The opinion of the court was delivered by: Buchwald, District Judge.
Plaintiff Korea Express USA, Inc. ("Plaintiff" or "Korea
Express") brings this contract action to recover unpaid freight
charges. Currently pending before the Court is a motion to
dismiss the complaint by defendant Nationsbanc Commercial
Corporation ("Nationsbanc") on the grounds of lack of subject
jurisdiction and improper venue.*fn1 In brief, Nationsbanc
alleges that since there is no maritime contract between itself
and plaintiff, there is no admiralty or maritime jurisdiction.
Alternatively, Nationsbanc argues that venue is improper in the
Southern District of New York because of the case's stronger
connection to New Jersey. For the reasons discussed below,
Nationsbanc's motion to dismiss is denied. However, we find that
plaintiff has not established that venue lies in the Southern
District of New York and, moreover, in the interest of justice
order the case to be transferred to the District of New Jersey.
Plaintiff Korea Express is a New Jersey corporation that
"operat[es] as a duly tariffed and bonded non-vessel-operating
common carrier." Plaintiffs Amended Complaint ("Am.Comp.") ¶ 3.
Currently, it seeks to recover $40,315.00 in freight charges
from defendant KKD,*fn2 a company that contracted with Korea
Express for the shipment of cargo between Asia and the United
States. Nationsbanc, a Georgia corporation, is a heavily secured
investor in KKD. Since KKD is apparently insolvent, Korea
Express is also proceeding against Nationsbanc on the theory
that Nationsbanc exercised a degree of control over KKD
sufficient to confer it with the status of a presumptive owner.
See Pl. Mem. at 7-15 (citing, inter alia, A/S
Dampskibsselskabet Torm v. Beaumont Oil Ltd., 927 F.2d 713 (2d
Nationsbanc provided financing to KKD through a July 3, 1996
"Letter of Credit." Pl. Mem. Ex. F. In return, KKD signed a July
3, 1996 "Factoring Agreement," which provided, in relevant part,
that KKD would:
grant [Nationsbanc] a security interest in all of
[KKD's] present and future accounts, instruments,
contract rights, chattel, paper, documents and
general intangibles, (whether arising before or after
termination of this Agreement) and all returned,
repossessed, and reclaimed goods, and books and
records relating thereto, to secure all of [KKD's]
Obligations [to Nationsbanc]. [KKD] further sell[s]
and assign[s] to [Nationsbanc] all [KKD's] title
and/or interest in the goods (unless released by
[KKD]) represented by Receivables as well as goods
returned by or repossessed from Customers, all of
[KKD's] rights against third parties with respect
thereto; [KKD] will cooperate with [Nationsbanc] in
exercising any rights with respect to the goods.
Pl. Mem. Ex. B, ¶ 5. The Factoring Agreement grants to
Nationsbanc a power of attorney to "receive, open, and dispose
of all mail addressed to [KKD] pertaining to Receivables" and to
endorse KKD's name on any "notes, acceptances, checks, drafts,
money orders, and other evidences of payment of receivables that
may come into [Nationsbanc's] possession." Id. ¶ 4.
Nationsbanc acted almost immediately to protect its interests
under the Factoring Agreement. Most importantly, on July 9,
1996, Nationsbanc had KKD's president sign an additional
instrument, which informed the warehouse holding its goods that
it had granted to Nationsbanc "a security interest in all of our
present and future inventory" and requested that the warehouse
send a monthly letter to Nationsbanc confirming the amount of
the inventory and honor any instructions related to the goods
issued by Nationsbanc. Pl. Mem. Ex. G. Throughout 1997 and 1998,
KKD apparently met part of its obligations to Nationsbanc by
assigning at least some of its receivables directly to the bank.
Id. Exs. H, I.
Between February 1, 1999 and March 31, 1999, KKD contracted
with Korea Express to convey cargo from various ports in Asia to
the United States. As is customary shipping arrangements, the
terms entered into between KKD and Korea Express are included in
the bills of lading for the various shipments. Pl. Mem. Ex. A.
The bills clearly read:
IN ACCEPTING THIS BILL OF LADING, the Shipper,
Consignee, Holder hereof, and Owner of the goods,
agree to be bound by all of its stipulations,
exceptions and conditions, whether written, printed
or stamped on the front or back herepf [sic], as well
as the provisions of the above Carrier's published
Trade Rules and Regulations, as fully as if they were
all signed by the Shipper, Consignee, Holder or
Owner. . . .
Id. The bills listed KKD as the "Consignee" and several Asian
companies as "Shipper/Exporter." Id. They in no way referred
to Nationsbanc. Id.
Despite this spate of activity, KKD defaulted on its
obligations to Nationsbanc in April of 1999. Defendant's Notice
of Motion ("Def.Mot."), Ex. O. KKD's president, Seong D. Park
("Park"), signed a "Surrender and Abandonment of Collateral" on
April 7, 1999. Id. Among other things, KKD acknowledged its
debt to Nationsbanc in the amount of $27,107,572 plus interest.
Id. Pursuant to Nationsbanc's secured position vis à vis
KKD, the document granted to Nationsbanc "all rights of
possession in and to" KKD's "inventory, accounts, equipment,
general intangibles, contract rights, books and records, chattel
paper, leases and other personal property." Id.
Three weeks later, on April 20, 1999, officers of Korea
Express visited the offices of KKD in order to demand payment
for outstanding freight charges. Affidavit of Seong D. Park,
dated March 24, 2000, appended to Pl. Mem. as Ex. E. ("Park
Aff."). At that time, Park "informed [them] that Korea Express
would have to look to Nationsbanc for payment since Nationsbanc
was the owner of the goods [that Korea Express had shipped] and
because KKD did not have any control over the goods or payment."
Nationsbanc's counsel subsequently provided Korea Express with
copies of the relevant security agreements, confirming its
rights to the goods. Aff. of Stephen C. Pascal, dated Oct. 11,
1999 ("Pascal Aff."), ¶ 4.
Korea Express filed its initial complaint ("Comp.") in this
suit on July 14, 1999, alleging contract claims against both KKD
and Nationsbanc. It asserted maritime jurisdiction pursuant to
an "in rem lien for unpaid freight." Comp. ¶ 12. However, in
August, Nationsbanc's attorney wrote to counsel for KKD
asserting the basic proposition that since Korea Express had
surrendered possession of the goods, it could "not enforce a
maritime lien for freight on that cargo." Letter of Stephen C.
Pascal, dated August 10, 1999, appended to Def. Mot. as Ex. C.
As a result, plaintiff amended its complaint on September 27,
1999 to withdraw its claim of ...