Great West Casualty Company v. Ross Wilson Trucking et al
Filing
33
OPINION entered by Judge Sue E. Myerscough on 2/21/2017. Motion to Dismiss or, in the Alternative, to Transfer Action, d/e 29 filed by Defendants Stevan Schmelzer and Shelly Schmelzer is DENIED. (SEE WRITTEN OPINION) (MAS, ilcd)
E-FILED
Wednesday, 22 February, 2017 09:54:11 AM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
GREAT WEST CASUALTY
COMPANY,
Plaintiff,
v.
ROSS WILSON TRUCKING;
TRANSPORT SERVICES OF
SULLIVAN, IL, LLC; MARK J.
MUNCY; STEVAN SCHMELZER;
And SHELLY SCHMELZER,
Defendants.
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No. 3:16-CV-03253
OPINION
SUE E. MYERSCOUGH, U.S. District Judge.
This matter is before the Court on the Motion to Dismiss or, in
the Alternative, to Transfer Action (d/e 29) filed by Defendants
Stevan and Shelly Schmelzer. The Motion is DENIED. Venue is
proper in the Central District of Illinois, and the Schmelzers have
failed to show that transfer to the Southern District of Illinois is
clearly more convenient or in the interest of justice.
Page 1 of 21
I. BACKGROUND
In September 2016, Plaintiff Great West Casualty Company
filed a Complaint for Declaratory Judgment (d/e 1) against
Defendants Transport Services of Sullivan, IL, LLC (Transport
Services), Ross Wilson Trucking, Mark J. Muncy, and the
Schmelzers. Plaintiff seeks a declaration that Plaintiff has no duty
to defend or indemnify Transport Services, Ross Wilson Trucking, or
Muncy for an underlying motor vehicle accident at issue in Stevan
Schmelzer and Shelly Schmelzer v. Mark J. Muncy, Ross Wilson
Trucking, Inc., and Transport Services of Sullivan, IL, LLC, United
States District Court for the Southern District of Illinois, Case No.
3:16-CV-0290 (the Underlying Lawsuit).
The complaint in the Underlying Lawsuit alleges that
Defendant Muncy was an agent, servant, or employee of Defendant
Ross Wilson Trucking and Transport Services. See Compl., Ex. 1,
Am. Compl. for Bodily Injury (d/e 1-2). On January 14, 2016, while
acting in the scope of his agency or employment, Muncy operated a
2012 Peterbilt semi-tractor owned by Ross Wilson Trucking on
Page 2 of 21
Route 130 in Richland County, Illinois.1 Muncy was towing a semi
tanker trailer that was owned by Transport Services. Muncy
attempted to back his semi-tractor and trailer from Route 130 into
a private drive and did so in a fashion that the tanker trailer was
completely blocking the southbound lane of the roadway. Stevan
Schmelzer was operating a vehicle on Route 130 and collided with
the semi tanker trailer. The Schmelzer alleges that Muncy was
negligent and his negligence caused injury and damage to the
Schmelzers.
Plaintiff’s Complaint in the instant action alleges that
Transport Services was a party to a contract between Ross Wilson
Trucking and Transport Services. Compl. ¶ 13; see also Ex. 2,
Independent Contractor Agreement For Owner-Operator (d/e 1-3).
The Independent Contractor Agreement provided that Ross Wilson
Trucking would lease to Transport Services certain motor vehicle
equipment together with operating personnel. Compl., Ex. 2, at 1,
¶ 1. The Agreement also contained a provision requiring Ross
Richland County is located within the Southern District of Illinois. See
Jurisdictional Map available at http://www.ilsb.uscourts.gov/southerndistrict-illinois-case-assignment-map (last visited February 21, 2017).
1
Page 3 of 21
Wilson Trucking to carry certain insurance coverage, including
commercial automobile coverage. Id. at 4 ¶ 7G; ¶ 8A.
