London Market Insurers Including Certain Underwriters at Lloyds of London v. Musket Corporation

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.January 31, 2017

DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829990v1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 GREENBERG TRAURIG, LLP Robert J. Herrington (SBN 234417) Email: HerringtonR@gtlaw.com 1840 Century Park East, Suite 1900 Los Angeles, CA 90067 TEL: 310-586-7700; FAX: 310-586-7800 GREENBERG TRAURIG, LLP Peter S. Wahby (admitted pro hac vice) Email: wahbyp@gtlaw.com; Peter K. Lacina (admitted pro hac vice) Email: lacinap@gtlaw.com 2200 Ross Avenue, Suite 5200 Dallas, TX 75201 TEL: 214-665-3600; FAX: 214-665-3601 Attorneys for Defendant Musket Corporation UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA London Market Insurers Including Certain Underwriters at Lloyd’s of London, Plaintiffs, v. Musket Corporation, Defendant. CASE NO. 2:16-cv-05726 SVW (JPRx) DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT [Memorandum of Points and Authorities and Proposed Order filed concurrently herewith] Date: Apr. 10, 2017 Time: 1:30 p.m. Courtroom: 10A, 350 W. 1st Street Los Angeles, CA 90012 Judge: Hon. Stephen V. Wilson Case 2:16-cv-05726-SVW-JPR Document 33 Filed 01/31/17 Page 1 of 3 Page ID #:269 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT Page 1 DAL 79829990v1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO PLAINTIFFS LONDON MARKET INSURERS INCLUDING CERTAIN UNDERWRITERS AT LLOYD’S OF LONDON AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE THAT on April 10, 2017 at 1:30 p.m. or as soon thereafter this matter may be heard in Courtroom 10A of the United States District Court for the Central District of California, 350 W. 1st Street, Los Angeles, CA 90012, the Honorable Stephen V. Wilson presiding, Defendant Musket Corporation (“Musket”) will and hereby does move to dismiss Plaintiffs London Market Insurers Including Certain Underwriters at Lloyd’s of London’s (collectively, “Underwriters” or “Plaintiffs”) First Amended Complaint for Breach of Contract and Declaratory Relief (“Amended Complaint”). In addition to the original Plaintiffs who issued an insurance policy and two-subsequent renewals (the “Lloyd’s-led Policies”), the Amended Complaint adds Plaintiffs subscribing to three additional insurance policies (the “Company-led Policies”). Musket moves to dismiss the lawsuit brought by the Plaintiffs added through the Amended Complaint, the so-called subscribers to the three Company-led Policies, under the doctrine of forum non conveniens. Musket further moves to dismiss the lawsuit pursuant to Federal Rule of Civil Procedure 12(b)(3) on the grounds that venue is not proper in this Court as Underwriters’ claims are based on events with no significant ties to the Central District of California. Alternatively, Musket will move to transfer this action to the United States District Court for the Southern District of Texas, or alternatively, the Western District of Oklahoma, pursuant to 28 U.S.C. § 1404(a). Musket moves to dismiss the breach of contract claim brought by the Plaintiffs subscribing to the Lloyd’s-led Policies for failure to state a claim pursuant to Federal Rules of Civil Procedure 12(b)(6). This Motion will be based on this Notice of Motion, the attached Memorandum of Points and Authorities and the Declaration of Jon P. Fjeld-Hansen, as well as the pleadings on file herein, arguments of counsel, if any, and upon such other and further matters adduced at a hearing or of which the Court takes judicial notice. Case 2:16-cv-05726-SVW-JPR Document 33 Filed 01/31/17 Page 2 of 3 Page ID #:270 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT Page 2 DAL 79829990v1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 This motion is made following the conference of counsel pursuant to L.R. 7-3 which took place on January 10, 2017. By so moving, Musket does not waive its objections to personal jurisdiction. DATED: January 31, 2017 GREENBERG TRAURIG, LLP By /s/ Peter S. Wahby Peter S. Wahby Attorney for Defendant Musket Corporation Case 2:16-cv-05726-SVW-JPR Document 33 Filed 01/31/17 Page 3 of 3 Page ID #:271 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT 2:16-cv-05726 DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 GREENBERG TRAURIG, LLP Robert J. Herrington (SBN 234417) Email: HerringtonR@gtlaw.com 1840 Century Park East, Suite 1900 Los Angeles, CA 90067 TEL: 310-586-7700; FAX: 310-586-7800 GREENBERG TRAURIG, LLP Peter S. Wahby (admitted pro hac vice) Email: wahbyp@gtlaw.com; Peter K. Lacina (admitted pro hac vice) Email: lacinap@gtlaw.com 2200 Ross Avenue, Suite 5200 Dallas, TX 75201 TEL: 214-665-3600; FAX: 214-665-3601 Attorneys for Defendant Musket Corporation UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA London Market Insurers Including Certain Underwriters at Lloyd’s of London, Plaintiffs, v. Musket Corporation, Defendant. CASE NO. 2:16-cv-05726 SVW (JPRx) MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT [Filed concurrently with Declaration of Jon P. Fjeld-Hansen] Date: Apr. 10, 2017 Time: 1:30 p.m. Courtroom: 10A, 350 W. 1st Street Los Angeles, CA 90012 Judge: Hon. Stephen V. Wilson Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 1 of 33 Page ID #:272 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page i MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS I. INTRODUCTION ..................................................................................................... 1 II. FACTUAL BACKGROUND .................................................................................... 2 III. ARGUMENT ............................................................................................................. 3 A. The Actions on the Company-led Policies Should Be Dismissed on the Basis of Forum Non Conveniens. .............................................................. 3 1. The Forum-Selection Clause Requires Suit In Oklahoma State Courts. ................................................................................................... 3 2. Dismissal Pursuant to Forum Non Conveniens Is Warranted. ............. 5 B. The Action Should Be Dismissed For Improper Venue. ................................ 7 1. Venue Is Improper In This District. ...................................................... 7 a. Venue Is Not Proper on the Grounds That Alleged Events and Omissions Giving Rise to the Claim Occurred in this District. ............................................................ 8 b. Plaintiffs Do Not Show That Musket Resides in the Central District, and Musket Does Not Reside in this District. ..................................................................................... 11 2. The Court Should Not Apply Admiralty Jurisdiction In This Case. .................................................................................................... 13 C. Alternatively, the Action Should Be Transferred to Another Venue. ........... 15 1. This Action “might have been brought” in the Western District of Oklahoma or the Southern District of Texas. ................................. 16 2. The Convenience of the Parties, the Convenience of the Witnesses, and the Interests of Justice Support Transfer. .................. 16 a. The Convenience of the Witnesses and the Parties Strongly Favors a Transfer. ...................................................... 17 b. The Location Where the Agreement Was Negotiated and Executed Is Less Meaningful Than the Other Factors. ............ 19 c. The State That Is Most Familiar With the Governing Law. .......................................................................................... 20 d. Underwriters’ Choice of Forum Is Entitled to No Deference. ................................................................................. 20 Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 2 of 33 Page ID #:273 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page ii MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 e. The Parties’ and the Causes of Actions’ Contacts With the Chosen Forum Favors a Transfer. ...................................... 21 f. Transfer Enhances the Availability of Compulsory Process to Compel Attendance of Unwilling Non-Party Witnesses. ................................................................................. 21 g. The Cost of Litigation Favors a Transfer. ................................ 21 h. The Ease of Access to Evidence Favors a Transfer. ................ 22 D. The Breach of Contract Claim Should be Dismissed For Failure to State a Claim. ................................................................................................ 22 1. Legal Standard. ................................................................................... 23 2. Underwriters Failed to State a Claim Based On Uberrimae Fidei. ................................................................................................... 23 IV. CONCLUSION ........................................................................................................ 25 Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 3 of 33 Page ID #:274 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page iii MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Allstar Marketing Group, LLC v. Your Store Online, LLC, 666 F. Supp. 2d 1109 (C.D. Cal. 2009) .......................................................................... 7 Alltrade. Inc., v. Uniweld Products, Inc., 946 F.2d 622 (9th Cir. 1991) ........................................................................................ 20 Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110 (C.D. Cal. 2015) .......................................................................... 20 Aqua-Marine Constructors, Inc. v. Banks, 110 F.3d 663 (9th Cir. 1997) ........................................................................................ 14 Argueta v. Banco Mexicano, S.A., 87 F.3d 320 (9th Cir. 1996) ........................................................................................ 4, 5 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ...................................................................................................... 23 Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for W.Dist. of Tex., 134 S.Ct. 568 (2013) ......................................................................................... 3, 5, 6, 20 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................................................................... 23 Boston Telecomms. Grp., Inc. v. Wood, 588 F.3d 1201 (9th Cir. 2009) ........................................................................................ 5 Brewer Envtl. Indus., LLC v. Matson Terminals, Inc., No. CIV. 10-00221 LEK-KS, 2011 WL 1637323 (D. Haw. Apr. 28, 2011) ............................................................................................................................. 15 Bridgemans Svcs. Ltd. v. George Hancock, Inc., No. C14-1714JLR, 2015 WL 4724567 (W.D. Wash. Aug. 7, 2015) ............................ 5 Carolina Cas. Co. v. Data Broad. Corp., 158 F. Supp. 2d 1044 (N.D. Cal. 2001) .................................................................. 10, 20 Commercial Lighting Products, Inc. v. U.S. Dist. Ct., 537 F.2d 1078 (9th Cir. 1976) ........................................................................................ 9 The Continental Cas. Co. v. Scully, No. 09-CV-1970 W(NLS), 2010 WL 2736078 (S.D. Cal. July 12, 2010) ............. 23, 24 Cottman Transmission Systems, Inc. v. Martino, 36 F.3d 291 (3rd Cir. 1994) ............................................................................................ 