Atlas Apartments Acquisitions, LLC et al v. Stifel Nicolaus & Company Inc. et al, No. 1:2022cv21469 - Document 40 (S.D. Fla. 2022)

Court Description: ORDER granting 11 Motion to Change Venue to the Northern District of Illinois and denying all other pending motions as moot with leave to re-file. Signed by Judge Federico A. Moreno on 11/18/2022. See attached document for full details. (mmd)
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UNITED STATESDISTRICT Y'OURTFOR THV SOU THERN D ISTRICT O F FLORID A M iymiDivision Case N um ber:22-21469-C1V -M O R EN O ATLASAPARTM ENTS ACQUISITIONS, LLC etJJ;, Plaintiffs, STIFEL N ICOLAU S & CO .IN C .,W ILLIAM scH ERR ,JOHN D O E ,JAN E D O E ,ZH U ZHA IH OLD IN G S,LTD .,PETER PU lTA K LEE,and JAN E D OE 2, Defendants. / q , x- . . ., OR D ER G M N TIN G M O T ION T O TM N SFE R V ENU E T 0 TH E N O R TH ERN DISTRICT OF ILLIN OIS . Thiscasestemsfrom theDefendants'actionsin apost-judgmentcollectionproceedingin TheN ol-thern D istrictofIllinois.Plqintiffs com plain thatD efendant StifelN icolaus & Co.Inc. and itsemployeeW illiam Scherrunlawfully disclosed inforlnation regarding Plaintiffs'accounts in responding to aCitation to DiscoverAssetsfiled in theNorthern Districtoflllinois.Plaintiffs also complain thatStifelNicolausuplawfully frozePlaintiffsdinvestmentaccountswithout notice.TheNolhernDistrictoftlli' poisDistrictJudgeSharonJohnsonColeman commented ina written orderthatratherthan file thiscase in Florida,the Plaintiffs could have soughtrelieffrom theIllinoiscitationsprocedurein hercourt,The Courtfindsthefirst-tiled ruleand the28 U.S.C. Atlas Apartments Acquisitions, LLC et al v. Stifel Nicolaus & Company Inc. et al Doc. 40 j1404factorsfavortransferofthi otheNorthernDis rict llino s. r..js 'caset .t ..ofl :i . . ., ' :7... . .'.. .. . .. ' . . THIS CAUSE camebeforlltheCotulupon DéfendantsjMotion to TransferVenue (D.E. . ' : . 11).THE COURT hasconsidek'edthemotion,theresponse,thepertinentportionsoftherecord, ahdbeingotherwisefullyadvisetjinthepremises,itis Dockets.Justia.com . ' . ' ' ADJUDGED thatthe motion isGRANTED.The Cleli ofCourtisdirected to transfer thecasetotheNorthernDistrictofIlllnoij.Itisalso ADJUDGED thata11othe' rpending motionsre DENIED asm ootwith leaveto refileif appropriate. I' . Backkrouhd Defendants,StifelNicol:tls& Co.Inc.andits'employeeW illiam Schem anIllinois resident,arem ovingtotransfervenueofthiscaseto theNorthern Districtoflllinois,wherethere isa related action involving the sam e padies.See Zhu ZhaiH oldings,Ltd.(î Peter . PT/fTak Lee v.lvankovich,No.20-4985-C1V (N.D.111.).Plaintiffsareelevenlimitedliabilitycompanies registered in Florida.1Theireight-countcom plaintallegesviolations of state and federallaw related to theirinvestm entaccountsatDefendantStlfelNicolaus,afinancialinstitution.Stifel NicolausisaDelaware col-poraiion,with headquaMersin St.Louis,M issouriand officesin the N orthern DistrictofIllinois.Itisiegistered to do business in Florida.D efendants Zhu Zhai H oldings,Ltd.and PeterPuiTak Lee are based in Hong K ong.They are the plaintiffs in the lllinoisactionseekingtorecoverona$4.5milliondefaultjudgmentagainstStevenlvarlkovich, WhOallegedly controlstheLLC Plaintlffsinthiscase.TheHongKongDefendants(theIllinois ' plaintiffs)stlpporttransfertotheNorthernDistrictoflllinols.Y1AeLLC