Kingdom Insurance Group LLC et al v. United Healthcare Insurance Company et al

Filing 33

ORDER granting #12 Motion to Dismiss Complaint or in the Alternative to Transfer. Case is transferred to the Southern District of Texas, Houston Division. The pending #13 Motion to Dismiss is active and transferred with the case. Ordered by Judge Hugh Lawson on 5/31/2011. (nbp)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
VALDOSTA DIVISION
KINGDOM INSURANCE GROUP, LLC, et
al.,

:
:
:
Plaintiffs,
:
:
:
v.
:
:
UNITED HEALTHCARE INSURANCE
:
COMPANY, et al.,
:
:
Defendants.
:
____________________________________ :

Civil Action No.
7:10-cv-79 (HL)

ORDER
Before the Court is the motion to dismiss or, in the alternative, to transfer
(Doc. 12) filed by the Defendants Protectors Insurance & Financial Services, LLC
and Messrs. David Harris, Jerry Boles and Howard Jefferson (referred to as
“Protectors and the individual Texas Defendants”). Protectors and the individual
Texas Defendants ask the Court to dismiss the case against them for lack of
personal jurisdiction and because the complaint fails to state a claim. Alternatively,
they argue that venue is proper in the Southern District of Texas. Also before the
Court is the motion to dismiss for failure to state a claim filed by Defendant United
Healthcare Insurance Company (“United”), Richard Frommeyer, and James Bletzer
(Doc. 13).
For the following reasons, the motion to transfer and to dismiss (Doc. 12) is
granted in part and denied in part. The Court grants the request to transfer the case,
but expresses no opinion on whether the complaint satisfies the pleading standards
set out in the Federal Rules of Civil Procedure. The motions to dismiss remain active

motions and transfer with the case.
I.

Factual and Procedural Background
Plaintiffs are insurance brokerage firms named Kingdom Insurance Group,

L.L.C., Kingdom Business Services, L.L.C., KingdomCare, L.L.C ., and Kingdom
Benefits Association, L.L.C., (collectively “Kingdom”). Kingdom sells senior life and
health insurance products.
In the complaint, Kingdom alleges that in 2007 it entered into a contract with
the insurance carrier, United. The contract terms required Kingdom to market and
sell United's products and in exchange United was required to pay Kingdom
commissions according to a marketing and sales hierarchy. The marketing and sales
hierarchy consisted of field marketing organizations, insurance agencies, and
agents. The purpose of the hierarchy was to create a large network of agents and
agencies to sell United's products. For each sale of its product or the enrollment of
a beneficiary, United paid a commission. The total commission payout was divided
among the members of the hierarchy.
After Kingdom contracted with United and became part of United's hierarchy
Kingdom expanded its network of agents and agencies to sell United's products. As
part of the expansion effort Kingdom brought Protectors into the hierarchy. It
solicited Protectors in Texas and instructed Protectors to contact Kingdom’s agent,
Ms. Shana Clark, in Dallas. Further contract negotiations between Kingdom,
Protectors, and the individual Texas Defendants occurred in Texas.
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On July 9, 2008, Protectors entered into a contract with United where
Protectors agreed to sell United's products and United promised to reimburse
Protectors according to the marketing and sales hierarchy. The contract
acknowledged that Protectors fell below Kingdom in the hierarchy.
Kingdom and Protectors then entered into a broker agreement where
Protectors acknowledged that it would receive commissions according to the
hierarchy and agreed that it fell below Kingdom in the hierarchy. Protectors and the
individual Texas Defendants traveled to Georgia on one occasion to discuss their
agreement with Kingdom.
The complaint alleges the Defendants did not perform under the agreements
because they wrongfully excluded Kingdom from marketing efforts and potential
sales of United's products. Specifically, Protectors sold United's products to National
Baptist Convention members in Texas and did not include Kingdom in the marketing
and sales processes. As a result, Kingdom no longer fell above Protectors in the
hierarchy. Ultimately, when United products were sold United did not pay Kingdom
commissions.
The complaint also alleges that Kingdom developed ancillary products to sell
to National Baptist Convention members. Because it was excluded from marketing
and sales efforts to the National Baptist Convention members, Kingdom was unable
to sell its ancillary products and it lost revenue.
Kingdom seeks to recover damages for breach of contract as well as under
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other tort and equitable theories.
II.

Discussion
Protectors and the individual Texas Defendants assert that the Court should

transfer venue pursuant to 28 U.S.C. § 1404(a) or § 1406(a). They claim that the
Southern District of Texas is a more convenient forum, if not the only forum, for this
lawsuit and therefore, the Court should transfer venue. Kingdom contends that the
Southern District of Texas is not a more convenient forum, that venue is proper in
this District, and its decision to bring suit in Georgia should be given deference.
A.

Legal Standard

Section 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).
It is within the discretion of the Court to transfer a case to another district, but it must
consider convenience and fairness. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22,
29, 108 S. Ct. 2239, 101 L.Ed.2d 22 (1988). The movant has the burden to
establish that its proposed forum is more convenient. In re Ricoh Corp., 870 F.2d
570, 573 (11th Cir. 1989).

