Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-02965/USCOURTS-cand-5_05-cv-02965-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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 This disposition is not designated for publication and may not be cited.

Case No. C 05-02965 JF 

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION 

(JFEX1)

**E-Filed**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SUSAN E. WOODWARD, et al.,

 Plaintiff,

 v.

CONRAD P. SEGHERS, et al.,

 Defendants.

Case Number C 05-02965 JF

ORDER1 TRANSFERRING ACTION

TO THE NORTHERN DISTRICT OF

TEXAS AND DENYING MOTION

FOR RECONSIDERATION

[re: docket no. 46]

On July 20, 2005, Plaintiff Susan E. Woodward (“Woodward”) filed the instant

complaint against Defendants Conrad P. Seghers (“Seghers”), Charles B. Manuel (“Manuel”),

and Manuel & Jones, P.C. (“Manuel & Jones”), alleging four claims for relief: (1) Breach of Oral

Contract, (2) Money on Open Book Account, (3) Complaint for Work, Labor, and Services at

Agreed Price, and (4) Complaint for Reasonable Value of Work, Labor and Services. Seghers,

proceeding pro se, moves to transfer the action to the Northern District of Texas, and

alternatively for reconsideration of Magistrate Judge Lloyd’s Order dated November 1, 2005

denying Seghers’s motion to dismiss for lack of personal jurisdiction. Woodward opposes both

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

motions. The Court has considered the parties’ briefing as well as the oral arguments presented

on June 30, 2006. For the reasons set forth below, the Court will transfer the instant action to the

Northern District of Texas. The motion for reconsideration will be denied. 

I. BACKGROUND

Woodward alleges the following: in 1998, Seghers, James R. Dickey (“Dickey”), and

Samer M. El Bizri founded a hedge fund company, Integral Investment Management, L.P.

(“Integral”). Through Integral, Seghers and Dickey offered and sold securities in three Texasbased hedge funds. The Art Institute of Chicago invested millions of dollars into these hedge

funds. In 2001, the hedge funds lost as much as 90% of their initial investments. Following

these losses, the Art Institute of Chicago filed suit against Seghers and Dickey in the Dallas

County District Court for allegedly defrauding it of millions of dollars. At about the same time,

the Securities and Exchange Commission (“SEC”) began an investigation of Seghers and Dickey. 

In 2002, Seghers’s counsel, Lawrence J. Friedman (“Friedman”) of Friedman and Feiger,

hired Woodward as an expert in the areas of economics and securities matters. Woodward

subsequently traveled to Dallas, Texas to consult with Seghers and Dickey and then returned to

California where she reviewed various depositions and documents related to the SEC

investigation. She was paid $15,000 to $20,000 for these services at a rate of $500 per hour. 

On June 16, 2004, the SEC filed a complaint against Seghers and Dickey in the United

States District Court for the Northern District of Texas. Seghers contacted Woodward in the fall

of 2004 to retain her expertise in connection with a motion for summary judgment filed by the

SEC. By this time, Seghers had retained Manuel as new counsel. Dickey retained Dwayne J.

Hermes (“Hermes”) of Hermes, Sargent & Bates LLP in Dallas, Texas. On January 6, 2005,

after several conversations with Manuel, Woodward sent a retainer agreement to Manuel stating

that her hourly rate was $600. Woodward thereafter began working on the case. Manuel and

Seghers sent the necessary documents and deposition transcripts to California where Woodward

resided. Woodward reviewed the relevant information and prepared an expert report dated

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2The invoice accounted for 71.5 hours of Woodward’s time.

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

February 5, 2005. On February 7, 2005, she mailed an invoice for $42,900.00 to Manuel &

Jones.2

On February 18, 2005, Woodward, Bruce Deal of Analysis Group, and Hermes met in

Menlo Park, California to discuss the SEC suit. Manuel and Amy Benevidez of Hermes, Sargent

& Bates LLP participated in the discussion via teleconferencing from Texas. Woodward alleges

that during this conversation Manuel stated that she should consider her retainer agreement

signed. 

At the request of Manuel and Seghers, Woodward prepared a second expert report in

early March. Woodward sent an invoice of $44,100.00 for the second report to Manuel & Jones. 

At about this time, Seghers informed Woodward that insurance funds were available to pay her. 

Woodward alleges that because the insurance company would pay only $425 per hour, Seghers

requested that she bill more hours than she had in fact worked. Woodward refused to adjust her

hours. 

