuant to Rule 12(b)(3) and motion to dismiss for failure to state a claim upon which relief may be granted pursuant to Rule 12(b)(6) must fail. By neglecting to raise these defenses in his first Motion to Dismiss filed more than five years ago, Ross waived his right to assert those defenses now. Rule 12(g) provides in pertinent part: If a party makes a motion under this rule but omits therefrom any defense or objection then available to him which this rule permits to be raised by motion, he shall not thereafter make a motion based on the defense or objection so omitted. . . . (emphasis supplied) With respect to the defense of improper venue, Rule 12(h)(1) further provides that this defense is waived if omitted from a defendant's first responsive pleading. As the District Court for the District of Columbia has observed, the rationale for prohibiting successive Rule 12 motions is articulated in the advisory committee notes to that rule, which state in pertinent part: This required consolidation of defenses and objection in a Rule 12 motion is salutary in that it works against piecemeal consideration of a case . . . . A party who by motion invites the court to pass upon a threshold defense should bring forward all the specified defenses he then has and thus allow the court to do a reasonably complete job. Khama v. Ashcroft, 215 F. Supp 2d 37, 39 (D.C. 2002); see also T&R Enter., Inc. v. Cont'l Gran Co., 613 F.2d 1272, 1277 (5th Cir. 1980) (party must raise all Rule 12 defenses in first motion); Stjernholm v. Peterson, 83 F.3d 347, 348 (10th Cir. 1996) ("A party waives the right to challenge 4

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venue if he fails to raise that defense either in his responsive pleading or in a motion to dismiss under Fed. R. Civ. P. 12(b)(3)."). Citing to Wright and Miller's Federal Practice and Procedure, the Fifth Circuit has also noted that the message conveyed by the present version of Rule 12(h)(1) seems clear. It advises a litigant to exercise great diligence in challenging personal jurisdiction, venue, or service of process. If he wishes to raise any of these defenses he must do so at the time he makes his first defensive move whether it be a Rule 12 motion or a responsive pleading.

T&R Enter., Inc., 613 F.2d at 1277. GLN anticipates that Defendant will argue that he could not have challenged venue any earlier because United Airlines was only recently dismissed from this case. However, United's dismissal is irrelevant, as proper venue is determined at the time the Complaint is filed, and is not affected by a change in parties. Exxon Corp. v. FTC, 588 F.2d 895, 899 (5th Cir. 1978) (venue is determined at the outset of the litigation and is not affected by a subsequent change in parties) (citing 3B Moore's Federal Practice ¶ 25.05, p. 25-167 (2d ed. 1978)); Moekel v. Caremark, Inc., 2006 U.S. Dist. Lexis 27225 (M.D. Tenn.) (same). This makes sense when one considers that a rule to the contrary would permit cases to drag on for years, as has happened here, only to be dismissed for improper venue when a co-defendant is later dismissed. Thus, Defendant was required to challenge venue, if at all, at the time he filed his first Motion to Dismiss. Having neglected to do so, Defendant is precluded from asserting defenses available under Rule 12 now.

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B.

Defendant has Not Met his Burden of Establishing that a Transfer of Venue is Appropriate Under the Facts of This Case. As an alternative to Ross's argument that venue is improper, he also requests a

discretionary transfer of venue to New York pursuant to 28 U.S.C. § 1404(a). This illustrates Ross's "anywhere but here" attitude towards this Court. Less than two months ago, Defendant urged the Court to transfer the entire case to bankruptcy court in Illinois. The Court rejected Ross's request and explicitly ordered that "GLN's claims against Ross shall proceed in this Court." Having lost that argument, Ross now seeks to transfer venue to the Southern District of New York essentially on the basis that doing so would be more convenient for him. For obvious reasons, the Tenth Circuit has rejected this argument as a basis for transferring venue. Scheidt v. Klein, 956 F.2d 963, 966 (10th Cir. 1992) ("Merely shifting the inconvenience from one side to the other, however, obviously is not a permissible justification for a change of venue."). Ross concedes that he bears the burden of justifying his request for a venue transfer. See Motion at 7-8; see also Sheidt, 956 F.2d at 965 (party moving to transfer venue bears burden of establishing that existing forum is inconvenient). To satisfy this burden, Ross alleges that he and one other witness (Stuart Oran) reside in New York. Motion at 7-9. Ross also alleges that "documentary evidence, including his computer files and other paper files" are located in New York. Motion at 8. On this basis, Ross asserts that convenience of the parties and witnesses would best be served by a transfer to New York. Ross's argument ignores the fact that GLN and its principal, Gerald Naekel, along with other witnesses and documentary evidence for GLN are located here in Colorado. Ross's

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argument also fails to establish the quality or materiality of the "defense witnesses" to which he vaguely refers, or that these witnesses are unwilling to come to Colorado for trial. See Scheidt at 965 (denial of request for transfer of venue proper where defendant failed to establish materiality of witnesses located in other venue, and failed to show that compulsory process would be necessary). Finally, Ross fails to explain why he is unable to bring his computer and paper files to Colorado for trial. See id. (denial of request for transfer proper where defendant failed to explain why documents could not be sifted through and the probative ones shipped at relatively minor cost to foreign venue for trial). Simply put, Ross has failed to meet his burden of establishing that the convenience of the parties and the witnesses justifies a transfer. At most, Ross has established that New York would be a more convenient forum for him; an unavailing argument. Further, Ross minimizes the substantial weight given to a plaintiff's choice of forum. Id. at 965 ("unless the balance is strongly in favor of the movant the plaintiff's choice of forum should rarely be disturbed."). GLN is a Colorado corporation that retained Ross to perform work on a Colorado project involving United Airlines. As GLN outlines in its First Amended Complaint, the damage suffered by GLN as a result of Ross's wrongful conduct occurred in Colorado and GLN's claims are based upon Colorado law. Under these circumstances, a transfer of venue to New York is not justified. CONCLUSION Defendant waived his right to assert the defenses of improper venue and failure to state a claim upon which relief may be granted by neglecting to assert those defenses in his first Motion 7

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to Dismiss. Further, Defendant has failed to meet his burden of establishing that a transfer of venue to New York is justified under the circumstances of this case. At most, Defendant has established that New York would be more convenient for him ­ an insufficient basis for disturbing GLN's choice of forum.

Dated: November 20, 2007

s/ Daniel A. Wartell Elizabeth A. Starrs Daniel A. Wartell STARRS MIHM & CASCHETTE LLP 707 Seventeenth Street, Suite 2600 Denver, CO 80202 Telephone: 303-592-5900 Fax: 303-592-5910 [email protected] [email protected]

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CERTIFICATE OF SERVICE I hereby certify that on November 20, 2007, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Mark T. Barnes, Esq. Brownstein Hyatt Farber Schreck 410 17th Street, Suite 2200 Denver, CO 80202-4437 Telephone: 303-223-1100 Fax: 303-223-1111 [email protected] Stephen D. Gurr, Esq. Kamlet Shepard & Reichert LLP 1515 Arapahoe St., Tower 1, Suite 1600 Denver, CO 80202 Telephone: 303-825-4200 Fax: 303-825-1185 [email protected] Micah E. Marcus, Esq. Kirkland & Ellis LLP 200 E. Randolph Drive Chicago, IL 60601 Telephone: 312-861-2165 Fax: 312-861-2200 [email protected] s/ Daniel A. Wartell Elizabeth A. Starrs Daniel A. Wartell STARRS MIHM & CASCHETTE LLP 707 Seventeenth Street, Suite 2600 Denver, CO 80202 Telephone: 303-592-5900 Fax: 303-592-5910 [email protected] [email protected]

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