Nationwide Life and Annuity Insurance Company v. Golden et al

Filing 35

ORDER Report and Recommendation : Defendants requests that the Court to take judicial notice, Doc. Nos. 12 ,[ 27], are GRANTED as unopposed. It is RECOMMENDED that the motions to dismiss, Doc. Nos.[ 13] and 14 , be DENIED 12 . Objections to R&R due by 1/25/2013 Signed by Magistrate Judge Norah McCann King on 1/07/13. (rew)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

NATIONWIDE LIFE AND ANNUITY
INSURANCE COMPANY,
Plaintiff,
vs.

Civil Action 2:12-cv-213
Judge Smith
Magistrate Judge King

EDMOND GOLDEN, et al.,
Defendants.

ORDER AND
REPORT AND RECOMMENDATION
This is a diversity action, 28 U.S.C. § 1332, in which plaintiff
Nationwide Life and Annuity Insurance Company (“plaintiff” or
“Nationwide”) seeks a declaratory judgment and other relief, alleging
that a life insurance policy issued by it on the life of Edward Barry
is void ab initio because it was procured by a stranger-originated
life insurance (“STOLI”) scheme without an insurable interest.

This

matter is before the Court for consideration of the motion to dismiss
filed on behalf of defendants Edmond Golden, FJ Smith, Inc., and Jeff
Railey, Doc. No. 13, and on defendant Leonard Aguiar’s motion to
dismiss, Doc. No. 14.

The motions ask that this action be dismissed

pursuant to Rules 12(b)(2), 12(b)(3), and 12(b)(6) of the Federal
Rules of Civil Procedure.

Alternatively, defendants seek to transfer

this action to the United States District Court for the Southern
District of California pursuant to 28 U.S.C. §§ 1404(a) and 1406(a).
The motions to dismiss are ripe for consideration.

Also before the

Court are defendants’ requests for the Court to take judicial notice
of certain facts.

Doc. Nos. 12, 27.

Defendants’ requests for the

Court to take judicial notice, Doc. Nos. 12, 27, are GRANTED as
unopposed.

For the reasons that follow, it is RECOMMENDED that this

action be transferred, pursuant to 28 U.S.C. §§ 1404(a) and 1406(a),
to the United States District Court for the Southern District of
California.
I.

Background
This is an action for fraud, breach of contract, negligent

misrepresentation, civil conspiracy, violation of the Ohio Viatical
Settlements Act, R.C. § 3916.01 et seq., and declaratory judgment
pursuant to 28 U.S.C. § 2201, in connection with an alleged fraudulent
STOLI scheme to procure a $4.5 million life insurance policy (the
“Policy”) on the life of Edward Barry (“Barry”).

The Complaint, Doc.

No. 2, alleges the following:
Plaintiff is a life insurance company organized and existing
under the laws of the State of Ohio, with its principal place of
business in Ohio.

Id. at ¶ 2.

Defendant Leonard Filizzola Aguiar

(“Aguiar”) is a citizen of the State of Texas; defendants Edmond
Golden (“Golden”) and Jeff Railey (“Railey”) are citizens of the State
of California; and defendant FJ Smith, Inc. (“FJ Smith”), is a
corporation organized under the laws of the State of California.

Id.

at ¶¶ 3-6.
On February 4, 2009, Aguiar, plaintiff, and the Legacy Network,
LLC, executed a Producer & Commission Assignment Agreement (the
“Agreement”).

Id. at ¶ 19; Doc. No. 2-1.
2 

The Agreement, which is

expressly governed by Ohio law, permitted Aguiar to solicit
applications for life insurance policies on behalf of plaintiff.
Complaint, at ¶¶ 19-20.
In April 2009, Aguiar, Golden, Railey, and FJ Smith (the “Moving
Defendants”) and other unknown parties identified as Does 1-20
developed a STOLI scheme to procure a $4.5 million life insurance
policy on Barry and to sell the policy on the secondary market.
at ¶¶ 24, 27.

Id.

In October 2008, the Edward Barry Insurance Trust (the

“Trust”) was created with Barry as the settlor and Golden as the
trustee.

Id. at ¶ 26.

On April 8, 2009, Aguiar submitted an application for life
insurance to plaintiff’s Ohio office.

Id. at ¶ 27.

The application

was signed by Barry as the insured, Aguiar as the insurance producer,
and Golden as the owner.

Id. at ¶ 28.

Aguiar also completed a

producer’s certification, “which was submitted to Nationwide in Ohio
wherein it was represented Barry’s net worth was $14,650,000.00 with
$804,000.00 in annual income.”

Id. at ¶ 29.

On that same day, Barry

and Golden signed and submitted to plaintiff’s Ohio office a Life
Financial Supplement, providing a similar representation of Barry’s
net worth and income.

Id. at ¶ 30.

Plaintiff alleges that certain

information contained in the application, producer’s certification and
Life Financial Supplement knowingly contained false information.

Id.

at ¶¶ 31-42, 91.
Once these documents were completed, Barry, Aguiar and Railey
“corresponded with Nationwide’s underwriters and agents in” Ohio “to

3 

provide the remaining documents necessary” to the issuance of the
Policy.

Id. at ¶ 43

On June 10, 2009, Railey, a certified public accountant,
“verified Barry’s income and net worth as listed on the Financial
Supplement.”

Id. at ¶¶ 6, 46.

On June 17 and 19, 2009, Aguiar

“submitted Life Insurance Illustrations” to plaintiff’s Ohio office.
Id. at ¶ 47.
Plaintiff issued the Policy on June 22, 2009.

Id. at ¶ 48.

On

July 20, 2009, Barry, Golden and Aguiar signed an Amendment to the
Policy and Golden and Aguiar signed a Receipt of Policy.
These documents were “received by” plaintiff in Ohio.

