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following Freudensprung, supra; Priller v. Cox, No. 5-15-01257-CV, 2016 WL 7163918, at *2 (Tex. App.—Dallas Nov. 15, 2016)
Summary of this case from Lea v. McGueOpinion
CIVIL ACTION NO. 1:19-CV-00341-MJT
2020-01-21
Samantha PALMER, Plaintiff, v. IDALIA LLORENS COLLECTION AGENCY, INC., Universidad del Sagrado Corazon, Defendants.
Shawn Jaffer, Shawn Jaffer Law Firm PLLC, Frisco, TX, Andrew Paul Gertz, Gertz Adair Law Firm, Beaumont, TX, for Plaintiff. Anthony W. Hernandez, Anthony W. Hernandez, Attorney at Law, Kevin Michael Acevedo-Carlson, The Gonzalez Law Group PLLC, Houston, TX, for Defendants.
Shawn Jaffer, Shawn Jaffer Law Firm PLLC, Frisco, TX, Andrew Paul Gertz, Gertz Adair Law Firm, Beaumont, TX, for Plaintiff.
Anthony W. Hernandez, Anthony W. Hernandez, Attorney at Law, Kevin Michael Acevedo-Carlson, The Gonzalez Law Group PLLC, Houston, TX, for Defendants.
OPINION AND ORDER OF TRANSFER
Michael J. Truncale, United States District Judge
Before the Court is Defendant Universidad del Sagrado Corazon ("the University")'s motion to dismiss the plaintiff's complaint for lack of personal jurisdiction and failure to state a claim for relief or alternatively to transfer venue to Puerto Rico. [Dkt. 22]. The Court has considered the motion, all other relevant filings, and the applicable law. For the reasons stated below, the Court finds that the case should be transferred in its entirety to the United States District Court for the District of Puerto Rico.
Including all claims against Idalia.
I. BACKGROUND
A. Procedural Background
Ms. Palmer filed her complaint with this Court on August 6, 2019, against the University and Idalia Llorens Collection Agency, Inc. ("Idalia"), asserting claims for wrongful debt collection under the Fair Debt Collection Practices Act ("FDCPA") and the Texas Debt Collection Act ("TDCA"). [Dkt. 1]. On September 11, 2019, Idalia filed an answer. [Dkt. 9]. Two weeks later, the University filed its answer on September 26, 2019. [Dkt. 11]. On November 5, 2019, the University filed a motion to dismiss for lack of personal jurisdiction and failure to state a claim for relief or alternatively to transfer venue. [Dkt. 22]. Ms. Palmer responded to the University's motion to dismiss on December 2, 2019. [Dkt. 26]. Subsequently, the University filed its reply on December 9, 2019. [Dkt. 28]. Additionally, pending before the Court are the University's motion for a protective order [Dkt. 21], Ms. Palmer's motion to change venue [Dkt. 31], the University's motion for a protective order [Dkt. 33], and the University's motion for a hearing [Dkt. 35].
B. Factual Background
The present dispute arises out of an alleged wrongful debt collection. [Dkt. 1]. The consumer debt arises from Ms. Palmer's attendance at the University. Id. However, Ms. Palmer's education was interrupted on October 2, 2017 due to Hurricane Maria. Id. Ms. Palmer alleges that the University demanded tuition from her for the 2018 spring semester, although the campus was closed due to Hurricane Maria's damage. Id.
Allegedly, the University mailed a tuition invoice in the amount of $5,568.68 to Ms. Palmer. Id. Then, Ms. Palmer contends that the University hired Idalia as a third-party debt collector. Id. Plaintiff states that Idalia "added an unauthorized 30% ($1,666.86) collection fee to the alleged balance owed." Id.
Then, Idalia mailed a collection letter to Ms. Palmer that allegedly violated the FDCPA. Id. More specifically, Ms. Palmer asserts three FDCPA violations, all of which concern mandatory notices of statutory rights under the FDCPA. Id. Additionally, Ms. Palmer alleges that the University violated several provisions of the TDCA by employing Idalia to collect on the consumer debt. Id.
Ms. Palmer alleges that Idalia violated the following FDCPA violations: §§ 1692(g)(a)(3) – (5); 1692 (e) – (f). See 15 U.S.C. § 1692 ; see also Hamilton v. United Healthcare of Louisiana, Inc. , 310 F.3d 385, 388 (5th Cir. 2002) (explaining the statutory requirements under the FDCPA).
As to the University, Ms. Palmer claims that the University violated the following violations of the TDCA: §§ 392.304(a)(8), (19); 392.306. See Tex. Fin. Code § 392.403 ; see also McCaig v. Wells Fargo Bank (Texas), N.A. , 788 F.3d 463, 472 (5th Cir. 2015) (explaining the causes of action under the TDCA).
II. RELEVANT LAW
A. Personal Jurisdiction
Federal Rule of Civil Procedure 12(b)(2) requires a court to dismiss a claim if the court does not have personal jurisdiction over the defendant. FED. R. CIV. P. 12(b)(2). Therefore, when a nonresident defendant files a motion to dismiss for lack of personal jurisdiction, the burden shifts to the plaintiff to establish that in personam jurisdiction exists. Bullion v. Gillespie , 895 F.2d 213, 217 (5th Cir. 1990) (citing WNS, Inc. v. Farrow , 884 F.2d 200, 202 (5th Cir. 1989) ); Wilson v. Belin , 20 F.3d 644, 648 (5th Cir. 1994) ; Bulkley & Assocs., LLC v. Occupational Safety & Health Appeals Bd. of California , No. 4:18-CV-642, 2019 WL 2411544, at *1 (E.D. Tex. June 7, 2019).
To satisfy that burden, the party seeking to invoke the court's jurisdiction must "present sufficient facts as to make out only a prima facie case supporting jurisdiction" if the court rules on the motion without an evidentiary hearing. Alpine View Co. v. Atlas Copco AB , 205 F.3d 208, 215 (5th Cir. 2000). However, if the court holds an evidentiary hearing, the plaintiff "must establish jurisdiction by a preponderance of the evidence." In re Chinese Manufactured Drywall Prods. Liab. Lit. , 742 F.3d 576, 585 (5th Cir. 2014) (citing Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co. , 517 F.3d 235, 241–42 (5th Cir. 2008) ). When considering a motion to dismiss, allegations in the plaintiff's complaint are taken as true, except to the extent that they are contradicted by the defendant. Stuart v. Spademan , 772 F.2d 1185, 1192 (5th Cir. 1985) ; Wyatt v. Kaplan , 686 F.2d 276, 282–83 n. 13 (5th Cir. 1982) ; accord Black v. Acme Mkts., Inc. , 564 F.2d 681, 683 n. 3 (5th Cir. 1977). Any material and genuine, conflicting facts are resolved in favor of the plaintiff for the purpose of determining whether a prima facie case exists. Jones v. Petty-Ray Geophysical Geosource, Inc. , 954 F.2d 1061, 1067 (5th Cir. 1992).
The Court is not required to hold an evidentiary hearing on the University's motion to dismiss for lack of personal jurisdiction. ITL Int'l v. Constenla, S.A. , 669 F.3d 493, 496 (5th Cir. 2012) ; see also Panda Brandywine Corp. v. Potomac Elec. Power Co. , 253 F.3d 865, 869 (5th Cir. 2001).
A federal court may exercise personal jurisdiction over a nonresident defendant if "(1) the long-arm statute of the forum state creates personal jurisdiction over the defendant; and (2) the exercise of personal jurisdiction is consistent with the due process guarantees of the United States Constitution." Revell v. Lidov , 317 F.3d 467, 469 (5th Cir. 2002) ; see also FED. R. CIV. P. 4(k)(2). Therefore, the Court must look to the Texas long-arm statute. Pedelahore v. Astropark, Inc. , 745 F.2d 346, 347 (5th Cir. 1984). The Texas long-arm statute is coextensive with the federal constitutional limits of due process and normally generates an inquiry limited to the scope of the Fourteenth Amendment's Due Process Clause. Stroman Realty, Inc. v. Wercinski , 513 F.3d 476, 482 (5th Cir. 2008) ; Religious Tech. Ctr. v. Liebreich , 339 F.3d 369, 373 (5th Cir. 2003).
