The opinion of the court was delivered by: CARTER
Defendant and second third-party plaintiff XCF Acceptance Corp., as successor by merger to CalFed, Inc. ("XCF"),
moves for reargument, pursuant to Local Rule 3(j), of the court's February 26, 1996 opinion denying XCF's motion to transfer venue to the United States District Court for the Central District of California. Familiarity with the court's February 26, 1996 opinion is assumed. KPMG, second third-party defendant, moves to dismiss for failure to state a claim and on the grounds of forum non conveniens. The court considers each motion in turn. The facts underlying this action will not be repeated here except as necessary for the present motions.
XCF brought an amended second third-party complaint
against KPMG, an English accounting partnership, for breach of contract, negligence, and indemnification and contribution. XCF moved for transfer to the United States District Court for the Central District of California, pursuant to 28 U.S.C. § 1404(a). After finding that XCF had satisfied the tests for plaintiff-as-movant for transfer under § 1404(a), and for showing that jurisdiction existed in the proposed transferee district, the court denied the motion based on the convenience factors considered within the court's discretion.
In order to be successful on its motion for reconsideration, XCF must present "matters or controlling decisions the court overlooked that might materially have influenced its earlier decision." Morser v. AT&T Information Systems, 715 F. Supp. 516, 517 (S.D.N.Y. 1989) (Sweet, J.). Rule 3(j) is to be narrowly construed and strictly applied to avoid repetitive arguments on issues that have been considered fully by the court. Ades v. Deloitte & Touche, 843 F. Supp. 888, 892 (S.D.N.Y. 1994) (Sweet, J.).
XCF moves for reargument on two grounds. First, XCF contends that the court incorporated KPMG's previous forum non conveniens motion
into its consideration of the convenience factors by comparing California with England rather than comparing California with New York. XCF argues it was judged under a burden that KPMG should have shouldered: showing that California was more convenient than both New York and England. Secondly, XCF contends that the court expressed uninvited conclusions on California's statute of limitations. In support of these two contentions, however, XCF does not present matters or controlling decisions overlooked; rather, XCF selectively relies on sentences taken out of context from the February 26, 1996 opinion.
The defendant and second third-party plaintiff's Rule 3(j) motion is denied.
A. Failure to State a Claim
Arguing that the laws of England are applicable to this dispute, whether or not the action is dismissed or transferred to England on forum non conveniens grounds, KPMG avers that XCF has not stated a claim under English law. KPMG thus moves for dismissal. Alternatively, KPMG argues that dismissal is warranted because XCF has not stated a claim under New York law.
In deciding which law would apply to this cause of action, a diversity case, this court applies the choice of law principles of New York, the forum state. Krauss v. Manhattan Life Ins. Co. of New York, 643 F.2d 98, 100 (2d Cir. 1981). In New York, the "interest analysis" test governs choice of law issues involving contract, tort, and indemnification or contribution disputes. Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc., 933 F.2d 131, 137 (2d Cir. 1991) (contracts); Dept. of Economic Development v. Arthur Andersen & Co. (U.S.A.), 747 F. Supp. 922, 935 (S.D.N.Y. 1990) (Stewart, J.) (contribution); Sullivan v. J.V. McNicholas Transfer Co., 224 A.D.2d 966, 638 N.Y.S.2d 260, 261 (4th Dept. 1996) (torts). Under such a test, the law of the jurisdiction having the greatest interest in the litigation will be applied. Wm. Passalacqua Builders, 933 F.2d at 137. Under this analysis, the court must look to factors such as: (1) the place of contracting, (2) the place of negotiation of the contract, (3) the place of performance, (4) the location of the subject matter of the contract, and (5) the domicile, residence, nationality, place of incorporation, and place of business of the parties. Id. A review of these factors leads to the conclusion that English law applies. While the parties dispute where (and whether) they entered into the oral agreement, the rare fact to which the parties do agree is that both parties met in London where they allegedly negotiated and agreed upon KPMG's alleged obligations.
See Declar. of George P. Rutland, former President of XCF's predecessor, CalFed, dated 5/03/95 at Exh. 5 annexed to Aff. of William K. Dodds, at PP 7-12; Second Third-Party Pl.'s Memo of Law in Opp'n to Mot. to Dismiss at 6-7; Second Third-Party Def.'s Memo of Law in Support of Mot. to Dismiss at 7. The subject matter of the alleged agreement--Anglo and the London insurance market--is located in England. Regarding performance, the court has previously held that the alleged oral contract indicated performance in both England and California, Anglo American Ins. v. CalFed Inc., 916 F. Supp. 1324 (S.D.N.Y. 1996) (Carter, J.). This factor is therefore inconclusive as is the fifth factor because XCF and KPMG are incorporated and residents of their respective forums. Although the sales agreement governing the sale of Anglo from XCF to plaintiffs contained a New York choice of law clause, KPMG was not a signatory to that agreement.
XCF argues that because this present action is a derivative of the main action, which was brought by plaintiffs as a result of that sales transaction gone wrong, the choice of law clause should still apply. XCF does not present any legal basis for binding KPMG, a non-signatory, to the choice of law clause. XCF's claims against KPMG do not involve the sales agreement nor any questions of law based on that agreement. Furthermore, the clause would not apply to XCF's tort claim against KPMG because under New York's conflict of law rules, a contractual choice of law provision "does not bind [the parties] as to causes of action sounding in tort." Fustok v. Conticommodity Services, Inc., 618 F. Supp. 1082, 1089 (S.D.N.Y. 1985) (Lasker, J.) (citing Klock v. Lehman Bros. Kuhn Loeb Inc., 584 F. Supp. 210, 215 (S.D.N.Y. 1984) (quoting Knieriemen v. Bache Halsey Stuart Shields, Inc., 74 A.D.2d 290, 427 N.Y.S.2d 10, 12-13 (1st Dept. 1980)); see also Broadcasting Rights Int'l Corp. v. Societe du Tour de France, 675 F. Supp. 1439, 1448 (S.D.N.Y. 1987) (Sweet, J.).
Pursuant to Rule 44.1, F.R.Civ.P., once an issue of foreign law has been properly raised, a federal court may make a determination of that law and in making that determination "may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence." Rule 44.1, F.R.Civ.P. The court's determination is treated as ruling on a question of law. Id. "Foreign law should be argued and briefed like the domestic law," Curtis v. Beatrice Foods Co., 481 F. Supp. 1275, 1285 (S.D.N.Y.) (Pollack, J.) (quoting Pollack, Proof of Foreign Law, XXVI Am. J. Comp. L. 470, 475 (1978)), aff'd, 633 F.2d 203 (2d Cir. 1980), and as with domestic law, judges should use both their own research and the evidence submitted by the parties to determine foreign law. Ackermann v. Levine, 788 F.2d 830, 838 (2d Cir. 1986). Both parties submitted affidavits from English counsel setting forth the relevant provisions under English law for determining whether an English court would dismiss on these grounds.
The relevant rule under English law is Order 18 Rule 19(1) of the English Rules of the Supreme Court ("RSC"). (Aff. of William K. Dodds for Second Third-Party Def., Ex. 10--Opinion of Richard Field, English counsel, dated 4/18/96 ("Field Opinion"); Decl. of Alvin K. Hellerstein for Second Third-Party Pl., Ex. 5--Opinion of Peter Hayward, English counsel, dated 5/14/96 ("Hayward Opinion")). This rule provides in part: