R.D. Offutt Co. v. Lexington Ins. Co., A3-04-79.
| Decision Date | 27 October 2004 |
| Docket Number | No. A3-04-79.,A3-04-79. |
| Parties | R.D. OFFUTT COMPANY, Plaintiff, v. LEXINGTON INSURANCE COMPANY, a foreign insurance company, Defendant. |
| Court | U.S. District Court — District of North Dakota |
Mark R. Hanson, Nilles, Hansen & Davies, Ltd., Fargo, ND, for Plaintiff.
This action arises out of a commercial property insurance policy issued by Lexington Insurance Company ("Lexington") to Plaintiff, R.D. Offutt Company ("RDO"). Before the Court is Lexington's motion for a change of venue (doc. # 3). Lexington is requesting that the Court transfer this case to the United States District Court for the District of Oregon. RDO has filed a brief in opposition. A hearing on the motion was held on October 12, 2004.
Because the threshold issue in this case is the interpretation of the insurance policy under North Dakota law, this Court is in a better position to apply North Dakota law. Moreover, Lexington failed to meet its heavy burden of showing a transfer is warranted under 28 U.S.C. & sect; 1404(a). Accordingly, Lexington's motion is DENIED. If, however, as this case proceeds, it becomes evident that a transfer to Oregon would be justified for the convenience of the witnesses, the Court will revisit the issue at that time.
RDO is a Minnesota corporation with its principal place of business in Fargo, North Dakota. Lexington is a Delaware corporation authorized to do business in North Dakota by the North Dakota Insurance Commissioner. Lexington sold an insurance policy to RDO through representatives in North Dakota. The insurance policy at issue was negotiated in North Dakota, purchased in North Dakota, and premiums are paid from North Dakota.
The commercial property insurance policy issued by Lexington to RDO covered property in eight states. One of the properties is farm land operated by Threemile Canyon Farms, located near Boardman, Oregon. Threemile Canyon leases the land to several farming operations that grow a variety of crops, including alfalfa, corn, mint, onions, potatoes, and wheat.
On June 29, 2002, an electrical switchgear failure occurred at the riverside pumping station for Threemile Canyon. The pumping station provides water to Threemile Canyon. The failure caused substantial damages to be incurred by RDO. The damages included expenses to repair the damaged switchgear and other equipment, expenses to rent temporary generators and supply them with diesel fuel, internal labor expenses for repairs, and expenses for preparation of the claim filed with Lexington. RDO filed a claim under the insurance policy. Lexington paid a portion of the damages, but refused to reimburse RDO for "expedited expenses." RDO estimates its expedited expenses total $264,642.61.
RDO's complaint seeks a declaratory judgment and also alleges breach of contract and bad faith. Lexington has denied coverage, asserting the claimed expenses are excluded from coverage under the "growing crops" exclusion. Further, Lexington has asserted the affirmative defense that RDO failed to mitigate or minimize any and all of its alleged damage.
Lexington has moved to transfer venue to the District of Oregon under 28 U.S.C. § 1404(a). The grounds for Lexington's request for a change of venue are that: (1) a majority of the anticipated witnesses reside in Oregon; (2) witnesses residing in Oregon cannot be compelled to appear in North Dakota; (3) documents and the site of the loss are located in Oregon; and (4) a transfer is in the interest of justice. Lexington does not dispute that this Court has jurisdiction and concedes that venue is proper in this Court. Instead, Lexington argues that Oregon would be a more convenient forum to adjudicate this matter.
Section 1404(a) of Title 28, United States Code, provides: "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." Although federal district courts may transfer any civil action to another district where it could have been brought, great deference is generally afforded to the plaintiff's choice of forum. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504, 67 S.Ct. 839, 91 L.Ed. 1055 (1947); Dakota W. Bank of North Dakota v. N. Am. Nutrition Companies, Inc., 284 F.Supp.2d 1232, 1234 (D.N.D.2003). In Gilbert, the Supreme Court stated that "unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed." 330 U.S. at 508, 67 S.Ct. 839. The moving party bears the heavy burden of showing why a change of forum is warranted. Dakota W. Bank, 284 F.Supp.2d at 1234.
