United States District Court, N.D. Illinois, Eastern Division
OPINION AND ORDER
L. ELLIS United States District Judge
Defendant Textmunication Holdings, Inc. (“THI”)
failed to honor its obligations arising from a convertible
promissory note THI made in favor of Plaintiff Lester Einhaus
in September 2015, Einhaus brought this federal securities
and state-law breach of contract, fraud, and debt action
against THI. THI has filed both a motion to dismiss  and
a motion to transfer venue to the District of Nevada pursuant
to 28 U.S.C. § 1404(a) . Because THI has failed to
establish that the balance of private and public interests
strongly favors transferring Einhaus' case to the
District of Nevada, the Court denies the motion to transfer
. Because Einhaus has failed to allege a violation of
§ 10(b) or common-law fraud with the requisite
particularity, the Court grants the motion to dismiss
Einhaus' federal securities fraud claim and state-law
fraud claims, Counts I and V, respectively. The Court denies
the motion with respect to Einhaus' claims in Counts II,
III, and IV for debt, breach of promissory note, and breach
of contract claims, respectively, because, while they may be
duplicative, THI has not stated which of the three counts
should be allowed to proceed and duplicativeness is not a
valid basis on which to strike all duplicative counts.
a technology company incorporated in Nevada and headquartered
in California that engages in mobile phone advertising.
Einhaus is a private investor who lives in Illinois.
September 2015, Einhaus loaned THI $25, 000 and the parties
executed a promissory note pursuant to which THI was
obligated to repay the $25, 000 with 10% annual interest. The
note matured on March 23, 2016 and remains unpaid as of the
filing of the complaint in this case. At the time Einhaus
made the loan, THI was “largely insolvent” and
unable to pay its debts. Doc. 1-1 at 2.
to the promissory note, Einhaus was entitled to convert the
outstanding principal and interest of the loan to shares of
THI common stock at a discounted rate. When the note became
due and THI failed to pay the balance owed, Einhaus demanded
that THI convert his loan into shares of common stock. The
promissory note states that failure on the part of THI to
honor such a request within 15 days will result in a 15%
penalty and an additional 15% penalty for every additional
period of 30 days that THI does not honor the conversion. To
date, THI has neither converted the debt to common stock nor
paid the amount owed on the loan. Einhaus asserts that by the
terms of the note, THI now owes Einhaus $489, 256.14
Motion to Transfer
argues that the Court should transfer this action to the
District of Nevada pursuant to 28 U.S.C. § 1404(a).
Section 1404(a) provides that the Court may transfer venue to
another district “for the convenience of the parties
and witnesses, in the interest of justice.” For the
Court to transfer the case under § 1404(a), THI must
demonstrate that “(1) venue is proper in this district;
(2) venue is proper in the transferee district; (3) the
transferee district is more convenient for both the parties
and the witnesses; and (4) transfer would serve the interest
of justice.” Gueorguiev v. Max Rave, LLC, 526
F.Supp.2d 853, 856 (N.D. Ill. 2007). The transfer decision is
committed to the Court's sound discretion because the
“weighing of factors for and against transfer
necessarily involves a large degree of subtlety and
latitude.” Coffey v. Van Dorn Iron Works, 796
F.2d 217, 219 (7th Cir. 1986). The parties do not dispute
that venue is proper in this district or in the District of
Nevada. Thus, the Court turns to whether transfer would serve
the convenience of the parties and witnesses and be in the
interest of justice.
Convenience of the Parties and Witnesses
evaluating the convenience of the parties and witnesses, the
Court considers (1) Einhaus' choice of forum, (2) the
situs of material events, (3) the relative ease of access to
proof, (4) the convenience of the parties in litigating in
the respective forums, and (5) the convenience of the
witnesses. Sojka v. DirectBuy, Inc., No. 12 C 9809,
2014 WL 1089072, at *2 (N.D. Ill. Mar. 18, 2014).
typically give a plaintiff's choice of forum substantial
deference, particularly when he lives in the district, as
Einhaus does here. Brandon Apparel Grp., Inc. v. Quitman
Mfg. Co., 42 F.Supp.2d 821, 833 (N.D. Ill. 1999). As a
result, this factor weighs against transfer.
respect to the situs of material events, Einhaus' claims
arise from the promissory note THI executed in Einhaus'
favor. Einhaus asserts, without basis, that “the very
plain language found [in the promissory note] states that the
situs of the transaction was Illinois.” Doc. 17 at 5.
There is no such language in the promissory note. However,
neither party states where any of the relevant events took
place, including the solicitation of the lending agreement,
the negotiation and execution of the promissory note, and the
lending of the funds. THI at most states that it is a Nevada
corporation and that these events took place, but it does not
state that these events took place in Nevada. Given the fact
that THI's place of business and employees are located in
California, it is likely these events did not take place in
Nevada. Regardless the Court is unable to make a
determination as to the situs of the material events and,
therefore, this factor is neutral.
sources of proof, the parties do not identify what proof,
other than witness testimony, they may present in this case.
To the extent the other sources of proof are documents, as
they are likely to be in a securities fraud case, they are
presumed to be easily transportable, so the access to proof
factor does not weigh heavily in favor of either district.
See Rabbit Tanaka Corp. USA v. Paradies Shops, Inc.,
598 F.Supp.2d 836, 840 (N.D. Ill. 2009) (“In this day
and age, transferring documents from one district to another
is commonplace and, given the widespread use of digital
imaging in big-case litigation, no more costly than
transferring them across town.”).
evaluating the convenience of the parties, the Court
considers the parties' residences and their ability to
bear the expense of litigating in each forum. Brandon
Apparel, 42 F.Supp.2d at 834. Where the parties have
willingly assented to a forum selection clause (even a
permissive one such as is present in this case), however,
they cannot then argue that it would be inconvenient to
litigate the case in the selected forum.Heller Fin.,
Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1293
(7th Cir. 1989). THI does not argue that the District of
Nevada is more convenient for it. Furthermore, Einhaus states
that the District of Nevada would be inconvenient for him.
Einhaus lives in Illinois, in this District. He claims to be
a novice investor, employed as a utility worker with
irregular hours. These allegations are not supported by an
affidavit or verified complaint, and as such, the Court
accords them little weight when balancing convenience,
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