Id. at ¶ 49.

Id. at ¶ 50.

On July 24 and 27 and August 12, 2009, Golden submitted premium
payments “via wire” to plaintiff in Ohio on behalf of the Trust. Id.
at ¶¶ 51-53.
“Following the issuance of the Policy, Aguiar corresponded with
Nationwide’s Columbus, Ohio office and received Policy Summaries,
Annual Statements and Statements of Coverage from that office.”

Id.

at ¶ 55.
On June 24, 2011, Golden and Jeff Keller signed an Application
for Designation of Owner, transferring ownership of the Policy from
Golden to Keller, as President of FJ Smith.

Id. at ¶ 56.

Golden and

Jeff Keller also signed an Application of Change of Beneficiary
Designation, designating FJ Smith as the primary beneficiary of the
Policy.

Id. at ¶ 56.

On September 12 and December 5, 2011, FJ Smith

submitted premium checks to plaintiff’s Ohio office.

4 

Id. at ¶ 58.

Barry died on October 20, 2011.

Id. at ¶ 59.

FJ Smith submitted

a claim to plaintiff’s Ohio office on December 26, 2011.

Id. at ¶ 60.

Plaintiff alleges that the Policy was obtained pursuant to an
agreement that it would be transferred to a STOLI investor with no
insurable interest in Barry’s life.

Id. at ¶ 70.

It is further

alleged that the Trust was created to facilitate the scheme, that
payments were allegedly financed by a person without an insurable
interest, and that plaintiff would not have issued the Policy but for
false statements made by Barry, Golden, Railey, and Aguiar.

Id. at ¶¶

26, 54, 79-89, 91.
Aguiar has submitted a declaration (“Aguiar Declaration”), Doc.
No. 15-1, that asserts the following:
Aguiar was a resident of the State of California during the time
that the actions alleged in the Complaint took place.
Declaration, ¶ 2.

Aguiar

Aguiar was recruited by Legacy, an Idaho company,

as an independent contractor for plaintiff.

Id. at ¶¶ 3-4.

Aguiar

obtained the Agreement from Legacy and returned it to Legacy after
signing it.

Id.

Aguiar has never had any direct contact with

plaintiff; all contacts relative to the Policy were with Legacy and
Legacy communicated and forwarded documents to plaintiff.

Id.

Aguiar

is not licensed to sell insurance in Ohio, has never sold a policy to
an Ohio resident, has no offices, property, or bank accounts in Ohio,
and has never travelled to Ohio.

Id. at ¶ 5.

The Policy, which is attached to the Aguiar Declaration, states
that California is the state of issuance.

Id. at p. 6.

asserts that the Policy was issued in California.
5 

Aguiar also

Id. at ¶ 6.

Golden has submitted a declaration (“Golden Declaration”), Doc.
No. 13-1, that provides that Golden is a citizen of the State of
California, currently residing in Escondido, California.
Declaration, ¶ 2.

Golden

Golden has never visited the State of Ohio, makes

no purchases or sales in Ohio, owns no property in Ohio, has no bank
account in Ohio, and conducts no business in, solicits no clients
from, and holds no assets in Ohio.

Id. at ¶ 4.

Golden also avers

that the Trust was created to facilitate the ownership of the Policy
and that Barry’s son, Paul Barry, was designated as the trust
beneficiary until the Policy was transferred to FJ Smith.

Id. at ¶¶

5-7.
Railey has submitted a declaration (“Railey Declaration”), Doc.
No. 13-2, that provides that Railey is a citizen of the State of
California, who currently resides in San Diego, California.
Declaration, ¶ 2.

Railey

Railey has never visited the State of Ohio, makes

no purchases or sales in Ohio, and owns no property, has no bank
account, conducts no business in, solicits no clients from, and holds
no assets in Ohio.

Id. at ¶ 4.

Jeff Keller, the CEO of FJ Smith, has submitted a declaration
(“Keller Declaration”), Doc. No. 13-3, that provides that FJ Smith is
a corporation organized under the laws of the State of California with
its principal place of business in California.
2.

Keller Declaration, ¶

Jeff Keller avers that FJ Smith is not licensed or registered to

do business in Ohio, has never done business in Ohio, has never
solicited clients or advertised in Ohio, and owns no property, has no
bank account, does not regularly sell or purchase goods in, solicits
6 

clients from, or has any assets in Ohio.

Id. at ¶ 4.

Furthermore, FJ

Smith does not maintain any offices, employees, agents, officers, or
directors in Ohio.

Id.

In their motions, the moving defendants contend that the Court
lacks personal jurisdiction over them, that the Complaint fails to
state a claim for relief against them and that the action was filed in
an improper venue.
II.

Personal Jurisdiction
A.

Standard

Federal Rule of Civil Procedure 12(b)(2) authorizes the filing of
a motion to dismiss for lack of personal jurisdiction over a
defendant.

In considering a properly supported motion to dismiss for

lack of personal jurisdiction, a district court is vested with the
discretion to decide the motion upon the affidavits alone, to permit
discovery in aid of deciding the motion, or to conduct an evidentiary
hearing to resolve any apparent factual question.

Theunissen v.

Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing Serras v. First
Tenn. Bank Nat’l Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989)).

Here,

no party has requested additional discovery or an evidentiary hearing
and this Court concludes that neither is necessary to the resolution
of the issue of personal jurisdiction.
A plaintiff bears the burden of establishing personal
jurisdiction.

Estate of Thomson v. Toyota Motor Corp. Worldwide, 545

F.3d 357, 360 (6th Cir. 2008) (citing Brunner v. Hampson, 441 F.3d
457, 462 (6th Cir. 2006)).