When determining whether to grant a motion to transfer, courts consider the following factors: (1) the convenience of the parties; (2) the convenience of the witnesses; and (3) the interests of justice. 28 U.S.C. § 1404(a); Terra Int'l, Inc. v. Mississippi Chem. Corp., 119 F.3d 688, 691 (8th Cir.1997). The district court's evaluation of a transfer motion, however, is not limited to these factors. Terra Int'l, 119 F.3d at 691. Rather, these determinations require a case-by-case evaluation of the particular circumstances in the case and a consideration of all relevant factors. Id.
"The `logical starting point' for analyzing the convenience of the parties is a consideration of their residences in relation to the district chosen by the plaintiff and the proposed transferee district." 17 James Wm. Moore et al., Moore's Federal Practice § 111.13[1][e][i] (3d ed.2004). In this case, North Dakota is the location of Plaintiff RDO's principal place of business while Defendant Lexington is a Delaware corporation with its headquarters located in Massachusetts. Oregon, on the other hand, is the location of the insured property in which the loss occurred.
Lexington seeks to transfer the action to Oregon, asserting that it would be more convenient for both the parties and the witnesses to litigate this case in Oregon. However, RDO chose to litigate in North Dakota. A plaintiff that chooses its home forum is generally presumed to have chosen the forum because it is convenient. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255-56, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). Thus, the plaintiff's choice must be afforded some deference. Dakota W. Bank, 284 F.Supp.2d at 1235. Transferring this action to a district court in Oregon would only serve to shift the alleged inconveniences to RDO. Merely shifting the inconveniences of the parties from one party to the other is not a permissible justification for a change of venue. Id.
Generally, the factor given the most weights by courts considering a motion for change of venue is the convenience of the witnesses. May Dep't Stores Co. v. Wilansky, 900 F.Supp. 1154, 1165 (E.D.Mo.1995). However, "[t]he party with the longest list of potential witnesses who reside in their respective district will not necessarily prevail." Dakota W. Bank, 284 F.Supp.2d at 1235. To determine the convenience of the witnesses, the Court must examine the materiality and importance of the anticipated witnesses' testimony and then determine their accessibility and convenience to the forum. Reid-Walen v. Hansen, 933 F.2d 1390, 1396 (8th Cir.1991).
Lexington asserts that since the claim concerns a loss which occurred exclusively near Boardman, Oregon, adjudicating this matter in Oregon will enable both parties ease of access to witnesses, documentation, and the site of the loss and also will allow for the subpoena of witnesses to ensure compulsory attendance of any unwilling witness. In contrast, RDO contends it is the interpretation of the insurance policy that is at issue and it is likely that the fact witnesses Lexington has referred to are unnecessary to determine whether coverage exists under the policy. Instead, RDO avers its principal place of business is in Fargo and all RDO representatives involved in this matter, including Loren Stahl and F. Scott Neal, are located in Fargo. Further, RDO notes that its claim was adjusted by J.A. Stoops, a national general adjuster, located in Bloomington, Minnesota. Lastly, RDO explains that the representatives from Lexington who might testify at trial will have to travel even if the case were to be transferred to Oregon as Lexington's headquarters are located in Massachusetts.
The threshold issue in this case the interpretation of the insurance policy. The parties specifically contest the meaning of the growing crops exclusion and the provision regarding expedited expenses. Construction of an insurance policy is a question of state law. See Nat'l Union Fire Ins. Co. of Pittsburgh v. Terra Indus., Inc., 346 F.3d 1160, 1164 (8th Cir.2003) (). As such, the Court can presume that testimony of fact witnesses will not, in all likelihood, be critical to the initial determination of coverage. Thus, the Court finds that at this time a transfer for the convenience of witnesses is not warranted. If, however, as this case proceeds, it becomes evident that a transfer to Oregon would be justified for the convenience of the witnesses, the Court will revisit the issue at that time.
When considering the interest of justice, a court can consider: (1) judicial economy; (2) the plaintiff's choice of forum; (3) the comparative costs to the parties of litigating in each forum; (4) each party's ability to enforce a judgment; (5) obstacles to a fair trial; (6) conflict of law issues; and (7) the advantage of having a local court determine questions of local law. Terra Int'l, Inc., 119 F.3d at 696.
The parties dispute which substantive law will apply. In this case, the two possibilities are Oregon law ...
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