# Nam v. Tex Net Inc

> District Court, S.D. California · February 12, 2021

URL: https://www.frixlaw.com/law-library/cases/10640097

## Case

- **Court:** District Court, S.D. California
- **Decided:** February 12, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10640097

## How later opinions describe it (automated extraction)

- finding that plaintiff's failure to defend her claim in her response to the defendant’s motion to dismiss “constituted abandonment”
- holding that failure to adequately brief an argument results in waiver
- finding courts “should not sever if the defendant over whom jurisdiction is retained is so involved in the controversy to be transferred that partial transfer would require the same issues to be litigated in two places”
- noting that, as a general rule, jurisdiction over an individual cannot be predicated on jurisdiction over a corporation unless a basis exists for disregarding the corporate fiction

## Opinion text

United States District Court
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
HEE SOOK NAM §
V. CIVIL ACTION NO. 3:20-CV-1132-S
TEX NET, INC.,, et al.
MEMORANDUM OPINION AND ORDER
This Memorandum Opinion and Order addresses Defendants’ Motion to Dismiss Amended
Complaint (“Motion to Dismiss”) [ECF No. 28]. Defendants move to dismiss for lack of personal
Jurisdiction under Rule 12(b)(2), failure to state a claim upon which relief may be granted under
Rule 12(b)(6), and improper venue under Rule 12(b)(3). In the alternative, Defendants move to
transfer the case to the Southern District of California pursuant to 28 U.S.C. § 1406(a), or for the
convenience of the parties, which the Court construes as a motion to transfer venue pursuant to
28 U.S.C. § 1404(a). For the following reasons, the Court DENIES IN PART and GRANTS IN
PART the Motion to Dismiss in that the Court DENIES the Motion to Dismiss for lack of personal
jurisdiction and GRANTS the motion to transfer venue.
I. PROCEDURAL BACKGROUND
This case was removed from the 44th Judicial District Court of Dallas County, Texas,
based on diversity jurisdiction. Defs. Tex Net, Inc., Theresa Surh, Gene Surh, and Thomas Ryu’s
Notice of Removal [ECF No. 1]. Shortly after removal, Thomas Ryu was terminated from the
case pursuant to an agreed stipulation of dismissal. Stip. of Dismissal as to P].’s Claims Against
Def. Thomas Ryu without Prejudice [ECF No. 9]. Plaintiff filed a motion to remand [ECF No. 7],
which the Court denied on the basis that: (1) Plaintiffs Original Petition did not state a claim

against Defendant Dae Surh, deceased, and Defendant Tex Tech Investments, Inc.;! and
(2) Defendants met their burden to show that Defendant Tex Net, Inc. was not a Texas citizen at
the time the case was filed and removed. Mem. Op. and Order [ECF No. 24]. As a result, Theresa
Surh, Gene Surh, and Tex Net, Inc, are the only remaining defendants in this case (“Defendants”).”
After obtaining leave of Court, Plaintiff filed its First Amended Petition, Application for
Temporary Restraining Order, Temporary Injunction, and Anti-Suit Injunction (“Amended
Complaint”) [ECF No. 27]. Defendants filed the Motion to Dismiss on August 28, 2020. After
obtaining multiple extensions, Plaintiff filed a response on January 11, 2021. Pl.’s Resp., and Br.
in Supp. thereof, to Defs. Tex Net, Inc., Theresa Surh, Gene Surh, and Thomas Ryu’s Mot. to
Dismiss (“Response”) [ECF No. 51]. The Motion to Dismiss is now ripe and pending before the
Court.
IH. FACTUAL BACKGROUND
This action arises out of a stock ownership dispute between Plaintiff and Defendants
Theresa Surh and Gene Surh. In 1999, Dae Surh and Theresa Surh, a married couple residing out-
of-state, created an investment scheme to purchase stock shares of Verimatrix, Inc. (“Verimatrix”),
a California corporation in which Dae Surh was a founding member, See Am. Compl. { 17.
According to Plaintiff, Dae Surh travelled to Texas to solicit investments from Plaintiff, Plaintiff's
husband, and other Texas residents (collectively, “Texas Investors”). Jd. §{[ 17-19. Under the

