Underberg v. Employers Mutual Casualty Company

Filing 12

ORDER: EMC'S 4 Motion to Transfer Venue 4 is DENIED. Signed by Magistrate Judge Carolyn S Ostby on 4/14/2016. (NOB)(cp)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION
DONNA M. UNDERBERG, as
Personal Representative of the
Estate of Thomas J. Underberg
and as Personal Representative
on behalf of Donna M. and Mark
G. Underberg,

CV-15-112-BLG-CSO

ORDER DENYING
MOTION TO
CHANGE VENUE

Plaintiff,
vs.
EMPLOYERS MUTUAL
CASUALTY COMPANY,
Defendant.
Plaintiff Donna M. Underberg, in the capacities stated in the
above caption (“Underberg”), alleges a spoliation of evidence claim
against Defendant Employers Mutual Casualty Company (“EMC”).
Cmplt. (ECF No. 1) at 4-6.1 Underberg claims that EMC wrongfully
disposed of a pickup truck that was relevant evidence in potential civil
lawsuits. Id. at 3-4.

“ECF No.” refers to the document as numbered in the Court’s
Electronic Case Files. See The Bluebook, A Uniform System of Citation,
§ 10.8.3. Any references to page numbers are to those assigned by the
electronic filing system.
1

On February 22, 2016, with the parties’ written consent, this case
was assigned to the undersigned for all purposes. Notice of Assignment
to U.S. Magistrate Judge (ECF No. 10). Pending is EMC’s motion to
transfer venue from this Court to the District of North Dakota under 28
U.S.C. § 1406(a) and Rule 12(b)(3), Fed. R. Civ. P.2 Answer (ECF No. 4)
at 2.
EMC made the motion in its Answer, but separately and
simultaneously filed a supporting brief. EMC’s Supporting Br. (ECF
No. 5). Underberg filed a response brief, and EMC filed a reply brief.
Underberg’s Resp. Br. (ECF No. 8); EMC’s Reply Br. (ECF No. 11).
Having considered the parties’ arguments and submissions, for the
reasons discussed below, the Court will deny EMC’s motion to change
venue.
EMC moved in the alternative for application of North Dakota
law to this case, and to stay this action pending resolution of a lawsuit
filed by Underberg against the pickup’s manufacturer in the Montana
Seventh Judicial District Court, Cause No. DV 15-077. Id. Because
References to rules are to the Federal Rules of Civil Procedure
unless otherwise noted.
2

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EMC’s brief supporting its motion to transfer venue addresses neither
the motion to apply North Dakota law nor the motion to stay, those
motions also will be denied, with leave to renew.
I.

Background3
On November 6, 2012, Thomas J. (“TJ”) Underberg was driving a

2010 Dodge Ram 3500 pickup truck (“the pickup”) eastbound on North
Dakota Highway 1804 near Trenton, North Dakota. Cross Petroleum
Services (“Cross Petroleum”), a Montana corporation, owned the
pickup. EMC, an Iowa insurance company licensed to conduct business
in Montana, insured the pickup for Cross Petroleum. While TJ was
driving the pickup, it crossed the center line and collided with a semitractor pulling a loaded trailer. TJ was killed.
EMC took control of the pickup. EMC notified Cross Petroleum
that the pickup was at a salvage yard. Salvage yard personnel reported
that the pickup was “gruesome” and had no useable parts. EMC
notified Cross Petroleum that the pickup would be disposed of by the

The background facts are from Underberg’s Complaint, EMC’s
Answer, and the parties’ submissions related to the motion at hand. The
facts are undisputed except where indicated.
3

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salvage yard where it was towed after the collision.
Underberg asserts that “EMC[ ] did not give Cross Petroleum an
adequate opportunity to retain the salvage, and directed the truck
‘would be disposed of.’” ECF No. 1 at ¶ 13. EMC denies this assertion
and maintains that Cross Petroleum did not request that the vehicle be
preserved and that neither Cross Petroleum nor anyone else notified
EMC of any contemplated civil claim or action against the pickup’s
manufacturer for any claim that would require preservation of the
evidence. ECF No. 4 at ¶ 10.
EMC did not notify TJ’s family of its intent to dispose of the
pickup. But, EMC maintains, no one on TJ’s behalf requested that
EMC retain the pickup nor did anyone on his behalf give EMC notice
that any civil action or claim was contemplated against the pickup’s
manufacturer. Id. at ¶ 10.
Underberg maintains that, at the time the pickup was disposed
of, it was well known that the left outer tie rods of certain Dodge Ram
pickups were defective and that the pickup TJ was driving was
“identified as defective by Dodge prior to November 12, 2012.” ECF No.