The Texas long-arm statute states:
In addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident:
(1) Contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part of this state; [or]
(2) Commits a tort in whole or in part in this state;...
TEX. CIV. PRAC. & REM. CODE ANN. § 17.042. " ‘[N]onresident’ includes: (1) an individual who is not a resident of this state; and (2) a foreign corporation, joint-stock company, association, or partnership." Id. at § 17.041.
Whether or not the Texas long-arm statute encompasses invoices mailed by an extraterritorial university, the Court finds that exercising personal jurisdiction over the University in the Eastern District of Texas would violate due process. The Due Process Clause of the Fourteenth Amendment prohibits the exercise of personal jurisdiction over a nonresident defendant unless the defendant has meaningful "contacts, ties, or relations" with the forum state. Int'l Shoe Co. v. Wash. , 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Jurisdiction may be general or specific. Wilson v. Belin , 20 F.3d 644, 647 (5th Cir. 1994). Where a defendant has "continuous and systematic general business contacts" with the forum state, the court may exercise general jurisdiction over any action brought against that defendant. Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 408, 415–16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Where the contacts are less pervasive, the court may still exercise specific jurisdiction "in a suit arising out of or related to the defendant's contacts with the forum." Id. at 414 n. 8, 104 S.Ct. 1868 (1984). This case presents only the question of specific jurisdiction.
The University is subject to general jurisdiction in Puerto Rico. [Dkt. 1]; 28 U.S.C. § 1391(c)(2) ; Luv N' Care, Ltd. v. Insta-Mix, Inc. , 438 F.3d 465, 469 (5th Cir. 2006).
The constitutional requirement for specific jurisdiction is that the defendant has "minimum contacts" with the forum state such that imposing a judgment would not "offend traditional notions of fair play and substantial justice." Int'l Shoe , 326 U.S. at 316, 66 S.Ct. 154. The Fifth Circuit has held that the specific personal jurisdiction inquiry involves a three-step analysis:
(1) Whether the defendant ... purposefully directed its activities toward the forum state or purposely availed itself of the privileges of conducting activities there;
(2) Whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and
(3) Whether the exercise of personal jurisdiction is fair and reasonable.
Stroman Realty, Inc. v. Wercinski , 513 F.3d 476, 484 (5th Cir. 2008) (citing Burger King Corp. v. Rudzewicz , 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ).
1. Minimum Contacts
To determine whether the University has "minimum contacts" with Texas, we must identify some act whereby it "purposefully availed" itself of the privilege of conducting activities in Texas, "thus invoking the benefits and protections of its laws." Hanson v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). The University's conduct must show that it "reasonably anticipat[ed] being haled into court" in Texas. World-Wide Volkswagen Corp. v. Woodson (Volkswagen I) , 444 U.S. 286, 297, 100 S.Ct. 580, 62 L.Ed.2d 490 (1980) ; see also Burger King , 471 U.S. at 472, 105 S.Ct. 2174 (1977) (Stevens, J., concurring) (reasoning that the person should have fair warning that their activity may subject them to jurisdiction in the foreign sovereign).
It is well established that "merely contracting with a resident of the forum state is insufficient to subject the nonresident to the forum's jurisdiction." Freudensprung v. Offshore Technical Services, Inc. , 379 F.3d 327, 344 (5th Cir. 2004) (citing Holt Oil & Gas Corp. v. Harvey , 801 F.2d 773, 778 (5th Cir. 1986) ); Colwell Realty Investments v. Triple T Inns , 785 F.2d 1330, 1334 (5th Cir. 1986). In fact, the Fifth Circuit has repeatedly held that,
the combination of mailing payments to the forum state, engaging in communications related to the execution and performance of the contract, and the existence of a contract between the nonresident
defendant and a resident of the forum are insufficient to establish the minimum contacts necessary to support the exercise of specific personal jurisdiction over the nonresident defendant.