Plaintiff issued a Non-Trucking Use Policy of Commercial Auto
Insurance to the “Independent Contractors of Transport Services of
Sullivan, IL, LLC,” for the policy period November 1, 2015 to
November 1, 2016. Compl. ¶ 16; Ex. 3, Policy (d/e 1-4) (showing an
address for the insured in Sullivan, Illinois). Transport Services,
Ross Wilson Trucking, and Muncy have requested that Plaintiff
defend and indemnify them in the Underlying Lawsuit. Compl. ¶
22. Plaintiff denies that it has any obligation to defend or
indemnify. Plaintiff asserts that (1) the subject loss falls outside the
non-trucking coverage grant; (2) the subject loss is an excluded
trucking loss; (3) Transport Services is not an insured; and (4)
Transport Services is not entitled to supplemental payments toward
its defense.
All of the Defendants have answered the Complaint and raised
affirmative defenses. See d/e 30, 32. On January 13, 2017, the
Schmelzers filed their Motion to Dismiss or, in the Alternative, to
Transfer Action.
Page 4 of 21
II. JURISDICTION
This Court has subject matter jurisdiction over this action
pursuant to 28 U.S.C. § 1332(a) (requiring complete diversity and
an amount in controversy in excess of $75,000 exclusive of interest
and costs). Based on the allegations in the complaint and other
documents, complete diversity exists between Plaintiff and
Defendants. Howell v. Tribune Entm’t Co., 106 F. 3d 215, 217 (7th
Cir. 1997) (complete diversity requires that “none of the parties on
either side of the litigation may be a citizen of the state of which a
party on the other side is a citizen.”).
Specifically, Plaintiff is a Nebraska corporation with its
principal place of business in South Sioux City, Nebraska. Compl.
¶ 2. Defendant Transport Services of Sullivan IL, LLC, is an Illinois
limited liability company with its principal place of business in
Sullivan, Illinois. Id. ¶ 3. The individual members of Transport
Services are Jon C. England and Roger L. Bragg, both citizens of
Sullivan, Illinois. Id. Defendant Ross Wilson Trucking is a
corporation organized under the laws of Illinois with its principal
place of business in Shelby County, Illinois. Id. at 4. Defendant
Mark J. Muncy is a citizen of Richland County, Illinois. Id. at 5.
Page 5 of 21
Although the Complaint only identifies the residence (as
opposed to citizenship) of Defendants Stevan and Shelly Schmelzer,
the Schmelzers admit in their Brief in support of the Motion that
they are citizens of Kentucky. See Brief at 2-3 (d/e 29-1); see also
Compl. Ex. 1, Am. Compl. For Bodily Injury in the Underlying
Action (d/e 1-2) (alleging that the Schmelzers are citizens of
Kentucky); see also Meyerson v. Harrah’s E. Chi. Casino, 299 F.3d
616, 617 (7th Cir. 2002) (noting that “residence and citizenship are
not synonyms” and citizenship is what matters for diversity
jurisdiction).
The amount-in-controversy requirement is also satisfied. In a
declaratory judgment action, “the amount in controversy is
measured by the value of the object of the litigation.” Hunt v.
Wash. State Apple Ad. Comm’n, 432 U.S. 333, 347 (1977). The
object of the litigation is the pecuniary result that would flow to the
plaintiff or the defendant from the court granting the declaratory
judgment. Am.’s MoneyLine, Inc. v. Coleman, 360 F.3d 782, 786
(7th Cir. 2004). In this case, the value of the underlying lawsuit
and the cost of defending the underlying lawsuit count toward the
jurisdictional amount. See Meridian Sec. Ins. Co. v. Sadowski, 441
Page 6 of 21
F.3d 536, 539 (7th Cir. 2006); Midland Mgmt. Co. v. Am. Alt. Ins.
Corp., No. 15 C 6203, 2015 WL 9582987, at *4 (N.D. Ill. Dec. 31,
2015).
The Court finds that the amount in controversy exceeds
$75,000. In the underlying lawsuit, the Schmelzers seek in excess
of $75,000 for damages that include traumatic brain injury,
multiple facial fractures, and loss of income for Stevan Schmelzer
and loss of consortium for Shelly Schmelzer. Defense costs will also
likely be substantial. Therefore, the Court finds the amount-incontroversy requirement satisfied. See Back Doctors Ltd. v. Metro.