However, where a Rule 12(b)(2) motion is

decided solely on written submissions and affidavits, as here, “the
7 

plaintiff’s burden is relatively slight, and the plaintiff must make
only a prima facie showing that personal jurisdiction exists in order
to defeat dismissal.”

Id. (quotations and citations omitted).

Indeed, “[t]he pleadings and affidavits submitted must be viewed in a
light most favorable to the plaintiff, and the [] court should not
weigh ‘the controverting assertions of the party seeking dismissal.’”
Id. (quoting Theunissen, 935 F.2d at 1459).

Nevertheless, the

pleadings must set forth with reasonable particularity those specific
facts that support jurisdiction.

Palnik v. Westlake Entm't, Inc., 344

F. App'x 249, 251 (6th Cir. 2009) (quoting Neogen Corp. v. Neo Gen
Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002)).

See also Fiore

v. Walden, 688 F.3d 558, 575 (9th Cir. 2012) (holding that a court
should draw only reasonable inferences from a plaintiff's pleadings in
assessing personal jurisdiction).
B.

Defendants Aguiar and Golden

“A Federal district court sitting in diversity must apply the law
of the forum state to determine whether it may exercise jurisdiction
over the person of a non-resident defendant.”

Theunissen, 935 F.2d at

1459 (citing Welsh v. Gibbs, 631 F.2d 436, 439 (6th Cir. 1980)).
Constitutional concerns of due process, however, limit the application
of this principle.

Id. (citing Welsh, 631 F.2d at 439).

The United

States Court of Appeals for the Sixth Circuit has recognized that
Ohio's long-arm statute does not extend to the constitutional limits
of the Due Process Clause.

Calphalon Corp. v. Rowlette, 228 F.3d 718,

721 (6th Cir. 2000) (quoting Cole v. Mileti, 133 F.3d 433, 436 (6th
Cir. 1998)).

“Accordingly, ‘when Ohio's long-arm statute is the basis
8 

for personal jurisdiction, the personal jurisdiction analysis requires
separate discussions of whether the defendant is amenable to suit
under Ohio's long-arm statute and whether due process requirements of
the Constitution are met.’”

Estate of Thomson, 545 F.3d at 361

(quoting Walker v. Concoby, 79 F.Supp.2d 827, 831 (N.D. Ohio 1999)).
1.

Ohio’s Long-Arm Statute

Defendants Aguiar and Golden are subject to personal jurisdiction
under the Ohio long-arm statute, which provides in pertinent part as
follows:
(A) A court may exercise personal jurisdiction over a
person who acts directly or by an agent, as to a cause of
action arising from the person's:
. . .
(6) Causing tortious injury in this state to any person by
an act outside this state committed with the purpose of
injuring persons, when he might reasonably have expected
that some person would be injured thereby in this state[.]
R.C. § 2307.382(A)(6).

Courts in this district generally take a

“broad approach” to application of § 2307.382(A)(6).

Schneider v.

Hardesty, 669 F.3d 693, 700 (6th Cir. 2012) (quoting Grigor v.
Starmark Hospitality Group LLC, No. 2:10-cv-20, 2010 WL 2403137, at *5
(S.D. Ohio June 10, 2010)).

Federal courts and Ohio state courts have

determined that fraudulent communications or misrepresentations
directed at Ohio residents satisfy the requirements of §
2307.382(A)(6).

Id. (citing Grigor, 2010 WL 2403137 at *5).

See also

Vlach v. Yaple, 670 F.Supp.2d 644, 648 (N.D. Ohio 2009); Highway Auto
Sales, Inc. v. Auto-Konig of Scottsdale, Inc., 943 F.Supp. 825, 829
(N.D. Ohio 1996); Kauffman Racing Equip., L.L.C. v. Roberts, 930

9 

N.E.2d 784, 792 (Ohio 2010); Herbruck v. LaJolla Capital, No. 19586,
2000 WL 1420282, at *3 (Ohio App. Sept. 27, 2000)).
The Complaint alleges that, in applying for the Policy, Aguiar
and Golden submitted documents to plaintiff in Ohio that knowingly
contained false and material information, that these defendants
intended plaintiff to rely on those documents, that plaintiff did in
fact rely on those documents in issuing the Policy, and that plaintiff
suffered damage as a consequence.

See Complaint, ¶¶ 27, 29-42, 78-95.

By allegedly knowingly sending false documents to Ohio in an
application for life insurance, Aguiar and Golden should have
reasonably expected that the Ohio recipient would have been injured in
Ohio.

See Vlach, 670 F.Supp.2d at 648.

Accordingly, the exercise of

jurisdiction over defendants Aguiar and Golden is proper under R.C. §
2307.382(A)(6).
2.

Federal Due Process

In order to satisfy notions of federal due process, a court may
exercise personal jurisdiction over a non-resident defendant only if
the exercise of such jurisdiction arises from “certain minimum
contacts with [the forum] such that [] maintenance of the suit does
not offend traditional notions of fair play and substantial justice.”
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citations
omitted).

The non-resident defendant must have conducted himself in

such a manner that he could “reasonably anticipate being haled into
court” in Ohio.

World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,

297 (1980) (citations omitted).

This requirement is met if the

defendant “purposefully directed his activities at residents of the
10 

forum, and the litigation results from alleged injuries that arise out
of or relate to those activities.”

Burger King Corp. v. Rudzewicz,

471 U.S. 462, 472 (1985) (citations and quotations omitted).
The United States Court of Appeals for the Sixth Circuit employs
three criteria for determining whether the exercise of in personam
jurisdiction comports with due process:
First, the defendant must purposefully avail himself of the
privilege of acting in the forum state or causing a
consequence in the forum state.
Second, the cause of
action must arise from the defendant's activities there.
Finally, the acts of the defendant or consequences caused
by the defendant must have a substantial enough connection
with the forum to make the exercise of jurisdiction over
the defendant reasonable.
Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th
Cir. 1968).

