Merchants Bank of Indiana v. Cypresswood TX Realty, LLC et al

OCR transcription for search; preserved printed pages are authoritative

Case 4:24-cv-03964 Document158 ~~ Filed on 12/01/25 in TXSD

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

Merchants Bank of Indiana,
Plaintiff,

v.

Cypresswood TX Realty, LLC,
et al.,

CGR 0G 6G C63 0G) GOD CG 6G

Defendants.

ORDER ON CYPRESSWOOD’S
MOTION TO TRANSFER VENUE

Page 1 of 15

United States District Court
Southem District of Texas

ENTERED
December 01, 2025
Nathan Ochsner, Clerk

Civil Action H-24-3964

Pending before the court is Defendant Cypresswood TX

Realty, LLC’s (Cypresswood) Motion to Transfer Venue of Case
Pursuant to 28 U.S.C. Section 1412 or 1404(a), ECF No, 148. The
court has considered the motion and supplemental authority,
responses, reply, and applicable law. For the reasons stated below,
Cypresswood’s Motion to Transfer Venue, ECF No. 148, 1s
DENIED.!

I. Background

This dispute involves eight parties—with citizenship, for
diversity jurisdiction purposes, in six different states—that,
amongst themselves, have executed more than twenty contracts
and business agreements pertaining to the Fallbrook
Rehabilitation and Care Center (the Facility). Most of the
background facts, as presented here, are from Plaintiff Merchants
Bank of Indiana’s (Merchants) Amended Complaint. ECF No. 68.

1A magistrate judge may order or deny transfer of a case to another district as a
non-dispositive matter under 28 U.S.C. § 686(b)(1)(A). Mulvey v. Vertafore, Inc.,

No. 21-cv-213, 2021 WL 3089386, at *1 (N.D. Tex. Jul. 22, 2021),

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A. The Facility, the Parties, and their Business
Relationships

The Facility is a 202-bed licensed skilled nursing facility,
located at 10851 Crescent Moon Drive, Houston, Harris County,
Texas 77064 (the Property). ECF No. 68 § 1. The Property is owned
by Cypresswood. Id. J 25.

On May 4, 2021, Cypresswood obtained a loan in the amount
of $25,000,000 from Merchants with the Property serving as
collateral. Id. 27. Cypresswood and Merchants executed a
Promissory Note (ECF No. 68-4) and Loan Agreement (HCF
No. 68-3). Jd. [§ 32-84. One of Cypresswood’s members, Samuel
Goldner, agreed to serve as personal guarantor of the loan. Jd. { 2.
Merchants perfected its security interest in the Property by
recording a Deed of Trust (ECF No. 68-5) and various other loan
documents (the Loan Documents) with Harris County and State of
Texas officials. Jd. || 32-35.

On July 7, 20238, Cypresswood and Crescent Moon Dr.
Healthcare, LLC (Crescent) executed an Operating Lease (Lease),
which placed Crescent in charge of operating the Facility. ECF
No. 68 § 36. One month after the Lease was executed, Merchants,
Cypresswood, Crescent, and eCapital Healthcare Corp. (eCap)
entered into a Lease Payment Agreement, which, in part, required
Crescent to make certain payments directly to Merchants, instead
of paying through Cypresswood as an intermediary. Jd. {[ 38. On
the same date, Crescent granted Merchants a security interest in
certain collateral related to the Property and operations of the
Facility. Id. §] 40.

Cresent subleased the Facility to Frio Hospital District
(Frio), a public entity of the State of Texas, on February 1, 2024.
ECF No. 68 § 43. Under that agreement, Frio became the operator
of the Facility. fd. Frio also executed a separate security

agreement with Merchants, which granted Merchants a security

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interest in certain collateral related to the Property and operations
of the Facility. Id, 4, 44—46.

