SAN FRANCISCO — A group of Californian investors who were solicited to invest in oil and gas partnerships had a motion to transfer the case to Oklahoma granted in court.
U.S. District Judge Jacqueline Corley, on the bench of the U.S. District Court for the Northern District of California, issued a 15-page order, transferring the venue of the lawsuit filed by Stephen Chess, Lois Chess, Bruce Callander, Jeff Drawdy and Susan Drawdy against Richard Romine and Striker Entities.
The group sued Romine and Striker under allegations of common-law fraud and violation of the California Business and Professions Code.
As described in the order, Romine and Striker "promote, solicit investments in, and operate 'partnerships that purportedly…acquire oil and gas drilling rights and engage in drilling.'” They advertised "these partnerships 'as tax shelters,' soliciting plaintiffs and others in California 'through written offering memoranda and subscription agreements,'” the order said.
The plaintiffs said in the order that Romine "omitted to inform Plaintiffs that 'the programs had not been properly vetted as tax shelters and would [thus] put Plaintiffs at risk for IRS audits and resulting penalties and interest.'" The defendants also "'diverted' the cash investments 'from drilling activities' to Mr. Romine, and 'destroyed records in order to make it more difficult for investors or the IRS to track how the cash invested in the programs was used,'” the court document said.
When filing the motion, the group of investors argued that "transfer of this action to the U.S. District Court for the Western District of Oklahoma is warranted 'because many of the promissory notes which are the subject of this Action' contain a forum-selection clause providing that 'all suits related to liability under this Note shall be filed in Shawnee, Okla.,'” as well as to the fact that the transfer was necessary to avoid duplicate litigation.
In her order, Judge Corley sided with the defendants' motion to transfer the lawsuit, stating that "the first-to-file factors weigh in favor of transferring this case to the Western District of Oklahoma, and a transfer clearly serves to 'maximize economy, consistency, and comity.'”
U.S. District Court for the Northern District of California Case number 3:18-cv-05098-JSC