Opinion
CIVIL ACTION No. 01-5725
August 22, 2002
MEMORANDUM
Plaintiffs Jean Presendieu and Marie Muriel Presendieu, domiciliaries of New York, have brought this diversity action for insurance benefits in excess of $75,000 against defendant the Chubb Group of Insurance Companies ("Chubb"), a New Jersey corporation with its principal place of business in New Jersey, and defendant the Fireman's Fund Insurance Company ("the Fireman's Fund"), a California corporation with its principal place of business in California. This Memorandum is concerned with two pending motions: a motion for a change of venue to the Southern District of New York by the Fireman's Fund, and a motion to compel arbitration on the part of the Fireman's Fund by plaintiffs. Chubb has acquiesced in plaintiffs' motion to compel arbitration, but has declined to take a position one way or another on the motion to transfer.
For the reasons which follow, the motion to compel arbitration on the part of the Fireman's Fund will be denied, the claims against the Fireman's Fund will be severed pursuant to Federal Rule of Civil Procedure 21, and the severed claims transferred, pursuant to 28 U.S.C. § 1404(a) to the Southern District of New York.
Factual and Procedural Background
The facts giving rise to this action are as follows. On January 19, 1999, Jean Presendieu was transporting a combination vehicle consisting of a truck and a trailer from New York City to Axton, Virginia. The trailer was owned by Movie Movers, Inc. ("Movie Movers"), and the truck was owned by Taz Transportation ("Taz"), the parent company of Movie Movers. Both truck and trailer had been leased by their respective owners to Fifty Fiddles, Inc., a subsidiary of Miramax Film Corporation ("Miramax"). En route to New York, Mr. Presendieu was involved in an accident in Chambersburg, Pennsylvania. Plaintiffs allege that Mr. Presendieu changed lanes suddenly to avoid hitting an unidentified driver, and consequently lost control of the trailer. The vehicle then overturned on the side of the road. Plaintiffs allege that Mr. Presendieu suffered injuries as a result of the accident.
This action turns on the proper interpretation of two insurance policies. The first policy ("the Fireman's Fund Policy") was issued to Miramax by the Fireman's Fund, and was brokered by Great Northern Brokerage Corporation. The Fireman's Fund Policy does not contain an arbitration clause. The second policy ("the Chubb Policy") was issued to Taz by Vigilant Insurance Company, a wholly-owned subsidiary of Chubb. The Chubb Policy does contain an arbitration clause by which Chubb and the Presendieus have agreed to be bound.
The Presendieus filed two separate claims in the Court of Common Pleas: one, for uninsured motorist coverage against Chubb and the Fireman's Fund; the second, against the unidentified driver of the vehicle which allegedly caused the accident, and derivatively against Chubb and the Fireman's Fund. The two cases were consolidated for discovery and trial purposes. The consolidated case was removed to this court at the initiative of the Fireman's Fund on November 13, 2001.
The Fireman's Fund has also filed a related action in the United States District Court for the Southern District of New York, captioned Fireman's Fund Insurance Co. v. Jean Presendieu, et al., No. 01-10044 ("the New York action"), seeking a declaratory judgment that the Fireman's Fund Policy should be interpreted under New York law, that Jean Presendieu is entitled to coverage of no more than $15,000 in uninsured motorist coverage under the Fireman's Fund Policy, and that Marie Presendieu is not entitled to coverage under the Fireman's Fund Policy.
Plaintiffs' Motion to Compel Arbitration
It is beyond question that "arbitration is a creature of contract law."E.I. DuPont de Nemours and Co. v. Rhone Poulenc Fiber and Resin Intermediates, S.A.S., 269 F.3d 187, 195 (3d Cir. 2001). For this reason, "a party cannot be required to submit to arbitration any dispute for which he has not agreed to submit." Sandvik AB v. Advent Int'l. Corp., 220 F.3d 99, 105 (3d Cir. 2000) (citing AT T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986)). In the instant case, here is no question that the Fireman's Fund Policy does not include an arbitration clause, whereas the Chubb Policy does include an arbitration clause by which Chubb and the Presendieus have agreed to be bound.
