Opinion
Civ. No. 04-21 (RHK/AJB)
April 19, 2004
David S. Evinger and Elisabeth M. Will, Robins, Kaplan, Miller Ciresi, LLP, Minneapolis, Minnesota, for Plaintiff
Konstandinos Nicldow, Meshbesher Spence, Ltd., Minneapolis, Minnesota, for Defendants
MEMORANDUM OPINION AND ORDER
Introduction
Plaintiff Birmingham Fire Insurance Company of Pennsylvania ("Birmingham Fire") and Defendants Up North Plastics, Inc., Poly-America, LP, and Poly-America, Inc. (collectively, "Defendants") dispute the coverage of an all-risk insurance policy. Defendants have moved pursuant to 28 U.S.C. § 1404(a) to transfer this matter to the United States District Court for the Northern District of Texas. Because the Court finds that Defendants have failed to demonstrate that the balance of factors under § 1404(a) warrants transfer, the Motion will be denied.
Background
On December 14, 2002, a fire broke out at Up North Plastic's manufacturing facility in Cottage Grove, Minnesota (the "Property"). (Bertrand Aff. ¶¶ 15, 16.) Up North Plastics, a Minnesota corporation with its principal place of business in Cottage Grove, Minnesota, manufactures, recycles, and sells plastic products. (Id. ¶¶ 2, 3.) Poly-America, LP, a Texas limited partnership with its principal place of business in Grand Prairie, Texas, purchased an all-risk insurance policy on the Property from Birmingham Fire, a Pennsylvania corporation with its principal place of business in New York, New York (Id. ¶¶ 7, 10; Jezewski Aff. ¶ 2, Ex. A (Policy Endorsement No. 9); Compl. 11.) Up North Plastics and Poly-America, LP are affiliated companies with common ownership and management. (Bertrand Aff. ¶ 9.) All discussions relating to the Policy's issuance took place at Poly-America's Grand Prairie, Texas, headquarters. (Id. ¶¶ 12, 13.) J.T. Shackelford, a Texas insurance agent for Horizon, Inc., sold Birmingham Fire's Policy to Poly-America. (Id. ¶ 31; Black Aff. ¶ 8.) Assisting Shackelford were Texas residents Susie Harris, Malcolm Coffee, Jennifer Harris, Michele Tweedle, and Phil Heidrich. (Black Aff. ¶ 8.)
Records submitted by Birmingham Fire show that the Property is owned by Mars, II, Inc., a Minnesota corporation located in Grand Prairie, Texas. (Will Aff. Exs. B-D.)
Although the Policy was initially issued to Poly-America, Inc., it was amended to name Poly-America, LP as the policy owner on May 15, 2002. (Jezewski Aff. Ex. A (Policy Endorsement No. 14).) Poly-America, LP is the successor in interest to Poly-America, Inc., a former Texas corporation. (Bertrand Aff. ¶¶ 4-6.)
The fire damaged railcars, which are owned by Exxon Mobil, Equistar, and Nova Chemical, that were located near the Property. (Bertrand ¶¶ 16, 24, 27; Jezewski Aff. ¶ 3.) Poly-America received damage estimates from Exxon and Equistar representatives located in Houston, Texas. (Bertrand Aff. ¶ 28.) Nova Chemical is headquartered in Canada. (Id. ¶ 29.) The fire also caused those entities which responded to the fire to incur expenses while fighting the fire, such as the foam and water used to douse the flames, usage of fire vehicles, and damage to equipment. (Id. ¶¶ 16, 24; Jezewski Aff. ¶ 3, Ex. B.) The Cottage Grove Fire Department, which has taken the lead in collecting the expenses for the various entities, billed Up North Plastics for the these expenses. (Jezewski Aff. ¶ 4, Ex. B.)
The Cottage Grove Fire Department has submitted the charges of twenty-one entities that responded to the fire, eighteen of which are identified as fire departments. (Jezewski Aff. Ex. B.) Up North Plastics has agreed to pay the City of Cottage Grove to settle all of the fire extinguishing claims. (Black Aff. ¶ 15.)
After the fire, Poly-America submitted a claim to Birmingham Fire. With the exception of the damaged railcars and the fire extinguishing expenses, all claims relating to the fire have been resolved. (Jezewski Aff. ¶ 2; see Bertrand Aff. ¶¶ 23,24.) In the instant suit, Birmingham Fire disputes that the Policy covers these claims. It requests, inter alia, a declaratory judgment that: (1) Up North Plastics is not an insured (Compl. ¶ 26); (2) Birmingham Fire has no obligation to pay for the railcar damages (id. ¶¶ 28-34); and (3) Birmingham Fire's liability for the fire extinguishing expenses is limited to the value of the foam or other fire extinguishing materials (id. ¶¶ 35-42).
Defendants also claim attorneys' fees. (Bertrand Aff. ¶ 24.)
The Policy states: "This Policy does not cover: . . . Railroad or railway rolling stock and contents (except contents on described premises consigned to or to be shipped by the Insured while not under control of public carrier)." (Compl. Ex A (Policy at 3).)
