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Holdings v. Certain Underwriters at Lloyds

June 12, 2008

ANNETT HOLDINGS, ET AL., PLAINTIFFS,
v.
CERTAIN UNDERWRITERS AT LLOYDS AND THOSE COMPANIES SEVERALLY SUBSCRIBING TO BOEING POLICY NUMBER 509/JC487006, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

MEMORANDUM OPINION AND ORDER

Plaintiffs, Annett Holdings, Inc. d/b/a TMC Transportation, Inc. and Yellowstone Trucking, Inc. filed their complaint for declaratory judgment in this court seeking, inter alia, a declaration that their liability for damages resulting from a truck accident is limited pursuant to a limitation of liability provision in a service contract between TMC and the Boeing Company. Defendants are various insurance companies that insured Boeing and that collectively paid the sum of 5.75 million dollars to cover damages that resulted from the accident. They are certain Underwriters at Lloyds and those Companies Severally Subscribing to Boeing Policy Number 509/JC487006, RLI Insurance Company, Great American Insurance Company, Tokio Marine & Nichido Fire Insurance Company, Fireman's Fund Insurance Company, Royal & Son Alliance Insurance PLC, St. Paul Fire & Marine Insurance Company, Mitsui Sumimoto Insurance Company of America, XL Specialty Insurance Company, The Baloise Insurance Company, Ltd., Hartford Fire Insurance Company, and Zurich Global Corporate, UK Ltd. Defendants have filed counterclaims of breach of bailment or carrier obligations, negligence, and breach of contract.

Defendants have filed motions to transfer this case to the Western District of Washington [#14] and to dismiss this case due to a prior action pending [#29]. For the following reasons, their motions will be denied.*fn1

I. Background

On February 1, 2006, TMC entered into a Freight/Transportation Services Agreement ("the Service Contract") with Boeing pursuant to which it agreed to transport cargo for Boeing throughout the United States. Complaint ¶ 18; Response to Motion to Transfer at 3.*fn2 The Service Contract included a limitation of liability provision that stated, "Liability of [TMC] for goods lost or damaged in transit shall be $2.50 per pound based on total weight of shipment." Complaint ¶ 20. It also included a choice of law provision designating Washington law. Motion at 3. Pursuant to the Service Contract and to two Bills of Lading issued by Boeing, TMC arranged for the shipment of two new Boeing jet engines from a General Electric facility in Ohio to Boeing's facilities in Tukwila, Washington. Motion, at 2; Complaint ¶¶ 21-22. On June 13, 2006, while transporting the jet engines from Ohio to Washington, a TMC truck was involved in an accident that defendants believe caused damage to the jet engines. Complaint ¶ 23.

Defendants paid Boeing $5.75 million to cover the alleged damage to the engines. Complaint ¶ 24. They made a claim against TMC for recovery of that amount. Complaint ¶ 25. Plaintiffs denied liability beyond $50,000, which they computed pursuant to the limitation of liability provision in the Service Contract. Complaint ¶ 31; Response at 2. On November 13, 2007, defendants filed a demand for mediation against TMC with the American Arbitration Association (AAA). Complaint ¶ 28. A mediation was scheduled for March 4, 2008 in Washington. Motion at 3. Plaintiffs filed their complaint in this case on February 22, 2008.

Plaintiffs are Iowa corporations with their principal place of business in Des Moines, Iowa. Complaint ¶ 1. Defendant RLI Insurance Company is an Illinois corporation with its principal place of business in Peoria, Illinois. Complaint ¶ 3. The other defendants are incorporated and have their principal places of business in various states around the country (and the world, in the case of defendant Tokio Marine). Complaint ¶¶ 4-14. Defendants have not identified any of their number as Washington corporations or as having their principal place of business in Washington. Boeing is a Delaware corporation with its corporate headquarters in Chicago, Illinois. Boeing Homepage, http://www.boeing.com/companyoffices/aboutus/ (last visited June 10, 2008); Vivas v. Boeing Co., 486 F. Supp. 2d 726, 728 (N.D. Ill. 2007).

II. Motion to Transfer

This motion to transfer venue is governed by 28 U.S.C. § 1404(a), which provides that "[f]or 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." As a practical matter, "[t]he moving party must show that (1) venue is proper in this district; (2) venue [and jurisdiction are] proper in the transferee district; (3) the transferee district is more convenient for both the parties and witnesses; and (4) transfer would serve the interest of justice." Gueorguiev v. Max Rave, LLC, 526 F. Supp. 2d 853, 856 (N.D. Ill. 2007) (citing Bryant v. ITT Corp., 48 F. Supp. 2d 829, 832 (N.D. Ill. 1999)). The moving party bears the burden of demonstrating that transfer is "clearly more convenient." Heller Fin. Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1293 (7th Cir. 1989) (quoting Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986)). Since the weighing of factors for and against transfer necessarily involves a large degree of subtlety and latitude, the decision to transfer is committed to the sound discretion of the trial court. Coffey, 796 F.2d at 219; see also Van Dusen v. Barrack, 376 U.S. 612, 622, 84 S.Ct. 805, 11 L.Ed. 2d 945 (1964) (noting that the remedial purpose of § 1404(a) requires "individualized, case-by-case consideration of convenience and fairness"); N. Shore Gas Co. v. Salomon Inc., 152 F.3d 642, 648, n.3 (7th Cir. 1998). Each factor should be given the appropriate weight under the circumstances of the case. Gueorguiev, 526 F. Supp. 2d at 857.

