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BMO Harris Bank, N.A. v. McM, Inc.

United States District Court, D. Minnesota

August 8, 2017

BMO Harris Bank, N.A., Plaintiff,
v.
McM, Inc. and Ronald G. McMartin, Jr., Defendants.

          Davit T. B. Audley, Esq., and Michael T. Benz, Esq., Chapman & Cutler, LLP; and Thomas J. Lallier, Esq., Foley & Mansfield, PLLP, counsel for Plaintiff.

          Jon R. Brakke, Esq., Vogel Law Firm, counsel for Defendants.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         This matter is before the Court on a Motion to Dismiss, on the Alternative, to Transfer Venue brought by Defendant Ronald G. McMartin Jr. (“McMartin Jr.”) (Doc. No. 19); a Motion to Appoint Receiver Over the Assets of McMartin Jr. brought by Plaintiff BMO Harris Bank, N.A. (“BMO”) (Doc. No. 24); and a Motion for Leave to Supplement the Record and Requesting that the Court Take Judicial Notice brought by BMO (Doc. No. 50). For the reasons set forth below, the Court denies the motion to dismiss or transfer, grants the motion to appoint a receiver, and grants the motion to supplement and take judicial notice.

         BACKGROUND

         This diversity action involves allegations by BMO that McMartin Jr. personally guaranteed a revolving line of credit extended by BMO to Defendant McM, Inc. (“McM, Inc.”). McM, Inc. was a farming and cattle operation before filing for bankruptcy.[1]McM, Inc. is a North Dakota corporation with its principal place of business in St. Thomas, North Dakota. (Doc. No. 1 (“Compl.”) ¶ 6; Doc. No. 22 (“McMartin Jr. Aff.”) ¶ 1.) McMartin Jr. is a citizen of the State of North Dakota and the sole owner and officer of McM, Inc. (Compl. ¶¶ 1, 7; McMartin Jr. Aff. ¶ 1.).[2] BMO is a national banking association with its primary office in Chicago, Illinois. (Compl. ¶ 5.) BMO alleges that McM, Inc. borrowed approximately $43 million from BMO and that McM, Inc.'s obligations have now matured. The Complaint details the loan agreements and related documents. (Compl. ¶¶ 8-36.) In addition, the Complaint alleges that McMartin Jr. executed and delivered to BMO a Guaranty dated July 31, 2012. (Compl. ¶ 30, Ex. 17; Doc. No. 34, Ex. 1 (the “Guaranty”).) The Guaranty contains a forum selection clause:

CHOICE OF VENUE GUARANTOR HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY GUARANTOR AND ARISING DIRECTLY OR INDIRECTLY OUT OF THIS GUARANTY OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN THE DISTRICT COURT OF BROWN COUNTY, MINNESOTA, OR AT LENDER'S DISCRETION IN THE UNITED STATES DISTICT COURT FOR THE DISTRICT OF MINNESOTA. GUARANTOR HEREBY EXPRESLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER IN SUCH COURT. GUARANTOR WAIVES ANY CLAIM THAT . . . THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. THE EXCLUSIVE CHOICE OF FORUM FOR GUARANTOR SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY LENDER, OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING, BY LENDER, OF ANY ACTION TO ENFOCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND GUARANTOR HEREBY WAIVES THE RIGHT, IF ANY, TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.

(Guaranty ¶ 13.)

         In addition, BMO alleges that McMartin Jr. granted BMO a security interest in all of his personal property (collateral). (Compl. ¶ 32.) BMO also alleges that McMartin Jr. breached the Guaranty, and further that McM, Inc. and McMartin Jr. fraudulently misrepresented (by millions of dollars) the financial statements and financial information that they delivered to BMO in support of the loans received and requests for advances under its revolving credit line with BMO. (See generally Compl. ¶¶ 37-58; see generally Doc. No. 26 (“Mueller Decl.”).)

         On February 1, 2017, BMO filed the present Complaint and a Motion for Appointment of a Receiver over the assets of McM, Inc. On the day that the motion was scheduled to be heard, McM, Inc. filed a voluntary petition under chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of North Dakota. By operation of law, this case is stayed as to McM, Inc. Subsequently, BMO filed the present Motion for the Appointment of a Receiver Over the Assets of McMartin Jr. McMartin Jr. moves to dismiss this case or to transfer it to the U.S. District Court for the District of North Dakota. Finally, BMO moves for leave to supplement the record and requests that the Court take judicial notice. The Court considers the motions below.

         DISCUSSION

         I. Motion to Dismiss or Transfer

         McMartin Jr. moves to dismiss this action pursuant to Rules 12(b)(3), 28 U.S.C. § 1391(b), and 28 U.S.C. § 1406(a), or, in the alternative, to transfer the action under 28 U.S.C. § 1406(a) and/or § 1404(a). Specifically, McMartin Jr. argues that this case should ...


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