MARKEL INSURANCE COMPANY v. MASLUF REALTY CORP.

Filing 9

OPINION. Signed by Magistrate Judge Joseph A. Dickson on 3/28/14. (jd, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

MARKEL INSURANCE COMPANY,
Plaintiff,

Civil Action No.l3-5057 (ES) (JAD)

v.

OPINION

MASLUF REALTY CORP.,
Defendant.

JOSEPH A. DICKSON, U.S.M.J.

This matter comes before the Court upon Defendant MaslufRealty Corp.'s Motion to
Transfer or to Dismiss for Lack of Personal Jurisdiction (ECF No. 3). Pursuant to Rule 78 of
Federal Rules of Civil Procedure, no oral argument was heard. Upon consideration ofthe
parties' submissions, and for the reasons stated below, the Court transfers this matter to the
United States District Court for the Eastern District ofNew York pursuant to 28 U.S. C.

§1406(a). 1
I.

BACKGROUND AND PROCEDURAL HISTORY

This is an action in which Markel Insurance Company ("Plaintiff') seeks a declaratory
judgment that its insurance policy does not cover MaslufRealty Corp.'s ("Defendant") alleged
loss due to vandalism. See Complaint (ECF No. 1). Plaintiff alleges that Defendant made a
material misrepresentation in submitting its claim for the loss. See id.

~~35-36.

Plaintiff also

Although Defendant moved to transfer pursuant to 28 U.S. C. § 1404, the Court transfers this matter under 28
U.S.C. §1406. Venue transfers under section 1404 "presuppose that the court has jurisdiction and that the case has
been brought in the correct forum." Lafferty v. St. Riel, 495 F. 3d 72, 76 (3d Cir. 2007). Because the Court finds
that venue in the District of New Jersey is improper, the Court transfers this matter under 28 U.S.C. § 1406 rather
than 28 U.S.C. §1404.
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seeks damages for insurance fraud pursuant to the New Jersey Insurance Fraud Prevention

See Complaint (ECF no. 1).
This action was initially brought in the Superior Court of the State of New Jersey,
Division, Morris County, and was removed to this Court on the grounds of diversity ·........ "..............,..
·.
on August 22, 2013. See Notice of Removal, ~2 (ECF No. 1). A related action is pending in
Eastern District ofNew York. Momjian Affidavit, ~30 (ECF no. 3-2). Plaintiff, Markel
Insurance Company, is a corporation organized and existing under the laws of the State of
Illinois. Complaint, ~1 (ECF no. I). Plaintiff's underwriting manager maintains a northeast
regional office in New Jersey. Id. at ~2. Defendant, MaslufRealty Corp. is a corporation
organized and existing under the laws of the State ofNew York, with a principal place of
business in Brooklyn, New York. Momjian Aff., ~4 (ECF no. 3-2).
Plaintiff alleges the following facts. Plaintiff issued an insurance policy (the "Policy'')
the Defendant on May 2, 2010. Compl., ~13 (ECF no. 1). The Policy insured Defendant's real
property, located at 171 Market Street, Staten Island, New York (hereinafter referred to as
"Staten Island property"), and was in effect from May 2, 2010 through July 16, 2011. !d. at ~14
Defendant submitted an insurance claim for a loss due to an alleged vandalism that occurred on
or about June 2, 2011. Id. at ~~21 and 35. Plaintiffhad declined to cover a prior loss that
occurred on February 13, 2011 due to a frozen pipe, and alleges that Defendant did not fully
remediate the water damage from that loss. !d. at ~28-33. Plaintiff alleges that Defendant, in
submitting its claim for the June 2, 2011 loss, misrepresented that it had completely remediated
approximately ninety percent of the water damage sustained in the February 13, 2011loss. Id. at
~36.

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On August 28,2013, the Defendant filed the instant motion, which seeks to transfer
action to the Eastern District ofNew York pursuant to 28 U.S.C. §1404, or alternatively, to
dismiss the complaint for lack ofpersonaljurisdiction. See ECF no. 3.

II.

