Opinion
Case No. 3:01 CV 7058
May 10, 2001
Michael M. Briley, Shumaker, Loop Kendrick, Toledo, OH, representing pty Travelers Casualty and Surety Company.
Nancy Eisner, Cadwalader, Wickersham Taft, New York, NY, representing pty Philadelphia Reinsurance Corp.
Michael P. Graney, Simpson Thacher Bartlett, Columbus, OH, representing pty Travelers Casualty and Surety Company.
Kevin D. Lewis, Simpson Thacher Bartlett, New York, NY, representing pty Travelers Casualty and Surety Company.
Pamela B. Reichlin, Simpson Thacher Bartlett, New York, NY, representing pty Travelers Casualty and Surety Company.
Theodore M Rowen, Spengler Nathanson P.L.L., Toledo, OH, representing pty Philadelphia Reinsurance Corp.
Joan C Szuberla, Spengler Nathanson P.L.L., Toledo, OH, representing pty Philadelphia Reinsurance Corp.
Mary Kay Vyskocil, Simpson Thacher Bartlett, New York, NY, representing pty Travelers Casualty and Surety Company.
ORDER
In this action, based on reinsurance certificates, plaintiff Travelers Casualty and Surety Company ("Travelers") alleges that defendant Philadelphia Reinsurance Corporation ("defendant") is obligated to reimburse Travelers for funds paid to Owens Corning Fiberglass ("OCF"). Jurisdiction arises pursuant to 28 U.S.C. § 1332. Pending is defendant's motion to transfer venue to the District of Connecticut pursuant to 28 U.S.C. § 1404(a). (Doc. 8). For the following reasons, the motion is granted.
BACKGROUND
Pursuant to reinsurance certificates, defendant agreed to reinsure Travelers' predecessor, The Aetna Casualty and Surety Company ("Aetna"), for certain losses Aetna, and now Travelers, paid under insurance policies issued to OCF.
Travelers is a Connecticut corporation with its principal place of business in Hartford, Connecticut. Defendant is a Pennsylvania corporation with its principal place of business in Philadelphia, Pennsylvania. OCF is headquartered in Toledo, Ohio. Two of the reinsurance certificates were negotiated on Travelers' behalf by reinsurance broker Herbert Clough Inc. ("Clough"), located in Connecticut, and the third by Guy Carpenter Company ("Carpenter"), also located in Connecticut.
Defendant's representatives discussed the reinsurance certificates with Travelers' employees in Connecticut. No representative of defendant has traveled to Ohio or communicated with anyone in Ohio in connection with the disputes in this action.
Defendant's records pertaining to the reinsurance certificates are all located at its Pennsylvania office. Defendant alleges that most of Travelers' records concerning the reinsurance certificates are located at its Connecticut offices.
Starting in the 1970s, OCF was named as a defendant in numerous lawsuits by persons alleging bodily injury from exposure to asbestos-containing products that OCF had distributed and sold in Ohio and other states. In April 1993, OCF sued Travelers in Ohio state court seeking a declaration that Travelers was obligated to cover certain asbestos-related personal injury claims.
The Ohio state court proceeding was stayed in favor of an alternative dispute resolution ("ADR") proceeding under the Wellington Agreement. This Agreement is a comprehensive settlement agreement between thirty-five former asbestos manufacturers and sixteen of their insurers. The Agreement gave an entity, the Asbestos Claim Facility, exclusive authority and discretion to administer, evaluate, settle, pay and defend asbestos-related claims asserted against the participating manufacturers.
Travelers provided notice of the claims settled under the 1995 settlement to defendant and thereafter submitted numerous billings under the reinsurance certificates for payments made by Travelers to OCF under the 1995 settlement. Travelers argues that defendant has wrongfully refused to pay the amounts owed under the reinsurance certificates.
On February 5, 2001, Travelers filed suit in this court seeking reimbursement under the reinsurance certificates. According to Travelers, this court is the more appropriate forum because OCF, the subject of the parties' reinsurance contracts, or the "risk", is located in Toledo.
On February 12, 2001, defendant filed suit against Travelers in the District Court of Connecticut for a determination of the parties' rights under the reinsurance certificates. Philadelphia Reinsurance Corp. v. Travelers Property and Cas. Co., 301 CV 224. Based on the general rule that the court in which the first action is filed should resolve the dispute, I issued an order directing Travelers to withdraw or move to stay consideration of the case filed in the Connecticut court. (Doc. 22). See Daimler Chrysler Corp. v. General Motors Corp., ___ F. Supp.2d ___ ___, 2001 WL 243376 (N.D.Ohio., Mar. 05, 2001).
ANALYSIS
Defendant moves for transfer of venue under 28 U.S.C. § 1404 (a), which states: "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."
