MAX TEN MARKETING, LLC v. MARKETECH, INC.

Filing 111

MEMORANDUM OPINION. Signed by Judge Renee Marie Bumb on 9/26/2014. (drw)

[Docket No. 81 & 105]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

MAX 10 MARKETING, LLC,
Plaintiff,
Civil No. 11-1823 (RMB/AMD)
v.
MARKETECH, INC., PAPERLESS
SOLUTIONS GROUP, INC., AND H.
THOMAS LANE, JR.,

MEMORANDUM OPINION

Defendant.
_

BUMB, United States District Judge:
Introduction:
This matter comes before the Court upon Defendants’,
Paperless Solutions Group, Inc., (“PSG”) and H. Thomas Lane
(“Lane”), Motion to Dismiss For Lack of Personal Jurisdiction or
to Transfer Venue [Docket No. 81].

For the reasons below, the

motion is granted to the extent it requests that the matter be
transferred to the United States District Court for the Northern
District of Florida. 1

1

Plaintiff has submitted a Motion to Seal [Docket No. 105]
in conjunction with its opposition papers. Because Plaintiff
has satisfied this Court that the motion meets the requirements
of Local Rule 5.3, that motion is GRANTED.
1

Background:
As stated in a prior Order by this Court, Plaintiff MAX 10
MARKETING, LLC (“MAX 10") is located in New Jersey and is in the
business of promoting the sales of “market variance products,”
including technology services, discount benefits, and energy
products. [Docket No. 36].

Defendant MARKETech Inc., (“MTI”) is

located in Florida and is in the business of developing
electronic business forms for use by businesses that conduct
business over the internet.

MAX 10 alleges that MTI owes it

unpaid commissions plus any future commissions for business it
secured for the benefit of MTI.

Previously, MTI filed a motion

to dismiss for lack of personal jurisdiction pursuant to Federal
Rule of Civil Procedure 12(b)(2), which this Court denied. 2
Following that decision, Plaintiff filed a Second Amended
Complaint adding two new Defendants, PSG and Lane, and
additional counts for fraudulent transfer (Count III) and
successor liability (Count IV). 3

2

It is undisputed that, like

On January 13, 2012, the Court entertained oral argument
on that motion as well as the Court’s sua sponte question
regarding transfer pursuant to 28 U.S.C. § 1404(a). After
examining the relevant factors, this Court held that transfer
was not appropriate.
3 This matter has been pending on the Court’s docket for
some time as the Court has made significant efforts to
2

MTI, both PSG and Lane are citizens of the State of Florida.
According to the Plaintiff’s allegations, PSG’s purchase of
the business assets of MTI left MTI insolvent.

Plaintiff

further alleges that the transfer of assets was completed in an
attempt by PSG and Lane to avoid liability that MTI had to the
Plaintiff. 4

In addition, Plaintiff alleges that PSG is liable

for alleged breaches of contract committed by MTI as its
successor-in-interest and as the assignee of the agreements
forming the basis of the alleged breaches.

With respect to

Defendant Lane, Plaintiff contends that Lane breached his
fiduciary duty to the Plaintiff by transferring assets of MTI,
which was insolvent, to PSG.
Defendants PSG and Lane have moved pursuant to Federal Rule
of Civil Procedure 12(b)(2) to dismiss the matter for lack of
personal jurisdiction or, in the alternative, to transfer venue
under 28 U.S.C. § 1404(a).

Analysis:
As demonstrated by the parties’ papers, a determination of

facilitate its settlement. See e.g., Docket No. 88, discussing
prior Court Order to engage in settlement negotiations.
4 As discussed below, Defendants have shown that there were
several creditors impacted by MTI’s transfer of assets, most of
whom are Florida residents.
3

whether this Court has personal jurisdiction over both PSG and
Lane requires a significant analysis of whether PSG is, in fact,
a successor-in-interest to MTI.

This, in turn, requires

significant inquiry into the transfer of assets from MTI to PSG,
which took place in Florida.

In addition, Plaintiff cites

Florida law for the proposition that Lane can be held liable as
a director and/or director-stockholder of a corporation.

In

reply, Defendants posit that, absent piercing the corporate
veil, which Plaintiff does not address, there are no grounds to
assert jurisdiction over Lane.

Plaintiff states that if this

Court determines that it cannot exercise personal jurisdiction
over PSG and Lane, then the matter should be transferred to the
Northern District of Florida.
In Sinochem International Co. v. Malaysia International
Shipping Corp., the Supreme Court instructed that the district
court may consider whether to transfer a case based on forum non
conveniens grounds without having to first address the issue of
personal jurisdiction.

549 U.S. 422, 425 (2007)(“a district

court has discretion to respond at once to a defendant’s forum
non conveniens plea, and need not take up first any other
threshold objection.”). 5

5

See Product Source International v.

