Placek et al v. Shopoff et al
Filing
26
ORDER AND OPINION: re: 11 MOTION to Dismiss for Lack of Jurisdiction or Improper Venue, Or, In Alternative, To Transfer to Central District of California filed by William Shopoff, William and Cindy Shopoff. For the reasons stated above, Defendants' motion to transfer is GRANTED. The Clerk is instructed to terminate Docket Entry 11 and transfer this matter to the Central District of California. SO ORDERED. (Signed by Judge Valerie E. Caproni on 9/24/2018) (ama)
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 9/24/18
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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DAVID PLACEK; DP INVESTORS III, LLC; and :
DP SLF II MEMBER, LLC;
:
:
Plaintiffs,
:
:
-against:
:
WILLIAM SHOPOFF, individually, and WILLIAM :
AND CINDY SHOPOFF, as TRUSTEES FOR THE :
SHOPOFF REVOCABLE TRUST;
:
:
Defendants.
:
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18-CV-4326 (VEC)
ORDER AND OPINION
VALERIE CAPRONI, United States District Judge:
Plaintiffs David Placek, DP Investors III, and DP SLF II Member—the latter two of
which are single-member LLCs that Placek controls (together, the “LLC Plaintiffs,” and with
Placek, “Plaintiffs”)—seek to enforce guaranty agreements they entered into with Defendants
related to Plaintiffs’ investments in certain real estate funds. Defendants moved to dismiss or
transfer the matter. For the reasons discussed below, the Court GRANTS Defendants’ motion
and transfers the case to the Central District of California.
I.
BACKGROUND
On April 9, 2018, Plaintiffs initiated this action in New York Supreme Court for New
York County, proceeding by way of summary judgment in lieu of a complaint.1 See Notice of
Motion for Summary Judgment in Lieu of a Complaint (“SJ Notice”) [Dkt. 15-2]; Memorandum
of Law in Support of Summary Judgment in Lieu of a Complaint (“SJ Mem.”) [Dkt. 15-3].
1
This is a mechanism of New York civil procedure for actions “based upon an instrument for the payment of
money only . . . .” See N.Y. C.P.L.R. § 3213.
1
According to Plaintiffs, they want to enforce two guaranty agreements2 (the “Guaranty
Agreements”) that relate to investments Plaintiffs made in commercial real estate funds pursuant
to separate investment agreements (the “Put Option Agreements”). See SJ Mem. at 1.3 Plaintiffs
invested several million dollars in the real estate funds as a condition of Placek’s employment by
Shopoff Realty Investments (“SRI”), 4 and did so in reliance on the Guaranty Agreements.5 Id. at
1–4, 8–9. Plaintiffs allege that the Guaranty Agreements have been triggered by breaches of the
Put Option Agreements—in particular, the LLC Plaintiffs sought to exercise the put options, but
the counterparties (which are other entities controlled by Defendants) defaulted. Id. at 2, 5–7, 9–
10. Defendants have, in turn, breached their obligations under the Guaranty Agreements to pay
Plaintiffs. Id. at 2, 7–8, 10. Defendant William Shopoff has allegedly acknowledged the debts
and promised to satisfy them. Id. at 10.
Defendants removed the matter to this Court on May 15, 2018. See Notice of Removal
(“Removal”) [Dkt. 1]. They then moved to dismiss for lack of personal jurisdiction and venue,
or, in the alternative, to transfer the case to the District Court for the Central District of
2
The Guaranty Agreements are governed by California law. See Investors III Guaranty [Dkt. 13-3] ¶ 8; SLF
II Guaranty [Dkt. 13-5] ¶ 8.
3
See also Investors III Put Option Agreement [Dkt. 13-2]; SLF II Put Option Agreement [Dkt. 13-4].
4
Defendants assert that Placek’s work for SRI was to be performed from his home in New Jersey, and that
SRI agreed to rent space in a shared office suite in New York “to give Placek’s activities the cache [sic] of a New
York mailing address, and a conference room in which he could meet business contacts who would find it easier to
travel to Manhattan versus New Jersey.” Memorandum of Law in Support of Defendants’ Motion to Dismiss or
Transfer (“Mem.”) [Dkt. 12] at 3; Declaration of William Shopoff (“Shopoff Decl.”) [Dkt. 13] ¶ 6. They further
contend that Placek nevertheless mostly worked from his home in New Jersey, and those who worked with or under
Placek were located in SRI’s office in California. Mem. at 3; Shopoff Decl. ¶¶ 7–8.
Defendants also report that Placek is pursuing arbitration related to his employment agreement in Orange
County, California as required under that agreement. See Employment Agreement [Dkt. 13-1] ¶ 9; Reply
Memorandum in Further Support of Defendants’ Motion to Dismiss or Transfer (“Reply”) [Dkt. 25] at 3.
5
Placek formed Plaintiffs DP Investors III and DP SLF II Member to invest in the real estate funds. See SJ
Mem. at 3, 8. DP Investors III and DP SLF II Member are both single-member Delaware LLCs owned by Placek.
