Rogers v. Wilmington Trust Co.

FRIEDA MAE ROGERS f/k/a FRIEDA ROGERS ROEN;and PREMIER TRUST, INC., a Nevada corporation,as Trustee of the FRIEDA M. ROEN RESULTING TRUST u/a/d July 19, 1934, Plaintiff v. WILMINGTON TRUST COMPANY, a Delaware corporation;and WILMINGTON TRUST INVESTMENT ADVISORS, INC.,a Maryland corporation, Defendants

CASE NO. 1:17-CV-00392 AWI SAB

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

January 18, 2018

ORDER ON MOTION TO CHANGE VENUE AND ORDER TRANSFERRING MATTER TO THE DISTRICT OF DELAWARE

(Doc. 10, 12, 13)

This case arises from a dispute concerning the management of a trust. Frieda Mae Rogers ("Rogers") and Premier Trust, Inc. ("Premier") (collectively "Plaintiffs") have alleged claims of negligence, breach of fiduciary duty, constructive fraud, financial elder abuse and a violation of the U.S. Investment Advisers Act against Wilmington Trust Company ("WTC") and Wilmington Trust Investment Advisors ("WTIA") (collectively "Defendants").

Defendants have moved to dismiss the negligence and Investment Advisors Act causes of action for failure to state a claim on which relief might be granted, and WTIA has moved to dismiss for lack of personal jurisdiction. Further, WTC has requested transfer of the entirety of the action to the U.S. District Court for the District of Delaware, under 28 U.S.C. § 1404(a).

For the reasons that follow, the Court now transfers this matter to the District of Delaware.

RELEVANT FACTUAL BACKGROUND¹

In 1934, Katherine Stuart Stibbs created a trust, naming WTC, a Delaware corporation headquartered in Delaware, as trustee. In 2004, the Delaware Court of Chancery bifurcated this trust, and in 2008, the same court further divided one of the halves into five separate trusts. The trust at issue in this case—the "Roen Trust"—springs from the 2008 partition.

Rogers, an elderly resident of the Eastern District of California ("EDCA"), is the primary beneficiary of the Roen Trust. From 2008 to 2015, WTC continued as trustee for the Roen Trust, administering it from its Wilmington, Delaware offices, as guided by Delaware law. WTC employee Christopher Sullivan served as the Roen Trust's "Investment Advisor," Tonia Gamble-Kennedy served as Rogers' "relationship manager," and three other WTC employees assisted Sullivan and Gamble-Kennedy. At the time of this lawsuit, only Christopher Sullivan was employed with WTC—though each of the four ex-employees still reside in Delaware.

In January 2015, Rogers removed WTC as trustee of the Roen Trust, and named Premier, a Nevada corporation headquartered in Nevada, as successor trustee. While investigating WTC's decisions, Rogers consulted with two members of a CPA firm, an "estate-planning attorney" and a "close personal friend," each of whom resides in the EDCA. Rogers also consulted two "wealth advisors" located in the Central District of California ("CDCA"). Additionally, Premier communicated with WTC about the prior investment and tax status of the Roen Trust, and WTC at times either delayed in providing forms or failed to communicate information to Premier, to the further detriment of the Roen Trust.

Plaintiffs filed this lawsuit, contending WTC allegedly "lost part or all of the [t]rust corpus and liquid cash investment[s] or failed to achieve a return on invested capital commensurate with [lower-risk] investments." Plaintiffs maintain WTC made unauthorized discretionary management decisions that caused a financial loss to the Roen Trust—negatively affecting Rogers' financial interests as beneficiary. Plaintiffs also maintain WTC conspired with WTIA, a Marylandcorporation headquartered in Maryland, "related to all management and investment decisions" of the Roen Trust. Both WTC and WTIA are wholly-owned subsidiaries of M&T Bank Corporation, and Plaintiffs allege WTC and WTIA each acted as "partner, co-owner, agent, employee . . . or alter ego" of the other during WTC's tenure as trustee of the Roen Trust.

WTIA now moves to dismiss for lack of personal jurisdiction, Defendants each move for a Rule 12(b)(6) dismissal of the negligence and Investment Advisors Act claims, and WTC requests transfer under 28 U.S.C. § 1404(a) to the District of Delaware.