' Plaintiff's Original Petition and Amended Complaint lists “Tex Tech Investments, LLC” in the caption, but the body
of each document refers to “Tex Tech Investments, Inc.” The reference to Tex Tech Investments, LLC in the caption
appears to be a typographical error. In the Court’s Memorandum Opinion and Order addressing Plaintiff's motion to
remand, the Court found that Plaintiff's Original Petition did not state a claim against Tex Tech Investments, LLC.
However, given that this name appears to be an error, the Court clarifies that the Memorandum Opinion and Order
found that Plaintiff's Original Petition did not state a claim against Tex Tech Investments, Inc.
2 Plaintiff continues to assert claims against Dae Surh and Tex Tech Investments, Inc. in the Amended Complaint.
See Am. Compl. §f 5, 8. As noted, the Court previously found that Dae Surh and Tex Tech Investments, Inc. were
improperly joined because Plaintiff did not state a claim against them in the Original Petition, Mem. Op. and Order
[ECF No. 24], which was tantamount to dismissing claims against them without prejudice, see Int’l Energy Ventures
Memt., L.L.C. v. United Energy Grp. Lid., 818 F.3d 193, 209 (Sth Cir, 2016).

proposed investment scheme, Dae Surh would purchase Verimatrix shares through a holding
company for the benefit of the Texas Investors. See id. 419. Tex Net, Inc. (“Tex Net’), a Delaware
corporation, was incorporated for this purpose. See id, 99] 22-23; id., Ex. B.
In 2001, the Texas Investors made their initial investment in Verimatrix, which was
documented by a stock purchase agreement (“Stock Purchase Agreement”). Jd. J 25. Theresa
Surh signed the Stock Purchase Agreement on behalf of Tex Net. Jd. Dae Surh and Theresa Surh
did not personally acquire Verimatrix shares pursuant to the Stock Purchase Agreement, but did
acquire Verimatrix shares through Tex Net at a later date. Jd J§ 26, 45, 53. Although Theresa
Surh executed the Stock Purchase Agreement on behalf of Tex Net, Plaintiff claims that Theresa
Surh subsequently represented at a Tex Net meeting that Tex Net belonged to the Texas Investors
and acknowledged that Plaintiff, not Theresa Surh, was Tex Net’s president. See id. 29.
Over the next several years, Tex Net entered into multiple transactions with Verimatrix
pursuant to which Tex Net either loaned money to Verimatrix, acquired additional Verimatrix
shares, or acquired warrants to purchase Verimatrix shares. /d. {§ 30-55. Plaintiff executed the
agreements documenting these transactions on behalf of Tex Net, and Dae Surh or Theresa Surh
recorded each investor’s contribution on handwritten notes. fd. ff 27, 30-55, 74.
In 2005, the Texas Investors and Dae Surh transferred their Verimatrix shares held by Tex
Net to anew company incorporated in Texas, Tex Tech Investments, Inc. (“Tex Tech”). id. {] 46-
47, The transfer was documented by a stock transfer agreement, dated August 10, 2005 (“Stock
Transfer Agreement”), which Plaintiff signed on behalf of each company. /d. {| 47-48. According
to Plaintiff, it was Dae Surh’s idea to form Tex Tech and Dae Surh instructed Plaintiff to sign the
Stock Transfer Agreement on behalf of Tex Net and Tex Tech, which she did. /d. {| 46, 48; see
also id, Ex. G (Stock Transfer Agreement signed by Plaintiff as the president of both Tex Net and

