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Ensource Investments LLC v. Tatham

United States District Court, S.D. California

September 7, 2017

ENSOURCE INVESTMENTS LLC, a Delaware limited liability company, Plaintiff,
THOMAS P. TATHAM, an individual; MARK A. WILLIS, an individual; et al., Defendants.



         On January 13, 2017, Plaintiff EnSource Investments LLC filed a complaint against Defendants Thomas P. Tatham, Mark A. Willis, and five limited liability companies controlled by Tatham and Willis.[1] (Doc. No. 1.) The First Claim is against Tatham and Willis only for violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Second Claim is against all Defendants for conversion.

         On February 9, 2017, Defendants filed a motion to dismiss, or in the alternative, to transfer venue to the Southern District of Texas. (Doc. No. 8.) On March 10, 2017, the Court denied the motion to dismiss and declined to transfer venue. (Doc. No. 15.) After the Court ruled on Defendants' motion, one of the Defendant LLCs and a non-Defendant related entity filed petitions for Chapter 11 bankruptcy in the Southern District of Texas. (Doc. No. 29 at 5, ¶ 5.)

         On August 14, 2017, Defendants filed a new motion to transfer venue to the Southern District of Texas on the grounds that the bankruptcy petitions make transfer appropriate under 28 U.S.C. §§ 1404 and 1412. (Doc. No. 29.) Plaintiff filed an opposition to the new motion to transfer venue on August 28, 2017. (Doc. No. 30.) Defendants elected not to file a reply. On September 5, 2017, pursuant to its discretion under Local Rule 7.1(d)(1), the Court determined that the motion was fit for resolution without oral argument and submitted the motion on the parties' papers. (Doc. No. 31.) For the reasons below, the Court now denies the new motion to transfer venue.


         This action arises out of a securities transaction by which Plaintiff invested in an entity called the Hopewell - Pilot Project, LLC (“Hopewell”). (Doc. No. 1 at 2, ¶¶ 1-3.) Hopewell was created to deploy title searching technology in order to quickly find viable oil and gas opportunities. (Doc. No. 1 at 12, ¶¶ 35-38; Id. at 18, Ex. A002.) Defendants Tatham and Willis are managers of Hopewell. (Doc. No. 1 at 4, ¶¶ 9-10.) Tatham and Willis have submitted declarations stating that they traveled to California in August, 2016 and had conversations about Hopewell. (Doc. Nos. 8-3 at 4, ¶ 8; 8-4 at 4, ¶ 8; 8-1 at 6, ¶ 6.) Plaintiff states that Tatham and Willis were in California to pitch the Hopewell project. (Doc. No. 13 at 6.) Plaintiff also states that EnSource, the Plaintiff LLC in this action, was formed based on the representations made during the initial meetings with Tatham and Willis. (Id.) EnSource was formed later in the same month that Tatham and Willis travelled to California. (Doc. No. 8-5.)


         I. Legal Standards

         A. 28 U.S.C. § 1404(a)

         A district court may transfer an action to a different venue under 28 U.S.C. § 1404(a). Section 1404(a) permits a court to transfer an action “[f]or the convenience of parties and witnesses” and “in the interest of justice, ” so long as the action could have been filed in the transferee district in the first instance. 28 U.S.C. § 1404(a). The district court must “adjudicate motions for transfer [of venue] according to an individualized, case-by-case consideration of convenience and fairness.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000) (quoting Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (internal quotation marks omitted)).

         In deciding a motion to transfer venue, courts typically weigh a number of public and private factors, including: “(1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof.” Jones, 211 F.3d at 498-99.

         The burden is generally on the moving party to establish that a transfer will allow a case to proceed more conveniently and better serve the interests of justice. See, e.g., Commodity Futures Trading Comm., 611 F.2d at 279. A plaintiff's choice of venue is generally accorded deference. See, e.g., Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947) (“[U]nless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.”); Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 842 (9th Cir. 1986) (“The defendant must make a strong showing of inconvenience to warrant upsetting the plaintiff's choice of forum.”).

         B. 28 U.S.C. § 1412

         “A district court may transfer a case or proceeding under title 11 [the Bankruptcy Code] to a district court for another district, in the interest of justice or for the convenience of the parties.” 28 U.S.C. § 1412. Once a bankruptcy case is transferred under Section 1412, the transferee district court refers the case to the bankruptcy judges for that district. In re Gugliuzza, 852 F.3d 884, 890 (9th Cir. 2017) (quoting In re Lazar, 200 B.R. 358, 367 (Bankr. C.D. Cal. 1996) (“[A]ll ...

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