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declining to transfer venue in insurance coverage dispute
Summary of this case from American S.S. Owners Mutual Protec. Assn. v. LafargeOpinion
04 Civ. 1852 (RCC).
March 23, 2005
MEMORANDUM ORDER
Arch Speciality Insurance Company ("Plaintiff") brought this action against Entertainment Specialty Insurance Services, Inc. ("ESIS") and its chief executive officer, Robert Reber ("Reber"), (together, "Defendants") for a declaratory judgment that an insurance policy issued by Plaintiff does not provide defense or indemnity coverage for a lawsuit filed against Defendants by a third party in a Texas state court. Defendants filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction over both ESIS and Reber, and under Rule 12(b)(3) for improper venue, or in the alternative to transfer venue. Defendants also filed a motion to dismiss under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Finally, Defendants moved pursuant to Rule 12(e) for a more definite statement of the claims. For the following reasons, Defendants' motion to dismiss under 12(b)(2) as to both ESIS and Reber is DENIED; their motion to dismiss or transfer under 12(b)(3) is DENIED with leave to file a new motion; and their motions to dismiss for failure to state a claim under 12(b)(6) and for a more definite statement of the claims under 12(e) are also DENIED.
I. BACKGROUND
The following facts are taken from the Complaint, the truth of which the Court assumes to decide these motions. The Court also refers to the affidavits submitted in support of and in opposition to the motion to dismiss for lack of personal jurisdiction.
Plaintiff is an insurance company incorporated in the state of Wisconsin, with its principal place of business in the state of New York. (Compl. ¶ 3.) ESIS is a company incorporated under the laws of Texas, with its principal place of business also in Texas. (Id. ¶ 4.) Reber is an individual residing and domiciled in Texas. (Id. ¶ 5.) On September 19, 2002, Defendants submitted an application to Plaintiff for insurance coverage. (Affidavit of Betty Shepherd ("Shepherd Aff."), Ex. B.) Defendants did so through a broker, Excel Underwriters Alliance Inc. ("Excel"). (Compl. ¶ 7.) Plaintiff thereupon issued to Defendants an insurance policy ("the policy"). (Id. ¶ 44.) The policy afforded coverage for any claims made against the insured that were reported in writing to Plaintiff during the policy period running from November 1, 2002 until November 1, 2003. (Id.) Constitution Insurance Company ("CIS"), an entity that is not a party to the present action, filed an action alleging negligence against ESIS, Reber, and others during the policy period in Texas state court. (Id. ¶¶ 12, 17, 23, 41.) On March 5, 2004, Plaintiff filed the present action for a declaratory judgment. Defendants responded with the instant motions.
II. DISCUSSION
A. Personal Jurisdiction Over Defendants
Defendants argue that this Court lacks personal jurisdiction over them because they have not conducted business in the state of New York or contracted to supply goods or services here. They also contend that the exercise of personal jurisdiction by this Court does not comport with the Due Process Clause of the Fourteenth Amendment. Upon a defendant's motion to dismiss under Rule 12(b)(2), the plaintiff bears the burden of showing that the court has personal jurisdiction over the defendant. Bank Brussels Lambert v. Fiddler Gonzales Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999). In the absence of or prior to jurisdictional discovery, the court presumes the truth of the complaint's allegations, construes the complaint in its most favorable light, and resolves all doubt in favor of the plaintiff, who need make only a prima facie showing of jurisdiction based on its own pleadings and affidavits.DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001). When deciding a Rule 12(b)(2) motion, courts may "consider affidavits and documents submitted by the parties without converting the motion into one for summary judgment under Rule 56." ESI, Inc v. Coastal Corp., 61 F. Supp. 2d 35, 50 n. 54 (S.D.N.Y. 1999). A federal district court entertaining an action in diversity applies the law of the forum state in which it sits.Agency Rent A Car Sys. Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 28 (2d Cir. 1996). If the defendant is amenable to service of process under the laws of the forum state, the court must then determine whether the exercise of jurisdiction satisfies the requirements of the Due Process Clause of the Fourteenth Amendment. Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir. 1999).
Plaintiff argues that this Court has personal jurisdiction over Defendants under New York Civil Practice Law and Rules 301 and 302. The Court agrees that New York has jurisdiction over the Defendants pursuant to Rule 302.
