Onset Financial v. Westchester Fire Insurance

Filing 54

MEMORANDUM DECISION and ORDER denying 42 Motion to Change Venue. Signed by Magistrate Judge Paul M. Warner on 12/22/2016. (blh)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

ONSET FINANCIAL, INC.,
Plaintiff,
v.
MEMORANDUM DECISION
AND ORDER DENYING MOTION TO
TRANSFER VENUE

WESTCHESTER FIRE INSURANCE
COMPANY, INC.,
Defendant.
WESTCHESTER FIRE INSURANCE
COMPANY, INC.,

Case No. 2:16-cv-0063
District Judge Jill Parrish

Third-Party Plaintiff,
v.

Magistrate Judge Paul M. Warner

FAMILY PRACTICE OF ATLANTA
MEDICAL GROUP, LLC, et al.,
Third-Party Defendants.

District Judge Jill Parrish referred this matter to Magistrate Judge Paul M. Warner
pursuant to 28 U.S.C. § 636(b)(1)(A). 1 Before the court is Defendant and Third-Party Plaintiff
Westchester Fire Insurance Company’s (“Westchester”) Motion to Transfer Venue. 2 Having
reviewed the parties’ briefs and the relevant law, the court renders the following Memorandum
Decision and Order. 3
BACKGROUND
This lawsuit arises out of a lease agreement between and Plaintiff Onset Financial, Inc.
(“Onset”) and Third-Party Defendants Sondial Proprieties, LLC and Family Practice of Atlanta
1

Dkt. No. 12.
Dkt. No. 42.
3
Pursuant to DUCivR 7-1(f), the court elects to determine the present motion on the basis of the written
memorandum and finds that oral argument would not be helpful or necessary.
2

1

Medical Group, LLC (collectively, “Co-Lessees”). 4 On November 7, 2014, Onset and the CoLessees entered into a Master Lease Agreement (“Master Lease”) wherein Onset agreed to lease
medical equipment to the Co-Lessees. 5 To facilitate the transaction, the Master Lease required
the Co-Lessees to obtain a lease payment bond in favor of Onset in the amount of $2,600,000. 6
On November 24, 2014, Westchester executed a Lease Payment Bond (“Lease Payment
Bond”) in favor of Onset for $2,600,000. 7 In exchange for the Lease Payment Bond, the CoLessees and the remaining Third-Party Defendants Sondial Pharmacy, LLC, Nexus Laboratories,
Inc., Alphonso Waters, and Dr. Sondi Moore-Waters, each executed an Agreement of
Indemnity. 8 The Agreement of Indemnity required each Third-Party Defendant to indemnify
Westchester for any obligation Westchester may incur under the Lease Payment Bond. 9
Subsequently, the Co-Lessees failed to make payments required under the Master
Lease. 10 Therefore, on December 7, 2015, Onset filed a lawsuit against Westchester in the Third
Judicial District Court for the state of Utah. 11 Onset alleges that the Co-Lessees are in default
and, therefore, Westchester is obligated to pay Onset $2,600,000 under the terms of the Lease
Payment Bond. 12
On January 26, 2016, Westchester removed this case to the District of Utah.
Additionally, on April 7, 2016, Westchester filed a third-party action against the Third-Party
Defendants alleging that the Third-Party Defendants are obligated to pay Westchester for any

4

Dkt. No. 2-1 at ¶ 5.
Id. at ¶¶ 4–6.
6
Id. at ¶¶ 7–8.
7
Id. at ¶ 8.
8
Dkt. No. 19 at ¶ 13.
9
Id.
10
Dkt. No. 2-1 at ¶ 10.
11
See Dkt. No. 2.
12
Dkt. No. 2-1 at ¶ 16.
5

2

amounts that Westchester may be obligated to pay Onset under the terms of the Lease Payment
Bond. 13
Subsequently, Westchester motioned for the court to transfer this case to the Northern
District of Georgia. 14 Westchester is a resident of Pennsylvania. 15 Westchester alleges that the
Third-Party Defendants are residents of the Northern District of Georgia and that the majority of
the witnesses and evidence in this case is located in the Northern District of Georgia. 16 Onset is
a Utah corporation with its principle place of business in Salt Lake City, Utah. 17 Onset claims
that the majority of its witnesses and evidence are located in Utah. 18
DISCUSSION
Pursuant to 28 U.S.C. § 1404(a), “[f]or 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 . . . .” To satisfy § 1404(a), the moving party must establish
two prerequisites. See RES-NV, LLC v. Rosenberg, No. 2:13CV00115DAK, 2013 WL 3548697,
at *2 (D. Utah July 11, 2013). First, the moving party must establish that the transferee court is a
forum in which the action could have been originally brought. Chrysler Credit Corp. v. Country
Chrysler, Inc., 928 F.2d 1509, 1515 (10th Cir. 1991) (“[Section] 1404(a) does not allow a court
to transfer a suit to a district which lacks personal jurisdiction over the defendants, even if they
consent to suit there.”). Second, the moving party “bears the burden of establishing that the
existing forum is inconvenient.” Id. Onset does not dispute that this action could have been

