United States District Court, D. New Jersey
L. WOLFSON, U.S. CHIEF DISTRICT JUDGE
matter comes before the Court on Defendants' Petr Lysich
(“P. Lysich”), Alexey Lysich (“A.
Lysich”), Protogroup, Inc. (“Protogroup”),
Inkvist, Inc. (“Inkvist”), and Smile Land
Inc.'s (“Smile Land”) (collectively,
“Defendants” or “Protogroup
Defendants”) motion, pursuant to Federal Rules of Civil
Procedure 12(b)(2) and 12(b)(3), to dismiss the action
initiated by Plaintiff Semyon Kremer
(“Plaintiff”), or, in the alternative, transfer
the case to the United States District Court for the Middle
District of Florida - Jacksonville Division. For the
following reasons, Defendant's motion to transfer is
granted pursuant to 28 U.S.C. § 1404(a) and this matter
is transferred to the Middle District of Florida -
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
addressing Defendant's Motion to Dismiss, this Court must
accept the allegations from Plaintiff's Complaint as
true. See Toys “R” Us, Inc. v. Step Two,
S.A., 318 F.3d 446, 457 (3d Cir. 2003); Dayhoff,
Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir.
1996). Thus, the facts recited below are taken
from the Complaint and do not represent this Court's
instant action is a minority shareholder oppression suit
against the Protogroup Defendants and Igor
Fedorenko (“Fedorenko”), stemming from
Plaintiff's involvement as a minority shareholder in
Inkvist and Smile Land.
2005, Defendant P. Lysich visited Plaintiff's New Jersey
home and presented him with a business opportunity. Compl.
¶35. Plaintiff agreed to become an officer and director
of any corporate entities created by P. Lysich, A. Lysich, or
Fedorenko, and was to receive a salary and a certain
percentage of shares of stock of any of the entities. Compl.
¶¶ 38-41. Plaintiff's role in the organization
consisted of, among other things, negotiating with lenders
and financial institutions, and generally providing
professional services to any of Defendants' corporate
entities - many of these activities were conducted from his
New Jersey residence. Compl. ¶39-43.
2007, Kremer, allegedly at P. Lysich's behest,
incorporated Inkvist DE, a Delaware corporation which is 80%
owned by Defendant Fedorenko and 20% owned by Plaintiff.
Compl. ¶¶ 58-59. In July 2007, Defendant P. Lysich
also allegedly instructed Plaintiff to incorporate a company
in Palm Coast, Florida called “Smile Land, Inc, ”
whose purpose was to engage in the purchase of land in
Florida. Compl. ¶¶ 64-65. At its inception,
Plaintiff received forty shares of Smile Land, equal to
twenty percent of the issued shares, and Smile Land purchased
slightly over four acres of land in Palm Coast, Florida with
the objective of building a franchise hotel. Compl.
¶¶ 66-67. Thereafter, Plaintiff entered into
negotiations with Days Inns Worldwide, a company based in
Parsippany, New Jersey, to acquire a hotel for the land in
Palm Coast, Florida. Compl. ¶¶ 69-71, 81. Plaintiff
participated in the negotiations and subsequent management of
the hotel planning from New Jersey. Id. Smile Land
and Days Inns Worldwide, on December 11, 2007, entered into a
franchise agreement to build a hotel in Palm Coast, Florida;
the franchise agreement is governed by New Jersey law. Compl.
2011, A. Lysich and P. Lysich invited Plaintiff to Florida to
discuss Smile Land's plans, including the development of
a property in Daytona Beach, Florida (“Daytona
Project”). Compl. ¶¶ 89-94. Defendants
informed Plaintiff that they would form a new corporation,
Protogroup, to own and develop the Daytona Project, and that
while Plaintiff would derive an economic benefit from
Protogroup, that he would not be an official shareholder.
Compl. ¶¶ 96-98. P. Lysich advised Plaintiff that
he would continue to remain a minority shareholder in Smile
Land, and that in addition to deriving an economic benefit,
he would serve as Protogroup's Vice President, rather
than, an official shareholder of record. Compl. ¶ 100
Further, Plaintiff was allegedly assured that he would
continue to receive actual compensation for his work for both
Smile Land and Protogroup regardless of their financial
performance. Compl. ¶ 101. After the meeting, Plaintiff
returned home and began working on the Daytona Project in New
Jersey. Compl. ¶¶ 102-103.
A. Lysich and P. Lysich, allegedly, directed Plaintiff to use
Smile Land and Protogroup as aliases of one another in
searching for funding for the Daytona Project. Compl. ¶
104. According to Plaintiff, he received payments from Smile
Land until December 2014, at which time the payments began to
come from Protogroup. Compl. ¶¶ 109-110. Payments
from Protogroup continued through September 2016. Compl.
to Plaintiff, A. Lysich allegedly caused Smile Land to pay
$710, 000 to Solinger Trading Company
(“Solinger”), a company that would later be
discovered via IRS audit to be a shell company located in the
Bahamas. Compl. ¶¶ 112-115. A. Lysich allegedly
prepared a back dated agreement between Smile Land and
Solinger, where Solinger would receive a 1% agency fee for
the purchase of international produce. Compl. ¶ 120.
