United States District Court, W.D. Kentucky, Paducah
MEMORANDUM OPINION AN ORDER
B. Russell, Senior Judge
matter is before the Court upon a motion by Defendants
D&G Properties (“D&G”), DGW Investments,
Inc. (“DGW”), Bruce Grisham
(“Grisham”), Daniel Williams
(“Williams”), RB Grisham, and Jacob Stauffer
(“Stauffer”) to dismiss for improper venue, or in
the alternative, to transfer venue to the Western District of
Missouri. [R. 16]. Plaintiff Michael McDorman has filed his
response [R. 19], and the Defendants have filed a reply. [R.
20]. Fully briefed, Defendants' motion is ripe for
review, and for the following reasons, it is
factual allegations as set out in the Complaint, [R. 1] and
taken as true are as follows.D&G and DGW (collectively
referred to herein as “Companies”) own and
operate multiple Sonic Drive-In (“Sonic”) and
Taco John's franchises in Missouri, Tennessee, Kentucky,
Indiana, Ohio, and West Virginia. Id. at 5. DGW was
formed by Tom Dunivant, Bruce Grisham, and Daniel Williams.
Id. D&G was formed by Dunivant and Grisham.
1996, Plaintiff met with Defendants in West Plains, Missouri
and discussed his prospective employment with the Companies.
Id. at 6. Defendants offered Plaintiff the job of
controlling the franchises and he accepted the offer shortly
thereafter. Id. As part of his employment agreement,
Plaintiff would receive a 10% ownership interest in all
future franchises purchased by the Companies. Id.
Plaintiff acquired his first 10% ownership interest in a
newly acquired franchise when Plaintiff and a separate
company owned by Dunivant executed an operating agreement to
establish Sonic of Malden, LLC (“The Malden Operating
Agreement”). Id. at 7. Thereafter, Plaintiff
and Defendants established eight additional Limited Liability
Companies to control newly acquired Sonic and Taco John's
franchises (“The McDorman Interest LLCs”).
continued to manage the operations of the McDornam Interest
LLCs, as well as the franchises wholly owned and operated by
D&G and DGW, until March 2016. Id. at 10. In
March 2016, Dunivant was bought out of his ownership interest
by the other shareholders of the Companies. Id. Upon
learning of Dunivant's departure, Plaintiff notified
Defendants of his desire to voluntarily withdraw from the
LLCs. Id. at 11. According to the terms of the
McDorman Interest LLC operating agreements, this notification
triggered a buy-out of Plaintiff's ownership interests.
however, desired to continue their business relationship with
Plaintiff and set up a meeting in order to persuade Plaintiff
to continue his role as Company Controller. Id. at
11-12. At the meeting, Plaintiff agreed to continue his role
as Company Controller for three years (“The Amended
Employment Agreement”). Id. at 12. In exchange
for this commitment, Defendants agreed to purchase 50% of
Plaintiff's ownership interests in the McDorman Interest
LLCs immediately, and then purchase the remainder of
Plaintiff's ownership interest at the conclusion of the
three-year term. Id. On April 12, 2016 Defendants
purchased 50% of Plaintiff's ownership interests in the
McDorman Interest LLCs. Id. at 13.
one-year into the Amended Employment Agreement, Plaintiff
began to sense a lack of communication from the shareholders
of the companies. Id. Because of this perceived lack
of communication, on February 6, 2017, Plaintiff approached
Defendants at the West Plains, Missouri office to express his
frustration. Id. Defendants told Plaintiff that the
shareholders had discussed the need to continue their
business without Plaintiff's services. Id.
next day, February 7, 2017, Plaintiff and Defendants met at
Defendants' office in Paducah, Kentucky. Id. At
this meeting, Defendants offered Plaintiff a severance
agreement and Plaintiff accepted the offer. Id. at
14. On February 21, 2017 a meeting was held to install
Plaintiff's replacement, Selina Harner, as the new
Director of Operations of the companies. Id. at 15.
Sometime after March 14, 2017, Plaintiff received a letter
sent by the law firm Husch Blackwell on behalf of Defendants
notifying Plaintiff that his employment with the Companies
was terminated “effective immediately.”
alleges that the Companies have not fulfilled their
obligations under the terms of the Severance Agreement,
Amended Employment Agreement, and operating agreements of the
McDorman Interest LLCs. Id. at 17-22. Plaintiff
further alleges that Defendants have breached their fiduciary
duties. Id. at 22-24. Plaintiff also claims that he
was fraudulently induced to continue his employment with the
companies after he expressed his desire to retire and sell
his interests in the LLCs. Id. at 24-25.
