United States District Court, E.D. California
ORDER ON DEFENDANT'S MOTION TO TRANSFER VENUE,
(DOC. NO. 6)
case stems from an employment relationship between Plaintiff
Timothy Denari (“Denari”) and his former
employer, Defendant U.S. Dry Cleaning Services Corporation
(“USDC”). Denari alleges claims for breach of
contract, three forms of indemnity, unfair competition, and
California Labor Code § 2802.
began his employment with USDC in March 2009 as a consultant.
Denari worked out of USDC's corporate headquarters in
Newport Beach, Orange County, California, but commuted from
his home in Bakersfield, Kern County, California.
See Denari Dec. ¶ 7. Denari would telecommute
from time to time, and after hours or on weekends would
answer e-mails or other communications from his Bakersfield
home. All of USDC's corporate employees worked out of the
Orange County headquarters. See Cox Dec. ¶ 4.
In February 2010, Denari became USDC's Chief Financial
March 4, 2010, USDC filed for Chapter 11 Bankruptcy in the
Central District of California - Santa Ana Division.
Denari's employment with USDC ceased in June 2010.
April 2011, USDC filed a debtor's plan with the
Bankruptcy Court. Following an objection from the Internal
Revenue Service (“IRS”), a stipulation was made
whereby USDC would make payments to the IRS of $41, 000 per
quarter, with $20, 500 allocated to non-trust fund payroll
taxes and $20, 500 allocated to trust fund payroll taxes.
September 14, 2011, the debtor's plan was amended to
include the IRS stipulation (“the Plan”). On
September 23, 2011, the Bankruptcy Court entered an order
confirming the Plan. Denari did not receive notice or service
of the Plan or the order confirming the Plan.
November 2012, Denari received a notice from the IRS that he
was considered a possible responsible party for recovery of
USDC's unpaid trust fund payroll taxes that were owing
prior to USDC's bankruptcy. However, no demands were
March 2013, Denari received another notice from the IRS that
he was considered a possible responsible party for recovery
of USDC's unpaid trust fund payroll taxes that were owing
prior to USDC's bankruptcy. However, no demands were
representations that the bankruptcy case was on track and
that USDC was fully performing, the bankruptcy case was
closed on June 5, 2013. At all relevant times, Denari was
informed by USDC's officers and corporate counsel that
USDC was current on its payments and that the IRS debt would
be paid in full by April 2015.
April 2015, Denari learned that there were issues with the
application of payments, but that payments were still being
made. Subsequently, Denari learned that USDC had requested an
extension through the end of July 2015. The Plan's
deadline was extended to December 2015.
September 2015, the IRS made an assessment against Denari for
$214, 202.04 and demanded payment in full.
made numerous demands on USDC to indemnify him against the
IRS demands and assessment. USDC refused and did not do so.
January 2016, the IRS placed a lien on Denari's assets
because the assessment was not paid in full.
was headquartered in Orange County, California until March
31, 2015, when it operated “remotely.” Cox Dec.
¶ 3. USDC moved its headquarters to Houston, Texas in
communications with USDC personnel and officers were directed
to individuals located in Orange County; Denari never sent
communications to Houston. See Denari Dec.
¶¶ 16, 18. The communications from the IRS to
Denari were received in Bakersfield, as were the
communications from USDC officers to Denari regarding the IRS
notices and assessments and USDC's performance under the
Plan. The IRS lien was also filed against Denari in Kern
maintains numerous One Hour Martinizing businesses in Fresno
County, California. At all relevant times to this case,
USDC's Bylaws and Articles of Incorporation stated that
USDC shall indemnify its current and former officers to the
fullest extent allowed by law.
argues that venue is improper in the Eastern District of
California (“EDCA”) as none of the three
categories of venue under § 1391(b) apply. First, for
purposes of § 1391(b)(1), no defendant resides in the
Eastern District. USDC argues that it is the only defendant,
and its corporate headquarters are in Houston, Texas. Prior
to Houston, the corporate headquarters where in Newport
Beach, California, which is not in the EDCA. Second, for
purposes of § 1391(b)(2), there is no indication that a
substantial part of the events or omissions giving rise to
the claims at issue occurred in the EDCA. The claims at issue
center around Denari's employment with USDC, which
occurred in Newport Beach. Denari cannot show that any of the
alleged acts or omissions (such as the alleged failure of
USDC to pay tax contributions, entering into the stipulation
with the IRS, and allegedly failing to make payments under
the stipulation/the Plan) occurred in the EDCA. The only
thing that connects this case to the EDCA is the impact of
USDC's alleged conduct on Denari. Third, §
1391(b)(3) does not apply because USDC could be sued in
Houston. As venue is not proper in the EDCA, the Court should
either dismiss this case or transfer it to Houston.
reply, USDC argues that its motion is timely. USDC raised
improper venue as an affirmative defense in its answer,
included it as an affirmative defense in its amended answer,
and filed the pending 12(b)(3) motion. This conduct comports
with Rule 12(h)(1). USDC also argues that Denari has not
cited cases that support his reliance on the location of the
harm suffered as being a “substantial event.” The
cases that are heavily relied upon are debt collection cases
in which the location where the improper communication was
received is an element of a claim and a substantial event.
There are no claims alleged under any debt collection statute
in the Complaint. Further, Denari has not shown that USDC
resides in the EDCA. There are no allegations in the
Complaint that relate to USDC's operations in Fresno, and
none of the conduct alleged occurred in Fresno and thus, the
claims do not arise out USDC's ...