9 Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 4 of 33 Page ID #:275 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page iv MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Daimler AG v. Bauman, 134 S. Ct. 746 (2014) .................................................................................................... 11 Doe 1 v. AOL LLC, 552 F.3d 1077 (9th Cir. 2009) ........................................................................................ 4 DVI, Inc. v. Superior Court, 104 Cal. App. 4th 1080 (2002) ..................................................................................... 12 E. & J. Gallo Winery v. F. & P. S.p.A., 899 F. Supp. 465 (N.D. Cal. 1994) ............................................................................... 20 E&J Gallo Winery v. Andina Licores S.A., 440 F. Supp. 2d 1115 (E.D. Cal. 2006) .......................................................................... 5 Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153 (10th Cir. 2010) ...................................................................................... 8 Firstar Bank v. Faul, 253 F.3d 982 (7th Cir. 2001) .......................................................................................... 7 Frankel v. Board of Dental Examiners, 46 Cal. App. 4th 534 (Cal. Ct. App. 1996) ................................................................... 25 Goodyear Tire & Rubber Co. v. McDonnell Douglas Corp., 820 F. Supp. 503 (C.D. Cal. 1992) ............................................................................... 16 Gray Line Tours v. Reynolds Electrical & Engineering Co., 193 Cal. App. 3d 190 (1987) ........................................................................................ 12 Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353 (2nd Cir. 2005) ......................................................................................... 9 Guz v. Bechtel Nat'l, Inc., 24 Cal. 4th 317 (2000) .................................................................................................. 25 Hoover Grp. v. Custom Metalcraft, Inc., 84 F.3d 1408 (Fed. Cir. 1996) ........................................................................................ 7 Italian Colors Rest. v. Am. Express Co., No. C 03-3719, 2003 WL 22682482 (N.D. Cal. Nov. 10, 2003) ................................ 21 Jenkins Brick Co. v. Bremer, 321 F.3d 1366 (11th Cir. 2003) ................................................................................ 8, 10 Jones v. GNC Franchising, Inc., 211 F.3d 495 (9th Cir. 2000) .................................................................................. 16, 17 Kalmbach, Inc. v. Ins. Co. of the State of Penn., 529 F.2d 552 (9th Cir. 1976) ........................................................................................ 14 Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 5 of 33 Page ID #:276 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page v MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Koken v. Stateco Inc., No. C 05-03007 JF, 2006 WL 2918050 (N.D. Cal. Oct. 11, 2006) ............................... 5 Kransco v. American Empire Surplus Lines Ins. Co., 23 Cal. 4th 390 (2000) ............................................................................................ 24, 25 La Reunion Francaise SA v. Barnes, 247 F.3d 1022 (9th Cir. 2001) ...................................................................................... 14 Lennar Mare Island, LLC v. Steadfast Insurance Company, 139 F. Supp. 3d 1141, 1161 (E.D. Cal. 2015) .............................................................. 24 Lockman Found. v. Evangelical Alliance Mission, 930 F.2d 764 (9th Cir. 1991) .......................................................................................... 6 Lou v. Belzberg, 834 F.2d 730 (9th Cir. 1987) ........................................................................................ 20 Lueck v. Sundstrand Corp., 236 F.3d 1137 (9th Cir. 2001) .............................................................................. 5, 6, 20 M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) ............................................................................................................ 4 Martin v. D-Wave Sys. Inc., No. C-09-03602 RMW, 2009 WL 4572742 (N.D. Cal. Dec. 1, 2009) ........................ 13 Martinez v. Aero Caribbean, 764 F.3d 1062 (9th Cir. 2014) ...................................................................................... 11 McAdam v. State Nat. Ins. Co., 28 F. Supp. 3d 1110, 1123 (S.D. Cal. 2014) .......................................................... 23, 24 Metz v. U.S. Life Ins. Co., 674 F. Supp. 2d 1141 (C.D. Cal. 2009) .................................................................. 17, 19 Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133 (9th Cir. 2004) .................................................................................... 4, 5 Myers v. Bennett Law Offices, 238 F.3d 1068 (9th Cir. 2001) ...................................................................................... 10 Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (2004) .................................................................................................. 14, 15 Overhill Farms Inc. v. W. Liberty Foods LLC, No. CV 14-03533-RSWL, 2014 WL 4180920 (C.D. Cal. Aug. 21, 2014) .................. 12 Picot v. Weston, 780 F.3d 1206 (9th Cir. 2015) ...................................................................................... 11 Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 6 of 33 Page ID #:277 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page vi MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252 (1981) ................................................................................ 6 Premiere Radio Networks, Inc. v. Hillshire Brands Co., No. CV 12-10199 CAS, 2013 WL 5944051 (C.D. Cal. Nov. 4, 2013) ......................... 4 Ranza v. Nike, Inc., 793 F.3d 1059 (9th Cir. 2015) ...................................................................................... 11 Sentry Select Ins. Co. v. Royal Ins. Co. of Am., 481 F.3d 1208 (9th Cir. 2007) ...................................................................................... 15 Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988) .......................................................................................................... 6 Those Certain Underwriters at Lloyd's of London v. Eugene Horton, LLC, No. C11-2111RSM, 2012 WL 1642208 (W.D. Wash. May 10, 2012) ........................ 14 Uffner v. LaReunion Francaise, S.A., 244 F.3d 38 (1st Cir. 2001) ............................................................................................. 9 Van Dusen v. Barrack, 376 U.S. 612 (1964) ...................................................................................................... 15 Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1 (1995) ...................................................................................................... 25 Washington Intern. Ins. Co. v Mellone, 773 F. Supp. 189 (C.D. Cal. 1990) ......................................................................... 23, 24 Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310 (1955) ...................................................................................................... 14 Zurich Am. Ins. v. Guam Indus. Servs., No. C 11-01874 MEJ, 2011 WL 3809804 (N.D. Cal. Aug. 29, 2011) ........................ 19 Statutes 28 U.S.C. § 1333(1) ............................................................................................................ 13 28 U.S.C. § 1390(B) ............................................................................................................ 15 28 U.S.C. § 1391(A) .............................................................................................................. 7 28 U.S.C. § 1391(B) .............................................................................................. 7, 8, 13, 16 28 U.S.C. § 1391(B)(2) ............................................................................................... 7, 8, 11 28 U.S.C. § 1391(C)(2) ....................................................................................................... 11 28 U.S.C. § 1391(D) ...................................................................................................... 11, 13 28 U.S.C. §§ 1404-07 ......................................................................................................... 15 Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 7 of 33 Page ID #:278 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page vii MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28 U.S.C. §1404(A) .................................................................................................. 1, 15, 16 28 U.S.C. § 1406(A) ........................................................................................................ 7, 13 28 U.S.C. § 2201 ................................................................................................................. 20 28 U.S.C. § 2202 ................................................................................................................. 20 Rules FED. R. CIV. P. 8(a)(2) ........................................................................................................ 23 FED. R. CIV. P. 12(b)(3) .................................................................................................... 1, 7 FED. R. CIV. P. 12(b)(6) ............................................................................................ 2, 22, 23 FED. R. CIV. P. 45 ............................................................................................................... 21 Other Authorities Schwarzer, Tashima and Wagstaffe, Cal. Prac. Guide: Fed. Civ. Pro. Before Trial ................................................................................................................................. 8 Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 8 of 33 Page ID #:279 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 1 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION Defendant Musket Corporation (“Musket”) moves to dismiss Plaintiffs London Market Insurers Including Certain Underwriters at Lloyd’s of London’s (collectively, “Underwriters” or “Plaintiffs”) First Amended Complaint for Breach of Contract and Declaratory Relief (“Amended Complaint”). In addition to the original Plaintiffs who issued an insurance policy and two-subsequent renewals (the “Lloyd’s-led Policies”), the Amended Complaint adds Plaintiffs subscribing to three additional insurance policies (the “Company-led Policies”). The subscribers to the Company-led Policies join in the declaratory judgment action initially included in the Complaint for Declaratory Relief (the “Original Complaint”). The Amended Complaint further adds a claim for breach of contract on the Lloyd’s-led Policies. Musket moves to dismiss the lawsuit brought by the Plaintiffs added through the Amended Complaint, the so-called subscribers to the three Company-led Policies, under the doctrine of forum non conveniens. The Company-led Policies include a forum- selection clause requiring suit in Oklahoma state courts. This action should also be dismissed under Federal Rule of Civil Procedure 12(b)(3) for improper venue as the material events giving rise to the coverage questions did not occur in the Central District of California. Musket is not a citizen of California or a resident of this District, and all events related to the damage or loss to Musket’s rolling stock occurred outside of this District. The issue of improper venue should not be based on federal maritime law as its application is inappropriate for this case. If any cause of action is not ultimately dismissed for improper venue or other grounds, this action should be transferred pursuant to 28 U.S.C. §1404(a) to the more appropriate jurisdiction of the Southern District of Texas or, alternatively, the Western District of Oklahoma. Musket is an Oklahoma corporation with its principal place of business in Houston, Texas. Importantly, the key activities related to the railcars occurred in Texas and Oklahoma, and thus the vast majority of witnesses are in or near these two states. Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 9 of 33 Page ID #:280 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 2 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Additionally, Musket moves to dismiss the breach of contract claim brought by the Plaintiffs subscribing to the Lloyd’s-led Policies for failure to state a claim pursuant to Federal Rules of Civil Procedure 12(b)(6). The extra-contractual basis of breach, utmost good faith, does not allow for Underwriters’ breach claim based on the facts asserted. II. FACTUAL BACKGROUND Underwriters assert that Musket operates a fleet of leased rolling stock (i.e., tankcars or “railcars”) which it uses to transport crude oil to various locations in the United States. (See Am. Compl. ¶ 18.) During the process of returning certain railcars at the end of the railcars’ respective lease terms, inspections revealed corrosion in certain railcars that carried crude oil. Musket initiated a claim to Underwriters under several insurance policies covering these railcars (the “Claim”), identified by Underwriters as (1) the Company-led Policies consisting of policy numbers B105807PYOM0579, B0576CN7743 and B080187743M09 that Underwriters made a basis of the Amended Complaint’s request for declaratory relief; and (2) the Lloyd’s-led Policies consisting of 11RU15013 and two renewals, that Underwriters made the basis of a breach of contract claim in addition to the aforementioned request for declaratory relief (collectively with the Company-led Policies, the “Policies”). (See Am. Compl. ¶¶ 21-23.) Underwriters initiated suit in the Central District of California, but Musket does not own any real estate in the District. (See Fjeld-Hansen Decl. ¶ 5, attached hereto as Exhibit 1) Musket did not send its railcars into the Central District of California. (See id. ¶ 5.) The only bases alleged by Underwriters to connect Musket with this District is that Musket, through a broker, reached out to Underwriters’ facility in the District to procure “several of the marine cargo policies at issue in this dispute,” and also that several insurance policies “were executed, issued and delivered to the Insured” in this District. (See Am. Compl. ¶¶ 9, 11.) Moreover, the Company-led Policies include a forum- selection clause requiring suit in Oklahoma state courts. (See Am. Compl., Ex. A p. 28; excerpt of Company-led Policy bearing number B105807PYOM0579 at Exhibit 1-1.) The vast majority of activities related to Musket’s Claim and this lawsuit occurred Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 10 of 33 Page ID #:281 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 3 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 in Texas and Oklahoma, and if not in one of these states, then in nearby states. Musket is an Oklahoma corporation with its primary place of business in Texas, but with substantial activities in Oklahoma City, including coordination of rail activities. (See Fjeld-Hansen Decl. ¶¶ 6-7.) Site visits and inspections by the insurers’ representatives occurred in: Hugo, Oklahoma; Saginaw, Texas; El Dorado, Kansas; Gordon, Georgia; and one railcar in Orange, Texas. (See Fjeld-Hansen Decl. ¶ 12; see also Orig. Compl. ¶ 15.) Musket’s primary contacts for three of its four principal railcar lessors are located in Texas. (See Fjeld-Hansen Decl. ¶ 11.) The locations where Musket’s railcars have been cleaned, maintained, inspected, and/or repaired include numerous shops in Texas and Oklahoma. (See id. ¶ 10.) Significant repair-related work on the interior of the railcars was conducted in Texas and Oklahoma. (See id. ¶ 10.) Nonetheless, in order to avoid a more suitable jurisdiction, despite the forum-selection clauses and the lack of witnesses, documents or activities in California, Underwriters initiated suit in California III. ARGUMENT A. The Actions on the Company-led Policies Should Be Dismissed on the Basis of Forum Non Conveniens. The lawsuit brought by the subscribers to the Company-led Policies should be dismissed under the doctrine of forum non conveniens. The three Company-led Policies added to this lawsuit with the Amended Complaint each contain a forum-selection clause calling for exclusive jurisdiction in Oklahoma state courts. As applicable here, the United States Supreme Court instructed that “the appropriate way to enforce a forum- selection clause pointing to a state or foreign forum is through the doctrine of forum non conveniens.” Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court for W.Dist. of Tex., 134 S.Ct. 568, 580 (2013) (emphasis added). Dismissal is warranted because the Company- led policies each include a forum-selection clause, an adequate alternative forum exists, and public interest factors weigh in favor of dismissal. 1. The Forum-Selection Clause Requires Suit In Oklahoma State Courts. The Company-led Policies contain forum-selection clauses mandating that any Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 11 of 33 Page ID #:282 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 4 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 lawsuits be pursued in Oklahoma state court. Two of these Company-led policies include language that “. . . each party agrees to submit to the exclusive jurisdiction of the Courts of Oklahoma State, U.S.A. . . .” (Am. Compl., Ex. A p. 28 (emphasis added)) and the third policy, in a section titled “Choice of Law & Jurisdiction,” requires that “. . . any dispute concerning the interpretation of this policy shall be governed by the Law and Jurisdiction of U.S.A. - Oklahoma State” (see Exhibit 1-1 (emphasis added)). The Ninth Circuit interpreted a forum-selection clause very similar to those in the Company- led Policies to require a state-court forum. See Doe 1 v. AOL LLC, 552 F.3d 1077, 1081- 82 (9th Cir. 2009). The Ninth Circuit in AOL LLC reasoned that, in the clause “[y]ou expressly agree that exclusive jurisdiction for any claim or dispute . . . resides in the courts of Virginia,” the “courts ‘of’ Virginia refers to courts proceeding from, with their origin in, Virginia-i.e., the state courts of Virginia.” AOL LLC, 552 F.3d at 1082 (emphasis added). “Federal district courts, in contrast, proceed from, and find their origin in, the federal government.” Id. The third policy, with its requirement for the jurisdiction of “Oklahoma State,” just as clearly calls for Oklahoma state courts. As such, the Company-led Policies each require suit in Oklahoma state courts. The forum selection clauses in the Company-led Policies are valid and enforceable. Forum selection clauses are presumptively valid. Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1140 (9th Cir. 2004). “[T]he party seeking to avoid a forum selection clause bears a ‘heavy burden’ to establish a ground upon which we will conclude the clause is unenforceable.” AOL LLC, 552 F.3d at 1083 (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 17 (1972)). Forum-selection clauses should be honored “absent some compelling and countervailing reason.” Murphy, 362 F.3d at 1140 (quoting M/S Bremen, 407 U.S. at 12). Any such departures from presumed validity are “construed narrowly.” Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996).1 Here, the 1 The Ninth Circuit identified three reasons that would permit a court to disregard a forum selection clause. See Premiere Radio Networks, Inc. v. Hillshire Brands Co., No. CV 12-10199 CAS (PJWx), 2013 WL 5944051, at *2 (C.D. Cal. Nov. 4, 2013) (citing Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 12 of 33 Page ID #:283 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 5 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 straightforward forum-selection clauses are valid and enforceable. 2. Dismissal Pursuant to Forum Non Conveniens Is Warranted. In order to enforce a forum selection clause and dismiss a case on grounds of forum non conveniens, a court must examine: “(1) whether an adequate alternative forum exists, and (2) whether the balance of private and public interest factors favors dismissal.” Lueck v. Sundstrand Corp., 236 F.3d 1137, 1142-43 (9th Cir. 2001). “[A]s the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted.” Atl. Marine Const. Co., 134 S.Ct. at 581. The plaintiff’s choice of forum “merits no weight.” Id. Moreover, when transfer is sought under a valid forum-selection clause, a court “should not consider arguments about the parties’ private interests,” but rather “must deem the private-interest factors to weigh entirely in favor of the preselected forum.” Id. at 581- 82.2 To meet its burden, a plaintiff must therefore demonstrate that the public interest Murphy, 362 F.3d at 1140). These reasons are: (1) its incorporation into the contract was the result of fraud, undue influence, or overweening bargaining power; (2) the selected forum is so inconvenient that the complaining party will be practically deprived of its day in court; or (3) enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought. See Bridgemans Svcs. Ltd. v. George Hancock, Inc., No. C14-1714JLR, 2015 WL 4724567, at *2 (W.D. Wash. Aug. 7, 2015) (citing Murphy, 362 at 1140 and Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996)). None of these situations apply, including because Underwriters do not show any significant inconvenience within the Oklahoma courts, and, further, Underwriters could not point to strong public policy of this forum protecting them. Instead, public policy “strongly favors the enforcement of forum selection clauses.” Koken v. Stateco Inc., No. C 05-03007 JF, 2006 WL 2918050, at *8 (N.D. Cal. Oct. 11, 2006) (citing Argueta, 87 F.3d at 325); accord, e.g., E&J Gallo Winery v. Andina Licores S.A., 440 F. Supp. 2d 1115, 1126 (E.D. Cal. 2006) (“[B]oth Supreme Court and Ninth Circuit cases clearly establish that strong public policy supports the enforcement of forum selection clauses.”). 2 Even if the private interest factors were considered, the balance falls in favor of dismissal. As described below under the venue-related arguments, Oklahoma is more appropriate than California under factors including: the residence of the parties and the witnesses, the forum’s convenience to the litigants, access to evidence, and the cost of bringing witnesses to trial. See Boston Telecomms. Grp., Inc. v. Wood, 588 F.3d 1201, 1206-07 (9th Cir. 2009) (identifying private interest factors). Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 13 of 33 Page ID #:284 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 6 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 factors “overwhelmingly disfavor a transfer.” Id. at 583. Public interest factors “will rarely defeat a transfer [or forum non conveniens] motion” and only under “extraordinary circumstances” should a court decline to enforce a valid forum selection clause. Id. at 581-82; see also Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30-31 (1988) (cases overruling a forum-selection clause “will not be common”). First, to demonstrate that an alternative forum does not exist, Underwriters must show that “the remedy provided by the alternative forum . . . is so clearly inadequate or unsatisfactory, that it is no remedy at all.” Lueck, 236 F.3d at 1143 (quoting Lockman Found. v. Evangelical Alliance Mission, 930 F.2d 764, 768 (9th Cir. 1991)). Underwriters have not raised the inadequacy of Oklahoma state courts or remedies. Second, Underwriters cannot prove that any public interest factors “overwhelmingly disfavor a transfer.” These factors include: “the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home with the law.” Atl. Marine Const. Co., 134 S.Ct. at 581 n. 6 (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n. 6, 102 S.Ct. 252, 258 n. 6 (1981)). Here, the factors are inapplicable as Underwriters cannot show: (1) significant congestion of the Oklahoma state courts; (2) that this controversy is localized to California let alone the Central District of California; or (3) a need for trial in this forum as Underwriters point to little or no law specific to the forum that relates to the claims of those Plaintiffs subscribing to the Company-led Policies, who only assert one cause of action, for declaratory relief. These public-interest factors do not “overwhelmingly disfavor” enforcing the forum-selection clause, but instead, the Company-led Policies show an agreement to initiate any lawsuit in Oklahoma state court. As the Company-led Policies include valid, enforceable, forum-selection clauses selecting Oklahoma state court, and public interest factors weigh in favor of dismissal, this Court should dismiss Underwriters’ case on forum non conveniens grounds. Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 14 of 33 Page ID #:285 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 7 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. The Action Should Be Dismissed For Improper Venue. An analysis of the underlying facts and allegations of this case shows the Underwriters selected an improper venue.3 An analysis of the proper venue should not be conducted using federal maritime law as such admiralty jurisdiction does not apply to this action. 1. Venue Is Improper In This District. Musket moves the Court to dismiss this action under Federal Rules of Civil Procedure 12(b)(3) on the ground that it is brought in the wrong district, in that it appears on the face of the complaint that: (1) jurisdiction of this action is founded only on diversity of citizenship as maritime jurisdiction is inapplicable; and (2) the judicial district in which this action was brought does not satisfy any of the three alternative requirements for proper venue in civil actions, as such requirements are set forth in Title 28, United States Code, Section 1391(a). See 28 U.S.C. § 1406(a); FED. R. CIV. P. 12(b)(3). “The plaintiff has the burden of showing that venue is proper in this district.” Allstar Marketing Group, LLC v. Your Store Online, LLC, 666 F. Supp. 2d 1109, 1126 (C.D. Cal. 2009). Venue requirements are for the benefit of defendants. Hoover Grp. v. Custom Metalcraft, Inc., 84 F.3d 1408 (Fed. Cir. 1996). The concept of venue is designed to protect the defendant and the witnesses against a plaintiff’s choice of an unfair or inconvenient venue. Firstar Bank v. Faul, 253 F.3d 982, 989-90 (7th Cir. 2001) (acknowledging that the primary purpose of venue statutes is to limit inconvenience to the parties). Underwriters assert that venue would be proper under 28 U.S.C. § 1391(b)(2) in that several of the insurance policies “were executed, issued and delivered to the Insured in Los Angeles, California.” (See Am. Compl. ¶ 9.) Pursuant to 28 U.S.C. § 1391(b), a lawsuit may be brought in: 3 For the claims initiated by the subscribers to the Company-led Policies, the Court need not reach this analysis if it dismisses that portion of the suit under forum non conveniens. Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 15 of 33 Page ID #:286 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 8 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action. 28 U.S.C. § 1391(b). The Central District of California does not fit into these categories. a. Venue Is Not Proper on the Grounds That Alleged Events and Omissions Giving Rise to the Claim Occurred in this District. The Amended Complaint attempts to satisfy venue under § 1391(b)(2), alleging that venue is proper here because the insurance policies “were executed by Underwriters’ authorized representative, issued and delivered to the Insured in Los Angeles, California,” and, as a result, “a substantial part of the events giving rise to this action occurred within this District.” (See Am. Compl. ¶¶ 9, 10.) These contentions are insufficient. In determining whether venue is proper under § 1391(b)(2), only those events and omissions that directly give rise to the claim are relevant (“only those acts and omissions that have a close nexus to the wrong”). Schwarzer, Tashima and Wagstaffe, Cal. Prac. Guide: Fed. Civ. Pro. Before Trial, ¶ 4:315 (emphasis in original) (citing Jenkins Brick Co. v. Bremer, 321 F.3d 1366, 1372 (11th Cir. 2003)). Courts therefore engage in a two part analysis to determine where “a substantial part of the events or omissions” took place. First, courts examine the nature of plaintiff’s claims and the acts or omissions underlying those claims. Second, courts determine whether substantial events material to those claims occurred in the forum district. Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1166 (10th Cir. 2010). Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 16 of 33 Page ID #:287 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 9 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (1) The Nature of Underwriters’ Claims. Underwriters assert a request for declaratory relief as to whether the loss or damage comprising the Claim is subject to coverage under the Policy. Underwriters, however, do not assert that any acts or omissions underlying the Claim or request for declaratory relief occurred in this District. Underwriters subscribing to the Lloyd’s-led Policies also submit a breach of contract claim, asserting a breach of a duty of good faith. All the alleged acts and omissions by Musket creating the supposed breach occurred entirely, or nearly entirely, outside of California save for the involvement of Underwriters’ current litigation counsel. (See Am. Compl.; Fjeld-Hansen Decl. ¶¶ 5-12.) (2) Whether a “Substantial Part” of the Events Giving Rise to Underwriters’ Claims Occurred in This District. What constitutes a “substantial part” of the events or omissions giving rise to the claim is a question of federal law. Commercial Lighting Products, Inc. v. U.S. Dist. Ct., 537 F.2d 1078, 1079 (9th Cir. 1976). Courts are “. . . required to construe the venue statute strictly.” Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 357 (2nd Cir. 2005). “That means for venue to be proper, significant events or omissions material to the plaintiff’s claim must have occurred in the district in question, even if other material events occurred elsewhere. It would be error, for instance, to treat the venue statute’s ‘substantial part’ test as mirroring the minimum contacts test employed in personal jurisdiction inquiries.” Id. The “substantiality” requirement is “. . . intended to preserve the element of fairness so that a defendant is not haled into a remote district having no real relationship to the dispute.” Cottman Transmission Systems, Inc. v. Martino, 36 F.3d 291, 294 (3rd Cir. 1994). In determining where a “substantial part” of the “events or omissions” occurred, most courts look “not to a single ‘triggering event’ prompting the action, but to the entire sequence of events underlying the claim.” See Uffner v. LaReunion Francaise, S.A., 244 F.3d 38, 42 (1st Cir. 2001). What constitutes a “substantial part” is to be determined in light of the purpose of the venue statute: “(T)he substantiality of the operative events is determined by assessment of their ramifications Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 17 of 33 Page ID #:288 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 10 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 for efficient conduct of the suit.” Myers v. Bennett Law Offices, 238 F.3d 1068, 1076 (9th Cir. 2001). “Only the events that directly give rise to a claim are relevant. And of the places where the events have taken place, only those locations hosting a ‘substantial part’ of the events are to be considered.” Jenkins Brick, 321 F.3d at 1371. In “an insurance coverage action, a court looks to the underlying events for which coverage is sought.” Carolina Cas. Co. v. Data Broad. Corp., 158 F. Supp. 2d 1044, 1047 (N.D. Cal. 2001). This approach makes eminent sense when, as here, the action is a dispute over whether an event qualifies for coverage under a particular insurance policy or whether events related to the Claim equate to a breach. (See Am. Compl. ¶ 50; Am. Compl. ¶¶ 42-45.) In this scenario, the facts surrounding Musket’s loss are integral to a determination of coverage, and the facts relating to the investigation of the loss are allegedly integral to the breach. No events causing or relating to damages to Musket’s railcars, however, occurred in the Central District of California. Underwriters initiated suit in the Central District of California, but Musket does not own any facilities in California and did not send its railcars into the Central District of California. (See Fjeld- Hansen Decl. ¶ 5.) The primary basis alleged by Underwriters to connect events related to Underwriters’ Claims with this District is through a recitation in the Lloyd’s-led Policy that the “Assurer has executed, issued and delivered this policy in Los Angeles, California” in a paragraph titled “Signature of this Assurer” placed immediately above the signature of Underwriters’ representative. (See Am. Compl. ¶ 9; Am. Compl., Ex. B, p. 72.) This language is not in the Company-led Policies. (See Am. Compl., Ex. A.) Underwriters also assert that “Certain Underwriters maintain an underwriting facility in Long Beach, California” and Musket “reached out to this facility through a broker” to procure several of the insurance policies. (See Am. Compl. ¶ 11.) Underwriters, however, do not describe which policies were allegedly procured through this facility. Regardless, no party is incorporated or has its principal place of business in the District and nothing else in the Policies references California. Further, the location of execution, Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 18 of 33 Page ID #:289 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 11 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 issuance, and delivery is not material to the nature of Underwriters’ lawsuit and this process is not one of the underlying events. Accordingly, a substantial part of the events or omissions giving rise to the claim did not occur in the Central District of California. 28 U.S.C. §1391(b)(2). b. Plaintiffs Do Not Show That Musket Resides in the Central District, and Musket Does Not Reside in this District. Underwriters simply assert that “Defendant resides in this District, and/or a substantial part of the events giving rise to this action occurred in this District.” (See Am. Compl. ¶ 10.) Underwriters allege certain ties between Musket’s business operations and California (see Am. Compl. ¶¶ 12-14), but do not describe specific actions by Musket in the District beyond reaching out to an underwriting facility in the District (see Am. Compl. ¶ 11). For venue purposes, a corporate defendant resides “in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action.” 28 U.S.C. § 1391(c)(2). As for the residency of a corporation in a state with multiple districts, such as California, “such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State . . . .” 