CASE NO. C15-1739JLR
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO TRANSFER VENUE AND FOR APPLICATION OF NEW JERSEY LAW
Before the court is Defendant Selective Insurance Company of America's ("Selective") motion to transfer venue and for the application of New Jersey law. (Mot. (Dkt. # 9).) Selective asks the court to transfer this case under 28 U.S.C. § 1404(a) to the United States District Court for the District of New Jersey or, if the court decides not to transfer the case, to rule that New Jersey law applies to Plaintiff T-Mobile USA, Inc.'s ("T-Mobile") claims. (See id. at 1-3.) T-Mobile opposes transfer and argues that Washington law should apply to all its claims. (See Resp. (Dkt. # 14) at 2-3.) The court has considered the motion, all submissions filed in support of and opposition to the motion, the balance of the record, and the applicable law. Being fully advised, the court grants Selective's motion in part and denies it in part as set forth below.
Neither party has requested oral argument, and the court deems oral argument unnecessary for the disposition of this motion. See Local Rules W.D. Wash. LCR 7(b)(4).
This is an insurance coverage dispute in which T-Mobile asserts (a) that it is an additional insured under a Selective policy issued to Innovative Engineering, Inc. ("Innovative"), and (b) that Selective wrongfully failed to defend and indemnify T-Mobile in construction litigation in New York State ("the underlying litigation"). (See 1st Tindal Decl. (Dkt. # 2) ¶ 3, Ex. A ("Compl.").) T-Mobile is a Delaware corporation headquartered in Bellevue, Washington. (Id. ¶ 2; Bauer Decl. (Dkt. # 15) ¶ 3; 2d Tindal Decl. (Dkt. # 11) ¶ 5, Ex. D ("T-Mobile 3dP Compl.") ¶ 6.) Selective and Innovative are New Jersey corporations with principal places of business in New Jersey. (Eber Decl. (Dkt. # 10) ¶¶ 2, 7; T-Mobile 3dP Compl. ¶ 10.) Through a New Jersey broker, Selective issued Innovative a commercial general liability policy ("the Policy") effective from January 16, 2012, through January 16, 2013. (Eber Decl. ¶ 7, Ex. A ("Policy") at 3, 7.)
Selective conducts some business in Washington State—namely, it issues flood insurance policies in Washington as a "Write-Your-Own" carrier participating in the federal government's National Flood Insurance Program. (See Eber Decl. ¶¶ 3-5.)
On October 17, 2000, Innovative entered into a Professional Service Agreement (the "PSA") with Omnipoint Communications, Inc. ("Omnipoint"), an alleged subsidiary of T-Mobile. (2d Tindal Decl. ¶ 2, Ex. A ("PSA"); see Compl. ¶ 2; Mot. at 2-3.) On July 8, 2010, Innovative entered into an additional agreement entitled "Field Services Agreement" (the "FSA") with an alleged T-Mobile subsidiary, T-Mobile NE, Inc. ("T-Mobile NE"). (2d Tindal Decl. ¶ 3, Ex. B ("FSA"); see Mot. at 2-3.) Both the PSA and the FSA required Innovative to obtain certificates of insurance naming its contractual counterparty (Omnipoint and T-Mobile NE, respectively) as an additional insured under Innovative's insurance policy. (See PSA ¶ 6; FSA ¶ 7.2.) Furthermore, the Policy contains an "Elitepac General Liability Extension" ("EGLE") that includes among "additional insured[s] any person or organization with whom [the insured] has agreed in a written contract, written agreement, or written permit to add as an additional insured on [the insured's] policy." (Policy at 27; see also id. at 27-28 (placing various limitations on the types of liability with respect to which "[s]uch person or organization" qualifies as an additional insured); Mot. at 3-4.)
The FSA provides, "T-Mobile USA, Inc. is not a party to this Agreement." (FSA ¶ 5.2.)
In its complaint, T-Mobile alleges it "was expressly identified as an additional insured under the Policy in insurance certificates . . . issued by Selective's representatives." (Compl. ¶ 8.) T-Mobile purports to quote from those certificates in its response memorandum but does not attach any certificates or provide any evidence of who issued the certificates. (See Resp. at 3-4.)
