Sauvageot v. State Farm Mutual Automobile Insurance Company
Filing
15
MEMORANDUM OPINION AND ORDER DENYING Defendant's 7 Motion to Dismiss; GRANTING 7 Defendant's Motion to Transfer Case. This case is TRANSFERRED to the U.S. District Court for the Western District of Pennsylvania. This civil action is DISMISSED and STRICKEN from the active docket of this Court. Signed by Senior Judge Frederick P. Stamp, Jr on 7/8/11. (cc)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
ARTIE H. SAUVAGEOT,
Plaintiff,
v.
Civil Action No. 5:11CV13
(STAMP)
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
MEMORANDUM OPINION AND ORDER
DENYING THE DEFENDANT’S MOTION TO DISMISS AND
GRANTING THE DEFENDANT’S ALTERNATIVE MOTION TO TRANSFER
I.
Procedural History
The plaintiff, Artie H. Sauvageot, filed a complaint in the
Circuit
Court
of
Brooke
County,
West
Virginia,
against
the
defendant, State Farm Mutual Automobile Insurance Company (“State
Farm”),
asserting
claims
for
uninsured/underinsured
motorist
(“UM/UIM”) benefits and violations of the West Virginia Unfair
Claims Settlement Practices Act and the duty of good faith and fair
dealing. State Farm filed a motion to dismiss or transfer pursuant
to a forum selection clause in the insurance contract.
The
plaintiff filed a response to which the defendant replied.
For the reasons set forth below, the defendant’s motion to
dismiss
is
denied
transfer is granted.
and
the
defendant’s
alternative
motion
to
II.
Facts1
Ka-Ce Lewis, driving a vehicle owned by Richard Lewis, crossed
the center line and his vehicle hit the plaintiff’s vehicle in a
head on collision.
Ka-Ce Lewis allegedly was under the influence
of drugs and alcohol at the time of the collision.
The plaintiff
carried automobile insurance through State Farm.
On April 13,
2009, the plaintiff sent a letter to State Farm making a request
for uninsured/underinsured motorist (“UM/UIM”) benefits under his
policy.
On April 21, 2009, Liberty Mutual, Richard Lewis’s
carrier, denied liability coverage to the plaintiff on the grounds
that Ka-Ce, Richard’s son, illegally and improperly took the
vehicle without Richard’s permission.
Ka-Ce allegedly had no auto
liability coverage.
The plaintiff’s insurance contract with State Farm provides a
forum selection clause in the “Uninsured Motor Vehicle Coverage”
section.
Under the heading of “Deciding Fault and Amount,” the
policy states that the insured shall:
(1) file a lawsuit, in a state or federal court that has
jurisdiction, against:
(a) us;
(b) the owner and driver of the uninsured
motor vehicle unless we have consented to a
settlement offer proposed by or on behalf of
such owner or driver; and
(c) any other party or parties who may be
legally liable for the insured’s damages.
1
For purposes of deciding this motion to dismiss, the facts
are based upon the allegations contained in the complaint.
2
III.
Applicable Law
This Court reviews a motion to dismiss pursuant to a forum
selection clause under Federal Rule of Civil Procedure (“Rule”)
12(b)(3).
Sucampo Pharmaceuticals, Inc. v. Astellas Pharma, Inc.,
471 F.3d 544, 550 (4th Cir. 2006).
In reviewing a motion to
dismiss under Rule 12(b)(3), this Court may “freely consider
evidence outside the pleadings.”
clause
“changes
the
default
Id.
venue
Because a forum selection
rules
applicable
to
the
agreement,” a federal court “will apply federal law and in doing
so, give effect to the parties’ agreement.”
Albemarle Corp. v.
Astrazeneca UK Ltd., 628 F.3d 643, 650 (4th Cir. 2010).
IV.
A.
Discussion
Motion to Dismiss
1.
Forum Selection Clause
The defendant’s motion to dismiss or transfer is based on a
forum selection clause in the UM/UIM section of the plaintiff’s
policy.
