The opinion of the court was delivered by: Cedarbaum, District Judge.
Defendants have moved under 28 U.S.C. § 1404(a) to transfer these
two related cases to the Western District of Pennsylvania on the ground
that that is a more convenient forum. All parties agree that these two
cases should be prepared and tried in the same forum. Discovery has been
coordinated, and justice and judicial economy require that the two cases
either remain together or be transferred together. Indeed, plaintiff has
moved to consolidate the two.
At the initial pretrial stages of the first case, I gave great weight
to plaintiff's choice of forum, and denied a motion for transfer without
prejudice to its renewal after the parties had acquired more information
about the location of the witnesses. Plaintiff has recently filed the
second case, asserting claims, including a RICO claim, against the
Pittsburgh law firm that advised the defendant in connection with the
conduct complained of in the first case. Until the second case was
filed, the Pittsburgh law firm represented the defendant in the first
After careful consideration, I have concluded that the addition of the
claims against the Pittsburgh law firm tips the balance of convenience.
For the reasons discussed below, these two actions are transferred to the
United States District Court for the Western District of Pennsylvania.
Prior to 1979, Mellon Bank, N.A. ("Mellon"), a national bank
headquartered in Pittsburgh, loaned money to Sharon Steel Corporation
("Sharon"). In 1979 and 1980, respectively, Mellon became the indenture
trustee for two series of subordinated debentures issued by Sharon.
Thus, after 1979, Mellon was both a creditor and an indenture trustee of
In March an~i April of 1985, Sharon failed to pay the interest due on
the debentures, and Sharon has remained in default to date. At the time
of Sharon's default, Mellon attempted to resign as indenture trustee,
effective on the appointment of a successor trustee. After Sharon filed a
petition for reorganization in the Bankruptcy Court for the Western
District of Pennsylvania in August of 1987, plaintiff IBJ Schroder Bank &
Trust Company ("Schroder") was appointed successor trustee.
At the time of Sharon's default, Mellon, pursuant to the indentures,
established a special account into which it deposited all money and
property it collected in repayment of Sharon's indebtedness to Mellon. The
funds in this account total approximately $32,000,000, plus interest.
When Schroder was appointed successor trustee, Mellon and Schroder were
unable to agree about the proper distribution of the funds in the special
account. On October 13, 1987, Mellon filed a declaratory judgment action
in the Western District of Pennsylvania seeking a determination that it,
as creditor, was entitled to the funds in the special account. On the
following day, Schroder filed the first case in this court seeking a
declaratory judgment to the contrary and damages for Mellon's alleged
breach of its contractual, statutory and fiduciary obligations as
indenture trustee. The district court in Pittsburgh determined that it
had jurisdiction over the action and the parties, but dismissed Mellon's
declaratory judgment action because its resolution would "not resolve the
entire controversy between the parties." Mellon Bank, NA. v. IBJ Schroder
Bank & Trust Co., No. 87-2169, slip op. at 8-9, 1989 WL 200443 (W.D.Pa.
August 17, 1989).
On June 13, 1989, Schroder filed the second case in this court, a
complaint against Kirkpatrick & Lockhart ("K & L"), the Pennsylvania law
firm which had advised Mellon with respect to its roles both as creditor
and as indenture trustee of Sharon. The complaint alleges that K & L had
a conflict of interest when it advised Mellon in both capacities and,
that K & L actively participated in Mellon's allegedly improper decisions
and conduct. The complaint also alleges that K & L mishandled lawsuits
brought by Mellon in Pennsylvania state court to recover from Sharon
unpaid interest due on the debentures, and drafted and approved allegedly
misleading press releases, notices of meetings to debenture holders and
trustee reports. When the second case was filed, K & L withdrew as
Mellon's counsel in the first case.
28 U.S.C. § 1404(a) provides:
For the convenience of 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.
The threshold requirement for transfer under 28 U.S.C. § 1404(a) is
that the action "might have been brought" in the transferee court. It is
undisputed that this statutory requirement is met in these two civil
actions. There is jurisdiction and proper venue in the Western District
of Pennsylvania for Schroder's suit against ...