In early May 2005, Woodward again billed Manuel for the two expert reports. Seghers

informed Woodward that on April 26, 2005, an injunction had been issued barring payment of

the insurance proceeds to Seghers and Dickey. Woodward subsequently telephoned Manuel at

least three times, but he did not return her calls. On June 2, 2005, Jennifer J. Snyder (“Snyder”)

from Reed Smith LLP sent Manuel a letter on behalf of Woodward demanding payment for her

expert reports by June 13, 2005. On June 9, 2005, Manuel sent Snyder a letter stating that he

refused to pay the $87,000. Woodward filed this action on June 20, 2005.

On May 1, 2006, Seghers filed a counterclaim against Woodward and her firm, Sand Hill

Econometrics, Inc. (“Sand Hill”) in this action. Seghers also filed a complaint against

Woodward and Sand Hill in the Northern District of Texas demanding $25,029,000 in damages.

Seghers’s motion to consolidate that action with the current action is pending in the Northern

District of Texas.

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

II. DISCUSSION

A. Motion to Transfer

Seghers argues that the instant action should be transferred to the Northern District of

Texas on the ground of convenience. “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). Venue in the instant action is proper in

either the Northern District of California, where Woodward resides, or the Northern District of

Texas, where Seghers resides. See 28 U.S.C. § 1391(a). Transfer of venue under 28 U.S.C. §

1404(a) helps “avoid [] disruption, expense, and inconvenience [that] parties must suffer by

having the trial in an improper forum.” Pacific Car & Foundry Co. v. Pence, 403 F.2d 949, 952

(9th Cir. 1968). 

A motion for transfer pursuant to § 1404(a) lies within the discretion of the Court. Jones

v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). The decision whether to grant such

a motion turns on the facts of the particular case. Id. The factors to be weighed in deciding a

motion for transfer include: (a) the location where the relevant agreements were negotiated and

executed; (b) the state that is most familiar with the governing law; ©) the plaintiff's choice of

forum; (d) the respective parties’ contacts with the forum and the contacts relating to the

plaintiff’s cause of action in the chosen forum; (e) the differences in the costs of litigation in the

two forums; (f) the availability of compulsory process to compel attendance of unwilling

non-party witnesses; (g) the ease of access to sources of proof; and (h) the relevant public policy

of the forum state, if any. Id. at 498-99. Ordinarily, a plaintiff’s choice of forum is accorded

substantial weight, and courts will not grant a motion under § 1404(a) unless the “convenience”

and “justice” factors tip strongly in favor of transfer. Florens Container v. Cho Yang Shipping,

245 F. Supp. 2d 1086, 1092 (N.D. Cal. 2002); see also Piper Aircraft Co. v. Reyno, 454 U.S.

235, 257 (1981); Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir.

1986). 

Seghers argues that: (1) seventeen non-party witnesses are located in Dallas, (2) all

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

relevant conduct occurred in Dallas, (3) the underlying litigation for which Woodward was hired

as an expert occurred in Dallas, (4) any work Woodward may have performed was done in

connection with litigation in Dallas, and (5) Seghers does not have the financial resources to

defend this litigation in California. 

Woodward argues that: (1) she is a resident of California, (2) the original complaint was

filed in the Northern District of California, and (3) she created the expert reports in California. 

At the hearing, Woodward’s counsel presented additional arguments that the instant action

should remain in California because this involves a simple matter of contract interpretation, and

the witnesses named by Seghers are unnecessary to resolution of the suit. 

After considering all of the relevant factors, this Court concludes that transfer to the

Northern District of Texas is appropriate. 

1. The Location Where the Relevant Agreements Were Negotiated and Executed

Woodward initially flew to Dallas in 2002 to discuss the possibility that she would be

hired as an expert in the SEC investigation. She apparently then did significant work for Seghers

without a written contract. The business relationship that began in 2002 continued intermittently

throughout the following years and always focused on the Texas SEC action. Woodward

prepared the two expert reports for which she seeks payment in connection with the Texas action. 

Again, it appears that this work was done without a written contract. The parties agree that

Woodward, Seghers and Manuel engaged in telephone conversations from their respective states,

and that a meeting took place in preparation for the SEC lawsuit in which Dickey’s counsel

traveled to California while Seghers and his counsel participated from Texas via

telecommunication. Accordingly, this factor does not weigh heavily for or against transfer. 

2. The State That is Most Familiar With the Governing Law

The legal issues involve relatively straightforward questions of contract and accounting

law. Either Texas or California will be capable of determining and applying the appropriate law. 

3. The Plaintiff's Choice of Forum

“The general rule is that the plaintiff’s choice of forum is afforded substantial weight.” 

