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Berger v. Bank of Colorado

United States District Court, D. Montana, Billings Division

November 27, 2017




         Plaintiffs Jeffrey W. Berger, Tami M. Berger, Wibaux 1, LLC, and Pro-Frac Heating & Trucking LLC (“Plaintiffs”) initiated this action in Montana state court against Defendant Bank of Colorado (the “Bank”) arising out of the financing of agricultural land Plaintiffs purchased in Montana, North Dakota and South Dakota. Plaintiffs bring claims for negligent misrepresentation, breach of fiduciary duty, fraud and undue influence, breach of the duty of good faith and fair dealing, contractive adhesion, and punitive damages. (Doc. 8.)

         The Bank removed the matter to this Court invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332. (Doc. 1.) Judge Watters has referred the case to the undersigned under 28 U.S.C. § 636(b)(1)(B). (Doc. 18.) Presently before the Court is the Bank's Motion to Transfer Venue. (Doc. 3.) The motion is fully briefed and ripe for the Court's review. (Docs. 4, 15, 16, 19.)

         Having considered the parties' submissions, the Court finds the Bank's motion should be DENIED.[1]

         I. BACKGROUND

         Plaintiffs Jeffrey and Tami Berger (the “Bergers”) reside in both Montana and North Dakota. (Docs. 15-1 at ¶ 6; 15-2 at ¶ 5.) Plaintiff Wibaux 1, LLC (“Wibaux 1”) is a Montana limited liability company that conducts farming and ranching operations in Montana, North Dakota, and South Dakota. (Docs. 3-1 at ¶ 5; 15-1 at ¶ 5; 15-2 at ¶ 6.) The Bergers are the sole members of Wibaux 1. (Doc. 8 at ¶ 2.) Plaintiff Pro-Frac Heating & Trucking, LLC (“Pro-Frac”) is a North Dakota limited liability company that does business in North Dakota.[2] (Doc. 3-1 at ¶ 6.) Jeffrey Berger is the sole member of Pro-Frac. (Doc. 8 at ¶ 3.) Defendant Bank of Colorado is a Colorado corporation that operates solely in Colorado. (Doc. 3-1 at ¶¶11, 12.)

         In 2012, the Bergers financed the purchase of a residence and a commercial lot in Estates Park, Colorado through the Bank. (Docs. 3-1 at ¶ 7; 3-5; 3-6; 3-7; and 8 at ¶ 5.) Then, in 2013, the Bank loaned additional funds to the Bergers to finance the purchase of agricultural land located in Montana, North Dakota, and South Dakota. (Docs. 3-1 at ¶ 19; 8 at ¶ 5.) The financing agreements associated with the purchase of the agricultural land are the subject of this lawsuit.

         Between March 2013 and May 2015, Plaintiffs purchased five ranches in Montana, and one ranch located in both North Dakota and South Dakota. (Docs. 3-12; 3-13; 15-1 at ¶ 5; 15-2 at ¶ 6; 8 at ¶ 6.) The ranch properties were purchased in the name of Wibaux 1. (Id.) The Bank provided approximately 50% of the financing for the purchase prices of the properties, and Plaintiffs used their own funds for the balance. (Doc. 8 at ¶ 6.) In December 2013, the Bank also loaned Plaintiffs over $7.5 million to buy cattle for the Montana ranches (the “Chattel Loan”). (Docs. 3-1 at ¶ 19; 8 at ¶ 7.)

         In the summer of 2015, Plaintiffs sought to consolidate their six real estate loans, and the Bank agreed to do so. (Doc. 15-1 at ¶ 10.) As a result, in late November 2015, Plaintiffs executed a $19.5 million Consolidated Real Estate Loan Agreement. (Id.) As part of the Bank's refinancing proposal, the Bank required Plaintiffs to agree to a modification of the Chattel Loan, and a new $4.5 million Line of Credit Loan. (Id.) Plaintiffs allege the terms of the refinancing proposal were unfavorable, in that certain maturity dates were shortened, the new Line of Credit Loan was required, any default under the Chattel Loan or the Line of Credit Loan would trigger a default of the Consolidated Real Estate Loan, and personal guarantees were required on all three loans. (Doc. 8 at ¶ 9.) Despite the unfavorable terms, Plaintiffs allege they agreed to the refinancing proposal based on the Bank's representations and assurances that the proposed terms were only a formality, and that the Bank would extend the maturity dates of the Chattel Loan and Line of Credit Loan as long as Plaintiffs continued to make loan payments that were roughly the same amount as they had been paying. (Id. at ¶¶ 10-11; Doc. 15-1 at ¶ 10.)

         In March 2016, and again in August 2016, the Bank extended the maturity dates of the Chattel Loan and Line of Credit Loan. (Docs. 8 at ¶ 12; 15-1 at ¶11.) However, Plaintiffs allege the Bank declined to extend the maturity dates in October 2016, and declared the Chattel Loan, Line of Credit Loan and Consolidated Real Estate Loan in default on October 14, 2016. (Doc. 8 at ¶ 13.)

         On November 18, 2016, Plaintiffs received a banker's box of documents from the Bank which contained a Forbearance Agreement. (Doc. 15-1 at ¶ 11.) Plaintiffs retained counsel in Billings, Montana to review the agreement and try to negotiate better terms with the Bank. (Doc. 15-1 at ¶ 11; Doc 15-3.) Plaintiffs allege the efforts were unsuccessful, and they were compelled to sign the Forbearance Agreement to prevent imminent foreclosure, even though the terms of the agreement were onerous and unconscionable. (Doc. 8 at ¶ 15.) Plaintiffs were ultimately unable to meet the terms of the Forbearance Agreement. (Id. at ¶ 17.) Plaintiffs allege the Bank is unwilling to negotiate any reasonable modifications to the Forbearance Agreement, and instead intends to commence foreclosure proceedings. (Id. at ¶¶ 17-18.) Plaintiffs assert that they would not be in default if the Bank had agreed to extend the maturity dates for the Chattel Loan and Line of Credit Loan as it had represented it would do. (Id. at ¶ 16.)


         A. Legal Standard

         Changes of venue are governed by 28 U.S.C. § 1404(a), which provides:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

28 U.S.C. § 1404(a).

         Whether to transfer a case is within the Court's discretion, and a decision whether to do so must be based on an “individualized, case-by-case consideration of convenience and fairness.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000) (citation omitted). There is no uniform list of factors that courts must weigh to determine whether transfer is appropriate in a particular case. Id. Factors that are frequently considered include:

1. the plaintiff's choice of forum,
2. the location where the relevant agreements were negotiated and executed,
3. the convenience of witnesses,
4. the ability of the two forums to compel non-party ...

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