T-Mobile asserts that Innovative performed work for T-Mobile on a cell phone tower in New York City. (See Resp. at 3; see also T-Mobile 3dP Compl. ¶¶ 1, 15, 45; Compl. ¶ 11 ("Innovative's work for T-Mobile was completed pursuant to agreements under which Innovative was obligated to obtain insurance coverage naming T-Mobile as an additional insured . . . .").) On April 23, 2013, a New York entity initiated the underlying litigation against T-Mobile and Omnipoint in New York State court alleging damage to the building on which the cell phone tower was located. (See 2d Tindal Decl. ¶ 4, Ex. C ("Underlying Compl.") ¶¶ 6, 10, 27; Compl. ¶ 10 (alleging that the plaintiff in the underlying litigation "alleged claims for damages arising from Innovative's work on the relevant building").) After T-Mobile and Omnipoint filed a third-party complaint against Innovative, Innovative tendered its defense to Selective, and Selective accepted Innovative's defense under a reservation of rights. (See T-Mobile 3dP Compl.; Compl. ¶¶ 13-14; Bauer Decl. ¶ 7, Ex. C ("RoR Letter").) Approximately a year and a half later, T-Mobile tendered a defense to Selective as well. (See Bauer Decl. ¶ 5, Ex. A ("Tender") (dated February 25, 2015); RoR Letter (dated July 23, 2013).) Selective Litigation Specialist Michael Parlin responded that Selective was declining T-Mobile's request for defense and indemnification. (See Bauer Decl. ¶ 6, Ex. B ("2/26/15 Parlin Email").) Mr. Parlin attests that he lives and works in New Jersey and that all responses to T-Mobile's demands for coverage were made in New Jersey. (Parlin Decl. (Dkt. # 19) ¶¶ 2-3; see also id. ¶¶ 4-6; Eber Decl. ¶ 6 ("All of Selective's decisions regarding T-Mobile's claims also took place in New Jersey.").)
T-Mobile removed the underlying litigation to the United States District Court for the Southern District of New York. (See 2d Tindal Decl. ¶ 7, Ex. F ("T-Mobile Removal").)
According to T-Mobile, the record shows that relevant Selective employees, including Mr. Parlin, were located in Kentucky, not New Jersey. (See Mot. at 4-8.) T-Mobile bases this assertion on the headers and footers of communications that Selective sent, several of which list "PO Box 7260" in London, Kentucky as the sender's mailing address. (See, e.g., id. at 5 (citing Tender; 2/26/15 Parlin Email); see also RoR Letter.) Mr. Parlin explains, however, that PO Box 7260 merely "functions as a servicing center for [Selective], where all paper mail is received, scanned, and then electronically distributed to the intended [Selective] recipient." (Parlin Decl. ¶ 5.) As such, the court finds that the Kentucky PO Box does not undermine Selective's attestations that the coverage decisions in this case and its communications with T-Mobile originated in New Jersey. (See Eber Decl. ¶ 6; Parlin Decl. ¶¶ 2-6 ("None of the coverage determinations in the [underlying litigation] were made in Kentucky.").)
T-Mobile then filed this lawsuit in the Superior Court for King County, Washington. (See Compl.) T-Mobile alleges that it is an additional insured pursuant to the Policy and its agreements with Innovative, and that the Selective had a duty to defend and indemnify T-Mobile in the underlying litigation. (See id. ¶¶ 8-16, 21, 27.) T-Mobile asserts causes of action against Selective for declaratory judgment, breach of contract, attorney's fees, bad faith, violation of the Washington Consumer Protection Act (the "CPA"), RCW 19.86 et seq., violation of the Washington Insurance Fair Conduct Act ("IFCA"), RCW 48.30.015, and coverage by estoppel. (See id. at 5-8.) Selective removed the case to this court on November 4, 2015, and on November 12, 2015, filed the present motion to transfer venue and for application of New Jersey law. (See Not. of Rem. (Dkt. # 1); Mot.) Selective's motion is now before the court.
A. Motion to Transfer Venue
Under 28 U.S.C. § 1404, the court has discretion to transfer this case in the interests of convenience and justice to another district in which venue would be proper. See Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). Specifically, Section 1404(a) states:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.28 U.S.C. § 1404(a). The purpose of this statute is to "prevent the waste of time, energy, and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Pedigo Prods., Inc. v. Kimberly-Clark Worldwide, Inc., No. 3:12-CV-05502-BHS, 2013 WL 364814, at *2 (W.D. Wash. Jan. 30, 2013) (quoting Van Dusen v. Barrack, 376 U.S. 612, 616 (1964)).