Freudensprung , 379 F.3d at 344 ; see, e.g., Holt , 801 F.2d at 778 (declining to exercise specific jurisdiction when nonresident defendant entered a contract with a Texas resident, sent a contract and checks to the forum, and engaged in telephonic and written communications with the resident); Stuart v. Spademan , 772 F.2d 1185, 1192–93 (5th Cir. 1985) (holding that the nonresident defendant did not intend to avail himself of the laws of the forum when he contracted with several Texas residents, sent letters to Texas, shipped products to Texas, included a Texas law provision in the contract, and marketed his product in Texas).
The University has also found a direct case on point, that Ms. Palmer has failed to refute. In Priller v. Cox , the Texas Court of Appeals in Dallas did not find specific jurisdiction over a nonresident defendant in a nearly identical case. No. 5-15-01257-CV, 2016 WL 7163918, at *2 (Tex. App.—Dallas Nov. 15, 2016). There, a Florida resident sent two letters to a Texas resident to collect on an unpaid account. Id. Here, Ms. Palmer asserts the same unsuccessful argument as the plaintiff in Priller ; that the University mailed letters from Puerto Rico to Texas to collect a debt incurred in Puerto Rico and thereby committed a tort in Texas. See, e.g., id. However, "[s]ending two letters seeking payment of invoices for an appraisal conducted in Florida is not sufficient to establish purposeful availment." Id. ; accord Freudensprung v. Offshore Technical Services, Inc. , 379 F.3d 327, 344 (5th Cir. 2004) ; Bulkley & Assocs., LLC v. Occupational Safety & Health Appeals Bd. of California , No. 4:18-CV-642, 2019 WL 2411544, at *6 (E.D. Tex. June 7, 2019) (declining to exercise specific personal jurisdiction over a nonresident defendant because the defendant's contacts with the forum state were only random, fortuitous, and attenuated) (citing Burger King Corp. v. Rudzewicz , 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ); Demolition Contracting & Disposal v. Beauticontrol, Inc. , No. 4:18-CV-270, 2018 WL 5263258, at *3–4 (E.D. Tex. Oct. 23, 2018) (explaining that one wire transfer fell short of purposeful availment); KC Smash 01, LLC v. Gerdes, Hendrichson, Ltd., L.L.P. , 384 S.W.3d 389, 393 (Tex. App.—Dallas 2012) ; Majors Mgmt., LLC v. Price & Co. , No. 09-17-00063-CV, 2018 WL 771008, at *7 (Tex. App.—Beaumont Feb. 8, 2018) (finding that telephone calls, emails, and wire transfers from a nonresident defendant to a Texas resident were insufficient to demonstrate that the defendant purposefully did business in Texas).
Here, the totality of the University's contacts with Texas involves mailing an invoice to Ms. Palmer's Texas residence. Although the University has "reached out" to collect on Ms. Palmer's account, the University has not "purposefully availed" itself of the benefits of Texas law like someone actually "doing business" in Texas. See Hanson v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958) ; see also Stroman Realty, Inc. v. Wercinski , 513 F.3d 476, 484 (5th Cir. 2008). Ms. Palmer does not allege that the University has made any contacts with Texas apart from the invoices at issue. Based on such minimal known contacts, the University, a nonresident corporation, could not have reasonably anticipated being haled into federal court in Texas to defend its collection efforts. See Volkswagen I , 444 U.S. 286, 297, 100 S.Ct. 580 (1980) ; Hanson , 357 U.S. at 253, 78 S.Ct. 1228.
See Burger King Corp. v. Rudzewicz , 471 U.S. 462, 479–80, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (holding that defendant "reached out" beyond Michigan and made a contact with Florida when he negotiated a franchise contract with Burger King, a Florida corporation).
Plaintiff merely contends that the University established minimum contacts with Texas by "purposefully engaging in unlawful debt collection activities by mailing a deceptive collection letter to the Plaintiff in the Eastern District of Texas." [Dkt. 27].
In fact, it was Ms. Palmer who chose to attend a university in Puerto Rico and transact business there. The University is simply attempting to collect on Ms. Palmer's student tuition account. If the Court adopted the approach urged by Ms. Palmer, any nonresident defendant who made an isolated communication to a Texas resident could potentially be subjected to suit in Texas. The Court is unwilling to establish such a broad principle.
