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The Security National Bank of Sioux City v. Kant

United States District Court, N.D. Iowa, Western Division

July 17, 2019

MAX C. KANT, d/b/a MK Feedlots, d/b/a MK Purchase, et al., Defendants.




         This case is before me on a motion (Doc. No. 13) by defendants Orville Lage, Douglas Lage and Tessie Lage (collectively, the Lages) to dismiss for improper venue or, in the alternative, to transfer venue. Plaintiff Security National Bank of Sioux City, Iowa (SNB), has filed a resistance (Doc. No. 14) and the Lages have filed a reply (Doc. No. 17). The Lages have also filed a supplement (Doc. No. 18) to the motion to dismiss. I find that oral argument is not necessary. N.D. Iowa L.R. 7(c).


         SNB commenced this action on December 27, 2018, by filing a complaint (Doc. No. 1) against the Lages, along with Max C. Kant and Ann M. Kant, doing business as MK Feedlots and MK Purchase (collectively, the Kants), Justin Simon and Don Hearnen. The Lages filed their motion to dismiss or transfer venue on March 14, 2019. Simon and Hearnen filed an answer (Doc. No. 19) on April 12, 2019. The Kants, while being served on January 15, 2019, have not responded to the complaint.


         This case arises from SNB's extension of credit to the Kants and Lages to purchase cattle, which were fed at a feedlot located in Battle Creek, Nebraska. SNB alleges that in September 2017, both the Kants and Lages defaulted on their loans. The cattle were sold to Cargill and the proceeds deposited into an account with SNB in Iowa. SNB alleges that pursuant to various security agreements, it has a perfected security interest in the proceeds. All of the defendants have also claimed interest in the cattle proceeds and other lawsuits have been filed concerning these competing claims. SNB now seeks a declaratory judgment as to the ownership rights and interests of the various parties to the cattle proceeds.

         A. Relationship Between the Parties

         The Kants, residents of Norfolk, Nebraska, entered into an oral agreement with the Lages, residents of Pilger, Nebraska, in 1998, in which the Kants agreed to care for the Lages' cattle on their feedlot if the Lages reimbursed them. The Kants also agreed to oversee the sale of such cattle. Doc. No. 13-3 at 74. The Lages' cattle were purchased with funds loaned to them by SNB.[1]

         SNB began funding the Kant's cattle feedlot business in the early 2000s. By March 1, 2013, SNB was supervising and effectively in control of the Kants' cattle feed business. As such, the Kants were required to submit all cattle sale proceeds received in the regular course of business to SNB. Pursuant to various Commercial and Agricultural Security Agreements, SNB alleges that it has a security interest in, among other things, the livestock at the Kants' feedlot, including cattle owned by others. Defendant Simon was the manager of M&S Livestock, LLC, and JS Enterprises, LLC. At some point after March 1, 2013, those two companies also began using the Kants' cattle feed services. Defendant Hearnen also owned cattle that were kept and cared for at the Kants' feedlot. Both Simon and Hearnen are residents of South Dakota.

         On September 18, 2017, SNB filed a replevin action against the Kants in Madison County, Nebraska, to obtain possession of the cattle due to the Kants' alleged default on their loan obligations to SNB. Doc. No. 13-3 at 21. During the course of that action, the cattle at issue were sold through several sales in Nebraska and the proceeds went to SNB.[2] See Id. at 27, 30, 34-35. SNB dismissed the replevin suit against the Kants without prejudice on September 25, 2017. Id. at 37.

         B. Other Lawsuits

         On December 18, 2017, SNB filed an action for breach of contract against Orville Lage in the District Court of Stanton County, Nebraska, due to his alleged default. Doc. No. 13-3 at 40. Orville Lage then filed a third-party complaint against Max Kant and MK Feedlots, LLC, on March 6, 2018, alleging breach of contract and negligence for the Kants' failure to care for Lage's cattle and for losing or “otherwise illegally dispos[ing]” of the cattle. Id. at 74. Kant counterclaimed, alleging that Lage did not pay for the services Kant provided for his cattle. Id. at 85-90.

         On December 22, 2017, SNB filed an action against Max Kant and Ann Kant, individually and doing business as MK Feedlots and MK Purchase, in the District Court of Madison County, Nebraska. Doc. No. 13-3 at 100-01. On February 1, 2018, SNB filed an amended complaint in that case, asserting claims for fraud and breach of contract and alleging that the Kants made false claims as to the amount of cattle in their inventory. Doc. No. 13-3 at 103-06. The District Court of Madison County, Nebraska, entered summary judgment in favor of SNB on December 18, 2018, on the breach of contract claim. Id. at 128-36. SNB then dismissed its fraud claim against the Kants without prejudice. Id. at 138.

         On July 11, 2018, Hearnen and businesses managed by Simon filed a complaint against the Kants for breach of contract and fraud in the District Court for Madison County, Nebraska. Doc. No. 13-3 at 146. The plaintiffs in that case alleged that the Kants sold all the cattle at their feedlot, including cattle owned by Hearnen and the other plaintiffs, and that the Kants failed to provide them with the sale proceeds from their cattle. Id. at 147. The Kants counterclaimed on March 6, 2019, and alleged that after selling the cattle they remitted Hearnen's proceeds to SNB on his behalf. Id. at 155, 160.

         On November 26, 2018, the Kants filed a complaint against SNB alleging, in essence, that the Kants paid excess money to SNB that should be returned. Doc. No. 13-3 at 162, 180-81. That case was removed to the United States District Court for the Northern District of Nebraska on December 11, 2018, by SNB. Id. at 278, 280.

         IV. ANALYSIS

         A. Motion to Dismiss for Improper Venue

         1. Applicable Standards

         Federal Rule of Civil Procedure 12(b)(3) provides that a party may make a pre-answer motion to dismiss an action that is not filed in the proper venue. Rule 12(b)(3) allows dismissal “only when venue is ‘wrong' or ‘improper.'” Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 571 U.S. 49, 55 (2013). “Whether venue is ‘wrong' or ‘improper' depends ...

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