Bull v. Illinois Union Insurance Company
MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 7/31/17.Mailed notice(ca, ) [Transferred from Illinois Northern on 8/1/2017.]
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
JAMES BULL, on behalf of himself
and a certified class,
ILLINOIS UNION INSURANCE
16 C 11446
Judge John Z. Lee
MEMORANDUM OPINION AND ORDER
Plaintiff James Bull (“Bull”), as representative of a certified class and the
assignee of US Coachways, brings this action against Defendant Illinois Union
Insurance Company (“IUIC”). Bull alleges that IUIC breached its obligations to
defend and indemnify US Coachways in a separate suit brought by Bull and the
class he represents. IUIC has moved to dismiss, or in the alternative, transfer this
case in light of related litigation pending in the Eastern District of New York. For
the following reasons, the Court transfers this action to the Eastern District of New
York pursuant to 28 U.S.C. § 1404(a). All other motions will be addressed by the
transferee court. 1
Given that the Court has decided to transfer the action, it need not reach the issue of
whether US Coachways is a necessary party under Federal Rule of Civil Procedure 19, nor
decide IUIC’s Federal Rule of Civil Procedure 12(b)(6) motion to dismiss for failure to state
Bull, a resident of Ohio, is the representative of a nationally based certified
class that entered into a settlement with US Coachways in a prior suit: Bull v. US
Coachways, Inc., No. 1:14-cv-05789 (N.D. Ill. settled Nov. 9, 2016) (“the Underlying
Action”). Compl. ¶¶ 1, 3, 28, ECF No. 1. The suit claimed that US Coachways had
violated the Telephone Consumer Protection Act (TCPA). Id. ¶ 7. Under the terms
of the settlement, US Coachways stipulated to paying $50,000 of $49,932,375 in
return for Bull’s agreement to seek recovery from US Coachways’ insurer, IUIC,
and pursue only IUIC in satisfying the judgment. Id. ¶¶ 28–30; Def.’s Mem. Supp.
Mot. Dismiss or Transfer 5, ECF No. 10.
During the course of the Underlying Action, US Coachways notified IUIC of
the suit and requested a determination of coverage for liability under the TCPA.
Compl. ¶¶ 16, 19. IUIC’s claims agent, ACE North American Claims, responded on
January 13, 2015, and denied coverage. Id. ¶ 20; Def.’s Mem. at 3–4. Counsel for
Bull thereafter sent a demand letter to IUIC on July 23, 2015. Compl. ¶ 23. In his
demand letter, Bull apprised IUIC of his intention to seek an assignment of the
policy and requested IUIC’s participation in settlement negotiations. Id. Again,
ACE North American Claims issued a letter declining to participate and reiterating
the denial of coverage.
Id. ¶ 24; Def.’s Mem. at 4.
The Underlying Action
eventually settled. Compl. ¶ 26. The settlement agreement received final approval
on November 9, 2016, and became effective on December 11, 2016. Id.
On November 29, 2016, shortly after receiving a copy of the settlement
agreement, IUIC filed a declaratory judgment action in the Eastern District of New
York, IUIC v. US Bus Charter & Limo, Inc. et al., No. 1:16-cv-06602 (E.D.N.Y. filed
Nov. 29, 2016) (“the New York Action”), seeking a ruling that it owes no coverage
obligations pertaining to the Underlying Action. Id. ¶ 42; Def.’s Mem. at 5–6. Bull
is a defendant in the New York Action. Compl. ¶ 42.
Subsequently, on December 19, 2016, Bull filed this diversity action on behalf
of himself and the certified class. Compl. ¶ 1. 2 Bull seeks damages for breach of
insurance contract, asserting rights assigned to him by the insured, US Coachways,
as part of the settlement of the Underlying Action. Compl. ¶ 2. Before the Court is
IUIC’s motion to dismiss in favor of its first-filed suit, or in the alternative, to
transfer this case to the Eastern District of New York, where its suit is pending. 3
28 U.S.C. § 1404(a) provides that “[f]or the convenience of the 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.”
§ 1404(a). Once an appropriate alternate forum is identified, a court undertakes a
Bull sought to have this case reassigned to Judge Pallmeyer, but she denied his
request, finding this case unrelated to the Underlying Action. Def.’s Reply 13, ECF No. 19.