Prop. & Cas. Ins. Co., 637 F.3d 827, 830 (7th Cir. 2011) (noting
that “unless recovery of an amount exceeding the jurisdictional
minimum is legally impossible, the case belongs in federal court”).
Because the parties are diverse and the amount in controversy
exceeds $75,000, this Court has jurisdiction.
III. ANALYSIS
The Schmelzers move to dismiss this action for improper
venue pursuant to Federal Rule of Civil Procedure 12(b)(3) or, in the
alternative, transfer to the United States District Court for the
Page 7 of 21
Southern District of Illinois pursuant to 28 U.S.C. §1404(a), 28
U.S.C. § 1406(a), or 28 U.S.C. § 1631.
A.
Plaintiff’s Motion to Dismiss for Improper Venue is Denied
Because Venue is Proper in the Central District of Illinois
On a motion to dismiss for improper venue under Rule12(b)(3),
the court assumes the truth of the allegations in the plaintiff’s
complaint unless those allegations are contradicted by the
defendant’s affidavits. Deb v. SIRVA, Inc., 832 F.3d 800, 809 (7th
Cir. 2016). The court may also look beyond the allegations of the
complaint. Id. If venue is improper, the district court may either
dismiss the suit or, in the interest of justice, transfer the suit to any
district or division in which the suit could have been brought. 28
U.S.C. § 1406(a).
Pursuant to the federal venue statute, a civil action may be
brought in:
(1) a judicial district in which any defendant resides, if all
defendants are residents of the State in which the district
is located;
(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 the property that is the subject of the
action is situated.
Page 8 of 21
(3) if there is no district in which an action may
otherwise be brought as provided in this section, any
judicial district in which any defendant is subject to the
court’s personal jurisdiction with respect to such action.
28 U.S.C. § 1391(b). “Venue may be proper in more than one
court.” Armstrong v. LaSalle Bank Nat’l Ass’n, 552 F.3d 613, 617
(7th Cir. 2009).
In this case, subsection (b)(1) does not apply because all of the
defendants are not residents of Illinois. Subsection (b)(3) does not
apply because there is a district in which venue is proper.
Therefore, venue will be proper in a district in which a substantial
part of the events or omissions giving rise to the claim occurred.
The Schmelzers assert that venue is improper in the Central
District of Illinois because issuance of the insurance policy in this
district is not a substantial part of the event giving rise to the claim.
Plaintiff asserts that venue is proper because the policy was
negotiated, issued, and delivered in the Central District of Illinois
and the business relationship between the independent contractors
to Transport Services and Transport Services is centered in this
district. Resp. at 5 (d/e 31).
Page 9 of 21
The Court agrees with Plaintiff. As noted above, venue may be
proper in more than one district. While venue is proper in the
Southern District of Illinois based on the facts that the Southern
District is where the underlying tort occurred and the Underlying
Lawsuit is pending there, venue is also proper in this district.
A reasonable inference can be drawn from the Complaint that
the policy was procured by either Transport Services or Ross Wilson
Trucking, both of whom are located in the Central District of
Illinois.2 Moreover, Plaintiff represents that the policy was
negotiated, issued, and delivered in the Central District (Resp. at 5),
and the Schmelzers do not appear to dispute that the policy was
issued in the Central District. See Brief at 9 (arguing that the
issuance of a policy in a certain jurisdiction is not an event giving
rise to the dispute). The resolution of this lawsuit will require an
interpretation of the policy. Therefore, venue is proper in the
Central District, and the Schmelzers’ Motion to Dismiss for
improper venue is denied. See Scottsdale Ins. Co. v. PMG Indus.,
Transport Services and its individual members are located in Sullivan,
Illinois, which is in Moultrie County. Moultrie County is located in the Central
District of Illinois, Urbana Division. Ross Wilson Trucking maintains its
principal place of business in Shelby County, Illinois, which is located in the
Central District of Illinois, Springfield Division. CDIL-LR 40.1.
2
Page 10 of 21
LLC, No. 2:16-CF-373-RLM-PRC, 2016 WL 7228796, at *3 (N.D.
