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