Courts consider similar factors under § 1404(a) for transfer as those in forum non conveniens motions; however, transfers under § 1404(a) are granted "upon a lesser showing of inconvenience." Sky Tech. Partners, LLC v. Midwest Research Institute, 125 F. Supp.2d 286, 291 (S.D.Ohio 2000) (citing Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955)). Such factors include: (1) convenience of the parties; (2) convenience of the witnesses; (3) the interests of justice; and (4) whether the civil action might have been brought in the district to which the movant requests a transfer. Central States, Southeast Southwest Areas Health Welfare Fund v. Guarantee Trust Life Ins. Co., 8 F. Supp.2d 1008, 1010-11 (N.D.Ohio. 1998) (citing Roberts Metals, Inc. v. Florida Properties Mkt. Group, Inc., 138 F.R.D. 89, 91-92 (N.D.Ohio. 1991)).
The moving party has the burden of demonstrating that the case should be transferred. Gulf Oil v. Gilbert, 330 U.S. 501, 508-09 (1947). The movant must demonstrate factors that weigh "strongly in favor of transfer." Picker Int'l, Inc. v. Travelers Indem. Co., 35 F. Supp.2d 570, 573 (N.D.Ohio. 1998) (citing Bacik v. Peek, 888 F. Supp. 1405, 1414 (N.D.Ohio. 1993)); see also Jeffrey Mining Prods. v. Left Fork Mining Co., 992 F. Supp. 937, 938 (N.D.Ohio. 1997) ("the balance of all relevant factors must weigh `strongly in favor of transfer.' ").
Convenience of the Parties
Connecticut is the more convenient forum based on the location of the parties. Travelers is a Connecticut corporation with its principal place of business in Hartford, Connecticut. Defendant, located in Pennsylvania, is more than 500 miles from Toledo, and only about 200 miles from Hartford. Additionally, the reinsurance certificates were negotiated and executed by reinsurance brokers located in Connecticut. Based on the location of the parties, defendant has demonstrated a hardship involving potential witnesses and relevant documents, all of which are located in Connecticut and Pennsylvania.
Travelers argues that, because defendant agreed to reinsure Travelers for losses paid under insurance policies issued to OCF, located in Toledo, this jurisdiction has a substantial connection to the cause of action between Travelers and defendant. I disagree.
The location of the insured is immaterial to the determination of a reinsurance dispute. The reinsurance certificates between Travelers and defendant are separate contracts, independent from the insurance contract between Travelers and OCF. In Stickel v. Excess Ins. Co. of America, 136 Ohio St. 49, 55 (1939), the Supreme Court of Ohio clarified the relationship between the reinsurance contract and the original insurance contract: "The reinsurance is absolutely foreign to the original assured, with whom the reinsurer contracts no sort of obligation." (internal citations omitted). The court noted that the original insured party was not part of the reinsurance contract, had nothing to do with its formation and had no contractual relationship with the reinsurer. As such, privity between the original insured and the reinsurance company was "entirely absent." Id.
The original assured, OCF, is only tangentially related to the terms and obligations of the contracts between Travelers and defendant. OCF's location, therefore, is much less important than such direct connections between Connecticut and Travelers as the presence in that state of its headquarters, the primary witnesses, and pertinent documents. See also Travelers Indem. Co. v. Scor Reins. Co., 62 F.3d 74, 76 (2d Cir. 1995) ("The reinsurer has no privity with, and is generally not liable to, the original purchaser of the underlying policy."); Syndicate 420 at Lloyd's London v. Early Am. Ins. Co., 796 F.2d 821, 831-2 (5th Cir. 1986) (granting forum non conveniens motion despite the fact that the underlying risk for the reinsurance contract was located in the jurisdiction and noting that the presence of the risk did not make the action a "local controversy").
Travelers cites Travelers Casualty and Surety Co. v. Excess Ins. Co. Limited, Case No. 2:99-CV-389 (S.D.Ohio 1999) as support for the proposition that the case should remain in this jurisdiction. In that case, Travelers sued Excess Insurance for money allegedly owed under similar reinsurance contracts. Travelers argued that Ohio was the proper jurisdiction, because OCF, the insured, was located in Toledo. Although the Southern District denied Excess' motion to transfer venue, the facts are distinguishable from the present case. Excess's principal place of business was Worthing, England, and it sought to change venue from Ohio to the District Court of New York. The Southern District noted that the cause of action had no relationship to New York. Without any connection to New York, the court reasoned that OCF's Ohio location provided a reason to retain jurisdiction. The decision is not applicable to the present case, because defendant seeks to move the action to Connecticut, where one party is located and several important contacts exist.
