Essex Insurance Company v. DiMucci Development Corp. of Ponce Inlet, Inc.

Filing 22

MEMORANDUM Opinion and Order: Defendant's motion to dismiss is denied and motion to transfer venue is granted. The Clerk is directed to transfer this matter to the Middle District of Florida. See Order for further details. Civil case terminated. Signed by the Honorable James B. Zagel on 3/10/2015. Mailed notice(ep, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ESSEX INSURANCE COMPANY,
Plaintiff,
No. 14 C 7234
Judge James B. Zagel

v.
DIMUCCI DEVELOPMENT
CORPORATION OF PONCE INLET, INC.,
Defendant.

MEMORANDUM OPINION AND ORDER
Plaintiff Essex Insurance Company (“Plaintiff) filed a complaint against Defendant
DiMucci Development Corporation (“Defendant”) seeking declaratory judgment. Defendant now
moves to dismiss Plaintiff’s Complaint and, alternatively, to transfer venue to the United States
District Court for the Middle District of Florida. For the following reasons, Defendant’s motion
to dismiss is denied and motion to transfer is granted.
I. STATEMENT OF FACTS
Towers Grande Condominium Association (the “Association”) sued Defendant in the
circuit court of Volusia County, Florida, alleging the breach of implied warranties, violation of
the Florida Building Code, and negligence in its construction of the Towers Grande
Condominium (the “Construction Lawsuit”). Defendant, upon receipt of service, notified
Plaintiff of the Construction Lawsuit and demanded that Plaintiff defend Defendant in the state
court litigation. In response, Plaintiff forwarded Defendant a Reservation of Rights Letter on
February 29, 2013 and a Supplemental Reservation of Rights letter on September 16, 2014.
Plaintiff then filed a Declaratory Judgment Action pursuant to the Federal Declaratory Judgment
Act, 28 U.S.C. § 2201 in this Court, seeking an order that, under its insurance policies, Plaintiff
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has no duty to defend or indemnify Defendant in the Construction Lawsuit.
II. DISCUSSION
A. Motion to Dismiss
Under the Declaratory Judgment Act (“the Act”), any court of the United States may
declare the rights and other legal relations of any interested party seeking such declaration of a
case of actual controversy within its jurisdiction. 28 U.S.C. § 2201(a). The Act confers on federal
courts “unique and substantial discretion” to decide whether to declare the rights of litigants.
Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). Under
what is known as the Wilton/Brillhart abstention doctrine, federal courts have considerable
leeway in deciding whether to dismiss or stay claims seeking declaratory judgment, even though
subject matter jurisdiction otherwise exists, and do not require exceptional circumstances to
abstain in a declaratory judgment action. Id.; Brillhart v. Excess Insurance Co. of America, 316
U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942).
Although the Supreme Court clarified that there is no set criteria for when a court should
exercise its discretion to abstain, the classic example of when abstention is proper is when solely
declaratory relief is sought and parallel state proceedings are ongoing. Brillhart, at 495 (“We do
not now attempt a comprehensive enumeration of what in other cases may be revealed as
relevant factors governing the exercise of a District Court's discretion.”); R.R. Street & Co., Inc.
v. Vulcan Materials Co., 569 F.3d 711, 715 (7th Cir.2009). Thus the “question for the district
court presented with a suit under the Act is whether the questions in controversy between the
parties to federal suit, and which are not foreclosed under the applicable substantive law, can be
better settled in the proceeding pending in the state court.” Wilton, 515 U.S. at 282.
To that end, federal courts typically consider (1) the nature of the state court proceeding

