Louisiana Generating LLC et al v. Illinois Union Insurance Company

Filing 107

RULING AND ORDER as to 8 Motion to Dismiss, Transfer Case, Stay. Accordingly, the motions (10CV516, doc. 8 and 10CV835, doc. 46) to stay, dismiss or transfer based upon venue are hereby DENIED. Signed by Judge James J. Brady on 9/22/2011. (LSM)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

LOUISIANA GENERATING LLC, ET AL.
CIVIL ACTION
VERSUS
NO. 10-516-JJB
ILLINOIS UNION INSURANCE
COMPANY, ET AL.
CONSOLIDATED WITH
ILLINOIS UNION INSURANCE
COMPANY
CIVIL ACTION
VERSUS
NO. 10-835-JJB
NRG ENERGY, INC., ET AL.
RULING AND ORDER
These consolidated matters are before the court on motions (10CV516, doc.
8 and 10CV835, doc. 46) to dismiss, stay or transfer based upon venue-related
arguments. The matter has been thoroughly briefed. There is no need for oral
argument.
Illinois Union Insurance Company (“Illinois Union” or “the Insurer”) issued a
pollution liability insurance policy covering certain locations including the Big Cajun
II plant operated by Louisiana Generating LLC (“LaGen” or “the Insured”) in New
Roads, Louisiana. In 2009, the United States, acting on behalf of the Environmental
Protection Agency, filed a Clean Air Act enforcement action in this court against

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LaGen (United States of America, Environmental Protection Agency v. Louisiana
Generating, LLC, Civil Action No. 09-100-JJB). The above referenced matters are
insurance coverage and indemnification disputes stemming from the enforcement
action.
The procedural history of these consolidated actions is as follows. The Insurer
first filed suit on July 29, 2010, in the U.S. District Court for the Southern District of
New York. The Insured then filed Civil Action No. 10-515 several days later, on
August 9, 2010, in this court. On December 4, 2010, Judge Barbara Jones, the
district judge handling the New York action, issued a transfer order sending that
litigation to this court with it being assigned docket number 10-835-JJB.
There are basically three grounds asserted by Illinois Union support of its
motions to transfer the coverage actions to the Southern District of New York: (I)
improper venue; (2) the First-Filed rule, and (3) 28 USC §1404(a). Taking the
arguments in reverse order, the court readily finds that §1404(a) does not warrant
transfer. As Judge Jones more fully explains in her ruling the “balance of
convenience” factors weigh in favor of the litigation proceeding in Louisiana. Not
only are the parties and witnesses based in this state; the relevant sources of
evidence are located here. It will be more efficient for the coverage and defense
issues to be tried in the same forum as the enforcement action. Additionally,
Louisiana has a strong interest in having the enforcement and insurance actions
tried locally.

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The court likewise finds no merit to the Insurer’s argument under the FirstFiled rule, which is at heart a discretionary rule “grounded in principles of comity and
sound judicial administration.” Save Power Ltd. v. Syntek Finance Corp., 121 F.3d
947 (5th Cir. 1997). In view of Judge Jones’ transfer order, mechanical application
of the First-Filed rule in this instance would certainly run afoul of notions of comity
and judicial efficiency; the court agrees with LaGen that a re-transfer order would
likely result in a “vicious circle of litigation.” The fact that Illinois Union has taken an
appeal from Judge Jones’ order to the Second Circuit does not alter this court’s
assessment of the matter.
The remaining grounds for transfer cited by Illinois Union are based upon its
contention that the policy contains a mandatory venue clause. The court has
carefully reviewed the arguments and finds that a plain reading of the clause shows
that it is permissive in nature;1 it does not prohibit the parties from litigating their
dispute in courts other than the New York state courts. See, City of New Orleans v.
Municipal Administrative Services, Inc., 376 F.3d 501, 504 (5th Cir. 2004). In short,
venue is proper here. The court adopts the reasoning advanced by the Insured in
its briefs.

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The clause providing in pertinent part: “the ‘Insurer’ and the ‘insured’ will submit
to the jurisdiction of the State of New York and will comply with all requirements to give
such court jurisdiction...”

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Accordingly, the motions (10CV516, doc. 8 and 10CV835, doc. 46) to stay,
dismiss or transfer based upon venue are hereby DENIED.
Baton Rouge, Louisiana, September 22, 2011.

JAMES J. BRADY, JUDGE
MIDDLE DISTRICT OF LOUISIANA

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