1. Long-Arm Jurisdiction
New York courts "may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent: 1. transacts any business within the state." N.Y.C.P.L.R. 302(a)(1). The basis of the cause of action must also arise out of the transaction of business within New York. McGowan v. Smith, 419 N.E.2d 321, 322 (N.Y. 1981). A single transaction of business in the state, if done purposefully, may be sufficient to satisfy the jurisdictional requirements of Rule 302. George Reiner Co. v. Schwartz, 363 N.E.2d 551, 553 (N.Y. 1977). Moreover, it is unnecessary for a defendant to physically travel to New York in order to be subject to long-arm jurisdiction because, "particularly in this day of instant long-range communications, one can engage in extensive purposeful activity here without ever actually setting foot in the State."Parke-Bernet Galleries, Inc. v. Franklyn, 256 N.E.2d 506, 508 (N.Y. 1970).
A business transaction is "'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" See McKee Elec. Co. v. Rauland-Borg Corp., 229 N.E.2d 604, 607 (N.Y. 1967) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Courts employ a four-factor test to decide whether an out-of-state defendant has transacted business in New York. Agency Rent a Car Sys., 98 F.3d at 29. The four factors are: (1) whether the defendant has an ongoing contractual relationship with a New York corporation; (2) whether the contract was negotiated or executed in New York and whether the defendant visited New York to meet with the parties after the contract was executed; (3) whether there is a choice-of-law clause in the contract; and (4) whether the contract requires the defendant to send notices and payments into the forum state.Id. None of the four factors is dispositive, and courts may also consider other factors, ultimately basing their decision on the totality of the circumstances. Id.
Here, ESIS is a nondomiciliary that transacted business through an agent within the state of New York. The present cause of action also arises from that transaction. ESIS utilized the services of Excel, a wholesale broker, to obtain the insurance policy at issue in this case. ESIS provided Excel with the requisite information to procure the policy. On behalf of ESIS, Excel then furnished that information in an application to Plaintiff's office in New York. (Shepherd Aff. ¶ 7.) Throughout the course of the underwriting process, Excel regularly conveyed information to Plaintiff via email and facsimile. (Id. Ex. D.) Plaintiff underwrote the policy in New York, handled all matters pertaining to it in New York, and eventually issued the insurance policy from its New York office. (Id. ¶¶ 6, 10 Ex. D.) The policy required ESIS to send notices and payments to Plaintiff in New York and covered ESIS from November of 2002 to November of 2003. (Id. Ex. A.) Finally, in compliance with the policy, ESIS submitted the claim at issue in this case to Plaintiff's office in New York. (Id. ¶ 9 Ex. A.)
ESIS's activities through Excel are sufficient to confer long-arm jurisdiction over ESIS. Rule 302 requires an analysis of the realities of the relationship, not the formalities of agency law. Kreutter v. McFadden Oil Corp., 522 N.E.2d 40, 44 (N.Y. 1988). It suffices that one party engaged in purposeful activities in the forum state on the behalf of another, with the knowledge and consent of that other, subject to that other's control. Id. Courts may therefore sustain jurisdiction when some transaction is attributable to the party sought to be reached by New York's long-arm statute. Ferrante Equip. Co. v. Lasker-Goldman Corp., 258 N.E.2d 202, 205 (N.Y. 1970).
Excel's connection to ESIS satisfies these requirements. By procuring an insurance policy for ESIS from a corporation located in New York, Excel purposefully engaged in activities in New York on behalf of ESIS. ESIS provided information for the policy to Excel, which then submitted the information to Plaintiff. (Shepherd Aff. ¶ 6 Ex. D.) ESIS accordingly manifested consent to and possessed the requisite knowledge of its broker's activities in New York. Additionally, ESIS had the authority to reject the insurance quote obtained by Excel. The actions of Excel are therefore attributable to ESIS.
Defendants argue that the forum selection clause contained in the insurance contract grants them the authority to choose a court of competent jurisdiction in the event of a dispute arising from any claim under the policy. Although the clause appears to grant them that authority, it is irrelevant to the question of personal jurisdiction. A defendant has no power to immunize himself from personal jurisdiction by inserting a mandatory forum selection clause in a contract. See New Moon Shipping Co. v. MAN B W Diesel AG, 121 F.3d 24, 28 (2d Cir. 1997); O'Brien v. Okemo Mountian, Inc., 17 F. Supp. 2d 98, 102 n. 2 (D. Conn. 1998) (citing New Moon in response to a motion to dismiss for lack of personal jurisdiction for the proposition that "we have long recognized that parties have no power by private contract to oust a federal court of jurisdiction otherwise obtaining"). As discussed below, this issue is more properly considered as a matter of venue.