Tex Tech). Plaintiff asserts that each investor’s ownership interest in Tex Net was transferred in
the same percentage to Tex Tech, except that Dae Surh transferred his ownership interest to his
son, Gene Surh, and daughter, Joanna Surh. fd. ¢ 49.
The parties continued to purchase additional Verimatrix shares through Tex Tech, Jd. 7 53.
In 2019, a company called Inside Secure purchased Verimatrix, including the Verimatrix shares
held by Tex Tech. /d § 55. Pursuant to the sale, Plaintiff asserts that each investor received
payment for their proportionate investment in Verimatrix. Jd.
After Dae Surh passed away, a disagreement arose between Plaintiff and Theresa Surh
regarding the validity of the Stock Transfer Agreement and ownership of Verimatrix shares.
See id. , 5, 66. On January 15, 2020, Theresa Surh, Gene Surh, and Tex Net sued Plaintiff, Tex
Tech, Verimatrix, and Robin Ross Cooper (Verimatrix’s president) in California secking to
invalidate the Stock Transfer Agreement (“California Lawsuit”), alleging, among other things, that
Theresa Surh was Tex Net’s president and Plaintiff was not authorized to execute the Stock
Transfer Agreement, /d J 66; id, Ex. K. According to Plaintiff, Theresa Surh also claims that,
as Tex Net’s alleged president and shareholder, she is entitled to all the shares held by Tex Net
prior to the transfer to Tex Tech. /d. § 67. Plaintiff alleges that: (1) Defendants’ claims in the
California Lawsuit are without merit and are barred by the statute of limitations; (2) Dae Surh and
Theresa Surh’s conduct constitutes fraud; (3) Defendants’ alleged misrepresentations will deprive
Plaintiff of the value of her Verimatrix investments; and (4) Plaintiff will be financially harmed
by the cost to defend against the California Lawsuit. See id. {| 68, 98, 101, 107.
Based on the foregoing allegations, Plaintiff brings the following claims: (1) fraud;
(2) unjust enrichment; and (3) money had and received. /d 4" 100-11. Plaintiff also seeks a
declaratory judgment that, among other things, the California Lawsuit is barred by the statute of

limitations. Jd. | 92. Finally, Plaintiff seeks a temporary restraining order and injunction
preventing Theresa Surh, Gene Surh, and Tex Net from taking any further action in the California
Lawsuit. Jd. 113-62.
HL. LEGAL STANDARD
A. Personal Jurisdiction
Federal Rule of Civil Procedure 12(b)(2) allows defendants to move to dismiss claims for
lack of personal jurisdiction. The plaintiff bears the burden of making a prima facie showing that
a court has personal jurisdiction over a defendant. Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d
429, 431 (5th Cir. 2014), In considering a motion to dismiss pursuant to Rule 12(b)(2), the court
must accept the plaintiff's “uncontroverted allegations, and resolve in its favor all conflicts.”
Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 215 (Sth Cir. 2000). The court may consider
“affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized
methods of discovery.” Stuart v. Spademan, 772 F.2d 1185, 1192 (Sth Cir. 1985).
Because Texas’s long-arm statute extends to the limits of federal due process, this Court
has personal jurisdiction over a nonresident defendant so long as the assertion of jurisdiction
comports with the Due Process Clause of the United States Constitution. See Sangha v. Navig8
ShipManagement Private Ltd., 882 F.3d 96, 101 (Sth Cir. 2018). Personal jurisdiction can be
general or specific. See Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir, 2001). General jurisdiction
allows a court to hear any claim against a nonresident defendant, and it exists when that
defendant’s “affiliations with [Texas] are so ‘continuous and systematic’ as to render them
essentially at home in [Texas].” Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (quoting
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). “Establishing
general jurisdiction is ‘difficult’ and requires ‘extensive contacts between a defendant and a
forum.’” Sangha, 882 F.3d at 101-02 (quoting Johnston, 523 F.3d at 609).