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1 at ¶ 11. EMC disputes this allegation and
affirmatively alleges that at the time of the accident, it was
unaware of any outstanding factory recalls and in fact
understands and believes that the factory recall notice
which [Underberg] allege[s] in a separate suit against the
manufacturer, recall Notice L16, had not been completed
had in truth and in fact been completed well prior to the
accident. Recall L16 was completed December 19, 2011,
approximately a year prior to the accident. Further,
Defendant [EMC] affirmatively alleges upon information
and belief that at the time of the accident there were no
outstanding recall notices with respect to any steering
mechanism or tie rod component of the subject vehicle.
ECF 4 at ¶ 8.
Underberg filed this action on November 5, 2015, invoking this
Court’s diversity jurisdiction under 28 U.S.C. § 1332 and asserting a
spoliation of evidence claim. Underberg claims that EMC wrongfully
disposed of the pickup when EMC either knew or should have known
that it was evidence in potential civil actions pursued by the semitractor driver for property damage and by TJ’s estate on the theory
that the pickup’s left outer tie-rod fractured causing TJ to lose control
and collide with the semi-tractor. ECF No. 1 at 2, 4-6.
In asserting that venue is proper in the District of Montana,
Underberg states in the Complaint that: (1) EMC issued Cross
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Petroleum’s insurance policy in Montana, id. at 2; (2) “the substantial
events and/or omissions giving rise [to] this claim occurred in Dawson
County, State of Montana[,]” id.; and (3) “[v]enue is appropriate in this
judicial district under 28 U.S.C. § 1391(b) because the events that gave
rise to this Complaint occurred in this district[,]” id.
II.

Parties’ Arguments

EMC argues that venue in Montana is improper. Rather, EMC
argues, venue is proper in North Dakota under 28 U.S.C. § 1391(b)(2)
“because all of the events or omissions giving rise to [Underberg’s]
claim occurred in the District of North Dakota.” ECF No. 5 at 2. Such
events and omissions occurring in North Dakota, it argues, include: (1)
TJ driving the pickup; (2) the pickup’s collision with the semi-tractor;
(3) towing of the pickup by a North Dakota towing company to a yard in
North Dakota; (4) a North Dakota EMC senior claims adjuster
adjusting the first party and third party claims that arose from the
collision; and (5) disposal of the pickup in North Dakota. Id. at 5-6.
Because venue in Montana is improper, EMC argues, 28 U.S.C. §
1406(a) allows the Court to transfer the case “to any district or division

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in which it could have been brought.” Id. at 2. And, EMC argues,
because the case could have been brought in the District of North
Dakota as the place where all events pertinent to Underberg’s claim
occurred, the Court should transfer venue of the action to North
Dakota. Id. at 3-7.
Underberg responds that venue properly lies in Montana. ECF
No. 8 at 1. First, she argues that this case is brought by Montana
citizens. Second, Underberg argues that venue is proper in Montana
under 28 U.S.C. § 1391(b)(1) because EMC resides in Montana. She
argues that EMC is a Montana resident under § 1391(b)(1) because
EMC: (1) is licensed to conduct business in Montana; (2) issued the
insurance policy to Cross Petroleum in Montana; and (3) has a website
stating that more than 20 Montana insurance offices are authorized to
provide EMC insurance services in Montana. Id. Thus, Underberg
argues, because EMC resides in Montana, venue is proper in Montana
under § 1391(b)(1). Id. at 5. Underberg further argues that EMC is
also deemed to reside in Montana under 28 U.S.C. § 1391(c)(2) because
it is subject to personal jurisdiction in Montana. Id. And, she argues,

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even if EMC was not subject to personal jurisdiction in Montana, it has
waived that defense under Rule 12(h) because it has failed to timely
raise it.
Third, Underberg argues that venue is proper in Montana under
28 U.S.C. § 1391(b)(2) because a substantial part of the events and
omissions giving rise to her claim against EMC occurred in Montana.
Id. She argues that: (1) she and TJ were, at all relevant times, citizens
and residents of Montana; (2) EMC, which is licensed and does business
in Montana, insured the vehicle driven by TJ in Montana, and has
authorized agents throughout Montana; (3) after the collision in which
TJ died, EMC took possession of the pickup on behalf of Cross
Petroleum, a Montana corporation; (4) EMC placed several phone calls
to Greg Cross of Cross Petroleum, in Montana, concerning disposal of
the pickup; (5) EMC contacted Donna Underberg, in Montana, before
disposing of the pickup; (6) on December 4, 2012, EMC issued payment
to Cross Petroleum, in Montana, to have title to the pickup transferred
from Cross Petroleum to EMC; and (7) the harm Underberg suffered
occurred in Montana, “specifically in the Montana Seventh Judicial