Defendants also argue that even if ESIS as a corporation is subject to personal jurisdiction in New York, Reber as an individual is not. They rely on Landoil Resources Corp. v. Alexander Alexander Services, Inc., 918 F.2d 1039 (2d Cir. 1990); Laufer v. Ostrow, 434 N.E.2d 692 (N.Y. 1982); andLancaster v. Colonial Motor Freight Line, Inc., 581 N.Y.S.2d 283 (App.Div. 1992). Such reliance is misplaced. Those cases concern general jurisdiction and the "doing business" test pursuant to Rule 301. When a nonresident individual engages in a systematic and continuous course of action in New York he or she is "doing business" in the state, thereby establishing "presence" for purposes of personal jurisdiction. Mantello v. Hall, 947 F. Supp. 92, 96 (S.D.N.Y. 1996). In contrast, Rule 302 pertains to specific jurisdiction. To be subject to personal jurisdiction under Rule 302, a nonresident individual does not have to be doing business in New York. Caballero Spanish Media, Inc. v. Betacom, Inc., 592 F. Supp. 1093, 1095 (S.D.N.Y. 1984). Rather, as noted above, the inquiry is whether the individual transacted any business in New York and whether the cause of action arises from that transaction.
As Plaintiff correctly points out, Defendants tacitly rely on the fiduciary shield doctrine. The doctrine protects out-of-state corporate officers from being subject to personal jurisdiction when they act in a corporate and not an individual capacity.See Kreutter, 522 N.E.2d at 43. Plaintiff also correctly points out that the New York Court of Appeals has rejected this doctrine. See id. at 46. That Defendants rely on Laufer, a New York Court of Appeals case decided six years beforeKreutter, further undermines their position. While Kreutter concerned the commission of a tortious act by a corporate officer and cases following it involved either torts, see Karabu Corp. v. Gitner, 16 F. Supp. 2d 319 (S.D.N.Y. 1998); RICO violations,see In re Sumitomo Copper Litig., 120 F. Supp. 2d 328 (S.D.N.Y. 2000); or patent infringement, see Kinetic Instruments, Inc. v. Lares, 802 F. Supp. 976 (S.D.N.Y. 1992), there is no reason to suspect that New York would retain the doctrine in cases involving contractual disputes. The court inKreutter held that "the fiduciary shield rule is not available to defeat jurisdiction under the New York long-arm statute" and did not leave room for any exceptions. See 552 N.E.2d at 47.
Although New York has rejected the fiduciary shield doctrine, it does not follow automatically that New York may exercise personal jurisdiction over all of a corporation's officers as a consequence of having jurisdiction over the corporation. See Kreutter, 522 N.E.2d at 45. If the corporate officer played a part in the activities that gave rise to the action, New York courts may exercise jurisdiction over that officer when reasonable and when it does not violate "notions of 'fair play and substantial justice.'" Id. at 46 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). New York has therefore determined that Due Process requirements sufficiently guard against the unfair exercise of personal jurisdiction under Rule 302.
Here, Plaintiff has established that Reber played a significant role in the activities that gave rise to the present action. Reber signed the application for the insurance policy. (Shepherd Aff. Ex. B.) In so signing he certified that he was the authorized representative of ESIS and that all the information contained in the application was true. (Id.) Reber also furnished to Excel the information needed to procure the insurance policy from Plaintiff. (Shepherd Aff. Ex. D.) Moreover, because New York has jurisdiction over ESIS, Reber would likely be the principal witness, would therefore likely have to travel to New York, and would thus not be inconvenienced by the exercise of personal jurisdiction over him individually. As the New York Court of Appeals reasoned in Kreutter, this does not make the exercise of personal jurisdiction inequitable. See Kreutter, 522 N.E.2d at 46.