Id. at 3; Affidavit of David Placek in Support of Summary Judgment (“Placek SJ Aff.”) [Dkt. 15-4] ¶¶ 7, 19.
2
California. See Notice of Motion to Dismiss or Transfer (“Notice of Mot.”) [Dkt. 11]; Mem.
After the parties’ initial conference, the Court stayed discovery and briefing on Plaintiffs’ motion
for summary judgment, and scheduled briefing on the motion to dismiss or transfer. See Order,
June 22, 2018 [Dkt. 22].
II.
DISCUSSION
A. Legal Background
Although challenges to personal jurisdiction are generally resolved before addressing
motions to transfer venue, there is no legal requirement to do so. Enigma Software Grp. USA,
LLC v. Malwarebytes Inc., 260 F. Supp. 3d 401, 408 (S.D.N.Y. 2017) (quoting Everlast World’s
Boxing Headquarters Corp. v. Ringside, Inc., 928 F. Supp. 2d 735, 741 (S.D.N.Y. 2013))
(internal quotation marks omitted). “A court may instead address venue applications at the
threshold, when there is a sound prudential justification for doing so, because neither personal
jurisdiction nor venue is fundamentally preliminary in the sense that subject-matter jurisdiction
is.” Id. (quoting Everlast, 928 F. Supp 3d. at 741) (internal quotation marks omitted). “Where
personal jurisdiction would likely exist in the transferee district over a defendant who contests
personal jurisdiction in the Southern District of New York, it is prudentially appropriate to
address venue first since a decision to transfer would render personal jurisdiction analysis with
respect to the Southern District of New York irrelevant.” Id. at 408–09 (quoting Everlast, 928 F.
Supp 3d. at 742) (internal quotation marks and alteration omitted). If a transfer would be in the
interest of justice, a court can do so even if it lacks personal jurisdiction over defendants, and
regardless of whether venue would be proper in the court’s district. Id. at 409 (quoting Volk
Corp. v. Art–Pak Clip Art Serv., 432 F. Supp. 1179, 1181 (S.D.N.Y. 1977)). See also Tlapanco
v. Elges, 207 F. Supp. 3d 324, 326 n.1 (S.D.N.Y. 2016) (“A district court may transfer venue
3
even if it lacks personal jurisdiction over the defendants. Accordingly, the Court may resolve the
threshold question of venue before addressing jurisdiction.”) (internal quotation marks and
citations omitted), reconsideration denied, No. 15-CV-2852 (AJN), 2017 WL 4329789
(S.D.N.Y. Sept. 14, 2017).
In general, a civil action may be brought in “(1) a judicial district in which any defendant
resides, if all defendants are residents of the State in which the district is located; (2) a judicial
district in which a substantial part of the events or omissions giving rise to the claim occurred, or
a substantial part of property that is the subject of the action is situated; or (3) if there is no
district in which an action may otherwise be brought as provided in this section, any judicial
district in which any defendant is subject to the court’s personal jurisdiction with respect to such
action.” 28 U.S.C. § 1391(b). Actions removed from state court are, however, removed “to the
district court of the United States for the district and division embracing the place where such
action is pending.” 28 U.S.C. § 1441(a). Relying on § 1441(a), courts have ruled that § 1391
does not apply to a case that has been removed from state court; venue for such a case is proper
in the District Court that embraces the state court from which the case was removed. See, e.g.,
Phillips v. Reed Grp., Ltd., 955 F. Supp. 2d 201, 235 (S.D.N.Y. 2013) (citing, inter alia, PT
United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65, 72 (2d Cir. 1998)).
Section 1404 of Title 28 of the United States Code 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 or to any district or division to
which all parties have consented.” Courts have “wide latitude to decide whether to transfer
venue.” Enigma Software, 260 F. Supp 3d at 406 (quoting Everlast, 928 F. Supp 3d. at 743)
(internal quotation marks omitted). Courts first determine whether the action could have been
4
brought in the prospective transferee district, and then consider whether transfer would be
appropriate. Id. at 407 (quoting Everlast, 928 F. Supp 3d. at 743). To guide this inquiry, courts
balance a number of factors including “(1) the convenience of the witnesses; (2) the convenience
of the parties; (3) the location of relevant documents and the relative ease of access to sources of
proof; (4) the locus of operative facts; (5) the availability of process to compel the attendance of
unwilling witnesses; (6) the relative means of the parties; (7) the forum’s familiarity with the
governing law; (8) the weight accorded the plaintiff’s choice of forum; and (9) trial efficiency
and the interests of justice.” Id. (quoting Everlast, 928 F. Supp 3d. at 743) (internal quotation
marks omitted). See also Dickerson v. Novartis Corp., 315 F.R.D. 18, 27 (S.D.N.Y. 2016)
(quoting Steck v. Santander Consumer USA Holdings Inc., No. 14–cv–6942 (JPO), 2015 WL
3767445, at *2 (S.D.N.Y. June 17, 2015)) (enumerating the same factors).