13

Dkt. No. 19.
Dkt. No. 42.
15
Id. at 18.
16
Id. at 10–15.
17
Dkt. No. 2-1 at ¶ 1.
18
Dkt. No. 48 at 6.
14

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brought in the Northern District of Georgia. 19 Therefore, the court is left to determine whether
Westchester has met its burden to demonstrate that the District of Utah is inconvenient.
“Section 1404(a) is intended to place discretion in the district court to adjudicate motions
for transfer according to an ‘individualized, case-by-case consideration of convenience and
fairness.’” Id. at 1515–16 (quoting Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29 (1988)). To
determine whether a forum is inconvenient and transfer proper, the court weighs a number of
factors, including:
the plaintiff's choice of forum; the accessibility of witnesses and other sources of
proof, including the availability of compulsory process to insure attendance of
witnesses; the cost of making the necessary proof; questions as to the
enforceability of a judgment if one is obtained; relative advantages and obstacles
to a fair trial; difficulties that may arise from congested dockets; the possibility of
the existence of questions arising in the area of conflict of laws; the advantage of
having a local court determine questions of local law; and, all other considerations
of a practical nature that make a trial easy, expeditious and economical.
Texas Gulf Sulphur Co. v. Ritter, 371 F.2d 145, 147 (10th Cir. 1967). The moving party does not
have to establish that every factor tips in his or her favor. See Rosenberg, 2013 WL 3548697 at
*2–3. Rather, § 1404(a) allows the Court to evaluate the relevant factors that contribute to
whether the chosen forum is inconvenient. Id.
Westchester claims that the Northern District of Georgia has more ties to this case than
the District of Utah because: (1) the Third-Party Defendants reside in the Northern District of
Georgia; (2) primary witnesses and other sources of proof are located in the Northern District of
Georgia; and (3) the assets at issue in the Master Lease and the Lease Payment Bond are located
in the Northern District of Georgia. 20 Onset counters that its choice of forum should remain
undisturbed because Westchester has failed to meet its burden to demonstrate the balance of

19
20

See Dkt. No. 48.
Dkt. No. 42 at 2–3.

4

relevant factors tips strongly in favor of transfer. 21 Onset argues that its primary witnesses and
documentary evidence are located in Utah and Utah law governs the Master Lease. 22
For the reasons that follow, Westchester’s Motion to Transfer Venue is denied. Where
the balance of evidence and witnesses remains equal among forums, the court must defer to the
plaintiff’s chosen venue. Particularly, there are three relevant factors that demonstrate that this
case should remain in Utah: (1) Onset’s chosen forum is Utah; (2) Westchester has not
demonstrated that the accessibility of witnesses and other sources of proof is harmed by the case
proceeding in Utah; and (3) the Master Lease is governed by Utah law and contains a forum
selection clause in favor of Utah.
A. Plaintiff’s Chosen Forum
Onset’s choice of forum weighs against transfer. “Unless the balance is strongly in favor
of the movant[,] the plaintiff’s choice of forum should rarely be disturbed.” William A. Smith
Contracting Co. v. Travelers Indem. Co., 467 F.2d 662, 664 (10th Cir. 1972). Indeed, the court
will “honor the plaintiff’s choice of forum ‘unless the balance in the defendant’s favor is shown
by clear and convincing evidence.” Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d
1153, 1168 (10th Cir. 2010) (citations omitted) (emphasis in original).
Onset is a Utah corporation with its principal place of business in Salt Lake City, Utah. 23
The Lease Payment Bond executed by Westchester and Onset and delivered to Onset in Utah. 24
The Master Lease supported by the Lease Payment Bond is expressly governed by Utah law. 25

21

Additionally, Onset argues that Westchester’s venue motion is untimely. However, § 1404(a) allows
transfer to occur “at any time during the pendency of the case, even after judgment has been entered.”
Chrysler Credit Corp., 928 F.2d at 1516.
22
Dkt. No. 48 at 6.
23
Dkt. No. 2-1 at ¶ 1.
24
Dkt. No. 48 at 5.
25
Dkt. No. 40-2 at § 20(e) (stating that the lease is governed and should be construed in accordance with
the laws of the state of Utah).

