Opinion
Docket No. 00-CV-0892E(Sc)
February 5, 2001
Michael A. Brady, Esq., c/o Hagerty Brady, Buffalo, NY, F. Warren Jacoby, Esq., c/o Cozen and O'Connor, Philadelphia, PA, For Plaintiff.
Robert B. Conklin, Esq., James P. Milbrand, Esq., Jeffrey C. Stravino, Esq., c/o Hodgson, Russ, Andrews, Woods Goodyear, Buffalo, NY, James D. Robenalt, Esq., Melissa M. Eckhause, Esq., c/o Thompson Hine Flory, Cleveland, OH, For the Defendant.
MEMORANDUM and ORDER
Plaintiff Praxair, Inc. filed suit against defendant Morrison Knudsen Corporation ("Morrison"), raising four causes of action — viz., (1) breach of contract, (2) negligent misrepresentation, (3) innocent misrepresentation and (4) breach of an implied covenant of good faith and fair dealing, all arising out of a construction project in Michigan. Plaintiff is incorporated in Delaware and has its principal place of business in Connecticut. Defendant is incorporated in Ohio and has its principal place of business in Idaho. This Court has jurisdiction over this case pursuant to diversity jurisdiction, 28 U.S.C. § 1332, because the parties are citizens of different states and the amount in controversy exceeds $75,000. Presently before this Court is defendant's motion to transfer venue to the Eastern District of Michigan.
Morrison Knudsen Corporation changed its name to Washington Group International, Inc. September 15, 2000. Leguay November 6, 2000 Aff. ¶ 1.
In May 1998, in response to a Praxair request for proposals, Morrison submitted a Proposal for Engineering Relationship ("the Proposal") to Praxair. Poli Aff. ¶ 4; Compl. ¶ 7, Ex. A. In response to the Proposal and after negotiations, Praxair and Morrison as of March 1, 1999 entered into the Master Construction Contract Cost Plus a Percentage Fee with Incentives ("the Master Contract") which was to govern the general relationship between the parties, but with a separate release to be executed for each individual project. Compl. ¶¶ 20-22, Ex. B. The Master Contract stated that "[t]his Contract sets forth the entire Contract between Owner [Praxair] and Contractor [Morrison] with respect to the subject matter of this Contract and supersedes all prior negotiations and dealings between the Parties, including but not limited to letters of intent, pertaining to the subject matter of this Contract." Compl. Ex B. (Master Contract § 40(2)). The contract is governed by Michigan law. Id. at Art. XII. On April 26, 1999, pursuant to the Master Contract, the parties entered into release No. 815F1580P for the construction of an oxygen plant and argon refinery at Praxair's Ecorse, Michigan facility ("the Ecorse Project"). Compl. ¶ 22, Ex. C. The Ecorse Project was expected to achieve mechanical completion in eight months and the total cost was estimated at $9,106,945. Compl. ¶¶ 25, 29, Ex. C. at 2. The Ecorse Project actually took twelve months to complete and the total cost was $19,576,000. Compl. ¶¶ 30-31.
Plaintiff states that the delay in completion and the increased cost of the Ecorse Project were attributable to the defendant's "mismanagement of the Project as evidenced by the high turnover in Defendant's site personnel", "failure to establish and maintain a system for continuous improvement", "lack of or inadequate procurement plan, worker supervision, operations policy, change control procedures, and construction management systems", and "failure to manage the construction of the Project in a professional manner." Compl. ¶¶ 32-36. Plaintiff states that, due to the delay in competing the Ecorse Project, it lost approximately $5,000,000 in anticipated income from the facility. Compl. ¶ 38. Praxair ceased paying Morrison in January 2000 as a result of which Morrison filed a construction lien against the Ecorse, facility May 11, 2000. Leguay November 6, 2000 Aff. ¶ 5. Praxair filed this action October 17, 2000. Morrison filed an action to foreclose its lien in the Circuit Court for Wayne County, Michigan October 20, 2000. Leguay November 6, 2000 Aff. ¶ 16. Praxair removed the state court action to the Eastern District of Michigan after Morrison had moved to transfer the instant action to the Eastern District of Michigan. Pl.'s Mem. of Law at 2. Morrison filed its answer to this action November 7, 2000 wherein it made a counterclaim for $6,021,706 plus interest which it states Praxair still owes it for the Ecorse Project. Morrison Answer ¶¶ 13, 17, 21. In its answer Morrison states:
"Praxair changed the scope of the work, failed to provide timely and accurate information, including buildable drawings and specifications, failed to timely order and ensure the delivery to the site [of] the equipment required to be provided by the owner, failed to provide full and unobstructed site access, including proper security, failed to provide foundation work in a timely fashion, provided defective foundation work, failed to provide proper and timely field engineering, required excessive filed modifications and issued excessive field engineering notices, failed to equitably adjust the schedule and the contract target cost and construction contract budget." Morrison Answer ¶ 15.