This list of factors is not exhaustive; there is no rigid formula for balancing them; and no
single factor is determinative. Dickerson, 315 F.R.D. at 27 (citing Pausch Med. GmbH v.
Pausch LLC, No. 14–cv–1945 (PAC), 2015 WL 783365, at *1 (S.D.N.Y. Feb. 24, 2015) and
quoting Citigroup Inc. v. City Holding Co., 97 F. Supp. 2d 549, 561 (S.D.N.Y. 2000)). See also
Tlapanco, 207 F. Supp. 3d at 328 (“No one factor is dispositive and the relative weight of each
factor depends on the particular circumstances of the case.”) (quoting Smart Skins LLC v.
Microsoft Corp., No. 14–CV–10149 (CM), 2015 WL 1499843, at *4 (S.D.N.Y. Mar. 27, 2015)
(internal quotation marks omitted)). Courts have “broad discretion in making determinations of
convenience under Section 1404(a) and notions of convenience and fairness are considered on a
case-by-case basis.” D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 106 (2d Cir. 2006) (citing In
re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992)). The party seeking transfer bears
the burden of proof, and must present clear and convincing evidence to warrant transfer.
5
Dickerson, 315 F.R.D. at 27 (citing New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc.,
599 F.3d 102, 114 (2d Cir. 2010)).
B. Venue in the Southern District is Not Improper
As discussed above, a court can appropriately consider venue motions before addressing
personal jurisdiction, particularly when the transferee court would have personal jurisdiction
over the complaining defendants. Courts have general personal jurisdiction over individuals in
their state of domicile. See, e.g., Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (quoting
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (U.S. 2011)); Yagman v.
Kelly, No. 17-CV-6022-MWF-PJWX, 2018 WL 2138461, at *5–6 (C.D. Cal. Mar. 20, 2018)
(citing Daimler and finding the court lacks general jurisdiction over individual defendants
domiciled in Pennsylvania, Connecticut, and Maryland). The Central District of California
would plainly have personal jurisdiction over Defendants, as each is domiciled in Orange
County, California, which falls within the Central District of California. See Removal ¶¶ 7–8.
Thus, the Court finds it appropriate to address Defendants’ motions as to venue prior to
addressing their motion to dismiss for lack of personal jurisdiction.
The Court denies Defendants’ motion to dismiss for lack of venue, which mistakenly
relies on 28 U.S.C. § 1391; as discussed above, the general venue statute is not applicable to
removed cases. See Mem. at 12–13. (In any event, Defendants appear to have abandoned this
argument in Reply. See Reply at 12–15.) Venue properly lies in this District because it
embraces the state court from which this case was removed, even if venue would have been
lacking had the case originally been filed here.
6
C. The Court Transfers the Case to the Central District of California
The Court begins its transfer analysis by finding that this case could have been brought in
the Central District of California. As discussed above, both Defendants are domiciled in Orange
County, California. Accordingly, the case could have been brought in the Central District of
California pursuant to the general venue statute. See 28 U.S.C. § 1391(b)(1).
The Court next considers and weighs the relevant factors for transfer.6
i. Convenience of the Witnesses
“Courts typically regard the convenience of witnesses as the most important factor in
considering a § 1404(a) motion to transfer.” Dickerson, 315 F.R.D. at 27 (quoting Jackson v.
Avis Rent A Car Sys., LLC, No. 14–cv–1658 (LLS), 2015 WL 1004299, at *3 (S.D.N.Y. Mar. 6,
2015)) (internal quotation marks omitted). The convenience of non-party witnesses weighs more
heavily than the convenience of party witnesses. Id. (quoting McGraw–Hill Companies Inc. v.
Jones, No. 12–cv–7085 (AJN), 2014 WL 988607, at *7 (S.D.N.Y. Mar. 12, 2014)). “The party
moving for transfer must provide the Court with a detailed list of probable witnesses who will be
inconvenienced if required to testify in the current forum.” Id. (quoting Kiss My Face Corp. v.
Bunting, No. 02–cv–2645 (RCC), 2003 WL 22244587, at *2 (S.D.N.Y. Sept. 30, 2003)) (internal
quotation marks omitted). That said, this is not merely a consideration of numerosity; the Court
must evaluate qualitatively the materiality of the testimony expected from the various witnesses.
Id. (quoting Herbert Ltd. P’ship v. Elec. Arts Inc., 325 F. Supp. 2d 282, 286 (S.D.N.Y. 2004))
(internal quotation marks omitted).
6
In their Reply, Defendants confusingly blend their statutory venue transfer argument with an argument to
transfer based on forum non conveniens. See Reply at 12–15. Because Defendants initially moved to transfer venue
pursuant to 28 U.S.C. § 1404(a), the Court will continue to construe their motion as such, and will consider the
forum non conveniens arguments contained in their Reply as they would apply to the analogous transfer factors.
7
Defendants have identified two key witnesses whom they believe will be “highly
inconvenienced” by litigation in New York: Defendants’ transactional attorney, Stevan J.
