Gulf Ins. Co. v. Glasbrenner

• Decision Date: 02 August 2005
• Docket Number: Docket No. 04-0070-cv.
• Citation: 417 F.3d 353
• Parties: GULF INSURANCE COMPANY, Plaintiff-Appellant, v. David GLASBRENNER and Susan Glasbrenner, Defendants-Appellees, The Caldor Corporation f/k/a Caldor, Inc., Defendant.
• Court: U.S. Court of Appeals — Second Circuit

Page 353

417 F.3d 353

GULF INSURANCE COMPANY, Plaintiff-Appellant, v. David GLASBRENNER and Susan Glasbrenner, Defendants-Appellees The Caldor Corporation f/k/a Caldor, Inc., Defendant.

Docket No. 04-0070-cv.

United States Court of Appeals, Second Circuit.

Argued March 10, 2005.

Decided August 2, 2005.

Francis LoBosco, New York, N.Y. (Jason Liam Schmolze, Taylor, Colicchio & Silverman, New York, NY, of counsel), for Appellant.

John N. Ellison, New York, N.Y. (Anderson, Kill & Olick, New York, NY, of counsel), for Appellees.

Before: MESKILL, JACOBS and STRAUB, Circuit Judges.

MESKILL, Circuit Judge.

In 1990, Congress amended the statute that dictates where venue lies in federal civil suits, 28 U.S.C. § 1391. Although those amendments are not particularly complicated, they are significant and we have previously addressed them only briefly. We do so at length now, and conclude that venue may properly lie in any judicial district in which significant events or omissions material to the plaintiff's claim have occurred. Because the United States District Court for the Southern District of New York, Stanton, J. — which dismissed this suit for improper venue — seemingly misapplied this standard, we vacate and remand.

I.

The history of this case — spanning eleven years and involving four separate civil actions as well as one non-binding arbitration — is tortuous, but the details are ultimately irrelevant to the appeal before us. We recapitulate only the important facts.

In April 1994, Susan Glasbrenner was injured in a Caldor store in New Jersey. She and her husband David (the appellants here) sued Caldor in New Jersey state court in February of the following year. But by that time, Caldor had filed for bankruptcy and the Glasbrenners' suit was stayed pending proceedings before the bankruptcy court in the Southern District of New York. The bankruptcy court required the Glasbrenners to arbitrate their claim, but ultimately permitted the New Jersey state suit to proceed. The bankruptcy court imposed one caveat, however: any judgment against Caldor could not be held against the bankrupt estate, but would instead have to be satisfied by Caldor's insurers, which included Gulf Insurance Co.

In April 2003, nine years after the injury, a New Jersey jury returned a verdict of approximately $2.6 million for the Glasbrenners. By then, Caldor's bankruptcy proceedings were long over, the bankruptcy court having ordered Caldor to wind down in late 2001.

Once the jury returned its verdict against Caldor, Gulf immediately filed this suit in the Southern District of New York seeking a declaration that, under the terms of the applicable insurance policy, it is not liable to pay the New Jersey judgment. The Glasbrenners promptly moved to dismiss the suit for improper venue, among other things, arguing that venue lies in New Jersey. Simultaneously, they filed a suit in New Jersey state court — since removed to federal court in the District of New Jersey — seeking to compel Gulf to pay the judgment.

The district court in New York dismissed Gulf's declaratory judgment action for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3), and this appeal followed. We understand that the New Jersey enforcement action has been stayed pending the outcome of this appeal.

II.

First, we consider the applicable standard of review. Gulf argues that our review should be de novo (as it is in reviewing criminal venue determinations, see, e.g., United States v. Geibel, 369 F.3d 682, 695 (2d Cir.2004)). The Glasbrenners advocate abuse of discretion.

We have not previously addressed this question, see U.S. Titan v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 153 (2d Cir.2001), although other circuits have. Those circuits typically treat venue determinations in the same way that they treat personal jurisdiction decisions, reviewing the ultimate question de novo and accepting any factual findings unless clearly erroneous. See, e.g., Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir.2004); Hooker v. U.S. Dep't of Health & Human Servs., 858 F.2d 525, 528 n. 2 (9th Cir. 1988). But see Milwaukee Concrete Studios, Ltd. v. Fjeld Mfg. Co., 8 F.3d 441, 445 (7th Cir.1993) (recognizing application of abuse of discretion standard); Home Ins. Co. v. Thomas Indus., 896 F.2d 1352, 1355 (11th Cir.1990) (applying abuse of discretion standard).

