Peck v. Saba et al

Filing 33

MEMORANDUM OPINION. Signed by Judge Paula Xinis on 11/29/2022. (bas, Deputy Clerk)

Case 8:21-cv-03310-PX Document 33 Filed 11/29/22 Page 1 of 8

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JOHN PECK,
Plaintiff,
v.

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MALINI SABA, et al.,
Defendants.

Civil Action No. 8:21-cv-03310-PX

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MEMORANDUM OPINION

Pending before the Court is the motion to dismiss filed by Defendants Rena McDonald
and McDonald Law Group, LLC (together the “McDonald Defendants”) and the motion to
transfer or dismiss filed by Defendants Malini Saba and Akaddian, Inc. (together the “Saba
Defendants”). ECF Nos. 17 & 28. The motions are fully briefed and no hearing is necessary.
See D. Md. Loc. R. 105.6. For the reasons discussed below, the motion to transfer is GRANTED
and the matter is transferred to the United States District Court for the District of Nevada. The
Court defers ruling of the McDonald Defendants’ motion so that it may be resolved by the
transferee court.
I.

Background
Plaintiff John Peck (“Peck”) accuses Defendant Malini Saba of fraudulently persuading

him to purchase stock in Defendant Akaddian, a Nevada-based corporation. ECF No. 9-2 ¶ 15. 1
Specifically, Saba falsely represented herself as a “self-made billionaire businesswoman” who
had “successfully launched 26 start-up companies,” and provided Peck a false and misleading
PowerPoint presentation and company financial statement. Id. ¶¶ 32 – 36. Peck maintains that
Saba induced him to enter into a Preferred Stock Purchase Agreement (“The Agreement”) where
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The Amended Complaint does not specify the nature of Akaddian’s business.

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he transferred $300,000 in exchange for allegedly worthless Akaddian stock. Id. ¶¶ 15 – 16, 20;
see also ECF Nos. 18-3 & 28-2.
On December 29, 2021, Peck initially sued only Saba and Akaddian for violations of
Section 10(b) of the Securities Exchange Act of 1934 and the accompanying Rule 10b-5, 15
U.S.C. § 78j(b) & 17 C.F.R. § 240.10b-5; the Civil RICO statute, 18 U.S.C. §§ 1962 & 1964;
and the Maryland Securities Act, Md. Code Ann., Corps. & Assn’s §§ 11-301 & 11-703; as well
as a common law unjust enrichment claim. See generally ECF No. 1. Next, Peck moved for
Clerk’s entry of default, although he had not yet perfected service of process. ECF No. 3. The
Court denied that motion and ordered that Peck show cause as to why the Complaint should not
be dismissed for failure to perfect service. ECF No. 4.
Instead of responding directly to the show cause order, Peck attempted to amend his
Complaint on three separate occasions. ECF Nos. 5, 7, & 9. The first time, the Clerk rejected
the filing because Peck had failed to move for leave to file the proposed amended complaint.
ECF No. 6. On the second attempt, the Clerk rejected the pleading for reasons not altogether
clear from the docket. ECF Nos. 7 & 8. The third time, Peck filed the proposed amended
complaint together with a motion for leave that had not been properly docketed. ECF No. 9.
The proposed amended complaint was near identical to the original pleading, but added the
McDonald Defendants, broadly averring that they participated in the “investment scam” as
counsel to the Saba Defendants. ECF No. 9-2 ¶¶ 8, 14, 23.
Before the Court could rule on Peck’s motion for leave to amend the complaint, Peck
filed questionable proof of service (ECF No. 11), and another motion for Clerk’s entry of default
against all Defendants. ECF No. 13. The McDonald Defendants also separately moved to
dismiss the yet-to-be-accepted amended complaint for lack of personal jurisdiction and on

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sufficiency grounds. ECF No. 17.
On October 11, 2022, the Court held a recorded telephone conference to address the
outstanding motions. The Court denied Peck’s motion for Clerk’s entry of default (ECF No. 25),
citing principally the swift and complete participation of all Defendants in the action and the
Court’s mandate to resolve cases on the merits, where possible. Cf. Xerox Corp. v. Kidd Int’l
Home Care, Inc., No. 8:21-cv-1058-PX, 2021 WL 4641558, at *2 (D. Md. Oct. 7, 2021). The
Court also granted Peck’s motion for leave to amend, accepting the proposed amended complaint
at ECF No. 9-2 as the operative one. ECF No. 24. In doing so, the Court made plain to the
parties that it granted the motion for leave solely to clear up the confusion on the docket. The
Court did not pass on the legal sufficiency of the claims.
Last, the Court clarified that the McDonald Defendants’ earlier motion to dismiss would
remain pending, and set a briefing schedule for the Saba Defendants to move for dismissal or
transfer, which they timely filed. See generally ECF No. 28. Peck has responded to the motions.
The Court now turns to the propriety of transfer.
II.

