and that forum can exercise jurisdiction over same.
The Temporary Restraining Order I signed on May 11 enjoining RAM remains in effect as does the $ 250,000 bond posted to secure RAM against any damages it may thereby incur. Their eventual disposition will depend on the rulings of the Northern District of Illinois.
Williams' claims asserting fraud, negligent representation, and violation of securities laws in the sale of the debentures, meanwhile, do not implicate RAM. Pls.' Mem. Opp'n Mot. at 3 ("RAM did not even exist before December 1, 1994--a year after the sale underlying most of the claims."). Moreover, the resolution of its claim for conversion against RAM and APX, and its breach of contract claim against APX, does not depend on whether RAM possessed the right to sub-service the mortgages. Consequently, I do not find, as this Court did in Can-Base Prods., Ltd. v. Portrait Records, 445 F. Supp. 777, 779 (S.D.N.Y.1978), that "what is already transpiring in the transferee court can be easily expanded to accommodate the issues raised here." Whether these remaining claims should be transferred to the Northern District of Illinois therefore will not turn to any extent on the existence of the Illinois action. I will instead undertake an analysis of the factors that control whether a case should be transferred under 28 U.S.C. § 1404(a) where no related action is pending in the proposed transferee district.
Williams cites as events militating against the transfer the facts that Continental was solicited to become the trustee in the Southern District of New York, "negotiations of the terms and conditions and preparation of the Indenture occurred in New York City,"
and the "Indenture was executed and delivered, and the purchase of the Debentures was closed, in this District." Pls.' Mem. Opp'n Mot. at 2. Williams correctly characterizes those activities as "events giving rise to the instant suit." The alleged deficient servicing of the mortgages and conversion of money in connection with the servicing, which occurred in Illinois, meanwhile, also gave rise to this suit, as did alleged fraudulent statements that occurred during the negotiation of the Indenture in New York. To the extent the latter occurred in the Southern District, they would weigh further against transfer. The totality of these Southern District activities also indicates that this case is related in significant part to the Southern District, and, as a result, Williams' choice of forum will be afforded significant deference even though this District does not constitute Williams' "home turf" of Delaware. See Tracy v. Consolidated Rail Corp., 723 F. Supp. 1051 (D. Dela. 1989).
In support of their motion, defendants RAM, NHE, and Starr stress that "key issues" in Williams' claims concern the "quality and contents of a portfolio of approximately 700 mortgage files and . . . the activities of the Illinois-based defendants who have serviced the mortgages." Defs.' Mem. Supp. Mot. at 2. The mortgage files, the moving defendants note, are held within the Northern District of Illinois, the "non-party banks whose records reflect the servicing activities are located in Chicago, Illinois," and four of the defendants are domiciled in the Northern District of Illinois, while two other defendants are located "three times closer to Chicago than to New York." Id. In addition, the moving defendants state that the "principals and former employees" of APX will provide particularly important testimony given Williams' claims that APX misrepresented the completeness of the mortgage files and improperly serviced the mortgages. Those individuals are also located in the Northern District of Illinois.
Williams responds that five of the defendants who live closer to Chicago than to New York consent to litigate in New York. Two of these parties are APX's control persons, Gorski and Allen, who the moving defendants above acknowledge will provide key testimony. By so consenting, these five parties remove from the section 1404(a) balancing exercise their inconvenience that would otherwise support the moving defendants' transfer motion. See Marks v. Fireman's Fund Ins. Co., 109 F. Supp. 800, 803 (S.D.N.Y.1953) ("It should be emphasized that defendant may not complain on this motion about inconvenience to plaintiff's witnesses."). Moreover, one defendant, Schneiderman, resides in the state of New York and apparently would be so inconvenienced by the transfer that she unsuccessfully sought leave of this Court to entertain her motion for summary judgment prior to the instant motion.
As for the convenience of witnesses, Williams correctly notes that "the events leading up to the closing of the transaction . . . will be [a] major fact area in this case," Pls.' Mem. Opp'n Mot. at 10, in light of Williams' assertions of fraud, negligent misrepresentation, and securities law violations in connection with the issuance of the debentures. Williams states that at least ten non-party witnesses possessing such relevant information "are based in New York." Id. The moving defendants term this a "laundry list" that is "nothing more than a transparent attempt to name as many New Yorkers as [Williams] can." Defs.' Reply Mem. Supp. Mot. at 5. The moving defendants caution that "'court[s] should not be persuaded merely by the number of prospective witnesses, but rather by the materiality and importance of their anticipated testimony.'" Id. at 6 (quoting Thomson & McKinnon v. Minyard, 291 F. Supp. 573, 576 (S.D.N.Y.1968)). The moving defendants further state that Williams has "failed to describe the anticipated testimony of these [witnesses] or how their testimony would tend to prove or disprove [Williams'] claims of misrepresentations and breaches by APX, [Exchange] and their alleged 'controlling persons.'" Id. In fact, Williams provided a sufficient description of anticipated testimony and, for one witness, even provided a declaration as to the breadth of his knowledge.
The moving defendants have failed to shoulder their substantial burden in demonstrating that Williams' remaining claims should be transferred from Williams' choice of the Southern District. The motion to transfer the third through tenth causes of action of the New York complaint is therefore denied except for Williams' claim against RAM for conversion, which is contained in the complaint's fifth cause of action. That claim has little relation to the Southern District as RAM was not involved in the alleged fraudulent activity that took place in connection with the issuance of the securities in New York.
Continental's claims and Williams' claims in the first two causes of action of the New York complaint are transferred to the Northern District of Illinois. The TRO I signed on May 11 and the $ 250,000 bond posted in connection therewith remain in effect. The motion to transfer Williams' remaining claims, that is, those constituting the third through tenth causes of action of the New York complaint, is denied, except that Williams' claim against RAM for conversion, which is contained in the fifth cause of action of the New York complaint, is transferred to the Northern District of Illinois.
Williams will notify all parties who remain before this Court that a pretrial conference will take place in Courtroom 17B between 12:30 and 1:30 p.m. on Thursday, July 13 where a pretrial scheduling order that details the times for discovery and additional motions will be drafted.
July 7, 1995
New York, New York