Plaintiff alleges that A. Lysich demanded that Plaintiff sign
and backdate the agreement and provide it to the IRS, but
when Plaintiff refused, his relationship with A. Lysich
abruptly ended. Compl. ¶¶ 121-123.
refusing to carry out A. Lysich's alleged scheme,
Plaintiff alleges that he stopped receiving monthly payments
from Smile Land and Protogroup, and was notified that he was
being removed as the director of the two entities, and
stripped of his signatory powers for Smile Land. Compl.
¶¶ 124-127. Moreover, Plaintiff allegedly
discovered that Protogroup broke ground on the Daytona
Project and that A. Lysich had claimed that Protogroup owned
the Days Inn in Palm Coast, rather than Smile Land. Compl.
¶¶ 138-139. Additionally, Plaintiff alleges that
over $300, 000 had been withdrawn from Smile Land's bank
account. Id. Plaintiff subsequently demanded an
accounting from Defendants, regarding the withdrawn funds,
but has not been provided one. Compl. ¶¶ 143-146.
on March 16, 2018, Plaintiff filed the instant complaint
alleging, breaches of fiduciary duty and minority shareholder
oppression by Defendants A. Lysich and Fedorenko, conversion,
civil conspiracy, wrongful termination, retaliatory conduct
in violation of the New Jersey Conscientious Employee Act
(“NJCEPA”), unjust enrichment, breach of contract
claims against all Defendants, and seeking an accounting of
Smile Land, Inkvist DE, and Protogroup accounts. Compl.
¶¶ 156-269. Now the Protogroup Defendants have
filed the instant motion to dismiss, or in the alternative,
move to dismiss this matter for lack of personal jurisdiction
and improper venue, or alternatively, transfer of venue to
the Middle District of Florida - Jacksonville Division. Def.
Br. at 3. Plaintiff, while maintaining the position that
personal jurisdiction exists and that venue is proper in New
Jersey, also urges this Court to allow jurisdictional
discovery to determine if personal jurisdiction exists over
Defendants. Pl. Br. at 3, 24. Plaintiff also opposes
transferring this matter to the Middle District of Florida.
Pl. Br. at 19-24.
“[t]he question of personal jurisdiction, which goes to
the court's power to exercise control over the parties,
is typically decided in advance of venue . . . a court may
reverse the normal order of considering personal jurisdiction
and venue.” Leroy v. Great W. United Corp.,
443 U.S. 173, 180 (1979). Accordingly, the Court addresses
the venue issue first, and because Defendants have
demonstrated that a transfer of venue is appropriate under
Section 1404(a), the Court does not reach the question of
whether the Individual Defendants are subject to the exercise
of personal jurisdiction by this Court.
district court may transfer any civil action to any district
where the action might have been brought in the interests of
justice and for the convenience of the parties and witnesses.
28 U.S.C. § 1404(a). The function of Section 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). The burden of establishing that transfer is
warranted is borne by the moving party. Piper Aircraft
Co. v. Reyno, 454 U.S. 235, 248 (1981); Ricoh v.
Honeywell, Inc., 817 F.Supp. 473, 480 (D.N.J. 1993). The
moving party must show that the proposed alternative forum is
not only adequate, but also more convenient, than the present
forum. Jumara v. State Farm Ins. Co., 55 F.3d 873,
879 (3d Cir. 1995).
1391 provides the guidelines for determining where venue is
appropriate. See 28 U.S.C. § 1391(a). Under
Section 1391, venue is proper “in (1) a judicial
district where any defendant resides, if all defendants
reside in the same State, (2) a judicial district where a
substantial part of the events or omissions giving rise to
the claim occurred ..., or (3) a judicial district in which
any defendant may be found, if there is no district in which
the action may otherwise be brought.” Id. A
defendant that is a corporation is “deemed to reside in
any judicial district in which it is subject to personal
jurisdiction at the time the action is commenced.”
Id. § 1391(c). If the proposed alternative
forum is appropriate, it is then within the Court's
discretion to transfer the action. Jumara, 55 F.3d
factors guide the Court's discretion when determining
whether to grant a transfer under Section 1404(a): (1) the
convenience of the parties, (2) the convenience of the
witnesses, and (3) the interests of justice. Liggett Grp.
Inc. v. R.J. Reynolds Tobacco Co., 102 F.Supp.2d 518,
526 (D.N.J. 2000) (citing 28 U.S.C. § 1404(a) and
Jumara, 55 F.3d at 879)). These factors are not
exclusive and must be applied on an “individualized
analysis . . . made on the unique facts presented in each
case.” Id. at 526-27 (citations omitted). The
first two factors have been refined into a non-exhaustive
list of private and public interests that courts should
consider. See Jumara, 55 F.3d at 879-80. As set
forth below, a balance of the pertinent ...