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LLC v. Towner

United States District Court, D. Minnesota

November 8, 2016

KTJ 229, LLC, KTJ 251, LLC, and KTJ 236, LLC, Plaintiffs,
v.
Jeff Towner, Chris Weiss, Todd Poss, and Christopher T. Walters, Defendants.

          Cynthia L. Hegarty, Esq., and Ryan R. Dreyer, Esq., Morrison, Sund PLLC, counsel for Plaintiffs.

          James R. Koby, Esq., Koby Law, LLC, counsel for Defendants Jeff Towner, Chris Weiss, and Todd Poss.

          Francis M. Doherty, Esq., Hale Skemp Hanson Skemp & Sleik, counsel for Christopher T. Walters.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK United States District Judge

         INTRODUCTION

         This matter is before the Court on a Motion to Transfer Venue brought by Defendants Jeff Towner, Chris Weiss, and Todd Poss (collectively, “Defendants”). (Doc. No. 8.) For the reasons set forth below, the Court denies the motion.

         BACKGROUND

         This case involves three contracts entered into by Plaintiffs KTJ 229, LLC, KTJ 251, LLC, and KTJ 236, LLC (collectively, “Plaintiffs”) with TCI Architects Engineers Contractor, Inc. (“TCI”), which is not a party to this case. (See generally Doc. No. 1, Ex. 2 (First Amended Complaint (“FAC”).) Basically, KTJ 229, LLC, hired TCI as a general contractor to improve real property located in Woodbury, Minnesota (see id. ¶¶ 8-9); KTJ 251, LLC, hired TCI to construct certain site and rail improvements on property located in Newcornerstown, Ohio (see Id. ¶¶ 12-13); and KTJ 236, LLC, hired TCI to construct a gas and oil field services facility on property located in Williston, North Dakota (see id. ¶¶ 16-17).

         Plaintiffs allege a single count for Civil Theft under Wisconsin Statute § 779.02(5). (Id. ¶¶ 24-34.) In particular, Plaintiffs claim that, prior to TCI's commencement of an insolvency proceeding in the Circuit Court of La Crosse County, Wisconsin (the “Assignment Proceeding”), each Plaintiff made payments to TCI under their respective contracts with TCI. (Id. ¶¶ 10, 14, 18, 20.) Plaintiffs allege that those payments were designated for payments to subcontractor claims related to each respective project. (Id. ¶¶ 10, 14, 18.) Plaintiffs further allege that Defendants-two were members of TCI's Board of Directors and shareholders of TCI, and the third was TCI's Chief Financial Officer-misappropriated funds intended for payment of Plaintiffs' subcontracts and caused TCI to fail to pay subcontractors. (Id. ¶¶ 11, 15, 19.)

         All three Plaintiffs are Minnesota limited liability companies with principal places of business in Excelsior, Minnesota. (Id. ¶ 1.) TCI was a Wisconsin corporation with its principal place of business in La Crosse, Wisconsin. (Doc. No. 10 (“O'Flaherty Aff.”) ¶ 2.) Defendants are all residents of Wisconsin. (FAC ¶¶ 2-4.) On July 10, 2015, TCI commenced the Assignment Proceeding. (FAC ¶ 20.) Attorney William Rameker was appointed receiver to liquidate assets of TCI (the “Receiver”). (O'Flaherty Aff. ¶ 7.) Since July 10, 2015, the Receiver has run the operations of TCI. (Id. ¶ 8.)

         Defendants assert that its response to Plaintiffs' claim, generally, is that TCI repaid a loan to BMO Harris Bank, N.A., its primary secured creditor, because BMO had a lien on the funds that was superior to any interest of Plaintiffs. (Id. ¶¶ 5, 9.) Defendants further assert that, to the extent that Plaintiffs' interest in those funds was superior to BMO, Plaintiffs should demand payments from BMO. (Id.) In addition, Defendants contend that Plaintiffs should seek relief from the Receiver. (Id. ¶10.) Accordingly, Defendants contend that both the Receiver and BMO are necessary parties and that they intend to implead them and their insurers. (Id. ¶ 11.) In addition, on or about April 13, 2016, Hartford Fire Insurance Company (“Hartford”) started a lawsuit against Defendants Chris Weiss and Jeff Towner in the United States District Court for the Western District of Wisconsin. (Id. ¶ 13, Ex. 1.) In that action, Hartford alleges that Weiss' and Towner's actions related to the Assignment Proceeding and that BMO wrongfully caused Hartford to pay monies to complete TCI bonded contract work. (Id. ¶ 13, Ex. 1 ¶¶ 7, 10-16, 20-22.)

         Defendants now move to transfer this action to the Western District of Wisconsin. The Court considers the motion below.

         DISCUSSION

         “For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a). When deciding a motion to transfer pursuant to § 1404(a), the Court must consider three factors: “(1) [t]he convenience of the parties, (2) the convenience of the witnesses, and (3) the interests of justice.” Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997). “[S]ection 1404(a) provides for transfer to a more convenient forum, not to a forum likely to prove equally convenient or inconvenient, and a transfer should not be granted if the effect is simply to shift the inconvenience to the party resisting the transfer.” Graff v. Qwest Commc'ns ...


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