The opinion of the court was delivered by: SEAN McLAUGHLIN, District Judge
MEMORANDUM AND ORDER OF COURT
This is an action for declaratory judgment and damages.
Plaintiffs, AMG Industries Corporation ("AMG Industries"), AMG
Holding Corporation and Allan M. Goldstein, have filed suit
against their former lawyer, defendant Rexford L. Lyon.
Plaintiffs seek a declaration that defendant is required to
indemnify them if plaintiff Goldstein is found liable to
defendant's wife in a proceeding currently pending in the
United States District Court for the District of New Jersey, Trenton
Division. Specifically plaintiffs allege that defendant, in his
capacity as their lawyer breached various duties he owed
plaintiffs and otherwise acted improperly by failing to disclose
that defendant's wife intended to sue plaintiff Goldstein.
Plaintiffs also seek compensatory and punitive damages, and the attorneys' fees they have incurred thus far in defending the New
Defendant has filed a motion to dismiss pursuant to
Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which
relief may be granted. Defendant argues that there is no case or
controversy that is ripe for adjudication because plaintiffs have
not been held liable to his wife in the New Jersey action and,
thus, have not suffered any harm. Defendant has also filed a
motion to transfer pursuant to 28 U.S.C. § 1404. For the reasons
that follow, we will grant defendant's motion to transfer and
order that this case be transferred to the United States District
Court for the District of New Jersey, Trenton Division, where
related litigation is pending.
The background of this case is somewhat complicated. Lois Lyon,
Rexford Lyon and Allan Goldstein used to practice law together in
New Jersey. Amended Complaint at ¶ 11 (hereinafter "Compl."). In
1988, Mr. Goldstein formed AMG Industries, PLC, (hereinafter "the
PLC") under the laws of Great Britain. Compl. ¶ 9. According to
plaintiffs, defendant Rexford Lyon was appointed the board of
directors of the PLC and was retained as legal counsel for the
PLC and provided legal advice to Mr. Goldstein. Compl. ¶¶ 11 &
13. Mrs. Lyon wanted to invest $300,000 in the PLC. Compl. ¶ 11. At the time, a subscription
agreement prohibited Mrs. Lyon from purchasing stock in the PLC.
Id. Instead, Mrs. Lyon and Mr. Goldstein executed a warrant
agreement which, inter alia, would allow Mrs. Lyon to purchase
55,835 shares of stock on demand at a nominal purchase price.
Id. Plaintiffs allege that, in his capacity as corporate
counsel, defendant drafted the warrant agreement between the PLC
and his wife. Id. Plaintiffs further allege that plaintiff
Goldstein directed defendant to keep his wife advised of any
material changes to the PLC. Compl. ¶ 11.
In 1992, the PLC underwent a corporate reorganization and
swapped stock with its wholly owned subsidiary, AMG Industries, a
Delaware corporation. Compl. ¶ 15. As a result, the British
corporation became a subsidiary of the Delaware corporation, and
the name was changed to AMG Industries. Id. Plaintiffs allege
this corporate reorganization was designed and implemented by
defendant. Defendant was thereafter appointed to the board of
directors of AMG Industries, Inc. Compl. ¶ 16.
On March 2, 1998, Mrs. Lyon attempted to exercise her rights
under the warrant agreement and served a certified check for
$558.35, the original warrant certificate, and a completed form
of election to purchase on plaintiff Goldstein. Compl. ¶ 18.
Plaintiff Goldstein advised Mrs. Lyon that he was still prohibited from issuing stock to her because of the subscription
agreement. Id. In 2003, AMG Industries implemented a "squeeze
out" merger to force certain minority shareholders to sell their
equity interest to AMG Industries. Compl. ¶ 22. As a result of
the merger, a new Delaware corporation, AMG Holding Corporation,
was formed. Id. Plaintiffs contend that defendant did not
inform them that his wife believed the warrant agreement had been
breached. Id. Plaintiffs allege that, had defendant properly
informed them his wife intended to sue plaintiffs, they would
have purchased her shares as part of the "squeeze out" merger.
In 2004, plaintiff Goldstein, defendant and Mrs. Lyon had a
meeting to discuss the warrant agreement. Compl. ¶ 24. Soon
thereafter, Mrs. Lyon filed a complaint against plaintiff
Goldstein in the Superior Court of New Jersey, alleging breach of
the warrant agreement. Compl. ¶ 25. Mrs. Lyon did not serve the
complaint on plaintiff Goldstein nor did defendant inform
plaintiffs of the lawsuit. Id. Mrs. Lyon thereafter filed and
served an amended complaint in state court. Plaintiff Goldstein
timely removed Mrs. Lyon's complaint to the United States
District Court for the District of New Jersey, Trenton Division.
That case is currently pending. Compl. ¶¶ 28 & 30. On February 15, 2005, plaintiffs AMG Holding Corporation and
AMG Industries filed a "Complaint for Declaratory Judgment"
against defendant in this court. Thereafter, on May 18, 2005,
plaintiffs filed an amended complaint adding plaintiff Goldstein
and seeking declaratory judgment and damages. The gravamen of
plaintiffs' complaint is that defendant should have informed
plaintiffs that his wife believed that they had breached the
warrant agreement and that she intended to sue them. Plaintiffs
contend that, had they known of Mrs. Lyon's intentions, they
would have purchased her shares in 1998 for a total of $227,248.
Plaintiffs have asserted five (5) counts: breach of the fiduciary
duty of loyalty (Count I); misrepresentation (Count II);
negligent misrepresentation (Count III); breach of the fiduciary
duty of care (Count IV); and breach of duty as legal counsel
(Count V). Plaintiffs seek compensatory and punitive damages; the
legal fees they have incurred thus far in defending Mrs. Lyon's
cause of action in New Jersey; and a declaration that defendant
is liable for any damage award to Mrs. Lyon in excess of
When the court considers a Rule 12(b) (6) motion to dismiss,
the issue is not whether plaintiff will prevail in the end or whether recovery appears to be unlikely or even remote. The issue
is limited to whether, when viewed in the light most favorable to
plaintiff, and with all well-pleaded factual allegations taken as
true, the complaint states any valid claim for relief. See
ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994). In
this regard, the court will not dismiss a claim merely because
plaintiff's factual allegations do not support the particular
legal theory he advances. Rather, the court is under a duty to
examine independently the complaint to determine if the factual
allegations set forth could provide relief under any viable legal
theory. 5A Charles Alan Wright & Arthur R. Miller, Federal
Practice & Procedure § 1357 n. 40 (2d ed. 1990). See also
Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
Section 1404(a) provides that "[f]or 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 court has
wide discretion "to adjudicate motions for transfer according to
an `individualized, case-by-case consideration of convenience and
fairness." Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 29
(1988). Requests for transfer under § 1404(a) may be ...