See also Calphalon Corp., 228 F.3d at 721-22.

“̔The purposeful availment requirement ensures that a defendant
will not be haled into a jurisdiction solely as a result of random,
fortuitous, or attenuated contacts, or of the unilateral activity of
another party or a third person.’”

Schneider, 669 F.3d at 701-02

(quoting Citizens Bank v. Parnes, 376 F. App’x 496, 502 (6th Cir.
2010)).

Purposeful availment may exist when a defendant sends

communications into the forum that “form the bases for the action.”
See id. (quoting Intera Corp. v. Henderson, 428 F.3d 605, 616 (6th
Cir. 2005) (“We have held previously that purposeful availment may
exist when a defendant makes telephone calls and sends facsimiles into
the forum state and such communications ‘form the bases for the
action.’”).

See also Neal v. Janssen, 270 F.3d 328, 332 (6th Cir.

2001) (“When the actual content of the communications into the forum

11 

gives rise to an intentional tort action, that alone may constitute
purposeful availment.”)
In the case presently before the Court, defendants Aguiar and
Golden allegedly submitted documents to plaintiff in Ohio that
knowingly contained false and material information; they allegedly
intended plaintiff to rely on those false documents and plaintiff
allegedly did rely on those false documents in issuing its Policy,
suffering damage as a result.

Complaint, ¶¶ 27, 29-42, 78-95.

The

action of sending false information into Ohio had foreseeable effects
in Ohio and was directed to a business in Ohio with the intent that
the business issue a life insurance policy.

These allegedly false

representations were not merely incidental communications sent to
Ohio; they form the heart of the claims of fraud and negligent
misrepresentation against Aguiar and Golden.

These alleged actions

are therefore sufficient to satisfy the “purposeful availment”
component of the Mohasco test.

See Janssen, 270 F.3d at 332 (“[T]he

actions of sending false information into Tennessee by phone and fax
had foreseeable effects in Tennessee and were directed at individuals
in Tennessee.

These false representations are the heart of the

lawsuit — they were not merely incidental communications sent by the
defendant into Tennessee.”).
The second Mohasco component “is that the plaintiff’s cause of
action arise from the defendant[s’] contacts with the state.”
Schneider, 669 F.3d at 703.
“lenient standard.”

This component is analyzed under a

Air Prods. & Controls, Inc. v. Safetech Int'l,

Inc., 503 F.3d 544, 553 (6th Cir. 2007).
12 

“If a defendant's contacts

with the forum state are related to the operative facts of the
controversy, then an action will be deemed to have arisen from those
contacts.”

CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1267 (6th

Cir. 1996).
As discussed supra, plaintiff’s claims of fraud and negligent
misrepresentation arise from the allegedly false communications sent
by Aguiar and Golden to plaintiff in Ohio.

Aguiar and Golden did not

merely purchase insurance from an Ohio company; rather, they allegedly
directed fraudulent communications into the forum that caused injury
within this forum State.

Those communications were allegedly

received, read, and relied upon by plaintiff in Ohio, and they form
the basis of plaintiff’s fraud claims.

Accordingly, the second prong

of the Mohasco test has been met.
Finally, Mohasco requires that the Court determine whether the
contacts are sufficiently substantial to reasonably subject Aguiar and
Golden to the personal jurisdiction of a court in Ohio. See Janssen,
270 F.3d at 332.

“When a court finds that a defendant has

purposefully availed itself of the privilege of conducting activities
within Ohio and the cause of action arose from that contact, it is
presumed that the assertion of personal jurisdiction is proper.”
Norcold, Inc. v. Greg Lund Prods. Ltd., 109 F.Supp.2d 819, 826 (S.D.
Ohio 2000) (citing Cole, 133 F.3d at 433).

“A court must consider

several factors in this context, including ‘the burden on the
defendant, the interest of the forum state, the plaintiff's interest
in obtaining relief, and the interest of other states in securing the

13 

most efficient resolution of controversies.’”

Id. (quoting Am.

Greetings Corp. v. Cohn, 839 F.2d 1164, 1169–70 (6th Cir. 1988)).
Although this case is not, of course, pending in an Ohio state
court, “the existence of federal avenues for relief in Ohio still
serves Ohio's interest in protecting its residents' legal options.”
Youn v. Track, Inc., 324 F.3d 409, 419 (6th Cir. 2003) (citing Burger
King, 471 U.S. at 478) (noting that the forum state had “manifest
interest” in providing a forum for its residents); McGee v. Int'l Life
Ins. Co., 355 U.S. 220, 223 (1957) (“It cannot be denied that
California has a manifest interest in providing effective means of
redress for its residents when their insurers refuse to pay
claims.”)).

Although it is undoubtedly burdensome for defendants

Aguiar and Golden to defend this case in Ohio, “‘when minimum contacts
have been established, often the interests of the plaintiff and the
forum in the exercise of jurisdiction will justify even the serious
burdens placed on the alien defendant.’”

Id. at 419–20 (quoting Asahi

Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 114 (1987)).
Thus, the Court concludes that it is reasonable to require that
defendants Aguiar and Golden defend themselves in this Court.
Accordingly, and after viewing the pleadings and affidavits on
file in the light most favorable to plaintiff, the Court concludes
that plaintiff has met its relatively slight burden of establishing a
prima facie showing of personal jurisdiction over defendants Aguiar
and Golden.

14 

B.

Defendant Railey

Plaintiff contends that defendant Railey is subject to personal
jurisdiction in Ohio because he assisted in the submission of
fraudulent information on the application and Insurance Supplement to
plaintiff in Ohio.

Doc. No. 18, p. 17.

However, the Court concludes

that plaintiff has failed to allege minimum contacts with the State of
Ohio sufficient for the proper exercise of personal jurisdiction over
defendant Railey.
A careful review of the Complaint reveals relatively few
allegations related to defendant Railey.

