Holtzman v. Vill. Green Mgmt. Co.

• Decision Date: 17 January 2020
• Docket Number: 2:19-cv-11150
• Citation: Holtzman v. Vill. Green Mgmt. Co., 2:19-cv-11150 (E.D. Mich. Jan 17, 2020)
• Parties: JONATHAN HOLTZMAN, et al., Plaintiffs, v. VILLAGE GREEN MANAGEMENT COMPANY LLC, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

JONATHAN HOLTZMAN, et al., Plaintiffs, v. VILLAGE GREEN MANAGEMENT COMPANY LLC, Defendant.

2:19-cv-11150

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

January 17, 2020

HON. TERRENCE G. BERG

ORDER GRANTING MOTION IN THE ALTERNATIVE TO TRANSFER CASE TO DISTRICT OF DELAWARE

This case arises from a so-called "business divorce" that has resulted in a number of lawsuits, including this one.The dispute before this Court pertains to whether the Defendant is unlawfully using PlaintiffJonathan Holtzman's family name and history in its advertising.Holtzman and his wholly owned company, City Club Apartments, LLC, also a plaintiff, are seeking a preliminary injunction to stop DefendantVillage Green Management Company, LLC from using the Holtzman family name and history in the company's website and advertising, and from claiming that Village Green Management Company, LLC was established in 1919 and is therefore 100 years old.Plaintiffs' underlying claims involve alleged violations of the Lanham Act,15 U.S.C. § 1125, and common law prohibiting unfair competition.Relying on a forum-selection clause contained in the agreement that established the terms of the "business divorce,"DefendantVillage Green Management Company, LLC seeks to dismiss this suit under the principle of forum non conveniens or, alternatively, to transfer the case to a federal court in Delaware pursuant to 28 U.S.C. § 1404(a).For the reasons discussed herein, the Court will grant Defendant's motion in the alternative, ECF No. 7, and transfer this case to the District of Delaware.Plaintiffs' motion for a preliminary injunction, ECF No. 15, will accordingly be denied.

BACKGROUND

Until 2016, PlaintiffJonathan Holtzman was the principal owner of the Holtzman family's conglomerate of business entities (the "Village Green entities").ECF No. 1, PageID.1, 3(Compl.).For approximately 100 years, the Village Green entities have engaged "in the business of developing, operating and managing high-end multifamily housing complexes."ECF No. 1, PageID.1, 3.In 2011, Holtzman agreed to partner with CCI Historic, Inc.("CCI"), a Dallas-based private-equity firm.Id.As a result of that agreement, CCI became a 50-percent owner of the Village Green entities.Id.DefendantVillage Green Management Company, LLC, a Delaware limited-liability company, was established as part of the process of organizing this partnership.ECF No. 14-2, PageID.354(Holtzman Decl.).SeeECFNo. 14-5(Village Green Management Company, LLC Del. Dep't of State Profile)(providing an incorporation date of 10/04/2011).According to Mark Van Kirk, CCI's President,DefendantVillage Green Management Company, LLC was formed "[i]n connection with the execution" of this deal and continued to perform the property-management functions that had previously been performed by another entity also called Village Green Management Company.ECF No. 22-2, PageID.565-66(Van Kirk Decl.).The older Village Green Management Company entity was established "around 1966."ECF No. 22-3, PageID.720(Diane Batayeh Decl.).

After a few years, the relationship between CCI and the Village Green entities began to deteriorate.Plaintiffs contend that CCI's method of "maximizing profit at the expense of quality service" was incompatible with the Village Green entities' business ethos.ECF No. 1, PageID.1, 3.Because of this discord, in 2016 Holtzman and CCI agreed to a "business divorce" which was executed through a contract labelled the "Redemption Agreement".SeeECF No. 1, PageID.5.The primary purpose of this agreement was "to divide up the ownership of the assets of [the]Village Green[entities]."ECF No. 22-2, PageID.566.The Redemption Agreement includes a clause providing that "any party may publicly or privately relay the history of 'Village Green' generally and the VGH [Village Green Holding] entities in the aggregate, including for marketing reasons, but no Party may misrepresent such history."ECF No. 7-1, PageID.171.

Pursuant to the Redemption Agreement, CCI acquired Holtzman's share of the Village Green property-management entities, including now-DefendantVillage Green Management Company, LLC.Accordingly, CCInow has complete control of DefendantVillage Green Management Company, LLC and other entities responsible for managing Holtzman's properties.ECF No. 1, PageID.4.Holtzman in turn, through an entity named Village Green Residential Properties, purchased properties that had previously been jointly owned with CCI and also secured an option to purchase properties being developed together with CCI, including projects known as Morrow Park and Southside Works.ECF No. 1, PageID.4-5.In addition, Holtzman established a new management company of his own, City Club Apartments, the other Plaintiff in this suit.ECF No. 14-2, PageID.354(stating that Holtzman incorporated City Club Apartments in December 2015).Holtzman is Chief Executive Officer, Manager, and Co-Chairman of City Club Apartments.

