No. 10 Civ. 8442 (LTS)(HBP)
MEMORANDUM ORDER GRANTING MOTIONS TO TRANSFER
Plaintiff Wade Robertson ("Plaintiff" or "Robertson") brings this action against Defendants William C. Cartinhour, Jr. ("Cartinhour"), Albert Schibani, Patrick J. Kearney, Michael Bramnick, Robert S. Selzer, Carlton T. Obecny, James G. Dattaro, Neil Gurvitch, Andrew R. Polott, H. Mark Rabin, Elyse L. Strickland (collectively, the "Attorney Defendants"), Vesna Kustudic, Tanja Milicevic (a.k.a. Tanja Popovic), and Aleksander Popovic. Plaintiff asserts RICO claims under 18 U.S.C. §§ 1962(c) and (d), as well as claims for fraud, defamation, and tortious interference. The Court has jurisdiction of the action pursuant to 28 U.S.C. §§ 1331 and 1367. Defendants have moved to dismiss Plaintiff's claims or, in the alternative, to transfer this action to the United States District Court for the District of Columbia (the "D.C. Court"), or to stay this action pending a determination of the related case before the D.C. Court. After Defendants filed their motion to dismiss, the D.C. Court entered a judgment in favor of Defendant Cartinhour in the related case. Subsequently, Plaintiff moved for, inter alia, a stay of the instant action and an order authorizing alternate service on Defendant Milicevic. For the following reasons, Defendants' motion is granted to the extent that this case is transferred to the D.C. Court. Plaintiff's motion for a stay and for authorization of alternative service is denied.
Plaintiff's motion also sought certificates of default with respect to certain defendants who have not appeared. The Clerk of Court has issued the requested certificates.
Unless otherwise noted, the following facts are alleged in the complaint and taken as true for purposes of this motion practice. Plaintiff Wade Robertson is an attorney and resident of Tennessee. (Compl. ¶¶ 3, 20.) Defendant William C. Cartinhour lives and operates businesses in the Washington, D.C. - Maryland - Virginia metropolitan area. (Compl. ¶ 25.) In September 2004, Robertson and Cartinhour formed a partnership, W.A.R. LLP ("W.A.R." or the "Partnership"), in the District of Columbia, through which Robertson was to work as an attorney in connection with securities class actions, while Cartinhour was to develop a related consulting business ancillary to Robertson's legal services. (Compl. ¶¶ 30, 35.) In particular, Robertson was to focus on a securities class action, the "Liu Action", that had been filed in the Southern District of Florida, then transferred to the Southern District of New York. (Compl. ¶¶ 20-24.) Robertson and Cartinhour agreed to contribute services and cash to the partnership, and that any profits from Robertson's legal work or Cartinhour's consulting work would be reinvested in the partnership. (Compl. ¶ 31.) Between September 2004 and April 2006, Cartinhour contributed $3.5 million in cash to the Partnership and, between September 2004 and August 2009, Robertson contributed $3.83 million in services. (Compl. ¶ 84.) As part of the partnership agreement, Cartinhour signed an "Indemnification, Hold Harmless, and Agreement to Waive All Claims" document (the "Indemnification Agreement"), stating that he would not "make any claims or demands, or file any legal proceedings against [plaintiff] Wade A. Robertson," including claims concerning "any future injuries, losses, and damages not not known or anticipated, but which may letter develop or be discovered." (Compl. ¶ 66; Affirmation of Peter C. Contino in Support re: Motion to Dismiss, Exh. D. Jan. 13, 2011, ECF No. 21.)
By February 2008, Robertson had exhausted all efforts in the "Liu Action" which yielded no profit for the Partnership. (Compl. ¶ 69.) He then began investigating another securities class action matter, on which he continued working until August 2009. (Compl. ¶ 71.) On January 9, 2009, and February 6, 2009, Cartinhour, through his attorney, Defendant Albert Schibani, contacted Robertson demanding the return of all the money that Cartinhour had invested in the Partnership. (Compl. ¶¶ 72, 74.) Robertson did not return any money to Cartinhour. On August 14, 2009, and August 21, 2009, Cartinhour, through his attorney, Defendant Carlton Obecny, served additional demand letters on Robertson and informed him that Cartinhour would file suit if the money was not returned. (Compl. ¶ 76.)