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and the nature of the defenses open there; and (2) whether the claims of all parties in interest can
be satisfactorily adjudicated in that proceeding and whether the necessary parties have joined or
if such parties are amenable to service in that proceeding. Brillhart, at 495. The Seventh Circuit
has also considered whether there is a substantial likelihood that the state court litigation will
dispose of all claims presented in the federal case. Envision Healthcare, Inc. v. Preferred One
Ins. Co., 604 F.3d 983, 986 (7th Cir. 2010). Ultimately, federal courts consider whether going
forward with the declaratory action will serve a useful purpose in clarifying the legal obligations
and relationships among the parties or if it will merely amount to duplicative and piecemeal
litigation. Med. Assurance Co. v. Hellman, 610 F.3d 371, 379 (7th Cir.2010)(citing Nationwide
Ins. v. Zavalis, 52 F.3d 689, 692 (7th Cir.1995)).
The state and federal actions present two distinct questions and are not parallel
proceedings. At the core of the Construction Lawsuit are facts surrounding the construction of
the Towers Grande Condominium—particularly, whether Defendant breached implied
warranties, violated the Florida Building Code, and was negligent in its construction of the
Towers Grande. Plaintiff is not a party to the state court proceeding. The federal court
proceeding, in contrast, will turn on whether Plaintiff must defend Defendant in the state court
litigation and indemnify Defendant if it is found to be liable for the acts alleged in the state court
litigation. The question in the federal court, while related to the underlying litigation, requires an
independent inquiry into the interpretation of the insurance policy issued by Plaintiff.
Consequently, litigating the federal court action is not duplicative of the state court proceeding
and will clarify the legal obligations and duties of Plaintiff in defending and indemnifying
Defendant. For these reasons, I decline to dismiss or stay Plaintiff’s declaratory judgment action.

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B. Motion to Transfer Venue
A court may transfer venue to another district for reasons of convenience, pursuant to 28
U.S.C. § 1404(a), when it is in the “interests of justice.” The moving party bears the “burden of
showing that the transferee forum is clearly more convenient” and must establish that the (1)
venue is proper in this district; (2) venue and jurisdiction are proper in the transferee district; and
(3) the transfer will serve the convenience of the parties, the convenience of the witnesses, and
the interest of justice. Heller Fin. Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1293 (7th
Cir. 1989) (internal citation omitted); College Craft Cos. v. Perry, 889 F.Supp. 1052, 1054
(N.D.Ill. 1995). In assessing the interests of justice, the court must weigh the private interest
factors and the public interest factors. Coffey v. Van Dorn Iron Works, 796 F.2d 219 (7th
Cir.1986). Private interest factors include: (1) the plaintiff’s choice of forum; (2) the situs of
material events; (3) the convenience of the parties; and (4) the convenience of the witnesses. Am.
Roller Co., LLC v. Foster Adams Leasing, LLP, 421 F.Supp.2d 1109, 1114 (N.D.Ill.2006). While
some courts accord substantial deference to plaintiff’s choice of forum when considering a
transfer under 28 U.S.C. § 1404(a), this presumption does not apply where the plaintiff does not
reside in the chosen forum. St. Paul Fire and Marine Ins. Co. v. Brother Intern. Corp., 2006 U.S.
Dist. 39952,*3, 4 (N.D.Ill. June 1, 2006).
Parties do not dispute that venue is proper in both the Northern District of Illinois and
Middle District of Florida, and consequently, our inquiry is limited to whether transfer will serve
the convenience of the parties and witnesses, and the interests of justice. Plaintiff is a corporation
incorporated in Delaware with its principal place of business in Virginia. Plaintiff claims that
Illinois is the preferred venue because Plaintiff delivered insurance policies to Defendant
DiMucci in Illinois, and Plaintiff solicited, negotiated, delivered, and executed its insurance

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policies in Illinois. Although DiMucci maintains an Illinois mailing address, Defendant has
substantially greater contacts with Florida. Defendant is incorporated in Florida and has its
principal place of business in Florida. Its owner and principal officer resides in Florida, and
approval of the insurance policies originated from Florida. The intended insured interest, the
Towers Grande, is located in Florida, and the nature of the acts purported to be covered by the
policies took place in Florida. Any witnesses testifying as to whether coverage exists or is
excluded would likely be located in Florida, but in any case, would not likely be in Illinois.
Public factors also weigh in favor of transfer to the Middle District of Florida. Resolution
of this matter will not be delayed, and is likely to be resolved more quickly, by transferring this
matter to Florida. Florida also has a strong interest in the interpretation of insurance coverage
over construction of residential buildings within its state.
For these reasons, the Middle District of Florida is a considerably more convenient forum
than the Northern District of Illinois, and I grant Defendant’s motion to transfer.
III. CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss is denied and motion to transfer
venue is granted. This case is transferred to the Middle District of Florida.
ENTER:

James B. Zagel
United States District Judge
DATE: March 10, 2015

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