The Complaint alleges that

Railey was a participant in the STOLI scheme and “a certified
accountant who was involved in verifying Barry’s financial net worth
to Nationwide.”

Complaint, ¶¶ 6, 24.

After Aguiar submitted an

application for life insurance and Golden and Barry submitted a Life
Financial Supplement to plaintiff, it is alleged that Railey
“corresponded with Nationwide’s underwriters and agents in [Ohio] in
order to provide the remaining documents necessary for Nationwide to
issue the Policy.”

Id. at ¶ 43.

It is also alleged that, on June 10,

2009, Railey, “in connection with a pre-policy issuance interview, . .
. verified Barry’s income and net worth as listed on the Financial
Supplement.”

Id. at ¶ 46.

Notably absent from the Complaint are allegations that Railey
purposefully took action to avail himself of the privilege of acting
in Ohio or causing a consequence in Ohio.1

Unlike the allegations

1

 Railey or the STOLI Promoters, a term defined by plaintiff to include Railey,
are also mentioned in paragraphs 27, 44-45, 64, 69, 81-85, 97-99, 105-09, and
112 of the Complaint. These allegations, however, fail to set forth with any

15 

against Aguiar and Golden, it is not alleged that Railey purposefully
sent knowingly false communications to plaintiff in Ohio.

Although it

is alleged that Railey “corresponded” with Nationwide and that he
“verified Barry’s income” “in connection with a pre-policy issuance
interview,” it is not clear from these allegations that Railey
initiated the correspondence or the pre-policy issuance interview or
that he took any action to purposefully avail himself of the privilege
of acting in Ohio or causing a tortious injury in Ohio.
Personal jurisdiction may be premised on communications sent into
the forum where those communications form the basis for the action.
Schneider, 669 F.3d at 701-02 (quoting Henderson, 428 F.3d at 616).
The Complaint does not allege, however, that Railey directed any
communication into the forum, let alone communication that forms the
bases for the action.

Although plaintiff argues that Railey was

involved with the STOLI scheme, plaintiff has not alleged facts
sufficient to establish Railey’s purposeful availment or to establish
that its claims arise from Railey’s contacts with Ohio.

Without such

allegations, this Court may not exercise personal jurisdiction over
Railey.

See LAK, Inc. v. Deer Creek Enters., 885 F.2d 1293, 1303 (6th

Cir. 1989) (“[The] failure to meet any one of the three [Mohasco
prongs] means that personal jurisdiction may not be invoked.”).
Accordingly, the Complaint does not allege minimum contacts with
the State of Ohio sufficient to permit this Court to exercise personal
jurisdiction over defendant Railey.

particularity whether, or how, Railey directed his activities to residents of
the State of Ohio, such that he should reasonably anticipate being haled into
an Ohio court.

16 

C.

Defendant FJ Smith

Plaintiff has also failed to allege sufficient minimum contacts
with the State of Ohio for the proper exercise of personal
jurisdiction over FJ Smith.

The Complaint alleges that FJ Smith’s

contacts with the State of Ohio consisted of the following:2
On “June 24, 2011, Golden and Jeff Keller, for FJ Smith, signed
an Application for Designation of Owner transferring ownership of the
Policy from Golden to Keller, as President of FJ Smith.”
56.

Complaint, ¶

Golden and Jeff Keller also “signed an Application of Change of

Beneficiary Designation designating FJ Smith, Inc., as primary
beneficiary” of the Policy.

Id.

On September 12 and December 5, 2011, “FJ Smith Inc., submitted
premium checks to Nationwide in its Columbus, Ohio office.”
58.

Id. at ¶

After Barry died in October 2011, “FJ Smith, Inc., submitted the

death claim to Nationwide in its Columbus, Ohio office.”

Id. at ¶¶

59-60.
“The [United States] Supreme Court has spoken with respect to the
significance of a contractual relationship between an in-state
plaintiff and an out-of-state defendant.

The Court has held that a

contract with an out-of-state party, standing alone, is not sufficient
to establish minimum contacts.”

Reynolds v. Int’l Amateur Athletic

Fed’n, 23 F.3d 1110, 1118 (6th Cir. 1994) (citing Burger King, 471
U.S. at 478).

“Instead, to determine whether a party purposefully

2

FJ Smith or the STOLI Promoters, a term defined by plaintiff to include FJ
Smith, are also mentioned in paragraphs 5, 66, 69, 97-99, 105-09, and 112 of
the Complaint. These allegations, however, fail to set forth with any
particularity whether, or how, FJ Smith directed activities to residents of
the State of Ohio, such that it should reasonably anticipate being haled into
an Ohio court. 

17 

availed itself of a forum[,] a court must evaluate ̔prior negotiations
and contemplated future consequences, along with the terms of the
contract and the parties' actual course of dealing.’”

Id. (quoting

Burger King, 471 U.S. at 479).
In the case presently before the Court, there were apparently no
negotiations between FJ Smith and plaintiff prior to Jeff Keller and
Golden signing the Application of Change of Beneficiary Designation
and transferring ownership of the Policy to FJ Smith.

Arguably, FJ

Smith had a minimal course of dealing with plaintiff in Ohio:

FJ

Smith signed an Application for Designation of Owner and an
Application of Change of Beneficiary Designation, it submitted two
premium checks to plaintiff in Ohio, and it submitted a death claim to
plaintiff in Ohio.

Complaint, ¶¶ 58-60.

However, the Policy, in

connection with which FJ Smith was not an originating party, required
that communications and payment requests be sent to plaintiff in Ohio.
See Doc. No. 13-5, pp. 2, 7 (“All elections, payment requests, claims,
instructions, and/or communications to [Nationwide] must be sent to
[Nationwide’s] Home Office” in Ohio.).