IUIC also requests dismissal under the common-law doctrine of forum non
conveniens. Forum non conveniens is only applicable where the alternate forum is abroad,
or in rare circumstances where a state or territorial court would be more convenient.
Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 430 (2007). Where the
alternate forum is another federal district court, and that forum is of “superior
convenience,” 28 U.S.C. § 1404(a) has displaced the doctrine of forum non conveniens and
provides for transfer, rather than dismissal. In re Hudson, 710 F.3d 716, 718 (7th Cir.
2013). Accordingly, the Court finds that transfer pursuant to § 1404(a) is more appropriate
than dismissal in this instance.
two-pronged inquiry into both convenience and the interests of justice to decide
whether transfer is warranted. Research Automation, Inc. v. Schrader-Bridgeport
Int’l, Inc., 626 F.3d 973, 978 (7th Cir. 2010).
The movant has the burden of
establishing, “by reference to particular circumstances, that the transferee forum is
clearly more convenient.” Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219–20 (7th
Cir. 1986). The factors relevant to the convenience inquiry include “the availability
of and access to witnesses, and each party’s access to and distance from resources in
each forum,” as well as “the location of material events and the relative ease of
access to sources of proof.” Research Automation, 626 F.3d at 978. With regard to
the interests of justice, a court will consider “docket congestion and likely speed to
trial” in each forum, “each court’s relative familiarity with the relevant law,” “the
respective desirability of resolving controversies in each locale,” and “the
relationship of each community to the controversy.” Id. The interest of justice
inquiry “may be determinative, warranting transfer or its denial even where the
convenience of parties and witnesses points toward the opposite result.”
Because ruling on a motion to transfer venue requires an “individualized, case-bycase consideration of convenience and fairness,” the district court is afforded broad
discretion and substantial deference in weighing the factors for and against
transfer. Coffey, 796 F.2d at 219.
The first-to-file rule stands for the principle that a suit “may be dismissed ‘for
reasons of wise judicial administration . . . whenever it is duplicative of a parallel
action already pending in another federal court.’” Serlin v. Arthur Andersen & Co.,
3 F.3d 221, 223 (7th Cir. 1993) (alteration in original) (quoting Ridge Gold
Standard Liquors v. Joseph E. Seagram & Sons, Inc., 572 F. Supp. 1210, 1213 (N.D.
Ill. 1983)). Although circuits follow the principle in varying degrees, the Seventh
Circuit does not rigidly adhere to the first-to-file rule. Research Automation, 626
F.3d at 980–82. On the contrary, the Seventh Circuit has held that “the first-filed
case may proceed where the principles that govern requests for transfer do not
indicate otherwise.” Id. at 980. Thus, the first-filed status of a case is relevant to
the transfer inquiry, but not dispositive.
The First-to-File Rule
As an initial matter, IUIC contends that the first-to-file rule provides for
dismissal of this, the second-filed action. Def.’s Mem. at 6. As noted, however, no
such mechanical rule exists in the Seventh Circuit. Research Automation, 626 F.3d
at 980, 982. Instead, filing priority is one of many factors relevant in the § 1404(a)
analysis, and transfer, rather than dismissal, is the appropriate remedy. Id.; see
Hecker v. Petco Animal Supplies, Inc., No. 16 C 10857, 2017 WL 2461546, at *2–3
(N.D. Ill. June 7, 2017) (collecting Seventh Circuit precedent dictating transfer,
rather than dismissal, of the second-filed action).
Therefore, IUIC’s motion to
dismiss pursuant to the first-to-file rule is denied.
Still, Bull raises two objections to allowing the order of filing to even
influence determination of whether to transfer his case. Pl.’s Resp. 5–6, ECF No.