Gromet, and the Chief Financial Officer of SRI, Lisa Jack, both of whom Defendants claim
“have knowledge of Defendants’ business dealings with Placek” and “reside and work in
Southern California.” Mem. at 6, 14; Decl. ¶ 19. They also recognize that Plaintiffs’ witnesses
in New York render this factor neutral. See Reply at 14. Plaintiffs contend that Defendants did
not describe their witnesses’ potential testimony, and Plaintiffs argue that Defendants’ CFO
would not have relevant testimony because she was not involved in the negotiation of the
contracts at issue. See Memorandum of Law in Opposition to Defendants’ Motion to Dismiss or
Transfer (“Opp.”) [Dkt. 23] at 20. Plaintiffs identify as their non-party witnesses their counsel,
Wayne Landesman and Brian Sampson, who assisted in the negotiation of the Guaranty
Agreements, and Plaintiffs’ tax advisor, Ms. Melendez, who purportedly “has relevant testimony
regarding the receipt of payments and how those payments were structured.” Opp. at 6–8, 20.
Plaintiffs assert that they are all located in the Southern District of New York and would be
“highly inconvenienced” by having to travel to California to testify. Id. at 20–21.
The Court finds that this factor is effectively neutral. Both Plaintiffs and Defendants
have pointed to witnesses who would be inconvenienced if they had to travel to the other parties’
preferred forum. That the Plaintiffs have pointed to three witnesses rather than Defendants’ two,
and that Plaintiffs provided a meager bit more detail as to anticipated testimony of their
witnesses, does not affect the Court’s determination.
ii. Convenience of the Parties
“The convenience of the parties favors transfer when transfer would increase
convenience to the moving party without generally increasing the inconvenience to the non-
8
movant.” Dickerson, 315 F.R.D. at 29 (quoting Liberty Mut. Ins. Co. v. Fairbanks Co., 17 F.
Supp. 3d 385, 399 (S.D.N.Y. 2014)) (internal quotation marks omitted). See also Enigma
Software, 260 F. Supp. 3d at 411 (“A defendant moving for transfer must show both that the
original forum is inconvenient for it and that the plaintiff would not be substantially
inconvenienced by a transfer.”) (quoting SBAV LP v. Porter Bancorp, Inc., No. 13 CIV. 372
PAE, 2013 WL 3467030, at *8 (S.D.N.Y. July 10, 2013) (internal quotation marks omitted)).
Convenience to counsel, however, is not relevant to the transfer analysis. See Dickerson, 315
F.R.D. at 29 (quoting GlaxoSmithKline Biologicals, S.A. v. Hospira Worldwide, Inc., No. 13–cv–
1395 (PKC), 2013 WL 2244315, at *3 (S.D.N.Y. May 21, 2013)).
Defendants assert that this factor is effectively neutral because litigation for them in New
York would be inconvenient, while transferring the case to California would inconvenience
Plaintiffs. Mem. at 15–16. They note, however, that because Placek initiated arbitration in
California, he will have to travel to California anyway, which might make litigation in California
less inconvenient to Plaintiff than it otherwise might be. Reply at 14. Plaintiffs disagree that this
factor is effectively neutral, arguing that Placek’s family obligations make it very inconvenient
for him to prosecute this lawsuit in California, while Defendants have the financial means to
travel to this Court. See Opp. at 21.
The Court finds that, as with the convenience of the witnesses, this factor is also neutral.
Both Plaintiffs and Defendants would be inconvenienced by having to litigate in the others’
preferred forum. Contrary to Defendants’ argument, the Court does not find that Placek’s
arbitration in California renders litigation of this suit convenient in the Central District of
9
California. Just because Placek is obligated to arbitrate other disputes there does not make it
convenient for him to litigate this (or any case) in California.7
iii. Location of Relevant Documents and Access to Sources of Proof
“The location of relevant documents and the ease of access to sources of proof is mostly a
neutral factor, in light of the technological age in which we live, where there is widespread use
of, among other things, electronic document production.” Tlapanco, 207 F. Supp. 3d at 330–31
(quoting Rindfleisch v. Gentiva Health Sys., Inc., 752 F. Supp. 2d 246, 258 (E.D.N.Y. 2010))
(internal quotation marks omitted). For this factor to favor either venue, a party must show a
“concrete illustration of inconvenience . . . arising out of access to documents or other nontestimonial proof . . . .” Enigma, 260 F. Supp. 3d at 412 (quoting SBAV LP, 2013 WL 3467030,
at *11) (internal quotation marks omitted).
Defendants contend that they will likely produce more documents than Plaintiffs, and
their documents and other potential sources of proof are located in California. Mem. at 15. They
also contend that Plaintiffs’ documents and sources of proof will be at Placek’s home in New
Jersey rather than in New York. Id. Plaintiffs argue that their bank records, which are located in
New York, are the most important documents. See Opp. at 22–23.
This factor is neutral as to the Court’s transfer analysis. Given the state of current
technology, the location of documents is effectively irrelevant, as records located in either forum
can be easily transmitted for litigation elsewhere. Neither side has presented any facts that
suggest it will be difficult to make documents available for litigation in the other parties’ desired
forum.
