Safeco Insurance Company of Illinois v. Estate of Concepcion Matute et al

Filing 157

MEMORANDUM OPINION AND ORDER granting 145 Motion to Dismiss for Lack of Jurisdiction; Safeco's claims against University of South Alabama are dismissed without prejudice to refiling in a court that has jurisdiction; granting 152 Motion to Change Venue. Clerk of Court directed to Transfer this case to the United States District Court for the Southern District of Alabama. Signed by District Judge Louis Guirola, Jr. on 7/18/2019 (wld) (Main Document 157 replaced on 7/18/2019 to correct Judge's initials only) (wld).

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
SAFECO INSURANCE
COMPANY OF ILLINOIS
v.

PLAINTIFF
CAUSE NO. 1:17CV67-LG-RHW

ESTATE OF CONCEPCION
MATUTE, et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER GRANTING UNIVERSITY
OF SOUTH ALABAMA’S MOTION TO DISMISS AND
SAFECO’S MOTION TO TRANSFER VENUE
BEFORE THE COURT are the [145] Motion to Dismiss for Lack of
Jurisdiction filed by the defendant University of South Alabama (“USA”) and the
[152] Motion to Change Venue filed by the plaintiff, Safeco Insurance Company of
Illinois, in this interpleader action. The parties have finished briefing the Motions.
After reviewing the submissions of the parties, the record in this matter, and the
applicable law, the Court finds that both motions should be granted.
BACKGROUND
On February 10, 2016, Arthur Campbell was involved in a motor vehicle
collision with five other vehicles near the intersection of Highway 49 South and
Mississippi Highway 53 in Harrison County, Mississippi. The accident allegedly
caused the deaths of three persons — Concepcion Matute, Rosalinda Matute, and
Julisa Matute. Several others claim they suffered injuries in the accident. These
individuals and the estates of the decedents claim that Campbell’s negligence
caused the accident.

At the time of the accident, Campbell and his wife were insured by an
automobile liability policy issued by Safeco. The policy limits are $50,000 per
person and $100,000 per accident. Faced with numerous claims that exceeded the
policy limits, Safeco filed this interpleader action and deposited $100,000 into the
Court registry. The defendants to the interpleader action included the Estates of
the three decedents, the persons who allegedly suffered injuries in the accident, and
several medical providers and insurers who claimed to have liens.
Upon Safeco’s Motion, the Court entered an [93] Order discharging Safeco
from liability and dismissing Safeco with prejudice as a party to this interpleader
action. Several defendants were also dismissed from the action. After numerous
lengthy negotiations, the remaining parties reached a tentative settlement, pending
Chancery Court approval of the settlement in the various estates and guardianship
proceedings. However, USA Medical Center had previously filed a probate claim in
the Chancery Court of Harrison County in the Estate of Julisa Matute, seeking to
recover payment for its treatment of Julisa Matute’s accident-related injuries. The
Chancery Court found that USA was not entitled to any recovery from the
settlement proceeds and USA appealed.
Soon afterwards, Arthur Campbell filed a Motion to join USA as a defendant
to this interpleader action. Campbell noted that USA had threatened to sue Safeco,
himself, and others in Alabama. This Court granted the Motion. The Court also
granted Safeco’s request to be reinstated as a party to this interpleader action and
permitted Safeco to amend its Complaint to name USA as a defendant.

