Hillerich & Bradsby Co. v. ACE American Insurance Company

Filing 39

ORDER denying 21 Motion to Transfer. Signed by Judge Donald W. Molloy on 6/20/2012. (dle)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
HELENA DIVISION

HILLERICH & BRADSBY CO.,

)
)
Plaintiff,
)
)
vs.
)
)
ACE AMERICAN INSURANCE
)
COMPANY,
)
)
Defendant.
)
___________________________________ )

CV 11-75-H-DWM

ORDER

ACE American Insurance Company moves to transfer this case to the
Southern District of New York. Hillerich and & Bradsby Company (“H&B”)
opposes the motion. The Court denies it. Because the parties are familiar with the
facts of this case, they are discussed here only when necessary to explain the
Court’s decision.
A court may change venue under 28 U.S.C. § 1404(a): “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 or to
any district or division to which all parties have consented.”
The parties do not dispute that H&B could have properly filed this lawsuit

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in the Southern District of New York. The question is whether a change of venue
will serve the interests of justice and will be more convenient for the parties and
witnesses.
There is no exhaustive list of factors to apply in determining whether a
change of venue is appropriate. Instead, in addition to the factors enumerated in
the statute, “[C]ourts have traditionally focused upon a host of other
considerations, the determinations basically turning on the facts of each case.”
Anderson v. Thompson, 634 F. Supp. 1201, 1204 (D. Mont. 1986). Factors
frequently considered include:
1.

the plaintiff’s choice of forum,

2.

the location where the relevant agreements were negotiated and
executed,

3.

the convenience of witnesses,

4.

the ability of the two forums to compel non-party witnesses to
testify,

5.

the respective parties’ relative contacts with the forums,

6.

the state that is most familiar with the governing law,

7.

the relative congestion in the two forums,

8.

The length of time action has already been pending in the
transferor forum,

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9.

ease of access to sources of proof, and

10.

whether there is a “local interest” in either of the forums.

Brunner v. Bawcom, 2010 WL 3724436 at *7 (D. Mont. 2010); Jones v. GNC
Fran., Inc., 211 F.3d 495, 498–99 (9th Cir. 2000).
The weight accorded to these factors is left to the sound discretion of the
trial judge. See e.g. Commodity Futures Trading Commn. v. Savage, 611 F.2d 270,
279 (9th Cir. 1979). But, as the party seeking transfer, ACE carries the burden of
making a “strong showing” that the factors weigh in favor of a change in venue.
See Anderson, 634 F. Supp. 2d at 1204.
I.

Factors (1) and (2): the plaintiff’s choice of forum and the location
where the relevant agreements were negotiated and executed
Montana is not H&B’s home forum. H&B is a Kentucky corporation with

its primary place of business in Kentucky. The weight given to H&B’s choice of
Montana as a forum turns on whether the operative facts of its claims took place in
Montana.
The affidavits submitted by ACE show that H&B’s insurance broker and
ACE’s underwriter negotiated the basic terms of the insurance policy in New
York. But those affidavits also show that the Endorsement was likely drafted in
Philadelphia. There is simply no evidence showing that the Endorsement was

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discussed or executed in New York. Thus, while the operative facts of negotiating
and drafting the policy slightly favor transfer to New York, the operative facts
surrounding the issuance of the self-insured endorsement do not favor transfer.
Thus, ACE has not met its burden of making a “strong showing” that the operative
facts surrounding the relevant agreement—the Endorsement—arose in New York.
And, as to H&B’s claim under Montana’s Unfair Trade Practices Act, none
of the operative facts took place in New York. There is an important distinction
between the interpretation of an insurance contract and the insurer’s handling of a
claim. While the relevant facts surrounding the former naturally arise in the
location where the insurer and insured discussed the terms of the contract, the
facts regarding the latter center on where the insurer makes coverage decisions and
where it then communicates those decisions to the insured. See e.g. Lorang v.
Fortis Ins. Co., 192 P.3d 186, 210–211 (Mont. 2008). Here, none of the operative
facts giving rise to ACE’s bad-faith claim took place in New York.
H&B’s lawsuit is sufficiently connected to Montana such that its choice of
forum is entitled “great weight” and weighs against transfer. Lou, 834 F.2d at 739.
II.

Factor (3): convenience of witnesses
Another factor to consider is whether a failure to change venue will result in

a “severe inconvenience” for those witnesses it wishes to call. Anderson, 634 F.
4

Supp. at 1207. A court should not transfer venue when the transfer would merely
shift the inconvenience from the defendant to the plaintiff. Decker Coal Co. v.
Cmmw. Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).
ACE has failed to meet its burden of establishing severe inconvenience for
its witnesses if trial is held in Montana. First, as to the breach of insurance
contract claims, the Court is not convinced that witnesses will be necessary to
resolve the dispute as to whether the Endorsement covers certain legal costs
associated with the Patch case. And, given ACE’s failure to affirmatively show
the current whereabouts of Lafakis and Messery, the Court cannot conclude that it
would be more convenient for these witnesses to attend trial in New York City, as
opposed to Montana. So the Court cannot determine that holding trial in Montana
would “severely inconvenience” either of these witnesses. Brunner, 2010 WL
3724436 at *8. Even if a transfer would be more convenient for ACE’s witnesses,
H&B has shown that it would be inconvenient for its bad-faith witnesses to attend
trial in New York. At best, a transfer of venue would impermissibly shift
inconvenience from ACE to H&B. Decker Coal Co., 805 F.2d at 843.
III.