The parties do not dispute that venue is proper in both the District of New Jersey and the Western District of Washington. (See Mot. at 7 (arguing that this suit could have been brought in New Jersey pursuant to 28 U.S.C. § 1391); Resp. (omitting any argument that venue is improper in New Jersey)); see also 28 U.S.C. §§ 1391(a), (b). Therefore, disposition of this motion depends on whether transfer to New Jersey is most convenient and just. Selective bears the burden of showing that a transfer is appropriate, Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255-56 (1981); Silver Valley Partners, LLC v. De Motte, No. C05-5590 RBL, 2006 WL 2711764, at *2 (W.D. Wash. Sept. 21, 2006), but the decision to transfer is ultimately left to the sound discretion of the district court and must be made on an "individualized, case-by-case consideration of convenience and fairness," Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen, 376 U.S. at 622).
The Ninth Circuit instructs district courts to apply a nine-factor balancing test to determine whether to transfer a case under § 1404(a). Jones, 211 F.3d at 498. The test balances the following factors: "(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 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, . . . (8) the ease of access to sources of proof," and (9) the public policy considerations of the forum state. Id. at 498-99. The court considers each of these factors in turn.
1. Location where agreement was negotiated and executed
Selective argues that the insurance contract at the foundation of this dispute—the Policy—was "issued by a New Jersey insurer through a New Jersey broker to a New Jersey insured" and was negotiated, executed, and issued in New Jersey. (Mot. at 7; see Eber Decl. ¶¶ 2, 7.) T-Mobile disputes the importance of these facts, arguing that this factor is generally unimportant in insurance cases and that Selective has failed to produce evidence that any substantive negotiations took place in New Jersey. (See Resp. at 10-12.) Selective counters that the Policy's multiple endorsements, some of which are specific to New Jersey, are evidence of substantive negotiations. (See Reply (Dkt. # 18) at 3-4; Policy at 5-6 (listing the endorsements).) On balance, the court concludes that the Policy was negotiated and executed in New Jersey and that this circumstance weighs in favor of transfer to New Jersey. (See Eber Decl. ¶¶ 2, 7; Policy at 5-6); Lifelast, Inc. v. Charter Oak Fire Ins. Co., No. C14-1031JLR, 2014 WL 4925493, at *3 (W.D. Wash. Sept. 29, 2014) (concluding that the first Jones factor favored transfer to Utah in a coverage dispute between a Washington assignee of a Utah insured and a Connecticut insurer where the policy was executed by the insurer in Connecticut and countersigned in Utah and the only evidence of negotiations was a list of endorsements to the policy).
T-Mobile points out that the PSA and FSA are additional agreements relevant to this case. (See Resp. at 12-13.) T-Mobile contends that the PSA and FSA have more "bearing on T-Mobile's claim to coverage" than the Policy and "were negotiated or executed in Washington." (Id. at 12; see also id. at 13 (stating that the PSA and FSA "appear to have both been executed in Bellevue, Washington").) However, T-Mobile does not explain why the PSA and FSA are more important to this case than the Policy and points the court to no evidence that the PSA and FSA were negotiated and executed exclusively in Washington. (See id. at 12-13.) Although Selective admits that the PSA and FSA were executed in "both New Jersey and Washington" (Mot. at 9), that admission has no impact on the court's analysis of this factor. Cf. Ahead, LLC v. KASC, Inc., No. C13-0187JLR, 2013 WL 1747765, at *9 (W.D. Wash. Apr. 23, 2013) (noting that this factor is "neutral . . . when the parties negotiate and execute a contract in multiple locations"). // //
T-Mobile's only support for this statement is a citation to the entire PSA and FSA. (See Resp. at 13 & n.22 (citing "Exhibits E and F to the Bauer Declaration").) The court will not scour those documents in search of support for T-Mobile's assertion. See United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) ("Judges are not like pigs, hunting for truffles buried in briefs."). Furthermore, the court notes that T-Mobile's complaint contains no allegations regarding where its agreements with Innovative were negotiated and executed. (See Compl.)
