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AMERICAN CASUALTY v. FILCO

October 14, 2004.

AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, CONTINENTAL CASUALTY COMPANY, TRANSCONTINENTAL INSURANCE COMPANY, TRANSPORTATION INSURANCE COMPANY and VALLEY FORGE INSURANCE COMPANY, Plaintiffs,
v.
FILCO d/b/a IDEAL UNIFORM RENTAL SERVICES (a/k/a FILCO, INC. d/b/a IDEAL UNIFORM SERVICES), PROGRESS LINEN d/b/a FILCO LTD., and QUALATEX d/b/a FILCO, INC., Defendants.



The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendants' motion to dismiss or in the alternative to stay or transfer. For the reasons stated below we deny all of Defendants' motions. BACKGROUND

Defendants operated a laundry facility starting in 1986. In 1998 Defendant Filco sold the site to Defendant Progress Linen. In 2001 Filco was anticipating redeveloping the property that was then idle. Filco alleges that it voluntarily undertook an environmental evaluation of the property and perchloreoethylene, a chemical used in dry cleaning, was discovered in the soil on the property. Filco alleges that after an initial evaluation, Filco paid for follow-up studies and took investigation measures such as the installation of monitoring wells and further soil borings. Filco claims that the costs associated with the soil contamination are covered under insurance policies issued by Plaintiffs. Plaintiffs brought the instant action in Illinois state court. In Count I Plaintiffs seek a declaration that they have no duty to defend Filco because there is no suit relating to the soil contamination. In Count II Plaintiffs seek a declaration that the soil contamination costs are not covered under the policies at issue because pollution exclusions apply. In Count III Plaintiffs seek a declaration that the costs associated with the removal of pollutants are not covered under the pertinent policies. In Count IV Plaintiffs seek a declaration that there is no duty to indemnify Filco for actions voluntarily taken on its part. In Count V Plaintiffs seek a declaration of rights and liabilities under certain missing and declined insurance contracts. Finally, in Count VI Plaintiffs seek a declaration that there is no coverage under the insurance contracts that do not insure the contaminated site. Filco subsequently removed the instant action to federal court.

  LEGAL STANDARDS

  A district court may transfer an action to another district where the action might have been brought pursuant to 28 U.S.C. § 1404(a) "[f]or the convenience of parties and witnesses, [if it is] in the interest of justice. . . ." 28 U.S.C. § 1404(a). A federal court has "discretion to decline to hear a declaratory judgment action, even though it is within [the court's] jurisdiction." Tempco Elec. Heater Corp. v. Omega Engineering, Inc., 819 F.2d 746, 747 (7th Cir. 1987).

  DISCUSSION

  I. Motion to Transfer

  Defendants request that this court transfer this action to the Southern District of Indiana pursuant to 28 U.S.C. § 1404(a). In order to transfer a case the transferor court must first find that: 1) venue is proper in the transferor district, see Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986) (stating that a court "in which suit is filed with proper venue" may transfer an action pursuant to § 1404(a)), and 2) venue is proper in the transferee district, see 28 U.S.C. § 1404(a) (stating that transfer can only be made to a district in which the action "might have been brought"). We find that venue is technically proper in the Northern District of Illinois, where some of the events at issue occurred, and in the Southern District of Indiana, where Filco has filed an action that addresses other related claims as well.

  If venue is proper in both the transferor and transferee district, the transferor court should then consider: 1) the choice of forum by plaintiff, Federal Deposit Ins. Corp. v. Citizens Bank and Trust Co. of Park Ridge, Ill., 592 F.2d 364, 368 (7th Cir. 1979), 2) the convenience of the parties, Coffey, 796 F.2d at 220 n. 3, 3) the convenience of the witnesses, Id. and 4) the interest of justice. Id. The movant bears the burden of establishing that the transferee district is "clearly more convenient." Id. at 219-20.

