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Maryland Court Holds That Transfer of Case to District of Utah is Appropriate Under 28 U.S.C. § 1404(a), Where Both Cases Shared Common Questions of Law and Fact

First Mariner Bank v. United Security Financial Corp.
Case No. 13-cv-3930-JKB, (April 25, 2014)

by Jhanelle A. Graham, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.mdd.uscourts.gov/Opinions/Opinions/13-3930%20First%20Mariner%20Bank%20v.%20United%20Security%20Financial%20Corp.pdf

In First Mariner Bank v. United Security Financial Corp., the Maryland federal district court was asked to decide whether to stay the proceedings, transfer venue, or grant the defendant’s motion to dismiss. In this case, First Mariner Bank (“FMB” or “Plaintiff”) brought a lawsuit against United Security Financial Corp. (“USF” or “Defendant”) alleging breach of contract, unjust enrichment, and detrimental reliance with regard to the sale of residential mortgage loans by FMB to USF. After reviewing the facts and discussing the applicable rules of civil procedure, the Maryland district court granted the motion and transferred the case to the United States District Court for the District of Utah.

By way of background, FMB sold numerous residential mortgage loans to USF; however, between December 27, 2011 and June 11, 2013, USF failed to pay a total of $766,896.39 due to FMB for the loans it purchased. On December 31, 2013, Plaintiff filed the present action, and USF moved to dismiss the case, stay the proceedings, or transfer the case to the United States District Court for the District of Utah. On December 20, 2013, eleven (11) days before FMB filed its lawsuit in Maryland district court, USF filed a lawsuit (the “Utah suit”) against FMB in the District Court of the Third Judicial District of the State of Utah in Salt Lake County, alleging breach of contract with regard to a mortgage loan sold by Plaintiff to Defendant (the “Ulino Loan”). Consequently, USF argued that the present case should be dismissed or stayed as a duplicative lawsuit or, in the alternative, transferred to the United States District Court for the District of Utah so that it could be consolidated with USF’s pending lawsuit.

The Maryland district court began its analysis by discussing the procedural grounds for transferring a case from one (1) federal court to another. According to the Maryland federal district court, a trial judge must consider a number of factors when deciding whether to transfer a case, including: “the private interest of the litigants, the relative ease of access to sources of proof, the availability of compulsory process for the attendance of unwilling witnesses, and ‘all other practical problems that make trial of a case easy, expeditious and inexpensive.’” Cronos Containers, Ltd. v. Amazon Lines, Ltd., 121 F. Supp. 2d 461, 465 (2000) (quoting Gulf Oil Corporation v. Gilbert, 330 U.S. 501 (1947)).

The Maryland district court then examined the facts of the case, finding that it did not merit abstention. Colorado River Water Conservation District v. United States, 424 U.S. 800, 817 (1976) (“As between federal district courts, however, though no precise rule has evolved, the general principle [governing abstention] is to avoid duplicative litigation.”). Nonetheless, the court pointed out that both FMB and USF agreed that the cases shared common questions of law and fact. In fact, in opposition to USF’s motion, FMB stated: “To the extent that USF’s Motion to Dismiss, Transfer or Stay is denied, First Mariner intends to seek the transfer of the Utah Litigation to this Court for consolidation with the Maryland Litigation.” Thus, according to the court, even FMB would agree that transfer to the United States District Court for the District of Utah was appropriate, pursuant to 28 U.S.C. § 1404(a).

The Maryland district court also determined that USF had met its burden of showing that the case should be transferred to the United States District Court for the District of Utah. FMB and USF each claimed that its preferred forum would best serve the convenience of the parties and witnesses—i.e., USF and its witnesses were located in Utah, and FMB and its witnesses were located in Maryland. Thus, the district court stated that the convenience of the parties and their witnesses was in equipoise. Instead of convenience, the court focused on the interest of justice in avoiding duplicative litigation—or, stated differently, the court’s interest in “the conservation of judicial resources and comprehensive disposition of litigation.” Cronos Containers, 121 F. Supp. 2d at 466 (quoting Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183 (1952)). Given that the Maryland and Utah actions shared common questions of law and fact, the Maryland district court held that transfer of the case to the District of Utah would permit the Utah court to consolidate the two (2) actions and treat them as one (1) case. In so doing, transfer would serve the interest of justice by making the adjudication of the case “easy, expeditious and inexpensive.” Cronos Containers, 121 F. Supp. 2d at 465.

Finally, the court acknowledged that, generally, a plaintiff is entitled to its choice of forum. Here, however, USF had already exercised that choice when it filed the Utah Suit—eleven (11) days before FMB filed the instant case. Additionally, an examination of the Utah Suit’s docket suggested that the Utah Suit had been more actively litigated than this case. Consequently, the district court gave the United States District Court for the District of Utah priority as the forum in which an action arising out of the same nucleus of facts as the present action was first filed. See Cronos Containers, 121 F. Supp. 2d at 465. For all these reasons, the Maryland district court granted USF’s motion to transfer the case to the District of Utah, pursuant to 28 U.S.C. § 1404(a).


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