The "Foam Loss Assumption Clause" provides, in relevant part: "This Company shall be liable for the loss to foam or other fire extinguishing materials lost, expended, or destroyed in fighting fire, involving property insured hereunder . . . but the liability shall not exceed the combined value of such extinguishing materials which are on the premises, or on adjacent premises if such materials are jointly owned, at the time the fire originates." (Compl. Ex. A (Policy at 8).) The `Tire Fighting Expense Clause" states: "This Company shall not be liable for any cost or expense in fighting fire except as provided by the Foam Loss Assumption Clause or unless endorsed hereon." (Id. Ex. A (Policy at 12).)
For their part, Defendants instituted an action in Texas state court — purportedly relating to its claims under the Policy — against AIG Insurance Services, Inc., J.T. Shackelford, Horizon Insurance Group, Inc., VeriClaim, Inc., Starr Technical Risks Agency of Texas, Inc., AIG Claim Services, Inc., and National Union Fire Insurance Company of Pittsburgh, Pennsylvania. (Nicklow Aff. Ex. 1 (Texas state court Amended Petition).) Birmingham Fire is not a named defendant. At oral argument, Birmingham Fire's counsel advised the Court that the Texas action has been removed to the United States District Court for the Northern District of Texas.
Analysis
Where, as here, venue is proper, § 1404(a) permits a party to move the district court to transfer a case to another judicial district. Generally, transfer under § 1404(a) "should not be freely granted."In re Nine Mile Ltd., 692 F.2d 56, 61 (8th Cir. 1982). Instead, transfer is only appropriate if certain conditions are met: "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). Section 1404(a) therefore encompasses three general categories of factors: (1) the convenience of the parties, (2) the convenience of the witnesses, and (3) the interest of justice. Terra Int'l. Inc. v. Mississippi Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997). The court's consideration, however, is not limited to these factors and may be based upon a case-by-case evaluation of the particular circumstances at hand. Id. The burden is on the moving party to show why a change of forum is warranted. Stinnett v. Third Nat'l Bank of Hampden County, 443 F. Supp. 1014, 1017 (D. Minn. 1978) (MacLaughlin, J.).
As this Court noted in Ahlstrom v. Clarent Corp., Civ. No. 02-780 (RHK/SRN), 2002 WL 31856386, at *3 n. 9 (D. Minn. Dec. 19, 2002) (Kyle, J.), the enactment of § 1404 had the effect of limiting forum non conveniens analyses to cases where the alternative forum is the court of another country. The language "unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed" initially appeared in Gulf Oil v. Gilbert, 330 U.S. 501, 508 (1947), a forum non conveniens case. While many courts — including this one — have used that language in the standard of decision, the Supreme Court has made clear that § 1404 is not merely a codification of the forum non conveniens doctrine. Instead, § 1404 "permits courts to grant transfers upon a lesser showing of inconvenience." Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955) (emphasis added). As this Court noted in 1971, "it is now clear that a plaintiff's choice of forum is no longer entitled to the great weight given it under the doctrine of forum non conveniens, and is simply one factor to be considered." Medtronic, Inc. v. American Optical Corp., 337 F. Supp. 490, 497 (D. Minn. 1971) (Larson, J.).
A. Convenience of the Parties
Defendants have shown that the convenience of the parties favors transfer. "The logical starting point for analyzing the convenience of the parties is a consideration of their residences in relation to the district chosen by the plaintiff and the proposed transferee district." 17 Moore's Federal Practice § 111.13[1][e][i] (quotation omitted). Section 1404(a) provides for transfer to a more convenient forum, "not to a forum likely to prove equally convenient or inconvenient." Graff v. Qwest Communications Corp., 33 F. Supp.2d 1117, 1121 (D. Minn. 1999) (Doty, J.) (citing Van Dusen v. Barrack, 376 U.S. 612, 646 (1964)). Here, Poly-America is a Texas corporation with its principal place of business in Grand Prairie, Texas, while Birmingham Fire is a Pennsylvania corporation with its principal place of business in New York, New York Because Defendants have identified several Texas employees who will be called to testify in this matter, while Birmingham Fire has not identified any Minnesota employees, this factor tilts in Defendants' favor.
B. Convenience of the Witnesses
The next factor is the convenience of the witnesses. To demonstrate that this factor tips in favor of transfer, Defendants "must clearly specify the essential witnesses to be called and must make a general statement of what their testimony will cover." Nelson v. Master Lease Corp., 759 F. Supp. 1397, 1402 (D. Minn. 1991) (MacLaughlin, J.) (citing Charles A. Wright, Arthur R. Miller Edward H. Cooper,Federal Practice and Procedure § 3851 at 425). In determining the convenience of the witnesses, the Court "must examine the materiality and importance of the anticipated witnesses' testimony and then determine their accessibility and convenience to the forum." Reid-Walen v. Hansen, 933 F.2d 1390, 1396 (8th Cir. 1991) (citation omitted). Relevant considerations include the number of essential non-party witnesses, their location, and the preference of courts for live testimony as opposed to depositions. Coast-to-Coast Stores. Inc. v. Womack-Bowers, Inc., 594 F. Supp. 731, 734 (D. Minn. 1984).