7
In fact, the Court surmises that the Orange County arbitration is also inconvenient to Plaintiff.
10
iv. Locus of Operative Facts
“The locus of operative facts is a primary factor in determining whether to transfer
venue.” Tlapanco, 207 F. Supp. 3d at 331 (quoting Steck, 2015 WL 3767445, at *6) (internal
quotation marks omitted). “The ‘locus of operative facts’ is the place where the ‘acts or
omissions for which Defendants could be held liable occurred.’” Id. (quoting Solar v.
Annetts, 707 F. Supp. 2d 437, 442 (S.D.N.Y. 2010)). “To determine the locus of operative facts,
a court must look to the site of the events from which the claim arises.” Enigma, 260 F. Supp. 3d
at 410 (quoting AVEMCO Ins. Co. v. GSV Holding Corp., No. 96 Civ. 8323 (LAP), 1997 WL
566149, at *6 (S.D.N.Y. Sept. 11, 1997)) (internal quotation marks omitted).
“Transfer is generally appropriate where a cause of action arises from claims of alleged
wrongdoing in the proposed transferee district.” Tlapanco, 207 F. Supp. 3d at 331 (quoting
Sheet Metal Workers’ Nat’l Pension Fund v. Gallagher, 669 F. Supp. 88, 92–93 (S.D.N.Y.
1987)) (internal quotation marks and alteration omitted). When there is no showing that any of
the operative facts arose in the Southern District of New York, this factor substantially favors
transfer. Enigma, 260 F. Supp. 3d at 410 (quoting SBAV LP, 2013 WL 3467030, at *4) (internal
quotation marks omitted). That said, transfer is not precluded just because there is some
connection between the operative facts and the initial forum, “so long as the transferee district
has a stronger connection with the operative facts.” Tlapanco, 205 F. Supp 3d at 331 (quoting
Gallagher, 669 F. Supp. at 93) (internal quotation marks omitted).
When assessing the locus of operative facts for transfer of a contract dispute, courts in
this District “consider[] where the contract was negotiated, formed, performed, and allegedly
breached, giving particular weight to the site of performance.” Rhoda v. Rhoda, No. 14-CV6740 CM, 2014 WL 6991502, at *11 (S.D.N.Y. Nov. 19, 2014) (quoting Age Grp. Ltd. v. Regal
11
Logistics, Corp., No. 06–CV–4328, 2007 WL 2274024, at *3 (S.D.N.Y. Aug. 7, 2007)) (internal
quotation marks omitted). When the thrust of the lawsuit is breach of contract, some courts place
particular focus on where the contract was performed and breached rather than where it was
proposed and negotiated. See, e.g., Pence v. Gee Grp., Inc., 236 F. Supp. 3d 843, 855 (S.D.N.Y.
2017) (quoting Billing v. Commerce One, Inc., 186 F. Supp. 2d 375, 378 (S.D.N.Y. 2002)); Age
Grp., 2007 WL 2274024, at *4 (“Moreover, as [plaintiff’s] primary claims center on
[defendant’s] alleged failure of performance and not on any matters relating to the formation or
negotiation of the contract, the Court places particular emphasis on the locus
of operative facts relating to the performance and alleged breach of the contract, as compared to
that of the negotiation and formation of the contract. This emphasis on the locus of operative
facts regarding contract performance and breach is in keeping with the practice of other courts in
this District considering similar motions to transfer breach of contract cases.”) (citing same).
Defendants contend that the locus of operative facts is California because Plaintiffs’
claims derive from incidents that took place there, namely Defendants’ failure to pay as required
by the Guaranty Agreements. Mem. at 16. Thus, the alleged wrongful acts and omissions took
place in California. Id. Plaintiffs argue that the locus of operative facts is the Southern District
of New York because that is where payment was to take place, and thus the breach of the
Agreement in the form of non-payment occurred in New York. See Opp. at 21–22. Although
they cite no law in this section of their argument, in arguing that venue is proper in this District,
Plaintiffs cited two cases to argue that venue is proper when defendants have been required to
make payments in New York. See id. at 17–18 (quoting Schindler v. Lyon, No. 12-CV-5928 JFB
AKT, 2013 WL 4544263, at *10 (E.D.N.Y. Aug. 28, 2013) and citing Saltzman v. Louisiana
Auction Exch., Inc., 997 F. Supp. 537, 541 (S.D.N.Y. 1998)).