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3

 Woodward argues that the first-to-file rule also is applicable to the instant action. Under

the first-to-file rule, when two cases involve the same or substantially similar parties and issues,

and are filed in two different federal courts, the court that received the later filing has discretion

to stay, transfer, or dismiss the second action, and the first action filed generally should proceed

to judgment. Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622, 628 (9th Cir. 1991);

Pacesetter Systems, Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982). The first-to-file rule

is applied at the discretion of the court. Biosite, Inc. v. XOMA Ltd., 168 F. Supp. 2d 1161, 1164

(N.D. Cal. 2001). Technically, the first-to-file rule is inapplicable here because this is the district

where the original complaint was filed. Nonetheless, the reasoning behind the first-to-file rule is

given deference when the Court considers the plaintiff’s choice of forum. 

4

 Seghers submitted a declaration supporting these assertions.

6

Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

Carolina Cas. Co. v. Data Broadcasting Corp., 158 F. Supp. 2d 1044, 1048 (N.D. Cal. 2001). 

“But, ‘[t]he degree to which courts defer to the plaintiff’s chosen venue is substantially reduced

where the plaintiff's venue choice is not its residence or where the forum chosen lacks a

significant connection to the activities alleged in the complaint.’” Id. (quoting Fabus Corp. v.

Asiana Exp. Corp., 2001 WL 253185 at *1 (N.D. Cal. 2001). Because Woodward resides in

California, and performed at least some of the services at issue in California, this factor weighs

heavily against transfer.3

4. The Respective Parties’ Contacts With the Forum and The Contacts Relating to the

Plaintiff’s Cause of Action in the Chosen Forum

Woodward’s services were focused on the Texas SEC action. While she prepared her

expert reports in California, the purpose of those reports was to aid Seghers in the Texas

litigation, and it was contemplated that she would testify at trial in the Texas action. Seghers

asserts that he suffered significant damages because Woodward did not in fact testify in the SEC

action (apparently she refused to testify because of the bill dispute). There is no allegation or

indication that either Seghers or Manuel ever traveled to California. All parties agree that

Woodward traveled to Texas on one occasion. This factor weighs heavily in favor of transfer.

5. The Differences in the Costs of Litigation in the Two Forums

Seghers asserts that he cannot afford to travel to California to defend this litigation and

cannot afford to hire counsel in California.4 Seghers further argues that because Woodward

already has retained counsel in Texas to represent her in the case he filed against her, it is more

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5

 Manuel resides in Connecticut and Florida.

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

economically feasible for her to litigate the action in Texas than for Seghers to litigate in

California. Woodward argues that a change of venue will simply shift the burden of litigation

from Seghers to her.

Seghers also asserts that seventeen non-party witnesses reside in the state of Texas. 

Seghers and Dickey are residents of Texas. The only resident of California who has been

identified as a potential trial witness is Woodward. “The convenience of the witnesses is often

the most important factor” when determining which forum would be the most convenient. 

Florens Container v. Cho Yang Shipping, 245 F. Supp. 2d 1086, 1092 (N.D. Cal. 2002). This

factor weighs in favor of transfer.

6. The Availability of Compulsory Process to Compel Attendance of Unwilling Non-Party

Witnesses 

The non-party witnesses are presumptively unavailable for trial in California, as they are

outside the subpoena power of this Court. See Fed. R. Civ. Proc. 45(b)(2). Seghers indicates

that these potential witnesses include three employees of Hermes, Sargent and Bates LLP, nine

employees of Friedman and Feiger, four individuals who reside in Texas, and Manuel.5 Reply

pp. 14-17. Seghers argues that all of these individuals can attest to the exchanges that took place

between the parties and whether a contract was formed. Id. Seghers further asserts that the

witnesses are not under his control because they are not his employees and he has dismissed his

counsel due to lack of finances. Woodward argues that these witnesses are irrelevant to the

action, which she characterizes as a simple collection action. However, it appears that there are

several factual issues regarding contract formation and performance that will implicate at least

some of these witnesses. Accordingly, this factor weighs in favor of transfer. 

7. The Ease of Access to Sources of Proof

Seghers argues that because the events giving rise to the instant claim, the SEC suit and

Seghers’s interactions with the Art Institute of Chicago predominately took place in Texas, Texas

is a better forum to access the evidence. Woodward asserts that she prepared all of the expert

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

reports in California, that she received information regarding the reports in California, and that

she was in California when she discussed her expert services over the phone with Seghers and

Manuel. All of the interactions arising between the parties stem from the business relationship

that was formed in Texas in 2002 and continued until 2005. As noted above, it appears that

witnesses and documents in Texas – specifically documents relating to the underlying SEC

action– will be relevant to the instant action. Transfer of venue to Texas would make the

documents and witnesses more accessible. Accordingly, this factor weighs in favor of transfer.