“In order for a... court to exercise specific jurisdiction, ‘the suit’ must ‘aris[e] out of or
relat[e] to the defendant’s contacts with the forum.’” Bristol-Myers Squibb Co. v. Superior Court,
1378. Ct. 1773, 1780 (2017) (first alteration added) (quoting Daimler AG, 571 U.S. at 127). “Such
activity or occurrence must ‘create a substantial connection with the forum State,’” and without
such “connection, ‘specific jurisdiction is lacking regardless of the extent of a defendant’s
unconnected activities in the State.”” Jnmar Rx Sols., Inc. v. Devos, Lid., No. 18-11443, 2019 WL
4440400, at *2 (Sth Cir, Sept. 16, 2019) (first quoting Walden v. Fiore, 571 U.S, 277, 284 (2014);
and then quoting Bristol-Myers Squibb, 1378. Ct. at 1781)).
In evaluating whether due process allows the exercise of specific jurisdiction, courts
consider:
(1) whether the defendant has minimum contacts with the forum state, i.e., whether
it purposely directed its activities toward the forum state or purposefully availed
itself of the privileges of conducting activities there; (2) whether the plaintiffs
cause of action arises out of or results from the defendant’s forum-related contacts;
and (3) whether the exercise of personal jurisdiction is fair and reasonable.
Carmona v. Leo Ship Mgmt. Inc., 924 F.3d 190, 193 (Sth Cir. 2019) (quoting Seiferth □□□
Helicopteros Atuneros, Inc., 472 F.3d. 266, 271 (Sth Cir. 2006)), The minimum contacts analysis
is fact intensive, and the touchstone is “whether the defendant’s conduct shows that it ‘reasonably
anticipates being hauled into court’” in the forum state. McFadin v. Gerber, 587 F.3d 753, 759
(5th Cir. 2009) (quoting Luv N’ care, Lid. y. Insta-Mix, Inc., 438 F.3d 465, 470 (Sth Cir, 2006)).
“Because ‘specific personal jurisdiction is a claim-specific inquiry,’ ‘[a] plaintiff bringing multiple
claims that arise out of different forum contacts of the defendant must establish specific
jurisdiction for each claim.’” Inmar Rx, 2019 WL 4440400, at *3 (quoting Mcadin, 587 F.3d at
759).

Once the plaintiff demonstrates that the defendant has minimum contacts with the forum
and that the action arises out of those contacts, the burden shifts to the defendant to show that the
exercise of jurisdiction is “unfair and unreasonable.” Sangha, 882 F.3d at 102. In determining
whether the defendant has carried this burden, courts balance five factors: (1) the burden on the
nonresident defendant of having to defend itself in the forum; (2) the interests of the forum state
in the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate
judicial system’s interest in the most efficient resolution of controversies; and (5) the shared
interests of the states in furthering fundamental social policies. Jd.
B. 1406(a)
Under 28 U.S.C. § 1406(a), “[t]he district court of a district in which is filed a case laying
venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer
such case to any district or division in which it could have been brought.”
Section 1406(a) allows a transfer where the first forum chosen is improper due to
the existence of some obstacle to adjudication on the merits. Dubin v. United
States, 380 F.2d 813, 816 (Sth Cir.1967). The statute specifically refers to “laying
venue in the wrong division or district,” but a transfer can be made due to the
absence of personal jurisdiction in a district where venue is otherwise proper. See
Bentz v. Recile, 778 F.2d 1026, 1028 (5th Cir.1985). ... [A] division or district may
be “wrong” under Section 1406(a) when the original court lacks personal
jurisdiction. Id.
Herman v. Cataphora, Inc., 730 F.3d 460, 466 (Sth Cir. 2013), “The district court has broad
discretion in determining whether to dismiss or transfer a case in the interest of justice under
§ 1406(a).” LSF4 Lean Invs. L LLC v. Weingart, No. 3:06-cv-419-M, 2006 WL 2370803, at *3
(N.D. Tex. Aug. 15, 2006) (citation omitted).
Cc. 1404(a)
“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 or to