“Congress codified the doctrine of forum non conveniens
4

Leonid Nahshin, No. 13-4997, 2014 U.S. Dist. LEXIS 87664 (D.N.J.
June 27, 2014)(addressing request to transfer first and
declining to make a determination regarding personal
jurisdiction); Axxa Commerce v. Digital Realty Trust, No. 09653, 2009 U.S. Dist. LEXIS 94103 (D.N.J. Oct. 8,
2009)(determining whether case should be transferred without
addressing issue of personal jurisdiction).
In this case, discussion of the appropriateness of transfer
in the first instance is appropriate because a determination of
whether this Court has personal jurisdiction over PSG and Lane
would require an in depth review of the ownership of shares of
PSG in an attempt to determine whether PSG is, in fact, MTI’s
successor-in-interest as alleged by Plaintiff.

Similarly, this

Court would need to first determine the basis of Plaintiff’s
claim against Lane before even embarking on a personal
jurisdiction analysis – i.e., whether a veil piercing analysis
is needed.

As such, an initial determination of whether the

matter should be transferred is appropriate.

See Axxa Commerce,

2009 U.S. Dist. LEXIS 94103 at *6-9 (finding that first
considering a motion to transfer was appropriate where

in §§ 1404(a) and 1406(a).” Lafferty v. Gito St. Riel, 495 F.3d
72, 78, n.8 (3d Cir. 2007).
5

determination of personal jurisdiction involved a complicated
analysis of the corporate structure of the defendants).
Defendants have asked that this case be transferred
pursuant to Section 1404(a). 6 Section 1404(a) provides that:
“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.”

28 U.S.C. § 1404(a).

This action could have been

filed in Florida, where MTI, PSG, and Lane are located.

Because

the proposed alternative forum, Florida, is appropriate, it is
within the Court’s discretion to transfer the action.

6

The Court notes that, as with personal jurisdiction, it
makes no finding as to whether venue is proper here. Even if
venue was not proper, the Court could engage in a transfer
analysis pursuant to 28 U.S.C. § 1406(a)(“The district court of
a district in which is filed a case laying venue in the wrong
division or district shall dismiss, or if it be in the interest
of justice, transfer such case to any district or division in
which it could have been brought.”). The purposes of § 1404(a)
and § 1406(a) overlap. See United States v. Berkowitz, 328 F.2d
328 F.2d 358 (3d Cir. 1964)(noting that 1404(a) and 1406(a) “are
companion sections, remedial in nature, enacted at the same
time, and both dealing with the expeditious transfer of an
action from one district or division to another.”); Kelly v.
Yeager, No. 13-2493, 2014 U.S. Dist. LEXIS 73784, at *7 n.1
(D.N.J. May 30, 2014)(noting that the Court would transfer the
matter under either § 1404(a) or § 1406(a)); Axxa Commerce, 2009
U.S. Dist. LEXIS 94103 at *8-9 n.5 (making no finding as to
venue and noting that transfer could be accomplished under
either § 1404(a) or § 1406(a)).
6

In deciding a transfer motion under § 1404(a), courts in
the Third Circuit consider both private and public interests, as
delineated in Jumara v. State Farm Ins. Co., 55 F.3d 873, 888
(3d Cir. 1995). 7

The private interest factors include:

1) the plaintiff’s forum preference; 2) the
defendant’s forum preference; 3) where the claim
arose; 4) the convenience of the parties as indicated
by their relative physical and financial condition; 5)
the convenience of the witnesses, but only to the
extent they may be unavailable for trial in one of the
fora; and 6) the location of books and records
(similarly limited to the extent that they could not
be produced in the alternative forum).
Id. at 879.

The public interest factors to be considered

include:
1) the enforceability of the judgment; 2) practical
considerations that could make the trial easy,
expeditious, or inexpensive; 3) the relative
administrative difficulty in the two fora resulting
from court congestion; 4) the local interest in
deciding local controversies at home; 5) the public
policies of the fora; and 6) the familiarity of the
trial judge with the applicable state law in diversity
cases.
Id. at 879-880.

7

In determining whether to transfer an action pursuant to §
1406(a), a court is not required to balance private or public
interest factors (as under § 1404), rather, the court must
simply decide if there is a venue where the action “could have
been brought” that serves the interest of justice. Rojas v.
Trans States Airlines, Inc., 204 F.R.D. 265, 269 (D.N.J. 2001).
For the reasons set forth infra, the Court finds that a transfer
to the Northern District of Florida serves the interests of
justice.
7

Previously, this Court raised the issue of whether a
transfer under Section 1404(a) was appropriate sua sponte.

At

that time, MTI was the only Defendant in this case, and this
Court held that the matter should not be transferred.