Plaintiffsillthiscaseare alsosuingJohnandJaneDoe's,whoàrethèattorneysintheIllinoisaction. The Illinois Action IntheIllinoiscase,Zhu'ZhaiHoldingsandLee.commencedpost-judgmentcollection ' i proceedingsby serving citationstlnderllll nois law to discoverlvankovich'sassets.Zhu Zhai H oldingsand Lee served StifelN icolaus & Co.w ith the the citation to determ ine ifIvarlkovich lTheeleven LLC PlaintiffsareAtlasApartm entsAcquisitions,LLC,AtlasApartm entH om es,LLC;Atlas . M ultifamily ThreeLLC,AtlasM F MezzanineBon' ower,LLC,PremierOrlando PortfolioTwo LLC,Atlas A lexandria& ParcvueLLC,A tlasCrowntreeLakesLLC,Apafm entH oldings,LLC,P2Portfolio M anaging M em berLLC,AtlasBirchwood,LLC,and lvankovich Fam ily LLC. 2 hadassetsinthecompany'saccounts.Aspa14oftheIllinoispost-judgmentcollection action, Schen-signed Stifel'sresponsetothecitation order,which listed accountstitled in thennm esof theLLC Plaintiffsin thiscase.Plaintiffsaresuing Stifeland Schen'here in FloridabecauseStifel disclosed account-related inform ation in zesponse to the citation filed in the Illinoisproceeding. Thecom plaintreads:Cçstifelfiledan answ erto the erroneouscitation thatm ade apublic disclosure ofeach bank accpuntpfçach PlaintiffjAtlasentity andtheamountofmoney and . financialinvestm entsby accountnumberin each Atlasentity bank account.''Plaintiffscoldplain Stifelcom pounded the errorby then freezing each ofPlaintiffs'investm entaccounts. Theaccotlntholders,theFloridaPlaintiffs,filedmotionstointerveneinthepost-judgment collectionproceedingsin Illinoisandalso filedthiscase.On M ay 9,2022,JudgeSharon Johnson Colem an oftheN orthern D istrictofIllinoisdenied a m otion by Zhu ZhaiH oldings,Ltd.and Lee to tul' lzover the funds in the A tlasLLC accountsdisclosed by Stifel.She found the evidence insufficienttofindthatStifelNicolausisholdingtheassetsofthejudgmentdebtorIvankovich. Thepartiesto the Illinoisaction continueto disputewhetherIvarlkovich'sassetsarein thePlaintiffs'accountsheldby StifelNicolaus.Initially,asnoted,Stifelfrozetheassetsin the accounts,buton M ay 3l,2022,JudgeJolmson Colem an,entered an orderlifting thefreezeover the assets Stifelis holding in the 132 Portfolio M anagem entM em berLLC Investm entA ccount andtheIvankovichFnmily,LLC InvestmentAccount(both arePlaintiffsinthisFloridacase).ln thatorder,JudgeJohnson Colemanreferenced thiscase,stating: Instead ofdirectin 'g the Coul-t's atlention to the continued freeze of these assets,on M ay 11,2022,lvankovich'slawyerfiled a law suit in the U nited StatesD istrictC oul4 forthe Southern D istrictof Florida,on behalfofthelim ited liability companiedlistedinthe Stifelanswerto thecitation to discoverassets,againsttheplaintiffs inthislawsuit.Stifel,andseveralJaneandJohnDoes.ln (their Floridalcomplaint,thelimitedliabilityplaintiffsallegea conspiracy claim againstdefendantsarguingthatthey conspired to 3 freezetheplaintiffs'assets,am ongothel-claim s.Thebetterway to approach this issue,how ever,w asto ask this Coul'tto u 'nfreeze the assets,instead offiling whatappearsto be a baselsslaw suitin another federaldistrict...M oreover,,through hisFlorida counsel's tactic,itappearsIvankovich isseekingto avoidpayingthe $4.5 millionjtldmentheowes.Thatsaid,untilplaintiffscansufficiently establishthatStifelisholdingtheassetsofjudgmentdebtor lvankovich,thereisno