The Presendieus have argued that their claims against the Fireman's Fund should be referred to arbitration because those claims arose out of the same transaction as their claims against Chubb. An arbitration agreement may indeed be enforced against a non-signatory under "traditional principles of contract and agency law," such as would arise in a third-party beneficiary or agent/principal situation. E.I. DuPont de Nemours, 269 F.3d at 195. However, the non-signatory in this instance — the Fireman's Fund — bears no contractual relationship whatsoever to Chubb, nor to the Presendieus under the Chubb Policy. The contractual remedies sought by the Presendieus against the Fireman's Fund under the Fireman's Fund Policy are linked to the contractual remedies sought by the Presendieus against Chubb under the Chubb Policy only by virtue of the fact that plaintiff named both defendants in the same civil action.
The Presendieus have cited the case of Pritzker v. Merrill Lynch, Pierce, Fenner Smith, Inc., 7 F.3d 1110 (3d Cir. 1993), in support of their position. The Third Circuit's limited holding in that case was that statutory ERISA claims are subject to arbitration under the Federal Arbitration Act when the parties have executed a valid arbitration agreement encompassing the claims at issue; the court further held that the arbitration clauses in the agreements in question should therefore have been read to include the non-signatory defendants. Id. at 1111-12 and n. 1. One of those non-signatories was held to be bound by the agreements under traditional agency theory. Id. at 1121. The other was also bound under agency principles by virtue of being a "corporate sister" and "alter ego" of the signatory. Id. Pritzker thus implicated the kind of contractual relationships which are lacking here between the Presendieus and the Fireman's Fund under the Chubb Policy. The same is true of another case cited by the Presendieus, Hoffman v. Deloitte Touche, LLP, 143 F. Supp.2d 995 (N.D.Ill. 2001) (allowing a non-signatory to an arbitration clause to compel arbitration on the grounds of common law agency principles, third-party rights, and the theory of equitable estoppel). The Presendieus also rely on Svedala Industries, Inc. v. Home Ins. Co., 921 F. Supp. 576 (E.D.Wis. 1995), in which the district court granted an insurer's motion to compel arbitration of the insured's claim for bad faith, despite the fact that the claim arose under an insurance policy which lacked an arbitration clause. Svedala Industries is inapposite to the instant case, because the bad faith claim alleged therein implicated rights established in a separate premium agreement between the same parties — an agreement which did include an arbitration clause. Id. at 580.
For these reasons, the arbitration agreed to by the Presendieus and Chubb has no effect on the litigation commenced by the Presendieus against the Fireman's Fund. The plaintiffs' motion to compel arbitration on the part of the Fireman's Fund will be denied. Fireman's Fund's Motion to Transfer Venue 28 U.S.C. § 1404(a) provides: "For the convenience of parties and witnesses, in the interests of justice, a district court may transfer any civil action to any other district or division where it might have been brought." The decision to transfer venue is thus vested in the discretion of the district court. See Reed v. Weeks Marine, Inc., 166 F. Supp.2d 1052, 1057 (E.D.Pa. 2001). The party moving for a transfer of venue must suggest a proper alternative venue. See Hoffman v. Blaski, 363 U.S. 335, 344 (1960). The moving party bears the burden of justifying the transfer. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).
In considering a motion to transfer, a court should take into account the three factors explicitly raised by § 1404(a) — i.e., the convenience of the parties, the convenience of witnesses, and the interests of justice. See Jumara, 55 F.3d at 879. Also relevant to the motion to transfer are other interests which courts have deemed protected by the language of § 1404(a), both private (e.g., the plaintiff's forum preference as manifested in the original choice; the defendant's preference; where the claim arose; and the location of books and records) and public (e.g., the enforceability of the judgment, ease and expense of trial, and court congestion in the two fora; the local interest in deciding controversies at home; the public policies of the two fora; and the familiarity of the trial judge with applicable state law in diversity cases). See id. at 879-80; Remick v. Manfredy, 138 F. Supp.2d 652, 655 (E.D.Pa. 2001). Among these various considerations, the plaintiff's choice of forum is paramount, and should not be disturbed lightly. See Pro Spice, Inc. v. Omni Trade Group, Inc., 173 F. Supp.2d 336, 341 (E.D.Pa. 2001). However, courts will be less inclined to defer to the plaintiff's choice where the forum chosen is neither his or her home nor the situs of the occurrence upon which the action is based. See id. at 341; Remick, 138 F. Supp.2d at 655.