The

filing of the Second Amended Complaint, with the addition of new
Defendants and new causes of action presents a sea change in
this litigation.

Thus, and for the reasons set forth below,

this Court finds that the addition of PSG and Lane as Defendants
in this action and new counts asserted by Plaintiff result in a
determination that a transfer to the Northern District of
Florida is appropriate.
With regard to the private interest factors, MAX 10 prefers
New Jersey, and MTI, PSG and Lane prefer Florida.

However, MAX

10 has indicated that if this Court lacked personal jurisdiction
over PSG and Lane, “the matter should be transferred to the
United States District Court for the Northern District of
Florida.” [Pl.’s Opp. Br. Docket No. 100 at 16].

Plaintiff has

submitted no other arguments with respect to the issue of
transfer.
It is clear from the Second Amended Complaint and the
Defendants’ briefs that the operative facts in this case
occurred both in New Jersey and Florida.
8

However, Plaintiff’s

new claims of fraudulent transfer and successor liability are
based on facts that took place only in Florida.

Thus, while

documents and witnesses are located in both New Jersey and
Florida, the addition PSG and Lane and the new counts make clear
that the majority of operative facts that this matter is based
on and related documents and witnesses are located in Florida.
For example:
•

•

The asset purchase agreement between MTI and PSG was
entered into in the state of Florida and states that it
shall be construed in accordance with the laws of the State
of Florida. [Docket No. 100-1, Ex. C]
Plaintiff claims that the fraudulent transfer of assets
took place so that MTI could avoid liability Plaintiff.
However, almost all other creditors impacted by the
transfer of assets from MTI to PSG are Florida residents,
including:
o Arthur Dunscombe
o Linda English
o Paragon Wholesale, Inc.
o Mary Catherine Parrish
o James and Pamela Pearce
o Thomas and Karen Berry
o Michael and Kathryn Holloway
o Ravindra Kolaventy
o Anthony and Rebecca Mendola
o Donald Stewart
o Joseph Vorwerk
o August Vorwerk
o Bonnie Vorwerk
o Joseph Vorwerk
o William and Elizabeth Futch
o Odest Frank Cannon
o Kenneth H. Mackay III
o Magdalena Giebl
o Mark and Sharon Jank
o Raquel and Kevin Chun
o Tracey M. Jenkins Trust
9

•
•

[Docket No. 106-1 ¶¶ 9(a)-(y)].
PSG’s majority shareholders are Florida residents:
o Less Paper Holding, LLC -47.2% of shares
o H. Thomas Lane – 19.5% of shares
Lane has stated in his declaration that “documents and
witnesses with information relevant to the formation and
corporate structures of MTI and PSG . . . the nature and
structure of the transactions through which MTI’s business
assets were sold to PSG, and similar matters relevant to
Plaintiff’s apparent veil-piercing and successor liability
claims . . . [and] MTI’s and PSG’s corporate records,
employees and agents . . . are located in Florida. [Docket
No. 81-2 at ¶ 46].

The Court also considers the convenience of the parties.
While MAX 10 would likely incur additional costs as a result of
litigating in the Northern District of Florida, additional costs
would inure to all three Defendants if they were forced to
litigate in New Jersey, especially in light of the number of
documents and witnesses relevant to this matter that are located
in Florida.

On balance, the foregoing private interest factors

therefore weigh in favor of a transfer.
With regard to the public factors, this Court is ready and
available to bring this matter to trial as soon as discovery is
completed.

However, the new Complaint, which significantly

changes the landscape of this case, now contains the issue of
whether PSG is MTI’s successor-in-interest and may require a
veil-piercing analysis, issues which would be analyzed pursuant
to Florida law. (See Pl.’s Opp. Br. Docket No. 100 at 15 citing
10

Florida case law).

While this Court is certainly capable of

applying the laws of Florida, as clearly stated in this Court’s
prior Order, the legal questions now presented are far more
complex with the addition of PSG and Lane, and a Florida judge
would be far more familiar with the applicable standards.

In

addition, the presence of three Florida citizens as Defendants
in this case along with many Florida based creditors means that
this case is of more local interest to Florida.

Finally, moving

this matter to Florida better serves practical considerations of
making the trial easy, expeditious, or inexpensive.

Therefore,

on balance, the public interest factors weigh in favor of
transfer.

Conclusion:
In sum, upon consideration of both the private and public
interest factors set forth in Jumara, supra, the Court finds
that a transfer of this action to Florida is warranted and in
the interests of justice.

For the foregoing reasons, PSG and

Lane’s motion is granted to the extent the Defendants seek a
transfer to the Northern District of Florida pursuant to 28

11

U.S.C. § 1404(a).

An appropriate Order will issue this date.

s/Renée Marie Bumb
RENÉE MARIE BUMB
United States District Judge
Dated: September 26, 2014

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