2. Due Process Clause of the Fourteenth Amendment
Defendants argue that even if they may be subject to personal jurisdiction under Rule 302, their contacts with New York are insufficient to satisfy scrutiny under the Due Process Clause. This is a difficult argument to make successfully because, while its language is broad, it is well established that Rule 302(a) "does not extend New York's long-arm jurisdiction to the full extent permitted by the Constitution." Levisohn, Lerner, Berger Langsam v. Medical Taping Sys., Inc., 10 F. Supp. 2d 334, 339 (S.D.N.Y. 1998); Albert v. Apex Fitness, Inc., No. 97 Civ. 1151 (LAK), 1997 WL 323899, at *4 n. 3 (S.D.N.Y. June 13, 1997). Consequently, "satisfaction of the section 302(a)(1) criteria will generally meet federal due-process requirements." Kelly v. MD Buyline, Inc., 2 F. Supp. 2d 420, 431 (S.D.N.Y. 1998). Those requirements are met here.
Due process allows a state to sustain personal jurisdiction over a nonresident defendant with whom it has "certain minimum contacts . . . such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe, 326 U.S. at 316 (internal quotations omitted). Courts must also decide whether the corporation purposefully availed itself of the privilege of doing business in the forum state and whether it could foresee being haled into court there. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
The Supreme Court essentially characterized the standard as one of reasonableness and provided the following factors that courts must consider: (1) the burden imposed on the defendant by the exercise of jurisdiction, (2) the interests of the forum state in adjudicating the case, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy, and (5) the shared interest of the states in furthering substantive social policies. Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 113 (1987); see also Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir. 1995).
The exercise of jurisdiction by this Court sitting in New York will impose a burden upon Defendants, both hailing from Texas. Not only would Defendants and their witnesses have to travel here, but Defendants may also have to produce voluminous records presently located in Texas. This burden is, however, eased by the "conveniences of modern communication and transportation."Metro. Life Ins. Co., 84 F.3d at 574. By itself this factor is insufficient to render unreasonable the exercise of personal jurisdiction. Id. The Supreme Court has stated that, to reach constitutional magnitude, the inconvenience of travel must be "substantial." Burger King Corp., 471 U.S. at 484. The burden imposed by travel in this case does not amount to a substantial one.
New York "has an undoubted interest in regulating an insurance contract negotiated, executed, and administered in New York by a New York company." National Union Fire Ins. Co. of Pitts. v. BP Amoco P.L.C., 319 F. Supp.2d 352, 366 (S.D.N.Y. 2004). Plaintiff's principal place of business is New York, where the policy at issue in this case was executed and where it was administered. (Affidavit of Linda Soughan ("Soughan Aff.") ¶¶ 5, 6.) Indeed, Plaintiff receives virtually all claims concerning insurance coverage here in New York where it maintains both its underwriting department and principal administrative office. (Id.) Adjudication in New York would thus provide convenient and effective relief for Plaintiff.
Moreover, adjudication in New York would be efficient and promote the interest of the interstate judicial system. "In evaluating this factor, courts generally consider where witnesses and evidence are likely to be located." Metro. Life Ins. Co., 84 F.3d at 574. Although both Reber and possibly many records are located in Texas, all personnel involved in underwriting and administering the policy, along with all underwriting and claims material, are located in New York. (Soughan Aff. ¶¶ 5, 6, 12.) Thus, while travel and inconvenience inevitably stem from adjudicating the case in either New York or Texas, greater inconvenience and inefficiency would result from requiring Plaintiff to send its employees and records to Texas.
Finally, neither party advances an argument concerning the common interests of the several states in promoting substantive social policies. As it is not clear that this case involves any such substantive policy, this factor does not affect the reasonableness of exercising personal jurisdiction over Defendants.
Although the first factor favors Defendants, the second, third, and fourth favor Plaintiff. As the foregoing reveals, exercising jurisdiction over ESIS and Reber would not violate traditional notions of fair play and substantial justice. Defendants could have reasonably foreseen being haled into court in New York when they retained the services of a broker to procure an insurance policy from a company working out of a New York office.
For the foregoing reasons, Defendants' motion to dismiss under Rule 12(b)(2) for lack of personal jurisdiction is denied. Plaintiff has carried its burden and established a prima facie case that this Court has personal jurisdiction over Defendants.
B. Motion to Dismiss for Improper Venue or to Transfer
Defendants also move to dismiss for improper venue or, in the alternative, to transfer venue to the Northern District of Texas, Dallas Division or the Eastern District of Texas, Sherman Division.