  In considering whether to transfer an action the court should "give some weight to the plaintiff's choice of forum." Federal Deposit Ins. Corp., 592 F.2d at 368; see also Heller Financial, Inc. v. Midwhey Powder Co., Inc, 883 F.2d 1286, 1294 (7th Cir. 1989) (stating that "some weight must be given to [a plaintiff's] choice of forum"). A transfer pursuant to 28 U.S.C. § 1404(a) should not merely "shift the convenience from one party to another," and the choice of a forum by a plaintiff should not be "lightly . . . disturbed." Warshawsky & Co v. Arcata Nat'l Corp, 552 F.2d 1257, 1259 (7th Cir. 1977); see also Heller Financial, Inc., 883 F.2d at 1294(expressing concern that a transfer would merely shift the inconvenience to the plaintiff). However, whenever the plaintiff and defendant are in different states, there will inevitably be an inconvenience to one side. In re National Presto Indus., Inc., 347 F.3d 662, 665 (7th Cir. 2003). When the potential inconvenience to the plaintiff and defendant are comparable "the tie is awarded to the plaintiff. . . ." Id.; see also Heston v. Equifax Credit Info. Servs. LLC, 2003 WL 22243986, at *1 (N.D. Ill. 2003) (stating that plaintiff's choice of forum is given less weight if the case has no "significant connection to the chosen forum. . . .").

  In addressing the interest of justice factor a court may consider: 1) whether a transfer promotes the "efficient administration of justice," 2) whether the action could be consolidated with other actions in the transferee district, 3) whether the judges in the transferee district are more familiar with the pertinent state law, 4) whether jurors in a particular district have a "financial interest in [the] case," and 5) which district would have jurors that could "best apply community standards." Coffey, 796 F.2d at 220-21, 221 n. 4. The court should also consider whether the transferee district has a lighter docket than the transferor district. In re National Presto Indus., Inc., 347 F.3d at 663. In addressing the interest of justice factor the transferor court should focus on whether the proposed transfer would promote the "efficient functioning of the courts." Coffey, 796 F.2d at 221. The interest of justice factor does not involve a consideration of the merits of the plaintiff's claim. Id.

  A. Plaintiffs' Choice of Forum

  Plaintiffs argue that their choice of forum is entitled to deference. Defendants attempt to twist the law and contend that its choice of forum is entitled to deference because it is the "true" plaintiff in this controversy. We disagree. It is the plaintiff's choice of forum that is entitled to deference. In order to pursue a declaratory judgment a plaintiff must show that "the feared lawsuit from the other party is immediate and real, rather than merely speculative." Hyatt Intern. Corp. v. Coco, 302 F.3d 707, 712 (7th Cir. 2002). Plaintiffs have shown that the instant action was brought based on a real and immediate necessity to address the duties owed by Plaintiffs to Defendants. Defendants cannot be deemed the natural plaintiffs in the controversy between the parties. One reason for our conclusion is that Illinois law encourages an insurer to seek guidance concerning its duties owed to its insured. Under Illinois law an insurer who has received a request to defend an insured can: "(1) seek a declaratory judgment regarding its obligations before or pending trial of the underlying action, (2) defend the insured under a reservation of rights, or (3) refuse either to defend or to seek a declaratory judgment at the insurer's peril that it might later be found to have breached its duty to defend." LaSalle Nat. Trust, N.A. v. Schaffner, 818 F.Supp. 1161, 1166-67 (N.D. Ill. 1993). If an insurer does not obtain a prompt declaration regarding its duty to defend and if it is subsequently found that the insurer violated its duty to defend the insured, the insurer "is estopped to deny policy coverage in a subsequent lawsuit by the insured. . . ." Id. (quoting Maneikis v. St. Paul Ins. Co. of Illinois, 655 F.2d 818, 821 (7th Cir. 1981)). We find no evidence that Plaintiffs engaged in a "race to the courthouse" as Defendants suggest. Plaintiffs appropriately brought the instant action to resolve the issues concerning the duty to defend and the duty to indemnify. Plaintiffs' choice of forum is entitled to deference. B. Convenience of the Parties and Witnesses

  Defendants argue that the convenience of the parties would be better served if the action was in Indiana. Defendants argue that the negotiation and purchase of the insurance policies at issue occurred in Indiana. Defendants also contend that their headquarters, environmental consultant, witnesses, and certain potential evidence is located in Indiana. Defendants also argue that Plaintiffs are incorporated in multiple states and the claims handler at issue is located in New Jersey and thus, Indiana would not be more inconvenient to Plaintiffs than Illinois. However, Defendants acknowledge that Plaintiffs are incorporated in Illinois, Plaintiffs' headquarters are located in Illinois, and at least one of Plaintiffs' claim handlers is located in Illinois. (Mem. 14). ...


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