The opinion of the court was delivered by: MACMAHON
MACMAHON, District Judge:
This is a motion under 28 U.S.C. § 1404(a) to transfer this derivative action to the Eastern District of Pennsylvania for the convenience of the parties and witnesses and in the interests of justice.
The complaint, invoking both statutory
and pendent jurisdiction, alleges violations of the Investment Advisers Act of 1940 (Advisers Act),
Rule 206(4) promulgated thereunder,
the Securities Exchange Act of 1934 (Securities Act)
and the common law.
Plaintiff is one of 5,900 shareholders of defendant Builders Investment Group (Builders), a real estate investment trust organized in August 1971 and sponsored by defendant Certain-teed Products Corporation (Certain-teed).
In September 1971, Certain-teed and defendants Byron C. Radaker, James A. Parker and Edward Diefenbach
acquired all the stock of defendant Housing Securities, Inc. (HSI), a small mortgage banking firm, for about $260,000. The four defendants then allegedly utilized their control of Builders and HSI to arrange for HSI to become Builders' investment advisor.
In July 1972, Certain-teed, Radaker, Parker and Diefenbach sold HSI to defendant Valley Forge Corporation (VFC), a company controlled by Certain-teed, for VFC common stock with a market value of $25,000,000. Plaintiff sues, on behalf of Builders, to recover the profit allegedly realized by Certain-teed, Parker, Radaker and Diefenbach from the sale of HSI to VFC. She alleges that they misused their control over the other defendants, especially HSI and Builders, to procure the sale and make a profit of $24,740,000. This huge profit, plaintiff claims, was due to assurances given by the four defendants to VFC that HSI would continue to serve as Builders' investment advisor for an indefinite period, thus guaranteeing a steady and substantial flow of revenue to HSI.
Plaintiff maintains that the defendants' actions and their concealment of those actions violated their fiduciary duties to Builders and the anti-fraud provisions of the Advisers Act and the Securities Act.
The remaining individual defendants, Malcolm Meyer, George H. Brown, Jr., Thomas P. Coogan, Sidney Bogardus
and William Klaus are trustees of Builders, accused by plaintiff of participating and acquiescing in the sale of HSI, thus violating their fiduciary duties to the trust and its shareholders.
Plaintiff also seeks to nullify the current advisory agreements between HSI and Builders because VFC obtained the benefits of those agreements under circumstances detrimental to Builders' interests. In addition, plaintiff seeks an accounting.
The criteria relevant to a determination of a motion for transfer include the convenience of the parties, the convenience of the witnesses, the ease of access to the sources of proof and the interests of justice.
Defendants, as movants, bear the burden of making a clear showing that the transferee district is a more convenient district and that the interests of justice would be better served by trial there.
There is no question that this action "might have been brought" in the Eastern District of Pennsylvania since the transactions complained of occurred there.
The corporate defendants have little contact with this district. Certain-teed, Builders, HSI and VFC all have their principal place of business in Valley Forge, Pennsylvania, which is within the Eastern District of Pennsylvania. Certain-teed, a Maryland corporation, and VFC, a Georgia corporation, have no offices, plants or investments in the Southern District of New York.
Builders, which was organized under the laws of Florida, has no offices in New York but has invested in a housing project in Westchester County.
HSI, a Delaware corporation, maintains a New York office devoted solely to the mortgage brokerage aspects of its business.
Only two of the eight individual defendants have any substantial contact with the Southern District of New York. Sidney Bogardus, who has not been served, lives and works in New York City. Thomas P. Coogan, who joins in the motion to transfer, resides in Miami Beach, Florida, and maintains a part-time office in New York. The remaining six individual defendants reside and maintain their business offices in the Eastern District of Pennsylvania.
Obviously, Philadelphia would be a more convenient place for trial than New York for both the individual and corporate defendants. In addition, plaintiff will be required to call the individual defendants and officers and employees of the corporate defendants as witnesses to prove the elements of her claim. Since these people work in Valley Forge or nearby, it would be manifestly inconvenient for them and ...