B. Cypresswood’s Default on the Loan and the
Receivership Action

On January 26, 2024, Merchants initiated a lawsuit against
Cypresswood in the Southern District of Indiana for breach of the
Loan Agreement. ECF No. 153 § 1. According to Merchants,
Cypresswood and Goldner defaulted on the Loan Agreement
because they failed to pay amounts when due and failed to pay the
entire sum of indebtedness on December 10, 2028—the maturity
date of the Promissory Note. ECF No. 68 { 28.

On September 4, 2024, Crescent gave Cypresswood and
Merchants written notice of lease termination and expressed its
desire to cease management of the Facility and vacate the
Property. ECF No. 68 9§ 57-58. Crescent reported that it was not
economically feasible to operate the Facility under the terms of the
lease because the operational cost and expense shortfalls exceeded
revenues, Id. §j 59.

Merchants alleges that it realized that “[a]bsent funding
(protective advances),” which Merchants was willing to cover, “the
Facility [was| in imminent danger of closing.” ECF No. 68 § 61.
To cover the Facility’s financial shortfalls, Merchants filed this
receivership action in the Southern District of Texas on
October 16, 2024. Jd. § 2. Merchants sought “to have a receiver
appointed to operate the [Flacility and ensure the health and
safety of its residents.” Id. The court appointed a receiver, Michael
Flanagan (the Receiver), on October 24, 2024. ECF No. 21.

On December 19, 2024, Cypresswood moved to dismiss the
instant case or, alternatively, to have it transferred to the
Southern District of Indiana. ECF No. 33. Ten days later,
Cypresswood filed a motion in the Southern District of Indiana

seeking the opposite—to transfer the Indiana action to the

Case 4:24-cv-03964 Document158- Filed on 12/01/25 in TXSD Page 4of15

Southern District of Texas and consolidate the two actions.
ECF No. 1538-2. Ultimately, Cypresswood and Merchants agreed to
litigate the entire dispute in the Southern District of Texas.
ECF No. 153 5. Merchants dismissed its case in Indiana, and
Cypresswood withdrew its motion to dismiss or transfer the
instant case. Id. | 6; see also ECF No. 66.

On February 11, 2025, Merchants filed an Amended
Complaint in the instant case. ECF No. 68. The Amended
Complaint included a request for the receivership to remain in
place. Id. Like Merchants’ Original Complaint, the Amended
Complaint names Cypresswood, Crescent, eCap, and Frio as
parties to the receivership action. Jd. Additionally, the Amended
Complaint added new requests for monetary relief against
Cypresswood, for breach of the Promissory Note, and Goldner, for
breach of the loan guaranty, as well as declaratory judgment to
allow Merchants to foreclose on the Deed of Trust and sell the
Property. Jd, 1. Crescent also filed crossclaims against
Cypresswood; Cypresswood TX Healthcare, LLC; and Samuel
Goldner for declaratory judgment, breach of contract, and unjust
enrichment, Id.

On March 4, 2025, Cypresswood and Goldner filed their
Answer and Amended Counterclaims, Crossclaims, and a Third-
Party Complaint. ECF No. 76. Cypresswood and Goldner assert
claims against Merchants, for breach of fiduciary duty and
conspiracy, against Crescent and Vertical, for breach of contract,
and against Crescent, Vertical, and William Miller (Cresent and
Vertical’s owner and member), for tortious interference and civil
conspiracy. Id. In that filing, Cypresswood relies on the Lease’s
forum-selection clause to establish that the Southern District of
Texas is a “proper venue to litigate” its claims. fd. at 16 (citing ECF
No. 68-9 at 58).

Case 4:24-cv-03964 Document158- Filed on12/01/25in TXSD Page5of15

C. Cypresswood Declares Bankruptcy

Cypresswood initiated Chapter 11 bankruptcy in the
Bankruptcy Court for the Eastern District of New York
(Bankruptcy Court) on July 28, 2025. ECF No. 148 1.
Accordingly, on July 28, 2025, the court administratively closed
the instant case, pending the outcome of Cypresswood’s
bankruptcy. ECF No. 148. The parties petitioned the court to lift
the stay to allow the Receiver and the receivership to continue the
operations, financing, and management of the Facility pursuant to
the Receivership Order. ECF No. 145. The court granted the
parties’ motion and lifted the stay as to the receivership action.
ECF No. 146. All other claims in the case remain stayed. Id.