any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). As a plaintiff's
original choice of forum is ordinarily entitled to some deference, the party seeking transfer must
demonstrate that the transferee venue is clearly more convenient. Jn re Volkswagen of Am., Inc.,
545 F.3d 304, 315 (Sth Cir. 2008) (en banc). The plaintiffs choice of forum is not, however, “an
independent factor within .. . the § 1404(a) analysis.” Jd 314 n.10. In applying § 1404(a), the
Court must first determine “whether the judicial district to which transfer is sought would have
been a district in which the claim could have been filed.” In re Volkswagen AG, 371 F.3d 201,
203 (5th Cir, 2004) (per curiam) (citation omitted). Once this determination is made,
{the Court] turn[s] to the language of § 1404(a), which speaks to the issue of “the
convenience of parties and witnesses” and to the issue of “in the interest of justice.”
The determination of “convenience” turns on a number of private and public
interest factors, none of which are given dispositive weight. The private concerns
include: (1) the relative ease of access to sources of proof; (2) the availability of
compulsory process to secure the attendance of witnesses; (3) the cost of attendance
for willing witnesses; and (4) all other practical problems that make trial of a case
easy, expeditious and inexpensive. The public concerns include: (1) the
administrative difficulties flowing from court congestion; (2) the local interest in
having localized interests decided at home; (3) the familiarity of the forum with the
law that will govern the case; and (4) the avoidance of unnecessary problems of
conflict of laws [or] the application of foreign law.
id. (citations omitted).
After considering “[a]ll relevant factors to determine whether or not on balance the
litigation would more conveniently proceed and the interests of justice be better served by transfer
to a different forum,” the decision to transfer venue under § 1404(a) is left to the sound discretion
of the court. See El Chico Rests. of Tex., Inc. v. Carroll, Civil Action No. 3:09-cv-2294-L, 2010
WL 2652286, at *2 (N.D. Tex. June 29, 2010) (alteration in original) (quoting Peteet v. Dow Chem.
Co., 868 F.2d 1428, 1436 (Sth Cir. 1989)).

IV. ANALYSIS
A. Personal Jurisdiction
(1) Gene Surh
Plaintiff asserts that Gene Surh is subject to specific personal jurisdiction based on the
following allegations: (1) Gene Surh is a shareholder of Tex Tech; (2) Dae Surh acted as Gene
Surh’s agent because Dae Surh transferred Gene Surh’s Tex Net shares to Tex Tech and attended
Tex Tech meetings in Texas, with Gene Surh’s consent; (3} Because Dae Surh was Gene Surh’s
alleged agent, Dae Surh’s Texas contacts should be imputed to Gene Surh; and (4) Between 2014
and 2018, Gene Surh communicated several times on behalf of Tex Tech regarding the disputed
shares, including communications directed toward Texas. Resp. 10-14. Defendants, on the other
hand, assert that Gene Surh resides in California, he does not have sufficient contacts with Texas,
and Plaintiff's claims do not arise out of Gene Surh’s alleged contacts with Texas. Defs.’ Texnet,
Inc., Theresa Surh, and Gene Surh’s Br. in Supp. of their Mot. to Dismiss Am. Compl. (“Br. in
Supp. of Mot. to Dismiss”) [ECF No. 29], 14-16, 24.
The Court finds that Gene Surh is not subject to specific personal jurisdiction for several
reasons. First, Gene Surh’s status as a Tex Tech shareholder is not sufficient to establish personal
jurisdiction. Bezner v. Poehler, Civil Action No. 3:18-cv-3060-B, 2019 WL 1514981, at *4 (N.D.
Tex. Apr. 8, 2019) (noting that it is “well understood” that an individual’s status as an officer,
director, or majority shareholder of a corporation alone is insufficient to support the exercise of
personal jurisdiction) (citation omitted).
Second, because Gene Surh’s alleged contacts with Texas, according to Plaintiff, were
made in his capacity as a Tex Tech shareholder, Tex Tech was the entity making contact with
Texas, not Gene Surh in his personal capacity. See Stuart, 772 F.2d at 1197 (noting that, as a
general rule, jurisdiction over an individual cannot be predicated on jurisdiction over a corporation