The forum selection clause states that the plaintiff must
sue State Farm and the alleged tortfeasors in a state or federal
court
that
has
jurisdiction
over
State
Farm,
the
alleged
tortfeasors, and any other parties that may be responsible for
damages. State Farm contends that because this Court does not have
personal jurisdiction over Ka-Ce and Richard Lewis, the plaintiff’s
action in bringing the suit in West Virginia violates the forum
selection clause. Alternatively, State Farm argues that this Court
3
should transfer this action to the District Court for the Western
District
of
Pennsylvania
Pittsburgh, Pennsylvania.
because
the
accident
occurred
in
It argues that the evidence is located
in Pittsburgh, the investigating police officers and emergency
medical
providers
all
likely
reside
in
Allegheny
County,
Pennsylvania, the plaintiff’s treating neurosurgeon practices in
Pittsburgh, and the alleged tortfeasors are not subject to this
Court’s jurisdiction.
The plaintiff claims that this Court now has jurisdiction over
the alleged tortfeasors because Wheeling is within 100 miles of the
alleged tortfeasors’ home in Pittsburgh.
The plaintiff cites Rule
4(k)(1)(B), also known as the “bulge rule,” to make this argument.
The plaintiff further argues that this district is convenient for
the plaintiff and State Farm.
The plaintiff’s treating physicians
are from West Virginia with the exception of a neurosurgical
consult.
The plaintiff also states that because liability is not
at issue, the location of liability witnesses should not factor
into the decision to transfer.
Finally, as to the forum selection
clause, the plaintiff argues that the clause was not reasonably
communicated to him.
As mentioned above, the Fourth Circuit has stated that a
federal district court must apply federal law rather than state law
in interpreting a forum selection clause.
F.3d at 650.
Albemarle Corp., 628
Under the federal standard, courts afford forum
4
selection clauses presumptive validity.
London,
94
F.3d
923,
928
(4th
presumption is not absolute.
clause
is
“prima
facie
valid
Cir.
Id.
and
Allen v. Lloyd’s of
1996).
However,
this
A mandatory forum selection
should
be
enforced
unless
enforcement is shown by the resisting party to be ‘unreasonable’
under the circumstances.”
U.S. 1, 10 (1972).
M/S Bremen v. Zapata Off-Shore Co., 407
Forum selection clauses are unreasonable under
the federal standard if:
(1) their formation was induced by fraud or overreaching;
(2) the complaining party “will for all practical
purposes be deprived of his day in court” because of the
grave inconvenience or unfairness of the selected forum;
(3) the fundamental unfairness of the chosen law may
deprive the plaintiff of a remedy; or (4) their
enforcement would contravene a strong public policy of
the forum state.
See Allen, 94 F.3d at 928 (articulating the federal standard as
discussed in The Bremen, 407 U.S. at 12–13, and Carnival Cruise
Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991)).
The party
opposing the application of the forum selection clause bears a
heavy burden of proving unreasonableness.
Here, rather than arguing the federal standard, the plaintiff
cites West Virginia law and contends that the forum selection
clause was not reasonably communicated to him.
The plaintiff
states that he is 64 years old and that he did not read, know, or
understand the forum selection clause.
As to the first prong, this Court finds that the formation was
not induced by fraud or overreaching.
5
The plaintiff’s “ignorance
due to failure to read is no excuse” to disregard a forum selection
clause.
Mercury Coal & Coke, Inc. v. Mannesmann Pipe & Steel
Corp., 696 F.2d 315, 318 (4th Cir. 1982).
As to the second prong, “[m]ere inconvenience or additional
expense is not the test of unreasonableness since it may be assumed
that
[the
complaining
party]
received
consideration for these things.”
under
the
contract
Davis Media Group, Inc. v. Best
Western Int’l, Inc., 302 F. Supp. 2d 464, 469 (D. Md. 2004) (citing
Central Contracting Co. v. Md. Cas. Co., 367 F.2d 341, 344 (3d Cir.
1966)).
Here, the plaintiff will not be deprived of his day in
court if this case is litigated in a Pennsylvania court.
In this
case, Pennsylvania is not a “remote alien forum,” nor is this
dispute an essentially local one more suited to resolution in West
Virginia than Pennsylvania given the fact that the plaintiff’s
injury occurred in Pennsylvania and the alleged tortfeasors reside
in Pennsylvania.
Carnival Cruise Lines, 499 U.S. at 594.
In
addition, the plaintiff resides within 50 miles of Pittsburgh.
The plaintiff does not argue that he will be deprived of a
remedy in a Pennsylvania court.
