Diskey v. Allstate Indemnity Company et al

Filing 29

WRITTEN Opinion entered by the Honorable Ronald A. Guzman on 11/27/2012: For the reasons set forth in this order, the Court denies defendants' motion to dismiss 14 and orders that this case be transferred to the Eastern District of Oklahoma. This case is terminated from this Court's docket. Mailed notice (cjg, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Ronald A. Guzman

CASE NUMBER

12 C 3728

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

10/27/2012

Carolyn Diskey vs. Allstate Indemnity Company, et al.

DOCKET ENTRY TEXT

For the reasons set forth in this order, the Court denies defendants’ motion to dismiss [14] and orders that this
case be transferred to the Eastern District of Oklahoma. This case is terminated from this Court’s docket.

O[ For further details see text below.]

Docketing to mail notices.

STATEMENT
Plaintiff, an Oklahoma citizen, is suing defendants, Illinois citizens, for breach of contract and other statelaw claims arising from their alleged use of inflated replacement values to determine the premium for the
insurance policy on her manufactured home. The policy contains a forum-selection clause that states “any and
all lawsuits in any way related to this policy, shall be brought, heard and decided only in a state or federal court
located in the state in which the [manufactured home] is located,” which is Oklahoma. (Defs.’ Mem. Law Supp.
Mot. Dismiss, Ex. 1, Policy at ALLDISK01-0000022 & Decl.; Pl.’s Mem. Law Opp’n Mot. Dismiss at 3.)1
Defendants argue that the forum-selection clause makes this Court the wrong venue for this case and, because
plaintiff had no basis for filing it here, the case should be dismissed. See Fed. R. Civ. P. 12(b)(3) (permitting
defendants to seek dismissal for “improper venue”); 28 U.S.C. § 1406(a) (“The 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 case to any district or division in which it could have been brought.”); see also Cote v. Wadel, 796
F.2d 981, 985 (7th Cir. 1986) (holding that an “elementary” mistake by plaintiff does not require a court to
transfer rather than dismiss a suit under § 1406(a)).
However, the Seventh Circuit has held that the propriety of venue is determined solely by federal venue
statutes, in this case § 1391, and a venue that meets the statutory requirements cannot be rendered “wrong” within
the meaning of § 1406(a) by a forum-selection clause. In re LimitNone, LLC, 551 F.3d 572, 575-76 (7th Cir.
2008). Such a clause may make one proper venue more suitable than another but, the LimitNone court said, that
concern implicates § 1404(a), not § 1406(a):
[T]he district court mischaracterized the transfer as one under § 1406(a) when it was 28 U.S.C.
§ 1404(a) that provided the necessary authority. Transfer under § 1406(a) is appropriate only
when venue is improperly laid. . . . Venue was . . . proper, within the meaning of § 1391, in the
Northern District of Illinois, notwithstanding the forum-selection clauses. There often may be
12C3728 Carolyn Diskey vs. Allstate Indemnity Company, et al.

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STATEMENT
multiple proper venues, although one, on the basis of a forum-selection clause or for other
reasons, may be superior to the rest. Because the Northern District of Illinois was not an improper
venue, § 1404(a), rather than § 1406(a), provided the authority for the transfer order.
LimitNone, 551 F.3d at 575-76 (citations and footnotes omitted); see 28 U.S.C. § 1404(a) (stating that a case filed
in a proper, but inconvenient venue, may be transferred to “another district . . . where it might have been brought
or to . . . which all parties have consented”). Because this Court meets the venue requirements of § 1391 (see
Compl. ¶¶ 2-7), LimitNone teaches that § 1404(a) applies.
Rule 12(b)(3), which permits dismissal for “improper venue,” muddies the water. In a decision issued
before LimitNone, the Seventh Circuit unequivocally stated that “[a] challenge to venue based upon a forum
selection clause can appropriately be brought as a [Rule 12(b)(3)] motion to dismiss.” Muzumdar v. Wellness
Int’l Network, Ltd., 438 F.3d 759, 760 (7th Cir. 2006). The LimitNone court did not cite to or discuss Muzumdar.
Thus, “it is not clear why a forum-selection clause . . . render[s] an otherwise proper venue ‘improper’ under Rule
12(b)(3),” as held in Muzumdar, “but not ‘wrong’ under § 1406(a),” as held in LimitNone. Schwarz v. Sellers
Mkts., Inc., 812 F. Supp. 2d 932, 941 (N.D. Ill. 2011).
Perhaps “improper,” as used in Rule 12(b)(3), is shorthand for the “proper-but-not-optimal” concept of
§ 1404(a). It is not, however, an issue the Court needs to decide because, “‘nothing . . . precludes a district court,
faced with a Rule 12 motion based on a forum selection clause, from considering § 1404 factors to determine
whether transfer is the better course.’” Schwarz, 812 F. Supp. 2d at 942 (quoting Salovaara v. Jackson Nat’l Life
Ins. Co., 246 F.3d 289, 299 (3d Cir. 2001)). That is what the Court will do.
Ordinarily, a § 1404(a) analysis requires the Court to consider, among other things, the alternate forum’s
convenience for the parties. See Medi USA v. Jobst Inst., Inc., 791 F. Supp. 208, 210 (N.D. Ill. 1992). Having
agreed to the forum-selection clause, however, the parties have waived any objection to litigating in Oklahoma
based on their own convenience. IFC Credit Corp. v. Aliano Bros. Gen. Contractors, Inc., 437 F.3d 606, 613
(7th Cir. 2006). Moreover, when the parties have agreed to a forum, that choice “should be overridden only if
[it] would impose significant costs on third parties or on the judicial system.” Abbott Labs. v. Takeda Pharm.
Co. Ltd., 476 F.3d 421, 423 (7th Cir. 2007); see Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (stating
that “[t]he presence of a forum-selection clause . . . [is] a significant factor that figures centrally in the . . .
[section 1404(a)] calculus.”). There is no evidence here that it would. Thus, because the property that is the
subject of the contested policy is located in the Eastern District of Oklahoma, the Court orders that this case be
transferred there. (See Defs.’ Mem. Law Supp. Mot. Dismiss, Ex. 1, Policy, Decls.(identifying Beggs, Oklahoma
as the location of the manufactured home); www.oked.uscourts.gov (stating that Beggs is in the Eastern District
of Oklahoma).
1.The Court can consider evidence outside of the pleadings in deciding a Rule 12(b)(3) motion
without converting it into a motion for summary judgment. Faulkenberg v. CB Tax Franchise
Sys., 637 F.3d 801, 809-10 (7th Cir. 2011).

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