1. Motion to Dismiss
Upon a motion to dismiss under Rule 12(b)(3), the plaintiff has the burden of showing venue is proper. U.S. Envtl. Prot. Agency v. Port Auth. of N.Y. N.J., 162 F. Supp. 2d 173, 183 (S.D.N.Y. 2001). In considering the motion, courts must presume the truth of the facts alleged in the complaint and draw all reasonable inferences in favor of the plaintiff. Cent. Nat'l-Gottesman, Inc. v. M.V. "GERTRUDE OLENDORF", 204 F. Supp. 2d 675, 677 (S.D.N.Y. 2002). Courts may consider materials outside of the complaint in determining whether venue is proper. U.S. Envtl. Prot. Agency, 162 F. Supp. 2d at 183. If venue is improper, courts have the discretion to dismiss the action or transfer the case to any district where it could have been brought. Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993).
Venue is proper in a judicial district in which a "substantial" portion of the events giving rise to the claim occurred. 28 U.S.C. § 1391(a)(2). Venue may be proper in more than one district. Bates v. C S Adjuster, Inc., 980 F.2d 865, 867 (2d Cir. 1992). A district may even be a proper venue when a more substantial portion of the events occurred in another district.Neufeld v. Neufeld, 910 F. Supp. 977, 986 (S.D.N.Y. 1996).
Here, Plaintiff has met its burden and established that venue is proper in the Southern District of New York. A substantial portion of the events occurred here. As detailed above, Defendants obtained the insurance policy through an agent from Plaintiff's New York office. Negotiation of the insurance contract involved the receipt of numerous emails and facsimiles in New York. (Shepherd Aff. ¶ 7.) Plaintiff executed the agreement in New York and issued the policy from New York. (Id. ¶¶ 6, 10 Ex. D.) Finally, ESIS submitted its claim for coverage to Plaintiff's New York office. (Soughan Aff. ¶ 9 Ex. A.)
Citing no authority in support of their position, Defendants counter with the fact that the lawsuit for which they sought coverage was filed in Texas. They also contend that the law of Texas will apply in this case. Plaintiff responds by citingConstitution Reinsurance Co. v. Stonewall Insurance Co., 872 F. Supp. 1247 (S.D.N.Y. 1995). This case is on point. There, the court explained that "§ 1391(a)(2) may be satisfied by a communication transmitted to or from the district in which the cause of action was filed, given a sufficient relationship between the communication and the cause of action." Id. at 1249 (internal quotations omitted). The court found the Southern District of New York to be a proper venue because "telephone calls and facsimile transmissions" were received in New York and the decision to deny insurance coverage was made in New York.Id. at 1250. By the same reasoning, the Southern District of New York is a proper venue in the instant case. Perhaps venue is also proper in Texas because of the lawsuit filed there against Defendants and the fact that the law of Texas might apply in this case, but that possibility does not make venue improper in New York. The action before this Court is ultimately one for a declaratory judgment concerning an insurance policy that was issued from the state of New York and is therefore sufficiently related to communications received in New York.
2. Motion to Transfer
Upon a motion to transfer under Rule 12(b)(3), the moving party bears the burden of showing transfer is appropriate. Linzer v. EMI Blackwood Music, Inc., 904 F. Supp. 207, 216 (S.D.N.Y. 1995). The burden is a heavy one. In considering motions to transfer, courts may exercise "broad discretion" based on "notions of convenience and fairness." In re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992). Courts should disturb plaintiff's choice of forum "rarely," doing so only when the defendant clearly establishes an "oppressiveness and vexation" that is "out of all proportion to the plaintiff's convenience."Guidi v. Inter-Cont'l Hotels Corp., 224 F.3d 142, 146 (2d Cir. 2000) (quoting Koster v. Lumbermen's Mut. Cas. Co., 330 U.S. 518, 524 (1947)).
Defendants have not carried their burden. A motion to transfer should include an affidavit containing detailed factual statements supporting the transfer. Berman v. Informix Corp., 30 F. Supp. 2d 653, 656 (S.D.N.Y. 1998). Although they seek transfer of venue in the "interest of justice" under 28 U.S.C. § 1406(a), Defendants have not offered any evidence of inconvenience other than that they are located or reside in Texas. This falls far short of citing facts that establish oppressiveness and vexation. Plaintiff's choice of forum should not be disturbed merely because of the inconvenience of travel to Defendants or because this lawsuit could have been brought in Texas.
