Great Western Mining & Mineral Company v. Adr Options, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 10-3142
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GREAT WESTERN MINING & MINERAL COMPANY,
Appellant
v.
ADR OPTIONS, INC.; BROWNSTEIN AND VITALE, P.C.;
BROWNSTEIN VITALE & WEISS, P.C.
____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 09-cv-02907)
District Judge: Honorable Peter G. Sheridan
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Argued April 27, 2011
Before: BARRY, HARDIMAN and NYGAARD, Circuit Judges.
(Filed: June 28, 2011)
Benjamin C. Weiner [Argued]
19 Countryside Drive
Livingston, NJ 07039
Attorney for Appellant Great Western Mining & Mineral Company
Kerri E. Chewning [Argued]
Frank D. Allen
Michael P. Hackett
Archer & Greiner
One Centennial Square
P.O. Box 3000
Haddonfield, NJ 08033-0000
Attorneys for Appellee ADR Options, Inc.

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Candidus K. Dougherty [Argued]
Jeffrey B. McCarron
Swartz Campbell
50 South 16th Street
Two Liberty Place, 28th Floor
Philadelphia, PA 19102-0000
Attorneys for Appellees Brownstein Vitale & Weiss, P.C.
and Brownstein and Vitale, P.C.
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OPINION OF THE COURT
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HARDIMAN, Circuit Judge.
Great Western Mining & Mineral Company appeals the District Court‟s order
granting Appellees‟ motions to dismiss for improper venue. For the following reasons,
we will vacate and remand to the District Court for further proceedings.
I
Because we write for the parties, who are familiar with the facts and procedural
history of this case, we summarize them only briefly.
In 1999, Great Western pursued a legal malpractice action against Appellees
Brownstein Vitale & Weiss, P.C., and Brownstein & Vitale, P.C. (collectively
Brownstein & Vitale) in the Court of Common Pleas of Philadelphia County. The parties
agreed to submit the matter to binding arbitration before Tom Rutter (Rutter), an
arbitrator with Appellee ADR Options, Inc. (ADR Options). The parties‟ arbitration
agreement stated:

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Each party and participating attorney has disclosed any past or present
relationship with the arbitrator, direct or indirect, whether financial,
professional, social or any other kind. The arbitrator has also disclosed any
past or present relationship with any party or attorney. It is understood that
any doubt has been resolved in favor of disclosure.
In September 2003, Rutter entered an arbitration award in favor of Brownstein &
Vitale. Great Western then filed a petition to vacate the award in the Court of Common
Pleas of Philadelphia County, Pennsylvania, alleging that ADR Options had undisclosed
conflicts of interest with defense counsel for Brownstein & Vitale. The court denied the
petition to vacate, and Great Western appealed to the Superior Court of Pennsylvania,
which affirmed on September 22, 2005.
While the petition to vacate was pending, Great Western filed a series of amended
complaints in Pennsylvania state court against ADR Options, Brownstein & Vitale, and
Rutter, alleging breach of contract, negligent misrepresentation, fraud, and violations of
Pennsylvania‟s Unfair Trade Practices and Consumer Protection Law (UTPCPL). The
Court of Common Pleas dismissed the actions, and the Superior Court of Pennsylvania
affirmed in May 2007.
In February 2008, Great Western filed a federal action in the District of New
Jersey, alleging that certain members of the Pennsylvania state judiciary conspired to
issue favorable rulings in exchange for future employment at ADR Options. The District
Court dismissed Great Western‟s complaint for failure to state a claim on March 16,
2009, and denied its motions for reconsideration and leave to amend. In a precedential

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opinion, we affirmed the District Court‟s determinations, finding that the complaint failed
to plead facts plausibly suggesting a conspiracy. Great W. Mining & Mineral Co. v. Fox
Rothschild LLP, 615 F.3d 159 (3d Cir. 2010).
Undeterred by defeats in both federal court and the state courts in Pennsylvania,
Great Western sued ADR Options in New Jersey Superior Court for breach of contract,
fraud, and violations of the New Jersey Consumer Fraud Act (CFA) on account of
alleged overbilling during the 2003 arbitration. That case settled on September 11, 2009,
but before it did, Great Western filed this action against ADR Options and Brownstein &
Vitale in the District of New Jersey, alleging breach of contract, negligent
misrepresentation, fraud, and violations of the CFA and the UTPCPL. In its amended
complaint, Great Western alleged that Brownstein & Vitale represented ADR Options in
two separate actions in 1997, that it had a duty to disclose this attorney-client relationship
pursuant to the arbitration agreement, and that its failure to do so resulted in an
unfavorable arbitration award for Great Western.
Appellees moved to dismiss Great Western‟s amended complaint on the basis of
improper venue, lack of subject matter jurisdiction, and failure to state a claim for relief.
On April 6, 2010, the District Court granted Appellees‟ motions to dismiss, finding that
venue in the District of New Jersey was improper and that transfer to another venue
would not be in the interest of justice. App. at 5a (citing 28 U.S.C. § 1406(a) (providing
that when venue is improper, a district court “shall dismiss, or if it be in the interest of

