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Gaymar Industries, Inc. v. Firstmerit Bank

March 21, 2007

GAYMAR INDUSTRIES, INC., PLAINTIFF,
v.
FIRSTMERIT BANK, N.A., DEFENDANT.



The opinion of the court was delivered by: William M. Skretny United States District Judge

DECISION AND ORDER

I. INTRODUCTION

On February 1, 2006, Plaintiff Gaymar Industries, Inc., commenced this diversity action against Defendant FirstMerit Bank, N.A., seeking equitable relief related to an unsuccessful leasing transaction. Presently before this Court is Defendant's Motion to Dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and for improper venue pursuant to Rule 12(b)(3). Alternatively, Defendant seeks an Order transferring this case to the Northern District of Ohio pursuant to 28 U.S.C. § 1404(a).*fn1 Plaintiff opposes the motion.*fn2

For the reasons discussed below, this Court finds that it lacks personal jurisdiction over Defendant. Defendant's motion seeking dismissal on that basis will therefore be granted. However, this Court finds that the interests of justice warrant the transfer of this case to the proper district. Therefore, this case will not be dismissed outright, but rather, will be transferred to the United States District Court for the Northern District of Ohio.

II. BACKGROUND

A. Facts

In adjudicating Defendant's motion, this Court assumes the truth of the following factual allegations contained in the Complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976); see also Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton Coll., 128 F.3d 59, 63 (2d Cir. 1997).

Plaintiff is a corporation organized and operating under New York law. (Complaint, ¶ 1.) Its principal place of business is in Orchard Park, New York, which is located in the Western District of New York. (Complaint, ¶ 1.) Defendant is a national banking association that maintains its principal office in Akron, Ohio, and it is a corporate citizen of the State of Ohio. (Complaint, ¶ 2.)

At some point prior to December 10, 2003, Defendant lent money and provided line of credit financing to non-party Preferred Capital, Inc. ("PCI"). (Complaint, ¶ 11.) PCI's main office is in Brecksville, Ohio. (Complaint, ¶ 13.) PCI purchased equipment with the money obtained from Defendant, and then leased that equipment to third parties, primarily in the medical and health services field. (Complaint, ¶ 11.) PCI executed Notes in favor of Defendant, and assigned Defendant the various Leases as collateral for the Notes. (Complaint, ¶ 12.)

On December 10, 2003, Defendant entered into an agreement with PCI to increase its available line of credit from $4,000,000 to $5,000,000. (Complaint, ¶ 14.) Thereafter, on or about March 19, 2004, Defendant and other lenders used by PCI entered into a formal Subordination Agreement wherein they established the relative priority of various liens on Leases and other of PCI's assets. (Complaint, ¶ 15.)

One of PCI's leasing programs involved certain telecommunication devices manufactured by non-party NorVergence, a New Jersey corporation. (Complaint, ¶ 16.) On June 30, 2004, NorVergence's creditors commenced an involuntary bankruptcy proceeding against NorVergence, which was subsequently converted to a Chapter 7 liquidation proceeding in the Newark Division of the United States Bankruptcy Court for the District of New Jersey on July 14, 2004. (Complaint, ¶ 17.) The bankruptcy proceedings were allegedly prompted by nationwide litigation concerning whether PCI and NorVergence had engaged in fraudulent activity in connection with certain Lease Agreements. (Complaint, ¶ 18.)

Plaintiff alleges that Defendant knew or should have known about the allegations against PCI in the Summer of 2004. (Complaint, ¶ 19.) At that time, Defendant demanded that PCI buy back a number of Leases that it had assigned to Defendant, despite knowing that PCI did not have enough cash to do so. (Complaint, ¶¶ 20, 21.) However, on September 28, 2004, Defendant advanced PCI $1,561,566.77 so that it could buy back the Leases. (Complaint, ¶ 22.) This allowed Defendant to extricate itself from issues surrounding the Leases and claims that could have been asserted or may have been asserted against Defendant. (Complaint, ¶ 22.)

Plaintiff alleges that by September 28, 2004, Defendant knew or should have known that PCI faced tremendous financial pressure or was insolvent. (Complaint, ¶ 23.) Nevertheless, Defendant continued to conduct business with PCI. (Complaint, ¶ 24.)

On November 25, 2004, PCI entered into four Leases with non-party Unlimited Advacare, Inc. of New Jersey for equipment manufactured by Plaintiff. (Complaint, ¶ 25.) Plaintiff delivered the equipment, which is still being utilized by Advacare. (Complaint, ¶ 26.) PCI received money from Defendant for the purchase of the equipment from Plaintiff and then assigned the Leases to Defendant. (Complaint, ¶ 27.) PCI, however, never paid Plaintiff for the equipment. (Complaint, ¶ 28.) Plaintiff therefore contacted Defendant to collect payment through the Lease payments being made by Advacare to Defendant. (Complaint, ¶ 29.) However, Defendant asserted that it had a lien on the Lease payments that is prior to Plaintiff's claim ...


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