Morgan et al v. Capitol Indemnity Corporation et al

Filing 33

ORDER granting Defendants' 25 Motion to Transfer venue to the Western District of Wisconsin. Signed by U.S. District Judge John C Coughenour.(TH)

THE HONORABLE JOHN C. COUGHENOUR

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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DONALD W. MORGAN, et al.,

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Plaintiffs,
v.

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CASE NO. C17-0754-JCC
ORDER GRANTING MOTION TO
TRANSFER VENUE

CAPITOL INDEMNITY
CORPORATION, et al.,

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Defendants.

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This matter comes before the Court on Defendants’ motion to transfer venue to the

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Western District of Wisconsin (Dkt. No. 9). Having thoroughly considered the parties’ briefing
and the relevant record, the Court GRANTS the motion for the reasons explained herein.

I.

BACKGROUND
Plaintiff Donald Morgan is a Washington insurance agent. (Dkt. No. 18 at 2.) He and

Plaintiff Morgan Insurance, LLC, a Washington limited liability company (“MLLC”)
(collectively “Plaintiffs”), bring suit against Defendants, a Wisconsin-based insurance group, for
failure to pay commissions on policies Plaintiffs wrote on Defendants’ behalf. (Id. at 2–9.) At
issue is application of a March 2011 Independent Agent Agreement (“Agent Agreement”)
between Defendants and Morgan & Associates, Inc., a Washington corporation (“MINC”). (Dkt.
No. 27 at 11.) Defendants assert that a forum selection clause contained in the Agent Agreement
ORDER GRANTING MOTION TO TRANSFER
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applies to the current dispute and, on this basis, seek to transfer venue to the District Court for

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the Western District of Wisconsin pursuant to 28 U.S.C. § 1404(a). (Dkt. No. 25 at 3.)

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Morgan switched his insurance agency’s operations from an incorporated entity to a

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limited liability company in August 2011. (Dkt. No. 18 at 3.) Plaintiffs asserted in their First

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Amended Complaint that at the time of the transfer “[MLLC] assumed all contractual obligations

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of [MINC], and was the successor to all rights of [MINC],” and that Defendants “expressly . . .

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acquiesced . . . [to] the substitution of entities” in the Agent Agreement. 1 (Dkt. No. 18 at 3.)

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Plaintiffs, in an effort to avoid transfer pursuant to the forum selection clause, now argue the

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Agent Agreement does not apply to this dispute and even if it did, public policy concerns cut

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against transfer. For the reasons described below, this Court disagrees. Transfer is warranted.

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II.

DISCUSSION

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According to the Agent Agreement,

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[i]n all matters concerning the validity, interpretations, performance, effect or
otherwise of this Agreement, the laws of the State of Wisconsin shall govern and
be applicable. The situs for any disagreement or legal action between [MINC] and
[Defendants] shall be Dane County, Wisconsin.

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(Dkt. No. 27 at 16.) Plaintiffs argue that the Court should disregard the provision above because
their agency relationship with Defendants “can be gleaned by the course of performance” rather
than through an assignment of the Agent Agreement. (Dkt. No. 28 at 4.) Plaintiffs also argue that
because some of their claims “can exist independently” of their contract-based claims, the forum
selection clause is inapplicable. (Dkt. No. 28 at 5.) But these arguments are not consistent with
the allegations contained in Plaintiffs’ First Amended Complaint. (See generally Dkt. No. 18.)

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Plaintiffs originally brought a breach of contract suit against Defendants in Snohomish
County. (Dkt. No. 1.) But Plaintiffs’ original complaint did not articulate facts demonstrating
privity between the named Plaintiffs—Morgan and MLLC—and Defendants. (See generally Dkt.
No. 1 at 6–10.) Following removal by Defendants, this Court dismissed Plaintiff’s original
complaint with leave to amend. (Dkt. No. 14 at 3–4.) Plaintiffs later filed their First Amended
Complaint, articulating facts supporting privity, namely that MLLC is a successor in interest for
the Agent Agreement between Defendants and MINC. (Dkt. No. 18 at 3.)
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All of Plaintiffs’ claims, as plead in their complaint, are either claims for breach of the Agent

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Agreement or require interpretation of the Agreement in some fashion. (See Dkt. No. 18 at 5–9.)