For the foregoing reasons, Defendants' motion to dismiss for improper venue or to transfer venue under Rule 12(b)(3) is denied. Plaintiff has established that the Southern District of New York is a proper venue, while Defendants have not established that transfer of venue is appropriate.
C. The Effect of the Forum Selection Clause
In their reply brief, Defendants for the first time cite a purportedly mandatory forum selection clause in the insurance contract and argue that its existence challenges the propriety of venue in the Southern District of New York. The clause requires Plaintiff to "submit to the jurisdiction of any Court of Competent Jurisdiction" at Defendants' request. (Shepherd Aff. Ex. A.) The Second Circuit has suggested that district courts may not decline to hear an issue solely because it was raised for the first time in a reply brief. See Booking v. Gen. Star Mgmt. Co., 254 F.3d 414, 418 (2d Cir. 2001). Nonetheless, Defendants have not explained the legal consequences of Plaintiff's noncompliance with the clause and Plaintiff has not had the opportunity to address the clause at all. In particular, Defendants have not specified whether Plaintiff's disregard of the forum selection clause warrants transfer to the Northern or Eastern District of Texas. The Court will therefore grant Defendants leave to file a new motion based upon the forum selection clause, namely, whether it warrants transfer of venue. The issue pertains to transfer of venue and not whether venue is proper because 28 U.S.C. § 1391 does not contain 'forum selection clauses' as a factor courts consider in determining the propriety of venue. GMAC Commercial Credit, LLC v. Dillard Dep't Stores, Inc., 198 F.R.D. 402, 405 (S.D.N.Y. 2001).
Before the filing of the new motion, the Court provides some direction on the issue since "there is no easy answer to the enforcement procedure question because there is no existing mechanism with which forum selection enforcement is a perfect fit." Lurie v. Norwegian Cruise Lines, Ltd., 305 F. Supp. 2d. 352, 356 (S.D.N.Y. 2004). As a preliminary matter, forum selection clauses "are prima facie valid and should be enforced,"M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972), unless "it clearly can be shown that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." Karl Koch Erecting Co. v. N.Y. Convention Ctr. Dev. Corp., 838 F.2d 656, 659 (2d Cir. 1988) (internal quotations omitted).
Although the party seeking transfer normally bears the burden of showing transfer is appropriate, Linzer, 904 F. Supp. at 216, the presence of a forum selection clause shifts the burden to the "plaintiff to demonstrate exceptional facts explaining why he should be relieved from his contractual duty." Weiss v. Columbia Pictures Television, Inc., 801 F.Supp. 1276, 1278 (S.D.N.Y. 1992). In this case, the motion to transfer will be assessed under 28 U.S.C. § 1404 and not 28 U.S.C. § 1406, because § 1406 applies only when venue is improper, Saferstein v. Paul, Mardinly, Durham, James, Flandreau Rodger, P.C., 927 F. Supp. 731, 737 (S.D.N.Y. 1996), even though both sections "employ the same 'interest of justice' analysis." ZPC 2000, Inc., v. SCA Group, Inc., 86 F.Supp. 2d 274, 279 n. 8 (S.D.N.Y. 2000). Thus, to determine whether the forum selection clause requires transfer to the Eastern or Northern District of Texas, this Court must apply the "factors specified in section 1404(a): the interests of the parties to the litigation and the public interest, as reflected in the public policy of the forum where the suit is pending." Weiss, 801 F. Supp. at 1278.
With these considerations in mind, Defendants have leave to serve on Plaintiff a motion to transfer venue based on the forum selection clause on or before April 25, 2005. Plaintiff's opposition shall be due May 25, 2005, and Defendants may serve a reply and file the motion on or before June 1, 2005.