Ind. Dec. 14, 2016) (venue for declaratory judgment action seeking
a declaration that the plaintiff had no duty to defend or indemnify
the defendant was proper in the district where the insurance policy
at issue was “negotiated, drafted, and entered into”); see also
Malveaux v. Christian Bros. Servs., 753 F. Supp. 2d 35, 39 (D.D.C.
2010) (recognizing the different approaches to venue in insurance
coverage actions and concluding that venue was proper where the
insurance company contracted to insure the individual but finding
it was possible that venue would be proper either where the
underlying event for which coverage is sought occurred or where
the contract was negotiated or executed, where it was to be
performed, or where the alleged breach occurred).
The Schmelzers also seek dismissal based on the so-called
“first-to-file” rule, which generally favors the forum of the first-filed
suit. Under the first-to-file rule, a district court may, for purposes
of judicial administration, dismiss a suit when it is duplicative of a
parallel action that is already pending in another federal court. See
Serlin v. Arthur Anderson & Co., 3 F.3d 221, 223 (7th Cir. 1993)
(involving two nearly identical lawsuits filed by the same plaintiff);
Page 11 of 21
Starin Mkt., Inc. v. Swift Distrib., Inc., No. 2:16-CV-67-TLS-JEM,
2017 WL 218663, at *2 (N.D. Ind. Jan. 19, 2017) (noting that a
district court can stay or transfer a duplicative suit).
A suit is generally considered duplicative if it involves the same
claims, parties, and available relief. Serlin, 3 F.3d at 223.
The Seventh Circuit “does not rigidly adhere to a ‘first-to-file’
rule.” Trippe Mfg. Co. v. Am. Power Conversion Corp., 46 F.3d 624,
629 (7th Cir. 1995). For example, where one case involves a
declaratory judgment action and the other case is a “mirror-image
action seeking coercive relief,” the Seventh Circuit generally gives
priority to the coercive action, regardless of which case was filed
first. Research Automation, Inc. v. Schrader-Bridgeport Int’l, Inc.,
626 F.3d 973, 980 (7th Cir. 2010); see also Schwartz v. Nat’l Van
Lines, Inc., 317 F. Supp.2d 829, 833 (N.D. Ill. 2004) (noting that
courts refuse to enforce the first-to-file rule where forum shopping
motivated the filing of the first suit or the first suit was filed after
threat of an imminent suit and asserts a mirror-image of the
threatened suit).
Here, the first-to-file rule is inapplicable. This lawsuit is not
duplicative of the Underlying Lawsuit. The Underlying Lawsuit
Page 12 of 21
seeks a determination that Muncy, Transport Services, and Ross
Wilson Trucking are all liable to the Schmelzers for Muncy’s alleged
negligence and for damages in excess of $75,000. Plaintiff is not a
party to the Underlying Lawsuit. The instant lawsuit seeks a
determination that Plaintiff has no duty to defend or indemnify
Muncy, Transport Services, and Ross Wilson Trucking for the
Underlying Lawsuit. The suits do not involve the same claims or all
of the same parties, and the available relief is different. Therefore,
the Court will not dismiss this lawsuit under the first-to-file rule.
B.
Transfer to the Southern District is Not Warranted
The Schmelzers also assert that, should the Court find venue
in this district proper, the Court should nonetheless transfer this
suit to the Southern District of Illinois pursuant to 28 U.S.C.
§ 1404(a).
Section 1404(a) provides the circumstances under which a
court may transfer a civil action to another district or division:
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 or to any district or division to which
all parties have consented.
Page 13 of 21
28 U.S.C. § 1404(a). To warrant transfer, the moving party must
show that (1) venue is proper in the current district; (2) venue and
jurisdiction are proper in the transferee district; and (3) the transfer
will serve the convenience of the parties and witnesses and will
serve the interest of justice. College Craft Cos., Ltd. v. Perry, 889 F.
Supp. 1052, 1054 (N.D. Ill. 1995); see also Gueorguiev v. Max Rave,
LLC, 526 F. Supp. 2d 853, 856 (N.D. Ill. 2007). The moving party
bears the burden of proving the transferee district is more
convenient. Gueorguiev, 526 F. Supp. 2d at 857. Whether to
transfer a case under § 1404(a) is within the court’s discretion.