Cypresswood’s bankruptcy is in the initial stages. The
Bankruptcy Court has not yet held an Initial Case Management
Conference. See Docket, In re Cypresswood TX Realty, LLC,
No. 8-25-72833-ast (Bankr. H.D.N.Y. 2025).

Merchants filed a proof of claim in the bankruptcy
proceeding. ECF No, 153-4 {| 39. On October 14, 2025, Merchants
filed a Motion to Dismiss the bankruptcy action, which Vertical
joined in support. ECF No. 153-4; In re Cypresswood, No. 8-25-
72838-ast (Bankr. E.D.N.Y. Nov. 12, 2025) (ECF No. 45), In the
Motion to Dismiss, Merchants and Vertical argue Cypresswood
filed its bankruptcy petition in bad faith, given that it has no
income, no chance of successful rehabilitation through the
bankruptcy process, and no viable path to a confirmable plan. ECF
No. 153-4; In re Cypresswood, No. 8-25-72833-ast (Bankr. E.D.N.Y.
Nov. 12, 2025) (ECF No. 45). As of the date of this Order,
Merchants’ Motion to Dismiss remains pending, and the
Bankruptcy Court is expected to hear the matter on December 10,
2025. In re Cypresswood, No. 8-25-72838-ast (Bankr. E.D.N.Y.
Nov. 18, 2025) (Letter of Adjournment, ECF No. 49).

Case 4:24-cv-03964 Document158- Filed on 12/01/25 in TXSD Page 6 of 15

D, The Instant Motion
On October 21, 2025, Cypresswood filed the instant motion

seeking transfer of the case to the Eastern District of New York for
referral to the Bankruptcy Court. ECF No, 148 { 7. Cypresswood
argues that the Eastern District of New York is “far more
appropriate and convenient” because its bankruptcy proceedings
“are pending in the Bankruptcy Court in that District.” Id. {[ 5.

Eight days after it filed the instant motion, Cypresswood
asked the court to shorten the parties’ deadline to respond to its
motion. ECF No. 149. The court denied Cypresswood’s request but
promised expedited consideration of the motion. ECF No. 150.

Merchants, Crescent, Vertical, Miller, and the Receiver
oppose Cypresswood’s motion. HCF Nos, 153, 154, 155. Three
parties—Frio, eCap, and Goldner—did not respond and are
considered unopposed. See S.D. Tex. L.R. 7.4 (stating that failure
to respond to a motion is “taken as a representation of no
opposition.”).

2. Legal Standard and Analysis

“(District courts have broad discretion in deciding motions
to transfer....” In re Planned Parenthood Fed’n of Am., Inc.,
52 F.4th 625, 682 (bth Cir. 2022) (quoting In re Volkswagen of Am.,
Inc., 545 F.8d 304, 315 (6th Cir. 2008) (en banc)). The transferee
venue must be “clearly more convenient than the venue chosen by
the plaintiff.” In re Clarke, 94 F.4th 502, 515 (6th Cir. 2024). The
moving party must “clearly establish good cause for transfer based
on convenience and justice.” Def. Distributed v. Bruck, 30 F.4th
414, 433 (5th Cir. 2022). “This ‘good cause’ burden reflects the
appropriate deference to which the plaintiffs choice of venue is
entitled.” In re Volkswagen of Am., Inc., 545 F.3d 304, 315 (5th Cir.
2008) (en banc).

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A. The Transfer Statutes

Cypresswood moves to transfer under 28 U.S.C. §§ 1412 and
1404(a). ECF No. 148 at 1.

Section 1404(a) applies “to the transfer of civil actions in
general,” while section 1412 “more specifically govern|s] the
transfer of actions that are ‘related to’ a bankruptcy proceeding.”
Campbell v. Williams, No. 14-97, 2015 WL 3657627, at *2
(S.D. Tex. June 12, 2015) (citations omitted).