LEGAL ANALYSIS
Transfers of venue under section 1404(a) are "discretionary determinations made for

convenience of the parties." Lafferty v. Riel, 495 F.3d 72, 77 (3d Cir. 2007). Because section
1404(a) comes into play ''where both the original and the requested venue are proper," Jumara
State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir. 1995), the threshold question in determining the
appropriateness of transferring a case under section 1404(a) is whether the original venue is
proper. If the original venue is improper, courts may transfer the case to a proper venue under
section 1406 if the "interest of justice" requires transfer rather than dismissal for improper
See, e.g., Lafferty v. Riel, 495 F. 3d 72, 75 (3d Cir. 2007); see also 28 U.S.C. §1406 ("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 of justice, transfer such case to any district or division in
which it could have been brought.").

A.

Venue is Not Proper in the District of New Jersey
Section 1391 governs venue for all civil actions brought in district courts of the Untied

States. 28 U.S.C. §1391(a)(1). Section 1391(b) governs where venue is proper and states that a
civil action may be brought in:
(1) a judicial district in which any defendant resides, if all defendants
residents of the State in which the district is located;

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(2) a judicial district in which a substantial part of the events or omissions givi
rise to the claim occurred, or a substantial part of property that is the subje
of the action is situated; or
(3) if there is no district in which an action may otherwise be brought as provid
in this section, any judicial district in which any defendant is subject to t
court's personal jurisdiction with respect to such action.
28 u.s.c. §1391(b).
In the instant matter, venue is not proper in the District ofNew Jersey under section
1391(b) for the following reasons.

1. Section 139l(b)(J)
Venue is not proper under section 1391(b)(l) because Defendant does not reside in Ne
Jersey. Section 1391(c)(2) explains how residency of"entit[ies] with the capacity to sue and b
sued," such as corporations, is determined. For purposes of venue, a defendant corporation ha
residency "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). Because the
Court concludes that it does not have personal jurisdiction over Defendant in New Jersey, secti n
1391(b)(l) does not operate to confer venue here.
Plaintiff argues that the Court has general jurisdiction over Defendant because "the
parties negotiated the insurance contract in New Jersey." Plaintiffs Opp. Brief at 6 (ECF no.
General jurisdiction results from, among other things, 'systematic and continuous' contact
between a non-resident defendant and the forum state. Spuglio v. Cabaret Lounge, 344 F. Ap x
724, 725 (3d Cir. 2009). Defendant is a New York corporation with its principal place of
business in New York. The negotiation of a single insurance contract in New Jersey, by itself,
does not demonstrate continuous and systematic contacts required for a court to exercise gene 1

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jurisdiction over a defendant. Thus, the Court finds that it does not have general jurisdiction
over Defendant.
Plaintiff also argues that the Court has specific jurisdiction over Defendant because
Defendant's adjuster submitted a materially misleading and false statement from its New Jerse
offices to the New Jersey offices of Plaintiffs independent adjuster. To establish specific
jurisdiction, ( 1) the defendant must have purposefully availed itself of the privilege of
conducting activities within the forum; (2) plaintiffs' claims must arise out of or relate to at le
one of the contacts with the forum; and (3) the exercise of jurisdiction must comport with
traditional notions of fair play and substantial justice. See O'Connor v. Sandy Lane Hotel Co.,

Ltd., 496 F. 3d 312, 317 (3d Cir. 2007). All three elements must be met to establish specific
jurisdiction. !d.
Because the Court finds the purposeful availment element is not met, the Court conclu s
it does not have personal jurisdiction. Defendant's principal, Timothy Fulton, has never visite
the offices of any New Jersey insurance broker. Affidavit of Henry Fulton, ~6 (ECF no. 8-1).
Defendant was contacted in New York by a broker who solicited its business from Pennsylv
and its account was assigned to Peachtree Special Risk Brokers who had offices in New Jerse

!d. Defendant's adjuster had offices in both New York and New Jersey. Miller Affidavit ~1
(ECF no. 8-2). The only reason Defendant's adjuster mailed the statement of damages from it
New Jersey office is because Plaintiffs independent adjuster instructed Defendant to submit
information and documentation for the claim to its New Jersey office. See Miller Affidavit~
and 9 (ECF no. 8-2); Letter from Edward Reilly Insurance Adjusters, Exhibit A (ECF no. 8-2)

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Because the Court does not have personal jurisdiction over Defendant in the District of
New Jersey, Defendant is not deemed to reside in the District ofNew Jersey for venue purpose
and section 1391(b)(l) does not apply to confer venue on Defendant based on residency.

