Atlas Apartments Acquisitions, LLC et al v. Stifel Nicolaus & Company Inc. et al
Filing
40
ORDER granting #11 Motion to Change Venue to the Northern District of Illinois and denying all other pending motions as moot with leave to re-file. Signed by Judge Federico A. Moreno on 11/18/2022. See attached document for full details. (mmd) [Transferred from Florida Southern on 11/18/2022.]
UNITED STATESDISTRICT Y'OURTFOR THV
SOU THERN D ISTRICT O F FLORID A
M iymiDivision
Case N um ber:22-21469-C1V -M O R EN O
ATLASAPARTM ENTS ACQUISITIONS,
LLC etJJ;,
Plaintiffs,
STIFEL N ICOLAU S & CO .IN C .,W ILLIAM
scH ERR ,JOHN D O E ,JAN E D O E ,ZH U
ZHA IH OLD IN G S,LTD .,PETER PU lTA K
LEE,and JAN E D OE 2,
Defendants.
/
q , x- . . .,
OR D ER G M N TIN G M O T ION T O TM N SFE R V ENU E T 0 TH E N O R TH ERN
DISTRICT OF ILLIN OIS
.
Thiscasestemsfrom theDefendants'actionsin apost-judgmentcollectionproceedingin
TheN ol-thern D istrictofIllinois.Plqintiffs com plain thatD efendant StifelN icolaus & Co.Inc.
and itsemployeeW illiam Scherrunlawfully disclosed inforlnation regarding Plaintiffs'accounts
in responding to aCitation to DiscoverAssetsfiled in theNorthern Districtoflllinois.Plaintiffs
also complain thatStifelNicolausuplawfully frozePlaintiffsdinvestmentaccountswithout
notice.TheNolhernDistrictoftlli'
poisDistrictJudgeSharonJohnsonColeman commented ina
written orderthatratherthan file thiscase in Florida,the Plaintiffs could have soughtrelieffrom
theIllinoiscitationsprocedurein hercourt,The Courtfindsthefirst-tiled ruleand the28 U.S.C.
j1404factorsfavortransferofthi
otheNorthernDis
rict
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THIS CAUSE camebeforlltheCotulupon DéfendantsjMotion to TransferVenue (D.E.
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11).THE COURT hasconsidek'edthemotion,theresponse,thepertinentportionsoftherecord,
ahdbeingotherwisefullyadvisetjinthepremises,itis
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ADJUDGED thatthe motion isGRANTED.The Cleli ofCourtisdirected to transfer
thecasetotheNorthernDistrictofIlllnoij.Itisalso
ADJUDGED thata11othe'
rpending motionsâre DENIED asm ootwith leaveto refileif
appropriate.
I'
.
Backkrouhd
Defendants,StifelNicol:tls& Co.Inc.andits'employeeW illiam Schem anIllinois
resident,arem ovingtotransfervenueofthiscaseto theNorthern Districtoflllinois,wherethere
isa related action involving the sam e padies.See Zhu ZhaiH oldings,Ltd.(î Peter .
PT/fTak Lee
v.lvankovich,No.20-4985-C1V (N.D.111.).Plaintiffsareelevenlimitedliabilitycompanies
registered in Florida.1Theireight-countcom plaintallegesviolations of state and federallaw
related to theirinvestm entaccountsatDefendantStlfelNicolaus,afinancialinstitution.Stifel
NicolausisaDelaware col-poraiion,with headquaMersin St.Louis,M issouriand officesin the
N orthern DistrictofIllinois.Itisiegistered to do business in Florida.D efendants Zhu Zhai
H oldings,Ltd.and PeterPuiTak Lee are based in Hong K ong.They are the plaintiffs in the
lllinoisactionseekingtorecoverona$4.5milliondefaultjudgmentagainstStevenlvarlkovich,
WhOallegedly controlstheLLC Plaintlffsinthiscase.TheHongKongDefendants(theIllinois
'
plaintiffs)stlpporttransfertotheNorthernDistrictoflllinols.Y1AeLLC Plaintiffsillthiscaseare
alsosuingJohnandJaneDoe's,whoàrethèattorneysintheIllinoisaction.