2. State most familiar with the governing law
The second factor favors the state that is most familiar with the governing law. Jones, 211 F.3d at 499. The parties dispute whether Washington or New Jersey law should apply to T-Mobile's claims. (See Mot. at 15-24; Resp. at 21-25.) Selective argues New Jersey law should apply and therefore this factor favors transfer. (See Mot. at 9-10.) T-Mobile, on the other hand, claims Washington law should apply and thus this factor weighs against transfer. (See Resp. at 14.)
The choice-of-law issue does not impact the court's decision on this factor. Federal courts are equally equipped to apply distant state laws when the law is not complex or unsettled. See, e.g., Barnstormers, Inc. v. Wing Walkers, LLC, No. 09cv2367 BEN (RBB), 2010 WL 2754249, at *3 (S.D. Cal. July 9, 2010) (stating that a federal court in Texas would be equally adept at applying California law related to unfair competition claims); Houk v. Kimberly-Clark Corp., 613 F. Supp. 923, 932 (D. Mo. 1985) ("This court is routinely called upon to apply the law of other jurisdictions in diversity actions; hence, the possibility that [a foreign] law might govern this action is not of great moment."). Neither party has asserted that the relevant substantive law of Washington or New Jersey is complex or unsettled. Accordingly, regardless of the substantive state law applied in this case, both district courts are equally equipped to handle the case, and this factor is therefore neutral. See Inlandboatmen's Union of the Pac. v. Foss Maritime Co., No. C14-1403JLR, 2015 WL 64933, at *3 (W.D. Wash. Jan. 5, 2015); Lifelast, 2014 WL 4925493, at *4.
3. Plaintiff's choice of forum
As the plaintiff in this action, T-Mobile's choice of forum receives substantial deference and Selective must "make a strong showing of inconvenience" to upset that choice. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). "This factor is generally given significant weight when the plaintiff resides in the chosen forum." Nordquist v. Blackham, No. C06-5433 FDB, 2006 WL 2597931, at *3 (W.D. Wash. Sept. 11, 2006) (citing Warfield v. Gardner, 346 F. Supp. 2d 1033, 1044 (D. Ariz. 2004), and Williams v. Bowman, 157 F. Supp. 2d 1103, 1006 (N.D. Cal. 2001)). T-Mobile's preference, however, is not dispositive. See Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955) (holding that "the discretion to be exercised is broader" under § 1404(a) than under the doctrine of forum non conveniens). In particular, courts are hesitant to defer to a plaintiff's choice of forum when the case lacks a significant connection to that district. See Pedigo Prods., 2013 WL 364814, at *3.
Selective argues that this case lacks strong ties to Washington and that the court therefore should not defer to T-Mobile's choice of forum. (See Mot. at 10-11.) According to Selective, "Washington has little nexus whatsoever to [this case], including whether T-Mobile qualifies as an [additional insured] under the . . . Policy. Here, the only operative facts that occurred in Washington are T-Mobile's tender of the claim to Selective, subsequent correspondence from T-Mobile, and the filing of this lawsuit." (See id. at 10 (citing Eber Decl. ¶ 6); see also Reply at 5 (acknowledging that T-Mobile, Omnipoint, and T-Mobile NE are all residents of Washington and that the PSA and FSA were executed in Washington and New Jersey).) T-Mobile counters that the PSA and FSA were executed in Washington and that Selective directed its bad faith claims handling to T-Mobile at T-Mobile's home offices in Washington. (See Resp. at 15.)
The court concludes that Washington's connection to this case is not so insubstantial that it appreciably erodes the deference due to T-Mobile's choice of forum. See Decker Coal, 805 F.2d at 843; Pedigo Prods., 2013 WL 364814, at *3. T-Mobile alleges that it is an additional insured under the Policy and that, as such, Selective owed T-Mobile duties to conduct a reasonable investigation of T-Mobile's claim, and provide a defense to and indemnify T-Mobile in the underlying litigation. (See Compl. ¶¶ 8-18, 25, 29, 34.) T-Mobile further alleges that Selective breached those duties in an unreasonable manner, causing harm to T-Mobile. (See id. ¶¶ 16-35.) Selective disputes neither that T-Mobile's principal place of business is in Washington nor that the PSA and FSA were executed at least in part in Washington. (See Mot. at 9, 11.) The court concludes this case has a connection to Washington sufficient to support deference to T-Mobile's choice of forum. See Decker Coal, 805 F.2d at 843; Pedigo Prods., 2013 WL 364814, at *3; Lifelast, 2014 WL 4925493, at * 5 (concluding that deference was appropriate where a Washington assignee of a Utah insured brought suit against a Connecticut insurer in Washington). This factor therefore weighs against transfer.