12
Plaintiffs, in arguing that the locus of operative facts is New York because Plaintiffs
operated out of New York and because payments from Defendants were to be paid to Plaintiffs’
New York bank accounts, highlight cases in which the terms of the contracts explicitly required
performance or payment in New York. In Schindler, for example, the court found venue proper
in this District because “the alleged agreement required that defendant make payments to New
York,” and because, in turn, that is where the breach of that specific obligation occurred. See
2013 WL 4544263, at *10. Likewise, in Saltzman, the court found venue appropriate in this
District based on a range of conduct and circumstances, including that “payment under the terms
of the letter agreement was due to plaintiff in New York.” 997 F. Supp. at 541. But here, the
Guaranty Agreements make no reference to the location of payments or Plaintiffs’ New York
bank accounts—they do not mention New York at all. See Investors III Guaranty; SLF II
Guaranty. The payment provisions in each Guaranty Agreement require payment of “all
amounts which are due and payable under the Put Options, when and as required under the Put
Options,” but nothing in the Put Option Agreements mandates payment in New York, either. See
Investors III Guaranty ¶ 1.1; SLF II Guaranty ¶ 1.1; Investors III Put Option Agreement; SLF II
Put Option Agreement.8 Thus, nothing in the Guaranty Agreements requires Defendants’
performance—its payments—to take place in New York.
Instead, the Court finds that the primary locus of operative facts is the Central District of
California, where Defendants breached their obligations. Although it appears that Plaintiffs’
counsel negotiated the Guaranty Agreements from New York (and the Plaintiffs may have
8
The Put Option Agreements require notices to be delivered to Placek’s entities and counsel at New York
addresses, but the payment provisions themselves do not require payment in any particular place or to any particular
bank account. See Investors III Put Option Agreement ¶¶ 3, 7; SLF II Put Option Agreement ¶¶ 3, 9. (Note that the
SLF II Put Option Agreement contains two provisions numbered ¶ 9; the Court here refers to the first of these (titled
“Notices”) on page five of this agreement.)
13
executed them here as well), the Court focuses on the location of Defendants’ alleged breach
because this case arises directly from the breach, not from the negotiation or execution of the
Guaranty Agreements. See, e.g., Mohsen v. Morgan Stanley & Co. Inc., No. 11 CIV. 6751 PGG,
2013 WL 5312525, at *7 (S.D.N.Y. Sept. 23, 2013) (“[T]he locus of operative facts remains in
the Central District of California. Plaintiff’s claims stem from alleged misconduct by Welker—a
bad faith margin call—during the performance of the contract in California, not from the initial
negotiation of the agreement.”). The Court finds that Defendants’ alleged breach of the
Guaranty Agreements—their failure to pay Plaintiffs, which, under the agreements was tied to no
particular accounts or locations—occurred in California, where they reside, and where they were
located when they allegedly failed to pay Plaintiffs amounts that were due. Other courts in this
District have found that a party’s breach of an agreement occurs where the breaching party is
located, including cases in which the breach consisted of a failure to make a payment. See, e.g.,
Guardian Life Ins. Co. of Am. v. Hernandez, No. 11 CIV. 2114 SAS, 2011 WL 3678134, at *4
(S.D.N.Y. Aug. 22, 2011) (“A breach of contract between two businesses located in different
states will necessarily ‘occur,’ in the strictest sense of the word, in the home state of the
breaching party . . . .”); Largotta v. Banner Promotions, Inc., 356 F. Supp. 2d 388, 390
(S.D.N.Y. 2005) (“Banner’s obligation, to make payments to Largotta, was to take place from its
office in Philadelphia; its alleged breach is therefore also situated in Philadelphia.”); Oubre v.
Clinical Supplies Mgmt., Inc., No. 05 CIV. 2062 (LLS), 2005 WL 3077654, at *4 (S.D.N.Y.
Nov. 17, 2005) (“CSM’s performance, paying Oubre and issuing him stock and stock options,
would naturally take place at CSM’s headquarters in North Dakota. Thus . . . CSM’s alleged
breach occurred in North Dakota.”); Ljungkvist v. Rainey Kelly Campbell Roalfe/Young &
Rubicam, Ltd., No. 01 CIV. 1681 (HB), 2001 WL 1254839, at *4 n.8 (S.D.N.Y. Oct. 19, 2001)
14
(“Ljungkvist also argues that she was injured by the defendants’ failure to compensate her in
New York pursuant to the contracts. . . . [T]he defendants[’] alleged wrongful breach occurred in
London where the withholding of money due on the contract took place.”). Accordingly,
Defendants’ alleged breach—the primary consideration in determining the locus of operative
facts for this case—took place in the Central District of California. That District thus has a
stronger connection to the facts of this case, and this key factor weighs in favor of transfer.
v. Availability of Process to Compel Attendance of Unwilling Witnesses
Although a court generally cannot compel a non-party witness to travel more than 100
miles to testify, this factor becomes irrelevant when parties fail to produce affidavits from
witnesses indicating that they would not voluntarily testify. See Tlapanco, 207 F. Supp. 3d at
332 (citing Fed. R. Civ. P. 45; EasyWeb Innovations, LLC v. Facebook, Inc., 888 F. Supp. 2d
342, 354 (E.D.N.Y. 2012); Eres N.V. v. Citgo Asphalt Ref. Co., 605 F. Supp. 2d 473, 482
(S.D.N.Y. 2009)).