The fact that plaintiff found

it convenient to require payment and communications to be sent to it
in Ohio is not, in this Court’s opinion, of controlling significance.
See Burnshire Dev., LLC v. Cliffs Reduced Iron Corp., 198 F. App’x
425, 433 (6th Cir. 2006); Mahler v. Startari, 142 F. App’x 839, 842
(6th Cir. 2005); Calphalon Corp., 228 F.3d at 722-23; Int’l Techs.
Consultants, Inc. v. Euroglas S.A., 107 F.3d 386, 395 (6th Cir. 1997)
(“[T]he only reason the communications . . . were directed to Michigan
was that . . . [the plaintiff] found it convenient to be present
18 

there. . . .

[The defendant] was not attempting to exploit any market

for its products in Michigan, and the company presumably would have
been pleased to communicate with . . . [the plaintiff] wherever the
latter wished. . . .

From the perspective of . . . [the defendant],

it was purely fortuitous that . . . [the plaintiff] happened to have a
Michigan address.).

Moreover, sending payment through the mail to

Ohio is a “secondary or ancillary” factor that “cannot alone provide
the minimum contacts required by due process.”

See Reynolds, 23 F.3d

at 1119 (citations and quotations omitted).
Even if FJ Smith purposefully availed itself of acting in Ohio or
causing consequences in this state, the proper exercise of personal
jurisdiction requires that the claims asserted against this defendant
have arisen out of those activities.

See id.

Plaintiff’s claims did

not, however, arise from FJ Smith’s attenuated contacts with Ohio.
Accordingly, the Complaint does not allege minimum contacts
sufficient for the exercise of personal jurisdiction over FJ Smith.
III. Venue
The moving defendants also challenge venue in this District and
Rule 12(b)(3) of the Federal Rules of Civil Procedure authorizes a
motion to dismiss on this basis. Plaintiff contends that venue is
proper in this District pursuant to 28 U.S.C. § 1391, which provides
in pertinent part as follows:
(b) Venue 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
19 

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).
The moving defendants argue that venue is improper under § 1391
because (1) no defendant resides in Ohio; (2) a substantial part of
the alleged events giving rise to plaintiff’s claims occurred in
California, not in Ohio; and (3) the action could have been brought in
California.

See Doc. No. 13, pp. 26-28; Doc. No. 15, pp. 9-11.

Plaintiff takes the position that venue is proper under § 1391(b)(2)
because a substantial part of the events giving rise to its claims
occurred in this District. Doc. No. 18, pp. 26-28; Doc. No. 19, p. 25.
It is alleged that plaintiff received and reviewed the Policy
application and related materials in the Southern District of Ohio.
These activities have a substantial connection to plaintiff’s claim
that the Policy is void ab initio because of material
misrepresentations in those application materials.

This Court

therefore concludes that venue in the Southern District of Ohio is not
improper.

See Aviva Life & Annuity Co. v. Goldstein, 722 F.Supp.2d

1067, 1077 (S.D. Iowa 2010).
IV.

Transfer of Venue
The moving defendants contend that, regardless of the propriety

of venue in this district, the action should be transferred to the
Southern District of California, which is a more convenient forum,
pursuant to 28 U.S.C. §§ 1404 and 1406.
20 

Doc. No. 13, pp. 28-29; Doc.

No. 15, pp. 14-18.

Under 28 U.S.C. § 1406(a), “[t]he 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.”

28 U.S.C. § 1406(a).

Section 1406(a) does

not require that the Court be vested with personal jurisdiction over a
defendant before transferring the case.
Co., 8 F.3d 325, 329 (6th Cir. 1993).

See Pittock v. Otis Elevator
Accordingly, this Court may

transfer this entire action, notwithstanding the lack of personal
jurisdiction over defendants Railey and FJ Smith, if it is in the
interest of justice to do so.
Under 28 U.S.C. § 1404(a), “[f]or the convenience of the 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).

Courts interpreting §

1404(a) must engage in a two-step analysis and determine: (1) whether
the action might have been brought in the proposed transferee court;
and (2) whether considering all relevant factors, the balance of
convenience and the interest of justice “strongly” favor transfer.
Kay v. Nat'l City Mortg. Co., 494 F.Supp.2d 845, 849–50 (S.D. Ohio
2007).

Ultimately, the decision whether to transfer venue is

committed to the sound discretion of the trial court.

Midwest Motor

Supply Co. Inc. v. Kimball, 761 F.Supp. 1316, 1318 (S.D. Ohio 1991).
“An action ‘might have been brought’ in a transferee court if:
(1) the court has jurisdiction over the subject matter of the action;
(2) venue is proper there; and (3) the defendant is amenable to
21 

process issuing out of the transferee court.”

Sky Techs. Partners,

LLC v. Midwest Research Institute, 125 F.Supp.2d 286, 291 (S.D. Ohio
2000) (citations and punctuation omitted).

It is not disputed that

plaintiff could have brought this action in the Southern District of
California.

Subject matter jurisdiction would be proper under 28

U.S.C. § 1332; personal jurisdiction and venue would be proper because
Golden, FJ Smith, and Railey are citizens of California3 and all of the
alleged communications and activity by the moving defendants
originated in California.
Once it is determined that the case “could have been brought” in
the transferee court, “a district court should consider the private
interests of the parties, including witnesses, as well as other public
interest concerns, such as systemic integrity and fairness, which come
under the rubric of ‘interests of justice.’”

Centerville ALF, Inc. v.

Balanced Care Corp., 197 F.Supp.2d 1039, 1049 (S.D. Ohio 2002)
(quoting Moses v. Bus. Card Express, Inc., 929 F.2d 1131, 1137 (6th
Cir. 1991)).