28 U.S.C. §1391(d). For general jurisdiction to exist, however, Musket’s affiliations with the forum must be “so ‘continuous and systematic’ as to render them essentially at home in the forum[.]” Daimler AG v. Bauman, 134 S. Ct. 746, 751 (2014). In the case of a corporation, “[t]he paradigmatic locations where general jurisdiction is appropriate . . . are its place of incorporation and its principal place of business” which, for Musket, are not in California. Ranza v. Nike, Inc., 793 F.3d 1059, 1069 (9th Cir. 2015). “Only in an ‘exceptional case’ will general jurisdiction be available anywhere else.” Martinez v. Aero Caribbean, 764 F.3d 1062, 1070 (9th Cir. 2014). As for specific jurisdiction, the cause of action “must be one which arises out of or relates to the defendant’s forum- related activities.” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015). Here, this is not such an exceptional case to allow general jurisdiction as Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 19 of 33 Page ID #:290 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 12 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Underwriters only assert, without detail, that Musket has ties to California through transportation of commodities in California, conducting business in the state, and by being subject to California’s reporting requirements. (See Am. Compl. ¶¶ 13, 15.)4 Underwriters do not assert any affiliations specifically to the District besides the asserted issuance and delivery of a Lloyd’s-led Policy. (Am. Compl. ¶¶ 9, 11 and Ex. B) Underwriters do not plead that Musket negotiated, or agreed to, any of the Policies from California. Musket, however, does not have significant ties to the District, including because it does not own real estate in the District and has no bank accounts in California. (See Fjeld-Hansen Decl. ¶¶ 5, 6, 10.) Musket has no employees in California. And, as for specific jurisdiction, the underlying events leading to the dispute did not occur in the District because Musket did not bring its railcars to the District and the parties did not conduct any joint investigation activities here. (See id. ¶¶ 5, 10, 12; Am. Compl.) To the extent Underwriters attempt to argue that appointing an agent for service of process within California constitutes consent to jurisdiction (see Am. Compl. ¶ 7), California courts have declined to find consent jurisdiction based on mere appointment of a California agent for service of process. See, e.g., DVI, Inc. v. Superior Court, 104 Cal. App. 4th 1080, 1095 (2002) (finding no personal jurisdiction even though the defendant company registered to do business in California, maintained a California agent for service of process, and had two officers residing in California); Gray Line Tours v. Reynolds Electrical & Engineering Co., 193 Cal. App. 3d 190, 193-95 (1987) (holding that designation of an agent for service of process and qualification to do business in California alone do not constitute grounds for general jurisdiction); see also Overhill Farms Inc. v. W. Liberty Foods LLC, No. CV 14-03533-RSWL, 2014 WL 4180920, at *4 (C.D. Cal. Aug. 21, 2014) (acknowledging that, “while it is relevant that Defendant may be registered to do business and has designated an agent for service of process in 4 Underwriters also describe trucking activities by a Gemini Transportation (see Am. Compl. ¶ 14.) Assuming Underwriters meant Gemini Motor Transport, L.P., Musket does not operate this entity. It is a separate entity with separate management. Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 20 of 33 Page ID #:291 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 13 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 California, these acts alone are insufficient to support a finding of general jurisdiction over Defendant”); Martin v. D-Wave Sys. Inc., No. C-09-03602 RMW, 2009 WL 4572742, at *2 (N.D. Cal. Dec. 1, 2009).5 Underwriters do not properly assert Musket is subject to personal jurisdiction or resides in the Central District of California, and, regardless, Musket does not. Accordingly, venue is improper in the Central District of California. See 28 U.S.C. §1391(b). Musket requests that the Court dismiss, or alternatively, transfer this case to a more appropriate district. 28 U.S.C. §1406(a). 2. The Court Should Not Apply Admiralty Jurisdiction In This Case. To the extent Underwriters assert that maritime law modifies the analysis to determine appropriate venue, the action does not invoke admiralty jurisdiction. Underwriters state that maritime jurisdiction applies “pursuant to 28 U.S.C. § 1333(1) in that all asserted claims derive from policies of marine insurance, each of which are maritime contracts subject to the federal admiralty jurisdiction.” (See Am. Compl. ¶ 7, see also ¶ 8 (the “policies provide insurance coverage for goods at sea, in inland marine transportation and storage as those terms are customarily used in the marine insurance industry.”) The railcars at issue, however, carried commodities entirely on land. (See Fjeld-Hansen Decl. ¶ 4; see also Am. Compl. ¶ 18 (“Musket operates a fleet of railcars . . . which it leases from multiple lessor entities to transport crude oil and various petroleum products throughout the United States”); Am. Compl. ¶ 20 (“Musket’s fleet of leased tank cars . . . delivers the crude oil to various refineries, storage facilities, and other end- users located throughout the United States”).) The railcars were not loaded onto ships or barges. (See Fjeld-Hansen Decl. ¶ 4.) Musket did not hold title to any crude oil moved on a barge or ship. (See id.) Musket did not charter any barges or ships to transport 5 To the extent Underwriters argue that another district in California has personal jurisdiction over Musket sufficient to transfer to that district, or, instead, sufficient contacts to permit venue in this District under a federal maritime law analysis, Underwriters do not sufficiently assert such arguments. See 28 U.S.C. § 1391(d). Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 21 of 33 Page ID #:292 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 14 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 crude oil. (See id.) To the extent any fraction of crude oil that Musket shipped in by rail was ultimately shipped over water or stored on barges, Musket was not a party to any such shipping or storage arrangements. (See id.) In sum, Musket’s rail activities were separate from marine activities. Admiralty jurisdiction does not attach simply because a contract is labeled as a “marine insurance policy.” La Reunion Francaise SA v. Barnes, 247 F.3d 1022, 1025 (9th Cir. 2001); Those Certain Underwriters at Lloyd’s of London v. Eugene Horton, LLC, No. C11-2111RSM, 2012 WL 1642208, at *3 (W.D. Wash. May 10, 2012). Even where a court finds that a contract is a maritime one, the court must then determine whether the parties’ dispute is inherently local. As explained by the Supreme Court in Norfolk S. Ry. Co. v. Kirby, a “maritime contract’s interpretation may so implicate local interests as to beckon interpretation by state law. . . . [W]hen state interests cannot be accommodated without defeating a federal interest . . . then federal substantive law should govern.” 543 U.S. 14, 27 (2004); see also Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310, 313 (1955) (applying state law to maritime contract for marine insurance because of state regulatory power over insurance industry). As the Ninth Circuit explained in Aqua-Marine Constructors, Inc. v. Banks, “disputes over maritime insurance contracts may be governed by state law, in the same manner as non-maritime insurance contracts, as long as the state law does not clearly conflict with federal maritime law.” 110 F.3d 663, 667-68 (9th Cir. 1997); see also, Kalmbach, Inc. v. Ins. Co. of the State of Penn., 529 F.2d 552, 555 (9th Cir. 1976) (“[W]e can see no significant difference between construction of an ordinary insurance policy and one with marine insurance overtones. In general, each is to be construed against the insurance company”). Federal substantive law governs when state interests cannot be accommodated without defeating a federal interest. See Kirby, 543 U.S. 14, 23. But, that is not a concern here. The relevant Policy provisions, and all underlying facts in this lawsuit (see Am. Compl.; Fjeld-Hansen Decl. ¶ 4), are unrelated or not unique to maritime law. Beyond the policy titles of “Marine Cargo Policy” and “Marine Cargo Insurance,” no Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 22 of 33 Page ID #:293 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 15 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 other facts or activities related to the claims relate to maritime activities. Therefore, as there is apparently no federal statute or unique judicially-created rule governing the interpretation of the relevant provisions of the Policies, in this matter, state law should apply. See Brewer Envtl. Indus., LLC v. Matson Terminals, Inc., No. CIV. 10-00221 LEK-KS, 2011 WL 1637323, at *4 (D. Haw. Apr. 28, 2011) (court could not discern any direct conflict between Hawai’i contract law and federal maritime law thus finding that Hawai’i state law applies to claims arising from an insurance policy). Further, under an inquiry of whether the “principle objective of a contract is maritime commerce,” as discussed in Sentry Select Ins. Co. v. Royal Ins. Co. of Am., 481 F.3d 1208, 1218 (9th Cir. 2007), all but a fraction of the Policies’ coverage is for land- based storage and transport. (See Am. Compl., Ex. A, p. 31; Ex. B, pp. 90, 95, 99.) Applying maritime jurisdiction to the matter under these facts does not “protect[] the uniformity of federal maritime law” (see Kirby, 543 U.S. at 23), but merely expands it. Nothing in this lawsuit relates to ocean or maritime commerce, thus maritime jurisdiction is inapplicable. C. Alternatively, the Action Should Be Transferred to Another Venue. If the Court declines to dismiss the action for improper venue, the Court may, and should, transfer the action to the U.S. District Court for the Southern District of Texas, or alternatively, the Western District of Oklahoma, pursuant to 28 U.S.C. §1404(a). The Court can transfer this case to a more appropriate venue regardless of whether jurisdiction rests in admiralty or diversity. See 28 U.S.C. § 1390(b) (providing that admiralty disputes are subject to the general transfer provisions in 28 U.S.C. §§ 1404- 07). Section 1404(a) provides that “[f]or 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 or to any district or division to which all parties have consented.” Its purpose “is 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). Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 23 of 33 Page ID #:294 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 16 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Section 1404(a) provides courts with broad discretion to transfer an action to a different venue according to an “individualized, case-by-case consideration of convenience and fairness.” Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). In assessing a transfer request, the court engages in a two-step analysis. First, the defendant must establish that the matter “might have been brought” in the district to which transfer is sought. 28 U.S.C. § 1404(a). Second, the court must balance the convenience of the parties and witnesses and the interest of justice. See Goodyear Tire & Rubber Co. v. McDonnell Douglas Corp., 820 F. Supp. 503, 506 (C.D. Cal. 1992). 