Opinion
Civil Action No. 3:04-CV-0635-D.
July 13, 2004
MEMORANDUM OPINION AND ORDER
In this lawsuit arising from an alleged failure to tender a full settlement amount, defendant Philadelphia Indemnity Insurance Company ("PIIC") moves to transfer venue to the Southern District of Texas. For the reasons that follow, the court denies the motion.
I
Plaintiff RLI Insurance Company ("RLI"), an Illinois corporation with its principal place of business in Illinois, sues defendants PIIC, a Pennsylvania corporation with its principal place of business in Pennsylvania, and USF Insurance Company ("USF"), a Pennsylvania corporation with its principal place of business in Pennsylvania or Michigan. RLI contends that defendants failed to tender their full shares of a settlement in an underlying action. PIIC moves to transfer this lawsuit to the Southern District of Texas, Houston Division, maintaining that venue is improper.
RLI filed its response on June 4, 2004. PIIC's reply brief, if any, was due June 21, 2004 (the Monday following the due date). See N.D. Tex. Civ. R. 7.1(f). Because the time for PIIC to reply has passed, the motion is ripe for determination.
II A
PIIC contends the court should transfer this case pursuant to 28 U.S.C. § 1391(a)(2). This request is more properly framed, however, as a basis for a motion to transfer under § 1406(a). Section 1391(a)(2) is a venue statute. It does not of itself confer a right to transfer venue. See Auto Wax Co. v. Weaver, 1998 WL 892312, at *2 (N.D. Tex. Dec. 15, 1998) (Fitzwater, J.) (analyzing improper venue argument under § 1391(a) in context of § 1406(a) motion); Humphreys v. Archer, Civil Action No. 3:92-CV-2492-D, slip op. at 9 (N.D. Tex. June 21, 1993) (Fitzwater, J.) (holding that venue under all provisions of § 1391(a) was improper, and citing § 1406(a) as authority for court to dismiss or transfer case to any district in which it could have been brought). The court therefore denies the motion to the extent that PIIC invokes § 1391(a)(2) as the procedural mechanism to obtain a transfer.B
The court now considers whether PIIC is entitled to transfer the case under § 1406(a).Section 1406(a) provides that "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." The "[d]efendant's only burden is to prove a defect in venue sufficient to enable the Court to dismiss or transfer the action." Sampson Indus., Inc. v. Amega Indus., Inc., 1998 WL 826907, at *2 (N.D. Tex. Nov. 18, 1998) (Solis, J.) (citing 28 U.S.C. § 1406(a) (1993 Supp. 1998); Gorman v. Grand Casino of La., Inc. — Coushatta, 1 F. Supp.2d 656, 660 (E.D. Tex. 1998)). "Once venue is challenged by a defendant, the burden is on the plaintiff to prove that venue is proper in the judicial district in which the action was brought." Id. (citing Advanced Dynamics Corp. v. Mitech Corp., 729 F. Supp. 519 (N.D. Tex. 1990) (Belew, J.)). Therefore, the question presented is whether venue is proper in this court.
Section 1391(a) states:
A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
PIIC argues that the court lacks venue under § 1391(a)(1) "because [PIIC and USF] reside in different states, thereby [a]ffecting diversity jurisdiction." D. Br. at 2. This assertion is not only factually incorrect, it confuses defendants' residency, for purposes of determining venue, with their citizenship, for purposes of diversity jurisdiction, and it reflects a backward understanding of what is required for complete diversity of citizenship.
PIIC also posits that venue is improper under § 1391(a)(2) because the events giving rise to the present claim occurred in Houston County, Texas, the site of settlement of the underlying action. The court need not reach this contention because PIIC has failed to demonstrate that the court lacks venue under § 1391(a)(1).
The origin of this assertion may be RLI's complaint. According to the complaint, USF's principal place of business is either in Pennsylvania or Michigan. See P. Compl. ¶ 3. This may be the basis for PIIC's contention that it and USF reside in different states. But even if USF's principal place of business is in Michigan, it is still a citizen of Pennsylvania for diversity purposes because it is a Pennsylvania corporation. A corporation is considered to be a citizen both of its state of incorporation and of its principal place of business. See Ill. Cent. Gulf R.R. Co. v. Pargas, Inc., 706 F.2d 633, 637 (5th Cir. 1983).
PIIC argues that diversity jurisdiction is affected because PIIC and USF reside in different states. This contention is factually correct — both are citizens of Pennsylvania, see supra note 3 — and it is legally irrelevant. Diversity jurisdiction requires that plaintiff RLI, on the one hand, and defendants PIIC and USF, on the other, be citizens of different states. If PIIC and USF are not citizens of the same states as is RLI, it is inconsequential whether PIIC and USF inter se are citizens of the same or different states. See 28 U.S.C. § 1332(a)(1) ("The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States[.]").
Because RLI, PIIC, and USF are corporations, they can be citizens of more than one state. See supra note 3.
Concerning the venue issue presented in this case, the relevant inquiry under § 1391(a)(1) is whether both defendants reside in the same state. The concept of "residence" in § 1391(a)(1) must be viewed through the informing prism of § 1391(c), which provides that "a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." Here, PIIC and USF are both organized under the laws of Pennsylvania. They are therefore subject to personal jurisdiction, and reside in, Pennsylvania. See City of Petoskey v. Oxy USA, Inc., 1996 U.S. Dist. LEXIS 22643, at *8 (W.D. Mich. 1996)) ("General jurisdiction is constitutionally permissible where a defendant has more than "minimum contacts" with a forum, such as incorporation[.]") (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984)); Comerota v. Vickers, 170 F. Supp.2d 484, 487 (M.D. Pa. 2001) ("To assert general jurisdiction in Pennsylvania over a corporation or partnership, a plaintiff bears the burden of proving incorporation or formation in the Commonwealth[.]") (citing 42 Pa. Cons. Stat. Ann. § 5301 (a) (2-3)). Because PIIC and USF both reside in the same state (Pennsylvania) as required by § 1391(a)(1), PIIC's argument that venue is improper "because all defendants reside in different states," D. Br. at 1, lacks merit.
Section 1391(c):
For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts.
At least PIIC, and perhaps USF, has its principal place of business in Pennsylvania.