Unreported / Non-Citable
Background
IsoCarbon Corporation and Basin Electric Power Cooperative entered into a master agreement and two confirmation letters under which IsoCarbon would supply electricity at delivery points in North Dakota and Basin Electric would purchase it. The parties negotiated and signed remotely from their respective offices in Texas and North Dakota. IsoCarbon later began developing power-generation facilities in North Dakota.
In January 2026, Basin Electric sent IsoCarbon a letter from North Dakota declaring the confirmation letters null, void, and terminated because IsoCarbon allegedly had not timely satisfied a condition precedent. IsoCarbon sued in the Northern District of Texas for declaratory relief and damages under contract and related theories. Basin Electric moved to dismiss for improper venue or, alternatively, to transfer the case.
The Court’s Holding
The court held that venue was improper in the Northern District of Texas under 28 U.S.C. § 1391(b)(2). Although IsoCarbon participated in negotiations from Dallas, the agreements required performance in North Dakota, and Basin Electric’s alleged acts and omissions constituting the breach occurred there. IsoCarbon’s receipt of the termination letter, business decisions, reliance expenditures, and financial injury in Dallas did not establish that a substantial part of the events giving rise to the claims occurred in Texas.
Because the action could have been brought in the District of North Dakota, the court transferred it there under 28 U.S.C. § 1406(a) rather than dismissing it. The court therefore did not address discretionary transfer under § 1404(a). It also denied as moot IsoCarbon’s motion for leave to file a sur-reply or to strike Basin Electric’s supplemental affidavit because that affidavit concerned only the § 1404(a) analysis.
Key Takeaways
- Remote contract negotiations conducted partly from a district do not necessarily make venue proper there when contractual performance and the alleged breach occurred elsewhere.
- Receiving a termination notice and suffering economic harm in the plaintiff’s home district were insufficient to establish transactional venue under § 1391(b)(2).
- When venue is improper but another proper district is available, transfer under § 1406(a) may serve the interest of justice by avoiding the cost and delay of dismissal and refiling.
Why It Matters
The decision emphasizes that venue in a contract dispute turns on the substantial events underlying the claims, not merely the plaintiff’s location or the place where communications and financial consequences were received. For contracts negotiated electronically across state lines, the required place of performance and the location of the defendant’s alleged breach may carry greater weight.
It also illustrates the procedural distinction between curing improper venue under § 1406(a) and transferring a properly venued case for convenience under § 1404(a).