unless a basis exists for disregarding the corporate fiction). Furthermore, Plaintiff has not asserted
a basis for disregarding Tex Tech’s corporate status and imputing Tex Tech’s contacts to Gene
Surh. Petras v. Mole, Civil Action No. 3:11-cv-1402-N, 2012 WL 13103200, at *6 (N.D. Tex.
May 17, 2012) (“The party seeking to impute the corporation’s jurisdictional contacts has the
burden of proof.”) (citation omitted).
Third, despite Plaintiff's allegation that Dae Surh acted as Gene Surh’s agent with respect
to Gene Surh’s Tex Tech shares, Plaintiff does not allege facts that demonstrate an agency
relationship. Blueskygreenland Env’t Sols., LLC v. Rentar Env’t Sols., Inc., Civil Action No. 4:11-
ev-01745, 2011 WL 5553706, *4 (S.D. Tex. Nov. 14, 2011) (Conclusory assertions, without
evidence in the record, are insufficient to infer agency relationship for the purposes of establishing
personal jurisdiction.”) (citation omitted). “The critical element of an agency relationship is the
tight of control, and the principal must have the right to control both the means and the details of
the process by which the agent is to accomplish his task in order for an agency relationship to
exist.” Goodman v. Whole Foods Market, Inc., Cause No. A-05-CA-422-LY, 2006 WL 8432867,
at *6 (W.D. Tex. Sept. 26, 2006) (citation omitted). Plaintiff does not allege that Gene Surh (as
the alleged principal) had the right to control Dae Surh’s actions (as the alleged agent); rather,
from the facts alleged, it appears that Dae Surh merely gifted Gene Surh with Tex Tech shares.
Absent proof of the right to control, Plaintiff has not stated sufficient facts to demonstrate an
agency relationship between Dae Surh and Gene Surh.
Finally, Plaintiff's suit does not arise out of or result from Gene Surh’s alleged contacts
with Texas. The crux of the California Lawsuit is whether Plaintiff was authorized to execute the
Stock Transfer Agreement and whether Theresa Surh is entitied to all of the Verimatrix shares held
by Tex Net at the time of the transfer. Am. Compl. ff 66-67. The crux of the case pending in this

10

Court is whether Defendants should be enjoined from pursuing the California Lawsuit. Id. J 112-
63. The Court finds that Gene Surh’s alleged communications (on behalf of Tex Tech) regarding
his Tex Tech shares are not sufficiently related to the instant lawsuit to support the exercise of
personal jurisdiction, and, therefore, the Court finds that Plaintiff has not alleged sufficient facts
to make out a prima facie case supporting personal jurisdiction over Gene Surh.?
(2) Remaining Defendants
The Court need not consider whether Plaintiff has alleged sufficient facts to make out a
prima facie case supporting personal jurisdiction over Theresa Surh and Tex Net. Assuming
arguendo that the Court has personal jurisdiction over Theresa Surh and Tex Net, ifthe Court were
to dismiss the lawsuit against Gene Surh, Plaintiff could file her lawsuit against Gene Surh in the
Southern District of California, which would result in the same issues being litigated in two places.
This is disfavored. See Liaw Su Teng v. Skaarup Shipping Corp., 743 F.2d 1140, 1148 (Sth Cir.
1984), overruled on other grounds, In re Air Crash Disaster Near New Orleans, La. on July 9,
1982, 821 F.2d 1147 (Sth Cir. 1987) (finding courts “should not sever if the defendant over whom
jurisdiction is retained is so involved in the controversy to be transferred that partial transfer would
require the same issues to be litigated in two places”) (citation omitted). Multiple courts faced
with this situation have exercised their discretion to transfer the entire case to a district where the
lawsuit could have been brought. See, e.g., Brooks & Baker, L.L.C. v. Flambeau, Inc., Civil Action
No, 2:10-cv-[46-TIW-CE, 2011 WL 4591905, at *6 (E.D. Tex. Sept. 30, 2011) (transferring entire
action when court lacked personal jurisdiction over some, but not all, defendants); see also
Martinez v. Angel Expl., LLC, No. 2:12-CV-265, 2013 WL 1496954, at *5 (N.D. Tex. Apr. il,

3 Because Plaintiff did not meet its burden to show that Gene Surh has minimum contacts with Texas and that the
action arose out of those contacts, the Court need not consider whether Defendants demonstrated that the exercise of
jurisdiction is unfair and unreasonable. Excentus Corp. v. Success Sys., Inc., Civil Action No. 3:19-cv-0897, 2019
WL 6346476, at *7 (NLD, Tex. Nov. 26, 2019) (citation omitted).

