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The Huntington National Bank v. Hard Rock Exploration, Inc.

United States District Court, N.D. West Virginia

February 16, 2018

THE HUNTINGTON NATIONAL BANK, Plaintiff,
v.
HARD ROCK EXPLORATION, INC., CARALINE ENERGY COMPANY, BLUE JACKET GATHERING, LLC, BLUE JACKET PARTNERSHIP, BROTHERS REALTY, LLC, DUANE YOST, JAMES L. STEPHENS, JR., GREGORY LAUGHLIN and MONICA R. FRANCISCO, Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT YOST'S MOTION TO TRANSFER, DENYING AS MOOT THE INDIVIDUAL DEFENDANTS' MOTIONS FOR ABSTENTION, DENYING AS MOOT HUNTINGTON'S MOTION TO STRIKE NOTICE TO CHAPTER 11 TRUSTEE AND GRANTING MOTIONS FOR JOINDER

          FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE.

         I. Background

         Defendants Hard Rock Exploration, Inc., Caraline Energy Company, Blue Jacket Gathering, LLC, Blue Jacket Partnership, and Brothers Realty (collectively, the “Hard Rock Entities”) are business entities affiliated with defendant Hard Rock Exploration, Inc., which engages in oil and gas development. Defendants James Stephens, Jr., Monica Francisco, Duane Yost, and Gregory Laughlin (collectively, “the individual defendants”) are shareholders of defendant Hard Rock Exploration, Inc. The Hard Rock Entities borrowed money from the plaintiff, The Huntington National Bank (“Huntington”), so as to pursue oil and gas operations. Several years into the lending relationship, however, Huntington claims that the defendants have failed to satisfy their obligations. In particular, the following amounts allegedly remain outstanding: (1) a $500, 000.00 loan; (2) a $17, 887, 867.00 loan; (3) a $6, 250, 000.00 loan; (4) a $5, 000, 000.00 loan; and (5) an unspecified credit card obligation, which is allegedly worth $19, 148.10. In addition, the parties engaged in a series of swap transactions and a forbearance agreement, which contain the following obligations: (1) termination charges for the swaps totaling $839, 606.02; and (2) a $30, 000.00 forbearance fee. Huntington seeks a judgment for the balance due under the obligations listed above, including legal fees.

         The defendants filed a counterclaim asserting claim for fraud and deceit (Count I), interference with prospective business advantage (Count II), breach of implied covenant of good faith and fair dealing (Count III), breach of contract (Count IV), economic duress (Count V), breach of fiduciary duty (Count VI), demand for injunctive relief (Count VII), demand for declaratory judgment (Count VIII), and demand for an accounting (Count IX). Huntington filed a motion to dismiss the counterclaims (ECF No. 40), and this Court entered a memorandum order and opinion denying Huntington's motion to dismiss the counterclaims (ECF No. 69).

         On September 7, 2017, the Hard Rock Entities filed a notice of bankruptcy stating that they each had filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of West Virginia. ECF No. 87. The bankruptcy actions are proceeding before United States Bankruptcy Judge Frank W. Volk in the United States Bankruptcy Court for the Southern District of West Virginia. Accordingly, pursuant to 11 U.S.C. § 362 of the United States Bankruptcy Code, this Court stayed this case as to the Hard Rock Entities. ECF No. 91. Also pursuant to § 362(a), the proceedings were not stayed as to the individual, non-debtor defendants.

         The state court civil action, which includes the same parties as this Court's case and was removed to the United States Bankruptcy Court for the Northern District of West Virginia on September 8, 2017 (Misc. No. 1:17-MP-00001), was transferred to the United States Bankruptcy Court for the Southern District of West Virginia (Misc. No. 2:17-MP-02001) on November 14, 2017. Accordingly, both that case and the bankruptcy case underlying this civil action are now before Judge Volk in the United States Bankruptcy Court for the Southern District of West Virginia.

         Defendant Duane Yost (“Yost”) has filed a motion for transfer of venue to the United States Bankruptcy Court for the Southern District of West Virginia. Thereafter, Huntington responded and defendant Yost replied. Thus, the motion is fully briefed and ripe for review. For the reasons set forth below, defendant Yost's motion to transfer venue is granted. Accordingly, pending motions for abstention filed by the individual defendants are denied as moot.

         II. Applicable Law

         There are two different transfer provisions that may be applicable to this civil action: 28 U.S.C. §§ 1404(a) and 1412.

         A. 28 U.S.C. § 1404(a)

         A motion to transfer a case to another venue is generally subject to the provisions of 28 U.S.C. §§ 1404(a) and 1391(a). Pursuant to 28 U.S.C. § 1404(a), “a district court may transfer any civil action to any other district or division where it might have been brought” where such transfer is made “[f]or the convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404(a). This rule is intended to allow a court to transfer venue in order to “make trial of a case easy, expeditious and inexpensive.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947) (superceded by statute on other grounds).

         Under § 1404(a), the decision to transfer venue is left to the sound discretion of the trial court. Southern Ry. Co. v. Madden, 235 F.2d 198, 201 (4th Cir. 1956). In making this determination, a court should consider:

(1) ease of access to sources of proof; (2) the convenience of parties and witnesses; (3) the cost of obtaining the attendance of witnesses; (4) the availability of compulsory process; (5) the possibility of a view; (6) the interest in having local controversies decided at home; and (7) the interests of justice.

         In re Campbell Transp. Co., Inc., 368 F.Supp.2d 553, 555-56 (N.D. W.Va. 2005) (citing Alpha Welding & Fabricating Co. v. ToddHeller, Inc., 837 F.Supp. 172, 175 (S.D. W.Va. 1993)). The movants typically bear the burden of demonstrating that transfer is proper. Versol B.V. v. Hunter Douglas, Inc., 806 F.Supp. 582, 592 (E.D. Va. 1992). The Supreme Court of the United States has further stated that “unless the balance is strongly in favor of ...


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