Section 1412 provides, “A district court may transfer a case
or proceeding under title 11 to a district court for another district,
in the interest of justice or for the convenience of the parties.”
28 U.S.C, § 1412. One way that a case may fall “under title 11” is
if it is “related to” the bankruptcy proceeding in the transferee
district. Campbell, 2015 WL 3657627, at *2. “[A] case is related to
a bankruptcy proceeding if it could ‘conceivably have any effect on
the estate being administered in bankruptcy.” Id. (citing
Creekridge Cap., LLC v. La. Hosp. Ctr., LEC, 410 B.R. 623, 627
(D. Minn. 2009). The parties do not dispute the fact that this
proceeding could conceivably have an effect on Cypresswood’s
estate. Cypresswood is the owner of the building and land upon
which the Facility sits, and Merchants has filed a proof of claim in
Cypresswood’s bankruptcy. This case is “related to” Cypresswood’s
bankruptcy in the Eastern District of New York, Accordingly,
section 1412 applies to this case.

The general transfer provision, 28 U.S.C. § 1404, provides,
“For the convenience of parties and witnesses, in the interest of
justice, a district court may transfer any civil action to any other
district or division where it might have been brought or to any
district or division to which all parties have consented.” Under
section 1404(a), the preliminary question is whether the civil
action at issue “might have been brought” in the movant’s proposed

destination venue. Volkswagen, 545 F.3d at 312. This preliminary

Case 4:24-cv-03964 Document158- Filed on 12/01/25 in TXSD Page 8of 15

“requirement remains a barrier to transfer...if at the time suit
was originally brought],] the transferee district would have lacked
jurisdiction over the defendant or if venue there would have been
improper.” Liaw Su Teng v. Skaarup Shipping Corp., 743 F.2d
1140, 1148 (5th Civ. 1984) (citing Hoffman v. Blaski, 363 U.S. 335,
344 (1960)).

While Cypresswood acknowledges that this is the
preliminary question that must be addressed under the statute, it
does not address whether Merchants could have filed this case in
the proposed transferee court. It is not clear to the court that, at
the time this lawsuit was filed, the Eastern District of New York
would have been able to exercise personal jurisdiction over all of
the named defendants. Nor it is clear to the court that, at the time
this lawsuit was filed, the Eastern District of New York would
have been an appropriate venue for the action under the general
venue statute, 28 U.S.C. § 1891(b)(1), or bankruptcy venue statute,
28 U.S.C. § 1409(a). Accordingly, because Cypresswood has failed
to even address this threshold inquiry, the court will not consider
transfer under Section 1404(a).

However, it makes little difference to the court’s analysis to
apply one transfer provision over the other. In re Zachry Holdings,
Inc., No. 24-90877, 2025 WL 8056951, at *2 (Bankr. 8.D. Tex.
Oct. 31, 2025) (“{Cl]hoosing one transfer provision over the other
generally has no effect on the ultimate transfer determination.”).
“Both statutes consider ‘in the interest of justice’ and ‘the
convenience of the parties.” fd. As a result of the similarities,
“Ic]ourts apply essentially the same factors in analyzing transfers
under” the two sections. Campbell, 2015 WL 8657627, at *2. The
analysis for both statutes includes consideration of private-
interest (or “convenience”) factors and public-interest (or “in the
interest of justice”) factors. See Def. Distributed, 30 F.4th at 433;

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Zachry, 2025 WL 3056951, at *2 (citing Atl. Marine Constr, Co, v.
U.S. Dist. Ct. W. Dist. Tex., 571 U.S. 49, 638 (2018)).
B, Private-Interest Factors

Generally, the private-interest factors under Section 1412
include (1) the location of the plaintiff and defendant, (2) the ease
of access to necessary proof, (8) the convenience of the witnesses,
(4) the availability of subpoena power over unwilling witnesses,
and (5) the expense related to obtaining witnesses. Cambell, 2015
WL 3657627, at *4; see also Def. Distributed, 30 F.4th at 433-34
(identifying the similar private-interest factors considered under
Section 1404(a)).