18. He asserts that because his suit requests coercive relief, in that it asks the
court to order IUIC to pay damages rather than merely declare IUIC’s obligations to
do so, it should take priority over IUIC’s declaratory action. Id. Moreover, he
asserts the declaratory action should be disfavored as improperly anticipatory. Id.
In reply, IUIC claims that bringing a declaratory judgment action is “the proper
response by a carrier when a coverage dispute becomes ripe for adjudication as
occurred when US Coachways agreed to the settlement.” Def.’s Reply at 5.
First, Bull is correct to point out that there is a general preference for
coercive actions over declaratory judgments. See Research Automation, 626 F.3d at
980. But the Seventh Circuit has made clear that this is not a mechanical rule. Id.;
see Republic Techs. (NA), LLC v. BBK Tobacco & Foods, LLC, No. 16 C 3401, 2016
WL 6248187, at *2 (N.D. Ill. Oct. 26, 2016) (finding that an automatic rule would
conflict with the Seventh Circuit’s mandate that first-filed nature of a suit is not
dispositive). Furthermore, the Court is inclined to agree with IUIC that declaratory
actions are a particularly common response in disputes over the extent of insurance
coverage. As a result, this action does not automatically take precedence over the
New York action simply because Bull seeks damages in addition to declaratory
But, to Bull’s point, the coercive nature of his suit further limits the
relevance of filing order in this case.
With regard to Bull’s second argument, the Court agrees that anticipatory
filings, i.e., filings where one party files its lawsuit in the face of a clear threat of an
impending suit by the opposing party, are not entitled to priority as the first-filed
action. See Research Automation, 626 F.3d at 980. But, even assuming arguendo
that the New York Action can be characterized as anticipatory, that alone would not
be dispositive in the transfer analysis. See Starin Mktg., Inc. v. Swift Distribution,
Inc., No. 2:16-CV-67-TLS-JEM, 2017 WL 218663, at *2 (N.D. Ind. Jan. 19, 2017)
(declining to transfer an allegedly anticipatory suit without more compelling
reasons to do so); see also Ginmar Corp. Promotions, Inc. v. Cardinal Health, Inc.,
No. 08 CV 4109, 2008 WL 4905994, at *2 (N.D. Ill. Nov. 12, 2008) (finding the
§ 1404(a) factors weighed in favor of transfer after disregarding the first-filed status
of the anticipatory suit in the transferee forum). Thus, the Court will not refrain
from transferring Bull’s suit merely because IUIC’s initial suit was arguably
anticipatory, but again, this consideration diminishes the importance of filing order.
For the foregoing reasons, the parties’ filing order is of little importance to
resolving whether to transfer Bull’s suit, and thus, IUIC’s request to dismiss this
suit is denied. The Court will proceed to evaluate whether transfer is nevertheless
appropriate under § 1404(a).
Motion to Transfer Pursuant to 28 U.S.C. § 1404(a)
Alternatively, IUIC requests that the instant action should be transferred to
the Eastern District of New York, where its suit is currently pending. In deciding
whether to transfer venue under 28 U.S.C. § 1404(a), a court considers whether the
transferee venue (1) is one where the action might have been brought; (2) is more
convenient to the parties and witnesses; and (3) would better serve the interest of
justice. See generally Van Dusen v. Barrack, 376 U.S. 612, 616 (1964).
Where the Action Might Have Been Brought
Transfer pursuant to § 1404(a) is appropriate only when the transferee forum
is one where the action “might have been brought.” Id. In other words, both venue
and jurisdiction must be proper in the alternate forum. Chem. Waste Mgmt., Inc. v.
Sims, 870 F. Supp. 870, 875–76 (N.D. Ill. 1994). The parties do not dispute that the
Eastern District of New York would be a proper venue under 28 U.S.C. § 1391(b).