2. Cause of Action "Arises From" Forum-Related Contacts
The second requirement for constitutionally sufficient contacts is that the underlying cause of action must "arise out of" the defendant's contacts with the forum state. Wercinski , 513 F.3d at 487. The focus of the personal jurisdiction analysis is on the "relationship among the defendant, the forum, and the litigation." Calder v. Jones , 465 U.S. 783, 788, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984) ; Wercinski , 513 F.3d at 487. There is no question that the underlying cause of action arises out of the University's collection efforts in Texas. "But keeping in mind the proper focus on the relationship among the defendant, the forum, and the litigation," the Court observes that the University's connection to Texas is based on Ms. Palmer's conduct in Puerto Rico. See, e.g., Wercinski , 513 F.3d at 487. It could be said that the University was forced to come to Texas. See id. As previously mentioned, the Court does not find that the University's actions are sufficient forum related contact.
3. Reasonableness of Personal Jurisdiction
The third element of the due process analysis – assessing the reasonableness of a court's exercise of personal jurisdiction – includes a five factor test: (1) the burden upon the nonresident defendant to litigate in that forum; (2) the forum state's interests in the matter; (3) the plaintiff's interest in securing relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the several states' shared interest in furthering substantive social policies. Wercinski , 513 F.3d at 487 (citing Asahi Metal Industry Co. v. Superior Court , 480 U.S. 102, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) ); see also Felch v. Transportes Lar-Mex SA De CV , 92 F.3d 320, 324 (5th Cir. 1996).
Allowing the Eastern District of Texas to assert jurisdiction over the University creates the possibility that the University will have to defend its collection efforts in courts throughout the nation. See, e.g., Wercinski , 513 F.3d at 487. Although Ms. Palmer has an interest in a convenient forum to pursue litigation, especially when it alleges harm from wrongful debt collection practices, and Texas has an interest in providing a forum to redress the grievances of its citizens, subjecting the University to suit in the Eastern District of Texas could lead to a multiplicity of inconsistent verdicts on a significant issue. See, e.g., Wercinski , 513 F.3d at 487–88. However, if the cause of action is litigated in Puerto Rico federal court, judicial efficiency and uniformity prevail. See id. at 488.
Federalism and state sovereignty are an essential part of the constraints that due process imposes upon personal jurisdiction. Wercinski , 513 F.3d at 488. The constraints "do more than ‘protect the defendant against the burdens of litigating in a distant or inconvenient forum’; they also ‘ensure that the States through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.’ " Id. (citing Volkswagen I , 444 U.S. 286, 292, 100 S.Ct. 580 (1980) ).
"Where a court finds it lacks personal jurisdiction, it may dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(2)" or the court may transfer the action under § 1406(a) to any district in which it could have been brought, if the court finds that it is "in the interest of justice" to transfer the action. Goldlawr, Inc. v. Heiman , 369 U.S. 463, 466, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962) ("The language of § 1406(a) is amply broad enough to authorize the transfer of cases, however wrong the plaintiff may have been in filing his case as to venue, whether the court in which it was filed had personal jurisdiction over the defendants or not"); Herman v. Cataphora, Inc. , 730 F.3d 460, 466 (5th Cir. 2013) ; Fogarty v. USA Truck, Inc. , 242 F. App'x 152, 154 (5th Cir. 2007) ; see Dubin v. United States , 380 F.2d 813, 815–16 (5th Cir. 1967) (finding that the congressional purpose of § 1406(a) is to prevent the plaintiff from time consuming and justice defeating technicalities).
B. Venue
Next, the Court must determine whether the case should be transferred to the United States District Court for the District of Puerto Rico. The overarching question is whether the Court should transfer the case from the Beaumont Division of the Eastern District of Texas – which has no connection to the parties, the witnesses, or the facts of this case – to the District of Puerto Rico, which has extensive connections to the parties, the witnesses, and the facts of this case.