The D.C. Action
In response to these demand letters, on August 28, 2009, Robertson filed a complaint in the United States District Court for the District of Columbia (the "D.C. Action") seeking a declaratory judgment enforcing the Indemnification Agreement that Cartinhour had signed. (Compl. ¶ 79.) Cartinhour, through his attorneys, Selzer Gurvitch Rabin & Obecny, filed an answer and counter-complaint on October 28, 2009, and later filed an amended counter-complaint. (Compl. ¶¶ 80.) The amended counter-complaint asserted several claims against Robertson, including fraud, breach of fiduciary duty, breach of partnership agreement, and negligent misrepresentation. (See Compl. ¶ 81.) Robertson proceeded to file numerous motions in the D.C. Court as well as in the United States Court of Appeals for the D.C. Circuit. See, e.g., Robertson v. Cartinhour, 691 F.Supp. 2d 65, 68-74 (D.D.C. 2010); Robertson v. Cartinhour, 711 F.Supp. 2d 136 (D.D.C. 2010).
On November 9, 2010, Robertson filed the instant action in this Court, alleging that Cartinhour and the Attorney Defendants had violated various federal laws, including RICO, during the course of the D.C. Action. (Compl. ¶¶ 109-149.) Shortly thereafter, Defendants filed motions to dismiss or, in the alternative, to transfer this action to the D.C. Court. While Defendants' motions were pending, the D.C. Action went to trial and, on February 18, 2011, the jury in that action rendered a verdict, finding that Robertson was liable for breach of fiduciary duty and for legal malpractice and awarding Cartinhour $7 million in compensatory and punitive damages. See Robertson v. Cartinhour, No. 09-1642, 2011 U.S. Dist. LEXIS 31959 (D.D.C. Mar. 28, 2011). On March 16, 2011, Plaintiff Robertson moved in this Court to stay this action.
Partnership Bankruptcy Proceedings
An involuntary Chapter 11 bankruptcy petition was filed against the Partnership in November 2010. Thereafter, issues were raised, and decided against Robertson and the Partnership in the bankruptcy and district courts, as to whether Cartinhour's continued pursuit of his counterclaims in the D.C. Action violated the automatic stay imposed by section 362 of the Bankruptcy Code, 11 U.S.C. § 362. See Memorandum Decision re Ray Connolly's Motion for Order of Civil Contempt and for Sanctions for Violating Bankruptcy Stay, filed as docket entry no. 164 in In re W.A.R. LLP, Chap. 11 Case No. 11-00044 (Bankr. D.D.C. June 15, 2011).
28 U.S.C. § 1404(a) provides that, "[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." A district court has broad discretion to transfer venue. In re Cuyahoga Equipment Corp., 980 F.2d 110, 117 (2d Cir. 1992). In deciding a motion to transfer, the Court conducts a two-pronged analysis: whether the action could have been brought in the transferee district and, if yes, whether transfer would be an appropriate exercise of the Court's discretion. Mattel, Inc. v. Robarb's, Inc., 139 F. Supp. 2d 487, 490 (S.D.N.Y. 2001).
This Action Could Have Been Brought in the Transferee District
A court may only transfer an action pursuant to § 1404(a) if the transferee district has personal jurisdiction over the defendants and the transferee district is an appropriate venue. The District of Columbia meets both of these criteria.