Federal Rule of Civil Procedure 12(b)(3), a defendant may
move to dismiss an action on the grounds that it was filed in
an improper venue. Fed.R.Civ.P. 12(b)(3). Federal law
provides that "[a] civil action may be brought in . . .
a judicial district in which a substantial part of the events
or omissions giving rise to the claim occurred." 28
U.S.C. § 1391(b)(2). "The 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, transfer such case to any district or
division in which it could have been brought." 28 U.S.C.
§ 1406(a). Even if venue is proper, however, "[f]or
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). "Once
challenged, Plaintiff bears the burden of showing that its
initial choice of venue is proper." Sechel Holdings,
Inc. v. Clapp, No. 3:12-CV-00108-H, 2012 U.S. Dist.
LEXIS 108298, 2012 WL 3150087, at *2 (W.D. Ky. Aug. 2, 2012)
(Heyburn, J.) (citing Crutchfield v. Santos, No.
5:07-CV-94-R, 2007 U.S. Dist. LEXIS 86558, 2007 WL 4124713,
at *1 (W.D. Ky. Nov. 19, 2007) (Russell, J.)). "The
Court may examine facts outside the complaint but must draw
all reasonable inferences and resolve factual conflicts in
favor of the plaintiff." NHCLC-Seattle, LLC v.
Kauffman, No. 13-12804, 2013 U.S. Dist. LEXIS 174421,
2013 WL 6474197, at *2 (E.D. Mich. Dec. 10, 2013) (quoting
Audi AG & Volkswagen of Am., Inc. v. Izumi, 204
F.Supp.2d 1014, 1017 (E.D. Mich. 2002)).
Whether Venue is Proper.
the Court must determine whether the Western District of
Kentucky is a proper venue for this case. 28 U.S.C. §
1391(b)(2) provides that "[a] civil action may be
brought in . . . a judicial district in which a substantial
part of the events or omissions giving rise to the claim
occurred." The Sixth Circuit has interpreted this
provision to mean that "the plaintiff may file his
complaint in any forum where a substantial part of
the events or omissions giving rise to the claim arose; this
includes any forum with a substantial connection to the
plaintiff's claim." First of Michigan Corp. v.
Bramlet, 141 F.3d 260, 263 (6th Cir. 1998). Accordingly,
the Court need not "base its determination that venue
[i]s improper on a single occurrence which directly gave rise
to the plaintiffs' action;" rather, it must merely
"consider whether the forum the plaintiffs chose had a
substantial connection to their claim." Id. at
264. Courts applying this standard have explained that
"venue may be proper in two or more districts, even
though most of the events occurred in only one of the
districts." NHCLC-Seattle, 2013 U.S. Dist.
LEXIS 174421, 2013 WL 6474197, at *2 (E.D. Mich. Dec. 10,
2013) (quoting Capitol Specialty Corp. v. Splash Dogs,
LLC, 801 F.Supp.2d 657, 671-72 (S.D. Ohio 2011));
see also IFL Grp. Inc. v. World Wide Flight Serv.,
Inc., 306 F.Supp.2d 709, 711 (E.D. Mich. 2004)
("Just because venue is proper in that district,
however, does not entail that it is not proper in another
district; 'venue may be may be proper in more than one
judicial district.'” (citation omitted).
case, a substantial part of the events giving rise to
Plaintiff's claims arose in the Western District of
Kentucky. In his complaint, Plaintiff raises multiple breach
of contract claims. These claims arise from the alleged
breach of the McDorman Interest LLC operating agreements,
Plaintiff's Amended Employment Agreement, and
Plaintiff's Severance Agreement. In a breach of contract
action, both the location where the contract was entered and
where Plaintiff was to perform the work under the contract is
relevant. Creech v. Blue Cross & Blue Shield of Fla.,
Inc., No. 3:17-CV-00335-TBR, 2017 U.S. LEXIS 211286 at
*9, 2017 WL 6567814 (W.D. Ky. Dec. 22, 2017). For over
fifteen years, Plaintiff performed his duties as an employee
of Defendants from his Paducah office. Also, Plaintiff
executed several of the operating agreements that give rise
to Plaintiff's claims in Paducah. Further, there were
meetings relevant to the various agreements at issue in this
case that occurred in Paducah. All of Plaintiff's claims
arise out of his employment relationship with Defendants.
Plaintiff's performance under the agreements at issue in
this case occurred predominately in Paducah, Kentucky, venue