Although the University's motion requests that this Court transfer venue pursuant to § 1404(a), the Court reasonably construes the University's request to be a § 1406(a) transfer since the University heavily contends that this Court is an improper venue. See Dkt. 22. Moreover, § 1406(a) " ‘shares the same statutory context’ as § 1404(a) and ‘contain[s] a similar phrase.’ " Atlantic Mar. Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex. , 571 U.S. 49, 58, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013) (citing Van Dusen v. Barrack , 376 U.S. 612, 621, n. 11, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) ) (emphasizing the similarities of the transfer statutes when the original venue is proper and improper); Volkswagen II , 545 F.3d 304, 325 n. 4 (5th Cir. 2008) (en banc) (noting that § 1406(a) is essentially "analogous" to § 1404(a)). Despite the similarities between the statutes, the analysis is not identical. See Clemons v. WPRJ, LLC , 928 F. Supp. 2d 885, 896 (S.D. Tex. 2013). The University has confused the requirements between § 1406(a) and § 1404(a) by applying the private and public interest factors and convenience factors, which relate to § 1404(a), to this § 1406(a) issue. See id. ; see also Dkt. 22, p. 16–17.
Under Federal Rule of Civil Procedure 12(b)(3) a party may move to dismiss a case for improper venue. Atlantic Mar. Constr. Co. v. U.S. Dist. Ct. for the W. Dist. of Tex. , 571 U.S. 49, 55, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013). When a case is filed in an improper venue, 28 U.S.C. § 1406(a) permits the district court to dismiss the case or in the interest of justice "transfer such case to any district or division in which it could have been brought." Atlantic , 571 U.S. at 55, 134 S.Ct. 568 ; Self v. M&M Chemical Co. , 177 F.3d 977 (5th Cir. 1999) (noting that the congressional purpose in allowing such transfers is to avoid the injustice which results when plaintiff's action is dismissed merely because they made an erroneous guess with venue). "[A] district is ‘wrong’ within the meaning of § 1406 whenever there exists an ‘obstacle (to) an expeditious and orderly adjudication’ on the merits." Clemons v. WPRJ, LLC , 928 F. Supp. 2d 885, 897 (S.D. Tex. 2013) (citing Ellis v. Great Southwestern Corp. , 646 F.2d 1099, 1105 (5th Cir. 1981) ). In addition, lack of personal jurisdiction is another ground for transferring venue. Id. ; Ellis , 646 F.2d at 1105 and n. 7. Although Section 1391 governs proper venue, it is uncontested that the Beaumont Division of the Eastern District of Texas is an improper venue for this case. See 28 U.S.C. § 1391(b). Therefore, the Court declines to analyze whether venue may be proper in this Court and instead will determine whether Ms. Palmer's case should be dismissed or transferred under Section 1406(a).
A district "may be ‘wrong’ under Section 1406(a) when the original court lacks personal jurisdiction." Herman v. Cataphora, Inc. , 730 F.3d 460, 466 (5th Cir. 2013) ; Bentz v. Recile , 778 F.2d 1026, 1028 (5th Cir. 1985).
The University contends that Beaumont is an improper venue. [Dkt. 22]. On January 13, 2020, Ms. Palmer filed a motion to ‘change’ venue to the Sherman Division of this District. [Dkt. 31]. In her motion, Ms. Palmer concedes that "this action was mistakenly filed in the Beaumont Division and Plaintiff and her attorney just realized the error." Id.
Nonetheless, none of the three situations under § 1391(b) are present. See 28 U.S.C. § 1391(b). Neither Ms. Palmer nor the Defendants reside in the Beaumont Division for the Eastern District of Texas. Nor did any substantial event giving rise to this litigation occur in this division. Moreover, the Court determined that it lacks personal jurisdiction over the University.