Defendants Appear to be Subject to Personal Jurisdiction in the District of Columbia
Plaintiff argues that this Court has personal jurisdiction over Cartinhour and the Attorney Defendants pursuant to 18 U.S.C. §§ 1965(a) and (b). 18 U.S.C. § 1965(a) provides that "any civil action or proceeding under [RICO] against any person may be instituted in the district court of the United States for any district in which such person resides, is found, has an agent, or transacts his affairs." 18 U.S.C. § 1965(b) further provides that if "the ends of justice require that other parties residing in any other district be brought before the court," the court may exercise personal jurisdiction over those parties as well. Therefore, "a civil RICO action can . . . be brought in a district court where personal jurisdiction based on minimum contacts is established as to at least one defendant." PT United Can Co. v. Crown Corp & Seal Co., Inc., 138 F.3d 65, 71 (2d Cir. 1998).
Plaintiff's assertion of the propriety of this Court's exercise of personal jurisdiction over all defendants named in this action is premised on his allegations that Defendants Kustudic, Milicevic and Popovic reside, and/or may be found, in New York. The active litigation of the D.C. Action in the D.C. Court against Cartinhour, with no issue raised by Cartinhour as to the propriety of that court's exercise of jurisdiction over him, indicates, particularly in light of Defendants' alternative request for transfer of the litigation to the D.C. Court, that the D.C. Court has personal jurisdiction over Cartinhour at a minimum. On the basis of that court's jurisdiction over Cartinhour, Plaintiff is at least as well poised to invoke 18 U.S.C. § 1965(b) as the basis for the exercise of jurisdiction over the other Defendants as he is to do so in this Court based on the alleged presence or residence of Kustidic, Milicevic and Popovic.
In his complaint, Plaintiff states that Vesna Kustudic "may be found and/or resides in New York County, New York"; that Tanja Milicevic "is a citizen of Serbia who . . . may be found in New York County, New York, and also transacts her affairs and/or has an agent in New York County, New York"; and that Aleksandar Popovic "is a citizen of Serbia who . . . may be found in New York County, New York, and also transacts his affairs and/or has an agent in New York County, New York." (Compl. ¶¶ 14-16.) --------
The District of Columbia is an Appropriate Venue for this Action
Under 28 U.S.C. § 1391(b)(2), venue is proper in 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." Plaintiff argues that the Southern District of New York is the appropriate venue for this action because the "Liu Action," the securities class action brought in this district, was "the genesis, epicenter, and foundation of the relationship and business between Defendant Cartinhour and Robertson from which Robertson's claims flow." (Plaintiff's Response in Opposition to Defendants' Motions to Dismiss 2, Mar. 7, 2011, ECF No. 34.) Without addressing the merits of that argument, the Court finds that the District of Columbia is also an appropriate venue for this action. Plaintiff's claims stem from the partnership between himself and Cartinhour, which was allegedly formed in the District of Columbia, and the subsequent litigation surrounding that partnership, which took place in the D.C. Court. These circumstances are sufficient to demonstrate that a substantial part of the events or omissions giving rise to this action occurred in the District of Columbia.
Transfer to the District of Columbia is an Appropriate Exercise of this Court's Discretion
When determining whether transfer is an appropriate exercise of discretion, courts consider several factors, including: (1) the convenience of 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, based on the totality of the circumstances. Reliance Insurance Co. v. Six Star, Inc., 155 F. Supp. 2d 49, 56-57 (S.D.N.Y. 2001); In re Nematron Corp. Secs. Litig., 30 F. Supp. 2d 397, 400 (S.D.N.Y. 1998), Even a brief review of these factors leans in favor of transfer to the District of Columbia.
With the exception of the three Serbian defendants, Popovic, Kustudic, and Milicevic, all other defendants and witnesses are in the D.C. metropolitan area. All relevant documents are in the District of Columbia, and such documents that were actually used in the trial of the D.C. Action are part of the record in that Court. The operative events relevant to Plaintiff's claims - the formation of the partnership between Plaintiff and Defendant Cartinhour, and the subsequent litigation brought on Cartinhour's behalf by the Attorney Defendants - took place in the District of Columbia, which is thus the locus of operative facts.