Instead, Bull alleges that the transferee forum is inappropriate because New York
lacks personal jurisdiction over him. Pl.’s Resp. at 6–8. The relevant question
under § 1404(a), however, is whether the plaintiff could have brought suit in the
transferee forum, for which personal jurisdiction over the plaintiff is not a
prerequisite. See In re Genentech, Inc., 566 F.3d 1338, 1346 (Fed. Cir. 2009) (“There
is no requirement under § 1404(a) that a transferee court have jurisdiction over the
plaintiff.”); see also Talent Servs. v. Giles, No. 85 C 1075, 1986 WL 3604, at *1 n.1
(N.D. Ill. Mar. 17, 1986) (“[P]ersonal jurisdiction over a plaintiff is not a
prerequisite to the plaintiff’s ability to bring suit in a particular court.”). To that
end, courts in this district have found personal jurisdiction over the plaintiff
irrelevant to a § 1404(a) transfer analysis.
See, e.g., Cosmetique, Inc. v. Robert
Haydon Jones & Assocs., LLC, No. 04 C 3139, 2004 WL 1510012, at *2 n.1 (N.D. Ill.
July 1, 2004).
Therefore, the Court declines to examine whether the Eastern
District of New York has personal jurisdiction over Bull. Having determined that
this action could have been brought in the Eastern District of New York, the Court
now turns to consider the convenience of the parties and witnesses and the interests
Convenience of the Parties and Witnesses
The Court’s assessment of convenience includes consideration of the
plaintiff’s choice of forum, the convenience of the parties and witnesses, the location
of material events, and the relative ease of access to sources of proof. Research
Automation, 626 F.3d at 978. The movant has the burden of establishing that the
alternate forum is clearly more convenient.
Coffey, 796 F.2d at 219–20.
balance, the Court is persuaded that the Eastern District of New York would be a
more convenient forum in which to litigate this matter.
As an initial matter, Bull contends that he has chosen to litigate in Illinois,
and that choice should not be disturbed.
Pl’s Resp. at 9.
He is correct that,
ordinarily, there is a preference for leaving the plaintiff’s choice of forum
undisturbed. Research Automation, 626 F.3d at 979. In cases such as this one,
however, where parallel suits are pending in separate federal districts, “this factor
loses its significance entirely: each case has a plaintiff, and one of them will
necessarily be disturbed.”
Consequently, because both Bull and IUIC are
plaintiffs in their respective suits, no presumptive weight will be afforded to
plaintiff’s choice of forum in this case. Thus, this factor is neutral.
On the other hand, in regard to the convenience of the parties, Illinois is
plainly a convenient forum for Bull, because he filed suit here and pursued the
Underlying Action here. IUIC concedes that the Northern District of Illinois would
not be an inconvenient forum for IUIC, whose principal place of business is in
Def.’s Reply at 14. Concern for the convenience of parties, therefore,
weighs against transfer.
The next factor, convenience of witnesses, is often viewed as the most
important of the convenience factors. Schwarz v. Nat’l Van Lines, Inc., 317 F. Supp.
2d 829, 836 (N.D. Ill. 2004). The convenience of party witnesses is afforded less
weight than the convenience of non-party witnesses. R&Q Reinsurance Co. v. St.
Paul Fire & Marine Ins. Co., No. 15-CV-7784, 2016 WL 1247478, at *3 (N.D. Ill.
Mar. 30, 2016). Parties are generally required to identify specific witnesses and the
general content of their testimony before the Court will consider their convenience.
See Taylor v. Midland Funding, LLC, 94 F. Supp. 3d 941, 946 (N.D. Ill. 2015).
Here, IUIC specifically identifies two non-party witnesses who would be
inconvenienced if this litigation were to proceed in Illinois. See Def.’s Mem at 11–
12; see also id., Ex. 1, Kramer Aff. The first, Michael Kramer, an employee of ACE
Westchester who was involved with underwriting the policy on behalf of IUIC, is
currently located in Manhattan. The second, Brandon Testa, is a New York broker
licensed and based in New York who negotiated and issued the policy in question.
IUIC indicates that their testimony may be necessary to interpret the policy’s scope
of coverage and whether IUIC’s conduct amounts to bad faith or unfair practices.
Def.’s Mem. at 2; Def.’s Reply at 2.