5

Furthermore, as discussed below, Westchester has not demonstrated the remaining relevant
factors tip strongly in Westchester’s favor. Therefore, the court will not disturb Onset’s choice
of forum.
B. The Accessibility of Witnesses and Other Sources of Proof
The accessibility of witnesses and other sources of proof weigh against transfer to the
Northern District of Georgia. The accessibility of witnesses and sources of proof is the “most
important factor” in determining whether a forum is inconvenient under § 1404(a). Employers
Mut. Cas. Co., 618 F.3d at 1169 (quotations and citation omitted). To demonstrate
inconvenience under this factor, it is not enough to merely point to the location of probable
witnesses outside the forum. Rather, the moving party must (1) identify the witnesses and their
locations; (2) indicate the “quality or materiality of their testimony”; and (3) show that any such
witnesses are unwilling to come to trial, that deposition testimony would be unsatisfactory, or
that the use of compulsory process would be necessary. See id. at 1169. Importantly, “[m]erely
shifting the inconvenience from one side to the other” will not be sufficient to support transfer.
Scheidt v. Klein, 956 F.2d 963, 966 (10th Cir. 1992).
In Scheidt v. Klein, the defendant argued, in part, that the case should be transferred to
Florida because the majority of the contemplated witnesses resided in Florida and the pertinent
documentary evidence was located in Florida. Id. at 965. The defendant had identified eight
Florida witnesses and stated generally that these witnesses could speak to the fact of the case.
See id. at 965–66. The Tenth Circuit agreed with the district court that the defendant had not met
its burden to show the venue was inconvenient. Id. at 966. The court found that the defendant
failed to submit anything that would “indicate the quality or materiality of the testimony.” Id. at
966 (quotations and citation omitted). Additionally, the defendant failed to show that the

6

purported witnesses were unwilling to come to the plaintiff’s chosen forum, that deposition
testimony would be unsatisfactory, or that the use of the court’s compulsory process would be
necessary. Id. The court held that the defendant’s “meager showing failed to demonstrate the
requisite inconvenience to his witnesses.” Id. Similarly, the defendant’s “conclusory averment
regarding the boxes of (unidentified, undescribed) ‘documents’” located in Florida was “clearly
deficient.” Id. (citations omitted). The court found it persuasive that the defendant did not
explain why the documentary evidence at issue could not be shipped to the plaintiff’s chosen
forum. Id.
Like Scheidt, the court is unpersuaded by Westchester’s “meager showing” of the
inconvenience of witnesses and other sources of proof. Westchester has identified the following
witnesses located in the Northern District of Georgia:
(1) Representatives of Family Practice; (2) Representatives of Sondial Pharmacy;
(3) Representatives of Sondial Properties; (4) Representatives of Nexus
Laboratories; (5) Waters; (6) Moore-Waters; (7) Representatives of ERHCAP,
LLC and Empire Realty Holdings, LLC; (8) Representatives of Private Preferred,
LLC; and (9) Representatives of Cushman & Wakefield of Georgia, Inc. 26
Westchester goes on to describe, generally, how each of these witnesses can speak to the facts of
the case. Westchester makes no attempt to demonstrate “quality or materiality of the testimony”
these witnesses will provide. Moreover, Westchester fails proffer why deposition testimony
would be unsatisfactory or that the use of the court’s compulsory process will be necessary.
Westchester merely states: “having these individuals deposed and, if necessary, testify in an
action venued in Utah would be prohibitive at best, impossible at worst.” 27 Without more, the

26

Dkt. No. 42 at 11.
Id. at 14. Additionally, the parties have already scheduled and presumably conducted several
depositions without interference from the court. Dkt. No. 48 at 3. Therefore, it appears Westchester’s
parade of horribles is unfounded.
27