Change of venue is governed by 28 U.S.C. § 1404 (a) which states that "[f]or the convenience of the 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." This provision is designed to "prevent the waste of time, energy, and money and to protect litigants, witnesses, and the public against unnecessary inconvenience and expense." Van Dusen v. Barrack, 376 U.S. 612, 616 (1964). The first issue to be resolved is whether the case could have been brought in the district to which transfer is sought and the second is the "convenience of the parties and witnesses" and the "interest justice." Hernandez v. Graebel Van Lines, 761 F. Supp. 983, 987 (E.D.N.Y. 1991). It is undisputed by the parties and this Court finds that this action could have originally been brought in the Eastern District of Michigan.
Internal Citations and quotations omitted.
"In determining whether a transfer is warranted for `the convenience of the parties and witnesses' and in `the interest of justice,' courts generally consider the following factors: (1) the convenience of the witnesses; (2) the location of relevant documents and relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of the operative facts; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) the forum's familiarity with the governing law; (8) the weight accorded to the plaintiff's choice of forum; and (9) trial efficiency and the interest of justice, based on the totality of the circumstances." Lencco Racing Co., Inc. v. Arctco, Inc., 953 F. Supp. 69, 71 (W.D.N.Y. 1997).
No one factor is determinative; rather the court, pursuant to its discretion, equitably balances the above factors in ruling upon a motion to change venue. Citigroup, Inc. v. City Holding Company, 97 F. Supp.2d 549, 561 (S.D.N Y 2000). The party requesting a change of venue has the burden of convincing the court by clear and convincing evidence that the above factors weigh strongly in favor of transfer. Pellegrino v. Straton Corporation, 679 F. Supp. 1164, 1166 (N.D.N.Y. 1988).
This Court will address each of these factors in turn based on the information in the affidavits submitted by the parties. Plaintiff has submitted affidavits from Nigel Shelton, Jack Noyes and Michael Poli. Shelton, who resides in Ontario, Canada is a Senior Project Manager. Shelton December 6, 2000 Aff. ¶¶ 1, 6, 11. Noyes, who resides in the Town of Amherst, N.Y. was the original Project Manager for the Ecorse Project. Noyes Aff. ¶¶ 2-3. who vaguely states that he resides "in or around Tonawanda, New York" is a Contracts Manager. Poli Aff. ¶¶ 1, 3. Defendant has submitted affidavits from Mark Griebe, John Drake and John J. Leguay all of whom reside in Ohio. Griebe is the Director of Business Development and Sales and was involved in the negotiations with Praxair over the Master Contract and the Ecorse Project. Griebe Aff. at ¶¶ 1-2. Drake is an Estimating Manager who was responsible for developing the "Contract Target Cost and Construction Contract Budget" for the Ecorse Project. Drake Aff. ¶¶ 1-2. Leguay is a Senior Projects Manager and was responsible for overseeing the management of the Ecorse Project. Leguay November 6, 2000 Aff. at ¶¶ 1, 3.
The first factor to be considered in a motion to transfer venue is the convenience of the witnesses, the most important aspect of which is the convenience of non-party witnesses. Aquatic Amusement Associates, Ltd. v. Walt Disney World Co., 734 F. Supp. 54, 57 (N.D.N.Y. 1990). A motion to transfer venue for the convenience of the witnesses, must specify the key witnesses and contain a general statement of their testimony. Pellegrino, at 1166-1167. Plaintiff has identified as possible witnesses numerous current employees in addition to Shelton, Noyes and Poli all of whom work in its Tonawanda office; however it has not given a general statement of the expected testimony of any of these additional employees. Noyes Aff. ¶ 9; Shelton December 6, 2000 Aff. ¶ 4; Shelton January 5, 2001 Aff. ¶¶ 10, 13. Plaintiff has also identified the following former employees as possible witnesses: Carol Streczywilk, Jerry Chenowith, Tom DeMayo, Dan Hall and Tom Berryman; however it again has failed to give a general statement of their expected testimony. Noyes Aff. ¶ 9; Shelton December 6, 2000 Aff. ¶ 4. While Berryman resides in Las Vegas, Nev., he is currently employed by a subsidiary of Praxair. Shelton January 5, 2001 Aff. ¶ 12.