Analysis of the private-interest factors changes significantly
when the parties’ contract contains a forum-selection clause.
Zachry, 2025 WL 3056951, at *2 (citing Atl. Marine, 571 USS.
at, 63). Under a valid forum-selection clause, the parties “waive[]
their right to challenge the designated forum as inconvenient or
less convenient for them or their witnesses.” Jd. (citations omitted).
Accordingly, “[t]he court does not consider arguments about the
parties’ private interests and must find that the private interests
weigh entirely in favor of the parties’ preselected forum.” Id.

The Loan Agreement and Deed of Trust contain nearly
identical forum-selection clauses, which establish the courts of
Hamilton County, Indiana and Texas as appropriate venues for
legal actions arising out of the parties’ dealings. ECF Nos, 68-3
at 69, 68-5 at 26. Additionally, under these clauses Cypresswood
agreed to waive any challenges to the inconvenience posed by
litigation in these venues. Jd. Cypresswood and Crescent’s Lease
also contains a forum-selection clause, which states that
Cypresswood may choose to bring suit relating to the Lease in “any
federal or state court located in the State of Texas.” ECF No. 68-9
at 58. Cypresswood later relied on this very clause to plead that

Case 4:24-cv-03964 Document 158

the Southern District of Texas is a “proper venue to litigate” its
claims. ECF No. 76 at 16.

The court agrees with Cypresswood’s argument that the
language of the foregoing forum-selection clauses is permissive
and does not mandate venue in this District or Division. See ECF
No. 156 at 8 (citing Weber v, PACT XPP Techs., AG, 811 F.3d 748,
786 (5th Cir. 2016)). But Cypresswood ignores the fact that the
clauses also contain an explicit waiver of Cypresswood’s right to
challenge this District and Division as “inconvenient.”

Merchants initiated the instant suit in the Southern District
of Texas. Because the parties waived their right to challenge the
Houston Division of the Southern District of Texas as
inconvenient, the court finds that the private-interest factors
weigh entirely against transfer.

Even if the forum-selection clauses were invalid or entirely
excluded from the agreements, Cypresswood failed to establish
that the private-interest factors favor transfer to the astern
District of New York. In its initial motion, Cypresswood merely
states that “venue is far more appropriate and convenient in the
Eastern District of New York because Cypresswood|’s] Bankruptcy
Proceedings are pending in the Bankruptcy Court in that District.
Transfer of venue to [that District] is therefore in the interest of
justice and for the convenience of the parties.” EC No. 148
{4 5-6. In its Reply, Cypresswood provides a bit more detail,
arguing that transfer is convenient for Cypresswood and
Merchants because (1) “Merchants is already litigating in the
Bankruptcy Proceedings[;]” (2) “Cypresswood’s members are
located in the Eastern District of New York[;]” and (8) “most
evidence is digital... .” HCF No. 156 at 5.

Cypresswood’s arguments are not persuasive. Merchants’
choice to file a Proof of Claim in the bankruptcy proceeding does

not weigh in favor of transfer when it simultaneously expresses its

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opposition to transfer and is seeking dismissal of the bankruptcy
proceeding in its entirely. Additionally, the fact that “most
evidence is digital” simply means that the evidence is likely to be
equally accessible in either District. That makes the accessibility
of evidence, at best, a neutral consideration in the court’s analysis.
Moreover, transfer of the case to New York does nothing more than
shift the inconvenience of the litigation from Cypresswood to the
other parties, which usually suggests that transfer should be
denied. See In re Harnischfeger Indus., Inc., 246 B.R. 421, 437
(Bankr. N.D. Ala. 2000).