The Illinois Action
IntheIllinoiscase,Zhu'ZhaiHoldingsandLee.commencedpost-judgmentcollection
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proceedingsby serving citationstlnderllll
nois law to discoverlvankovich'sassets.Zhu Zhai
H oldingsand Lee served StifelN icolaus & Co.w ith the the citation to determ ine ifIvarlkovich
lTheeleven LLC PlaintiffsareAtlasApartm entsAcquisitions,LLC,AtlasApartm entH om es,LLC;Atlas .
M ultifamily ThreeLLC,AtlasM F MezzanineBon'
ower,LLC,PremierOrlando PortfolioTwo LLC,Atlas
A lexandria& ParcvueLLC,A tlasCrowntreeLakesLLC,Apafm entH oldings,LLC,P2Portfolio M anaging
M em berLLC,AtlasBirchwood,LLC,and lvankovich Fam ily LLC.
2
hadassetsinthecompany'saccounts.Aspa14oftheIllinoispost-judgmentcollection action,
Schen-signed Stifel'sresponsetothecitation order,which listed accountstitled in thennm esof
theLLC Plaintiffsin thiscase.Plaintiffsaresuing Stifeland Schen'here in FloridabecauseStifel
disclosed account-related inform ation in zesponse to the citation filed in the Illinoisproceeding.
Thecom plaintreads:Cçstifelfiledan answ erto the erroneouscitation thatm ade apublic
disclosure ofeach bank accpuntpfçach PlaintiffjAtlasentity andtheamountofmoney and
.
financialinvestm entsby accountnumberin each Atlasentity bank account.''Plaintiffscoldplain
Stifelcom pounded the errorby then freezing each ofPlaintiffs'investm entaccounts.
Theaccotlntholders,theFloridaPlaintiffs,filedmotionstointerveneinthepost-judgment
collectionproceedingsin Illinoisandalso filedthiscase.On M ay 9,2022,JudgeSharon Johnson
Colem an oftheN orthern D istrictofIllinoisdenied a m otion by Zhu ZhaiH oldings,Ltd.and Lee
to tul'
lzover the funds in the A tlasLLC accountsdisclosed by Stifel.She found the evidence
insufficienttofindthatStifelNicolausisholdingtheassetsofthejudgmentdebtorIvankovich.
Thepartiesto the Illinoisaction continueto disputewhetherIvarlkovich'sassetsarein
thePlaintiffs'accountsheldby StifelNicolaus.Initially,asnoted,Stifelfrozetheassetsin the
accounts,buton M ay 3l,2022,JudgeJolmson Colem an,entered an orderlifting thefreezeover
the assets Stifelis holding in the 132 Portfolio M anagem entM em berLLC Investm entA ccount
andtheIvankovichFnmily,LLC InvestmentAccount(both arePlaintiffsinthisFloridacase).ln
thatorder,JudgeJohnson Colemanreferenced thiscase,stating:
Instead ofdirectin
'g the Coul-t's atlention to the continued freeze of
these assets,on M ay 11,2022,lvankovich'slawyerfiled a law suit
in the U nited StatesD istrictC oul4 forthe Southern D istrictof
Florida,on behalfofthelim ited liability companiedlistedinthe
Stifelanswerto thecitation to discoverassets,againsttheplaintiffs
inthislawsuit.Stifel,andseveralJaneandJohnDoes.ln (their
Floridalcomplaint,thelimitedliabilityplaintiffsallegea
conspiracy claim againstdefendantsarguingthatthey conspired to
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freezetheplaintiffs'assets,am ongothel-claim s.Thebetterway to
approach this issue,how ever,w asto ask this Coul'tto u
'nfreeze the
assets,instead offiling whatappearsto be a baselsslaw suitin
another federaldistrict...M oreover,,through hisFlorida counsel's
tactic,itappearsIvankovich isseekingto avoidpayingthe $4.5
millionjtldmentheowes.Thatsaid,untilplaintiffscansufficiently
establishthatStifelisholdingtheassetsofjudgmentdebtor
lvankovich,thereisno basisforthelkeeze to rem ain intact.