Saba Defendants’ Motion to Transfer
The Saba Defendants move to transfer the case to the United States District Court for the

District of Nevada, relying principally on the forum-selection clause in the Agreement. ECF No.
28-1 at 3. The clause states:
Each of the parties hereto hereby (I) irrevocably submits to the exclusive jurisdiction
of any court located in the state of Nevada for the purposes of any suit, action or other
proceeding arising out of this agreement; (II) irrevocably and unconditionally waives
(and agrees not to plead or claim) any objection to the laying of venue of any action,
suit or proceeding arising out of this agreement in any state or federal court located in
the state of Nevada, or that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
ECF No. 28-2 ¶ 7 (paragraph all capitalized in original document).

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The Saba Defendants’ motion to transfer is governed by 28 U.S.C. § 1404, which
provides that a court “may transfer any civil action to any other district or division where it
might have been brought[.]” 28 U.S.C. § 1404(a). This Court retains broad discretion to transfer
a matter pursuant to Section 1404, undertaking “an individualized, case-by-case consideration of
convenience and fairness.” United States ex rel. Salomon v. Wolff, 268 F. Supp. 3d 770, 774 (D.
Md. 2017) (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988)). The Court must
first determine whether the action could have been brought in the requested district. Mamani v.
Bustamante, 547 F. Supp. 2d 465, 469 – 70 (D. Md. 2008). Next, the Court customarily
considers several non-exclusive factors such as “(1) the weight accorded the plaintiff’s choice of
venue; (2) witness convenience and access; (3) convenience of the parties; and (4) the interest of
justice.” Lynch v. Vanderhoef Builders, 237 F. Supp. 2d 615, 617 (D. Md. 2002).
Generally, the plaintiff’s choice of venue is accorded special consideration such that
“[u]nless the balance of the factors ‘is strongly in favor of the defendant, the plaintiff’s choice of
forum should rarely be disturbed.’” CareFirst, Inc. v. Taylor, 235 F. Supp. 3d 724, 733 (D. Md.
2017) (quoting Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984)). However, where
parties in advance of litigation “have agreed to a valid forum-selection clause, a district court
should ordinarily transfer the case to the forum specified in that clause[.]” Atl. Marine Constr.
Co. v. U.S. Dist. Court for the W. Dist. Of Tex., 571 U.S. 49, 62 (2013). 2 Thus, absent
extraordinary circumstances, “a valid forum-selection clause [should be] given controlling
weight.” Id. at 63.
In deciding whether to enforce a forum-selection clause, the Court must determine first

Although the Agreement’s choice-of-law provision requires application of Nevada law (ECF No. 28-2 ¶
7), the propriety of venue pursuant to a forum-selection clause “is a procedural matter governed by federal law.”
See Albemarle Corp. v. AstraZeneca UK Ltd., 628 F.3d 643, 650 (4th Cir. 2010).
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whether the clause is “mandatory” and next whether “the claims fall within the scope of the
forum-selection clause.” Brown v. Emery Fed. Credit Union, No. DLB-21-591, 2022 WL
991387, at *3 (D. Md. Mar. 31, 2022) (internal citations omitted). If the answer to both
questions is yes, then the forum-selection clause is presumptively enforceable and transfer must
be granted absent a showing that transfer would be “unreasonable.” Id.; see also J. v. Genuine
Title, LLC, No. RDB-13-0081, 2015 WL 8315704, at *13 (D. Md. Dec. 9, 2015). The party
opposing transfer bears a “heavy burden of demonstrating unreasonableness.” See TECH USA,
Inc. v. Evans, 592 F. Supp. 2d 852, 859 (D. Md. 2009) (citing M/S Bremen v. Zapata Off-Shore
Co., 407 U.S. 1, 15 (1972)). To sustain that burden, the party must demonstrate that he was
fraudulently induced to agree to the clause; that the selected forum is gravely inconvenient or
deprives the complaining party of his ability to gain relief; or that enforcement is against public
policy. Allen v. Lloyd’s of London, 94 F.3d 923, 928 (4th Cir. 1996); see also CoStar Realty
Info., Inc. v. Meissner, 604 F. Supp. 2d 757, 772 (D. Md. 2009).
Peck does not dispute that his claims could have been brought in Nevada. Peck also
concedes that the forum-selection clause is mandatory and reaches all claims in the Amended
Complaint. ECF No. 29-1 at 7. From this, the Court easily concludes that the forum-selection
clause is presumptively enforceable and will grant transfer unless Peck can carry the “heavy
burden” of demonstrating unreasonableness.
Peck first argues that the forum-selection clause is “void” because Saba tricked Peck into
signing the Agreement to purchase Akaddian stock. ECF No. 29-1 at 2-4. But the mere
allegation that Defendants have committed securities fraud does not establish that the forumselection clause itself had been procured by fraud. See, e.g., Allen, 94 F.3d at 929. Indeed,
“[f]raud and overreaching must be specific to a forum selection clause in order to invalidate it.”

