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GREGORY v. POCONO GROW FERTILIZER CORP.

January 26, 1999

C. WESLEY GREGORY, III, ET AL., PLAINTIFFS,
v.
POCONO GROW FERTILIZER CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Larimer, Chief Judge.

DECISION AND ORDER

Plaintiffs, C. Wesley Gregory, III ("Gregory"), C. Wesley Gregory, Jr. ("Junior"), Donald E. Gordon ("Gordon"), and Waste Stream Environmental, Inc. ("Waste Stream") (collectively "plaintiffs"), commenced this action against defendants, Pocono Grow Fertilizer Corporation ("Pocono Grow"), Bruce Ecke, and Karen Ecke (collectively "defendants"), for a declaratory judgment that no enforceable agreement exists between the parties. Pending before the Court is defendants' motion to dismiss plaintiffs' complaint for improper venue or, in the alternative, to transfer the action to the Middle District of Pennsylvania.

FACTUAL BACKGROUND

Waste Stream is a New York corporation with its principal place of business in Weedsport, New York. Waste Stream recycles bio-solids and sells products and services to the wastewater treatment industry in the Northeast United States. All the shares of Waste Stream were owned by Gregory, who resides in New York, Junior, who resides in Massachusetts, and Gordon, who resides in Maryland.

Pocono Grow is a Pennsylvania corporation with its principal place of business in Stroudsberg, Pennsylvania. Pocono Grow owns the permits and licenses necessary to construct and operate a waste treatment and recycling facility in East Stroudsberg, Pennsylvania. All the shares of Pocono Grow are owned by Bruce and Karen Ecke, who reside in Pennsylvania.

The undisputed facts on this motion establish that the parties began discussing a potential business relationship in February 1997. They conducted these negotiations between New York and Pennsylvania by telephone, facsimile, and mail. Additionally, one face-to-face meeting occurred between Gregory and the Eckes in Pennsylvania during the summer or fall of 1997.

On March 12, 1998, Gregory prepared and executed a letter of intent in New York, which proposed that Waste Stream become a 50% equity owner of Pocono Grow's stock and execute an operation and maintenance agreement for the facility. This letter of intent was delivered to Bruce Ecke in Pennsylvania, signed by him on March 13, 1998, and then returned to Gregory in New York.

In April 1998, Gregory informed Pocono Grow that all the stock of Waste Stream and Earth Blends, Inc., a company affiliated with Waste Stream, had been acquired by U.S. Liquids, Inc. and U.S. Liquids Northeast, Inc. Gregory assured Pocono Grow that this stock acquisition would not have any adverse effect on Waste Stream's commitment to the facility. Gregory also indicated that in the event U.S. Liquids declined to undertake the project, the individual partners would assume Waste Stream's obligations.

On May 22, 1998, U.S. Liquids informed Pocono Grow that it did not intend to provide equity for the facility. Waste Stream's individual partners also decided that they did not want to pursue the transaction contemplated by the letter of intent.

On June 4, 1998, defendants advised the plaintiffs that they were prepared to commence litigation against Waste Stream and the individual plaintiffs for breach of the letter of intent. Plaintiffs immediately commenced this action for a declaratory judgment that there is no enforceable agreement between the parties. Defendants now move to dismiss plaintiffs' complaint for improper venue or, in the alternative, to transfer this action to the Middle District of Pennsylvania.

DISCUSSION

A. Defendants' Motion to Dismiss Pursuant to
  28 U.S.C. § 1406(a)

Defendants move to dismiss plaintiffs' complaint for improper venue pursuant to 28 U.S.C. ยง 1406(a). Section 1406(a) provides that "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, ...


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