D. Motion to Dismiss for Failure to State a Claim
In considering a motion to dismiss for failure to state a claim under Rule 12(b)(6), courts must assume the truth of the factual allegations contained in the complaint, construe the pleadings in a light most favorable to the non-moving party, and draw all reasonable inferences in that party's favor. Sheppard v. Beerman, 18 F.3d 147, 150 (2d Cir. 1994). Dismissal is appropriate only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Connelly v. Gibson, 355 U.S. 41, 45-46 (1957). The court must ordinarily confine itself to the facts contained in the complaint, documents attached to the complaint as exhibits and documents incorporated by reference. Dangler v. N.Y. City Off Track Betting Corp., 193 F.3d 130, 138 (2d Cir. 1999). In limited circumstances, however, the court may consult other materials because they are both integral to the plaintiff's claim and the plaintiff had notice of them. Schnall v. Marine Midland Bank, 225 F.3d 263, 266 (2d Cir. 2000). Moreover, courts routinely take judicial notice of documents filed in other courts, not for their truth or accuracy, but to establish the fact of litigation. Ackoff-Ortega v. Windswept Pacific Entm't Co., 130 F. Supp. 2d 440, 444 (S.D.N.Y. 2000).
The complaint is sufficient to withstand a motion to dismiss for failure to state a claim. Defendants argue that Plaintiff has moved on a pleading that is no longer "live." Their argument is predicated on the status of a petition in the suit CIS brought against them in Texas. When Plaintiff filed the instant action on March 5, 2004, it sought a declaratory judgment based on the third amended petition of the Texas lawsuit. The third amended petition contained claims by CIS against both ESIS and Reber for negligence in their role as fiduciaries in allegedly transferring funds negligently or negligently allowing them to be transferred. (Affidavit of Jonathan Harwood, Ex. E. ¶¶ 63-74.) The third amended petition alleged that ESIS was to hold the funds in trust on behalf of CIS and that these funds have not been remitted to CIS. (Id.) Defendants maintain that the filing by CIS of a fourth amended petition on February 25, 2004 supercedes the third amended petition and renders it of no legal effect. Thus, they filed this motion to dismiss for failure to state a claim because they assert that Plaintiff has moved on a "dead pleading." They also contend that leave to amend the complaint is improper because the fourth amended petition drops Reber as a defendant, thereby making this an entirely different lawsuit based upon entirely different grounds and entirely different pleadings.
Plaintiff responds that, to the contrary, the fourth amended petition is virtually identical to the third. Upon examination by the Court, the two petitions are indeed substantially the same, with the only difference being that all references to Reber have been removed from the fourth amended petition. The underlying claims of negligence or gross negligence remain, founded on the same set of facts, save that ESIS is the sole party allegedly liable. No other facts have been added or deleted. ESIS and CIS maintain the same alleged fiduciary relationship and CIS prays for the same relief. The fourth amended petition thus in no way alters the subject matter of the present action.
The Court takes judicial notice of the fourth amended petition, which was attached to Defendants' motion to dismiss, because it is integral to Plaintiff's claim and Plaintiff had notice thereof. Indeed, with respect to this motion, the fourth amended petition is for all practical purposes the same as the third amended petition. Being substantially the same, it is as integral to Plaintiff's claim as the third amended petition. Moreover, Plaintiff in essence had notice of the fourth amended petition, with no information being added to the third and only references to Reber being removed. Moreover, Reber might still seek coverage for defense costs he incurred before he was dropped from the suit and the underlying issue remains as to whether the insurance policy provides defense or indemnity coverage for the Texas lawsuit filed against ESIS.
For the above reasons, Defendants motion to dismiss for failure to state a claim is denied. It does not appear beyond doubt that Plaintiff could prove a set of facts sufficient to entitle it to relief.
E. Motion for a More Definite Statement
Defendants lastly contend that the facts provided by Plaintiff are too vague and ambiguous for this Court to rule on their motions to dismiss for lack of personal jurisdiction and improper venue. A motion under Rule 12(e) is properly brought when a pleading is "so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading." Fed.R.Civ.P. 12(e). "The motion shall point out the defects complained of and the details desired." Id. Defendants merely assert that the Plaintiff's complaint is vague and ambiguous as to the facts supporting jurisdiction and venue. As the discussion above demonstrates, Plaintiff set forth facts with sufficient specificity for Defendants to respond and for this Court to rule. Defendants' motion for a more definite statement is therefore denied.
III. CONCLUSION
For the foregoing reasons, Defendants' motions to dismiss for lack of personal jurisdiction, for improper venue, for failure to state a claim, and for a more definite statement are all DENIED. Their motion to transfer venue is also DENIED with leave to file a new motion based upon the issue raised by the forum selection clause. That motion shall be served on or before April 25, 2005. Plaintiff's opposition shall be due May 25, 2005, and Defendants may serve a reply and file the motion on or before June 1, 2005.