The plaintiff insurance companies issued performance and payment bonds naming Ballenger Construction Company as principal on nine Texas construction projects, three of which were located in the Western District of Texas. Slip op. at 3 and 13. In connection with the bonds, the defendants signed an Agreement of Indemnity, promising to “exonerate and indemnify” the insurance companies for losses on the projects. Id. After Ballenger Construction Company filed for bankruptcy and unpaid subcontractors and suppliers made claims on the bonds, the insurance companies filed this suit. Id. at 3.
The District Court denied the defendants’ Rule 12(b)(3) motion and motion to transfer venue, rejecting the suggestion that the Southern District was the proper venue because most of the defendants resided there. Venue was proper under 28 U.S.C. § 1391(b)(2) because the location of three construction projects in the District meant that “a substantial part of the events or omissions giving rise to the claim” occurred in the District. Slip. at 12-16. For the same reason, much of the evidence and many of the witnesses were located in the Western District and the Southern District was not “clearly a more convenient” venue. Slip op. at 21-30.
The defendants argued that the insurance companies’ claim under Chapter 162 of the Texas Property Code should be dismissed under Rule 12(b)(6) because the statute did not create a private cause of action. Slip op. at 16. The District Court, however, pointed out that the Texas Supreme Court recognized such a cause of action in Dealers Electrical Supply Co. v. Scoggins Construction Co., 292 S.W.3d 650, 657 (Tex. 2009) and denied the motion. Slip op. at 16-21.