United States District Court, W.D. North Carolina, Charlotte Division
ROBERT J. CONRAD, Jr., District Judge.
THIS MATTER is before the Court on Defendants' motion to dismiss and supporting memorandum, (Docs. 4, 8), Plaintiff's response, (Doc. 14), the Magistrate Judge's Memorandum and Recommendation, (M&R) (Doc. 18), the Plaintiff's objection and supporting memorandum, (Docs. 19, 24-1), and Defendants' responses thereto (Docs. 20, 25). It is ripe for review.
I. FACTUAL BACKGROUND
This case involves a series of allegedly fraudulent transfers between Corporex Realty and Defendant Corporex Companies. In general terms, Plaintiff Bank of America alleges that Corporex Companies is a shell company established by Defendants to drain the assets of Corporex Realty. Specifically, Bank of America alleges that Corporex Realty transferred assets fraudulently to Corporex Companies in order to avoid paying a judgment to Bank of America.
Although this case involves numerous business entities, the crux of the allegations centers on the relationship between Corporex Realty, Corporex Companies, and Bank of America. Bank of America is a national bank headquartered in North Carolina. Defendant Corporex Companies is a limited liability company headquartered in Kentucky. Defendants Butler and Banta are officers of Corporex Companies and residents of Kentucky.
Between 2005 and 2008, Corporex Realty guaranteed three loans obtained by affiliate companies (borrowers) from LaSalle Bank (LaSalle), an Illinois company. Defendants maintain that their contacts with LaSalle were limited to communications related to the loan contracts that were conducted with personnel from LaSalle's office in Cincinnati, Ohio.
At some point after the finalization of the loan contracts but before the transfer of assets by Corporex Realty, Bank of America purchased LaSalle bank and obtained, as successor, the rights and obligations under the loan contracts. Following default on the loans, Bank of America brought foreclosure actions in June 2011 against the borrowers in Kentucky and Florida. (Docs. 1, 18). At the same time, Plaintiff filed suit against Corporex Realty for damages in excess of $30 million in connection with the loans. (Doc. 1). That action was originally filed in the Southern District of Ohio but was removed to the Eastern District of Kentucky. (Doc. 18).
Bank of America alleges that, after receiving notice of the foreclosure actions, Defendants Butler and Banta stripped Corporex Realty of its assets and transferred them to Corporex Companies with the express purpose of preventing Bank of America from recovering on the defaulted loans. (Docs. 1, 19). Further, Bank of America alleges that Corporex Realty transferred its assets without obtaining its consent and that such actions violated the terms of the loan agreements, whereby the parties agreed not to sell, transfer, or assign its assets without consent from the counter-party. As evidence of intent to defraud, Bank of America claims that it was the sole counter-party to whom notice of the transfers was not given and from whom consent was not obtained. Such actions, Bank of America contends, evince an intent by Defendants to harm Bank of America by placing assets out of its reach while leaving them accessible to all other counter-parties.
Plaintiff filed this suit against Defendants to rescind certain transfers of assets from Corporex Realty to Corporex Companies. (Id.). Defendants moved to dismiss for lack of personal jurisdiction or, alternatively, to transfer to the Eastern District of Kentucky. (Doc. 18). The Magistrate Judge recommended that this Court deny the motion to dismiss for lack of personal jurisdiction but grant the motion to transfer. (Id.).
II. STANDARD OF REVIEW
The Federal Magistrate Act provides that a district court "shall make a de novo determination of those portions of the report or specific proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1); Camby v. Davis , 718 F.2d 198, 200 (4th Cir. 1983). A written objection to a magistrate judge's recommendation must identify the portion of the proposed findings or recommendations to which objection is made and state the basis for such objection. Orpiano v. Johnson , 687 F.2d 44 (4th Cir. 1982). De novo review is not necessary where a party makes general or conclusory objections that do not direct the court to a specific error in the magistrate judge's proposed findings and recommendations. See United States v. Mertz , 376 U.S. 192 (1964).
Each of the parties has objected to one aspect of the M&R: Defendants object that the Court lacks personal jurisdiction over them; Plaintiff objects that transfer is not warranted in this case. The Court reviews each of these questions de novo.
A. Personal ...