2. Section 1391(b)(2)
Venue is not proper in the District ofNew Jersey pursuant to section 139l(b)(2) becaus
a substantial part of the events or omissions giving rise to the claim did not occur in New Jerse
The events giving rise to the claim occurred in New York. The property that was allegedly
vandalized is located in New York, and therefore, any assessments of the damage that occurre
during the February 13, 2011loss as well as the June 2, 20llloss would have taken place upo
visiting the property in New York. Furthermore, because Defendant's offices are located in
Brooklyn, New York, it is unlikely that any alleged misrepresentation that Defendant made to
Plaintiff would have occurred in New Jersey. Although Defendant argues that the insurance
contract was negotiated in New Jersey, the events giving rise to the claim relate to a
misrepresentation of damages sustained by a New York property, rather than to the negotiatio
of the insurance contract.
Plaintiff does not allege that Defendant prepared a materially misleading insurance clai
in New Jersey, or that Defendant ever visited the office of its underwriting manager in New
Jersey and made a misrepresentation there. While Plaintiff argues that Defendant's adjusters
a misleading statement from its New Jersey offices, there is no indication that the misleading
statement was prepared in New Jersey or in New York, especially where Defendant's adjuster
has offices located in both places and the subject property is located in New York. Furthermo ,

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Defendant's adjuster explains that the allegedly misleading statement was sent to Plaintiffs
adjuster's New Jersey offices only at their request.

3. Section 139l(b)(3)
Venue is not proper in the District ofNew Jersey pursuant to section 1391(b)(3)

u~;;\.;au~.­

section 13 91 (b)(3) does not apply to this case. Section 13 91 (b)(3) applies when "there is no
district in which an action may otherwise be brought as provided" in section 13 91. Because
Court finds that this action maybe brought in the Eastern District ofNew York, as explained
more fully below, section 1391(b)(3) does not apply.

B.

Transfer of Venue to the Eastern District of New York under 28 U.S.C. 1406.
Because venue is not proper in the District ofNew Jersey, the Court considers whether

transfer to the E.D.N.Y. is proper under section 1406. Under 28 U.S.C. §1406, "[t]he 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 of justice, transfer such case to any district or division in
it could have been brought." The Court must assess whether (1) the action "could have been
brought" in the Eastern District ofNew York; and (2) whether it is "in the interest of justice"
transfer the case to the Eastern District ofNew York rather than dismiss it for improper venue.
The Court finds that the action "could have been brought" in the Eastern District ofN
York, which encompasses Staten Island. A substantial part of the events that gave rise to the
claim occurred in Staten Island, New York, where the property that was allegedly vandalized is
located. The February 13, 2011loss, which Plaintiff alleges was not fully remediated by the
time of the June 2, 2011loss, occurred at Defendant's property in Staten Island. The June 2,

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2011loss also occurred in Staten Island at the same property. The insurance policy that
alleges "excludes any duty to pay Defendant" for the June 2, 2011loss because of the alleged
material misrepresentation insured Defendant against loss or damage to this property in Staten
Island. See Complaint (ECF no. 1). Venue is also appropriate in the Eastern District ofNew
York because "a substantial part of property that is the subject of the action," i.e., the Staten
Island property, is situated in this district.
The Court also finds that it is in the "interest of justice" to transfer the case. Section

of their actions merely because they had made an erroneous guess as to the facts underlying
choice of venue." Eviner v. Eng, no. 12-2245 (KM) (MCA), 2013 WL 6450284, at *5 (D.N.J.
Dec. 6, 2013) (internal citations omitted). A transfer is appropriate here because there is a
related case pending in the Eastern District ofNew York; the property is located in New York;
and it is likely that New York will have personal jurisdiction over Defendant, who is a New Y
corporation whose property is located in New York.

C.