We agree that a motion to dismiss for improper venue under Rule 12(b)(3) raises a quintessential legal question — where is venue proper? — even to the extent that it may be fact-specific. Accordingly, we will apply the same standard of review in Rule 12(b)(3) dismissals for improper venue as we do in Rule 12(b)(2) dismissals for lack of personal jurisdiction:

If the court chooses to rely on pleadings and affidavits, the plaintiff need only make a prima facie showing of [venue]. But if the court holds an evidentiary hearing ... the plaintiff must demonstrate [venue] by a preponderance of the evidence. On appeal, we review de novo the legal question of whether a prima facie case has been established. After a hearing, where findings are made by the trial court, those findings may be set aside on appeal only when clearly erroneous.

CutCo Indus. v. Naughton, 806 F.2d 361, 364-65 (2d Cir.1986) (citations omitted); see also Sunward Elecs. v. McDonald, 362 F.3d 17, 22 (2d Cir.2004). Here, there has been no substantial disagreement about the facts relevant to venue. Our review is therefore de novo.

III.

We turn now to the civil venue statute itself. See 28 U.S.C. § 1391. It provides, in pertinent part:

A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only 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 may be found, if there is no district in which the action may otherwise be brought.

28 U.S.C. § 1391(b).¹ Caldor was a Delaware corporation doing business out of Connecticut. The Glasbrenners reside in Pennsylvania. The defendants thus reside in different states, and subsection (1) does not apply. And because the parties concede that the action could have been brought in New Jersey — indeed, the Glasbrenners' New Jersey enforcement action is nothing but the mirror-image of this declaratory judgment action — subsection (3) does not apply. Thus, our question is whether the Southern District of New York is "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred." Id.

A.

Prior to its amendment in 1990, however, the civil venue statute required a different inquiry. It provided that "a civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district ... in which the claim arose." 28 U.S.C. § 1391(b) (1989) (emphasis added). See generally Colleen McMahon, Venue, in Federal Civil Practice 61, 67-68 (Georgene M. Vairo ed., 1989). The emphasized language left considerable doubt as to whether, under this provision, venue could plausibly lie in more than one jurisdiction, see, e.g., Cheeseman v. Carey, 485 F.Supp. 203, 210-11 (S.D.N.Y.1980), although the Supreme Court supposed that it could, at least in an "unusual case," Leroy v. Great Western United Corp., 443 U.S. 173, 185, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979).

In any event, in 1990 Congress revamped the venue statute and enacted the current language, which is clearer. See Judicial Improvements Act of 1990, Pub.L. No. 101-650, § 311, 104 Stat. 5089 (1990); see also Report of the House Committee on the Judiciary, H.R.Rep. No. 101-734 (1990), reprinted in 1990 U.S.C.C.A.N. 6860, 6869 (expressing the view that the former statute's reference to the district "in which the claim arose" was "litigation breeding," because it failed to address the situation "in which substantial parts of the underlying events have occurred in several districts"). By laying venue in "a" — not "the" — "judicial district in which a substantial part of the events or omissions giving rise to the claim occurred," 28 U.S.C. § 1391(b)(2) (emphasis added), Congress removed much of the ambiguity of the former statute. The new language contemplates that venue can be appropriate in more than one district.

We thus join several other circuits in holding that the civil venue statute permits venue in multiple judicial districts as long as "a substantial part" of the underlying events took place in those districts, a conclusion that we alluded to in Bates v. C & S Adjusters, 980 F.2d 865, 867 (2d Cir. 1992) (holding that the revised statute "does not, as a general matter, require the District Court to determine the best venue"). See, e.g., Jenkins Brick Co. v. Bremer, 321 F.3d 1366, 1371 (11th Cir.2003); Uffner v. La Reunion Francaise, S.A., 244 F.3d 38, 42 (1st Cir.2001); First of Mich. Corp. v. Bramlet, 141 F.3d 260, 263 (6th Cir.1998); Setco Enters. v. Robbins, 19 F.3d 1278, 1281 (8th Cir.1994).

In doing so, however, we caution district courts to take seriously the adjective "substantial." We are required to construe the venue statute strictly. See Olberding v. Illinois Cent. R.R., 346 U.S. 338, 340, 74 S.Ct. 83, 98 L.Ed. 39 (1953). That means for venue to be proper, significant events or omissions material to the plaintiff's claim must have occurred in the district in question, even if other material events occurred elsewhere. It would be error, for instance, to treat the venue statute's "substantial part" test as mirroring the minimum contacts test employed in personal jurisdiction inquiries. See Jenkins Brick, 321 F.3d at 1372; Cottman Transmission Sys. v. Martino, 36 F.3d 291, 294 (3d Cir.1994); cf...