The insurance contract, in
paragraph 14 of the “General Terms” section, provides that the law
of the State of West Virginia will control in the event of any
disagreement as to the interpretation and application of any
provision in the insurance contract.
6
The final prong of the unreasonable test is whether the forum
selection clause contravenes the forum state’s public policy.
In
West Virginia, forum selection clauses “are not contrary to public
policy.” Caperton v. A.T. Massey Coal Co., 679 S.E.2d 223, 235 (W.
Va. 2008).
This Court looks to whether the clause is fair and
reasonable.
Id.
the
public
If it is not fair and reasonable, only then does
policy
unenforceable.
Id.
prong
make
a
forum
selection
clause
As mentioned above, a forum selection clause
is not unreasonable because a party to a contract failed to read
the provision.
Mercury Coal & Coke, Inc., 696 F.2d at 318.
Because this Court has found the forum selection clause fair and
reasonable, and because forum selection clauses are not in and of
themselves contrary to the public policy of West Virginia, the
parties’ forum selection clause contained in the contract should be
given effect.
2.
Personal Jurisdiction over the Alleged Tortfeasors
Because this Court has found that the forum selection clause
contained in the insurance contract is valid and enforceable, this
Court must now determine whether the plaintiff filed a lawsuit in
a state or federal court that has jurisdiction against State Farm,
the owner of the vehicle, and the driver of the vehicle.
The
parties do not dispute that the Circuit Court of Brooke County,
West Virginia, where the plaintiff originally filed suit, does not
have personal jurisdiction over the alleged tortfeasors.
7
However,
the plaintiff argues that this Court has jurisdiction over the
alleged tortfeasors pursuant to Rule 4(k)(1)(B).
First, this Court notes that the language of the forum
selection clause requires the plaintiff to file suit in a court
that has jurisdiction over the tortfeasors.
a suit.
He did not file such
Secondly, even if the plaintiff had filed suit in this
Court rather than state court, the “bulge rule” of Rule 4 does not
provide personal jurisdiction over the alleged tortfeasors in this
case.
Rule 4(k)(1)(B) states that, “[s]erving a summons or filing a
waiver
of
service
establishes
personal
jurisdiction
over
a
defendant . . . who is a party joined under Rule 14 or 19 and is
served within a judicial district of the United States and not more
than 100 miles from where the summons was issued.”
4(k)(1)(B).
Accordingly,
“if
a
party
Fed. R. Civ. P.
delineated
in
Rule
4[(k)(1)(B)] has minimum contacts with the 100-mile bulge area, the
district court in the forum state gains personal jurisdiction over
such
party
through
service
of
process
pursuant
4(k)(1)(B)], providing due process is satisfied.”
to
[Rule
Quinones v. Pa.
Gen. Ins. Co., 804 F.2d 1167, 1174 (10th Cir. 1986).
In this case, although the alleged tortfeasors live within 100
miles of this point of holding court, they have not been served
with a summons, nor has there been a filing of waiver of service.
This Court notes that Richard and Ka-Ce Lewis are not third-party
8
defendants
pursuant
to
Rule
14.
Likewise,
they
are
not
indispensable parties pursuant to Rule 19. As the plaintiff states
in his response brief, the present civil action is a bad faith
action
against
State
Farm
and
liability
is
not
an
issue.
Accordingly, this Court finds that it does not have personal
jurisdiction
over
Ka-Ce
and
Richard
Lewis
pursuant
to
Rule
4(k)(1)(B).
B.
Alternative Motion to Transfer
As discussed above, a 12(b)(3) motion is the appropriate
motion to dismiss pursuant to a forum selection clause.
However,
“transfer is the preferred remedy to dismissal when a forum
selection clause dictates that another federal forum is the proper
venue for litigation.”
Petroleum Products, Inc. v. Commerce &
Indus. Ins. Co., 2009 WL 4782063, *5 (S.D. W. Va. Dec. 4, 2009)
(citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 28-29
(1988)); see also Salovaara v. Jackson Nat’l Life Ins. Co., 246
F.3d 289, 299 (3d Cir. 2001) (stating that it makes “better sense”
to transfer rather than to dismiss).
In this case, the forum
selection clause provides that the plaintiff could bring suit
against the defendant in an appropriate state or federal court.
