Wolfkiel v. Krug et al

Filing 28

ORDER Transferring Venue. Defendants' Motion to Transfer Venue 15 is GRANTED, by Judge John L. Kane on 8/7/12.(sgrim)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 11-cv-3170-JLK-KLM
BILL S. WOLFKIEL,
Plaintiff,
v.
ADRIENNE KRUG,
NORMAN KRUG, and
HILDA SUGARMAN,
Defendants.
________________________________________________________________________
ORDER TRANSFERRING VENUE UNDER 28 U.S.C. § 1404(a)
________________________________________________________________________
KANE, J.
This fraud action is before on the Motion of Defendants Adrienne Krug, Norman
Krug, and Hilda Sugarman to Transfer Venue from this Court to the Central District
Court for the District of California under 28 U.S.C. § 1404 (a) (Doc. 15). The Motion is
GRANTED because (1) the majority of the witnesses are in California, beyond the
subpoena power of this court, and have no external incentive to appear there without
process; (2) the nature of the case creates a particular need for oral testimony; and (3)
Plaintiff’s claims require the presiding court to apply California and federal law as much
as Colorado law, such that questions of Colorado law do not predominate.
Section 1404(a) provides that “[f]or 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.” The section was enacted to allow for simple
changes of venue within a unitary federal system. Chrysler Credit Corp. v. Country
Chrysler, Inc., 928 F. 2d 1509, 1515 (10th Cir. 1991) (citing Piper Aircraft Co. v. Reyno,
454 U.S. 235, 254 (1981)). To warrant transfer, the moving party must establish that: (1)
the action could have been brought in the alternate forum; (2) the existing forum is
inconvenient; and (3) the interests of justice are better served in the alternate forum. Wolf
v. Gerhard Interiors, Ltd., 399 F. Supp.2d 1164, 1166 (D. Colo. 2005) (citing Chrysler,
928 F.2d at 1515).
It is within the discretion of the trial judge to make the determination of
inconvenience. Texas Eastern, 579 F.2d at 567. Analysis of inconvenience should
include the following factors:
[1] the plaintiff s choice of forum; [2] the accessibility of witnesses and
other sources of proof, including the availability of compulsory process to
ensure attendance of witnesses; and [3] the cost of making the necessary
proof; [4] questions as to the enforceability of a judgment if one is obtained;
[5] relative advantages and obstacles to a fair trial; [6] difficulties that may
arise from congested dockets; [7] the possibility of the existence of questions arising in
the area of conflict of laws; [8] the advantage of having a local court determine questions
of local law; and [9] all other considerations of a practical nature that make a trial easy,
expeditious, and economical.
Chrysler, 928 F. 2d at 1516 (quoting Texas Gulf Sulphur Co. v. Ritter, 371 F.2d 145, 147
(10th Cir. 1967)). While a plaintiff’s choice of forum is given substantial weight, it is not,
by itself, determinative. See Bailey v. Union Pacific R. Co., 364 F. Supp.2d 1227, 1230
(D. Colo. 2007). However, unless the balance of inconvenience weighs strongly in favor
of the movant, plaintiff’s choice of forum should “rarely be disturbed.” Schmidt v. Klein,
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956 F.2d 963, 965 (10th Cir. 1992).
Discussion.
In this case, Mr. Wolfkiel asserts that granting Defendants’ motion for transfer
would simply shift the burden and inconvenience from Defendants to himself. He
emphasizes a plaintiff’s right to choose his forum of suit and argues Defendants have
failed to demonstrate that the Central District for the District of California would be
substantially more convenient.
Defendants argue transfer would significantly reduce overall inconvenience and be
in the interests of justice because: (1) the majority of witnesses listed in initial disclosures
reside in California, (2) these non-party witnesses cannot be compelled to appear in
Colorado but are integral to the case, (3) it is a long established principle that live
testimony is more desirable than that produced through deposition, and (4) the majority of
claims arise under or are governed by California law. Defendants also argue that where,
as here, the facts giving rise to suit have no material relation to the chosen forum, the
weight given to the plaintiff’s choice is reduced. I agree.
Mr. Wolfkiel concedes that a majority of witnesses reside outside the chosen
forum and cannot be compelled by the court to appear, but relies heavily on the case of
Galvin v. McCarthy, 545 F. Supp.2d 1176 (D. Colo. 2008)(Nottingham, J.) to argue
transfer is inappropriate notwithstanding that fact. In Galvin, transfer was denied even
though the majority of witnesses resided in Texas and were outside the compulsory
process of this Court. Id. at 1182-83. Judge Nottingham reasoned that because the
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majority of Texas witnesses in Galvin were the defendant’s executives and employees,
there were other incentives for their appearance in Colorado proceedings such that the
lack of compulsory process did not weigh so heavily. Id. In addition, Judge Nottingham
noted that the defendant solicited plaintiff’s business by traveling to Colorado. Because
the defendant had availed himself of the Colorado forum to establish the business
relationship with plaintiff and because the majority of out-of-forum witnesses had
external incentives to appear, neither justice nor convenience demanded a transfer of
venue. Id. The facts here are clearly distinguishable.
In the present case, none of the non-party witnesses are “employees” of
Defendants or “executives” in their LLC, which is simply a closely held, family entity
and not an operational business at all. Indeed, the only witnesses who are identified as
businesspeople in the Galvin sense are Mr. Wolfkiel and his business associate, Patrick
Ingrassia.1 Were this case transferred to California, it would be Messrs. Wolfkiel and
Ingrassia who would have external incentives to appear notwithstanding a failure of
compulsory process – Plaintiff, to pursue his claims, and Mr. Ingrassia, because of his
involvement with the business. Defendants’ witnesses lack such incentives, and Galvin
does not help Mr. Wolfkiel preserve his choice of forum. With regard to Defendants’
“solicitation” of Mr. Wolfkiel in Colorado, the record is vague, but not even Mr. Wolfkiel