4. Parties' contacts with the forum
The fourth factor focuses on the parties' contacts with the current and potential forum. See Ahead, 2013 WL 1747765, at *11. Selective argues that the "vast majority" of the contacts relevant to this case are with New Jersey, not Washington. (Mot. at 11.) In particular, Selective points out that Selective and Innovative are New Jersey corporations, the Policy was negotiated and executed in New Jersey, Selective's actions that gave rise to this lawsuit took place in New Jersey, and T-Mobile does business and was served in the underlying action in New Jersey. (See id.; see also Reply at 6 (pointing out that the T-Mobile bases its claim for coverage on contracts that T-Mobile subsidiaries entered into with a New Jersey corporation).) T-Mobile responds that it is headquartered and has its principal place of business in Washington. (Resp. at 15.) Furthermore, T-Mobile notes, Selective does some business in Washington and has sent communications to T-Mobile in Washington regarding T-Mobile's claim for coverage. (Id.)
This factor favors transfer to New Jersey. T-Mobile is headquartered and has its principal place of business in Washington, and Selective is incorporated and has its principal place of business in New Jersey. (See Compl. ¶ 2; Bauer Decl. ¶ 3; Eber Decl. ¶ 2.) In addition, T-Mobile does business in New Jersey, and Selective does business in Washington. (See T-Mobile Removal ¶ 2; PSA; FSA; Eber Decl. ¶¶ 3-5.) Selective's business in Washington, however, has no connection to this lawsuit. (See Eber Decl. ¶¶ 3-5); Inlandboatmen's Union of the Pac., 2015 WL 64933, at *3 (treating a party's case-related contacts as more significant than its general contacts). On the other hand, T-Mobile's alleged subsidiaries entered into the agreements on which T-Mobile bases its claims with Innovative, a New Jersey corporation. (See Compl. ¶¶ 2, 11; T-Mobile 3dP Compl. ¶¶ 10, 45; Eber Decl. ¶ 7; PSA; FSA; Resp. at 3.) Thus, although both parties have contacts with both forums, the court finds that T-Mobile's contacts with New Jersey are more significant than Selective's contacts with Washington. See Inlandboatmen's Union of the Pac., 2015 WL 64933, at *3.
5. Contacts relating to Plaintiff's cause of action in the chosen forum
This factor concerns the contacts between T-Mobile's claims against Selective and T-Mobile's chosen forum—Washington. See Ahead, 2013 WL 1747765, at Selective emphasizes that the Policy was negotiated and executed in New Jersey and that the PSA, the FSA, and the underlying litigation relate to a project just across the border from New Jersey in New York City. (See id. at 12.) Selective also argues that the business decisions causing the alleged breach occurred in New Jersey. (Id.) T-Mobile counters that such contacts are unimportant to its claims. (See Resp. at 16.) T-Mobile stresses its allegations that Selective directed wrongful conduct at T-Mobile in Washington and T-Mobile experienced the consequences of that conduct in Washington. (See id.)
This factor favors neither forum. "For the purposes of 28 U.S.C. § 1404(a), courts consider a number of factors when determining 'the situs' of the action, including where the contract was negotiated and executed, where business decisions causing the breach of contract took place, and where the alleged conduct was directed." Lifelast, 2014 WL 4925493, at *6. Courts also consider "the location of the subject of the contract." Ahead, 2013 WL 1747765, at *11.
Here, the Policy was negotiated and executed in New Jersey. (See Eber Decl. ¶ 7; Policy at 5-7); supra § III.A.1. Yet the PSA and FSA appear to have been negotiated in both New Jersey and Washington and concerned a project located in New York. (See Mot. at 9; Resp. at 3; Underlying Compl. ¶¶ 6, 10, 27; T-Mobile 3dP Compl. ¶¶ 1, 15, 45; Compl. ¶¶ 10-11.) Selective made the business decisions causing the alleged breach and constituting the alleged bad faith and statutory violations in New Jersey. (See Parlin Decl. ¶¶ 2-6; Eber Decl. ¶ 6.) However, Selective directed its alleged wrongful conduct at T-Mobile in its Washington headquarters, and T-Mobile experienced the consequences of that conduct at least partially in Washington. (See 2/26/15 Parlin Email; Bauer Decl. ¶¶ 2-4); Lifelast, 2014 WL 4925493, at *6. T-Mobile's claims thus have contacts with both Washington and New Jersey. The court concludes this factor is neutral with respect to transfer. See Lifelast, 2014 WL 4925493, at *6.