Even if venue were proper in the District of New Jersey, the Court f"mds that
action should be transferred pursuant to 28 U.S.C. §1404.
Pursuant to 28 U.S.C. §1404(a), the Court may transfer a case to any venue where it

have been brought "[t]or the convenience of parties and witnesses, in the interest of justice."
U.S.C. § 1404(a). "The purpose of §1404(a) is to avoid the waste of time, energy and money
and, in addition, to safeguard litigants, witnesses, and the public against avoidable
and expense." Rappoport v. Steven Spielberg, Inc., 16 F. Supp. 2d 481,497 (D.N.J. 1998).
decision of whether to transfer a case is committed to the trial court's sound discretion.
Cadapult Graphic Sys. v. Tektronix, Inc., 98 F. Supp. 2d 560,564 (D.N.J. 2000); Days Inns

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Worldwide, Inc. v. RAM Lodging, LLC, No. 09-2275,2010 WL 1540926, at *2 (D.N.J. April1
2010).
In determining whether to transfer a matter pursuant to section 1404(a), a court must
consider:

(1) the convenience of the parties, (2) the convenience of the witnesses, and (3) the

interests of justice. 28 U.S.C. §1404(a). In addition to these statutory factors, courts consider
various private and public interests protected by the language of§ 1404(a):
The private interests have included: plaintiffs forum preference as
manifested in the original choice; the defendant's preference;
whether the claim arose elsewhere; the convenience of the parties
as indicated by their relative physical and financial condition; the
convenience of the witnesses-but only to the extent that the
witnesses may actually be unavailable for trial in one of the fora;
and the location of books and records (similarly limited to the
extent that the files could not be produced in the alternative
forum).
The public interests have included: the enforceability of the
judgment; practical considerations that could make the trial easy,
expeditious, or inexpensive; the relative administrative difficulty in
the two fora resulting from court congestion; the local interest in
deciding local controversies at home; the public policies of the
fora; and the familiarity of the trial judge with the applicable state
law in diversity cases.

Jumara v. State Farm Ins. Co., 55 F.3d 873, 879-80 (3d Cir. 1995) (internal citations omme:a
Regarding the private interest factors, including "whether the claim arose elsewhere,"
claim arose inN ew York, as the property that allegedly suffered water damage from frozen
in February 2011, which led to the denial of the vandalism claim at the heart of the instant
dispute is located in New York. Although Plaintiff chose to litigate this case in New Jersey,
Plaintiff is an Illinois corporation and "plaintiff's choice of forum is entitled to less deference
the chosen forum is not its home forum." See Allianz Life Ins. Co. ofNorth America v. Estate

Bleich, 2008 WL 4852683 *4 (D.N.J. Nov. 7, 2008) (internal citations omitted). Similarly,

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deference given to a plaintiffs choice of forum is reduced when the operative facts that give
to the action occur in another district." !d. (internal citations omitted). Finally, requiring the
Plaintiff to litigate in the Eastern District ofNew York, rather than in Newark, New Jersey,
only create a small inconvenience to the plaintiff, if any, as the distance between the district
courts is minimal. Plaintiff does not argue that this will inconvenience them, financially or in
any other way, or that their witnesses would be inconvenienced, and there is no suggestion
its books and records cannot be produced in New York. Therefore, the private factors do not
weigh against transfer.
As for the public interest factors, practical considerations that could make the trial '
expeditious, or inexpensive" are evident. Most of the witnesses and evidence related to this
dispute are located in New York, including the property itself, the property manager, and
Plaintiffs offices. As for New York's "local interest" and applicable public policies, New Y
has a meaningful connection to the operative facts giving rise to the cause of action because
claim involves a property in New York, and no party claims that the applicable law governing
the case would be New Jersey law. Furthermore, a nearly identical matter between the
which Plaintiff in this case is the defendant, is pending in the Eastern District ofNew York.

III.

CONCLUSION

For the foregoing reasons, this Court concludes that venue in the District ofNew J
improper, and that it is in the interest of justice to transfer this case to the Eastern District of
York. Because the Court concludes that venue is improper in the District ofNew Jersey and
transfer is appropriate, the Court does not address Defendant's argument that the Court does

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have personal jurisdiction over Defendant. The Court orders that this matter should be
transferred to the Eastern District ofNew York pursuant to 28 U.S.C. §1406.

JOSEPH A. DICKSON, U.S.M.J.

cc: Hon. Esther Salas, U.S.D.J.

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