JudgeJohnsonColeman'sM ay31,2022Orderalsograntedthejudgmentcreditors'
m otion fororderto show cause.ltdirected Ivarlkovich and tw o non-pal-ty LLC 's,132 Portfolio
M anagingM emberLLC,andtheIvankovichFamily,LLC toanswerthejudgmentcreditors'
A pril13,2022 citationsby June 24,2022.The lllinoisCourtalso denied a m otion to quash the
citations.
The Florida A ction
Ilofthe Com plaintpeeking declaratory and
Plaintiffsvoluntarily dism i,sjed Counts land '
injunctiverelief-againststifelxicolaus.countltIseeksdamagesunderthefederalGramm$
.
Leach-Bliley A ctagainstStifelN icolatts and W illiam Scherrbased on theirdisclosure of
inform ation abouttheaccounts.CountIV isaclaim undertheFaiiDebtCollection PracticesAct
againstthe H ong K ong D efendants and their law yerJane D oe 2.This claim stem s from the Hong
KongDefendants'collection methodstoobtainpaymentontheIllinoisdefaultjudgment.It
assel'tsthatCçgdlefendantsluisrepresentedto Stifelthecharacter,amount,orlegalstatusofthe
ctebtowedby Ivankovich,byrepresentingthatthedelk wassomehow owedby andcouldbe
satisfiedbyusingPlaintiffs'bank accountstopaythejudgment.''CountV isaclaim underthe
FloridaConstitutionandFloridaStaiutej655.059forviolationofafiduciarydutyby Stifel
N icolaus,Scherr,and thdirlaw yers,Jolm and Jane D oe.CountV1allégesthe D efendants
.
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engagedincivilconspirâcybyexchanginginformatitm regardingPlaintiffsy acc.ounts.Co.unts
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V1Iand Vl11are forabuseofprocessand intentionalinterferencewith abusinessrelgtionship
againstthe H ong K ong D efendantsand their law yers,Jane D oe and Jane D oe 2.
L ezalStanw
dard and A nalysi.
s
Defendants,StifelNicolaus& Co.and itsemployee W illiam Schen',arem ovingto
transferthiscasetotheNorthernDistrictofIllinoisunderthefirst-filedruleand28U.S.C.j
1404.DefendantsZhu ZhaiHoldings,Ltd.and PeterPuiTak Leefiled a statementin supportof
themotiontotransferwithoutwaivingtherighttocontestpersonaljurisdictioninthisFlroida
proceeding.
First-Filed Rule
ç'W here tw o actidns involving overlapping issues and partiesare pending in tw o federal
courts,thereisastrongpresumptionacrossthefederalcircuitsthatfavorstheforum ofthetirstfiled suitunderthe first-filed rule.'iu
%eeM anuelv. CovergysCol
p.,430F.3d 1132,1135 (11th
Cir.2005).t$Allthatneedbepresèntisthat'thetwoactionsinvolvecloselyrelatedquestionsor
com m on
subjectmatter....Thecasesneednotbeidenticaltobeduplicative.''Strotherv.Hylas
'
Yachts,Inc.,No.12-80283,2012MT'
L 4531357,at2(S.D.Fla.Oct.1,2012).ttgojncethecourt
determ inesthatthe tw o suitslikely involve substantialoverlap,itisno longerup to the secondfiled coul'
tto resolve the question'ofwhetherboth should be allow ed to proceed.''fn re Checking
AccountOvt
drlrl./ifitigation,859F.Supp.2d 1313,1325(S.D.Fla.2012).Ct
M oreover...the
pal-tyobjectingtojurisdictioninthefirst-filedforum carrgies)theburdenofprovingGcompelling
circumstances'towarrantanexceptiontothetirst-filed1-ule.''M anuel,430F.3dat1135(quoting
MerrillLynch,Pierce,FennerdrSmith,Inc.v.Haydu,675F.2d 1169,1174(11th Cir.1982)).
Here,thePlaintiffshavenotobjectedtotheapplication ofthefirst-filedrule,directingtheir
responsetothemotion on whytrbnsferisinappropriateullder28U.S.C.j1404.