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justice, transfer such case to any district or division in which it could have been
brought”)). Although the Court chose not to reach the merits, it held that “it is apparent
that Great Western is attempting to initiate a new action that has previously been decided
at least two or three times on the merits, involving the same parties, events, and legal
claims.” Id. at 6a. In its order denying Great Western‟s motion for reconsideration, the
District Court rejected Great Western‟s contention that “the Court has been hoodwinked
by defendant‟s clever strategy of misrepresenting the facts,” again stating that “it is clear
that this litigation had been previously litigated several times.” Id. at 8a.
Great Western filed this timely appeal, claiming the District Court erred in
dismissing its amended complaint for improper venue. Appellees urge us to affirm for
numerous reasons, including: (1) venue was improper; (2) the Rooker-Feldman doctrine
bars jurisdiction; (3) the claims are barred by res judicata and the entire controversy
doctrine; (4) ADR Options is immune from suit; and (5) Great Western fails to state a
claim for relief.
II
A
Appellees claim we have no subject matter jurisdiction over Great Western‟s
appeal because, under the Rooker-Feldman doctrine, we are barred from considering a
claim that is “inextricably intertwined” with a state court adjudication. Exxon Mobil
Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). We exercise de novo

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review over questions of subject matter jurisdiction, PennMont Sec. v. Frucher, 586 F.3d
242, 245 (3d Cir. 2009), and “have an independent obligation to determine whether
subject-matter jurisdiction exists,” Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006).
The Rooker-Feldman doctrine bars a federal claim only if four requirements are
satisfied: “(1) the federal plaintiff lost in state court; (2) the plaintiff „complain[s] of
injuries caused by [the] state-court judgments‟; (3) those judgments were rendered before
the federal suit was filed; and (4) the plaintiff is inviting the district court to review and
reject the state judgments.” Great Western, 615 F.3d at 166 (quoting Exxon Mobil, 544
U.S. at 284). Here, Great Western does not allege that its injuries were caused by the
state courts‟ refusal to vacate Rutter‟s arbitration award or award it monetary relief.
Rather, the gravamen of Great Western‟s complaint is that Appellees‟ failure to disclose
material information regarding their prior attorney-client relationship caused Great
Western to submit to binding arbitration before an allegedly biased arbitrator. Because
“the injury complained of in federal court existed prior to the state-court proceedings and
thus could not have been „caused by‟ those proceedings,” Great Western, 615 F.3d at
167, the second and fourth requirements of Exxon Mobil have not been satisfied. Thus,
the Rooker-Feldman doctrine is no obstacle to our jurisdiction over this appeal.1
1 Appellees assign too much weight to Exxon Mobil‟s use of the phrase “inextricably
intertwined.” In Great Western, we explained that the phrase “inextricably intertwined” “is
simply a descriptive label attached to claims that meet the [four] requirements outlined in Exxon
Mobil.” 615 F.3d at 170 (internal citations and quotation marks omitted).

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B
Turning to the merits, we consider the District Court‟s finding that venue was
improper in New Jersey. We exercise plenary review over the District Court‟s legal
determination, and review its decision to dismiss Great Western‟s amended complaint for
abuse of discretion. Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir. 1995).
In federal diversity suits, venue is proper in any district where: (1) “any defendant
resides, if all defendants reside in the same State;” (2) “a substantial part of the events or
omissions giving rise to the claim occurred, or a substantial part of property that is the
subject of the action is situated;” or (3) “any defendant is subject to personal jurisdiction
at the time the action is commenced, if there is no district in which the action may
otherwise be brought.” 28 U.S.C. § 1391(a). For purposes of Section 1391(a)(1), “a
defendant that is a corporation shall be deemed to reside in any judicial district in which
it is subject to personal jurisdiction at the time the action is commenced.” Id. § 1391(c).
Because improper venue is an affirmative defense, the burden of proving lack of proper
venue remains—at all times—with the defendant. Myers v. Am. Dental Ass’n, 695 F.2d
716, 724-25 (3d Cir. 1982) (comparing jurisdictional questions “concerning the court‟s
power to entertain the action” with “dilatory defenses [such as venue] that do not concern
the court‟s authority to adjudicate,” and holding that while the plaintiff bears the burden
of proving the former, defendants must plead facts showing the absence of the latter). As