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Therefore, the forum selection clause is valid.

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Ordinarily, the Court considers the convenience of the parties and public factors in

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determining whether to grant a motion for a change in venue. See 28 U.S.C. § 1404. But “[w]hen

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the parties have agreed to a valid forum-selection clause . . . only under extraordinary

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circumstances unrelated to the convenience of the parties should a § 1404(a) motion be denied.”

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Atl. Marine Const. Co., Inc. v. U.S. Dist. Ct. for W. Dist. of Texas, 134 S. Ct. 568, 581 (2013).

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Instead of the normal § 1404 calculus, “the plaintiff bears the burden of establishing that transfer

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to the forum for which the parties bargained is unwarranted,” and this analysis is based solely on

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public interest factors. Id. at 581–82. Further, the public interest factors must “overwhelmingly

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disfavor a transfer.” Id. at 583.

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The Ninth Circuit has identified the following public interest factors: “(1) the local

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interest in the lawsuit, (2) the court's familiarity with the governing law, (3) the burden on local

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courts and juries, (4) congestion in the court, and (5) the costs of resolving a dispute unrelated to

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a particular forum.” Boston Telecomm. Group, Inc. v. Wood, 588 F.3d 1201, 1211 (9th Cir. 2009)

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(internal citation and quotation marks omitted). Here, Plaintiffs concede that local interest in the

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lawsuit is “the only one of those factors at play in this case.” (See Dkt. No 28 at 8.)

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Plaintiffs do not assert that they directly represent the interests of Defendants’ insureds,

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nor do they plausibly argue how this action would serve to protect the interests of Washington’s

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insureds. Instead, they simply argue that “all matters relating to insurance affect the public

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interest of [Washington].” (Dkt. No. 28 at 11) (emphasis in original). Plaintiffs support this

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argument with reference to portions of Washington’s Insurance Code, which describes the public

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interest nature of Washington’s insurance industry. (Id. at 8–9); see Wash. Rev. Code

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§ 48.01.030. This is a bridge too wide. The public interest described in Washington’s Insurance

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Code is that of the insureds, not professionals in the industry. See generally Chapter 48.01 Wash.
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Rev. Code; see also Transamerica Title Ins. Co. v. Johnson, 693 P.2d 697, 702 (Wash. 1985)

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(for purposes of Washington’s Consumer Protection Act, the public interest impact of an

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insurer’s bad act is only presumed for an insured). Morgan, an insurance agent, alleges

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Defendants failed to pay him sales commissions. His lawsuit has nothing to do with the public

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interest impact on insureds. 2

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Given Plaintiffs’ inability to demonstrate public policy reasons against enforcing the

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forum selection clause, the Court finds that transfer to the Western District of Wisconsin is

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warranted.

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III.

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CONCLUSION
For the foregoing reasons, Defendants’ motion to transfer venue to the Western District

of Wisconsin (Dkt. No. 25) is GRANTED.
DATED this 27th day of December 2017.

A

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John C. Coughenour
UNITED STATES DISTRICT JUDGE

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Nor does this Court find persuasive Plaintiffs’ reliance on Revised Code of Washington
section 48.18.200, which preempts provisions in insurance contracts that deprive Washington’s
court’s of jurisdiction in actions against insurers. (See Dkt. No. 28 at 9.) The provision clearly
relates to insurance contracts between insureds and insurers—not between insurance
professionals. See generally Chapter 48.18 Wash. Rev. Code (governing insurance contracts
containing provisions governing dealings between insureds and insurers).
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