basisforthelkeeze to rem ain intact. JudgeJohnsonColeman'sM ay31,2022Orderalsograntedthejudgmentcreditors' m otion fororderto show cause.ltdirected Ivarlkovich and tw o non-pal-ty LLC 's,132 Portfolio M anagingM emberLLC,andtheIvankovichFamily,LLC toanswerthejudgmentcreditors' A pril13,2022 citationsby June 24,2022.The lllinoisCourtalso denied a m otion to quash the citations. The Florida A ction Ilofthe Com plaintpeeking declaratory and Plaintiffsvoluntarily dism i,sjed Counts land ' injunctiverelief-againststifelxicolaus.countltIseeksdamagesunderthefederalGramm$ . Leach-Bliley A ctagainstStifelN icolatts and W illiam Scherrbased on theirdisclosure of inform ation abouttheaccounts.CountIV isaclaim undertheFaiiDebtCollection PracticesAct againstthe H ong K ong D efendants and their law yerJane D oe 2.This claim stem s from the Hong KongDefendants'collection methodstoobtainpaymentontheIllinoisdefaultjudgment.It assel'tsthatCçgdlefendantsluisrepresentedto Stifelthecharacter,amount,orlegalstatusofthe ctebtowedby Ivankovich,byrepresentingthatthedelk wassomehow owedby andcouldbe satisfiedbyusingPlaintiffs'bank accountstopaythejudgment.''CountV isaclaim underthe FloridaConstitutionandFloridaStaiutej655.059forviolationofafiduciarydutyby Stifel N icolaus,Scherr,and thdirlaw yers,Jolm and Jane D oe.CountV1allégesthe D efendants . . engagedincivilconspircybyexchanginginformatitm regardingPlaintiffsy acc.ounts.Co.unts 4 V1Iand Vl11are forabuseofprocessand intentionalinterferencewith abusinessrelgtionship againstthe H ong K ong D efendantsand their law yers,Jane D oe and Jane D oe 2. L ezalStanw dard and A nalysi. s Defendants,StifelNicolaus& Co.and itsemployee W illiam Schen',arem ovingto transferthiscasetotheNorthernDistrictofIllinoisunderthefirst-filedruleand28U.S.C.j 1404.DefendantsZhu ZhaiHoldings,Ltd.and PeterPuiTak Leefiled a statementin supportof themotiontotransferwithoutwaivingtherighttocontestpersonaljurisdictioninthisFlroida proceeding. First-Filed Rule ç'W here tw o actidns involving overlapping issues and partiesare pending in tw o federal courts,thereisastrongpresumptionacrossthefederalcircuitsthatfavorstheforum ofthetirstfiled suitunderthe first-filed rule.'iu %eeM anuelv. CovergysCol p.,430F.3d 1132,1135 (11th Cir.2005).t$Allthatneedbepresèntisthat'thetwoactionsinvolvecloselyrelatedquestionsor com m on subjectmatter....Thecasesneednotbeidenticaltobeduplicative.''Strotherv.Hylas ' Yachts,Inc.,No.12-80283,2012MT' L 4531357,at2(S.D.Fla.Oct.1,2012).ttgojncethecourt determ inesthatthe tw o suitslikely involve substantialoverlap,itisno longerup to the secondfiled coul' tto resolve the question'ofwhetherboth should be allow ed to proceed.''fn re Checking AccountOvt drlrl./ifitigation,859F.Supp.2d 1313,1325(S.D.Fla.2012).Ct M oreover...the pal-tyobjectingtojurisdictioninthefirst-filedforum carrgies)theburdenofprovingGcompelling circumstances'towarrantanexceptiontothetirst-filed1-ule.''M anuel,430F.3dat1135(quoting MerrillLynch,Pierce,FennerdrSmith,Inc.v.Haydu,675F.2d 1169,1174(11th Cir.1982)). Here,thePlaintiffshavenotobjectedtotheapplication ofthefirst-filedrule,directingtheir responsetothemotion on whytrbnsferisinappropriateullder28U.S.C.j1404. 