6. Differences in the costs of litigation in the two forums
When comparing the costs of litigation in various forums, courts disfavor transferring venue when "transfer would merely shift rather than eliminate" costs and inconvenience. Decker Coal, 805 F.2d at 843. "The relative cost analysis focuses primarily on the venue's proximity to witnesses." Inlandboatmen's Union of the Pac., 2015 WL 64933, at *4. T-Mobile claims that "a majority, if not all, of T-Mobile's witnesses currently reside in the states of Washington and Oregon." (Resp. at 17.) T-Mobile specifically identifies Lisa Bauer (Washington), the primary person involved in the claims-related discussions with Selective; Robert Burton (Oregon), T-Mobile's insurance claims administrator; and Diane Mathis and Michael Simpson (Washington), T-Mobile employees with knowledge of the relationship between T-Mobile and Omnipoint and T-Mobile NE. (See id.; Bauer Decl. ¶¶ 16-17.) T-Mobile also argues that litigation would be more expensive in New Jersey because billing rates for counsel are higher there than in Seattle and if the case is transferred to New Jersey, new counsel would have to be hired and brought up to speed. (See Resp. at 16.)
Selective does not identify any specific witnesses who are located in New Jersey. Instead, Selective merely asserts that "[a]ll of the witnesses with knowledge of the events that give rise to the [underlying litigation] are in New York and/or New Jersey . . . ." (Mot. at 13; see also Reply at 7 ("Selective's witnesses are located in New Jersey. Potentially relevant non-party witnesses are located in both New York and New Jersey."); Eber Decl. ¶ 9 ("All of [Selective's] witnesses are located in New Jersey or the New York metropolitan area.").) Selective acknowledges that "T-Mobile's witnesses are located in Washington and Oregon" and that "shifting of litigation costs from one party to another is generally not a basis to transfer venue." (Reply at 7.) Nevertheless, Selective argues that transfer is appropriate in the unique circumstances of this case because "T-Mobile entities interjected themselves into New Jersey," whereas Selective "took no affirmative steps to get involved with any Washington entity." (Id. at 7-8.)
Selective has failed to carry its burden of showing that transfer would reduce rather than merely shift costs. See Decker Coal, 805 F.2d at 843. Both parties claim to have witnesses who may need to travel depending on where this case is tried, but Selective fails to indicate how many witnesses are in New York and New Jersey and what role those witnesses play in this case. (See Mot. at 13; Reply at 7; Resp. at 17; Bauer Decl. ¶¶ 16-17.) Moreover, Selective appears to concede in its reply memorandum // // that transfer would merely shift costs to T-Mobile. (See Reply at 7.) As such, the court concludes that transfer would at best shift costs to T-Mobile without reducing costs overall. This factor therefore weighs against transfer. See Decker Coal, 805 F.2d at 843.
Selective argues that cost shifting is appropriate here because T-Mobile's case-related contacts with New Jersey are purposeful, whereas Selective's case-related contacts with Washington are not purposeful. (See Reply at 7-8.) In making this argument, Selective appears to be analogizing to the law of personal jurisdiction. (See id. at 6-8.) Selective, however, cites no authority for the notion that the purposefulness of a party's contacts is relevant to the court's costs analysis under 28 U.S.C. § 1404(a). Accordingly, the court rejects Selective's argument.
7. Availability of compulsory process to compel attendance of unwilling non-party witnesses
This factor favors transfer to New Jersey only if New Jersey has the ability to subpoena more non-party witnesses than Washington, and the non-party witnesses within New Jersey are likely to refuse to testify. See Inlandboatmen's Union of the Pac., 2015 WL 64933, at *5; Lifelast, 2014 WL 4925493, at *7. The focus here is on not "the number of witnesses . . . at each locale," but rather "the materiality and importance of the anticipated . . . witnesses' testimony." Lueck v. Sundstrand Corp., 236 F.3d 1137, 1146 (9th Cir. 2001). Selective argues that Innovative is located in New Jersey and likely unwilling to testify. (See Mot. at 14; Reply at 8; Siegel Decl. (Dkt. # 21) ¶¶ 3-4.) However, Selective neither lists the individuals at Innovative who will be witnesses nor explains "the materiality and importance" of such testimony to this case. Lueck, 236 F.3d at 1146; (see Mot. at 14; Reply at 8.) In fact, Selective appears to be uncertain regarding whether testimony from Innovative representatives will prove necessary at all. (See Mot. at 14; Reply at 8 ("[I]t may be necessary for [Innovative] to provide testimony with respect to the execution of the [FSA].").) Accordingly, the court concludes that Selective has failed to carry its burden on this factor, and that this factor therefore weighs against transfer.