Defendant has identified as possible witnesses current employees William Jones and Brett Williams who were involved in negotiations for the contracts. Leguay November 6, 2000 Aff. ¶ 13. Defendant has also identified as possible witnesses its former employees, Mary Gretka, Dan Deihl, Treca Pente, Brad Hammon and Randy Williams each of whom it believes resides in Michigan although it has not given a general statement of their expected testimony. Id. at ¶ 10. Defendant has also identified Daryle Olsen, its former "clerk of the works" for the Ecorse Project, who resides in Michigan and who would testify regarding the personnel and accounts related to that project. Id. at ¶ 11. Finally and most importantly, defendant has identified numerous non-party witnesses all of whom reside in Michigan. Defendant specifically names seventeen foremen of the various types of construction workers involved in the Ecorse Project and eight subcontractors. Leguay December 12, 2000 Aff. ¶¶ 4-5. These individuals are expected to testify regarding the conditions during the construction project and that the delay and cost overrun were due to plaintiff not to defendant. Id. at ¶¶ 2-7. Defendant states that all of the above individuals participated in weekly planning meetings and provided the information used during the nine monthly progress review meetings between the senior management of plaintiff and defendant. Id. at ¶¶ 6-7.
The second factor to be considered is the location of relevant documents and the relative ease of access to sources of proof. Plaintiff states that, after the Ecorse Project had been completed, it transferred all documents and records concerning the project to its Tonawanda office. Shelton December 7, 2000 Aff. ¶ 14. Morrison's documents and records are located in Cleveland, Ohio. Leguay November 6, 2000 Aff. ¶ 14. The construction site is located in Ecorse.
The third factor is the convenience of the parties. Neither the Western District of New York nor the Eastern District of Michigan would be more convenient to Morrison because its office involved in this dispute, its employees and documents are all located in Ohio. It would be more convenient to Praxair to litigate this case in the Western District of New York, because its employees involved in the Ecorse Project are located in its Tonawanda office as are the documents relating thereto.
The fourth factor is the locus of the operative facts. "The core determination under § 1404(a) is the center of gravity of the litigation ***." Viacom International, Inc. v. Melvin Simon Productions, Inc., 774 F. Supp. 858, 868 (S.D.N.Y. 1991). The main cause of action raised in the complaint is breach of contract arising from the defendant's alleged mismanagement of the construction project in Ecorse. All of the operative facts relevant to the breach of contract claim occurred in Ecorse. In addition, plaintiff raises a claim for $5,000,000 in lost income from customers who are located within 35 miles of the Ecorse plant. Leguay December 12, 2000 Aff. ¶ 8, Ex. A (Praxair September 28, 2000 News Release). While the complaint also contains causes of action premised on both negligent and innocent misrepresentation, such claims relate to the preliminary proposals and negotiations relating to the Master Contract which are not particularly relevant inasmuch as the Master Contract states that "[t]his Contract sets forth the entire Contract between Owner [Praxair] and Contractor [Morrison] with respect to the subject matter of this Contract and supersedes all prior negotiations and dealings between the Parties, including but not limited to letters of intent, pertaining to the subject matter this Contract." Compl. Ex B. General Promise, § 40(2). In addition defendant states that plaintiff never even accepted the Proposal upon which plaintiff relies so heavily. Griebe Aff. ¶ 5. While Praxair understandably places heavy reliance on the Proposal submitted by Morrison and the negotiations leading up to the Master Contract, this Court finds such factors to be clearly outweighed in light of both the integration clause and the fact that the construction and the alleged mismanagement thereof occurred in Michigan.
The fifth factor is the availability of process to compel the attendance of unwilling witnesses. The availability of process to compel the attendance of unwilling witnesses is an important consideration — Arrow Electronics, Inc. Ducommun, Inc., 724 F. Supp. 264, 266 (S.D.N.Y. 1989) —; however it is "generally relevant only with respect to third-party witnesses, since employees of the parties will as a practical matter be available in any venue by virtue of the employment relationship." Citigroup, at 561. This Court is unable to compel the attendance of the non-party witnesses most of whom are located in Michigan, whereas the United States District Court for the Eastern District of Michigan can do so. In contrast, the parties can compel their current employees to attend the necessary proceedings and former employees are more likely to willingly attend than are non-party witnesses.