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such, it is not necessary for the plaintiff to include allegations in his complaint showing
that venue is proper. Id. at 724.
In its amended complaint, Great Western alleged that ADR Options and
Brownstein & Vitale were corporations “doing business” in the State of New Jersey, so
venue was proper under 28 U.S.C. § 1391(a) and (c). See Wilson v. Paradise Vill. Beach
Resort & Spa, 395 N.J. Super. 520, 528 (App. Div. 2007) (holding that, under New
Jersey law, any party that “maintains minimum contacts with the . . . state that are
continuous and substantial” will be subject to personal jurisdiction). Brownstein &
Vitale argued in its motion to dismiss that venue was improper in New Jersey, because all
defendants were citizens of Pennsylvania resident in the Eastern District of
Pennsylvania.2 The law firm failed to acknowledge, however, that a corporation may
“reside” in more than one state, see 28 U.S.C. § 1404(a) (providing for transfer of a case
where both the original and the requested venue are proper), and presented no evidence
2 ADR Options did not raise the venue issue in its motion to dismiss and its failure
to do so constituted a forfeiture of that right. See FED. R. CIV. P. 12(h); see also Myers,
695 F.2d at 721 (“The federal rules single out four defenses which must be raised by the
defendant‟s initial responsive pleading in order to be preserved. Such a rule reflects a
strong policy against tardily raising defenses that go not to the merits of the case but to
the legal adequacy of the initial steps taken by the plaintiff in his litigation.”). Where a
defendant fails to timely object to venue, “it is inappropriate for the trial court to dispose
of the case sua sponte.” Sinwell v. Shapp, 536 F.2d 15, 19 (3d Cir. 1976). However,
because Brownstein & Vitale objected to venue and Great Western had adequate
opportunity to respond, the District Court did not err in considering the issue.

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showing that it was not subject to personal jurisdiction in New Jersey.3 28 U.S.C. §
1391(c). Thus, the firm failed to satisfy its burden of showing that venue was improper
in the District of New Jersey, and the District Court erred in dismissing Great Western‟s
amended complaint on that basis.
C
Appellees maintain that even if the District Court‟s venue determination is
erroneous, we should affirm the District Court‟s order dismissing Great Western‟s
amended complaint on alternative grounds, including claim preclusion, arbitral immunity,
and failure to state a claim for relief. See United States v. Sanchez, 562 F.3d 275, 279 (3d
Cir. 2009) (holding that an appellate court may affirm the result reached by a district
court on alternative grounds).
Although these arguments may well be meritorious, because “the resolution of
[these] issue[s] requires the exercise of discretion or fact finding,” we find that “it is
inappropriate and unwise” to decide these matters in the first instance. Norfolk S. Ry. Co.
v. Basell USA Inc., 512 F.3d 86, 97 (3d Cir. 2008) (citation and internal quotation marks
omitted); see K-Land Corp. No. 28 v. Landis Sewerage Auth., 800 A.2d 861, 868 (N.J.
2002) (recognizing that equitable considerations can relax New Jersey‟s mandatory-
3 Based on the limited record before us, it appears that corporate Appellee
Brownstein & Vitale has strong ties to the District of New Jersey. These contacts
include: membership in the New Jersey State Bar, a substantial caseload in New Jersey
courts, and an office in Cherry Hill, New Jersey.

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joinder requirements when joinder would be “unfair”); Mireles v. Waco, 502 U.S. 9, 11-
12 (1991) (addressing standard for overcoming judicial immunity). Thus, we leave it to
the District Court on remand to evaluate the merits of Appellees‟ alternative defenses.
For the reasons stated, we will vacate the order of the District Court and remand
for further proceedings consistent with this opinion.

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