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INDIAN HARBOR INSURANCE CO. v. FACTORY MUTUAL INSURANCE CO.

August 17, 2005.

INDIAN HARBOR INSURANCE COMPANY, and THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA, Plaintiffs,
v.
FACTORY MUTUAL INSURANCE COMPANY d/b/a FM GLOBAL INSURANCE COMPANY, Defendant.



The opinion of the court was delivered by: PETER LEISURE, District Judge

OPINION AND ORDER

Plaintiffs, The Trustees of the University of Pennsylvania ("Penn") and Indian Harbor Insurance Company ("Indian Harbor"), bring this action for declaratory judgment, pursuant to 28 U.S.C. § 2201, against defendant Factory Mutual Insurance Company d/b/a FM Global ("FM"). Plaintiffs jointly seek a declaration that an insurance policy issued by FM to Penn provides coverage for damages Penn sustained at its veterinary hospital. Indian Harbor further seeks a judgment declaring that its own policy with Penn covers only those damages in excess of those covered by the FM policy or, in the alternative, that Indian Harbor's obligation should be apportioned based on the respective policy limits of the Indian Harbor and FM policies.

  Defendant FM filed the instant motion to transfer venue to the Eastern District of Pennsylvania, pursuant to 28 U.S.C. § 1404(a), on April 25, 2005. It argues that transfer would advance the convenience of parties and witnesses as well as the interests of justice. Plaintiffs Indian Harbor and Penn oppose the motion and wish to remain in the Southern District of New York. For the reasons that follow, the Court finds that FM has borne its burden, and defendant's motion to transfer is granted.

  BACKGROUND

  Plaintiff, Penn, is a Pennsylvania not-for-profit corporation, which owns the New Bolton Center Veterinary Hospital ("NBC") located in Chester County, Pennsylvania. (Complaint ("Compl.") ¶¶ 1,6.) Penn is insured by plaintiff Indian Harbor and defendant FM under two separate insurance policies. (Id. ¶ 1.) Indian Harbor is incorporated in North Dakota, but conducts insurance business throughout the United States, including New York. (Id. ¶ 5.) FM is incorporated and has its primary place of business in Rhode Island, and conducts insurance business in New York. (Id. ¶ 7.) FM's policy insures Penn against all risk of property loss and damages up to $1 billion, from July 1, 2003 to July 1, 2004. (Id. ¶ 8.) The FM policy was negotiated, underwritten, issued and serviced by Thomas Tarczali, a Connecticut-based Senior Account Manager at FM. (Affidavit of Thomas E. Tarczali ("Tarczali Aff.") ¶ 2.) Tarczali negotiated the policy with Ian Anderson, a Vice President at Marsh USA, Penn's insurance broker. This occurred primarily in Connecticut, but Tarczali also met with Andersen and Kenneth Hoffman, Penn's Director of Risk Management and Insurance, in Pennsylvania. (Id. ¶ 3.) Tarczali sent the binder that led to the issuance of the FM policy to Hoffman in Pennsylvania on July 1, 2003, and issued the FM policy in Connecticut and had it delivered to Marsh USA's New York office on July 10, 2003. (Id. ¶ 4.)

  Indian Harbor issued a Pollution and Remediation Legal Liability Policy that provided coverage for Penn from July 1, 2003 to July 1, 2006. The Indian Harbor policy coverage was limited to $2 million for each loss, remediation or legal defense expenses, and to $6 million in the aggregate, with a self-insured retention (akin to a deductible) of $50,000, and was to cover loss in excess of that covered by any other valid and collectible insurance policy. (Id. ¶ 9.) The Indian Harbor policy contains a forum selection clause under which Penn and Indian Harbor agree to resolve any dispute arising from the policy in New York State, and submit to New York State law. (Affidavit of Nolan C. Burkhouse, Esq. ("Burkhouse Aff.") at 11.)

  In March 2004, a number of animals at the NBC fell victim to an outbreak of Salmonella Newport which impacted several of NBC's barns and its neo-natal care unit. (Compl. ¶¶ 10-11, 14.) NBC's efforts to control the outbreak were unsuccessful, and Penn was forced to close the center completely from May 2004 through August 2004. (Id. ¶ 12.) In order to decontaminate the clinic, NBC sandblasted its walls, repainted, removed semi-porous materials, including mats and flooring, and undertook additional cleaning measures. (Id. ¶ 13.) Penn reported its claim to both insurers, asserting a loss to property of $3 million, less any deductible or self-insured retention, and seeking to recover cleanup costs and business interruption expense. (Id. ¶¶ 15-16.) FM assigned Steven Gioia, a Pennsylvania-based General Adjuster for the company, to assess the Penn claim. (Affidavit of Steven A. Gioia ("Gioia Aff.") ¶ 2.) Gioia traveled to the site and physically inspected the claimed damage.