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USA filed the present Motion to Dismiss for Lack of Jurisdiction on the basis
of sovereign immunity. Safeco then filed the present Motion to Transfer Venue to
Alabama. USA has not opposed the Motion to Transfer Venue, but several
defendants, including the Estates of Julisa, Rosalinda, and Concepcion Matute,
opposed the transfer of venue.
DISCUSSION
I. SOVEREIGN IMMUNITY
The Eleventh Amendment of the United States Constitution provides,
The Judicial power of the United States shall not be construed to
extend to any suit in law or equity, commenced or prosecuted against
one of the United States by Citizens of another State, or by Citizens or
Subjects of any Foreign State. The Fifth Circuit has explained that
“[t]he Eleventh Amendment bars citizens of a state from suing their
own state or another state in federal court . . . .
Raj v. La. State Univ., 714 F.3d 322, 328 (5th Cir. 2013). “The state need not be the
named party in a federal lawsuit, for a state’s Eleventh Amendment immunity
extends to any state agency or entity deemed an ‘alter ego’ or ‘arm’ of the state.”
Perez v. Region 20 Educ. Serv. Ctr., 307 F.3d 318, 326 (5th Cir. 2002). Similarly,
the Alabama Constitution provides that “the State of Alabama shall never be made
a defendant in any court of law or equity.” Ala. Const. Art. I, § 14.
USA Medical Center is a hospital operated by the University of South
Alabama, a state university. See generally Sarradett v. Univ. of S. Ala. Med. Ctr.,
484 So. 2d 426 (Ala. 1986). The Alabama Supreme Court has held that “[t]he
operation of a hospital by a State university falls within the realm of sovereign
immunity.” Health Care Auth. v. Davis, 158 So. 3d 397, 427 (Ala. 2013). As a
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result, this Court cannot exercise jurisdiction over USA, and USA must be
dismissed from this lawsuit.1
II. Fed. R. Civ. P. 19 and 28 U.S.C. § 1404
Safeco argues that USA is a necessary and indispensable party pursuant to
Fed. R. Civ. P. 19. Due to the procedural posture of this case, Safeco argues that
the case should be transferred to the United States District Court for the Southern
District of Alabama in lieu of dismissal.
Courts conduct a two-step inquiry when determining whether a party is
necessary and indispensable. Hood ex rel. Miss. v. City of Memphis, Tenn., 570 F.3d
625, 628 (5th Cir. 2009). The first step involves analysis of Fed. R Civ. P. 19(a)(1),
which provides that:
a person who is subject to service of process and whose joinder will not
deprive the court of subject-matter jurisdiction must be joined if: (A) in
that person’s absence, the court cannot accord complete relief among
existing parties; or (B) that person claims an interest relating to the
subject of the action and is so situated that disposing of the action in
the person’s absence may: (i) as a practical matter impair or impede
the person’s ability to protect the interest; or (ii) leave an existing
party subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the interest.
Id. (citing Fed. R. Civ. P. 19(a)(1)). If these factors are satisfied, but the necessary
party cannot be joined without destroying subject matter jurisdiction, the court then

For the reasons stated below, the Court finds that the remainder of this lawsuit
should be transferred to the United States District Court for the Southern District
of Alabama. After transfer, Safeco can seek permission to once again add USA as a
defendant.
1

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determines whether the party is indispensable by analyzing the following factors
set forth in Fed. R. Civ. P. 19(b):
(1) the extent to which a judgment rendered in the person’s absence
might prejudice that person or the existing parties; (2) the extent to
which any prejudice could be lessened or avoided by: (A) protective
provisions in the judgment; (B) shaping the relief; or (C) other
measures; (3) whether a judgment rendered in the person’s absence
would be adequate; and (4) whether the plaintiff would have an
adequate remedy if the action were dismissed for nonjoinder.
Id. at 629.
The Rule 19 factors yield a determination that USA is a necessary and
indispensable party to this lawsuit. This is an interpleader action with a limited
sum of funds available for distribution among numerous claimants. USA seeks a
portion of those funds, but it refuses to voluntarily subject itself to this Court’s
jurisdiction. For the reasons explained previously, this Court cannot compel USA to
participate in this lawsuit. Safeco cannot be afforded complete relief in the absence
of USA’s participation in this lawsuit, and Safeco could potentially be subjected to
multiple inconsistent judgments if this case proceeds without USA’s participation.
Fed. R. Civ. P. 19 does not specifically provide for transfer, but some courts
have found that transfer can be ordered in this circumstance pursuant to 28 U.S.C.
§ 1404. See, e.g., Tex. Utilities Co. v. Santa Fe Indus., Inc., 553 F. Supp. 106, 113
(N.D. Tex. 1982) (explaining that avoiding multiplicity of litigation is “a clear point
of overlap between Rule 19 and 28 U.S.C. § 1404(a)” and exercising the court’s
equitable discretion to transfer the case to another venue); see also Plomis v. Hodel,