The sixth factor is the relative means of the parties. This factor is mainly relevant when an individual is suing a large corporation. Hernandez, at 989. Both parties are large, public corporations listed on the New York Stock Exchange. Accordingly the relative means of the parties are relatively equal and not particularly pertinent for purposes of choice of venue.
The seventh factor is the forum's familiarity with the governing law. It is preferable that a diversity case be tried in a "forum that is at home with the state law that must govern the case." Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 509 (1947). The Master Contract states that each project undertaken pursuant thereto will be governed by the law of the forum where the construction site is located. The construction site was in Michigan and Michigan law therefore governs this case. The Eastern District of Michigan would accordingly be familiar with Michigan law whereas this Court is not.
The eighth factor is the weight accorded to the plaintiff's choice of forum. While a plaintiff's choice of forum is generally entitled to considerable weight, that weight is lessened when the plaintiff's choice of forum has little connection to the operative facts of the case. Totonelly v. Cardiology Assoc. of Corpus Christi, 932 F. Supp. 621, 623 (S.D.N.Y. 1996); Nieves v. American Airlines, 700 F. Supp. 769, 772 (S.D.N.Y. 1988). Although plaintiff prefers to litigate this case in the Western District of New York, this District has little connection to the operative facts of this case.
The ninth and last factor is trial efficiency and the interest of justice, based on the totality of the circumstances. The prior-pending-action rule states that, when two competing lawsuits are filed, the first will generally have priority. Gibbs Hill, Inc. v. Harbert International, Inc., 745 F. Supp. 993, 996 (S.D.N Y 1990). This rule is rendered inapplicable, however, when one party merely "wins the race to the courthouse" or when the competing suits are filed within days of each other. Ibid. Morrison filed a construction lien on Praxair's Ecorse facility May 11, 2000 and filed a lawsuit, Washington Group, International, Inc. v. Praxair, Inc. and Union Carbide Corp., in the Circuit Court for the County of Wayne, Mich. October 20, 2000 which Praxair removed to the Eastern District of Michigan after Morrison had moved to transfer venue in this case. Given the fact that Morrison was the first to commence legal action by filing a lien, and that Morrison filed its complaint only three days after Praxair, the prior-pending-action rule is inapplicable to this case. Gibbs, at 996. "Transfer is particularly appropriate where there is a pending lawsuit in the transferee district involving the same facts, transactions, or occurrences." Nieves, at 773. The calendar conditions of the competing districts is also a relevant factor to consider. Pellegrino, at 1167. According to the 1998 Federal Court Management Statistics of the Administrative Office of the United States, it takes approximately 32 months from the time the complaint is filed for a civil case to go to trial in the Western District of New York as opposed to only 20 months in the Eastern District of Michigan. Therefore transferring this case to the Eastern District of Michigan would not only allow this case to be consolidated there with Washington Group, International, Inc. v. Praxair, Inc. and Union Carbide Corp. but the case would be likely to go to trial a full year quicker than if it remained in this District.
After evaluating the above factors in light of the facts gleaned from the affidavits submitted, this Court finds that defendant has clearly shown that the "convenience of the parties and witnesses" and the "interest of justice" strongly favor transferring this case to the Eastern District of Michigan. Other than current and former employees of the parties, none of the prospective witnesses resides in New York. In contrast, the vast majority of non-party witnesses reside in Michigan. Defendant has identified and intends to call numerous witnesses employed by the various subcontractors involved in the Ecorse Project to testify concerning the conditions of the facility while the construction was taking place in order to refute Praxair's allegations of mismanagement. Furthermore, it cannot be considered a serious hardship for Praxair to litigate this case in the Eastern District of Michigan because it has a facility in Ecorse to which its Tonawanda employees traveled during the project. "Courts routinely transfer cases when the principal events occurred, and the principal witnesses are located, in another district." Viacom, at 868. Therefore this Court will grant the motion to transfer venue.
Accordingly it is hereby ORDERED that defendant's motion to transfer venue is granted, that this case shall be transferred to the Eastern District of Michigan and that this case shall be closed in this Court.