“Although there is no definitive list of factors that

must be considered in determining whether a change of venue is
warranted, [a] district court may consider a number of case-specific
factors.”

Id.

Private interest factors include:

The
relative
ease
of
access
to
sources
of
proof;
availability of compulsory process for attendance of
unwilling, and the cost of obtaining attendance of willing
witnesses; possibility of view of the premises, if view
would be appropriate to the action; and all other practical
problems that make trial of a case easy, expeditious, and
inexpensive.

3

 In fact, service of process was effected on Golden, Railey, and FJ Smith in
the Southern District of California. See Doc. No. 5, pp. 1-2; Doc. No. 6, p.
1.

22 

Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).

Public interest

factors include docket congestion, the burden of trial to a
jurisdiction with no relation to the cause of action, the value of
holding trial in a community where the public affected live, and the
familiarity of the court with controlling law.

Id.

The moving defendants argue that the Southern District of
California would be a more convenient forum because it will be
burdensome to litigate the case in Ohio.

Plaintiff argues that its

choice of forum is entitled to deference and to transfer the case will
merely transfer the inconvenience from one party to another.

Doc. No.

18, pp. 30-31.
Plaintiff's choice to litigate in its home state of Ohio is
generally entitled to substantial deference.

See Jamhour v.

Scottsdale Ins. Co., 211 F.Supp.2d 941, 946 (S.D. Ohio 2002).

A

plaintiff's choice of forum is entitled to less deference, however,
when the chosen forum “has no connection with the matter in
controversy,” St. Joseph Solutions, LLC v. Microtek Medal, Inc., No.
1:11–cv–388, 2011 WL 5914010, at *7 (S.D. Ohio Nov. 28, 2011)
(citations omitted), or when “the vast majority of operative facts
giving rise to the lawsuit took place” in a forum other than that
chosen by the plaintiff.

U.S. ex rel. Kairos Scientia, Inc. v.

Zinsser Co., No. 5:10–cv–383, 2011 WL 127852, at *2-3 (N.D. Ohio Jan.
14, 2011). Although the moving defendants argue that the only nexus
with Ohio is plaintiff’s domicile here, see Doc. No. 28, p. 7, Doc.
No. 29, p. 21, this is not, in the view of this Court, a case in which
the forum state has no meaningful ties to the events giving rise to
23 

the claims asserted herein.

Aguiar and Golden allegedly directed

fraudulent communications to plaintiff in Ohio, where and plaintiff’s
home office is located.

Accordingly, plaintiff’s choice of forum is

therefore entitled to “substantial consideration.”

See St. Joseph

Solutions, LLC, 2011 WL 5914010 at *7 (quoting Steelcase Inc. v. Smart
Techs., Inc., 336 F.Supp.2d 714, 720 (W.D. Mich. 2004)).
Nevertheless, “the location of the events giving rise to the
dispute is [a] factor considered in ruling on [a] § 1404(a) motion to
transfer.”
1049).

Id. at 6 (citing Centerville ALF, Inc., 197 F.Supp.2d at

The Complaint alleges that most, if not all, of the operative

facts giving rise to this action occurred in California and were then
directed to Ohio.

This fact weighs against the deference in favor of

plaintiff’s choice of forum and in favor of transfer.
With regard to the convenience of the parties, there is no doubt
that the transfer of this case to the Southern District of California
would be most convenient for defendants Golden and Railey.

These

defendants, according to their declarations, are citizens of
California4 who have no connection with Ohio apart from their defense
against the claims asserted against them in this action. Railey
Declaration, ¶¶ 2, 4; Golden Declaration, ¶¶ 2, 4.

Similarly, FJ

Smith is a corporation organized under the laws of the State of
California with its principal place of business in California.
Declaration, ¶ 2.

Keller

It is not licensed or registered to do business in

 “The residence of the parties is another factor relevant to a motion to

4

transfer.” St. Joseph Solutions, LLC, 2011 WL 5914010 at *7 (citing
Centerville ALF, Inc., 197 F.Supp.2d at 1049).

24 

Ohio, has never done business in Ohio, has never solicited clients or
advertised in Ohio, and does not own any property, have a bank
account, regularly sell or purchase goods in, solicit clients from, or
have any assets in Ohio.

Id. at ¶ 4.

FJ Smith does not maintain

offices, employees, agents, officers, or directors in Ohio.

Id.

On

the other hand, litigation of this action in this Court would be most
convenient for plaintiff, as it is an Ohio corporation with its
principal place of business in Franklin County, Ohio.

Complaint, ¶ 2.

Defendant Aguiar is a Texas resident, Aguiar Declaration, ¶ 1, and
would presumably be inconvenienced regardless of whether this action
is litigated in Ohio or California.

However, defendants have provided

uncontroverted evidence that plaintiff is registered to do business in
California, is licensed with the California Department of Insurance,
and has more than 200 associates in 44 cities in California.
Nos. 12, 27; Doc. No. 29, Exhibits 3-7.

See Doc.

Accordingly, it appears to

the Court that the transfer of this case to the Southern District of
California would not greatly inconvenience plaintiff.

When this

consideration is weighed against the inconvenience to defendants
caused by having to litigate in Ohio, the balance tips in favor of
transfer.
The convenience of the witnesses, which is often considered the
most important factor, see Kay, 494 F.Supp.2d at 852, also weighs in
favor of transfer.

Plaintiff’s central assertion in this case is that

material misrepresentations were made in the application (and related
materials) for the Policy and that there was no insurable interest at
the time the policy was issued.

See Complaint, ¶¶ 31-46, 69-70, 73,
25 

79-81, 91.

The moving defendants maintain that the relevant witnesses

and documents are located in California because that is “where the
application, creation of trust documents, estate planning, medical
exam of the insured and other formative actions occurred.”
13, p. 29.