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In thiscase,there isno question thattheIllinoisaction wasfiled first,asitwasfiled on
August24,2020,andthiscasewasfiled onM ay 11,2022.Thedefaultjudgmententeredon
August17,2021,triggeredpost-judjmentcollectionproceeèingsinlllinois.Thejudgment
creditorfled citationsto discoverIvankovich'sassetsin theNorthern Districtoflllinois
proceeding and the D efendants'responsesto the citations are atissue in this case.B ecause the
Floridaaction relatestotherightto freezeorturn overassetsin Stifelaccountsto satisfy the
Illinoisjudgment,theactionsoverlap.Finally,allparties,exceptfortheDoedefendants,are
parties,intervenol-s,orparticipantsin the Illinois caje.
This com plaintoverlaps with the ongoing collection proceedingsin the N orthern D istrict
ofIllinois,wherethecotll4willdeterm inewhetherthefundsin theStifelaccountscontain
Ivankovich's propel4y.Litigating here aboutthe propriety ofStifel's answ el's to the citations is
im proper.The rightcourtto decide these issues is the N ol-thern Districtoflllinois,w ho hasthe
pal-tiesbeforeitand canàssessthep'k1-ties'responsestotheèitationsfiledinthepost-collection
jroceedingsitisadjudicating.Hàvingfoundthefirst-to-fileruleapplies;tdthepropercourseof
action gisjforthecourttotransferthecasetothe(first-filed)court....''In re:CheckingAcc'
ount
Overdraf Litig.,859F.Supp.2dat1321.
Tl'
ansferunder28 US.C J1404
Even ifthefirst-filedruledidnotrequiretransfer,the28U.S.C.j 1404factorsfavor
transfer ofthe case to the N ol-thern D istrictoflllinois.Courts have broad discretion to transfer
casesunder28U.S.C.j1404(a);I'lightv.Uu% Dep 'tofHonlelahdsecurity,391F.Supp.3d
11'78,1182-83(S.D.Fla.2019).Todeterminewhetheracaseshouldbetransfen-edptlrsuanttoj
1404,courtsapply atwo-prong tesi.f#.,391F.Supp.3d at1183.First,coul-tslookto whether
thecasecouldhavebeenbroughtinthealternativevenue,wherethecourthassubjectmatter
jurisdictioh,venueisproper,andthedefendantisamenabletoselwice.Id Second,courts
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evaluatewhetherçfconvenienceandtheinterestsofjusticerequiretransfer.''Id Underthis
second prong,coul'tsw eigh factors such asthe convenience ofthe witnessesal:d parties,the
location ofrelevantdocum entsandeaseofaccessto sourcesofproof,thelocusofoperative
facts,theavailability ofprocesstb compelthe attendanceofunwilling witnesses,therelative
m eans ofthe pa/ies,a forum 's faluiliarity w ith the govelming law ,the w eightàccorded a
plaintiffschoiceofforum andtrialefficiency.16L(citingManuel,430F.3dat1135n.1).
Jurisdiction and J'k/zzfcintheNorthernDistrictoflllinois
The firstquestion is whetherPlaintiffs could have filed this case in the N orthern D istrict
ofIllinois.Jurisdiction in this case stem s from diversity and federallaw sincluding the Gram m -
Leach-Bliley Act,15U.S.C.j6801,andtheFairDebtCollectionPracticesAct,15U.S.C.j
1692.The com plaintalso containjstate law claim s forwhich a federalcoul'tcan exercise
supplementaljurisdiction.28U.S.C.j1367.Boththiscoul'
tandtheNorthernDistrictoflllinois
havejurisdiction.
The second question is whethervenue is properin the N ortlzern D'
istrictofIllinois. 28
'
.
u.s.c.j1391providesthatvenueisproperinajudicial'districtinwhich asubstmatialpartofthe
eventsoromissionsgivingrisetotheclaim occun'edorinanyjudicialdistrictinwhichany
defendantissubjecttothecoul-t'spersonaljurisdiction.A defendantthatisnotaU.S.resident
maybesuedinanyjudicialdistrict.
Here,theeventsgiving'risetothecomplaintstem from thepost-jttdgmentcollection
proceedings in theN ortherh D istrictoflllinois:D efendaltts StifelN icolausand Scherr's
responsesto the Illinoiscitationsareatissue in thiscase.TheN ol-thern Districtoflltinoishas
pelsonaljurisdictionoverthemovingDefendantw illiam jchm-r,wtaoresidesinthatdistrict.
M oreover,the H ong K ong D efendants,filed a notice in suppol'
tofthe m otion to transfer
indicatingthatthelllinoisCourtcoùldexercisepersonaljurisdiction'overthem,giventheyhave
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consentedtopersonaljurisdictionintherelatedaction.Accordingly,venueisproperinthe
Nol-thern Districtoflllinoisbecausethepost-collectiop pröceedingsgivingrisetotheclaim s
tookplaceinIllinoisandtheDçfendantsareamenabletopersonaljurisdiction izèIllinois.The
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.
HongKongDefendantïmaynotbestlbjecttopersonaljurisdictionhere.Havingfoundthatthe
Northern DistrictofIllinoisisaproperfprum withjurisdiction,theCourtt'urnstothe
's.
convenience factor
Convenience Factors
The only connection to the Southern DistrictofFlorida isthe Plaintiffs'residence.Any
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deferencetothePlaintiffs'choice offorum islesswhere,ashere,theactionsatissuetook place
inIllinoiséndtheIllinoiscoul4isadjudicatingwhethertheStifelNicolausaccountscontainthe
assetsofthejudgmentdebtorIvankovich.SeeHight,391F.Supp.3dat1184-85,
.seealso
Greiserv.Drinkard,No.18-61126-ClV,2018Mq.
a7287083at*5(S.D.Fla.Nov.16,2018).
Becausethe dslocusofoperative facts''is in Illinois,the w eightaccorded to Plaintiffs'choice of
forum isentitledto lessdeferenceand doesnotovenidethefactorsweighing in favoroftransfer.
M oreover,there isa clearcom m onality ofw itnesses and interestofthe partiesw ith the
post-collection proceedingsin the lllinoiscase.lndeed,the Plaintiffshere moved to intervene in
the lllinois action.Tw o ofthe Plaintiffs here,132 Portfolio M anaging M em ber,LLC and
Ivallkovich Fam ily LLC are citation respondents in the lllinoisaction.ltw ould be m ore
convenientforthePlaintiffsandDefendantstoadjudicatedisputesconcerningwhetherthe
judgmentdebtor'sassetsareheldintheStifelaccounts,inthesamevenuethatisaddressingthe
locationofthejudgmentdebtor'sassets.
Thepublicfactorsalso .
w eigh in favoroftransfer.These includetheforum 'sfam iliazity
withthegoverninglaw,theforum 'sinterestinadjudicatingthedispute;theburden ofjuly duty
on the forum 'scom m unity,and the relative docketcongestion.Seè Cellularvision Tech.(î
8
Telecomms.,L.P.v.CellcoP'
shi
p,No.06-60666-C1V,2006*'L 2871858,at*4(S.D.Fla.Sept.
12,2006).
To reiterate,Plaintiffs are challenging thepropriety oftheD efendants'actions in the
Illinoisproceeding.Supplementaly proceedingstoenforceamoneyjudgmentfollow thestate's
procedurewheretheco'urtislocated.SeeFed.R.Civ.P.69(a)(1).W hethertheDefendants
disclosure ofPlaintiffs'information in thatcaseisproperwillno doubtimplicateIllinoislaw.
Undoubtedly,thelllinoiscoul4hasagreaterinterestin adjudicatingthiscase.JudgeJolmson
Coleman even stated in hbrorderitwould havebeen betterforthePlaintiffsto filearequestin
theN orthern DistrictofIllinoisratherthan file thijcase.The public interestfactors also w eigh in
favoroftransfer.Accordingly,theCoul'tgrantsthem otion totransferto theNorthern Districtof
lllinois.
D ON E AN D O RDERED in Cham bers at M iam i,Florida, this
of N ovem ber
2022.
FEDERI
UN IT
Copiesfufnished to:
Cotm selofRecord
.VORENU
STA TES D ISTRICT JUD GE
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