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Bull v. Illinois Union Insurance Co.

United States District Court, N.D. Illinois, Eastern Division

July 31, 2017

JAMES BULL, on behalf of himself and a certified class, Plaintiff,
v.
ILLINOIS UNION INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          John Z. Lee United States District Judge

         Plaintiff James Bull (“Bull”), as representative of a certified class and the assignee of U.S. Coachways, brings this action against Defendant Illinois Union Insurance Company (“IUIC”). Bull alleges that IUIC breached its obligations to defend and indemnify U.S. Coachways in a separate suit brought by Bull and the class he represents. IUIC has moved to dismiss, or in the alternative, transfer this case in light of related litigation pending in the Eastern District of New York. For the following reasons, the Court transfers this action to the Eastern District of New York pursuant to 28 U.S.C. § 1404(a). All other motions will be addressed by the transferee court.[1]

         Factual Background

         Bull, a resident of Ohio, is the representative of a nationally based certified class that entered into a settlement with U.S. Coachways in a prior suit: Bull v. U.S. Coachways, Inc., No. 1:14-cv-05789 (N.D. Ill. settled Nov. 9, 2016) (“the Underlying Action”). Compl. ¶¶ 1, 3, 28, ECF No. 1. The suit claimed that U.S. Coachways had violated the Telephone Consumer Protection Act (TCPA). Id. ¶ 7. Under the terms of the settlement, U.S. Coachways stipulated to paying $50, 000 of $49, 932, 375 in return for Bull's agreement to seek recovery from U.S. Coachways' insurer, IUIC, and pursue only IUIC in satisfying the judgment. Id. ¶¶ 28-30; Def.'s Mem. Supp. Mot. Dismiss or Transfer 5, ECF No. 10.

         During the course of the Underlying Action, U.S. Coachways notified IUIC of the suit and requested a determination of coverage for liability under the TCPA. Compl. ¶¶ 16, 19. IUIC's claims agent, ACE North American Claims, responded on January 13, 2015, and denied coverage. Id. ¶ 20; Def.'s Mem. at 3-4. Counsel for Bull thereafter sent a demand letter to IUIC on July 23, 2015. Compl. ¶ 23. In his demand letter, Bull apprised IUIC of his intention to seek an assignment of the policy and requested IUIC's participation in settlement negotiations. Id. Again, ACE North American Claims issued a letter declining to participate and reiterating the denial of coverage. Id. ¶ 24; Def.'s Mem. at 4. The Underlying Action eventually settled. Compl. ¶ 26. The settlement agreement received final approval on November 9, 2016, and became effective on December 11, 2016. Id.

         On November 29, 2016, shortly after receiving a copy of the settlement agreement, IUIC filed a declaratory judgment action in the Eastern District of New York, IUIC v. U.S. Bus Charter & Limo, Inc. et al., No. 1:16-cv-06602 (E.D.N.Y. filed Nov. 29, 2016) (“the New York Action”), seeking a ruling that it owes no coverage obligations pertaining to the Underlying Action. Id. ¶ 42; Def.'s Mem. at 5-6. Bull is a defendant in the New York Action. Compl. ¶ 42.

         Subsequently, on December 19, 2016, Bull filed this diversity action on behalf of himself and the certified class. Compl. ¶ 1.[2] Bull seeks damages for breach of insurance contract, asserting rights assigned to him by the insured, U.S. Coachways, as part of the settlement of the Underlying Action. Compl. ¶ 2. Before the Court is IUIC's motion to dismiss in favor of its first-filed suit, or in the alternative, to transfer this case to the Eastern District of New York, where its suit is pending.[3]

         Legal Standard

         28 U.S.C. § 1404(a) provides that “[f]or the convenience of the 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.” 28 U.S.C. § 1404(a). Once an appropriate alternate forum is identified, a court undertakes a two-pronged inquiry into both convenience and the interests of justice to decide whether transfer is warranted. Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d 973, 978 (7th Cir. 2010). The movant has the burden of establishing, “by reference to particular circumstances, that the transferee forum is clearly more convenient.” Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986). The factors relevant to the convenience inquiry include “the availability of and access to witnesses, and each party's access to and distance from resources in each forum, ” as well as “the location of material events and the relative ease of access to sources of proof.” Research Automation, 626 F.3d at 978. With regard to the interests of justice, a court will consider “docket congestion and likely speed to trial” in each forum, “each court's relative familiarity with the relevant law, ” “the respective desirability of resolving controversies in each locale, ” and “the relationship of each community to the controversy.” Id. The interest of justice inquiry “may be determinative, warranting transfer or its denial even where the convenience of parties and witnesses points toward the opposite result.” Id. Because ruling on a motion to transfer venue requires an “individualized, case-by-case consideration of convenience and fairness, ” the district court is afforded broad discretion and substantial deference in weighing the factors for and against transfer. Coffey, 796 F.2d at 219.

         The first-to-file rule stands for the principle that a suit “may be dismissed ‘for reasons of wise judicial administration . . . whenever it is duplicative of a parallel action already pending in another federal court.'” Serlin v. Arthur Andersen & Co., 3 F.3d 221, 223 (7th Cir. 1993) (alteration in original) (quoting Ridge Gold Standard Liquors v. Joseph E. Seagram & Sons, Inc., 572 F.Supp. 1210, 1213 (N.D. Ill. 1983)). Although circuits follow the principle in varying degrees, the Seventh Circuit does not rigidly adhere to the first-to-file rule. Research Automation, 626 F.3d at 980-82. On the contrary, the Seventh Circuit has held that “the first-filed case may proceed where the principles that govern requests for transfer do not indicate otherwise.” Id. at 980. Thus, the first-filed status of a case is relevant to the transfer inquiry, but not dispositive.

         Analysis

         I. The First-to-File Rule

         As an initial matter, IUIC contends that the first-to-file rule provides for dismissal of this, the second-filed action. Def.'s Mem. at 6. As noted, however, no such mechanical rule exists in the Seventh Circuit. Research Automation, 626 F.3d at 980, 982. Instead, filing priority is one of many factors relevant in the § 1404(a) analysis, and transfer, rather than dismissal, is the appropriate remedy. Id.; see Hecker v. Petco Animal Supplies, Inc., No. 16 C 10857, 2017 WL 2461546, at *2-3 (N.D. Ill. June 7, 2017) (collecting Seventh Circuit precedent dictating transfer, rather than dismissal, of the second-filed action). Therefore, IUIC's motion to dismiss pursuant to the first-to-file rule is denied.

         Still, Bull raises two objections to allowing the order of filing to even influence determination of whether to transfer his case. Pl.'s Resp. 5-6, ECF No. 18. He asserts that because his suit requests coercive relief, in that it asks the court to order IUIC to pay damages rather than merely declare IUIC's obligations to do so, it should take priority over IUIC's declaratory action. Id. Moreover, he asserts the declaratory action should be disfavored as improperly anticipatory. Id. In reply, IUIC claims that bringing a declaratory judgment action is “the proper ...


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