1]

2013) (transferring entire action when venue was improper as to one defendant to avoid
unnecessary delay and expense). Thus, regardless of whether the Court has personal jurisdiction
over Theresa Surh and Tex Net, transfer of the entire action is appropriate under either 28 U.S.C.
§ 1406(a) or § 1404(a) for the reasons explained below.
B. 1406(a)
Section 1406(a) permits a court to transfer a case to any district or division in which it
could have been brought regardless of whether it has personal jurisdiction over the defendants,
Nationwide Bi-Weekly Admin., Inc. v. Belo Corp., 512 F.3d 137, 140 (Sth Cir, 2007) (citing 28
U.S.C. § 1406(a); Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466 (1962)). Defendants argue that
Plaintiff could have originally filed her lawsuit in the Southern District of California, see Br. in
Supp. of Mot. to Dismiss 24, which Plaintiff does not dispute. Defendants also consent to specific
personal jurisdiction for purposes of this lawsuit in the Southern District of California. Jd at 24
n.5.
The Court agrees that Plaintiff could have originally filed suit in the Southern District of
California because both venue and jurisdiction are proper there. Under 28 § U.S.C. 1391(b)(2), a
civil action may be brought in a judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred. A substantial part of the events giving rise to
Plaintiff's claims occurred in the Southern District of California because: (1) Defendants filed the

4 Moreover, Plaintiff does not address Defendants’ alternative motion to transfer venue in her Response. Accordingly,
Plaintiff has waived any objection to the motion to transfer venue. See, e.g., United Siates v. Reagan, 596 F.3d 251,
254 (5th Cir, 2010) (holding that failure to adequately brief an argument results in waiver); Black v. North Panola
School Dist., 461 F.3d 584, 588 (Sth Cir. 2006) (finding that plaintiff's failure to defend her claim in her response
to the defendant’s motion to dismiss “constituted abandonment”) (citation omitted); Arkansas v. Wilmington Tr. Nat’!
Ass'n, No. 3:18-CV-1481-L, 2020 WL 1249570, at *5 (N.D. Tex. Mar. 16, 2020) (‘Failure of a party to respond to
arguments raised in a motion to dismiss constitutes waiver or abandonment of that issue at the district court level.”).

12

California Lawsuit in the state court embraced by that district,” see Am. Compl., Ex. K; and (2) the
disputed transactions with Verimatrix occurred in that district, see id § 95 (noting the transfer of
Verimatrix shares from Tex Net to Tex Tech was ratified by Robin Ross Cooper on behalf of
Verimatrix); id., Ex. K, $4] 7-8 (noting Verimatrix’s principal place of business is in San Diego and
Robin Ross Cooper resides in San Diego). Alternatively, if there is no venue in which the action
may otherwise be brought, venue is proper in any judicial district in which any defendant is subject
to the court’s personal jurisdiction, 28 U.S.C. § 1391(b)(3). Thus, because Defendants assert that
they are subject to personal jurisdiction in the Southern District of California, Br. in Supp. of Mot.
to Dismiss 24, venue may also be proper under 28 U.S.C. § 1391(b)(3}. Accordingly, the Court
finds that the present lawsuit could have been brought in the Southern District of California.
Transfer is also appropriate in the interest of justice to avoid duplicative litigation arising from the
same transactions and events. See Taylor v. Turner Indus. Grp., LLC, Civil Action No. 2:11-cv-
57, 2011 WL 13134192, at *5 (E.D. Tex. June 20, 2011) (finding that splitting Plaintiff's claims
into multiple cases would be judicially and economically inefficient).
Cc. 1404(a)
Alternatively, Defendants argue that “the Court should transfer the case to the Southern.
District of California because that is a more convenient venue for the parties.” Br. in Supp. of
Mot. to Dismiss 24 n.4. The Court construes this argument as a motion to transfer venue pursuant
to 28 U.S.C. § 1404(a), See Walter Oil & Gas Corp. v. Teekay Shipping, 270 F. Supp. 2d 855,
859 (S.D. Tex. 2003) (construing motion to transfer venue for convenience as a motion to transfer
pursuant to 28 U.S.C. § 1404(a)). Having determined that Plaintiff's lawsuit could have been
brought in the Southern District of California, the Court must decide whether private and public