Unless the balance is strongly in favor of the moving

party, the plaintiff’s choice of forum should not be disturbed. Robinson v. Giarmarco
& Bill, P.C., 74 F.3d 253, 260 (11th Cir. 1996).
determining whether to transfer are:

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Factors to be considered in

(1) the convenience of the witnesses; (2) the location of relevant documents
and the relative ease of access to sources of proof; (3) the convenience of the
parties; (4) the locus of operative facts: (5) the availability of process to
compel the attendance of unwilling witnesses; (6) the relative means of the
parties; (7) a forum’s familiarity with the governing law; (8) the weight
accorded a plaintiff’s choice of forum; and (9) trial efficiency and the interests
of justice, based on the totality of the circumstances.

Manuel v. Convergys Corp., 430 F.3d 1132, 1135 n. 1 (11th Cir. 2005).
Section 1406(a) provides that “[t]he district court of a district in which is filed
a case laying venue in the wrong division or district shall dismiss, or if it be in the
interest of justice, transfer such as to any district or division in which it could have
been brought.” 28 U.S.C. § 1406(a). For a diversity case where the defendants do
not reside in the same state venue is proper in “a judicial district in which a
substantial part of the events or omissions giving rise to the claim occurred . . . .” 28
U.S.C. § 1391(a)(2). Venue is also proper in the “judicial district in which any
defendant is subject to personal jurisdiction . . . if there is no district in which the
action may otherwise be brought.” 28 U.S.C. § 1391(a)(3).
Venue in this Court is certainly questionable, but the Court need not make a
definitive ruling on whether it is proper. The Court chooses to transfer venue
pursuant to § 1404(a)–for convenience and the interests of justice–rather than for
improper venue pursuant under § 1406.
B.

Application

To transfer a case pursuant to § 1404(a), the Court must first determine

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whether this case“might have been brought” in the Southern District of Texas. It is
clear that the Southern District of Texas has personal jurisdiction over the
Defendants. United consents to the transfer, so any personal jurisdiction defense
it may have is waived. As for the rest of the Defendants Protectors is registered to
do business in Texas and is a Texas business, and the individual Texas Defendants
reside in Texas.
The next question that must be answered is whether the “convenience of
parties and witnesses” and “the interest of justice” weigh in favor of the requested
transfer.” Here, Kingdom’s choice of forum weighs against transfer. Kingdom argues
that its witnesses and offices are in Georgia making Texas an inconvenient forum.
It also asserts that the Protectors and the individual Texas Defendants did not
demonstrate that litigating in Georgia would be impossible. Alternatively, Kingdom
argues that the factors do not favor either side and that transferring would only shift
the inconvenience of litigation from one party to another.
The Court disagrees with Kingdom. Other factors weigh in favor of transfer,
including that the majority of Kingdom’s claim arose in Texas, Kingdom has offices
in Texas, a key third party witness (an agent of Kingdom) resides in Texas, personal
jurisdiction over the Texas Defendants in Georgia is uncertain, and Texas law may
govern the action. Important is that the plaintiff’s forum choice is a factor that “has
minimal value, or should be given less consideration . . . where none of the conduct
complained of occurred in the forum selected by [the plaintiff] . . . .” Eagle N. Am.,
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Inc. v. Tronox, LLC, 2008 WL 1891475, at * 5 (S.D. Ga. April 29, 2008) (citation
ommitted). “[A] plaintiff’s choice of forum is afforded less weight if the majority of the
operative events occurred elsewhere.” Great Am. E & S Ins. Co. v. N. Seattle
Comm. College Foundation, 2009 WL 2912908, at * 4 (M.D. Ga. Sept. 2, 2009)
(citation omitted). Here, since the complained of conduct is that the Texas
Defendants ousted Kingdom out of the policy and product sales to Baptist
Convention members in Texas, Kingdom’s choice of forum receives less deference.
Additionally, a transfer to Texas will obviate the need for litigation in this Court
concerning personal jurisdiction. It is worth noting that it is doubtful that the Court
has personal jurisdiction over Protectors because Kingdom sought out Protectors to
sell insurance products in Texas and the performance and breach of the contract
mostly occurred in Texas. As for the individual Texas Defendants, it appears they
never entered Georgia to transact business individually or committed an injury in the
state. There appear to be too few minimum contacts with Georgia to satisfy the
Court that the exercise of personal jurisdiction is proper.
In sum, Protectors and the indivdiualTexas Defendants have met their §
1404(a) burden by showing that the Southern District of Texas is the more
convenient forum for the parties and witnesses, and that the interests of justice are
served by the transfer.
III.

Conclusion
The motion to transfer (Doc. 12) is granted. The case is transferred to the
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United States District Court for the Southern District of Texas, Houston Division.
Pending motions to dismiss the complaint are active and are transferred with the
case.
SO ORDERED, this the 31 st day of May, 2011.
s/ Hugh Lawson
HUGH LAWSON, SENIOR JUDGE

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