First, the court will address the first two factors in the test set out by Gueorguiev: whether venue is appropriate in the Northern District of Illinois and whether venue and jurisdiction are both appropriate in the Western District of Washington. Defendants do not dispute that venue is appropriate in the Northern District of Illinois, so that requirement is satisfied. In their opening brief in support of their motion, defendants discuss the appropriateness of venue and jurisdiction with respect to the plaintiffs in the Western District of Washington. They say, "This action could have been brought in the Western District of Washington because both Yellowstone and TMC have sufficient contacts with said district to subject them to personal jurisdiction there as if it were a separate state." Motion at 7 (citing 28 U.S.C. § 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.")). As plaintiffs point out in their response, the relevant consideration, which the defendants have the burden to show, is whether venue and jurisdiction in Washington would have been appropriate as to the defendants when plaintiffs filed their complaint. Response, at 5 (citing, inter alia, RWM Kinetics Enterprises, Inc. v. Kinetic Concepts, Inc., 1996 WL 238753, at *2 (N.D. Ill. May 7, 1996)).

In their reply, defendants cite cases that stand for the general proposition that "in many actions for declaratory judgment the realistic positions of the parties is reversed." Reply at 4 (citing, inter alia, Debartolo v. Healthsouth Corp., 2006 WL 2989290, at *6 (N.D. Ill. Oct. 17, 2006) (explaining that subject matter jurisdiction over a declaratory judgment suit can be determined by examining what the nominal defendant's claims would have been in the expected suit)). This doctrine applies to subject matter jurisdiction, however, not to personal jurisdiction, which is the relevant consideration. Defendants have not cited any authority for their proposition that on a motion to transfer a declaratory judgment action, the court should examine venue and personal jurisdiction according to the alignment of the expected suit by the nominal defendants. Moreover, defendants' representation that "well before the present action was filed, counsel for Defendants proposed to consent to personal jurisdiction in Washington federal court," is not supported by their citation, which merely shows that they had suggested discussing the possibility of agreeing on a Washington forum. Additionally, their argument that they would be subject to specific jurisdiction in Washington based solely on the fact that they are insurers for Boeing and for cargo transported to its facility in Washington is not supported by their citations to the facts or to the applicable law. Because the court does not have enough information to determine whether this case could have been brought by the plaintiffs in the Western District of Washington on February 22, 2008, the motion to transfer must be denied.*fn3

In the alternative, and for purposes of providing context for the motion to dismiss, the court will also address the factors of convenience and the interests of justice. "When evaluating the convenience of the parties and witnesses -- a factor that is sometimes referred to as the private interests at stake -- a district court considers: (1) the plaintiff's choice of forum; (2) the situs of material events; (3) the relative ease of access to sources of proof; (4) the convenience of the witnesses; and (5) the convenience to the parties." Washington Nat. Life Ins. Co. v. Calcasieu Parish School Bd., 2006 WL 1215413, at *8 (N.D. Ill. May 2, 2006) (citing Coleman v. Bucheit, Inc., 2004 WL 609369, at *1 (N.D. Ill. Mar. 22, 2004) (citing Plotkin v. IP Axess, Inc., 168 F. Supp. 2d 899, 902) (N.D. Ill. 2001))). A declaratory judgment plaintiff's choice of forum is entitled to some weight, but not as much as is given to a plaintiff in a non-declaratory judgment suit. Washington Nat. Life. Ins., 2006 WL 1215413, at *9 (citing Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 718 (7th Cir. 2002)).

Plaintiffs' choice of forum is entitled to some weight, but less than it would have been entitled to if they were not declaratory judgment plaintiffs or had brought suit in their home state of Iowa. Plaintiffs persuasively explain that they filed their complaint in Illinois because it was the closest state to Iowa where they were certain that the court would have personal jurisdiction over the defendants. While defendants focus on the fact that Boeing's Commercial Airplanes Division is located in Washington, Motion at 3; Boeing Homepage, http://www.boeing.com/commercial/overview/index.html (last visited June 10, 2008), the court has noted that Boeing's corporate headquarters is located in Chicago. None of the defendants have Washington as a home state, and in fact, Illinois is the home state of the defendant RLI. This factor weighs against granting the motion to transfer. For the same reasons, consideration of the convenience to the parties would also weigh against granting the motion.

The material events in this case are the pickup of the engines in Ohio and the crash in Illinois. The Service Contract was signed in Kansas and Missouri and the insurance contracts between defendants and Boeing were signed in Chicago. The engines were destined for Boeing's facility in Washington. Although Boeing's facility in Washington certainly had an important interest in the engines, this factor focuses on the "events" in the case, and the crash is certainly the most important event. This is bolstered by the defendants' own contention that "[a] central issue to be determined in this case is whether or not the truck driver's conduct -- intentionally driving after becoming fatigued (for an additional 139 miles past three rest stops) -- a charge to which the driver did plead guilty in court -- constitutes gross ...


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