Concern for IUIC’s non-party witnesses,
therefore, weighs in favor of transfer to New York. 4
Yet Bull would discount this factor’s significance altogether, contending that
witness testimony is unlikely to be needed in a dispute over insurance coverage
such as this one, which concerns interpretation of a written insurance policy. Pl.’s
Resp. at 10–11.
Some courts have noted that witness testimony provides little
value when only the interpretation of an insurance contract is in dispute. Grange
Mut. Cas. Co. v. Hallmark Specialty Ins. Co., No. 1:14-CV-00823, 2015 WL 5552660,
at *4 (S.D. Ind. Sept. 16, 2015) (finding witness testimony often provides little value
to the interpretation of an insurance policy). Other courts, however, have found
that witness testimony is valuable to an insurance coverage dispute. Bhd. Mut. Ins.
Co. v. GuideOne Mut. Ins. Co., No. 1:10-CV-462, 2011 WL 1627114, at *5 (N.D. Ind.
Apr. 28, 2011) (finding the location of witnesses who made insurance coverage
decisions material to the decision to transfer venue). Indeed, insofar as the parties’
intentions in forming the agreement are at issue or language of the agreement is
ambiguous, witness testimony may be necessary. See Wash. Nat’l Life Ins. Co. v.
Calcasieu Par. Sch. Bd., No. 05 C 2551, 2006 WL 1215413, at *11 (N.D. Ill. May 2,
2006) (finding that witnesses could provide relevant and perhaps key evidence in
determining policy coverage).
And, where, as here, an insurer’s alleged unfair
practices are at issue, witness testimony may also be relevant to that issue. In this
In addition, US Coachways, which is based in New York, would be inconvenienced to
the extent its participation in this suit, even if only as a witness, requires it to appear here
while litigating the same dispute in the Eastern District of New York.
instance, therefore, the Court is persuaded that IUIC’s non-party witnesses could be
helpful, or even necessary, to resolve this dispute. For this reason, the Court finds
that the convenience of non-party witnesses—a key factor in the convenience
analysis—weighs in favor of transfer.
The remaining convenience factors either support transfer or are neutral. As
the parties note, the material event underlying an insurance coverage dispute such
as that here is the decision to deny coverage. Evangelical Lutheran Church in Am.
v. Atl. Mut. Ins. Co., 973 F. Supp. 820, 823 (N.D. Ill. 1997). Bull asserts that the
decision to deny coverage occurred in Illinois, evidently based on no more than the
fact that IUIC is incorporated and has its principal place of business here. Pl.’s
Resp. at 2. For its part, IUIC asserts that the decision to deny coverage was issued
by and through IUIC’s claims representatives based in or around New York. Def.’s
Reply at 12.
Indeed, the letter denying coverage, which Bull attached to his
complaint, was issued by ACE North American Claims.
Compl., Ex. 1.
because it appears that New York, rather than Illinois, is the site of the material
event giving rise to the dispute, this factor supports transfer. Finally, with regard
to the relative ease of access to sources of proof, documentary evidence is easily
transferable and access would not pose a significant burden in either forum. First
Nat’l Bank v. El Camino Res., Ltd., 447 F. Supp. 2d 902, 912 (N.D. Ill. 2006). Thus,
this factor is neutral.
In sum, although the convenience of the parties weighs against transfer, the
convenience of non-party witnesses weighs in favor, and this latter factor is more
important. In addition, the location of the decision to deny coverage—the material
event at issue—weighs in favor of transfer. Finally, the relative ease of access to
the sources of proof factor is neutral. On this basis, the Eastern District of New
York is the more convenient forum.
Interests of Justice
The interests of justice—the second element of the § 1404 inquiry—reflects a
concern for the “efficient administration of the court system” and thus, a court will
compare: the respective desirability of resolving controversies in each locale, each
court’s relative familiarity with the relevant law, docket congestion and likely speed
to trial, and the relationship of each community to the controversy.
Automation, 626 F.3d at 978. The interest of justice inquiry carries greater weight
than concern for convenience. Id. (“The interests of justice may be determinative,
warranting transfer or its denial even where the convenience of the parties or
witnesses point toward the opposite result.”).
