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WESTCHESTER FIRE INSURANCE v. CAROLINA CASUALTY INSURANCE

January 13, 2004.

WESTCHESTER FIRE INSURANCE COMPANY, individually and as subrogee of PIONEER CENTER OF MCHENRY COUNTY, INC. Plaintiff,
v.
CAROLINA CASUALTY INSURANCE COMPANY, Defendant



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

This is an action by Westchester Fire Insurance Company ("Westchester") against Carolina Casualty Insurance Company ("Carolina") for a declaratory judgment of bad faith and breach of duty by Carolina. Carolina has moved to transfer venue to the United States District Court for the Northern District of Illinois, Western Division. For the reasons set forth in this Memorandum Opinion and Order, the Court grants the defendant's motion to transfer

FACTS

  Carolina is a primary insurer incorporated in Florida, with its principal place of business in Jacksonville, Florida. (Compl. ¶ 2.) Carolina sold primary liability insurance to Pioneer Center of McHenry County, Inc. ("Pioneer"), located in McHenry County, Illinois, with a $1 million "occurrence" limit of liability. (Id. ¶ 5.) Westchester is an Page 2 excess insurer incorporated in New York, with its principal place of business in New York City, New York. (Id. ¶ 1.) Westchester provided excess liability insurance to Pioneer, for the purpose of covering Pioneer's liabilities in excess of Carolina's $1 million liability limit. (Id. ¶ 6.) Neither Carolina nor Westchester maintains offices in Illinois. (Pl.'s Mem. Opp'n Def.'s Mot. Transfer at 3.)

  In 1995, Sandra Wilburn ("Wilburn"), as Special Administrator of the Estate of Charlotte J. Deckert, deceased, brought a wrongful death action against Pioneer in McHenry County, Illinois. (Compl. ¶ 7.) Carolina defended Pioneer in that action. (Id. ¶ 8.) Westchester argues that Carolina could have settled the Wilburn action for less than Carolina's $1 million liability limit, but failed to do so, in bad faith and in breach of its duty to Pioneer's subrogee, Westchester. (Id. Count I ¶¶ 25-30; Id. Count II ¶¶ 25-28.) Westchester further claims that Carolina's failure to settle lead to a $1.56 million judgment against Pioneer, leaving Westchester to pay the amount in excess of Carolina's $1 million liability limit. (Compl. ¶ 24.) The instant suit is, in part, a subrogation action in which Westchester stands in the shoes of its insured, Pioneer.

  DISCUSSION

  Carolina moves to transfer this action from the Northern District of Illinois, Eastern Division, to the Northern District of Illinois, Western Division, pursuant to 28 U.S.C. § 1404(a), which provides that: "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," Transfer is proper when: (1) venue is Page 3 appropriate in the transferor court; (2) jurisdiction and venue are proper in the transferee court; and (3) "transfer will serve the convenience of the parties and witnesses and the interests of justice." Sornberger v. First Midwest Bancorp, Inc., No. 02 C 246, 2002 WL 1182121, at *1 (N.D. Ill. June 4, 2002). The movant bears the burden of showing that "the transferee forum is clearly more convenient." Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1293 (7th Cir. 1989).

  There being no dispute as to the first and second factors, the Court focuses on the third factor, i.e., whether the transfer will serve private interests as well as public interests. Sornberger, 2002 WL 1182121, at *1, "Private interests include: `(1) plaintiff's choice of forum, (2) the situs of material events, (3) the relative ease of access to sources of proof in each forum . . . [and] (4) convenience to the parties — specifically, their respective residences and abilities to bear the expense of trial in a particular forum.'" Id. (quoting Von Holdt v. Husky Injection Molding Sys., Ltd., 887 F. Supp. 185, 188 (N.D. Ill. 1995)). "Public interest factors include `such concerns as ensuring speedy trials, trying related litigation together, and haying a judge who is familiar with the applicable law try the case.'" Id. (quoting Heller, 883 F.2d at 1293).