Pursuant to 28 U.S.C. § 1404(a), “a district court may
transfer any civil action to any other district or division where
it might have been brought” where such transfer is made “[f]or the
convenience of parties and witnesses, in the interest of justice.”
9
28 U.S.C. § 1404(a). The decision to transfer venue is left to the
sound discretion of the trial court.
235 F.2d 198, 201 (4th Cir. 1956).
Southern Ry. Co. v. Madden,
In making this determination,
a court should consider:
(1) ease of access to sources of proof; (2) the
convenience of parties and witnesses; (3) the cost of
obtaining the attendance of witnesses; (4) the
availability of compulsory process; (5) the possibility
of a view; (6) the interest in having local controversies
decided at home; and (7) the interests of justice.
In re Campbell Transp. Co., Inc., 368 F. Supp. 2d 553, 555-56 (N.D.
W. Va. 2005) (citing Alpha Welding & Fabricating Co. v. Todd
Heller, Inc., 837 F. Supp. 172, 175 (S.D. W. Va. 1993)).
The
movants typically bear the burden of demonstrating that transfer is
proper. Versol B.V. v. Hunter Douglas, Inc., 806 F. Supp. 582, 592
(E.D. Va. 1992).
“The presence of a forum-selection clause . . .
will be a significant factor that figures centrally in the district
court’s calculus.”
Stewart Org., 487 U.S. at 29.
Here, the plaintiff’s concerns with transfer involve a 64year-old man dealing with downtown Pittsburgh traffic and parking.
He also states that his doctors are located in West Virginia, with
the exception of a neurosurgical consult from Pittsburgh.
The
plaintiff states that the adjusters from State Farm are located in
Charleston, West Virginia, and as liability is not at issue,
witnesses to the accident which might live in western Pennsylvania
are not necessary.
10
This Court finds that this civil action should be transferred
to the Western District of Pennsylvania.
As mentioned above, the
forum selection clause in the insurance contract represents “the
parties’ private expression of their venue preferences.”
30.
Id. at
This Court balances that private expression along with the
private and public interests.
As to the ease of access to sources of proof, the defendant is
correct that the accident occurred in Pittsburgh and any relevant
physical evidence will be located in the Pittsburgh area.
Because
this is a bad faith action, and not a liability action, this factor
only weighs slightly in favor of transfer.
The convenience of the
parties and witnesses weighs neither in favor of transfer nor this
Court retaining this civil action.
The plaintiff states that he
has doctors in West Virginia and he does not want to drive or park
in downtown Pittsburgh.
The defendant points to a neurologist in
Pittsburgh as well as investigating police officers and emergency
medical providers located in western Pennsylvania. This Court also
notes that the expense for the adjusters to travel to Wheeling,
West Virginia or Pittsburgh, Pennsylvania from Charleston, West
Virginia does not impact the balancing.
Again, as there are
potential witnesses in both West Virginia and Pennsylvania, the
availability of compulsory process weighs neither in favor nor in
opposition to transfer.
11
The insurance contract states that West Virginia law will
apply to this civil action.
There is an interest in “having the
trial of a diversity case in a forum that is at home with the state
law that must govern the case.”
4782063 at *8.
Petroleum Products, 2009 WL
This factor would slightly weigh in favor of not
transferring the case. However, this Court has been presented with
no evidence that the United States District Court for the Western
District of Pennsylvania could not accurately apply the law of West
Virginia.
After carefully balancing the interests, this Court believes
that the transfer of this civil action to the Western District of
Pennsylvania is appropriate as the parties entered into a contract
with a valid forum selection clause and the public and private
factors this Court must consider slightly do weigh in favor of this
Court transferring this civil action.
V.
Conclusion
For the reasons stated above, the defendants’ motion to
dismiss
is
DENIED
transfer is GRANTED.
and
the
defendant’s
alternative
motion
to
Accordingly, it is ORDERED that this case be
TRANSFERRED to the United States District Court for the Western
District of Pennsylvania for all further proceedings. The Clerk of
Court shall transfer the case to the Clerk of the Court of the
United
States
District
Court
for
12
the
Western
District
of
Pennsylvania.
It is further ORDERED that this civil action be
DISMISSED and STRICKEN from the active docket of this Court.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:
July 8, 2011
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
13
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