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Brooks-Williams v. Keybanks, Nat’l Assoc., No. WDQ-15-559, 2015 WL 9255327, at *6 n.21
(Dec. 17, 2015) (quoting Haynsworth v. The Corp., 121 F.3d 956, 963 (5th Cir. 1997)); see also
Pulse Med. Instruments, Inc. v. Drug Impairment Detection Servs., LLC, No. DKC 09-0921,
2009 WL 4062095, at *2 (D. Md. Nov. 20, 2009) (“Plaintiff contends that the entire Agreement
was procured through fraud and misrepresentation, but does not argue that the forum selection
clause specifically was induced by fraud. That is not enough.”). Otherwise, the mere allegation
of fraudulent inducement would defeat the parties’ agreement on the proper forum for
litigation—an outcome that “would render the clause virtually meaningless” based solely on the
nature of the allegation. See Belfiore v. Summit Fed. Credit Union, 452 F. Supp. 2d 629, 632 n.4
(D. Md. 2006).
Peck next asserts that the clause should be invalidated as contravening public policy.
Peck more particularly argues that Maryland maintains a comparatively stronger interest “in
protecting its residents from investing in stocks due to false statements and misrepresentations,”
citing the anti-fraud and civil liability provisions in the Maryland Securities Act. ECF No. 29-1
at 4 – 5. Thus, says Peck, “Maryland has a far greater interest in protecting Maryland investors
than does Nevada.” Id. at 5.
It is well-established that the “availability of comparable, albeit different, legislation in
different states demonstrates that protection under the [statute] is unnecessary where there is a
substitute[.]” James v. Seed Consulting, LLC, No. RDB-20-0371, 2020 WL 1974766, at *4 (D.
Md. Apr. 24, 2020) (quoting Kunda v. C.R. Bard, Inc., 671 F.3d 464, 469 (4th Cir. 2011)). It is
further plain that Nevada statutes comparably punish securities fraud and create civil causes of
action. Compare Md. Code Ann., Corps. & Assn’s §§ 11-301 & 11-703, with Nev. Rev. Stat. §§
90.570 & 90.660. Peck has simply failed to demonstrate that Maryland’s interest in enforcing

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securities laws so far outweighs Nevada’s that enforcing the forum-selection clause would
contravene public policy. See Allen, 94 F.3d at 928 – 30. Thus, the Court concludes that Peck
has failed to sustain his burden of demonstrating that the clause is unenforceable. The Saba
Defendants’ motion to transfer is granted.
III.

The McDonald Defendants
Although the McDonald Defendants are not signatories to the Agreement, the Court

easily concludes that their claims, too, should be transferred. Where the alleged misconduct of a
defendant who is not a party to the contract is “closely related” to the contractual relationship,
the Court generally extends the forum-selection clause to that defendant. Belfiore, 452 F. Supp.
2d at 633 (citing Manetti-Farrow, Inc. v. Gucci Am. Inc., 858 F.2d 509, 514 n.5 (9th Cir. 1988)
(forum-selection clause applies to non-parties because “the alleged conduct of the non-parties is
so closely related to the contractual relationship that the forum selection clause applies to all
defendants”)); cf. TECH USA, Inc., 592 F. Supp. 2d at 858. According to the Amended
Complaint, the McDonald Defendants had conspired with the Saba Defendants to engage in the
claimed fraud by, in part, drafting the Agreement and other materials. ECF No. 9-2 ¶¶ 8, 14.
The McDonald Defendants drafting the very instrument that includes the forum-selection clause
supports transfer of the claims against them.
Likewise, under traditional forum-selection analysis, the Court finds that transfer of the
claims against the McDonald Defendants is warranted. Although the plaintiff’s choice of forum
is accorded significant weight, the remaining factors strongly favor transfer. It is undisputed that
the McDonald Defendants are Nevada residents who practice law from their offices in Nevada.
See ECF Nos. 9-2 ¶ 8 & 17-1 at 8. Further, the Amended Complaint avers that the McDonald
Defendants engaged in the alleged conspiracy by acting as counsel to the Saba Defendants. ECF

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No. 9-2 ¶¶ 8, 23. Thus, as to the McDonald Defendants, Nevada is a far more convenient and
equitable forum, especially given that the remainder of the case will be transferred pursuant to a
valid and enforceable forum-selection clause.
IV.

Conclusion
For the foregoing reasons, the Saba Defendants’ motion to transfer (ECF No. 28) is

GRANTED, and this case shall be TRANSFERRED to the United States District Court for the
District of Nevada. A separate Order follows.
November 29, 2022
Date

/s/
Paula Xinis
United States District Judge

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