Defendants argue that this Court cannot secure the attendance of California witnesses
should they be unwilling to testify, but such witnesses could be compelled by the California
court. See Mem. at 17. Nevertheless, they ultimately concede that this factor is neutral. See
Reply at 15. Plaintiffs respond that Defendants’ CFO could be compelled to testify in New York
by virtue of her employment, and that videotaping testimony is an option for those who do not
wish to travel to New York. See Opp. at 22.
Neither Plaintiffs nor Defendants produced affidavits from potential witnesses indicating
an unwillingness to testify voluntarily in this matter. Accordingly, this factor is neutral in the
Court’s transfer analysis.
15
vi. Relative Means of the Parties
“The relative means of the opposing parties may support or discourage transfer of venue
if there is a significant financial disparity between the parties.” Tlapanco, 207 F. Supp. 3d at 332
(quoting Herbert Ltd. P’ship, 325 F. Supp. 2d at 290) (internal quotation marks omitted). But a
party must provide proof of this potential hardship for a court to consider this factor: “where a
plaintiff has not supplied the court with any documentation showing that transfer would be
financially burdensome, this factor is neutral.” Id. (quoting Speedfit LLC v. Woodway USA,
Inc., 53 F. Supp. 3d 561, 578 (E.D.N.Y. 2014)). See also Dickerson, 315 F.R.D. at 31–32
(affording “relative means” factor limited weight where plaintiff only offered an unsupported
assertion to argue that litigating in the transferee district would be unduly burdensome).
Defendants assert that “Plaintiffs and Defendants likely have similar relative means and
are equally equipped to bear the costs associated with proceeding in a distant forum,” rendering
this factor neutral. Mem. at 17. Plaintiffs respond (without citation or support) that Defendant
William Shopoff is wealthy and maintains property all across the country, while Plaintiff Placek
is not currently employed, is the primary caregiver to his children, supports his wife who works
full-time, and has no other income aside from what he expected from these agreements,
rendering the expense of a lawsuit in California burdensome. See Opp. at 23; Declaration of
David Placek (“Placek Decl.”) [Dkt. 24] ¶¶ 25–30. In their Reply, Defendants respond that
Plaintiffs’ arguments as to Defendants’ means are “purely speculative.” Reply at 15.
Notwithstanding Plaintiffs’ arguments that Placek is in a weaker financial position than
Defendants, none of the parties submitted any documentation showing that transfer would be
financially burdensome, and, therefore, this factor is neutral.
16
vii. Forum’s Familiarity with Governing Law
Familiarity with the governing law is generally given little weight when considering
transfer because federal courts are equally capable of deciding issues of federal law, and federal
courts are deemed capable of applying the substantive law of other states. See Dickerson, 315
F.R.D. at 32 (citations omitted). “The forum’s familiarity with the governing law [is] one of the
least important factors in determining a motion to transfer . . . .” Enigma, 260 F. Supp. 3d at 412
(quoting ACE Am. Ins. Co. v. Bank of the Ozarks, No. 11 Civ. 3146 (PGG), 2012 WL 3240239,
at *13 (S.D.N.Y. Aug. 3, 2012)) (internal quotation marks omitted). A party seeking to invoke
this factor as favoring transfer might point to “nuanced issues of . . . state law that [one] [c]ourt is
materially more qualified to apply than [the other] court would be.” Everlast, 928 F. Supp. 2d at
747.
Defendants argue that this case involves breach of a contract expressly governed by
California law, with which the transferee court is more familiar than this Court. See Mem. at 17.
They emphasize that “this case will involve complex issues of California law, including the issue
of whether this matter should proceed as an arbitration in Orange County, California.” Reply at
14. Plaintiffs counter that this factor should be afforded little weight because the legal issue
involved—breach of contract—is straightforward. See Opp. at 23–24.
Were this case limited to straightforward analysis of a breach of contract, this factor
would not weigh in favor of transfer. Defendants’ Reply, however, illustrates that they intend to
argue that the arbitration clauses in the Put Option Agreements apply to the Guaranty
Agreements because a dispute over the Guaranty Agreements “clearly relates” to the Put Option
Agreements, Reply at 7–8, and because “California law also holds that where an agreement
secures performance of another contract containing an arbitration clause, the arbitration clause
17
applies to both agreements.” Id. at 9. This latter argument raises more nuanced and complicated
issues of California law that would involve assessing, inter alia, California contract
jurisprudence; California’s public policy towards arbitration; how California law would consider
bonds, sureties, and guaranties; and what language is necessary under California law for one
contract to incorporate another contract by reference. See Reply at 9–12. Therefore, in this
instance, the Court finds that the Central District of California is materially more qualified to
adjudicate this case. Thus, this factor weighs in favor of transfer.
viii. Plaintiff’s Choice of Forum
“Although a plaintiff’s choice of forum is accorded considerable weight in the § 1404(a)
balancing test, that choice merits less deference where, as here, the connection between the case
and the chosen forum is minimal.” Enigma Software, 260 F. Supp. 3d at 411–12 (quoting SBAV
LP, 2013 WL 3467030, at *11; Everlast, 928 F. Supp. 2d at 748) (internal quotation marks and
alteration omitted). See also Dickerson, 315 F.R.D. at 32 (allocating plaintiff’s choice of forum
substantially diminished weight where the selected forum was not plaintiff’s home forum and
had only a limited connection to the operative facts of the action).