1. This Action “might have been brought” in the Western District of Oklahoma or the Southern District of Texas. This action “might have been brought” in the Western District of Oklahoma and the Southern District of Texas because the requirements for subject matter jurisdiction, personal jurisdiction, and proper venue are met. 28 U.S.C. § 1404(a). Musket is an Oklahoma corporation with an office in Oklahoma City, Oklahoma and with its principal place of business in Houston, Texas. (See Am. Compl. ¶ 6; Fjeld-Hansen Decl., ¶ 6 (Musket has offices in Houston, Oklahoma City, and a smaller office in Arizona).) As such, Musket is subject to personal jurisdiction in these states and resides in these districts. Finally, venue is proper in these districts as Musket resides in these districts and because, as described herein, both are “judicial district[s] in which a substantial part of the events . . . giving rise to the claim occurred” under 28 U.S.C. § 1391(b)(1), (2). Thus, venue is appropriate under this analysis or under a maritime jurisdiction analysis. 2. The Convenience of the Parties, the Convenience of the Witnesses, and the Interests of Justice Support Transfer. Next, a court must balance three general factors consisting of the convenience of the parties, the convenience of the witnesses, and the interests of justice. 28 U.S.C. § 1404(a). In determining this, courts often consider a number of factors including: (1) the location where the relevant agreements were negotiated and executed; (2) the state that is most familiar with the governing law; (3) the plaintiff’s choice of forum; (4) the Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 24 of 33 Page ID #:295 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 17 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 respective parties’ contacts with the forum; (5) the contacts relating to the plaintiff’s cause of action in the chosen forum; (6) the differences in the costs of litigation in the two forums; (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses; and (8) the ease of access to sources of proof. See, e.g., GNC Franchising, 211 F.3d at 498-99. These factors clearly favor a transfer. a. The Convenience of the Witnesses and the Parties Strongly Favors a Transfer. The relative convenience to the witnesses is often recognized as the most important factor to be considered in ruling on a motion under § 1404(a). See Metz v. U.S. Life Ins. Co., 674 F. Supp. 2d 1141, 1147 (C.D. Cal. 2009). The convenience of the parties, and non-party witnesses, calls for a transfer. Musket personnel located in Oklahoma City, Oklahoma who coordinated the movement, maintenance, and the return of the railcars at the end of their respective leases and may provide important testimony thereto, include, among others: (a) Doug Lumry, General Manager - Crude and Rail Operations for Musket, who manages rail transport and crude trucking and would testify on matters including the return of railcars to the railcar lessors, the cleaning and inspections of the railcars at the end of the lease, and the asserted damages to the railcars and resulting costs; (b) Thad Davis, Senior Logistics Coordinator; (c) Shane Farmer, Rail Logistics Specialist, knowledgeable of rail movements and records thereto; and (d) Ron Harrison, Rail Analyst, knowledgeable of records including those relating to railcar history, inspections, and invoicing. (Fjeld-Hansen Decl., ¶ 7.) Musket’s personnel in Houston, Texas who may provide important testimony, include, among others: (a) Jon P. Fjeld- Hansen, Managing Director and Vice President for Musket Corporation, with knowledge of Musket’s operations and the logistics involving crude oil and multiple other commodities; and (b) Al Finn, Manager of Terminals and Equipment, who has facts and knowledge of the condition, maintenance and inspection of the railcars and the regulations and processes thereto. (Id. ¶ 8.) Further, nearly all activities and inspections relating to the use and return of the Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 25 of 33 Page ID #:296 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 18 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 railcars to lessors at the end of the lease periods, including a determination of any damages, occurred primarily in or near Oklahoma and Texas. (Fjeld-Hansen Decl., ¶¶ 10, 12); (Orig. Compl. ¶ 15 (“[a]fter an extensive investigation conducted by a multi- discipline team of expert consultants which included site visits in Georgia, Oklahoma, Texas and Kansas . . . .”)6.) Musket’s railcars have been cleaned, maintained, inspected, and/or repaired at locations including: Saginaw, Texas (Trinity Rail Maintenance Services); Channelview, Texas (Rescar Companies); Elmendorf, Texas (Strataflex Midstream); Cleveland, Texas (Union Tank Car Company); Orange, Texas (Rescar Companies); Harwood, Texas (TXGN); Elkhart, Texas (Eagle railcar services); Roscoe, Texas (Eagle railcar services); and Hugo, Oklahoma (Trinity Rail Maintenance Services). (Fjeld-Hansen Decl., ¶ 10). While this activity occurred in other states as well, Oklahoma and, especially, Texas figure most prominently. Further, significant repair- related work to the interior of certain railcars was conducted in Saginaw, Texas, Channelview, Texas, and Hugo, Oklahoma. (See id.) One of the principal lessors of railcars to Musket, Trinity Industries, is headquartered in Dallas, Texas. (Fjeld-Hansen Decl., ¶ 11). Musket’s primary rail contacts with Trinity Industries are in the Dallas, Texas area, including: (1) Jay Tulimieri, a vice president of sales; and (2) David Faber, an account manager and Musket’s customer service representative at Trinity Industries. (See id.) Further, Musket’s primary rail contacts with railcar lessor Union Tank Car are in the Houston, Texas area, including: (1) Sharon Fowler, a vice president of sales; and (2) Cynthia Salinas, Musket’s customer service representative at Union Tank Car. (See id.) Musket’s primary rail contacts with railcar lessor ARL are in the Houston, Texas area, including: (1) Cliff Snyder, a sales manager with ARL; and (2) Margo Escobar, one of Musket’s customer service representative at ARL. (See id.) Of the four main lessors of railcars 6 Underwriters changed this statement between their Original Complaint and their Amended Complaint to now read “. . . included site visits to multiple locations in four different states.” (Am. Compl. ¶ 42.) Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 26 of 33 Page ID #:297 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 19 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 included within the Claim, three of those are Trinity Industries, Union Rail Car, and ARL. Each of the sales representatives may be called to provide testimony on the design, quantity, and history of railcars leased by Musket. Each of the customer service representatives may be called to provide testimony on the return of railcars at the end of a lease period and the related inspections or repairs. (See id.) Musket may call witnesses from the above-mentioned facilities or organizations. These witnesses may provide relevant or necessary testimony relating to the allegations supporting Underwriters’ causes of action, including: (1) the request for declaratory judgment as to whether the nature of the “alleged loss or damage comprising the Claim is subject to coverage” (see Am. Compl. ¶ 48); and (2) the breach of contract claim that includes assertions related to the “nature of the alleged loss,” “access to documents, tank cars, samples, and similar reasonable information,” and the “extent of[] the alleged loss” (see id. ¶¶ 42, 45). As the convenience of these witnesses is often considered as the most important factor, see Metz, 674 F. Supp. 2d at 1147, proceeding in Texas or Oklahoma would be more convenient and less costly for the parties and non-parties. b. The Location Where the Agreement Was Negotiated and Executed Is Less Meaningful Than the Other Factors. Underwriters assert that the Policy was “executed, issued and delivered to the Insured in Los Angeles, California.” (See Am. Compl. ¶ 9; see also ¶ 11.) The events giving rise to the lawsuit, however, occurred primarily in Texas and Oklahoma, thus supporting transfer. See Zurich Am. Ins. v. Guam Indus. Servs., No. C 11-01874 MEJ, 2011 WL 3809804, at *4 (N.D. Cal. Aug. 29, 2011) (determining that, while plaintiffs argued that the facts giving rise to this lawsuit occurred in San Francisco-where plaintiffs argue the insurance policy at issue was negotiated and drafted-the events giving rise to the claims under the policy are “what actually triggered [p]laintiffs to deny liability and spawned this lawsuit” and thus “supports a finding that this action is more appropriately litigated in Guam, where the events giving rise to the insurance dispute occurred”). Accordingly, the alleged execution of the document in the Central District of Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 27 of 33 Page ID #:298 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 20 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 California is of lesser importance in this analysis. c. The State That Is Most Familiar With the Governing Law. This factor, regarding knowledge of the governing law, does not particularly aid the Court’s analysis in light of dicta in Atlantic Marine, stating that “federal judges routinely apply the law of a State other than the State in which they sit.” See 134 S.Ct. at 584; Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Grp., Inc., 99 F. Supp. 3d 1110, 1167 (C.D. Cal. 2015). Any federal court is capable of applying the applicable law to Underwriters’ initial cause of action under the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, and their later-added cause of action for breach of contact. d. Underwriters’ Choice of Forum Is Entitled to No Deference. In many cases, a plaintiff’s choice of forum is entitled to some deference. Here, however, the action involves non-resident Plaintiffs, as Underwriters do not plead residency in this forum (see, e.g., Am. Compl. ¶ 5), and thus their choice of forum receives less deference. Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143 (9th Cir. 2001); Carolina Cas. Co. v. Data Broadcasting Corp., 158 F. Supp. 2d 1044, 1048 (N.D. Cal. 2001). Indeed, Underwriters do not appear to have a significant connection to this forum except Underwriters assert they have an underwriting facility here. (Am. Compl. p. 1 and ¶ 11.) The underwriting process, however, is not a part of the Amended Complaint. As for Underwriters’ other tie to this District, the location of their litigation counsel, attorney convenience plays no part in a § 1404(a) determination. See E. & J. Gallo Winery v. F. & P. S.p.A., 899 F. Supp. 465, 466 (N.D. Cal. 1994). A plaintiff’s choice of forum may also be given less deference if, as is true here, the key factual issues in dispute are centered in the transferee forum. See Lou v. Belzberg, 834 F.2d 730, 739 (9th Cir. 1987) (finding that deference to plaintiff’s choice of venue is further diminished if the operative facts occurred outside of the forum). Moreover, the Ninth Circuit has established that courts should disregard a plaintiff’s forum choice where the suit is a result of forum-shopping. See Alltrade. Inc., v. Uniweld Products, Inc., 946 F.2d 622, 628 (9th Cir. 1991); Carolina Cas. Co., 158 F. Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 28 of 33 Page ID #:299 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 21 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Supp. 2d at 1048 (stating that if “there is any indication that plaintiff’s choice of forum is the result of forum shopping, plaintiff’s choice will be accorded little deference”). One could rationally infer forum shopping here, in addition to a race to the courthouse to file an anticipatory suit, based on Underwriters’ filing of the Complaint on August 2, 2016, but holding off on service until October 21, 2016 (see Dkt. 9) and ignoring forum- selection clauses. Accordingly, Underwriters’ choice of forum should get no deference. e. The Parties’ and the Causes of Actions’ Contacts With the Chosen Forum Favors a Transfer. As set forth above, non-citizens Musket and Underwriters have minimal contacts with California, especially regarding the underlying issues in this lawsuit, when compared to Texas and Oklahoma. As for the Underwriters, the Amended Complaint states that “Underwriters were Companies and Syndicates organized under the laws of the United Kingdom, doing business in London, England,” but certain of the Underwriters have an underwriting facility in this District. (See Am. Compl. ¶¶ 5, 11.) The Amended Complaint does not describe which of the Underwriters the facility serves. (See id. ¶ 11.) As noted above, most importantly, however, the underlying events of Underwriters’ causes of action are almost entirely unrelated to California. f. Transfer Enhances the Availability of Compulsory Process to Compel Attendance of Unwilling Non-Party Witnesses. Transfer to Texas allows for a compulsory process to compel the attendance of any unwilling non-party witness. As discussed above, many non-party witnesses with relevant testimony are in Texas, thus providing an advantage to transfer under this factor. Venue in California would prevent compulsory process from Texas, or Oklahoma, because of federal court’s subpoena range limitations. See FED. R. CIV. P. 45. g. The Cost of Litigation Favors a Transfer. The costs of litigation would be greatly diminished by transfer to Texas or Oklahoma as Musket will require testimony from multiple employee and non-employee witnesses in these locations. See Italian Colors Rest. v. Am. Express Co., No. C 03- Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 29 of 33 Page ID #:300 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 22 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3719, 2003 WL 22682482, at *5 (N.D. Cal. Nov. 10, 2003) (“Generally, litigation costs are reduced when venue is located near most of the witnesses expected to testify or give depositions.”). Additionally, local attorney rates are likely to be lower than in California. According to the United States Consumer Law Attorney Fee Survey Report for 2013- 2014, the average large firm attorney rate in the South (including Oklahoma) is $393 per hour and in Texas is $410 per hour, compared to $423 for a comparable California attorney. See United States Consumer Law Attorney Fee Survey Report for 2013-2014, Ronald L. Burge, https://www.nclc.org/images/pdf/litigation/fee-survey-report-2013- 2014.pdf. h. The Ease of Access to Evidence Favors a Transfer. Musket’s evidence is located in Oklahoma and Texas. (See Fjeld-Hansen Decl., ¶ 9.) Particularly, Musket’s records concerning the use, maintenance, and repair history of the railcars, its insurance records, and its financial records are located in Oklahoma or Texas. Moreover, the most likely non-party lessor witnesses and the repair facilities are located in these states or, at least, much closer to these states than California. (Fjeld- Hansen Decl., ¶¶ 10-12.) Weighing all relevant factors, this action should be transferred to the Southern District of Texas, or alternatively, the Western District of Oklahoma. Most importantly, the facts underlying the dispute arose outside of California and this District, and few, if any, witnesses or evidence may be found here as compared to Texas and Oklahoma. D. The Breach of Contract Claim Should be Dismissed For Failure to State a Claim. Underwriters’ breach of contract claim should be dismissed under Federal Rule of Civil Procedure 12(b)(6). Underwriters assert Musket breached the Lloyd’s-led insurance policies by failing to meet Musket’s alleged obligations to act in good faith under an admiralty principle of uberrimae fidei, or utmost good faith. Underwriters’ breach of contract claim should be dismissed because Underwriters failed to state a claim for which relief can be granted under admiralty law. Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 30 of 33 Page ID #:301 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 23 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. Legal Standard. Pursuant to Federal Rule of Civil Procedure 12(b)(6), dismissal of an action is appropriate whenever the complaint, on its face, fails to state a claim upon which relief can be granted. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to relief.’” Id. at 679 (quoting FED. R. CIV. P. 8(a)(2)). While the court is required to accept the factual allegations of the complaint as true and draw all reasonable inferences in favor of the plaintiff, labels, conclusions, “naked assertions devoid of further factual enhancement” and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 678. 2. Underwriters Failed to State a Claim Based On Uberrimae Fidei. Underwriters failed to assert a claim for which this Court may grant relief because their chosen cause of action does not apply. Underwriters allege Musket breached a legal duty under a principle of uberrimae fidei, apparently because it did not “disclose all relevant information that is material to the risk.” (See Am. Compl. ¶ 38.) Underwriters’ claim fails because the principle of uberrimae fidei may only apply in certain circumstances where an insured makes a material concealment during the underwriting process, meaning facts material to a calculation of the insurance risk. See McAdam v. State Nat. Ins. Co., 28 F. Supp. 3d 1110, 1123 (S.D. Cal. 2014); Washington Intern. Ins. Co. v Mellone, 773 F. Supp. 189, 191 (C.D. Cal. 1990). In contrast, the Southern District of California refused to find uberrimae fidei applied to an insurance policy where the plaintiff alleged misrepresentations made during the claims process. The Continental Cas. Co. v. Scully, No. 09-CV-1970 W(NLS), 2010 WL 2736078, at *6 (S.D. Cal. July 12, 2010) (denying insurer’s motion to dismiss seeking to apply the Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 31 of 33 Page ID #:302 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 24 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 doctrine of uberrimae fidei to the defendants’ alleged misrepresentations during the insurance claims process, not the defendants’ insurance application). Here, Underwriters did not allege, and could not allege, that Musket intentionally misrepresented a fact or failed to disclose a fact material to the risk calculation during the underwriting process. See Am. Comp.; compare McAdam, 28 F. Supp. 3d at 1123-24 (determining whether insured misrepresented or concealed known material facts) and Mellone, 773 F. Supp. at 191, with Scully, 2010 WL 2736078, at *6 (denying claim under uberrimae fidei where party sought to apply doctrine to misrepresentations made during the claims process). Underwriters allege that Musket’s supposed failure to disclose information occurred when Musket presented its Claim under the policies. (See Am. Compl. ¶ 30.) Underwriters failed to state a claim upon which relief can be granted because the controlling law does not recognize their breach of contract claim. 3. The Policy Does Not Provide Grounds For A Reverse Bad Faith Claim. Underwriters’ assert a myriad of “unjustified breaches” of the Policies consisting of “failure to cooperate, duty to mitigate, failure to provide timely access to insured property, failure to timely notify, and failure to disclose information.” (See Am. Compl. ¶ 46.) In support, Underwriters rely on a mix of unsupportive non-maritime California cases and theories inapplicable to their apparent maritime-based breach claim. Underwriters do not cite the Policies, but rather appear to allege that these duties are implied by the very existence of the Policies. Such a claim cannot stand. Underwriters’ assertion of these “duties” is simply an attempt to contravene California courts’ prohibition on reverse bad faith tort claims. See Kransco, 23 Cal. 4th 390, 405 (2000) (agreeing that a “reverse” bad faith claim is not viable because an insured’s breach of an implied covenant of good faith and fair dealing is not a tort).7 7 Notably, several of these breaches cannot be converted to affirmative causes of action but rather are, at most, a form of defense. See, e.g., Lennar Mare Island, LLC v. Steadfast Insurance Company, 139 F. Supp. 3d 1141, 1161 (E.D. Cal. 2015) (determining that the insurer “must pursue its cooperation-clause theories as a defense, not an independent, affirmative contract claim”). Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 32 of 33 Page ID #:303 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S Page 25 MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79829908v4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Absent a contractual right, “the implied covenant has nothing upon which to act as a supplement, and should not be endowed with an existence independent of its contractual underpinnings.” Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th 1, 36 (1995) (internal quotation removed). The scope of any duty of good faith “is confined by the express contractual provisions of the policy.” Kransco, 23 Cal. 4th at 405. Therefore, an implied covenant imposes no substantive duties beyond the contract’s terms. See Guz v. Bechtel Nat'l, Inc., 24 Cal. 4th 317, 349-50 (2000). While Underwriters couch this claim as a breach of contract claim, Underwriters do not explain how these duties arise from the Policies or are indispensable to the parties. See Frankel v. Board of Dental Examiners, 46 Cal. App. 4th 534, 545-46 (Cal. Ct. App. 1996). Finally, Underwriters assert that Musket’s breach of the implied duties have prejudiced Underwriters’ “rights to receive the benefit of the bargain.” (See Am. Compl. ¶ 46.) Such a conclusory allegation fails to indicate how Underwriters were prevented from “receiving the benefit of the bargain”-or even what this benefit may be. Underwriters allege no actions they were not already obligated to undertake. (See id. ¶ 7 (stating Underwriters had an obligation to investigate the Claim).) As such, Underwriters have failed to assert any claim for which this Court may grant relief. IV. CONCLUSION Based upon the facts and authorities set forth in this motion, this memorandum of law, the declaration and the exhibits thereto, Musket submits that this action should be dismissed and, to the extent any claims remain, transferred to the U.S. District Court for the Southern District of Texas, or alternatively, the Western District of Oklahoma. DATED: January 31, 2017 Respectfully submitted, By /s/ Peter S. Wahby Peter S. Wahby GREENBERG TRAURIG, LLP Attorney for Defendant Musket Corporation Case 2:16-cv-05726-SVW-JPR Document 33-1 Filed 01/31/17 Page 33 of 33 Page ID #:304 1 GREENBERG TRAURIG, LLP 2 Robert J. Herrington (SBN 234417) Email: HerringtonR@gtlaw.com 3 1840 Century Park East, Suite 1900 4 Los Angeles, CA 90067 TEL: 310-586-7700; FAX: 310-586-7800 5 6 GREENBERG TRAURIG, LLP 7 Peter S. Wahby (admitted pro hac vice) Email: wahbyp@gtlaw.com; 8 Peter K. Lacina (admitted pro hac vice) 9 Email: lacinap@gtlaw.com 2200 Ross Avenue, Suite 5200 10 Dallas, TX 75201 11 TEL: 214-665-3600; FAX: 214-665-3601 12 Attorneys for Defendant Musket Corporation 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA London Market Insurers Including Certain Underwriters at Lloyd's of London, Plaintiffs, v. Musket Corporation, Defendant. CASE NO. 2:16-cv-05726 SVW (JPRx) DECLARATION OF JON P. FJELD- HANSEN IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS FIRST AMENDED COMPLAINT Date: Time: Courtroom: Judge: Apr. 10, 2017 1:30 p.m. lOA, 350 W. 1st Street Los Angeles, CA 90012 Hon. Stephen V. Wilson DECLARATION OF JON P. FJELD-HANSEN IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS DAL 79829909v2 Case 2:16-cv-05726-SVW-JPR Document 33-2 Filed 01/31/17 Page 1 of 7 Page ID #:305 1 I, Jon P. Fjeld-Hansen, make this unsworn Declaration pursuant to 28 U.S.C. § 2 1746, and declare as follows: 3 1. My name is Jon P. Fjeld-Hansen. I am over twenty-one (21) years of age, I 4 have never been convicted of a felony or crime of moral turpitude, and I am of sound 5 mind and competent and capable of making this Declaration. I have personal knowledge 6 of the facts herein, and if called upon to testify concerning these facts under oath, I could 7 and would do so competently. 