8. Relevant Public Policy

Woodward argues that Seghers has “unduly delayed in making a transfer motion,” and

that the transfer should not be granted in the interest of justice. Seghers contends that he did not

delay in asking for a change of venue. Instead, he argues that he was preparing for a trial in

February 2006 and has not been able to focus on this case until recently. Trial is a considerable

time commitment. Seghers’s delay in filing a motion to transfer is not unreasonable under the

circumstances. Furthermore, only one case management conference has been conducted in this

Court with respect to the instant matter. 

Weighing all of the above factors, the Court concludes that transfer of venue is

appropriate. Accordingly, the Court will grant the motion to transfer venue to the Northern

District of Texas. 

B. Motion for Reconsideration

Seghers moves for reconsideration of Magistrate Judge Lloyd’s Order denying his motion

to dismiss for lack of personal jurisdiction. A United States Magistrate Judge may obtain

jurisdiction either by referral from a district court judge or consent by the parties. See 28 U.S.C.

§ 636. On October 13, 2005, Seghers indicated that he consented to have Magistrate Judge

Lloyd issue a dispositive ruling with respect to his motion to dismiss: “Defendant Conrad P. 

Seghers consents to submit the matter of personal jurisdiction to a United States Magistrate

Judge.” Order RE: Reassignment p. 2. Accordingly, when Magistrate Judge Lloyd denied

Seghers’s motion to dismiss on November 1, 2005, he had jurisdiction to do so. 

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

It appears that Seghers, a pro se party, mistakenly believes that even though he consented

to have Magistrate Judge Lloyd rule upon his motion to dismiss, he has recourse by means of a

motion for reconsideration before a district judge. However, when a party has consented to

proceed before a magistrate judge, as Seghers did, that party properly should file a motion for

reconsideration with the magistrate judge who issued the order. Accordingly, it would have been

appropriate for Seghers to file his motion for reconsideration with Magistrate Judge Lloyd. 

Instead, Seghers filed a motion for reconsideration by a United States District Court Judge. 

The action ultimately was transferred to this Court because there appeared to be some

ambiguity regarding Seghers’s consent to proceed before Magistrate Judge Lloyd. Because

Seghers is proceeding pro se, this Court will disregard the procedural defects of the motion for

reconsideration and reach the merits of the motion. The motion is governed by Civ. L. R. 7-9,

which requires that the party seeking leave to file a motion for reconsideration show:

(1) That at the time of the motion for leave, a material difference in fact or law

exists from that which was presented to the Court before entry of the interlocutory

order for which reconsideration is sought. The party also must show that in the

exercise of reasonable diligence the party applying for reconsideration did not

know such fact or law at the time of the interlocutory order; or

(2) The emergence of new material facts or a change of law occurring after the

time of such order; or

(3) A manifest failure by the Court to consider material facts or dispositive legal

arguments which were presented to the Court before such interlocutory order.

Civ. L. R. 7-9(b). Seghers’s motion for reconsideration does not present an excusable failure to

present material facts or law, does not indicate that there has been a material change in fact or

law since Magistrate Judge Lloyd’s order was issued, and does not suggest that Magistrate Judge

Lloyd failed to consider material facts or arguments. Accordingly, this Court will deny Seghers’s

motion for reconsideration. 

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

IV. ORDER

Good cause therefore appearing, IT IS HEREBY ORDERED that the motion to transfer is

GRANTED and the motion for reconsideration is DENIED. The Clerk of the Court SHALL

TRANSFER the action to the Northern District of Texas.

DATED: July 28, 2006

 

JEREMY FOGEL

United States District Judge

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Case No. C 05-02965 JF

ORDER TRANSFERRING ACTION TO THE NORTHERN DISTRICT OF TEXAS AND DENYING MOTION FOR

RECONSIDERATION

(JFEX1)

This Order has been served upon the following persons:

John L. Cooper jcooper@fbm.com, brestivo@fbm.com, calendar@fbm.com 

Thomas B. Mayhew tmayhew@fbm.com, ksmall@fbm.com, calendar@fbm.com 

Jenny A. Teaford jteaford@fbm.com, pvoight@fbm.com, calendar@fbm.com 

Charles B Manuel, Jr

Suite 1000

230 Park Avenue

New York, NY 10169

Manuel & Jones, P.C.

Suite 1000

230 Park Avenue

New York, NY 10169

Charles Manuel, Jr , JR

Manuel & Jones PC

Suite 2000

230 Park Avenue

New York, NY 10169

Conrad P Seghers

7010 Clear Springs Parkway

Garland, TX 75044

Case 5:05-cv-02965-JF Document 55 Filed 07/28/06 Page 11 of 11