In its Notice of Supplemental Authority, Cypresswood
argues that the court should follow the “similarly situated civil
action” in Omega Healthcare Investors, Inc. v. Apex Construction
Management, LLC, No. 25-7356, 2025 WL 3084057 (N.D. Tl. Oct,
30, 2025). ECF No. 151 at 1. Cypresswood argues that the court in
Omega “granted a motion to transfer similar to” the instant
motion. Id. The dispute in Omega involved eleven long-term care
facilities owned by Omega Healthcare Investors, Inc. (OHI) and
leased to third-party operators. 2025 WL 3034057, at *1. As in the
instant case, Defendant Goldner was a named defendant. Id. Two
entities controlled by Goldner—Goldner Capital Management,
LLC (GCM) and SRZ Master Tenant, LLC (8RZ)-—-were held to be
necessary parties and added as defendants. Jd. After it removed
the action, OHI requested transfer to the Eastern District of New
York, where GCM and SRZ filed bankruptcy petitions. Id. at *2.
The District Court for the Northern District of linois determined
that the private-interest factors favored transfer. Among other
things, the court found that the only party resisting the transfer
had conceded in court filings that there would be no inconvenience
related to litigating in the transferee court. Id. at *4. The court also
gave no deference to the plaintiffs choice of forum because the

plaintiff was the party seeking transfer. Jd. Finally, all defendants

t1

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were New York residents. Id. at *4. This case is very different from
Omega. Here, transfer is hotly contested. Cypresswood agreed by
contract to waive any objection to venue in Texas and Merchants
is seeking to hold Cypresswood to that waiver. Cypresswood is the
only party in this action with ties to New York. The cases are not
comparable.

Cypresswood has not met its burden of showing that the
Eastern District of New York is clearly more convenient than the
Southern District of Texas.

C,. Public-Interest Factors

The public-interest factors that are relevant to the venue-
transfer analysis include: (1) the economics of estate
administration; (2) the “home-court” presumption; (8) judicial
efficiency; (4) the ability of the parties to receive a fair trial; (6) the
state’s interest in having local controversies decided within its
borders, by those familiar with its laws; (6) the enforceability of
any judgment rendered; and (7) the plaintiffs original choice of
forum. Cambell, 2015 WL 3657627, at *4; see also Def. Distributed,
80 F.4th at 485 (explaining the similar public-interest factors
considered under Section 1404(a)).

Cypresswood argues that the Bankruptcy Court is “better
suited to address the issues presented in this action and their
effect on the reorganization.” ECF No. 148 § 12. It argues that
transfer would promote the economics and efficiency of estate
administration because it would allow “all litigation and claims”
related to Cypresswood’s estate to “be decided in a single forum.”
Id. 4§ 15, 18. Cypresswood also argues that “ensur[ing] the
efficient administration of the estate” is “an interest that
supersedes any contractual venue preference.” ECF No. 156 at 4.

Under the facts of this case, the court disagrees.

Cypresswood ignores a critical point made by Merchants and the

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Receiver. Transfer of this case may actually interrupt the
receivership and result in delay and confusion if the bankruptcy
proceeding is dismissed. Cypresswood presents no evidence that
the bankruptcy action cannot proceed while this case remains
largely stayed.

Cypresswood also argues that the “home-court” presumption
applies and weighs in favor of transfer, ECF Nos. 148 { 12;
156 at 4. The “home-court” presumption is “a strong presumption
that proceedings ‘related to’ a bankruptcy should be litigated in the
judicial district where the bankruptcy itself is pending.”
Orthodontic Cents. of Tex., Inc. vu. Corwin, No. 6-2595, 2007 WL
1738220, at *1 (6.D. Tex. Jan. 18, 2007). The home-court
presumption is not binding on the court, however, and is just one
factor to be considered, albeit a strong factor, especially when the
movant is the bankruptcy filer. Hanrischfeger, 246 B.R. at 436 n.42
(disagreeing with cases holding that courts lack discretion when
considering whether to transfer a case to the home court).

