Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

LED One Distribution, Inc. v. C.S. Koida LLC

United States District Court, N.D. California

May 12, 2017

LED ONE DISTRIBUTION, INC., Plaintiff,
v.
C.S. KOIDA LLC, et al., Defendants.

          ORDER DENYING MOTION TO TRANSFER CASE TO DISTRICT OF NEW JERSEY; ORDER VACATING HEARING DATE

          PHYLLIS J. HAMILTON United States District Judge.

         Before the court is the motion of defendants and counterclaimants C.S. Koida (“Koida”) and Jin Choi (“Choi”) to transfer this case to the District of New Jersey pursuant to 28 U.S.C. § 1404(a) for the convenience of parties and witnesses. Having read the parties' papers and carefully considered their arguments and the relevant legal authority, the court hereby DENIES the motion.

         BACKGROUND

         Plaintiff LED One Distribution, Inc. (“LED One”) filed this action against Koida and Choi on July 29, 2016, asserting claims of breach of contract, fraud/misrepresentation, breach of the implied covenant of good faith and fair dealing, unjust enrichment, account stated, goods and services delivered, and quantum valebant. LED One is a California corporation, with its principal place of business in Fremont. It manufactures and sells light emitting diode ("LED") lighting products. Koida is a Delaware limited liability company, with its principal place of business in New Jersey. Choi, a New Jersey resident, is the “owner” or “manager” of Koida.

         Koida began purchasing LED lighting products from LED One in November 2013. LED One alleges that from November 2013 to December 2014, Koida paid each invoice for the lighting products it ordered and received from LED One, but that in about January 2015, Koida ceased remitting payment for the merchandise it had received. Cplt ¶¶ 12-17. As a result, LED One became hesitant to continue providing lighting products to Koida.

         On March 6, 2015, Choi executed a Personal Guaranty, pursuant to which he unconditionally agreed to be responsible for timely payment of any and all amounts owing by Koida. This allegedly induced LED One to continue to extend credit to Koida and to continue to ship products to Koida. Cplt ¶¶ 18-20 & Exh. 1. The Personal Guaranty also stated that "[t]his guaranty shall be governed by and interpreted and enforced in accordance with the laws of the State of California." Cplt. Exh. 1, § VI. However, notwithstanding Choi's execution of the Personal Guaranty, Koida and Choi did not bring the account current, and the past-due balance continued to grow. By the beginning of August 2015, Koida owed LED One over $2.6 million, and by early November 2015, the amount Koida owed to LED One had risen to approximately $3.3 million. See Cplt ¶ 14, Exh. 2.

         On November 13, 2015, in an attempt to maintain Koida's operations so that the amounts owing would be paid, LED One and Koida entered into a “Joint Management Agreement, ” referred to by the parties as the “Joint Venture Agreement” (“JV Agr.”). The Joint Venture Agreement was formed "pursuant to the Laws of the State of New York." JV Agr. ¶ 1.1. It provides that "[t]he business of the Venture shall be conducted under the name of CS Koida NY, Inc. ("CSKNY"), and that "[t]he share of CSKNY would be 100% owned by" LED One. JV Agr. ¶ 1.2. The principal place of the Venture is New York. JV Agr. 1.3. The Agreement also contains a provision requiring the parties to arbitrate "[a]ny controversy or claim arising out of or relating to" the Joint Venture Agreement. JV Agr. ¶ 3.10. Finally, the Joint Venture Agreement provides that it "shall be construed in accordance with the laws of the State of New Jersey." JV Agr. ¶ 3.11. And, "in the event of a dispute or controversy with regard to the subject matter of this Venture Agreement, the courts of the State of New Jersey shall have exclusive jurisdiction, and exclusive venue shall lie in the County of Union, State of New Jersey." JV Agr. ¶ 3.12.

         On July 29, 2016, LED One filed the complaint in this action, in an attempt to recover the amounts owed to it by Koida and Choi. LED One alleges that Koida breached its agreement to pay for the lighting products in purchased (“the Unpaid Orders”) and that Choi breached the Guaranty by failing to pay for the Unpaid Orders. Cplt ¶¶ 26-30; 37-40.

         On August 8, 2016 (approximately 10 days after the present case was filed in this district), Choi, Koida, and another entity called Smart LED Corp. ("Smart LED"), also allegedly owned by Choi, filed a complaint in the Superior Court of New Jersey, Union County, against LED One, alleging breach of the Joint Venture Agreement and other state-law and common-law claims. LED One removed that case to the District of New Jersey on August 19, 2016, alleging diversity jurisdiction. See Koida v. LED One, C-16-5095-JMV (D.N.J.).

         On September 7, 2016, Choi, Koida, and Smart LED filed a motion in the New Jersey case seeking an order compelling arbitration, or in the alternative, to remand the case to the New Jersey state court (based on the Agreement's forum-selection clause), and LED One filed a motion to dismiss the complaint pursuant to Rules 12(b)(1) and 12(b)(6). On September 19, 2016, LED One filed an opposition to the motion to compel arbitration and alternative motion to remand, and a "cross motion to transfer the case" to the Northern District of California pursuant to the first-to-file rule. On October 21, 2016, the New Jersey court entered a text order stating it would first rule on the motion to compel arbitration, and that it was administratively terminating the motion to dismiss. As of May 12, 2017, the New Jersey court has not ruled on the motion to compel arbitration.

         Meanwhile, on November 11, 2016, LED One filed a motion in the present case for entry of default as to Choi, and a second motion for entry of default as to Koida, neither of whom had responded to the complaint. Default was entered, but on November 19, 2016, defendants filed a motion to vacate the default, and in the same papers, a motion to compel arbitration.

         On January 10, 2017, the court issued an order vacating the default. On February 15, 2017, the court issued an order denying the motion to compel arbitration, on the basis that while there was an arbitration provision in the Joint Venture Agreement, that Agreement did not give rise to the claims asserted in the complaint in this action (and indeed, was not even mentioned in the complaint). Thus, the court found, the parties had not agreed to arbitrate the claims arising from the Unpaid Orders and the Guaranty.

         On March 7, 2017 (approximately three weeks after this court denied the motion to compel arbitration), defendants in this case filed an answer to the complaint, and a counterclaim alleging that LED One had breached the November 2015 Joint Venture contract when it ceased operating CSKNY and also asserting a claim for an accounting, a claim of breach of the implied covenant of good faith and fair dealing, a claim of breach of the duty of loyalty, and a claim of intentional interference with business relationships (Koida's relationships with its business clients). LED One filed its answer to the counterclaim on March 28, 2017.

         Now before the court is the motion of Koida and Choi to transfer this case to the District of New Jersey, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.