DISCUSSION

I. Motion to Change Venue Under 28 U.S.C. § 1404(a)Defendants' Argument

WTC maintains Delaware is the "clear center of gravity for nearly every aspect of this case," and therefore transfer under § 1404(a) is appropriate. WTC emphasizes that the Roen Trust "was created and administered in Delaware, all of the complained-of activities occurred in Delaware, likely all of the critical non-party witnesses and evidence are in Delaware," and that "the trust agreement itself specifies that both the agreement and the trusts created thereunder are to be governed and interpreted according to Delaware law." WTC contends that, "of the twelve factors set out by the Ninth Circuit as relevant to a motion to transfer, eleven are supportive of the transfer of this case to the District of Delaware."

Plaintiffs' Opposition

Plaintiffs counter that WTC has failed to carry their burden demonstrating whether the EDCA or Delaware are proper venues for their action, necessitating denial of WTC's motion to transfer. Further, Plaintiffs contend "all balancing factors weigh against transfer," including that Rogers chose the EDCA as her preferred venue. Plaintiffs highlight that "important agreements were negotiated in the [EDCA]," California law governs the causes of action (and not Delaware law, as WTC argues), Rogers was harmed in the EDCA, many other critical non-party witnesses are in the EDCA, California has a strong local interest in the case, and other factors are either neutral or weigh in favor of the EDCA. Thus, Plaintiffs aver that transfer to Delaware would serve neither the convenience of the parties nor the interests of justice.

Legal Standard

28 U.S.C. § 1404(a) provides in relevant part: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought . . . ." 28 U.S.C. § 1404(a). This statute partially displaces the common law doctrine of forum non conveniens. See Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).

The purpose of § 1404(a) is "to prevent the waste of time, energy, and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Van Dusen v. Barrack, 376 U.S. 612, 616 (1964). "Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness." Stewart Organization, Inc. v. RICOH Corp., 487 U.S. 22, 29 (1988).

In order to transfer a case under § 1404(a), the "defendant must make a strong showing of inconvenience to warrant upsetting the plaintiff's choice of forum." Decker, 805 F.2d at 843. In deciding whether to transfer under § 1404(a), courts consider inter alia: (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 forum's contacts with the plaintiff's cause of action; (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; (8) the ease of access to sources of proof; (9) the presence of a forum selection clause (which is a "significant factor"); (10) the relevant public policy of the forum state, if any; (11) convenience of the parties; (12) convenience of the witnesses; (13) local interest in the controversy; (14) court congestion of the two forums; and (15) feasibility of consolidating other claims. See Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000); Hawkins v. Gerber Prods. Co., 924 F.Supp.2d 1208, 1213 (S.D. Cal. 2013); Barnes & Noble, Inc. v. LSI Corp., 823 F.Supp.2d 980, 994 (N.D. Cal. 2011); Metz v. United States Life Ins. Co., 674 F.Supp.2d 1141, 1145-46 (C.D. Cal. 2009).

Analysis

There is some dispute as to whether this case might have been brought in the District of Delaware: Plaintiffs contend WTC has failed to explain why Delaware would have jurisdiction.

Subject matter jurisdiction would be proper in Delaware for the same reasons as exist for the EDCA. Plaintiffs filed one claim of a violation of the Investment Advisors Act, 15 U.S.C. §§ 80b-1 through 80b-21, and so each district would have 'arising under' jurisdiction, 28 U.S.C. § 1331, and supplemental jurisdiction over the corresponding state law claims, 28 U.S.C. § 1367. Plaintiffs further allege diversity jurisdiction, 28 U.S.C. § 1332, since the parties are citizens of different states and the amount in controversy exceeds $75,000.

WTC does not contest personal jurisdiction in the EDCA, and admits general personal jurisdiction would lie in Delaware since it is a Delaware corporation. See Daimler AG v. Bauman, 134 S. Ct. 746, 760-61 (2014). WTIA, in their motion to dismiss for lack of California personal jurisdiction (Doc. 10), admits that personal jurisdiction would lie in Delaware:

- "As explained more fully in Wilmington Trust's Motion to Transfer Venue, the most efficient resolution of this matter can only be obtained in Delaware, not California."

- "Finally, as more fully explained in Wilmington Trust's Motion to Transfer Venue, a more than adequate alternative venue exists - the District of Delaware. Litigation in the District of Delaware is more practical for both WTIA and [WTC] . . . ."

See Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). Plaintiffs do not dispute this contention. Therefore, the District of Delaware would have personal jurisdiction over both Defendants.

As to the propriety of venue in Delaware, the question is whether "a substantial part of the events or...