JPaulJones, L.P. v. Zurich General Insurance Company (China) Limited
| Decision Date | 09 April 2021 |
| Docket Number | Case No. 3:20-cv-01767 |
| Citation | 533 F.Supp.3d 999 |
| Parties | JPAULJONES, L.P., Plaintiff, v. ZURICH GENERAL INSURANCE COMPANY (CHINA) LIMITED, Defendant. |
| Court | U.S. District Court — District of Oregon |
Brian D. Chenoweth & David B. Hutchinson, Chenoweth Law Group, PC, 510 SW Fifth Avenue, Portland, Oregon 97204. Attorneys for Plaintiff.
Jennifer Michelle Lee and William J. Cremer, Cremer Spina Shaughnessy Jansen & Siegert, LLC, 1 N Franklin St 10th Floor, Chicago, IL 60606; Stephen P. Rickles, The Rickles Law Firm, PC, P.O. Box 10065, Portland, Oregon 97296. Attorneys for Defendant.
This matter comes before the Court on Defendant's Motion to Dismiss. ECF 6.
Defendant asserted in its Motion three independent grounds for dismissal: lack of personal jurisdiction under Rule 12(b)(2), improper venue due to arbitration and venue provisions under Rule 12(b)(3), and improper service of process under Federal Rule of Civil Procedure 12(b)(5). ECF 6 at 7. Because this Court finds that the venue and arbitration provisions warrant dismissal pursuant to a forum non conveniens analysis, this Court does not address the other grounds. Cf. Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp. , 549 U.S. 422, 436, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) ().
Plaintiff JPaulJones, L.P. is a limited partnership incorporated in Texas with its principal place of business in Austin, Texas. ECF 1 at ¶ 4. The members of this limited partnership are citizens of Texas and Florida. Id. at ¶ 5. Defendant Zurich General Insurance Company (China) Limited is a foreign entity existing and organized under the laws of The People's Republic of China, with its principal place of business in Shanghai, China. Id. at ¶ 3.
Plaintiff is a product designer that creates multiple functional products, including the EyeVac Pro touchless vacuum (the "EyeVac"). ECF 1-1 at ¶ 4. In or around 2007, Plaintiff hired TEK Electrical Co., Ltd., and Ecovacs Robotics, Inc. ("Ecovacs") to manufacture the EyeVac at Ecovacs's factory in China. Id. As part of this agreement, Ecovacs agreed to include JPJ as an additional insured under its factory liability insurance policy with Defendant, Policy Number CGO0010320BG (the "ZC Policy"). Id.
The ZC Policy has a forum selection provision1 that provides as follows:
Plaintiff alleges that the ZC Policy is an occurrence policy that provides defense and indemnity coverage for property damage occurring from 2007 through September 23, 2019. Id. at ¶ 5. An occurrence-based policy, as opposed to a claims-based policy, triggers coverage based on when the property damage occurred. Id. at ¶ 13. Plaintiff states that Defendant has denied coverage on some claims on the ground that when it renewed Ecovacs's policy for 2019, Defendant inserted a "sunset clause" which excluded any claims arising from the products Ecovacs sold to Plaintiff which were not reported to Defendant by September 23, 2019. Id. at ¶ 12. Plaintiff contends that although Plaintiff was a party or intended third-party beneficiary, neither Ecovacs nor Defendant obtained Plaintiff's consent to modify the ZC Policy or the additional insured endorsement ("AI Endorsement") to convert the ZC Policy from an occurrence policy to a claims-made policy. Id. at ¶ 13. Plaintiff alleges that Defendant has denied coverage for claims filed against Plaintiff in Oregon, Wisconsin, New York, Georgia, Maine, and Texas, based on property damage that allegedly occurred during the ZC Policy term. Id. at ¶¶ 9-11, 15, 16, 25.
On July 27, 2020, Plaintiff filed a complaint against Defendant in Multnomah County Circuit Court alleging breach of insurance contract, seeking damages and a declaration that "the 2019 ZC Policy renewal and sunset clause [are] null and void as to [Plaintiff], obligating [Defendant] to defend [Plaintiff] from claims based on occurrences during the policy period ...." ECF 1-1 at 1, 8-9. Plaintiff seeks performance of Defendant's alleged defense obligations in Oregon, Wisconsin, New York, Georgia, Maine, and Texas. ECF 1-1 at ¶¶ 9-11, 15, 16, 25. On October 14, 2020, Defendant removed the action to this Court on the basis of diversity jurisdiction. ECF 1 at ¶¶ 8-10. On October 20, 2020, Defendant filed its Motion to Dismiss. ECF 6.
