The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge,
Defendant John Morrell & Co. ("Morrell") moves pursuant to
28 U.S.C. § 1404 (a) to transfer this action to the United
States District Court for the Southern District of Ohio. The
motion is denied.
This action was commenced by plaintiff Congress Financial
Corporation ("Congress") in New York State Court by service
of a summons and verified complaint on defendant on October 18,
1990. Defendant, who is qualified to do business in New York and
has an office in Schenectady, served its verified answer and a
notice of removal to the United States District Court for the
Southern District of New York on November 8, 1990. This motion
was made January 31, 1991.
The complaint herein is based on a letter from Congress to
Morrell dated October 2, 1990 (the "Letter Agreement"), and
accepted by Morrell and Dinner Bell Foods, Inc.
("Dinner Bell"), a company whose assets Morrell acquired by
purchase agreement of the same date ("Purchase Agreement"), and
whose trademarks and other intellectual property, and whose
"accounts" and "inventories" and their "products" and "proceeds"
as those terms are defined in the Uniform Commercial Code had
been previously assigned to Congress as collateral for financing.
The Letter Agreement in essence was an agreement by Morrell to
purchase the products and inventory of Dinner Bell, subject to
Congress' lien, and pay the proceeds to Congress, thereby paying
off Dinner Bell's financing from Congress in return for a release
by Congress of all security interests it held in the intellectual
property, trademarks and other assets of Dinner Bell. Affidavit
of Thomas Davis, January 28, 1991, Exhibit B.
Congress' claim against Morrell is for breach of contract
because Morrell failed to pay Congress for 35 invoices for
products shipped by Dinner Bell totalling $2,295,865.11, pursuant
to short-term co-pack contracts referred to in the Letter Agreement
and failed to pay Congress for the remaining inventory of Dinner
Bell, valued at $400,000. Morrell pled, as an affirmative defense,
fraud in the inducement based on Morrell's alleged knowledge that
Dinner Bell's inventory was misstated at the time of Morrell's
purchase of Dinner Bell assets.
On this motion, Morrell claims that the balance of interest
favors a transfer to the Southern District of Ohio due to the
necessity of calling as witnesses the Dinner Bell employees
knowledgeable about the status of its inventory and the knowledge
of Congress of its misstated size. It also points out (1) that
the Purchase Agreement was entered into in Ohio and requires the
application of Ohio law and that both Morrell and Dinner Bell
signed the Letter Agreement in Ohio.
The acquisition of Dinner Bell arises out of circumstances
typical of the decade of 1980-1990. Dinner Bell was purchased in
a leveraged buy-out in June 1988 by a New York based group
comprised of BJF Holding Corp. ("BJF"), owned by Joshua Leibowitz
and Citicorp Venture Capital Ltd. ("Venture"). In connection with
this leveraged buy-out, Congress entered into financing agreements
which were to be governed by New York law, pursuant to which all
Dinner Bell's present and after acquired "Accounts," "Inventory"
and the "Products" and "Proceeds thereof" were assigned as
collateral.*fn1 In 1990, Dinner Bell's New York investors entered
into extensive negotiations with Morrell and, ultimately, the
Purchase Agreement whereby Dinner Bell agreed to sell its North
Carolina plant, the Dinner Bell name and customer list, trademarks,
copyrights, patents, trade secrets, planned projects and goodwill
to Morrell. Morrell and Dinner Bell also entered into co-pack
agreements to purchase products and inventory of Dinner Bell. The
Letter Agreement was entered into simultaneously. Under the Letter
Agreement, Congress released its existing lien on the trademarks
and products and inventory in return for Morrell's agreement to
pay for products delivered by Dinner Bell under the short-term
In a motion pursuant to 28 U.S.C. § 1404 (a), the Court must
weigh the convenience of the parties, convenience of witnesses,
ease of access to sources of proof, availability of process to
compel attendance of witnesses, costs of obtaining willing
witnesses and practical problems relating to the prompt trial and
the interests of justice. Seagoing Uniform Corp. v. Texaco, Inc.,
705 F. Supp. 918, 935 (S.D.N.Y. 1989); Schneider v. Sears,
265 F. Supp. 257 (S.D. N.Y. 1967) (Weinfeld, J).
In this case, Dinner Bell's representatives in the negotiation
of the Purchase Agreement and Letter Agreement, Stanley Frieze,
Joshua Leibowitz of BJF and Richard E. Mayberry, Jr., a vice
president of Venture, as well as Edwin Stern, the senior vice
president of Congress who negotiated the Letter Agreement, are
located in New York. Morrell's representatives to the negotiations
are located in Ohio, and Dinner Bell's former Ohio plant employees,
who are knowledgeable as to its inventory, are located in Ohio or
that area of the country. On the other hand, the accountant for
Congress who along with Morrell representatives, oversaw the
inventory taken by Dinner Bell's accountant, is located in
Philadelphia and John Baccash, an accountant with Coopers &
Lybrand who closed out Dinner Bell's books and did a year-end
audit, lives in New York.
Morrell's records are in Ohio. Congress' are in New York.
Certain contracts relative to the events in question call for Ohio
law to apply and others call for New York law to apply.
Although the balance of interests is close, the Court finds
the balance weighs in favor of keeping the action in New York.
Furthermore, plaintiff's choice of forum should be given weight.
A. Olinick & Sons v. Dempster Bros., Inc., 365 F.2d 439, 444 (2d
Cir. 1966); U.S. Barite Corp. v. M.V. Haris, 534 F. Supp. 328
(S.D.N.Y. 1982); First National City Bank v. Nanz, Inc.,
437 F. Supp. 184, 188 (S.D.N.Y. 1975). Accordingly, the motion to
transfer is denied.