Here, Defendants have not produced sufficient evidence by which the Court could conduct this analysis. While Defendants have summarily identified their prospective witnesses, the Court cannot begin to assess the materiality and importance of their testimony without a general statement of what their testimony will cover. See Nelson, 759 F. Supp. at 1402. For example, Defendants state that Shackelford will be a witness, along with five other Horizon employees, because "he made representations as to the policy coverage." (Defs.' Reply Mem. in Supp. at 5.) This is an insufficient statement of what his testimony will cover. Similarly, Defendants identify the railcar owners as witnesses (Defs.' Mem. in Supp. at 13) — presumably to testify about damages — but provide no general statement of what their testimony will cover. Therefore, Defendants have failed to carry their burden as to this factor.
C. Interest of Justice
Finally, Defendants have also failed to show that the interest of justice favors transfer. Courts weigh the interest of justice factor very heavily. Radisson Hotels Int'l, Inc. v. Westin Hotel Co., 931 F. Supp. 638, 641 (D. Minn. 1996) (Kyle, J.). Among the considerations that may be relevant to a court in analyzing this factor are the plaintiff's choice of forum, the relative familiarity of the two courts with the law to be applied, judicial economy, the relative abilities of the parties to bear the expenses of litigating in a distant forum, obstacles to a fair trial, and each party's ability to enforce a judgment. Terra, 199 F.3d at 696. The parties contest four aspects of the interest of justice factor — plaintiff's choice of forum, familiarity with the applicable law, judicial economy, and the relative abilities to bear the expenses of litigating. (Pl's Mem. in Opp'n at 10, 15-16; Defs.' Mem. in Supp. at 10, 14; Defs.' Reply Mem. in Supp. at 7-8.)
1. Plaintiff's Choice of Forum
Although federal courts generally "give considerable deference to a plaintiff's choice of forum," Terra Int'l. Inc., 119 F.3d at 695, where plaintiff does not reside in the selected forum, or where the underlying transaction or facts did not occur in the chosen forum, plaintiff's choice is afforded significantly less deference, Nelson v. Soo Line R.R. Co., 58 F. Supp.2d 1023, 1026 (D. Minn. 1999) (Doty, J.). Here, Birmingham Fire does not reside in Minnesota. As for the underlying transaction and facts, the fire occurred in Minnesota, although the Policy was negotiated and sold in Texas. Given these circumstances, the Court will afford Birmingham Fire's choice of forum only limited deference.
2. Familiarity With Applicable Law
In general, federal courts favor adjudication of diversity actions by the court that is located in the state whose substantive law governs the case. 17 Moore's Federal Practice 111.13 [1][m]. If the questions of state law are relatively simple, however, courts tend to give this factor little weight in the analysis. See id.; Scheidt v. Klein, 956 F.2d 963, 966 (10th Cir. 1992). Because the primary issue in this case is a relatively simple and straightforward contract dispute, this aspect of the interest of justice factors carries little weight.
3. Judicial Economy
Defendants contend that their pending Texas action counsels toward transfer. Judicial economy is served by allowing related actions to proceed in the same district. 17 Moore's Federal Practice § 111.13[l][o]. The avoidance of duplicative or piecemeal litigation is a factor that weighs in favor of transferring an action to a district in which all parties can be joined in a single action. Houk v. Kimberly-Clark Corp., 613 F. Supp. 923, 931 (W.D. Mo. 1985):see Codex Corp. v. Milgo Elec. Corp., 553 F.2d 735, 739 (1st Cir. 1977) ("The pendency of related litigation in another forum is a proper factor to be considered in resolving choice of venue questions."). Although the issues in this Court and in the Texas court may overlap — but it is not clear from Defendants' submissions what exactly is at issue in the Texas action — Birmingham Fire is not a named party in the Texas action. Therefore it is doubtful that judicial resources could be conserved by joining the two cases in a single federal action.
4. Relative Abilities to Bear Expenses
Defendants claim that they "have nowhere near the resources of [Birmingham Fire] to be able to litigate this action in a distant forum." (Defs.' Mem. in Supp. at 14.) While Defendants may have fewer resources, they have provided only bare assertions — and not Evidence — of such a resource disparity and have not shown that litigating this matter in Minnesota would pose an undue financial hardship. Furthermore, it lacks credibility to state that Minnesota is a "distant forum" for Up North Plastics, given its Cottage Grove, Minnesota location.
5. Summary of the Interest of Justice Factor
Although Birmingham Fire's choice of forum is entitled to only limited deference, Defendants have not shown that considerations of the familiarity with the applicable law, judicial economy, or the relative abilities to bear expenses favor transfer. Therefore, the interest of justice factor does not favor transfer.
D. Overall Balance
While the convenience of the parties favors transfer, the convenience of the witnesses and the interest of justice does not. Accordingly, because Defendants have not met their burden to demonstrate that transfer is warranted, the Court will deny the Motion.
Conclusion
Based on the foregoing, and all of the files, records, and proceedings herein, IT IS ORDERED that Defendants' Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) (Doc. No. 4) is DENIED.