  First, the Court examines the private interests of the parties. As the court explained in Sornberger v. First Midwest Bancorp, Inc.: "Though plaintiffs' forum choice is usually accorded great deference, such deference is inappropriate [where] plaintiff's do not reside in this district and . . . the litigation has no significant contact with it." 2002 WL 1182121, at *2; see Celotex Asbestos Settlement Trust v. Int'l Ins. Co., No. 98 C 8300, 1999 WL 284783, at *3 (N.D. Ill, Apr. 23, 1999). Westchester is not a Page 4 resident of the Eastern Division or the state of Illinois.

  Furthermore, there is no substantial connection between this litigation and the Eastern Division. Westchester asserts two connections to this division: the delivery of mail related to the underlying litigation to and from Cook County, and the presence of the lawyers in the underlying litigation in Chicago. As Carolina points out, the fact that correspondence was once physically within a division's boundaries does not establish any connection between that division and the litigation. Facing somewhat similar facts, where the events giving rise to the litigation took place in Michigan but e-mails related to the events passed through a computer server in Illinois, the court in Allstate Insurance Co. v. Mathison held that the passage of e-mails through Illinois was "too tenuous a connection" to Illinois for the purposes of establishing venue. No. 02 C 418, 2002 WL 1396951, at *4 (N.D. Ill. June 26, 2002). Similarly, the origin or destination of any correspondence related to the underlying litigation does not demonstrate any real connection to the Eastern Division. Furthermore, because the insured, Pioneer, resides in McHenry County and the underlying litigation occurred in McHenry County, the situs of material events as they relate to the underlying litigation, which, in turn, lead to the instant suit, occurred in McHenry County, which is within the Western Division. Accordingly, this factor strongly favors a transfer to that division.

  Next, Westchester argues that access to, sources of proof favors the Eastern Division. These sources of proof consist of the correspondence between the parties to the underlying litigation and the files of attorneys participating in that litigation. As an initial point, it is unclear how much, if any, of this evidence is still physically located in the Eastern Division. Westchester asserts that one of the critical participants in the Page 5 underlying litigation, lawyer Kevin Shaw of Robins, Kaplan, Miller & Ciresi, currently practices in Chicago, yet Carolina has proffered evidence that Robins, Kaplan, Miller & Ciresi no longer has an office in Chicago and that Mr. Shaw no longer works for that firm. Westchester's failure to establish correctly the location of its proposed witnesses, coupled with Carolina's proffer of an affidavit establishing an alternative location of at least one of its proposed witnesses, places Westchester at a disadvantage in this argument. Westchester's apparent failure further undermines its claim of a connection between this litigation and the Eastern Division; presumably, Mr. Shaw's files are housed by his former firm, which is no longer located in Chicago. Correspondence to and from defense counsel for Pioneer is located in the claim file of Carolina in Minnesota. Other correspondence which may be relevant to the issue of reasonableness is located on site at Pioneer's offices in McHenry County or at the office of Pioneer's general counsel, which is also in McHenry County.

  Convenience to the parties is a neutral factor in this case with regard to a transfer to the Western Division. Neither party resides in Illinois and the parties' ability to bear the expense of trial is relatively the same whether the litigation occurs in either division.

  Convenience to the witnesses "is the factor often viewed as having the most weight in determining whether to transfer venue." Concrete Structures of Midwest, Inc. v. Treco Constr. Servs., Inc., No. 95 C 50211, 1996 WL 67213, at *4 (N.D. Ill. Feb. 16, 1996). To determine which division would be more convenient to the witnesses, it is first necessary to establish which witnesses might be relevant at trial. Westchester argues that only the lawyers in and parties to the underlying litigation will testify in the instant case, while Carolina includes several McHenry County residents as potential witnesses. Page 6

  Carolina argues that it can only be found liable in the instant case if it acted unreasonably in declining the underlying plaintiffs offers to settle the case. To prove it acted reasonably, Carolina thus proposes to call at least some of the witnesses in the underlying action presumably to demonstrate that the underlying plaintiff's case appeared weak to Carolina's lawyers. In addition, Carolina seeks to call several attorneys specializing in personal injury or wrongful death who practice and reside in McHenry County to establish that, prior to the Wilburn case, there had never been a personal injury or wrongful death settlement in excess of $1 million. Carolina's argument that it will need to call as witnesses attorneys from McHenry County to testify about the verdict potential of personal injury cases in the area is persuasive. If Carolina can demonstrate that the verdict against Pioneer far exceeded the norm for personal injury cases tried ...


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