8 2. I am Managing Director and Vice President for Musket Corporation 9 ("Musket"). In that capacity, I supervise and participate in handling the logistics and 10 operations of Musket, including the purchasing, sale, storage, and transport of crude oil 11 and other commodities, in addition to negotiations of contracts related to these functions. 12 3. I have 25 years of experience in the oil business, including marketing, 13 trading, and logistics involving crude oil, plus multiple other commodities including 14 refined products, natural gas, renewable fuels, alternative energy and natural gas liquids. 15 4. Musket operates a fleet of leased rolling stock, or railcars, which it uses to 16 transport crude oil and other commodities to locations in the United States. Musket's 17 railcars carried commodities entirely on land and the railcars were not loaded onto ships 18 or barges. Musket did not hold title to any crude oil moved on a barge or ship. Musket 19 did not charter any barges or ships to transport crude oil. To th~ extent any fraction o 20 crude oil that Musket shipped by rail was ultimately shipped over water or stored on 21 barges, Musket was not a party to such shipping or storage arrangements. 22 5. Musket does not own any real estate within the counties within the United 23 States District Court, Central District of California. Musket has not sent its railcars into 24 the counties within the United States District Court, Central District of California to 25 deliver crude oil. Musket has no bank accounts in California. 26 6. Musket is an Oklahoma Corporation with its headquarters in Houston, 27 Texas. Musket also has offices in Oklahoma City, Oklahoma and Phoenix, Arizona. The 28 employees in these offices frequently travel between these two offices. 2 DECLARATION OF JON P. FJELD-HANSEN IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS DAL 79829909v2 Case 2:16-cv-05726-SVW-JPR Document 33-2 Filed 01/31/17 Page 2 of 7 Page ID #:306 1 7. Musket personnel located in Oklahoma City, Oklahoma who coordinated the 2 movement, maintenance, and the return of the railcars at the end of their respective leases 3 and may provide important testimony thereto, include, among others: (a) Doug Lumry, 4 General Manager - Crude and Rail Operations for Musket, who manages rail transport 5 and crude trucking and would testify on matters including the return of railcars to the 6 rail car lessors, the cleaning and inspections of the railcars at the end of the lease, and the 7 asserted damages to the railcars and resulting costs; (b) Thad Davis, Senior Logistics 8 Coordinator; (c) Shane Farmer, Rail Logistics Specialist, knowledgeable of rail 9 movements and records thereto; and ( d) Ron Harrison, Rail Analyst, knowledgeable o 10 records including those relating to railcar history, inspections, and invoicing. 11 8. Musket's personnel in Houston, Texas who may provide important 12 testimony, include, among others: (a) Jon P. Fjeld-Hansen, Managing Director and Vice 13 President for Musket Corporation, with lmowledge of Musket's operations and the 14 logistics involving crude oil and multiple other commodities; and (b) Al Finn, Manager 15 of Terminals and Equipment, who has facts and knowledge of the condition, maintenance 16 and inspection of the railcars and the regulations and processes thereto. 17 9. Any documents in Musket's possession relating to its railcars and the 18 dispute giving rise to this action, are maintained by Musket in the ordinary course of its 19 business in Oklahoma, Texas and Arizona. 20 10. During the process of returning Musket's railcars at the end of their 21 respective lease terms, the railcars have been cleaned, maintained, inspected, and/or 22 repaired at locations including: Saginaw, Texas '(Trinity Rail Maintenance Services); 23 Channelview, Texas (Rescar Companies); Elmendorf, Texas (Strataflex Midstream); 24 Cleveland, Texas (Union Tank Car Company); Orange, Texas (Rescar Companies); 25 Harwood, Texas (TXGN); Elkhart, Texas (Eagle railcar services); Roscoe, Texas (Eagle 26 railcar services); Hugo, Oklahoma (Trinity Rail Maintenance Services). After or during 27 the returns, significant repair-related work to the interior of certain railcars was 28 conducted in Saginaw, Texas, Channelview, Texas, and Hugo, Oklahoma. None or 3 DECLARATION OF JON P. FJELD-HANSEN IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS DAL 79829909v2 Case 2:16-cv-05726-SVW-JPR Document 33-2 Filed 01/31/17 Page 3 of 7 Page ID #:307 1 almost none of Musket's railcars have been cleaned, maintained, inspected, and/or 2 repaired in California. 3 11. One of the principal lessors of railcars to Musket, Trinity Industries, is 4 headquartered in Dallas, Texas. Musket's primary rail contacts with Trinity Industries 5 are in the Dallas, Texas area, including: (1) Jay Tulimieri, a vice president of sales; and 6 (2) David Faber, an account manager and Musket's customer service representative at 7 Trinity Industries. Further, Musket's primary rail contacts with railcar lessor Union Tank 8 Car are in the Houston, Texas area, including: (1) Sharon Fowler, a vice president o 9 sales; and (2) Cynthia Salinas, Musket's customer service representative at Union Tank 10 Car. Musket's primary rail contacts with railcar lessor ARL are in the Houston, Texas 11 area, including: (1) Cliff Snyder, a sales manager with ARL; and (2) Margo Escobar, one 12 of Musket's customer service representative at ARL. Each of the sales representatives 13 may provide testimony on the design, quantity, and history of railcars leased by Musket. 14 Each of the customer service representatives may provide testimony on the return o 15 railcars at the end of a lease period and the related inspections or repairs. 16 12. Site visits and inspections of railcars involving representatives of Musket 17 and representatives of its insurers occurred in: Hugo, Oklahoma; Saginaw, Texas; El 18 Dorado, Kansas; Gordon, Georgia, and one railcar in Orange, Texas. No site visits and 19 inspections of railcars involving representatives of Musket and representatives of its 20 insurers occurred in California. 21 13. I have direct access to and regularly utilize records and communications that 22 Musket keeps in the ordinary course of business. These records include the record 23 attached hereto as Exhibit 1-1, a true and correct copy of an excerpt from an insurance 24 policy bearing number Bl05807PYOM0579. 25 Ill 26 Ill 27 Ill 28 Ill 4 DECLARATION OF JON P. FJELD-HANSEN IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS DAL 79829909v2 Case 2:16-cv-05726-SVW-JPR Document 33-2 Filed 01/31/17 Page 4 of 7 Page ID #:308 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I declare under penalty of perjury that the foregoing is true and correct. ~ Executed this~ day of January, 2017 in Harris County, Texas. 5 DECLARATION OF JON P. FJELD-HANSEN IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS DAL 79829909v2 Case 2:16-cv-05726-SVW-JPR Document 33-2 Filed 01/31/17 Page 5 of 7 Page ID #:309 EXHIBIT 1-1 Case 2:16-cv-05726-SVW-JPR Document 33-2 Filed 01/31/17 Page 6 of 7 Page ID #:310 GLENCAIRN~ Attaching to and fonning part of Cover Note Number 07PYOM0579 dated 18 June 2007 EXPRESS WARRANTIES: SEVERAL LIABILITY: CHOICE OF LAW & JURISDICTION: PREMIUM: Warranted all tanks and pipelines in which the products are carried are properly cleaned and tested and found satisfactory by attendant third party surveyors. Underwriters agree that non-compliance with the above warranty shall not prejudice claims hereunder other than claims in respect of contamination or where contamination is involved. LSW1001 The subscribing Underwriters' obligations under contracts of insurance to which they subscribe are several and not joint and are limited solely to the extent of their individual subscriptions. The subscribing Underwriters are not responsible for the subscription of any co-subscribing Underwriter who for any reason does not satisfy all or part of its obligations. It is hereby understood and agreed by both the Assured and Underwriters that any dispute concerning the interpretation of this policy shall be governed by the Law and Jurisdiction of U.S.A. - Oklahoma State. Minimum Earned and Deposit Premium ofUSDISS,000 payable at Inception and adjustable on expiry at a rate of0.0122% on actual values shipped (estimated to be USDJ,700,000,000). The above rates are inclusive of War, Strikes Riots and Civil Commotions Risks where applicable. Foreign Currency: Privilege is granted the Assured to insure in foreign currencies, losses to be payable in the same funds. Premium, other than in respect of shipments declared in United States Dollars, Canadian Dollars or Euros are payable in Pounds Sterling at the rate of exchange current on the date of invoice. Premium in respect of shipments declared in United States Dollars, Canadian Dollars or Euros must be paid in such currency. United States Terrorism Risk Insurance Extended - Acts of Terrorism already included. It is agreed that in accordance with the provisions and limitations of the US Terrorism Risk Insurance Act of2002, where coverage for acts of terrorism is already included in this policy, the portion of the annual premium stated elsewhere in this policy attributable to coverage for such acts of terrorism is USDJS0.00 Glencaim Limited are authorized by Underwriters to transmit notification to the Assured in conjunction with the NAIC approved Policy Holder Disclosure Notice of Terrorism Insurance Coverage Form as currently issued which is deemed to be included in the policy. Page 11 of 17 Decl. of Fjeld-Hansen, Ex. 1-1, Page 006 Case 2:16-cv-05726-SVW-JPR Document 33-2 Filed 01/31/17 Page 7 of 7 Page ID #:311 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79830091v1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA London Market Insurers Including Certain Underwriters at Lloyd’s of London, Plaintiffs, v. Musket Corporation, Defendant. CASE NO. 2:16-cv-05726 SVW (JPRx) [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT Date: Apr. 10, 2017 Time: 1:30 p.m. Courtroom: 10A, 350 W. 1st Street Los Angeles, CA 90012 Judge: Hon. Stephen V. Wilson Case 2:16-cv-05726-SVW-JPR Document 33-3 Filed 01/31/17 Page 1 of 2 Page ID #:312 1 PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT DAL 79830091v1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendant Musket Corporation’s Motion to Dismiss First Amended Complaint (the “Motion”) came to be heard before this Court. The Court, having considered all papers filed in support of and in opposition to the Motion, and having considered the argument of counsel, HEREBY ORDERS THAT: The Motion is GRANTED in its entirety. Plaintiff’s First Amended Complaint is hereby DISMISSED. IT IS SO ORDERED. DATED: , 2017 STEPHEN V. WILSON UNITED STATES DISTRICT JUDGE Case 2:16-cv-05726-SVW-JPR Document 33-3 Filed 01/31/17 Page 2 of 2 Page ID #:313