See also Doc. No. 15, p. 16.

Doc. No.

Presumably most if not all

non-party witnesses, including Railey and Jeff Keller, would be
located in California. Although defendants have not identified these
witnesses, nor have they explained the importance of their anticipated
testimony, to require Railey, Jeff Keller, and other witnesses who
reside in California to travel to Ohio from California would place a
significant burden on those witnesses and the party who intends to
offer their testimony.

Furthermore, since these witnesses reside more

than 100 miles from any location in Ohio, this Court cannot compel
their attendance at a trial in this District.
45(b)(2)(B).

See Fed. R. Civ. P.

Although plaintiff asserts that it “has company

witnesses and information associated with the underwriting and
issuance of the Policy, all located in Ohio,” Doc. No. 18, p. 30, it
too has not identified any of these witnesses, nor has it explained
the importance of their anticipated testimony.

It is also more likely

that plaintiff can assure the appearance of its own employees at a
trial in California than can the individual defendants assure the
appearance of their witnesses at a trial in Ohio.
F.Supp.2d at 1078.

See Goldstein, 722

Furthermore, plaintiff is a large insurance

corporation which can likely afford to travel to California to obtain
redress.

See Nationwide Mut. Ins. Co. v. Tryg Int’l Ins. Co., Ltd.,

91 F.3d 790, 796-97 (6th Cir. 1996) (“[I]nternational insurance
26 

companies like Nationwide can afford to travel to a defendant
corporation's home state or country in order to recover if the
situation so requires.

Nationwide is a large insurance corporation

dealing at arms-length world-wide with other similar insurance
corporations, and there is no threat here that Nationwide will not be
able to afford to travel to the defendant's jurisdiction to obtain
redress, and Nationwide does not claim otherwise.”).

On balance, the

convenience of the witnesses weighs heavily toward transfer.
The public interest factors also weigh in favor of transfer,
although the factors of familiarity with controlling law and state
interest are in equipoise.

Defendant Aguiar concedes that plaintiff’s

contract claim against him is governed by Ohio law, see Doc. No. 15,
p. 17; the parties otherwise disagree as to what law applies in this
action.

The Policy’s choice of law provision specifies that

California law applies.

See Doc. No. 13-4, p. 3; Doc. No. 13-5, p. 5.

Plaintiff, however, takes the position that the Policy and its terms
are

void ab initio.

Doc. No. 18, pp. 33-35.

Without deciding what

law applies in this case, the Court concludes that this consideration
favors neither position.
The State of Ohio has an interest in providing an effective means
of redress for its residents, as does the State of California.

Both

states also have an interest in regulating the activities of insurance
companies that do business within their state.

Cf. McGee, 355 U.S. at

223 (“It cannot be denied that California has a manifest interest in
providing effective means of redress for its residents when their
insurers refuse to pay claims.”).
27 

Despite this apparent state of equipoise, consideration of
judicial economy weighs in favor of transfer.

As discussed supra,

this Court lacks personal jurisdiction over Railey and FJ Smith.

All

defendants may, however, be joined in a single action in California.
The transfer of this action will avoid duplicative claims and will
“reduce the prospect of inconsistent adjudications and the cost of
presenting the same evidence in multiple forums.”

See Stewart v.

Chesapeake Exploration, LLC, No. 2:12-CV-270, 2012 WL 3151255, at *4
(S.D. Ohio Aug. 2, 2012) (citing Ltd. Serv. Corp. v. M/V APL PERU, No.
2:09-cv-1025, 2010 WL 2105362, at *6 (S.D. Ohio May 25, 2010).
For the convenience of the parties and witness and in the
interest of judicial economy, the Court therefore concludes that the
applicable factors under § 1404(a) strongly favor transfer of this
case.

The Court also concludes that, as to Railey and FJ Smith and

pursuant to § 1406(a), it would be in the interest of justice to
transfer this case to the United States District Court for the
Southern District of California.
V.

12(b)(6) Motion to Dismiss
The moving defendants also contend that plaintiff has failed to

state a claim upon which relief can be granted.

In light of the

foregoing, it is recommended that the motions to dismiss in this
regard be denied without prejudice to renewal in the transferee
District.

It would be improvident, in this Court’s view, to consider

the sufficiency of the claims in light of the fact that this Court
lacks personal jurisdiction over Railey and FJ Smith.

28 

WHEREUPON, defendants’ requests that the Court to take judicial
notice, Doc. Nos. 12, 27, are GRANTED as unopposed.

It is RECOMMENDED

that the motions to dismiss, Doc. Nos. 13 and 14, be DENIED.
Furthermore, it is RECOMMENDED that this action be transferred,
pursuant to 28 U.S.C. §§ 1404(a) and 1406(a), to the United States
District Court for the Southern District of California.
If any party seeks review by the District Judge of this Report
and Recommendation, that party may, within fourteen (14) days, file
and serve on all parties objections to the Report and Recommendation,
specifically designating this Report and Recommendation, and the part
thereof in question, as well as the basis for objection thereto.
U.S.C. §636(b)(1); Fed. R. Civ. P. 72(b).

28

Response to objections must

be filed within fourteen (14) days after being served with a copy
thereof.

Fed. R. Civ. P. 72(b).

The parties are specifically advised that failure to object to
the Report and Recommendation will result in a waiver of the right to
de novo review by the District Judge and of the right to appeal the
decision of the District Court adopting the Report and Recommendation.
See Thomas v. Arn, 474 U.S. 140 (1985); Smith v. Detroit Fed’n of
Teachers, Local 231 etc., 829 F.2d 1370 (6th Cir. 1987); United States
v. Walters, 638 F.2d 947 (6th Cir. 1981).

January 7, 2013

s/Norah McCann King_______
Norah McCann King
United States Magistrate Judge

29