Civil Practice — Venue – Transfer – Bankruptcy – Texas Claim

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Campbell v. Williams (Lawyers Weekly No. 002-115-15, 12 pp.) (Andrew Hanen, J.) 2:15-cv-02395; D.S.C.

Holding: Now that the South Carolina bankruptcy trustee has been substituted for the Texas claimant as a real party and the Texas claimant’s underlying lawsuit has been stayed because of the bankruptcy, venue for the trustee’s claims against the South Carolina defendants is proper in South Carolina.

The United States District Court for the Southern District of Texas grants defendants’ motion to transfer venue to the United States District Court for the District of South Carolina.

Since the trustee’s claims are related to the debtor’s bankruptcy case, they are “case[s] or proceeding[s] under title 11” and should be transferred pursuant to 28 U.S.C. § 1412. As the trustee has now effectively replaced the claimant (a creditor of the debtor) as the plaintiff in this lawsuit, were the trustee to prevail on his claim, the alleged fraudulent transfer of assets by the debtor to defendants would be set aside. This would undoubtedly increase the value of the bankruptcy estate.

The debtor’s bankruptcy case was filed in the District of South Carolina, and South Carolina law applies to all claims in this case. All of the parties in this case, including the trustee, are either South Carolina residents or have their principal places of business in South Carolina.

All conceivable reasons weighing against transfer were essentially eliminated when the claimant’s case was severed and stayed by the debtor’s bankruptcy. Therefore, transfer to the District of South Carolina is warranted.

Because the analysis under 28 U.S.C. § 1404(a) is essentially the same, granting defendants’ motion to transfer is also warranted under § 1404(a). This case could have been originally filed in the District of South Carolina because it is “a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located.” 28 U.S.C. § 1391(b)(1).

Transferred.