As the alleged accident at the heart of this litigation occurred in the Middle District of Pennsylvania, and the Presendieus reside in New York State, their chosen forum of the Eastern District of Pennsylvania is entitled to less deference than would otherwise be the case. The Fireman's Fund argues that the Southern District of New York is a preferable forum for this action because the Fireman's Fund Policy was created in the state of New York, is governed by New York law, and was brokered by a New York agent. The Fireman's Fund also argues that its pending New York action weighs in favor of transfer. As none of the parties reside in this district and no relevant incident or transaction occurred in this district, and particularly in view of the pendency of the New York action, a transfer to the Southern District of New York is indeed desirable with respect to the claims asserted by the Presendieus against the Fireman's Fund.
It bears noting that the Fireman's Fund also argues that because plaintiffs' response to the motion to transfer was filed on December 6, 2001 — at least six days after the 14-day period allowed by Local Rule 7.1 had expired — I should simply treat the response as untimely and grant the motion as uncontested. Local Rule 7.1 permits a court to grant a motion as uncontested in such circumstances, but does not mandate this result; it further provides: "The Court may require or permit further briefs if appropriate." There is no compelling reason here to grant the instant motion as uncontested.
As far as the claims asserted against Chubb are concerned, the motion to transfer venue takes on a different cast: the claims against Chubb do not feature the same characteristics as the claims against the Fireman's Fund — characteristics which weigh in favor of the Southern District of New York as a desirable forum; furthermore, the Presendieus and Chubb have agreed to arbitrate, in this district, their differences regarding the Chubb Policy. But before considering whether transfer of this entire action — including the claims asserted by the Presendieus against Chubb — is warranted, the plaintiffs' motion to compel arbitration on the part of the Fireman's Fund must be considered.
Severance of Claims under Rule 21
If resolved in accordance with the preceding discussion, the two pending motions would yield the following scenario: the Presendieus' claims against Chubb would proceed, by mutual agreement, to arbitration in this district, whereas the Presendieus' claims against the Fireman's Fund would be litigated in an alternate venue — specifically, the Southern District of New York. I have determined that the most expedient solution for all the parties is the severance of the Presendieus' claims against the Fireman's Fund pursuant to Federal Rule of Civil Procedure 21, and the transfer of those claims to the Southern District of New York, as requested by the Fireman's Fund.
Rule 21 provides: "Any claim against a party may be severed and proceeded with separately." Fed.R.Civ.P. 21. A district court has broad discretion to sever parties under Rule 21. Charles Alan Wright, Arthur R. Miller Mary Kay Kane, Federal Practice and Procedure § 1689, 515-16. Severance of parties may be a useful device in the event that venue is improper as to one or more of the parties. See Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 296 (3d Cir. 1994). In its motion to transfer, the Fireman's Fund has not intimated that venue is not proper in the Eastern District of Pennsylvania. See 28 U.S.C. § 1391(a). However, "[e]ven when venue is proper as to all defendants, the court may sever a claim against a party and transfer it to a more convenient forum. . . ." Wright, Miller Kane § 1689 at 517 (citing, inter alia, Dao v. Knightsbridge Int'l. Reinsurance Corp., 15 F. Supp.2d 567, 576 (D.N.J. 1998) and Cable-La, Inc. v. Williams Communications, Inc., 104 F. Supp.2d 569 (D.N.J. 1999)). Given the disposition of the two pending motions, severance of the parties in this case is in order.
Conclusion
For the reasons given above, the Presendieus' motion to compel arbitration on the part of the Fireman's Fund will be denied; the Presendieus' claims against the Fireman's Fund will be severed pursuant to Rule 21; and the Fireman's Fund motion for a change of venue will be granted, and the severed claims transferred to the Southern District of New York. An appropriate Order accompanies this Memorandum.
ORDER
Upon consideration of the motion by plaintiffs Jean Presendieu and Marie Muriel Presendieu to compel arbitration on the part of defendant the Fireman's Fund Insurance Company and the motion by the Fireman's Fund for a change of venue, and for the reasons given in the accompanying Memorandum, it is hereby ORDERED that:
(1) Plaintiffs' motion to compel arbitration is DENIED;
(2) Plaintiffs' claims against defendant the Fireman's Fund Insurance Company are SEVERED from this action pursuant to Federal Rule of Civil Procedure 21; and
(3) The motion of defendant Fireman's Fund Insurance Company for a change of venue is GRANTED and the severed claims TRANSFERRED to the Southern District of New York.