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HARRIS TRUST & SAV. BANK v. SLT WAREHOUSE

United States District Court, Northern District of Illinois, E.D


March 28, 1985

HARRIS TRUST AND SAVINGS BANK, PLAINTIFF,
v.
SLT WAREHOUSE COMPANY, INC., DEFENDANT.

The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Harris Trust and Savings Bank ("Harris") has charged SLT Warehouse Company, Inc. ("SLT") with breach of duty and failure to exercise due care as a warehouseman of grain in which Harris held a security interest. SLT now moves under 28 U.S.C. § 1404(a) ("Section 1404(a)") for transfer of this action to the United States District Court for the Western District of Kentucky. For the reasons stated in this memorandum opinion and order, the motion is granted.

Facts

Both Harris' place of incorporation and its principal place of business are in Illinois. As to SLT, both those relationships are with Missouri. SLT is licensed to do business in both Illinois and Kentucky and conducts field warehousing operations in both states.

This action arises out of warehousing services SLT provided to Wathen's Elevators, Inc. ("Wathen's")*fn1 in Henderson County, Kentucky between 1977 and 1982. To obtain credit from Harris for grain purchases, Wathen's turned over to SLT control of the grain storage facilities and inventory on Wathen's property. Wathen's would purchase grain from farmers and store it with SLT. SLT would issue a non-negotiable warehouse receipt to Harris, to secure the latter's interest in the grain. SLT could not release grain for resale without Harris' prior approval.

SLT hired Wathen's bookkeeper and office manager Raymond Sheets ("Sheets") to conduct SLT's warehousing operation on Wathen's premises. Sheets' duties to SLT included maintaining grain elevator and inventory records, preparing and issuing the warehouse receipts to Harris and obtaining executed withdrawal records for grain released for shipment. Harris in turn employed the First National Bank in Henderson ("Henderson Bank") as its agent to deal with Sheets and SLT. Henderson Bank processed the paperwork, including the warehouse receipts, for Wathen's line of credit. Upon notification by Henderson Bank that the proper paperwork had been completed, Harris would wire funds to Wathen's.

In March 1982 Wathen's ceased operations and filed for bankruptcy. When Harris attempted to enforce its security interest in Wathen's remaining inventory it discovered soybeans and white corn valued at over $435,000 were missing. Harris then filed its Complaint here against SLT:

    1. Counts I and II charge SLT with failure to exercise the
  due care required of warehousemen under Kentucky common law.

    2. Count III asserts SLT (through Sheets) breached its duty
  to notify Harris of a change in Wathen's financial condition
  that rendered Wathen's unable to perform its agreement with
  Harris.

    3. Count IV charges SLT violated its Kentucky statutory duty
  (Ky.Rev.Stat. § 359.110) to deliver grain promptly upon
  demand by Harris.

Wathen's bankruptcy has also given rise to other lawsuits currently pending in the Western District of Kentucky.

Section 1404(a) Standards

Section 1404(a) provides:

  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.

As this Court has had frequent occasion to explain,
*fn2 a district court's discretion to transfer a case under Section 1404(a) is broader than its discretion to dismiss under the older doctrine of forum non conveniens. Norwood v. Kirkpatrick, 349 U.S. 29, 32, 75 S.Ct. 544, 546, 99 L.Ed. 789 (1955). Section 1404(a) does not accord plaintiff's choice of forum the decisive weight it enjoyed under forum non conveniens. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253, 102 S.Ct. 252, 264, 70 L.Ed.2d 419 (1981). Today the choice of forum is only one of many factors to consider. And for over 30 years it has been clear that factor merits minimal consideration where (as here) the chosen forum bears no relation to the events giving rise to the cause of action. Chicago, Rock Island & Pacific R.R. Co. v. Igoe, 220 F.2d 299, 304 (7th Cir. 1955); Berks v. Rib Mountain Corp., 571 F. Supp. 500, 501 n. 2 (N.D.Ill. 1983).

Nonetheless a transfer will not be ordered "if the result is merely to shift the inconvenience from one party to another." 15 Wright & Miller, Federal Practice & Procedure: Jurisdiction § 3848, at 246. SLT has the burden of demonstrating that litigation of this action in Illinois would result in a "clear balance of inconvenience." Hotel Constructors, Inc. v. Seagrave Corp., 543 F. Supp. 1048, 1050 (N.D.Ill. 1982).

That balancing process involves the factors identified in Section 1404(a): the convenience of parties and witnesses and "the interest of justice." As for the last catchall item, Piper Aircraft, 454 U.S. at 241 n. 6, 102 S.Ct. at 258 n. 6 (citations omitted) recapitulated from Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947) (the classic case on forum non conveniens) the various considerations generally grouped under the "interest of justice" rubric:

  The factors pertaining to the private interests of the
  litigants included the "relative ease of access to sources of
  proof; availability of compulsory process for attendance of
  unwilling, and the cost of obtaining attendance of willing,
  witnesses; possibility of view of premises, if view would be
  appropriate to the action; and all other practical problems
  that make trial of a case easy, expeditious and inexpensive."
  . . . The public factors bearing on the question included the
  administrative difficulties flowing from Court congestion; the
  "local interest in having localized controversies decided at
  home"; the interest in having the trial of a diversity case in
  a forum that is at home with the law that must govern the
  action; the avoidance of unnecessary problems in conflict of
  laws, or in the application of foreign law; and the unfairness
  of burdening citizens in an unrelated forum with jury duty.