Here, in addition to convenience
weighing in favor of transfer, the Court finds transfer to the Eastern District of New
York would better serve the interests of justice.
First, it is generally desirable to resolve related litigation in the same forum. 5
See Coffey 796 F.2d at 221 (“Related litigation should be transferred to a forum
where consolidation is feasible.”). The declaratory action pending in New York will
Bull contends that the instant action is related to the Underlying Action despite the
fact that Judge Pallmeyer denied his motion to reassign the instant action to her. The
Court agrees with Judge Pallmeyer and finds the issues raised in each action to be distinct
from the Underlying Action. Cf. Evangelical Lutheran Church, 973 F. Supp. at 823 (finding
the declaratory action to have “nothing to do with the merits of the underlying [tort]
decide the same issues presented in this lawsuit.
Bull has alleged that IUIC
breached its duty to defend and indemnify US Coachways in the Underlying Action,
Compl. ¶¶ 45–54, which is precisely the question before the Eastern District of New
York. Though Bull does not address this factor in his brief, the Court assumes that,
while he would not dispute the value of consolidation as a general matter, he would
prefer consolidation here, rather than in New York. But additional factors, such as
convenience of witnesses, the situs of material events, familiarity with the relevant
law, and docket congestion point toward New York as the more appropriate forum.
Therefore, to the extent that consolidation with the New York Action is feasible, it
would be most prudent to consolidate in the forum best suited to hear the action,
and thus, this concern favors transfer.
Next, “[i]n a diversity action it is also considered advantageous to have
federal judges try a case who are familiar with the applicable state law.” Coffey,
796 F.2d at 221.
New York law controls the interpretation of the policy in
question. 6 Def.’s Mem. at 8. Federal judges sitting in New York are more likely
familiar with New York law. While this factor is of limited importance given that
district courts regularly apply the laws of other states, e.g., Hyatt Franchising,
L.L.C. v. Shen Zhen New World I, LLC, No. 16 C 8306, 2017 WL 372313, at *4 (N.D.
Ill. Jan. 26, 2017), it nevertheless weighs in favor of transfer as well.
Per Illinois’s choice-of-law rules, New York law controls because the policy was
delivered in New York to U.S. Coachways, a New York corporation which operated its
business in New York. See Supreme Laundry Serv., L.L.C. v. Hartford Cas. Ins. Co., 521
F.3d 743, 746 (7th Cir. 2008) (citing Lapham–Hickey Steel Corp. v. Prot. Mut. Ins. Co., 655
N.E.2d 842, 845 (Ill. 1995)).
The other considerations under the interest of justice inquiry either support
transfer or are neutral. The Eastern District of New York’s docket is less congested
and the average time from filing to trial is shorter than in the Northern District of
Illinois, which supports transfer. See U.S. District Courts—Combined Civil and
http://www.uscourts.gov/statistics/table/na/federal-court-management-statistics/2016/12/313. Finally, each community has a relationship to the controversy. While Illinois
may have an interest in policing IUIC as an Illinois corporation, New York has an
equal interest in enforcing and interpreting insurance contracts entered into in New
York. Therefore, this factor does not weigh for or against transfer.
On balance, because this action will concern the same issues as the New York
Action, New York law controls the interpretation of the policy, and Bull is more
likely to secure speedy relief in the Eastern District of New York, the Court
concludes it is in the interests of justice to transfer this case. Based upon this
conclusion, and combined with the determination that the convenience factors also
weigh in favor of transfer, the Court grants IUIC’s motion to transfer this case to
the Eastern District of New York.
For the reasons articulated herein, IUIC’s motion to dismiss, or in the
alternative, transfer  is granted in part and denied in part.
The motion to
dismiss pursuant to the first-to-file rule is denied, but the Court hereby transfers
this suit to the Eastern District of New York forthwith.
This case is hereby
terminated on this Court’s docket.
IT IS SO ORDERED.
John Z. Lee
United States District Judge
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