Defendant moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(3), arguing that the forum selection provision in the ZC Policy dictates that disputes arising from the ZC Policy must be brought before the Shanghai arbitration committee or a Chinese court.
Although the Ninth Circuit had previously held that motions to dismiss based on a forum selection clause are properly construed as Rule 12(b)(3) motions to dismiss for improper venue, Argueta v. Banco Mexicano, S.A. , 87 F.3d 320, 324 (9th Cir. 1996), the United States Supreme Court has since instructed that whether a forum selection clause warrants dismissal is properly analyzed under the doctrine of forum non conveniens. See Atlantic Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Texas , 571 U.S. 49, 55-56, 60-61, 134 S.Ct. 568, 187 L.Ed.2d 487 (2013). The Supreme Court explained that a Rule 12(b)(3) motion permits dismissal only where venue is "wrong" or "improper," which depends on federal venue laws and is unrelated to the existence of a forum selection clause in a contract. Atlantic Marine , 571 U.S. at 55-57, 134 S.Ct. 568. "Instead, forum selection clauses should be analyzed under the federal transfer statute, 28 U.S.C. 1404(a), unless the moving party seeks a non-federal forum, in which case forum non conveniens is the appropriate doctrinal analysis." Milliner v. Bock Evans Fin. Couns., Ltd. , 114 F. Supp. 3d 871, 876 (N.D. Cal. 2015) (citation omitted). Because the moving party seeks a non-federal forum, this Court assesses the effect of the forum selection clause under the forum non conveniens analysis. See, e.g., Martinez v. Bloomberg LP , 740 F.3d 211, 216-17 (2d Cir. 2014) ().
In applying the forum non conveniens analysis, the "practical result is that forum-selection clauses should control except in unusual cases." Atlantic Marine , 571 U.S. at 64, 134 S.Ct. 568. "Unlike the situation where there is no forum-selection clause, the plaintiff ‘must bear the burden of showing why the court should not transfer [or dismiss] the case to the forum to which the parties agreed.’ " Yei A. Sun v. Advanced China Healthcare, Inc. , 901 F.3d 1081, 1087 (9th Cir. 2018) (quoting Atlantic Marine , 571 U.S. at 64, 134 S.Ct. 568 ). "The plaintiff's subsequent choice of forum merits no weight." Id. (citation omitted). Additionally, "a court must deem all factors relating to the private interests of the parties (such as the ‘relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive’) as weighing ‘entirely in favor of the preselected forum.’ " Id. at 1087-88 (quoting Atlantic Marine , 571 U.S. at 64, 62 n.6, 134 S.Ct. 568 ). "While a court may consider factors relating to the public interest (such as ‘the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home with the law,’ those factors will rarely defeat a transfer motion." Id. at 1088 (internal citations omitted) (alteration in original).
In sum, "only under extraordinary circumstances unrelated to the convenience of the parties should a motion to enforce a forum-selection clause be denied." Id. (alteration omitted) (quotation marks and citation omitted). In evaluating such "extraordinary circumstances" or "exceptional reasons," courts consider the Supreme Court's "prior guidance on this issue" in M/S Bremen v. Zapata Off-Shore Co. , 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) (" Bremen "). Yei A. Sun , 901 F.3d at 1088. Forum selection clauses may be held unenforceable under federal law if the litigant makes "a strong showing" that (1) its inclusion in a contract was the product of fraud or overreaching, (2) enforcement would contravene a strong public policy of the forum in which suit is brought, or (3) trial in the contractual forum will be so gravely difficult and inconvenient that the litigant will for all practical purposes be deprived of his day in court. Gemini Techs., Inc. v. Smith & Wesson Corp. , 931 F.3d 911, 915 (9th Cir. 2019) (discussing Bremen factors). Nevertheless, a "forum selection clause is presumptively valid; the party seeking to avoid a forum selection clause bears a ‘heavy burden’ to establish a ground upon which we will conclude the clause is unenforceable." Doe 1 v. AOL LLC , 552 F.3d 1077, 1083 (9th Cir. 2009) (quoting Bremen , 407 U.S. at 17). Additionally, a party...
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