In most of the reported cases that the court has considered,
including Orthodontic Centers, as well as in the cases it cites,
courts follow the home-court presumption when the bankruptcy
proceeding was initiated before the federal-court action for which
transfer was sought. See, e.g., Orthodontic Cents., 2007 WL
173220, at *1; Zhang v. Rothrock, No. 5-3461, 2006 WL 213951,
at *1 (S.D. Tex. Jan. 25, 2006) (citing Maritime Elec. Co. v. United
Jersey Bank, 959 F.2d 1198, 1212 (8rd Cir. 1991)) ([F]Jor a civil
proceeding that is related toa... bankruptcy case and that is filed
after the bankruptcy case, the proper venue for the civil proceeding
is the district in which the [bankruptcy] case is pending.”); AEP
Energy Servs. Gas Holding Co. v. Bank of Am., N.A., No. 83-4973,
2004 WL 2278770, at *3 (S.D. Tex. Sept. 14, 2004).

The situation changes somewhat when the case to be

transferred was filed before bankruptcy and has been ongoing for

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some time. See, e.g., Frelin v. Oakwood Homes Corp., 292 BR. 369,
388-90 (Bankr. E.D. Ark. 2003) (refusing to transfer the case to
the home court when the case sought to be transferred had been
ongoing for two years before the bankruptcy was initiated); in re
Northfield Laboratories Inc., 467 B.R. 582, 590 (Bankr. D. Del.
2010) (transferring claims out of the home court when litigation
related to those claims was already ongoing in the transferee
court), In such a case, depending on the unique facts of each case,
transfer of an ongoing case to the home court may not make sense.
The court concludes that to be the case here, under the unique facts
presented.

This case involves many entities from many states. There
are counterclaims, cross-claims, and many pending issues that
appear to the court to be well beyond the scope of the issues to be
decided by the Bankruptcy Court. The Facility and the Property
are in Texas, and the receivership has been established by this
court and has been in place for many months. The Facility houses
hundreds of people requiring assisted living. The whole point of
the receivership was to ensure uninterrupted operation of the
facility. The parties jointly moved the court to reinstate the case so
that the receivership could continue. ECF No, 145, There is
currently a motion to dismiss pending in the Bankruptcy Court,
and it is not clear to the court what will take place if the
Bankruptcy Case is dismissed after this case is transferred. The
court is concerned that there will be significant unintended
consequences that may result from transferring this ongoing,
complex case. The home-court presumption, while applicable, is
overcome by the foregoing unique facts of this case.

Except for the receivership process, the instant case is
stayed while Cypresswood’s bankruptcy is pending. Cypresswood
has failed to demonstrate that there is a reai risk of an inconsistent

judgment that would affect Cypresswood’s assets. Nor has

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Cypresswood shown that the Bankruptcy Court would be
prevented from properly administering Cypresswood’s estate.
Additionally, none of the parties argue that trial of this case in this
District would be unfair.

Texas has a compelling interest in the resolution of this
matter. This case is centered around a Texas-based Facility that
houses Texas citizens, and it involves a defendant, Frio, that is a
public entity of the State of Texas. Texas’s interest in the matter
weighs strongly against transfer,

Finally, while the Southern District of Texas was not
Merchants’ original choice of forum, the fact that Cypresswood and
Merchants agreed to litigate this action in the Southern District of
Texas—instead of continuing to litigate in the Southern District of
Indiana—weighs strongly against transfer. The court again notes
that Cypresswood has itself argued that venue here is appropriate.

On balance, the public-interest factors weigh against
transfer to the Eastern District of New York.

8 Conclusion

For the reasons stated, the private- and public-interest
factors weigh strongly against transfer. It would not be “in the
interest of justice” nor “for the convenience of the parties’ to
transfer the case to the Eastern District of New York under
28 U.S.C. § 1412.

Accordingly, Cypresswood’s Motion to Transfer Venue,
ECF No. 148, is DENIED.

Signed at Houston, Texas on December 1, 2025.

fe bag

Peter Bray{/
United States Magistrate Judge

15