Defendants filed suit in the Superior Court of the State of California for the County of San Diego. Am, Compl., Ex.

13

concerns weigh in favor of or against the transfer. See In re Volkswagen AG, 371 F.3d at 203
(citation omitted).
The private concerns weigh in favor of transfer. Plaintiff filed her lawsuit to enjoin the
California Lawsuit and the facts and allegations contained in the Amended Complaint overlap
considerably with the facts and allegations asserted in the California Complaint. Compare Am.
Compl. with id, Ex. K (California Complaint), It is apparent that much of the evidence, witnesses,
and parties, including Gene Surh, located in California and relevant to the California Lawsuit
would also be relevant to the present case. The Court may not have jurisdiction over many of the
California witnesses to compel their attendance at trial. Further, the cost for the willing witnesses
to attend a trial in Texas would be significantly higher than for those witnesses located in
California. Therefore, the Court finds that trial would be more expeditious, and less expensive in
California.®
Finally, the public concerns also weigh in favor of transfer. Because Plaintiff’s lawsuit
centers on the California Lawsuit, involves actions that took place in California, and implicates
California residents, California has an interest in adjudicating this case. Although Plaintiff brings
her claims under Texas law, the transactional documents at issue in this case, which Plaintiff
attached to her Amended Complaint in support of her claims, are governed by California law.
Am, Compl., Ex. B (Security Agreement); id, Ex. C (Warrant to Purchase Series B Preferred
Stock); id., Ex. E (Founders Settlement Agreement and General Release); id, Ex. F (Settlement
Agreement); id., Ex. G (Stock Transfer Agreement); id, Ex. H (Verimatrix, Inc. Amended and
Restated Shareholders’ Agreement). The claims asserted in the California Lawsuit are also

® The Court also notes that a related case was transferred from this district to the Southern District of California
pursuant to 28 U.S.C. § 1406(a). See Lee v. Verimatrix, Inc,, Civil Action No. 3:19-cv-0898-B, 2019 WL 5535764
(N.D. Tex. Oct. 25, 2019) (case brought by James Pyung Lee and Plaintiff against Verimatrix, Inc., Robin Ross
Cooper, and Inside Secure regarding a dispute over Verimatrix, Inc, stock ownership).

14

brought under California law. Ex. K (California Complaint). Having weighed the private and
public factors, the Court concludes that the Southern District of California is clearly the most
convenient forum in which to litigate the parties’ dispute. Therefore, regardless of the status of
personal jurisdiction, transfer is proper under either 28 U.S.C. §§ 1406(a) or 1404(a).
V. CONCLUSION
For the foregoing reasons, the Court DENIES IN PART and GRANTS IN PART
Defendants’ Motion to Dismiss Amended Complaint [ECF No. 28]. The Court DENIES
Defendants’ Motion to Dismiss for lack of personal jurisdiction. The Court GRANTS
Defendants’ motion to transfer venue and TRANSFERS this case to the Southern District of
California, San Diego Division. As the Court exercises its discretion to transfer the case, the Court
shall not reach the remaining arguments in the Motion to Dismiss. Any unresolved issues are
respectfully deferred to the considered judgment of the transferee Court.
SO ORDERED.
SIGNED February 12, 2021.

KAREN GREN SCHOLER
UNITED STATES DISTRICT JUDGE

15

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10640097. Public record. Not legal advice.