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No. 87-2893, 1988 WL 26091, at *3 (D.C. March 10, 1988) (transferring venue in
lieu of dismissal in the interests of justice).
District courts “have broad discretion in deciding whether to order a transfer”
pursuant to 28 U.S.C. § 1404(a), which provides, “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 . . . .” In re
Volkswagen of Am., Inc., 545 F.3d 304, 311 (5th Cir. 2008); 28 U.S.C. § 1404(a). The
parties do not dispute that this case could have been filed in the Southern District
of Alabama. To determine whether transfer is in the interest of justice and for the
convenience of the parties and witnesses, courts evaluate private and public
interest factors. Id.
The private interest factors are: (1) the relative ease of access to
sources of proof; (2) the availability of compulsory process to secure the
attendance of witnesses; (3) the cost of attendance for willing
witnesses; and (4) all other practical problems that make trial of a case
easy, expeditious and inexpensive . . . . The public interest factors are:
(1) the administrative difficulties flowing from court congestion; (2) the
local interest in having localized interest decided at home; (3) the
familiarity of the forum with the law that will govern the case; and (4)
the avoidance of unnecessary problems of conflict of laws or in the
application of foreign law.
Id. (internal quotation marks and brackets omitted). These factors are not
exhaustive or exclusive, and none of the factors have dispositive weight. Id. The
Fifth Circuit has explained: “We do not suggest — nor has this court held — that a
raw counting of the factors in each side, weighing each the same and deciding
transfer only on the resulting ‘score,’ is the proper methodology.” In re Radmax,
Ltd., 720 F.3d 285, 290 n.8 (5th Cir. 2013).
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In the present case, all the applicable private and public interest factors
weigh in favor of transfer to Alabama. First, if the Court does not transfer the case,
it must dismiss the case, and Safeco would be required to refile the case in Alabama
in order to receive relief. Numerous potential claimants who have previously been
dismissed from this lawsuit would have to be sued once again, resulting in
unnecessary expense and time. As a result, transfer would be more cost-effective
and expeditious.
However, some of the defendants argue that Safeco waived its right to seek
transfer by filing the case in this Court and by waiting over two years to seek a
change of venue. In support of this argument, the defendants cite Smilde v. Snow,
73 F. App’x 24 (5th Cir. 2003), and Utterback v. Trustmark Nat’l Bank, 716 F. App’x
241 (5th Cir. 2017). In Smilde, the Fifth Circuit upheld the lower court’s denial of
the plaintiff’s request for a change of venue, because the plaintiff had failed to
demonstrate that transfer would be more convenient to other parties or witnesses
and he waited almost four months after circumstances occurred that caused him to
desire a transfer of venue. Id. at 25. In Utterback, the plaintiff requested a change
of venue pursuant to 28 U.S.C. § 1406(a), arguing that he had originally filed the
case in the wrong venue. Utterback, 716 F. App’x at 244. The court held that a
plaintiff who files his lawsuit in a venue that is not authorized by statute
“relinquishes his right to object to the venue.” Id. (quoting Olberding v. Ill. Cent.
Ry. Co., 346 U.S. 338, 340 (1953)). The court also denied the Utterback plaintiff’s
request for a change of venue pursuant to § 1404 because the plaintiff had selected

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the forum he claimed was inconvenient and the parties had committed a lot of time
and resources to litigating the case prior to the request for a change of venue. Id. at
245. The court also noted that the plaintiff’s request for a change of venue was
likely an attempt to “take a second bite at the apple” after receiving an unfavorable
ruling. Id.
The present case is distinguishable from Smilde and Utterback. Safeco did
not file this case in an improper venue, and it filed its Motion to Transfer Venue
less than one month after the circumstances justifying a change of venue — the
filing of USA Medical Center’s Motion for Dismiss for Lack of Jurisdiction —first
arose. A finding of waiver is inappropriate in this circumstance. See Farmer v.
Synergy Refrigeration, Inc., No. 3:13cv213-DPG-FKB, 2014 WL 12622456, at **2-3
(S.D. Miss. Oct. 14, 2014) (holding that cases preventing a plaintiff from seeking a
transfer of venue do not apply to circumstances in which a plaintiff seeks a transfer
in response to a motion to dismiss for improper venue and lack of personal
jurisdiction). The defendants’ waiver argument is unpersuasive. Therefore,
pursuant to the § 1404 factors, the Court finds that Safeco’s Motion to Transfer
Venue should be granted.2
CONCLUSION
USA Medical Center is entitled to sovereign immunity, but it is a necessary
and indispensable party pursuant to Rule 19. In the interests of justice,

The Court further finds that these defendants’ vague, unsupported arguments
regarding res judicata, the law of the case doctrine, standing, and the first to file
rule are likewise unpersuasive.
2

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convenience of the parties, and judicial economy, the Court finds that this lawsuit
should be transferred to the United States District Court for the Southern District
of Alabama.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the [145] Motion
to Dismiss for Lack of Jurisdiction filed by the defendant University of South
Alabama is GRANTED. Safeco’s claims against University of South Alabama are
DISMISSED WITHOUT PREJUDICE to refiling in a court that has jurisdiction.
IT IS, FURTHER, ORDERED AND ADJUDGED that the [152] Motion to
Change Venue filed by the plaintiff, Safeco Insurance Company of Illinois, is
GRANTED. The Clerk of Court is directed to TRANSFER this case to the United
States District Court for the Southern District of Alabama, Mobile Division.
SO ORDERED AND ADJUDGED this the 18th day of July, 2019.
s/

Louis Guirola, Jr.

Louis Guirola, Jr.
United States District Judge

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