United States District Court, N.D. Illinois, Eastern Division
OPINION AND ORDER
CHARLES RONALD NORGLE, District Judge.
Before the Court is Defendant Michael Sears's ("Defendant") motion to transfer venue to the United States District Court for the Eastern District of Virginia pursuant to 28 U.S.C. §§ 1406(a) and 1404(a). For the following reasons, the motion is denied.
Since 2002, Plaintiff John Tung ("Plaintiff") and Defendant have each held a forty-five percent partnership interest in two companies, Capital Area Regional Center Job Fund, LLC ("CARc") and Global Capital Markets Advisors, LLC ("GCMA"). A third partner, Michael Kolodner ("Kolodner"), who is not a party to the instant suit, owns the remaining ten percent of both companies. While the official mailing address for GCMA is located in Virginia, the company has not operated out of a physical corporate office in any state since 2009. Rather, each of the three partners work out of their respective home offices: Plaintiff in Illinois, Defendant in Virginia, and Kolodner in New York.
In 2012, Defendant was in China working for GCMA by marketing and seeking investors for a pending development project. While in China, Defendant became aware of an entity, A Chicago Convention Center, LLC ("ACCC"), which was competing with GCMA for business. ACCC was seeking foreign investors for a proposed convention center in Chicago, Illinois. Defendant, Plaintiff, and Kolodner communicated regularly with respect to ACCC's business strategy and its effect on GCMA. Upon learning more information about ACCC's proposed project, the GCMA partners became suspicious and began an investigation into ACCC.
Plaintiff alleges that in November of 2012, he and Defendant agreed to take the information that they had gathered about ACCC's proposed project to the United States Securities and Exchange Commission ("SEC") on behalf of GCMA. Defendant argues that he brought the information to the SEC on his own, and not in coordination with or on behalf of the other partners.
In any event, Plaintiff continued his investigation in Chicago. On November 29, 2012, Defendant emailed Plaintiff in Illinois and asked him to drive by and take pictures of the alleged ACCC development site in Chicago as soon as possible, which Plaintiff did. On November 30, 2012, Defendant sent an email communication to Plaintiff in Illinois, stating that "[t]he SEC is investigating the offering and asked if we knew if construction' had begun [on the ACCC project site] as the marketing material has announced." Pl.'s Opp'n to Def.'s Mot. to Transfer Venue Ex. 1A (emphasis added).
The SEC began its investigation into ACCC's offering in early 2013, and eventually filed a complaint against ACCC in the Northern District of Illinois to seize more than $145 million of funds obtained fraudulently from foreign investors. See United States Sec. & Exchange Comm'n v. A Chi. Convention Ctr., LLC, No. 13-CV-982, (N.D. Ill. filed Feb. 6, 2013).
Plaintiff further alleges that in February of 2013, all three partners of GCMA agreed to apply for a whistleblower award from the SEC using GCMA's outside attorney, Ramsey Whitworth ("Whitworth"). Plaintiff states that the partners agreed to divide the proceeds in accordance with their respective partnership interests. Upon learning that the SEC rules do not allow an entity to file for a whistleblower award, Plaintiff contends that the partners agreed that Defendant would submit the application in his name, but continue to act on behalf of all three partners. According to Defendant, however, he applied for the award on his own without Plaintiff's knowledge.
The partners continued to communicate about the case before the SEC, including sharing communications from Whitworth, the attorney representing Defendant. In September of 2013, Defendant received a $14.7 million dollar whistleblower award from the SEC. Defendant then informed Plaintiff and Kolodner that he did not intend to share the money with them. Thereafter, Plaintiff attempted to get Defendant to honor his alleged agreement to divide the award. As part of the discussions, Plaintiff and Defendant met in person at O'Hare International Airport in the Northern District of Illinois on October 25, 2013 and December 15, 2013.
B. Procedural History
On June 23, 2014, Plaintiff, a citizen of Illinois, filed this action against Defendant, a citizen of Virginia, in this District based upon diversity jurisdiction. See 28 U.S.C. § 1332(a). Plaintiff alleges Illinois state law claims of breach of fiduciary duty, promissory estoppel, breach of implied contract, and accounting and constructive trust in connection with the division of the $14.7 million whistleblower award that Defendant received from the SEC. Defendant filed a motion to dismiss for lack of venue pursuant to Federal Rule of Civil Procedure 12(b)(3), which the ...