Research Automation., 626 F.3d at 977-78 (noting that “we grant a
substantial degree of deference to the district court in deciding
whether transfer is appropriate”).
The parties do not dispute that venue and jurisdiction are
proper in the Southern District of Illinois. And, as the Court just
found, venue is proper in the Central District of Illinois.
Consequently, the Court need only address whether the transfer
will serve the convenience of the parties and witnesses and is in the
interest of justice.
Page 14 of 21
1.
Transfer is not Warranted for the Convenience of the
Parties and Witnesses
When considering the convenience factor, the Court considers
the following factors: (1) the plaintiff’s choice of forum; (2) the situs
of material events; (3) the relative ease of access to evidence; (4) the
convenience of the parties; and (5) the convenience of the witnesses.
See Body Sci. LLC v. Boston Scientific Corp., 846 F. Supp. 2d 980,
992 (N.D. Ill. 2012) (citing Research Automation, Inc., 626 F.3d at
978).
The plaintiff’s choice of forum is generally accorded
substantial weight but is entitled to less deference when the forum
is not the plaintiff’s home forum or lacks significant contact with
the litigation. Plotkin v. IP Axess, Inc., 168 F. Supp. 2d 899, 902
(N.D. Ill. 2001). The Central District of Illinois is not Plaintiff’s
home forum. Plaintiff is a Nebraska corporation with its principal
place of business in South Sioux City, Nebraska. Therefore, this
factor weighs slightly in favor of denying the transfer. See First
Horizon Pharm. Corp. v. Breckenridge Pharm., Inc., No. 04 C 2728,
2004 WL 1921059, at *3 (N.D. Ill. July 21, 2004) (affording this
factor “less deference” where the Northern District of Illinois was
Page 15 of 21
not the plaintiff’s home forum and the plaintiff did not have
meaningful contacts within the state).
As for the situs of material events, that factor is neutral. The
accident occurred in the Southern District, but Plaintiff asserts that
that the insurance policy at issue in this lawsuit was negotiated,
issued, and delivered in the Central District.
The third factor, relative ease of access to evidence, is neutral.
Plaintiff states that the corporate books and records of Transport
Services and Ross Wilson Trucking are located in the Central
District. While some of the documents are maintained in the
Central District of Illinois (and some are likely maintained in
Nebraska), neither party suggests the files and records are so
voluminous that they cannot be easily transferred from one district
to the other. Therefore, based on this factor, the Southern District
and the Central District are equally convenient. Great W. Cas, Co.
v. DeKeyser Express, Inc. No. 05 C 2681, 2005 WL 2861074, at *4
(N.D. Ill. Oct. 31, 2005) (where there was no suggestion that the
files and records could not be easily transferred from one district to
another, both districts were equally convenient as it related to the
relative ease of access to sources of proof).
Page 16 of 21
The convenience-of-the-parties factor is also neutral.
Transferring the case to the Southern District of Illinois would
merely shift the inconvenience from one set of parties to another.
While the Southern District would be more convenient for the
Schmelzers (who live in Kentucky) and Muncy (who lives in the
Southern District of Illinois), the Central District is more convenient
for Transport Services and Ross Wilson Trucking. Plaintiff is
inconvenienced in either district. Therefore, this factor is neutral.
See, e.g., Gueorguiev, 526 F. Supp. 2d at 857 (“The burden is on
the moving party to demonstrate that the balance of the factors
weighs heavily in favor of transfer and that transfer would not
merely shift inconvenience from one party to another.”).
The convenience-of-the-witnesses factor is also neutral. The
Schmelzers bear the burden of establishing the witnesses they
would call, their testimony, and the importance of their testimony.
Rohde v. Central R.R. of Ind., 951 F. Supp. 746, 748 (1997); Rosen
v. Spirit Airlines, Inc., 152 F. Supp. 3d 1055, 1061 (N.D. Ill. 2015)
(the moving party must “provide specific information about the
witness testimony”). The Court should also consider whether the
nonparty witnesses can be subpoenaed to testify from the forum.