Applying the Standards*fn3

1. Convenience of Parties

Harris contends there is a major imbalance in the "convenience of parties" factor because Missouri corporation SLT would be equally inconvenienced by an Illinois or Kentucky venue, while Illinois-based Harris would find litigating here much more convenient than a Kentucky venue. However, two items on the Kentucky side of the balance tip the scales back most of the way toward equilibrium:

    1. Because the actors, events and property at issue in this
  lawsuit are all located in Kentucky (Hinderer Aff. ¶ 4), all
  direct discovery must be carried out there. Harris would thus
  have to carry on substantial litigation activities in
  Kentucky even if Illinois venue were preserved.

    2. SLT is already involved in extensive litigation in
  Kentucky related to Wathen's bankruptcy (Hinderer Aff. ¶¶ 6,
  7, 8). It would therefore find a Kentucky venue significantly
  more convenient than an Illinois venue, where it would also
  have to retain additional counsel.

In sum, "convenience of parties" weighs only slightly in Illinois' favor.

2. Convenience of Witnesses

"Convenience of witnesses" strongly favors Kentucky. Certainly the most important witnesses in this action are Sheets and the other Wathen's and Henderson Bank employees involved in the operation of the Wathen's grain elevator. All those people are Kentucky residents (Hinderer Aff. ¶ 9).*fn4

Harris attempts to avoid that obvious analysis by (1) identifying two Illinois employees it intends to call as witnesses and (2) urging SLT has not committed itself to calling a single specific Kentucky resident. But those arguments are only so much smoke:

    1. Harris' employee-witnesses would only authenticate
  documents and verify account balances (Breen Aff. ¶ 9). Even
  were that testimony not obviated by stipulation (as it might
  well be), it would not be nearly as important as that of
  Sheets and other Kentucky occurrence witnesses.

    2. Harris is disingenuous in contending SLT fails to identify
  a single Kentucky witness. Harris' own complaint singles out
  Kentucky resident Sheets as the most important actor in this
  affair. And although it is too early for SLT to commit itself
  to calling specific witnesses, SLT has clearly indicated —
  and Harris

  must concede — the prime prospects are all Kentuckians.

3. Interest of Justice

"Interest of justice," as given content in Piper Aircraft, also points decidedly toward Kentucky. Of the four relevant considerations in this area,*fn5 two favor Kentucky slightly and two do so strongly.

    (a) Access to grain elevators. Kentucky-based litigation
  would allow inspection of the location where the grain was
  stored. That must be viewed as no more than a marginal
  consideration, because there is no indication at this stage
  of the proceedings that such access will be necessary.

    (b) Judicial economy. SLT and Harris differ strenuously
  over the state of Wathen's non-bankruptcy litigation in the
  Western District of Kentucky. There is no assurance that any
  aspect of this litigation could be coordinated with that
  pending in Kentucky. But a Kentucky venue offers at least the
  remote possibility of such coordination, while none exists in
  Illinois.

    (c) (c) Application of Kentucky law. Kentucky common and
  statutory law govern this action. Piper Aircraft, 455 U.S.
  at 285, 102 S.Ct. at 255 teaches a diversity case should,
  when possible, be decided by a court most at home with the
  applicable state law. Harris retorts the Kentucky law to be
  applied here is simple and should therefore not be a factor
  in the current motion. But at this early stage only a
  soothsayer could predict how sticky the legal issues might
  become. Moreover, no matter how simple the law may be, Piper
  Aircraft (drawing on Gulf Oil) also stresses the "local
  interest in having localized controversies decided at
  home."*fn6

    (d) Availability of compulsory process. There is no contest
  on this important factor. Key witness Sheets is a Kentucky
  resident and is not currently an employee of SLT (Harris
  Surreply Mem. 1). Thus neither the parties nor this Court
  could compel him to testify in Illinois. Other Wathen's and
  Henderson Bank employees appear to be in the same position.
  Although the lack of compulsory process is normally not a
  strong factor unless the potential witness has demonstrated
  recalcitrance, it would be imprudent to proceed in a forum
  where none of the important witnesses is subject to
  process. That would unnecessarily risk a major impediment to
  an effective trial.

Conclusion

This is clearly a Kentucky case. Although the convenience of the parties favors Illinois slightly, the convenience of witnesses and the interest of justice far overbalance the scales toward Kentucky. SLT's motion is granted, and this action is transferred to the Western District of Kentucky.


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