Global Decor Inc. v. Cincinnati Ins. Co.

• Decision Date: 16 June 2011
• Docket Number: CASE NO. CV 11-2602-JST (FMOx)
• Court: U.S. District Court — Central District of California
• Parties: GLOBAL DECOR, INC. and THOMAS H. WOLF Plaintiffs, v. THE CINCINNATI INSURANCE COMPANY, Defendant.

GLOBAL DECOR, INC. and THOMAS H. WOLF Plaintiffs,

v.THE CINCINNATI INSURANCE COMPANY, Defendant.

CASE NO. CV 11-2602-JST (FMOx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

DATED: June 16, 2011

ORDER GRANTING DEFENDANT'S

MOTION TO TRANSFER

I. INTRODUCTION

Before the Court is Defendant and Counterclaimant The Cincinnati Insurance Company's Motion to transfer the case to the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a). (Def.'s Mot., Doc. 22.) Plaintiffs and Counter-defendants Global Decor, Inc. and Thomas Wolf have filed an opposition (Pls.' Opp'n, Doc. 28), and Defendant has filed a reply (Def.'s Reply, Doc. 31-1). The Court finds this matter appropriate for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. R. 7-15. Accordingly, the hearing set for June 20, 2011, at 10:00 a.m. is vacated. Having considered the parties' briefs, the Court GRANTS Defendant's Motion and transfers the case to the United States District Court for the Northern District of Illinois.

II. BACKGROUND

The following facts are taken from Plaintiffs' Complaint and the exhibits attached thereto. Plaintiff Global Decor is an Illinois corporation, and Plaintiff Wolf is its President and Chief Executive Officer. (Compl. ¶¶ 1-2.) Defendant is an Ohio corporation. (Id. ¶ 3.) Defendant issued Plaintiffs an insurance policy and subsequent renewals providing commercial general liability and commercial umbrella coverage for the period from December 15, 2008, through December 15, 2011 (the "Policy"). (Id. ¶¶ 8-9.)

On March 31, 2010, Ted Merianos filed suit in the Central District of California against Merry Chance Industries, Ltd. and Steven Kwan ("Merianos" action). (Id. ¶ 12.) On February 3, 2011, Merry Chance filed a counterclaim against Merianos and Plaintiffs. (Id. ¶ 21.) On February 16, 2011, Plaintiffs provided notice to Defendant of the Merry Chance counterclaim and requested coverage under the Policy. (Id. ¶ 31, Exh. 6.) On March 11, 2011, Defendant denied this request. (Id. ¶ 32, Exh. 7.) Two weeks later, Plaintiffs filed this suit seeking declaratory relief that Defendant has a duty to defend Plaintiffs against the Merry Chance counterclaim in the Merianos case. On May 9, 2011, Defendant filed the instant Motion to transfer venue.

III. LEGAL STANDARD

"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." 28 U.S.C. § 1404(a). A district court has broad discretion in determining whether to transfer venue. See 28 U.S.C. § 1404(b); Jones v. GNC Franchising, Inc., 211 F. 3d 495, 498 (9th Cir. 2000). "This transfer power is, however, expressly limited by the final clause of § 1404(a) restricting transfer to those federal districts in which the action 'might have been brought.'" Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (quoting 28 U.S.C. § 1404(a)). Thus, district courts utilize a two-step analysis to determine if venue is proper. "The threshold question under Section 1404(a) requires the court to determine whether the case could have been brought in the forum to which the transfer is sought." Roling v. E*Trade Sec., LLC, 756 F. Supp. 2d 1179, 1184 (N.D. Cal. 2010). "If venue would be appropriate in the would-be transferee court, then the court must make an 'individualized, case-by-case consideration of convenience and fairness.'" Id. (quoting Jones, 211 F.3d at 498). In Jones, the Ninth Circuit set forth ten permissive factors that a court might consider: (1) the location where the relevant agreements were negotiated and executed; (2) the state that is most familiar with the governing law; (3) the plaintiff's choice of forum; (4) the respective parties' contacts with the forum; (5) the contacts relating to the plaintiff's cause of action in the chosen forum; (6) the differences in the costs of litigation in the two forums; (7) the availability of compulsory process to compel attendance of non-party witnesses; (8) the ease of access to sources of proof; (9) the presence of a forum selection clause; and (10) the public policy of the forum state. Jones, 211 F.3d at 498-99.

In reviewing a motion to transfer venue, a court may consider facts outside of the pleadings and the pleadings need not be accepted as true. Cf. Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004) (reviewing an analogous improper venue motion pursuant to Federal Rule of Civil Procedure 12(b)(3)). The movant bears the burden of persuasion to make a strong showing of inconvenience to warrant upsetting the plaintiff'schoice of forum. See Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).