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District Court, because that is the location of the harm caused by
[EMC’s] spoliation of evidence.” Id. at 7-8.
In reply, EMC first argues that Underberg has failed to carry her
burden of establishing that venue is proper in Montana because her
Complaint premises venue solely on 28 U.S.C. § 1391(b)(2). EMC
argues that Underberg has failed to offer any factual allegations
demonstrating that a substantial portion of the events giving rise to
her spoliation claim occurred in Montana. ECF No. 11 at 3-8. Rather,
it argues, Underberg has made factual allegations that are merely
“insubstantial events that may have occurred in Montana but are
immaterial to [Underberg’s] claim.” Id. at 7 (emphasis omitted).
Second, EMC argues that Underberg’s Complaint premised venue
solely on § 1391(b)(2) and she may not now advance a new theory of §
1391(b)(1) residential venue neither alleged nor factually supported in
her Complaint. Id. at 2, 10-11. But, EMC argues, even if Underberg is
permitted to assert this new theory in her response brief, she has not
provided sufficient factual allegations to show that residential venue
exists in Montana. Id. at 11-14. It argues that Underberg’s Complaint

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has not met its burden of alleging that EMC’s contacts in Montana
sufficiently establish general personal jurisdiction in Montana. Id. at
12. And, EMC argues, Underberg’s Complaint also fails to allege
sufficient facts to confer specific personal jurisdiction over EMC in
Montana for the spoliation claim at issue in this case. Id. at 12-14.
III. Discussion
A.

Legal Standard

Rule 12(b)(3) allows a defendant to challenge a complaint for
improper venue. When a court considers a Rule 12(b)(3) motion, “[the]
pleadings need not be accepted as true, and facts outside the pleadings
may be considered.” Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir.
2009).
Once venue is challenged, the plaintiff bears the burden of
showing that venue is proper. Piedmont Label Co. v. Sun Garden
Packing Co., 598 F.2d 491, 496 (9th Cir. 1979); Martensen v. Koch, 942
F.Supp.2d 983, 996 (N.D. Ca. 2013). And, 28 U.S.C. § 1406(a) provides
that 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

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of justice, transfer such case to any district or division in which it could
have been brought.” Whether to dismiss for improper venue or to
transfer a case to a proper court is within the district court’s sound
discretion. King v. Russell, 963 F.2d 1301, 1304 (9th Cir. 1992).
With certain exceptions not relevant here, 28 U.S.C. § 1391
“governs the venue of all civil actions brought in district courts of the
United States[.]” 28 U.S.C. § 1391(a)(1). Section 1391(b) provides that,
in general:
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 property that is the subject of
the action is situated; or

(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).
As noted, only sections 1391(b)(1) and (2) are at issue in the case

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at hand. Respecting section 1391(b)(1)’s reference to whether a
defendant resides in a particular judicial district, section 1391(c)(2)
provides, in relevant part, that:
(2)

an entity with the capacity to sue and be sued in its
common name under applicable law, whether or not
incorporated, shall be deemed to reside, if a defendant,
in any judicial district in which such defendant is
subject to the court’s personal jurisdiction with respect
to the civil action in question[.]

28 U.S.C. § 1391(c)(2).
Respecting section 1391(b)(2), only those events or omissions “that
directly give rise to a claim are relevant . . . [and] only those locations
hosting a ‘substantial part’ of the events are to be considered.” Jenkins
Brick Co. v. Bremer, 321 F.3d 1366, 1371 (11th Cir. 2003). But a
“substantial part of the events or omissions” does not mean that the
events in that district predominate or that the chosen district is the
“best venue.” Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 563
(8th Cir. 2003); see also Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir.
2004) (“[I]n determining whether events or omissions are sufficiently
substantial to support venue . . ., a court should not focus only on those
matters that are in dispute or that directly led to the filing of the
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action. . . . Rather, it should review ‘the entire sequence of events
underlying the claim.’”) (citations omitted); First of Michigan Corp. v.
Bramlet, 141 F.3d 260, 264 (6th Cir. 1998). “In some cases, venue will
be proper in more than one district.” Hartford Cas. Ins. Co. v. SANY
America, Inc., 991 F.Supp.2d 1303, 1305 (N.D. Ga. 2014) (citing Jenkins
Brick, 321 F.3d at 1371); see also Mitrano, 377 F.3d at 405 (noting that
“it is possible for venue to be proper in more than one judicial district”).
“The ‘substantiality’ requirement is ‘intended to preserve the
element of fairness so that a defendant is not haled into a remote
district having no real relationship to the dispute.’” SCHWARZER,
TASHIMA & WAGSTAFFE, Federal Civil Procedure Before Trial at ¶ 4:325
(2015) (quoting Cottman Transmission Systems, Inc. v. Martino, 36
F.3d 291, 2914 (3d Cir. 1994) and citing Gonsalves-Carvalhal v. Aurora
Bank, FSB, 2014 WL 201502, *7 (E.D. N.Y. 2014)). Also, “[i]n
determining where a ‘substantial part’ of the ‘events or omissions’
occurred, most courts look ‘not to a single “triggering event” prompting
the action, but to the entire sequence of events underlying the claim.’”
Id. at ¶ 4:325.1 (quoting Uffner v. La Reunion Francaise, S.A., 244 F.3d

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38, 42 (1st Cir. 2001) and citing First of Michigan, 141 F.3d at 264
(emphasis omitted)).
B.

Analysis

Applying the foregoing authority, the Court concludes that it
must deny EMC’s motion to transfer venue. Venue is proper in the
District of Montana both because EMC resides in Montana for purposes
of 28 U.S.C. § 1391(b)(1), and because a substantial part of the events
giving rise to the claim occurred in Montana for purposes of 28 U.S.C. §
1391(b)(2).
Turning first to § 1391(b)(1), as noted above, venue is proper in a
judicial district in which any defendant resides. Section 1391(c)(2)
provides that an entity resides “in any judicial district in which such
defendant is subject to the court’s personal jurisdiction with respect to
the civil action in question....”4 EMC has not challenged this Court’s
jurisdiction and, under Rule 12(h)(1), has waived its right to do so.
Thus, it is subject to this Court’s personal jurisdiction in this civil

This statute was amended in 2011, when the language “with respect
to the civil action in question” was added. Pub.L. 112-63, Title II, § 202,
Dec. 7, 2011, 125 Stat. 763.
4

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action. In 14D Wright & Miller, Federal Practice and Procedure
§3811.1 at 296, the authors conclude that “if an entity defendant
waives its right to object to personal jurisdiction, it has ipso facto
consented to venue under this statute.” In Sentry Select Inc. Co. v.
McCoy Corp., 980 F.Supp.2d 1072, 1077 (W.D. Wis. 2013), the court
first rejected defendants’ claim that the court lacked personal
jurisdiction over them. The court then rejected defendants’ venue
challenge, finding that in light of the court’s ruling on personal
jurisdiction, “both defendants are, therefore, residents of the Western
District of Wisconsin for venue purposes” under sections 1391(b)(1) and
1391(c)(2).
Some courts reached this conclusion even before 2011, when
section 1391(a) required that the corporate defendant be subject to
personal jurisdiction when the action was commenced. See, e.g., Duke
Energy Indus. Sales, LLC v. Massey Coal Sales Co., Inc., 2011 WL
4744907 (S.D. W. Va.) (“The Court finds venue is proper here because
Defendant is a corporation that is subject to personal jurisdiction, by its
waiver, in this District”); Thomas v. Lockheed Martin Corp., 2006 WL

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1174026 *2 (D. Kan.) (holding that because defendant had not timely
asserted that the court lacked personal jurisdiction, the claim of
improper venue had been waived). On this basis, the Court concludes
that venue is proper under subsection 1391(b)(1).
Even if venue were not proper under that subsection, the Court
concludes that venue is proper under subsection 1391(b)(2). The Court
is mindful that it cannot reasonably be disputed that a substantial part
of the events or omissions giving rise to Underberg’s claim of spoliation
occurred in North Dakota. After all, North Dakota was the place
where: (1) TJ was driving the pickup; (2) the collision occurred; (3) TJ
was killed; (4) the pickup sustained damages rendering it
unsalvageable; (5) a towing company brought the pickup to a storage
yard; (6) an EMC adjuster adjusted claims arising out of the collision
for its insured; (7) EMC took possession of the pickup when its insured
decided not to retain it; and (8) the towing company disposed of the
pickup.
But those undisputed facts, which demonstrate that venue may
also be proper in the District of North Dakota, are not exclusively