5 In thiscase,there isno question thattheIllinoisaction wasfiled first,asitwasfiled on August24,2020,andthiscasewasfiled onM ay 11,2022.Thedefaultjudgmententeredon August17,2021,triggeredpost-judjmentcollectionproceeèingsinlllinois.Thejudgment creditorfled citationsto discoverIvankovich'sassetsin theNorthern Districtoflllinois proceeding and the D efendants'responsesto the citations are atissue in this case.B ecause the Floridaaction relatestotherightto freezeorturn overassetsin Stifelaccountsto satisfy the Illinoisjudgment,theactionsoverlap.Finally,allparties,exceptfortheDoedefendants,are parties,intervenol-s,orparticipantsin the Illinois caje. This com plaintoverlaps with the ongoing collection proceedingsin the N orthern D istrict ofIllinois,wherethecotll4willdeterm inewhetherthefundsin theStifelaccountscontain Ivankovich's propel4y.Litigating here aboutthe propriety ofStifel's answ el's to the citations is im proper.The rightcourtto decide these issues is the N ol-thern Districtoflllinois,w ho hasthe pal-tiesbeforeitand canàssessthep'k1-ties'responsestotheèitationsfiledinthepost-collection jroceedingsitisadjudicating.Hàvingfoundthefirst-to-fileruleapplies;tdthepropercourseof action gisjforthecourttotransferthecasetothe(first-filed)court....''In re:CheckingAcc' ount Overdraf Litig.,859F.Supp.2dat1321. Tl' ansferunder28 US.C J1404 Even ifthefirst-filedruledidnotrequiretransfer,the28U.S.C.j 1404factorsfavor transfer ofthe case to the N ol-thern D istrictoflllinois.Courts have broad discretion to transfer casesunder28U.S.C.j1404(a);I'lightv.Uu% Dep 'tofHonlelahdsecurity,391F.Supp.3d 11'78,1182-83(S.D.Fla.2019).Todeterminewhetheracaseshouldbetransfen-edptlrsuanttoj 1404,courtsapply atwo-prong tesi.f#.,391F.Supp.3d at1183.First,coul-tslookto whether thecasecouldhavebeenbroughtinthealternativevenue,wherethecourthassubjectmatter jurisdictioh,venueisproper,andthedefendantisamenabletoselwice.Id Second,courts 6 evaluatewhetherçfconvenienceandtheinterestsofjusticerequiretransfer.''Id Underthis second prong,coul'tsw eigh factors such asthe convenience ofthe witnessesal:d parties,the location ofrelevantdocum entsandeaseofaccessto sourcesofproof,thelocusofoperative facts,theavailability ofprocesstb compelthe attendanceofunwilling witnesses,therelative m eans ofthe pa/ies,a forum 's faluiliarity w ith the govelming law ,the w eightàccorded a plaintiffschoiceofforum andtrialefficiency.16L(citingManuel,430F.3dat1135n.1). Jurisdiction and J'k/zzfcintheNorthernDistrictoflllinois The firstquestion is whetherPlaintiffs could have filed this case in the N orthern D istrict ofIllinois.Jurisdiction in this case stem s from diversity and federallaw sincluding the Gram m - Leach-Bliley Act,15U.S.C.j6801,andtheFairDebtCollectionPracticesAct,15U.S.C.j 1692.The com plaintalso containjstate law claim s forwhich a federalcoul'tcan exercise supplementaljurisdiction.28U.S.C.j1367.Boththiscoul' tandtheNorthernDistrictoflllinois havejurisdiction. The second question is whethervenue is properin the N ortlzern D' istrictofIllinois. 