Factor (4): Compulsory Process
Under Rule 45(b)(2)(A)–(B) of the Federal Rules of Civil Procedure, a

subpoena requiring the attendance of a witness at a trial may be served at any
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place within the district in which the trial is being held, or at any place within 100
miles of the district.
Here, ACE and H&B identify four potential non-party witnesses: Zielinski
(former ACE claims-handling supervisor), Messery (former ACE underwriter),
Lafakis (former H&B insurance broker), and Drake (attorney for the Patch family).
Assuming Zielinski still resides in Sinking Spring, Pennsylvania, he is
beyond the Southern District’s reach. Thus, the Southern District, like Montana,
lacks the ability to compel Zielinski to attend trial. The Southern District would,
however, have the power to compel Messery to attend trial, assuming he still
resides in the last known address offered by ACE—Hasbrouck Heights, New
Jersey. It is unknown whether Lafakis would be within the Southern District’s
reach, as the only evidence as to his current employment is a social-networking
website that puts Lafakis working in the “Greater New York City area.” But Drake
resides within this district, in Helena, Montana. The Southern District would not
be able to compel him to testify, but this Court could.
Given these tradeoffs and unknowns, the Court finds this factor to be
neutral.
IV.

Factor (5): The respective parties’ contacts with the forum.
When a case involves nationwide entities, this factor is typically not useful.
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See e.g. Costco Wholesale Corp. v. Liberty Mut. Ins. Co., 472 F. Supp. 2d 1183,
1192 (S.D. Cal. 2007). H&B and ACE are both incorporated in states other than
Montana and New York. H&B is Kentucky corporation with its principal place of
business in Kentucky, and ACE is a Pennsylvania corporation with its principal
place of business in Pennsylvania. In this regard, the parties have no greater
contacts with New York than Montana, making this factor weigh against transfer.
Id.
V.

Factor (6): Familiarity of State Law
This factor weighs against transfer at this juncture. The only law that

definitely applies to the case is Montana’s choice-of-law rules. See Costco
Wholesale Corp., 472 F. Supp. 2d at 1191. The parties agree that Montana’s
choice-of-law rules apply if the Court keeps the case here. See Arno v. Club Med
Inc., 22 F.3d 1464, 1467 (9th Cir. 1994). And they apply if the Court transfers the
case to the Southern District of New York. See Muldoon v. Tropitone Furniture
Co., 1 F.3d 964, 965 (9th Cir. 1993). Having a federal court familiar with
Montana’s conflict-of-law rules is a significant concern because of the confusing
turn Montana’s choice-of-law jurisprudence recently took in Tucker v. Farmers
Ins. Exch., 215 P.3d 1 (Mont. 2009). See Great Am. Assur. Co. v. Discover Prop.
and Cas. Ins. Co., 779 F. Supp 2d 1158 (D. Mont. 2011).
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The Court need not resolve, at this point, whether Montana law or New
York law will ultimately apply.
VI.

Factors (7) & (8): The relative court congestion in the two forums
and the length of time action has already been pending in the
transferor forum
One of the practical factors a court may consider in a discretionary transfer

motion is the docket congestion in the transferee forum as compared to the docket
congestion in the transferor forum. Parsons v. Chesapeake & O. Ry. Co., 375 U.S.
71, 73 (1963) (per curiam). Although neither party has submitted evidence on this
issue, other courts have used statistics collected by the federal government that
show the median time necessary to resolve a case in varying districts. See e.g.
Saleh, 361 F. Supp. 2d at 1167 n.2 (comparing Southern District of California’s
docket to Eastern District of Virginia’s docket). These statistics show that the time
necessary to resolve a case in the Southern District of New York takes, on average,
38.5 months while the District of Montana takes only 9.6 months. See
Administrative Office of the United States Courts, Federal Judicial Caseload
Statistics, Table C–5: Time Intervals From Filing to Disposition of Civil Cases
Terminated, by District and Method of Disposition, at 1, 3 (March 31, 2011)
(available at http://www.uscourts. gov/Viewer.aspx?doc=/uscourts/
Statistics/FederalJudicialCaseloadStatistics/2011/tables/C05Mar11.pdf) (last
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visited May 24, 2012). This factor weighs against transfer.
VII. Factor (9): The ease of access to sources of proof.
Although technological advances have made accessing remote evidence
much less burdensome, this factor is not superfluous. In re Volkswagen of Am.,
Inc., 545 F.3d 304, 316 (5th Cir. 2008) (en banc). This is particularly true in the
case of immovable evidence that is located in the transferee forum. See e.g. Dicken
v. United States, 862 F. Supp. 91, 94 (D. Md. 1994) (when “core issue” in tort
claim was condition of staircase, actual inspection was preferable to photographs).
There is no immovable evidence at issue in this case, and both parties agree that
this factor is accorded minimal weight.
VIII. Factor 10: localized interest in the resolution of the dispute.
ACE has failed to demonstrate that New York has a more significant
interest in the disposition of this case than Montana does. In fact, ACE does not
mention a single reason why New York has an interest in a dispute between
Kentucky and Pennsylvania corporations regarding a trial that was held in
Montana. This factor weighs against transfer.
CONCLUSION
ACE has failed to make a “strong showing” that the relevant factors favor a
transfer of venue to the Southern District of New York. The Court therefore
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concludes that ACE is not entitled to a discretionary change of venue under 28
U.S.C. § 1404(a).
IT IS ORDERED that ACE American Insurance Company’s motion to
change venue (doc. 21) is DENIED.
Dated this 20th day of June 2012.

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