  By letter to Penn on December 1, 2004, Indian Harbor stated it was prepared to cover Penn's loss in excess of that covered by the FM policy. (Compl. ¶ 17, Ex. C.) However, on February 16, 2005, FM denied Penn's claim on the grounds that Penn failed to show physical loss to property, and that the claimed loss fell under the pollution exclusion in the FM policy. (Id. ¶ 18.) FM also claimed that the Indian Harbor policy should apply before the FM policy. (Id. ¶ 18, Ex. D.)

  On March 4, 2005, Indian Harbor and Penn filed the instant suit against FM seeking declaratory judgment that the FM policy (1) provides valid and collectible insurance for Penn's loss up to $1 billion, subject to Penn's applicable deductible; (2) is sufficient to cover Penn's loss; and, (3) must be exhausted before the Indian Harbor policy applies. (Id. ¶ 19.) In the alternative, Indian Harbor maintains that coverage should be apportioned in accordance with the respective coverage limits of the FM and Indian Harbor policies. (Id. ¶ 19.) FM now petitions the Court for a transfer of venue to the Eastern District of Pennsylvania under 28 U.S.C. § 1404(a), for the convenience of parties and witnesses, and in the interest of justice. DISCUSSION

  I. Transferring Venue

  Title 28 United States Code Section 1404(a) provides that, "for 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." 28 U.S.C. 1404(a). The statute is purposed to prevent waste "`of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense.'" Generale Bank, New York Branch v. Wassel, 779 F. Supp. 310, 313 (1991) (Leisure, J.) (quoting Van Dusen v. Barrack, 376 U.S. 612, 616 (1964)).

  Defendant-movant bears the burden of establishing that plaintiffs' choice of forum is inappropriate. Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir. 1978), cert. denied, 440 U.S. 908 (1979) (citations omitted). Defendant must establish that (1) the action is one that "might have been brought" in the proposed transferee district,*fn1 28 U.S.C. § 1404(a), and (2) the transfer is appropriate given the convenience of parties and witnesses and in the interest of justice. See Royal Ins. Co. of Am. v. Tower Records, Inc., No. 02 Civ. 2612, 2002 WL 31385815, at *2 (S.D.N.Y. Oct. 22, 2002) (Leisure, J.); Lesser v. Camp Wildwood, No. 01 Civ. 4209, 2002 WL 1792039, at *2 (S.D.N.Y. Aug. 2, 2002); Reliance Ins. Co. v. Six Star, Inc., 155 F. Supp. 2d 49, 56 (S.D.N.Y. 2001). The moving party must "make a clear-cut showing that transfer is in the best interests of the litigation." Miller v. Bombardier Inc., No. 93 Civ. 0376, 1993 WL 378585, at *2 (S.D.N.Y. Sept. 23, 1993) (Leisure, J.) (citing Schieffelin & Co. v. Jack Co. of Boca, Inc., 725 F. Supp. 1314, 1321 (S.D.N.Y. 1989)); see also Factors Etc., 579 F.2d at 218. Movant must "name the witnesses who will be appearing and describe their testimony so that the court may measure the inconvenience caused by locating a lawsuit in a particular forum." Schieffelin & Co., 725 F. Supp. at 1321 (citing, inter alia, Factors, 579 F.2d at 218). "[M]otions for transfer lie within the broad discretion of the district court and are determined upon notions of convenience and fairness on a case-by-case basis." In re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992) (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988)). "A court of appeals will issue a writ of mandamus to correct a district court's disposition of a section 1404 transfer motion for a clear abuse of discretion." Warrick v. General Elec. Co., 70 F.3d 736, 740 (2d Cir. 1995).

  The Court assesses the balance of convenience and the interest of justice by weighing: (1) the convenience of witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof;*fn2 (3) the convenience of the parties;*fn3 (4) the locus of the operative facts; (5) the availability of process to compel attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum; and (9) trial efficiency and the interest of justice based on the totality of the circumstances. See Posven, C.A., 303 F. Supp. 2d at 404; Reliance Ins., 155 F. Supp. 2d at 56-57; Trehern v. OMI Corp., No. 98 Civ. 0242, 1999 WL 47303, at *2 (S.D.N.Y. Feb. 1, 1999). "There is no rigid formula for balancing these factors and no single one of them is determinative." Citigroup Inc. v. City Holding Co., 97 F. Supp. 2d 549, 561 (S.D.N.Y. 2000) (citing S & S Mach. Corp. v. Gen. Motors Corp., No. 93 Civ. 3237, 1994 ...


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