Page 17 of 21
Rohde, 951 F. Supp. at 748. The Schmelzers did not provide such
information, asserting only that “a majority of the evidence and
witnesses are located in the Southern District of Illinois.” Brief at
11. Consequently, the Court cannot determine that this factor
favors the Southern District of Illinois. Moreover, declaratory
actions involving a duty to defend generally involve only questions
of law and are frequently resolved by summary judgment and not
trial. See, e.g., Starr Indemnity & Liab. Co. v. Boys & Girls Club of
Carbondale, No. 11-cv-0858-MJR-PMF, 2012 WL 5843159, at *2
(S.D. Ill. Nov. 19, 2012) (noting that in a declaratory action, the
court generally compares the allegations in the underlying
complaint and the relevant provisions in the insurance policy, citing
Illinois law). In addition, this Court regularly uses
videoconferencing to avoid the cost of travel for parties, witnesses,
and attorneys, even for purposes of trial. Given the lack of
information provided by the Schmelzers and the fact that any
potential witnesses can testify by videoconference, the Court finds
this factor is neutral.
Considering the convenience of the parties and the witnesses,
the Court finds that the inconvenience in both forums is
Page 18 of 21
comparable. In such case, “the tie is awarded to the plaintiff[.]” In
re Nat’l Presto Indus., Inc., 347 F.3d 662, 665 (7th Cir. 2003)
(“When plaintiff and defendant are in different states there is no
choice of forum that will avoid imposing inconvenience; and when
the inconvenience of the alternative venues is comparable there is
no basis for a change of venue; the tie is awarded to the plaintiff[.]”).
2.
Transfer Would Not Serve the Interest of Justice
Whether transfer would serve the interest of justice requires
the Court to consider the following factors: (1) the “docket
congestion and likely speed to trial” in each forum; (2) “each court’s
relative familiarity with the relevant law;” (3) “the respective
desirability of resolving controversies in each locale;” and (4) “the
relationship of each community to the controversy.” Research
Automation, 626 F.3d at 978. The Schmelzers do not specifically
address these factors.
The docket congestion and likely speed to trial factor only
slightly favors the Central District. According to the U.S. District
Courts Federal Management Statistics3 for districts within the
See http://www.uscourts.gov/statistics-reports/federal-court-managementstatistics-september-2016 (last visited February 21, 2017).
3
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Seventh Circuit for the 12-month period ending September 30,
2016, the number of civil and criminal case filings per judgeship in
the Central District of Illinois was 493 cases (1,971 pending cases
and four judgeships) with a median time from filing to disposition of
10.7 months for a civil case. The median time from filing to trial in
civil cases was 37 months.
In the Southern District, the civil and criminal filings per
judgeship was 469 (1,877 pending cases and four judgeships) with
a median time from filing to disposition of 29.7 months in a civil
case. The median time from filing to trial in civil cases was 37.3
months. The only significant difference between the statistics in the
two districts is the median time from filing to trial in civil cases.
Therefore, this factor only slightly favors the Central District.
The second factor—each court’s relative familiarity with the
relevant law—is a neutral factor. The parties do not identify the
State law that should apply to the policy. Because both districts
are in the same state, however, either district would be familiar with
the relevant law. Therefore, this factor is neutral.
The final factors—the respective desirability of resolving
controversies in each locale and the relationship of each community
Page 20 of 21
to the controversy—are also neutral. Both districts have an interest
in the controversy.
Considering all of the factors, the Court finds that the
Schmelzers have failed to show that transfer to the Southern
District of Illinois is clearly more convenient or in the interest of
justice. The relevant factors are largely neutral or slightly favor
denying transfer. Plaintiff has chosen this forum, and this forum is
not unduly inconvenient to the defendants or adverse to the interest
of justice. Moreover, this forum has an interest in the litigation in
light of two of the defendants being located here and the issuance of
the policy in this district. For all of these reasons, transfer is not
warranted.
IV. CONCLUSION
For the reasons stated, the Motion to Dismiss or, in the
Alternative, to Transfer Action (d/e 29) filed by Defendants Stevan
Schmelzer and Shelly Schmelzer is DENIED.
ENTER: February 21, 2017
FOR THE COURT:
s/Sue E. Myerscough
SUE E. MYERSCOUGH
UNITED STATES DISTRICT JUDGE
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