Citing ALTA Analytics Inc. v. Muuss, 75 F. Supp.2d 773, 782 (S.D.Ohio 1999), Travelers also argues that, because defendant has engaged in business in Ohio, defendant should be required to submit to suit in this jurisdiction. In ALTA, the defendant was in charge of soliciting an account in Ohio, was required to remain in constant contact with several departments of plaintiff's business located in Ohio, and the defendant's breach of contract allegedly resulted in injury to an Ohio corporation. The contacts in that case were far more substantial than defendant's contacts in the present action.
Finally, Travelers argues that, as the plaintiff, its selection of forum is entitled to deference. When, however, the chosen forum is not the plaintiff's residence, the "choice is given less consideration."Central States, 8 F. Supp.2d at 1010-1011. Because Travelers is located in Connecticut, its choice of forum in Ohio is less influential.
Convenience of the Witnesses
The majority of potential witnesses in this action are located in Connecticut. All of Travelers' personnel with whom defendant communicated disputes and other negotiations for the reinsurance certificates are located in Connecticut. The reinsurance brokers, Clough and Guy, who may be called as nonparty witnesses, are located in Connecticut. Defendant also alleges that none of its witnesses is in Ohio. Many of defendant's witnesses are located in Pennsylvania and thus are closer to Hartford than Toledo.
Travelers also argues that OCF employees, who may be called as third-party witnesses, are located in Ohio. In Travelers, the Southern District relied on the presence of OCF employees to justify jurisdiction in Ohio. In that case, however, the contacts in Ohio were more substantial (though still attenuated) than the parties contacts with the Southern District of New York, which were nonexistent.
Finally, Travelers argues that defendant wrongfully failed to identify specific witnesses inconvenienced by an Ohio forum. This argument is without merit.
In Dowling v. Richardson-Merrell, Inc., 727 F.2d 608 (6th Cir. 1984), the Sixth Circuit held that a moving party is not required to specifically provide the names of witnesses to be used in an action to establish inconvenience. Instead, the party must "provid[e] enough information to enable the trial court to balance the parties' interests."Id. at 615. Defendant has met this burden by demonstrating that the location of parties, documents and witnesses favors a transfer to Connecticut.
Interests of Justice
Travelers argues that the interests of justice demand that this suit remain in this forum based on the following Ohio contacts: 1) OCF, the insured risk, is located in Ohio; 2) many of the underlying asbestos liabilities arose in Ohio; 3) OCF sued Travelers in Ohio state court seeking a determination of Travelers' obligations under the insurance policies it issued to OCF; 4) Travelers' claims against defendant stem from a settlement agreement resolving that Ohio litigation and the subsequent ADR proceeding; and 5) defendant is licensed to conduct business in Ohio. I conclude that these contacts are not sufficient to keep the action in this forum.
First, as mentioned above, the location of the insured is separate and independent from the terms and obligations of a reinsurance dispute. Similarly, the location of the underlying dispute and liability between the insured and insurer is not important for reinsurance obligations under separate and independent contracts. Next, Travelers points to the underlying litigation between OCF and Travelers in Ohio state court. This dispute was resolved out of the Ohio state court by alternative dispute resolution, and more importantly, does not bear directly on the reinsurance contract between Travelers and defendant. Finally, although defendant may be licensed to conduct business in Ohio, Travelers has not provided any instances of defendant's business contacts with Ohio, except for its tenuous contact with OCF as Travelers' insured.
Based on the location of the parties and witnesses, defendant has demonstrated that Connecticut is the more appropriate forum.
Action Can Be Brought In Connecticut
It must be possible to bring this suit in the District Court of Connecticut to warrant transfer. An action "might have been brought" in a transferee court if: 1) the court has jurisdiction over the subject matter of the action; 2) venue is proper there; and 3) personal jurisdiction is proper over defendant in the transferee court.Continental Grain Co. v. Barge 364 U.S. 19, 80 (1960). Travelers could properly bring this action in the District Court of Connecticut.
The District Court of Connecticut has jurisdiction based on diversity between Travelers and defendant, thus giving that court subject matter jurisdiction.
Next, venue is proper "if a substantial part of the events or omissions giving rise to the claim occurred" in the judicial district. 28 U.S.C. § 1391(a). Travelers and the reinsurance brokers are both located in Connecticut. In addition, the reinsurance contracts were negotiated in that jurisdiction. Therefore, significant events occurred in Connecticut, satisfying the venue requirements.
Finally, the District Court of Connecticut could properly exercise personal jurisdiction over defendant. Defendant has transacted business in Connecticut by forming the reinsurance contracts with a Connecticut company. Conn. Gen. Stat. § 33-929(e). By entering into the reinsurance contracts, defendant could also anticipate being hailed into court in Connecticut, thus satisfying federal due process requirements for personal jurisdiction.
Conclusion
Accordingly, it is hereby ORDERED THAT
1. Defendant's motion to transfer venue (Doc. 8), based on 28 U.S.C. § 1404(a), be, and the same hereby is, granted.
So ordered.