8. Ease of access to sources of proof
This factor focuses on the location of witnesses, documentary evidence, and inventory to be inspected, if any. See Jones, 2011 F.3d at 499. Because most documentary evidence can now be produced electronically, the location of such evidence outside the forum does not support transfer absent some unique difficulty. See Burns v. Gerber Prods. Co., 922 F. Supp. 2d 1168, 1173 (E.D. Wash. 2013). Furthermore, just as with factor seven, the focus here is on the materiality of an importance of the evidence in question. See Lueck, 236 F.3d at 1146. Selective argues that this factor favors transfer because Selective's witnesses are in New York and New Jersey and the claim and underwriting files are in New Jersey. (See Mot. at 14-15 (acknowledging that this factor is "less important in the modern era"); Eber Decl. ¶ 8.)
As discussed above, some witnesses are likely in Washington and others are likely in New York or New Jersey. (See Mot. at 13; Reply at 7; Resp. at 17; Bauer Decl. ¶¶ 16-17); supra § III.A.6. Selective has not demonstrated that the New Jersey and New York witnesses are more important to this case than the witnesses located in Washington. (See Mot. at 13-15; Reply at 7-8); supra §§ III.A.6-7. Furthermore, although Selective identifies some documentary evidence located in New Jersey, Selective does not claim that it cannot produce such evidence electronically or that any undue difficulties stand in the way of producing such evidence in Washington. (See Mot. at 14-15; Eber Decl. ¶ 8.) The court therefore finds that this factor does not support transfer.
9. Public policy of the forum state
Public policy factors include the "local interest in having localized controversies decided at home" and deciding cases "where the claim arose." Decker Coal, 805 F.2d at 843 (quoting Piper Aircraft, 454 U.S. at 241 n.6). Forum states have an interest in providing redress for their injured residents. See Gordy v. Daily News, L.P., 95 F.3d 829, 836 (9th Cir. 1996) ("California maintains a strong interest in providing an effective means of redress for its residents tortiously injured.") (quoting Sinatra v. Nat'l Enquirer, Inc., 654 F.2d 1191, 1200 (9th Cir. 1988)). As discussed above, the "situs" of the case is in both Washington and New Jersey. See supra § III.A.5. In addition, T-Mobile is headquartered in Washington and alleges that it suffered an injury due to the actions of an insurance company that does business in this state. (See Bauer Decl. ¶ 3; Compl. ¶¶ 2-3, 8-35; Eber Decl. ¶¶ 3-5.) Accordingly, Washington's interest in the present case is greater than New Jersey's interest. See Lifelast, 2014 WL 4925493, at *8. This factor weighs against transfer.
10. Balancing the Jones factors
In light of the foregoing factors, the court concludes that Selective has failed to carry its burden to show that transfer to New Jersey is appropriate. See Piper Aircraft, 454 U.S. at 255-56; Silver Valley Partners, 2006 WL 2711764, at *2. Plaintiff's choice of forum, the costs of litigation, the availability of compulsory process, the ease of access to sources of proof, and the public policy of the forum all weigh against transfer. See supra §§ III.A.3, 6-9. Familiarity with the governing law and the contacts relating to Plaintiff's claims are neutral. See supra §§ III.A.2, 5. Only the place of contracting and the parties' contacts with the forum support transfer. See supra §§ III.A.1, 4. On balance, these factors favor maintaining venue in Washington. The court therefore denies Selective's motion to transfer venue to the District of New Jersey.
B. Motion for Application of New Jersey Law
As discussed above, T-Mobile brings claims for breach of contract, bad faith, violation of the CPA, and violation of IFCA. (See Compl. at 5-8.) Selective moves the court to rule that New Jersey law applies to all those claims. (See Mot. at 15-24.) T-Mobile opposes that motion and argues that Washington law applies to all its claims. (See Resp. at 20-25.)