Defendants argue that Plaintiff’s choice of forum should receive little weight because
there is little connection, if any, between the case and New York. See Mem. at 18. They also
contend that the provisions in the Put Option Agreements requiring mandatory arbitration in
Orange County apply to the Guaranty Agreements. See Reply at 13. See also Reply at 7–12;
Investors III Put Option Agreement ¶ 8; SLF II Put Option Agreement ¶ 9.9 Plaintiffs argue that
there is a connection to New York—performance under the contract was due in New York,
performance and breach in the form of payment and non-payment were in New York, and
9
The SLF II Put Option Agreement contains two provisions numbered ¶ 9; the Court here refers to the
second of these (titled “Miscellaneous”) on page six of this agreement.
18
documents and witnesses are in New York. See Opp. at 24. They also note that Placek “resides
in new Jersey [and] lives extremely close to the chosen district.” Id.
As discussed above, although there is some connection to New York, this case is more
strongly connected to California. Although the Guaranty Agreements were negotiated in part in
New York, as discussed above, nothing in the Guaranty Agreements mandates performance in
New York, and the alleged breach would have occurred in California. Accordingly, at best, this
factor weighs minimally in favor of denying transfer, but perhaps more practically should be
considered neutral given the relatively limited connection of the case to this District.
ix. Trial Efficiency and the Interests of Justice
“The Court’s consideration of whether transfer is in the interest of justice is based on the
totality of the circumstances, and relates primarily to issues of judicial economy.” Dickerson,
315 F.R.D. at 32 (quoting Indian Harbor Ins. Co. v. Factory Mut. Ins. Co., 419 F. Supp. 2d 395,
407 (S.D.N.Y. 2005)) (internal quotation marks and alteration omitted). A court may consider
the amount and duration of litigation in the current forum. See id. at 32–33; Tlapanco, 207 F.
Supp. 3d at 332–33.
Defendants contend that this case would be more efficiently litigated in the Central
District of California because a number of witnesses reside there, and hard copies of documents
are there as well. See Mem. at 18. Transfer is in the interest of justice, Defendants contend,
because California is the location of the alleged wrongful conduct, and Plaintiff Placek does not
reside in New York. See id. at 19. Defendants also assert, ipse dixit, that because all of
Plaintiffs’ agreements require arbitration in Orange County, it would be efficient to transfer this
case, as Placek is currently pursuing arbitration in California with regard to his employment
19
agreement. Reply at 15. Plaintiffs argue, inter alia, that the matter is already pending in this
Court at the summary judgment stage. See Opp. at 24–25.
The Court finds this factor to be neutral, and notes that the parties’ arguments primarily
recycle points made with regard to the other factors. While the case is technically at the
summary judgment stage, it is only so because Plaintiffs filed a motion for summary judgment in
lieu of a complaint in New York state court, which was removed to this Court. There have been
minimal proceedings and no discovery in this Court since removal. Nonetheless, the locations of
some witnesses, some documents, and a separate arbitration in California do not make it more
efficient for the Court to transfer the case—there are also documents and witnesses here, and the
employment agreement arbitration is, as far as this Court is aware, distinct from the breach of
contract at issue in this case. Nor is it clear that Defendants will ultimately prevail in arguing
that the arbitration clause in the Put Option Agreements applies to the Guaranty Agreements.
x. Weighing the Factors
As discussed above, most of the transfer factors are neutral. The only factor that might
counsel toward retaining the case in this District is Plaintiff’s choice of forum, which the Court
finds to be minimal, if not neutral. But two factors counsel strongly in favor of transfer—the
locus of operative facts lies in California and the Central District of California is better equipped
to address the nuanced issues of California law that will likely arise in this case. Accordingly,
the Court transfers this case to the Central District of California.10
10
In a footnote at the very end Plaintiffs’ Opposition, they ask that if the case is to be transferred, it be
transferred to the District of New Jersey rather than to the Central District of California. See Opp. at 25 n.6. The
Court denies this request. Not only has there been no briefing on the appropriateness of transfer to the District of
New Jersey, but the factors that guided this Court’s decision to transfer the case—the locus of operative facts is in
California and the case involves complex issues of California law—would still counsel toward transfer to the
Central District of California rather than the District of New Jersey.
Because the Court grants Defendants’ motion to transfer, it does not reach the issues of personal
jurisdiction.
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III.
CONCLUSION
For the reasons stated above, Defendants’ motion to transfer is GRANTED. The Clerk is
instructed to terminate Docket Entry 11 and transfer this matter to the Central District of
California.
SO ORDERED.
____________________________
_
_________________________________
VALERIE CAPRONI
N
CAPRONI
United States District Judge
Date: September 24, 2018
New York, New York
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