Most importantly, trial efficiency and the interests of justice are best served by having the D.C. Court decide Plaintiff's current claims. Both this action and the D.C. Action arise from the same underlying issue - Cartinhour's alleged breach of the Indemnification Agreement by threatening to sue Robertson and pursuing claims in the subsequent litigation - meaning that the D.C. Court is uniquely familiar with the facts and legal theories asserted by both Plaintiff and Defendants. Additionally, in the time since Defendants initially filed their motions to dismiss in this Court, a jury reached a verdict and judgment was entered for Defendant Cartinhour in the related D.C. Action. Because Defendants' motions to dismiss the instant Complaint were substantially briefed prior to that verdict, Defendants raised the issue of res judicata before this Court only in their Reply Memoranda, to which Plaintiff has, to date, not responded. The D.C. Court, having entered the judgment in the underlying D.C. Action and having presided over that jury trial, is in the best position to review any further briefing and make res judicata determinations.
Finally, while courts generally defer to a plaintiff's choice of forum, a plaintiff's choice of forum will be given less deference "where the connection between the case and the chosen forum is minimal," or where plaintiff's choice of forum is motivated primarily by tactical considerations. See, e.g., Chiste v. Hotels.com L.P., 756 F. Supp. 2d 382, 401 (S.D.N.Y. 2010); Terra Securities ASA Konkursbo v. Citigroup, 688 F. Supp. 2d 303, 315 (S.D.N.Y. 2010). Here, Robertson's decision to file suit in the Southern District of New York appears to have been principally a tactical maneuver to avoid the jurisdiction of the D.C. Court, and so should be accorded little deference.
For the above stated reasons, the Defendants' motion to transfer this action to the United States District Court for the District of Columbia is granted. The Defendants' motions to dismiss the Complaint are terminated without prejudice to renewal in that Court.
Plaintiff's Motion for a Stay, and for Alternative Service
Plaintiff Robertson's motion for a stay is denied. Plaintiff asserts that a stay is warranted in this proceeding because he has moved in the bankruptcy court for a determination that the judgment of the U.S. District Court for the District of Columbia ("D.C. Judgment") is void ab initio, as obtained in violation of an automatic bankruptcy stay. Similarly, Plaintiff also asserts that an appeal of the D.C. Judgment is pending before the U.S. Court of Appeals for the District of Columbia, such that it would be a waste of judicial resources for this court to proceed in the present action until the appeal is resolved. Neither argument is availing. First, on June 15, 2011, Bankruptcy Judge Teel decisively rejected as "frivolous" the argument that the D.C. Judgment was void ab initio, noting that "the automatic stay did not bar the actions [Defendants] took after the commencement of this bankruptcy case, and, in any event, Cartinhour obtained relief from the automatic stay to pursue his claims." Memorandum Decision re Ray Connolly's Motion for Order of Civil Contempt and for Sanctions for Violating Bankruptcy Stay, filed as docket entry no. 164 in In re W.A.R. LLP, Chap. 11 Case No. 11-00044 (Bankr. D. D.C. June 15, 2011). A pending appeal is not automatic grounds for a stay of a related action. The factors that courts consider in determining whether to stay their own orders pending appeal are instructive in this connection. Those factors are: "(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies." In re World Trade Center Disaster Site Litigation, 503 F.3d 167, 170 (2d Cir. 2007) (internal quotations omitted). None of these factors favors a stay of the instant motion.
For the foregoing reasons, Defendants' motions to dismiss the Complaint or, in the alternative, to transfer the action to the United States District Court for the District of Columbia, are granted insofar as they seek transfer, and are terminated without prejudice in all other respects. Plaintiff's motion for a stay is denied, and his request for approval of alternative service on Defendant Milicevic is denied without prejudice.
This Memorandum Order resolves docket entry nos. 20, 24, and 38. The Clerk of Court is respectfully requested promptly to effectuate the transfer of this case and to close the matter in this Court. Dated: New York, New York
October 28, 2011
LAURA TAYLOR SWAIN
United States District Judge