IV. DISCUSSION

A. This Action Could Have Been Brought in the Northern District of Illinois

The parties do not dispute that Plaintiffs could have brought this case in the Northern District of Illinois. Because diversity of citizenship under 28 U.S.C. § 1332 provides the sole basis for jurisdiction, 28 U.S.C. § 1391(a) applies. See 28 U.S.C. § 1391(a). Under § 1391(a), a case may be heard 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.

28 U.S.C. § 1391(a). Defendant resides in Illinois, does business in the Northern District of Illinois, and is therefore subject to personal jurisdiction in the Northern District of Illinois. (Def.'s Mot. at 12.) Thus, this case can be heard in the Northern District of Illinois.

B. Interests of Convenience and Justice - Jones Factors

Defendant argues that the balance of convenience supports a finding that the convenience of the parties and the interest of justice would be better served in the Northern District of Illinois. See 28 U.S.C. § 1404(a). The Court agrees.

1) Location Where Relevant Agreements Were Negotiated and Executed

Defendant issued Plaintiffs the original Policy in the Northern District of Illinois, as the underwriter for Defendant who negotiated the Policy with Plaintiffs did so from the Northern District of Illinois. (Monahan Decl., Doc. 24, ¶¶ 3, 15.) The underwriter for Defendant who negotiated the renewals for the Policy did so from Ohio. (Wilson Decl., Doc. 25, ¶¶ 3, 11.) Nor do Plaintiffs dispute that they negotiated and accepted the Policy and the renewals in the Northern District of Illinois. The Policy was therefore negotiated and executed in the Northern District of Illinois. Thus, this factor weighs in favor of transferring the case.

2) State Most Familiar with the Governing Law

A diversity case should be litigated "in a forum that is at home with the law that must govern the action[.]" Decker, 805 F.2d at 843. "To determine the applicable substantive law, a federal court sitting in diversity applies the choice-of-law rules of the forum." Narayan v. EGL, Inc., 616 F.3d 895, 898 (9th Cir. 2010). California's choice of law statute is California Civil Code section 1646.¹ Section 1646 states that "a contract is to be interpreted according to the law and usage of the place where it is to be performed; or, if it does not indicate a place of performance, according to the law and usage of the place where it is made." Cal. Civ. Code § 1646. A contract '"indicates' a place of performance within the meaning of section 1646 if the intended place of performance can be gleaned from the nature of the contract and its surrounding circumstances." Frontier Oil Corp. v.RLI Ins. Co., 63 Cal. Rptr. 3d 816, 827 (Cal. Ct. App. 2007) ("The intended place of performance is a question of contract interpretation for the court to decide, except to the extent the answer may depend on the credibility of extrinsic evidence.").

The Policy does not contain a choice of law provision nor does it explicitly indicate a place of performance. Defendant argues the "intended place of performance" for the Policy was Illinois because the Policy "was issued in Illinois, through an Illinois insurance agent, covering solely Illinois operations." (Def.'s Mot. at 13.) Defendant further asserts that the Policy "contains endorsements with Illinois-specific terms and conditions" and the "premium paid by Global Decor to Cincinnati was based on these Illinois exposures and the risks of loss associated with Illinois-based operations." (Id.) Plaintiffs argue, however, that California law applies because section 1646 mandates application of the law of the state where the defense of an underlying lawsuit is to be performed. (Pls.' Opp'n at 8.) In addition, Plaintiffs claim that because the Policy's "coverage territory" included the entire country and other parts of the world, Defendant "had to expect the place of performance of its defense duty was wherever Global [Decor] might get sued, certainly including as [sic] California." (Id. at 9.) Under either Plaintiffs' or Defendant's argument, Illinois law applies.

Under Plaintiffs' broad theory, i.e., that the intended place of performance is wherever the underlying lawsuit actually arises, a specifically intended place of performance would not exist. Pursuant to section 1646, if a policy does not indicate a place of performance, the governing law is "where [the contract] is made." Cal. Civ. Code § 1646. Here, Plaintiffs do not dispute that they accepted and executed the terms of the Policy in the Northern District of Illinois and, thus, that the Policy was "made" there. See Costco Wholesale Corp. v. Liberty Mut. Ins. Co., 472 F. Supp. 2d 1183, 1197 (S.D. Cal. 2007) ("A contract is 'made' in the place of acceptance." (citing ABF Capital Corp. v. Grove Props. Co., 126 Cal. App. 4th 204, 222 (Cal....