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determinative of the issue of whether venue also properly lies in the
District of Montana. As noted above, venue may be proper in more
than one district. Mitrano, 377 F.3d at 405; Jenkins Brick, 321 F.3d at
1371; Hartford Cas. Ins. Co., 991 F.Supp.2d at 1305. Other undisputed
facts relevant to Underberg’s spoliation of evidence claim share a nexus
with Montana.
In considering those facts, the Court must begin with the contours
of the spoliation of evidence claim. In Montana, “the tort of spoliation
of evidence, which may be negligent or intentional, [is] an independent
cause of action with respect to third parties who destroy evidence.”
Oliver v. Stimson Lumber Company, 993 P.2d 11, 18 (Mont. 1999). The
tort consists of the following elements:
(1)
(2)
(3)
(4)
(5)
(6)
(7)

existence of a potential civil action;
a legal or contractual duty to preserve evidence relevant to
that action;
destruction of that evidence;
significant impairment of the ability to prove the potential
civil action;
a causal connection between the destruction of the evidence
and the inability to prove the lawsuit;
a significant possibility of success of the potential civil
action if the evidence were available; and
damages[.]

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Id. at 19 (citations omitted).
In addition, the court in Oliver affirmed the well-known principle
that “to prevail in a tort action, a plaintiff must show by a
preponderance of evidence that the defendant breached a legal duty to
the plaintiff and that the breach was the cause of the plaintiff’s
damages.” Id. at 19-20 (citations omitted). Thus, the court set forth
ways in which the duty element of the cause of action may arise as
follows:
A duty to preserve evidence may arise in relation to a
third-party spoliator where:
(1)

(2)
(3)
(4)

the spoliator voluntarily undertakes to preserve the
evidence and a person reasonably relies on it to his
detriment;
the spoliator entered into an agreement to preserve the
evidence;
there has been a specific request to the spoliator to preserve
the evidence; or
there is a duty to do so based upon a contract, statute,
regulation, or some other special circumstance/relationship.

Id. at 20 (citations omitted).
In determining whether a substantial part of the events or
omissions giving rise to the claim occurred in Montana, the Court must
“review the entire sequence of events underlying the claim[,]” Mitrano,
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377 F.3d at 405 (citations and quotations omitted). EMC’s involvement
began when it provided Cross Petroleum, a Montana entity, with a
policy of insurance for the subject pickup truck in Montana.
Underberg, and TJ, were at all relevant times, citizens and residents of
Montana. Following the collision, EMC, via written correspondence,
email, and telephone, communicated with Cross Petroleum and
Underberg, in Montana, about the pickup. See ECF No. 8-1 at 3-4. In
terms of omissions, as noted above, Underberg alleges that EMC did
not give Cross Petroleum, in Montana, an adequate opportunity to
retain the pickup, and did not inform Underberg, in Montana, or others
in TJ’s family, that it intended to dispose of the pickup. Although EMC
contests some of these allegations, it cannot reasonably be argued that
they are irrelevant to Underberg’s claim in light of the foregoing
authority.
Also, in tort actions, “the locus of the injury [is] a relevant factor”
in determining whether venue is proper. Myers v. Bennett Law Offices,
238 F.3d 1068, 1076 (9th Cir. 2001); see also Fiore v. Walden, 688 F.3d
558 (9th Cir. 2012), rev’d on other grounds, 134 S. Ct. 115, 1121 n. 5.

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Here, although the actual tort of spoliation of evidence allegedly
occurred in North Dakota, the injury Underberg may have suffered
may be felt in Montana, where EMC represents there is pending a
lawsuit by Underberg against the pickup’s manufacturer.
Based on the foregoing, the Court concludes that a substantial
part of the events or omissions giving rise to Underberg’s claim
occurred in Montana. Because Montana is not an improper venue for
this action, EMC’s motion to transfer venue necessarily fails.
IV.

Conclusion

Based on the foregoing, IT IS ORDERED that EMC’s motion to
transfer venue (ECF No. 4) is DENIED.
DATED this 14th day of April, 2016.
/s/ Carolyn S. Ostby
United States Magistrate Judge

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