7

court cannot say that the location of Westchester’s witnesses renders the District of Utah an
unsuitable forum.
Similarly, Westchester relies heavily on the fact that a substantial portion of its
documentary evidence is located in Georgia and that the equipment at issue in the Master Lease
is located in Georgia. 28 With the arsenal of tools at counsel’s disposal in the digital age, the
court finds it difficult to believe that any documentary evidence located in Georgia cannot be
shipped or electronically delivered to Utah at a minimal cost. See Corel Software, LLC v.
Microsoft Corp., 2:15-cv-528-JNP-PMW, 2016 WL 782249 at *3 (D. Utah Feb. 26, 2016)
(recognizing that “transferring documents from one forum to another is as easy as a click of a
mouse”). Additionally, at its core the dispute between the parties is contractual. 29 Neither
Onset nor Westchester will be required to haul the lease equipment into court to prove its case.
Therefore, the location of documentary evidence and the lease equipment in Georgia does not
lead to the conclusion that the Northern District of Georgia is a proper forum.
Furthermore, Onset has also proffered that its key fact witnesses and documentary
evidence is located in Utah. 30 Where Westchester has merely shifted inconvenience from “one
side to the other,” there is no justification for the court to transfer venue pursuant to § 1404(a).
See Scheidt, 956 F.2d at 966.
C. Locality Factor
The likely application of Utah law weighs against transfer. “When the merits of an action
are unique to a particular locale, courts favor adjudication by a court sitting in that locale.”
Employers Mut. Cas. Co., 618 F.3d at 1170 (citing cases). Indeed, “[t]here is a local interest in

28

Dkt. No. 42 at 15–16.

29

See Dkt. No. 2-1; Dkt. No. 19 at ¶¶ 19–25, 26–30 (seeking contractual indemnification and declaratory
judgment for subrogation).
30
Dkt. No. 48 at 6.

8

having localized controversies decided at home.” Bailey v. Union Pac. R.R. Co., 364 F. Supp. 2d
1227, 1233 (D. Colo. 2005) (quotations and citation omitted). Moreover, the Supreme Court has
recently reinforced the rule that § 1404(a) “provides a mechanism for enforcement of forumselection clauses that point to a particular federal district.” Atl. Marine Const. Co. v. U.S. Dist.
Court for W. Dist. of Texas, 134 S. Ct. 568, 579 (2013) The Court found that Ҥ 1404(a)
requires that a forum-selection clause be given controlling weight in all but the most exceptional
cases.” Id. (quotations and citation omitted). The Court further held that when the parties enter
into a valid forum selection clause, they “waive the right to challenge the preselected forum as
inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the
litigation.” Id. at 582. Indeed, the “enforcement of valid forum-selection clauses, bargained for
by the parties, protects their legitimate expectations and furthers vital interests of the justice
system.” Id. at 581 (quotations and citation omitted).
In this case, the Master Lease is governed by Utah Law. 31 Any claims by Westchester
for indemnification from the Third-Party Defendants will be dependent on whether Onset or the
Third-Party Defendants have breached the terms of the Master Lease. 32 Moreover, the Master
Lease has a forum selection clause mandating that all disputes under the Master Lease be
litigated in Utah. 33 While Westchester is not a party to the Master Lease, Westchester issued a
Lease Payment Bond with knowledge that any dispute related to the performance of the Master
Lease would be litigated in the District of Utah. Furthermore, Westchester points to the location

31

See supra note 25.
Dkt. No. 19 at ¶ 22 (“[T]he Third-Party Defendants are further obligated to indemnify Westchester for
any and all costs that Westchester incurs in defending this action filed against it by Onset or in otherwise
complying with the Lease Payment Bond.”).
33
Dkt. No. 40-2 at § 20(e) (stating that any litigation related to the Master Lease shall be brought only in
the state or federal courts in the state of Utah).
32

9

of the Co-Lessees as a justification for transferring the case to the Northern District of Georgia. 34
However, the Co-Lessees bargained for a forum selection clause in favor of Utah and should
expect to appear in Utah to answer to any claims that may arise under the Master Lease.
Therefore, the application of Utah law and the forum selection clause in the Master Lease favor
litigation in the District of Utah.
CONCLUSION
After reviewing all the relevant factors, the court concludes that Westchester has not
established that a change of venue is justified under 28 U.S.C. § 1404(a). Westchester and the
Third-Party Defendants chose to engage in business with a Utah company. Therefore,
Westchester should be prepared to defend itself in the District of Utah. Westchester’s Motion to
Transfer Venue 35 is DENIED.
IT IS SO ORDERED.
DATED this 22nd Day of December, 2016.
BY THE COURT:

_______________________________
PAUL M. WARNER
United States Magistrate Judge

34
35

Dkt. No. 42 at 11.
Dkt. No. 42.

10