Plaintiffs' main contention is that DefendantVillage Green Management Company, LLC misleads the renting public and businesses operating in the multi-family housing industry by advertising itself as an entity established in 1919 and improperly touting accolades acquired during the Holtzman family's ownership and operation of the properties.ECF No. 1, PageID.5, 7.Essentially, Plaintiffs urge that Village Green Management Company, LLC is coopting the Holtzman family's legacy of success in developing and managing single and multi-family residential communities.The record indicates that Joseph Holtzman, the grandfather of PlaintiffJonathan Holtzman, began developing, building, and managing apartment communities in 1919.ECF No. 1, PageID.6.That operation was subsequently taken over by Holtzman & Silverman.ECF No. 1, PageID.6.The Village Green entities, which CCI acquired as a result of the Redemption Agreement, were not established until 1968 and were initially owned and operated by Joseph Holtzman and subsequently by Jonathan Holtzman in conjunction with "various successive partners, including CCI."ECF No. 1, PageID.6.

On November 21, 2018, counsel for Plaintiffs sent a cease-and-desist letter requesting that CCI immediately refrain from "using misleading and unauthorized advertising materials referring to the Village Green companies' purported activities and history that pre-date such companies' inception."ECF No. 5, PageID.16(Nov. 21, 2018 Cease-and Desist Notice).Village Green Management Company, LLC continued to engage in the challenged conduct so on April 19, 2019Plaintiffs Holtzman and City Club Apartments filed the instant lawsuit.See generallyECF No. 1.

The record shows as well that Holtzman and some of the Village Green entities are also in litigation with CCI and its parent entity, Compatriot Capital, Inc., in Delaware Chancery Court, where Defendant would prefer this case be litigated.¹There, Holtzman, Village Green Residential Properties, LLC, and VGM Clearing, LLC are suingCompatriot and CCI for claims "stem[ming] from the 'business divorce' between Compatriot and Mr. Holtzman."ECF No. 7-1, PageID.63.More specifically, that litigation involves CCI and Compatriot's alleged interference with Holtzman's rights under the Redemption Agreement to purchase the Morrow Park and Southside Works properties.SeeECF No. 1, PageID.2;ECF No. 7-1, PageID.67-68(Del. Ch. Compl. #1).The complaint in that case, filed by Holtzman and two of his companies, states that under the Redemption Agreement the parties have "consent[ed] to personal and exclusive jurisdiction in Delaware for purposes of litigation arising from or relating to certain business of Village Green and the Redemption Agreement."ECF No. 7-1, PageID.225.

In another lawsuit, also pending in Delaware Chancery Court, Village Green Holding LLC, owned by CCI, is suing the Plaintiffs in this case(Holtzman, and City Club Apartments), as well as other related entities.ECF No. 7-1, PageID.223. (Del. Ch. Compl. #2).The complaint in that case, which also arises from the Redemption Agreement, likewise states that "[t]he [Delaware Chancery]Court has personal jurisdiction over each of the Defendants because in the Redemption Agreement each party consented to personal and exclusive jurisdiction in Delaware for purposes of litigation arising from or relating to certain business of Village Green and the Redemption Agreement."ECF No. 7-1, PageID.225.The central question now before the Court is whether theinstant litigation should be transferred to a state or federal court in Wilmington, Delaware because of the forum-selection clause in the Redemption Agreement.

DefendantVillage Green Management Company, LLC has moved to dismiss this case under the doctrine of forum non conveniens or, in the alternative, to transfer the matter to a federal district court in Wilmington, Delaware pursuant to 28 U.S.C. § 1404(a).Defendant roots this request for dismissal or transfer in the Redemption Agreement's forum-selection clause, which provides:

Each party to this agreement hereby consents to the jurisdiction of any United States District Court or Delaware State Court located in Wilmington, Delaware and irrevocably agrees that all actions or proceedings arising out of or relating to this agreement or the transactions contemplated hereby (whether such actions or proceedings are based in statute, tort, contract or otherwise), shall be litigated in such courts.

ECF No. 7-1, PageID.169.Plaintiffs have also filed a motion for a preliminary injunction requesting that this Court order Village Green Management Company, LLC to refrain from engaging in the challenged advertising conduct during the pendency of this litigation.SeeECF No. 15.Oral argument was presented to the Court on both motions on October 31, 2019.

DISCUSSION

Although the plain language of the Redemption Agreement's forum-selection clause mandates that the parties have consented to "...