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The relationship between the two men is described both on their website,
http://ksgllc.com/our-company/ksg-team, and in a case brought against Mr. Ingrassia, Coventry
First, LLC v. Ingrassia, Civ. Case No. 05-2802, 2005 WL 1625042 (E.D. Pa. July 11, 2005)).
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asserts that Defendants traveled to Colorado to meet with or “solicit” Mr. Wolfkiel’s
purchase of an interest in the proceeds of Mr. Krug’s life insurance policy. Ostensibly,
the solicitation occurred remotely, further distinguishing Galvin from the case at bar.
The linchpin of the transfer question for me is the preference for live testimony in
this case, which ultimately turns on the personalities and testimony of its principle
players. Generally speaking, deposition or other recorded testimony is always “secondbest” to hearing from witnesses in person. See Garcia-Martinez v. City and County of
Denver, 392 F.3d 1187, 1193 (10th Cir. 2004). Here, much of what will come before the
factfinder are the conflicting assertions of the parties with regard to the investment, their
respective sophistication, and Mr. Krug’s health and fraudulent intent. Integral to the
resolution of such conflicts are judgments as to an individual witness’s credibility. Such
credibility determinations are easier to make, and likely to be better-reasoned, when the
witness appears in person, where his demeanor and other intangibles can be readily
assessed. It is undisputed in this case that live testimony of a majority of the identified
non-party witnesses cannot be compelled in Colorado. This factor is entitled to
considerable weight.
While both sides overstate the importance of its preferred forum’s law to the
resolution of Mr. Wolfkiel’s claims, it is certainly true that Colorado law does not
predominate over California law as Mr. Wolfkiel maintains. Mr. Wolfkiel asserts six
causes of action: One federal and two state (one Colorado, one California) securities fraud
claims; a claim under California Civil Code for rescission; and two common law claims
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that would be analyzed under the law of the eventual forum. In other words, only one of
the six causes of action – the Colorado securities fraud claim – would have to be analyzed
by a “foreign” judge if the case were transferred to California. By contrast, both Mr.
Wolfkiel’s California securities fraud claim and his claim for rescission would have to be
analyzed under California law if venue remained in this Court. Thus, Mr. Wolfkiel’s
concern that his Colorado claims will have to be adjudicated by a California judge are
felt in reverse and magnified in degree if the forum remains Colorado. If Mr. Wolfkiel
were so troubled at the prospect of a judge in one forum applying the law of another, it is
curious that he included two California statutory claims in his Colorado Complaint. As I
have previously observed, one of those California claims, the claim for rescission, is the
primary and essential form of relief sought by Mr. Wolfkiel in this case.
Finally, Defendants argue the weight to be given Mr. Wolfkiel’s choice of forum
should be decreased where the forum has no material relation or significant connection to
the facts giving rise to the suit, citing PLX Technology, Inc. v. Knuettel II, 2010 WL
1813291, *2 (D. Colo. May 17, 2012) (Ebel, J.) (citing Employers Mut. Cas. Co., 618
F.3d 1153, 1168 (10th Cir. 2010)). Defendants analogize the present facts to those in
Knuettel, where the plaintiff’s choice of the forum of Colorado was afforded less weight
because the only connection to Colorado was plaintiff’s residence and because the actions
giving rise to suit occurred in Texas. Here, it is a contested issue of fact whether
Defendants ever contacted Mr. Wolfkiel in Colorado to commence sale of the policy. The
parties agree, however, that the medical care received by the insured, Mr. Krug, the
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application for and original purchase of his life insurance policy, and the alleged scheme
to defraud Plaintiff occurred in California, not Colorado. Under these circumstances, the
facts relevant to the Chrysler analysis are akin to those in Knuettel, and Mr. Wolfkiel’s
choice of forum is entitled to less weight. Only his residence and a possible remote phone
call link the suit to Colorado.
Conclusion
If any case merits a transfer of venue pursuant to 28 U.S.C. § 1404 (a), it is this
one. The strongest arguments in favor of maintaining Mr. Wolfkiel’s chosen forum are
the general principles that a plaintiff be able to choose his forum of suit and that venue
only be transferred when the balance weighs strongly in favor of the change. Here, the
balance does weigh strongly in favor of transfer. The majority of witnesses reside in
California or outside Colorado and cannot be compelled by the Court to appear here. And
while it is true that neither Mr. Wolfkiel nor Mr. Ingrassia could be compelled by process
to testify in California, each has clear external incentives to do so. The nature of Mr.
Wolfkiel’s claims makes live testimony of particular importance, and California, not
Colorado, law forms a predominant basis for Plaintiff’s claims. Because the majority of
actions giving rise to suit, including the allegedly fraudulent representations regarding
Mr. Krug’s health used to get the insurance policy in the first instance, occurred in
California, not Colorado, California is the most appropriate forum for Mr. Wolfkiel’s
claims. Defendants’ Motion to Transfer Venue (Doc. 15) is GRANTED.

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Dated this 7th day of August, 2012, at Denver, Colorado.

s/John L. Kane
SENIOR U.S. DISTRICT JUDGE

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