Like personal jurisdiction, "venue is ‘designed to protect the defendant against the risk that a plaintiff will select an unfair or inconvenient place of trial.’ " Utterback v. Trustmark Nat'l Bank , 716 F. App'x 241, 244 (5th Cir. 2017) (citing Leroy v. Great W. United Corp. , 443 U.S. 173, 183–84, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979) (emphasis in original)); see also In re Volkswagen of Am., Inc. (Volkswagen II) , 545 F.3d 304, 313 (5th Cir. 2008) (en banc). A transfer of venue may be made upon the motion of a party or by the court sua sponte. Caldwell v. Palmetto State Sav. Bank , 811 F.2d 916, 919 (5th Cir. 1987) (citing 28 U.S.C. §§ 1404, 1406 ); accord Mills v. Beech Aircraft Corp. , 886 F.2d 758, 761 (5th Cir. 1989) ; 15 CHARLES ALAN WRIGHT , ARTHUR R. MILLER & EDWARD H. COOPER , FEDERAL PRACTICE AND PROCEDURE , § 3844 (3d ed. 2018). Furthermore, "courts have ‘broad discretion in deciding whether to order a transfer.’ " Volkswagen II , 545 F.3d at 311 (quoting Balawajder v. Scott , 160 F.3d 1066, 1067 (5th Cir. 1998) ); Mays v. Yusuff , 214 F.3d at 1350 (5th Cir. 2000).
Next, the Court must determine if venue for Plaintiff's claims is proper in the District of Puerto Rico. See In re Volkswagen AG , 371 F.3d 201, 203 (5th Cir. 2004) ; In re Horseshoe Entm't , 337 F.3d 429, 433 (5th Cir. 2003). Under the general venue provision, 28 U.S.C. § 1391(b), a civil action may be brought only in:
(1) a judicial district where any defendant resides, if all defendants reside in the same State;
(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred;...or
(3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.
Venue would be proper in Puerto Rico. The University is a Puerto Rican entity with its principal place of business in Puerto Rico. [Dkt. 1]. An entity's residence for venue purposes is where personal jurisdiction could be exercised over the entity. 28 U.S.C. § 1391(c)(2). The District of Puerto Rico has general jurisdiction over the University. See Luv N' Care, Ltd. v. Insta-Mix, Inc. , 438 F.3d 465, 469 (5th Cir. 2006) (finding that general jurisdiction exists in the forum state where the defendant has continuous and systematic general business contacts) (citing Helicopteros Nacionales de Colombia, S.A. , 466 U.S. 408, 415, 104 S.Ct. 1868 (1984) ). Thus, venue is proper in the District of Puerto Rico. Moreover, dismissal of this action would force Ms. Palmer to refile and would result in more inefficiencies. Therefore, the Court finds that it is in the interest of justice to transfer the case to Puerto Rico.
The Court also finds that transferring this case to Puerto Rico is in the interest of justice and promotes judicial efficiency because Ms. Palmer has alerted the Court that she plans to refile in the Sherman Division – which, like the Beaumont Division – lacks personal jurisdiction over the University and would be an improper venue. See Dkt. 31. Therefore, if the Court dismissed Ms. Palmer's action, she would merely continue creating jurisdictional conflict.
Furthermore, the Court must find that it has personal jurisdiction over a defendant before it makes any decisions on the merits. Allchem Performance Prod., Inc. v. Aqualine Warehouse, LLC , 878 F. Supp. 2d 779, 785 (S.D. Tex. 2012). Because the Court lacks in personam personal jurisdiction over the University, the Court declines to delve into the merits of this action by ruling on the University's 12(b)(6) argument and discovery dispute.
III. CONCLUSION
The court "cannot both dismiss and transfer" the case. Herman v. Cataphora, Inc. , 730 F.3d 460, 463–64 (5th Cir. 2013). Additionally, even if the Texas long-arm statute permits an assertion of jurisdiction over the University, the exercise of jurisdiction related to the University's collection efforts would violate due process. Moreover, the Court finds that it is in the interest of justice to transfer this case under § 1406(a) to the United States District Court for the District of Puerto Rico.
IT IS THEREFORE ORDERED that the University's motion to dismiss for lack of personal jurisdiction and failure to state a claim for relief or alternatively transfer venue [Dkt. 22] is GRANTED IN PART and the case is hereby TRANSFERRED to the United States District Court for the District of Puerto Rico in its entirety with the two pending motions [Dkt. 21; 33].
IT IS FURTHER ORDERED that Ms. Palmer's motion to change venue to the Sherman Division is DENIED [Dkt. 31].
IT IS FURTHER ORDERED that the University's motion for a hearing [Dkt. 35] is MOOT and the hearing [Dkt. 37] is CANCELLED.