28 ' . u.s.c.j1391providesthatvenueisproperinajudicial'districtinwhich asubstmatialpartofthe eventsoromissionsgivingrisetotheclaim occun'edorinanyjudicialdistrictinwhichany defendantissubjecttothecoul-t'spersonaljurisdiction.A defendantthatisnotaU.S.resident maybesuedinanyjudicialdistrict. Here,theeventsgiving'risetothecomplaintstem from thepost-jttdgmentcollection proceedings in theN ortherh D istrictoflllinois:D efendaltts StifelN icolausand Scherr's responsesto the Illinoiscitationsareatissue in thiscase.TheN ol-thern Districtoflltinoishas pelsonaljurisdictionoverthemovingDefendantw illiam jchm-r,wtaoresidesinthatdistrict. M oreover,the H ong K ong D efendants,filed a notice in suppol' tofthe m otion to transfer indicatingthatthelllinoisCourtcoùldexercisepersonaljurisdiction'overthem,giventheyhave 7 consentedtopersonaljurisdictionintherelatedaction.Accordingly,venueisproperinthe Nol-thern Districtoflllinoisbecausethepost-collectiop pröceedingsgivingrisetotheclaim s tookplaceinIllinoisandtheDçfendantsareamenabletopersonaljurisdiction izèIllinois.The ' . . . HongKongDefendantïmaynotbestlbjecttopersonaljurisdictionhere.Havingfoundthatthe Northern DistrictofIllinoisisaproperfprum withjurisdiction,theCourtt'urnstothe 's. convenience factor Convenience Factors The only connection to the Southern DistrictofFlorida isthe Plaintiffs'residence.Any ' deferencetothePlaintiffs'choice offorum islesswhere,ashere,theactionsatissuetook place inIllinoiséndtheIllinoiscoul4isadjudicatingwhethertheStifelNicolausaccountscontainthe assetsofthejudgmentdebtorIvankovich.SeeHight,391F.Supp.3dat1184-85, .seealso Greiserv.Drinkard,No.18-61126-ClV,2018Mq. a7287083at*5(S.D.Fla.Nov.16,2018). Becausethe dslocusofoperative facts''is in Illinois,the w eightaccorded to Plaintiffs'choice of forum isentitledto lessdeferenceand doesnotovenidethefactorsweighing in favoroftransfer. M oreover,there isa clearcom m onality ofw itnesses and interestofthe partiesw ith the post-collection proceedingsin the lllinoiscase.lndeed,the Plaintiffshere moved to intervene in the lllinois action.Tw o ofthe Plaintiffs here,132 Portfolio M anaging M em ber,LLC and Ivallkovich Fam ily LLC are citation respondents in the lllinoisaction.ltw ould be m ore convenientforthePlaintiffsandDefendantstoadjudicatedisputesconcerningwhetherthe judgmentdebtor'sassetsareheldintheStifelaccounts,inthesamevenuethatisaddressingthe locationofthejudgmentdebtor'sassets. Thepublicfactorsalso . w eigh in favoroftransfer.These includetheforum 'sfam iliazity withthegoverninglaw,theforum 'sinterestinadjudicatingthedispute;theburden ofjuly duty on the forum 'scom m unity,and the relative docketcongestion.Seè Cellularvision Tech.(î 8 Telecomms.,L.P.v.CellcoP' shi p,No.06-60666-C1V,2006*'L 2871858,at*4(S.D.Fla.Sept. 12,2006). To reiterate,Plaintiffs are challenging thepropriety oftheD efendants'actions in the Illinoisproceeding.Supplementaly proceedingstoenforceamoneyjudgmentfollow thestate's procedurewheretheco'urtislocated.SeeFed.R.Civ.P.69(a)(1).W hethertheDefendants disclosure ofPlaintiffs'information in thatcaseisproperwillno doubtimplicateIllinoislaw. Undoubtedly,thelllinoiscoul4hasagreaterinterestin adjudicatingthiscase.JudgeJolmson Coleman even stated in hbrorderitwould havebeen betterforthePlaintiffsto filearequestin theN orthern DistrictofIllinoisratherthan file thijcase.The public interestfactors also w eigh in favoroftransfer.Accordingly,theCoul'tgrantsthem otion totransferto theNorthern Districtof lllinois. D ON E AN D O RDERED in Cham bers at M iam i,Florida, this of N ovem ber 2022. FEDERI UN IT Copiesfufnished to: Cotm selofRecord .VORENU STA TES D ISTRICT JUD GE
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