T-Mobile also asserts causes of action for a declaratory judgment, attorney's fees, and coverage by estoppel. (See Compl. at 5-6, 8.) However, T-Mobile maintains that these causes of action are merely additional remedies for its other claims. (See Resp. at 25; Compl. at 5 (asking for a declaration that Selective "is obligated to defend and indemnify T-Mobile"), 6 (asserting that T-Mobile, "as the insured in a legal action to obtain the benefits under an insurance policy, is entitled to attorney's fees and costs associated with compelling Defendant to fulfill its contractual obligations thereunder"), 8.) Selective agrees that the declaratory and attorney's fees causes of action do not require a choice-of-law analysis separate from the breach of contract claim. (See Mot. at 16-18 ("Because all three causes of action sound in contract interpretation, we view the three claims as singular.").) Although Selective treats T-Mobile's estoppel cause of action as a separate claim, Selective analyzes the estoppel claim exactly as it analyzes T-Mobile's bad faith claim. (See id. at 18-20, 23-24.) Moreover, T-Mobile concedes that if the estoppel cause of action requires a choice-of-law analysis, that analysis should be identical to the analysis the court performs on T-Mobile's bad faith claims. (See Resp. at 25.) The court therefore concludes that the declaratory judgment, attorney's fees, and estoppel causes of action require no separate choice-of-law analysis at this time.
When the laws of more than one state potentially apply, a federal district court sitting in diversity applies choice-of-law rules from the forum state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) (holding that a federal court sitting in diversity applies the conflict-of-law rules of the state in which it sits). In Washington, choice-of-law disputes require a two-step inquiry. First, the court must determine whether there is an actual conflict between the laws or interests of Washington and the laws or interests of another state. Seizer v. Sessions, 940 P.2d 261, 265 (Wash. 1997). An actual conflict exists when the result of the issues is different under the law of the two states. Id. If there is no actual conflict, the presumptive local law applies. Erwin v. Cotter Health Ctrs., 167 P.3d 1112, 1120 (Wash. 2007).
Washington courts follow the rule of dépeçage, which may require a court to apply the law of one forum to one issue, while applying the law of a different forum to another issue in the same case. Brewer v. Dodson Aviation, 447 F. Supp. 2d 1166, 1175 (W.D. Wash. 2006); Polygon Nw. Co. v. Nat'l Fire & Marine Ins. Co., No. 11-92Z, 2011 WL 2020749, at *3 (W.D. Wash. May 24, 2011). --------
If the court concludes there is an actual conflict between the law of the two states on any given issue, the court must move on to the second step of the analysis, and determine which jurisdiction has the "most significant relationship" to the particular issue. Seizer, 940 P.2d at 265. Washington courts have adopted the restatement tests for determining which jurisdiction has the "most significant relationship" to the occurrence and the parties. See Rice v. Dow Chem. Co., 875 P.2d 1213, 1217 (Wash. 1994) (applying the Restatement (Second) of Conflict of Laws § 145 to a tort dispute); Mulcahy v. Farmers Ins. Co. of Wash., 95 P.3d 313, 317-18 (Wash. 2004) (applying the Restatement (Second) of Conflict of Laws § 188 to a contract dispute).
1. Breach of contract
The parties dispute whether Washington and New Jersey law conflict with respect to this claim. (See Mot. at 16-17; Resp. at 21-23.) Selective concedes that "the basic guiding principles of insurance policy interpretation do not appear to differ between Washington and New Jersey law." (Mot. at 16.) Selective maintains, however, that the laws of these states conflict "with regard to the weight afforded to the outcome of the actual coverage determination." (Id. at 17.) Specifically, Selective points out that the failure to prove coverage has different consequences under Washington and New Jersey law. (See id. at 16-19.) Under Washington law, "a claim for bad faith claims handling remains viable even if the insurer did not breach its duty to defend, pay, or settle." Bayley Const. v. Great Am. E & S Ins. Co., 980 F. Supp. 2d 1281, 1290 (W.D. Wash. 2013); see St. Paul Fire & Marine Ins. Co. v. Onvia, Inc., 196 P.3d 664, 669 (Wash. 2008); (Mot. at 18.) Under New Jersey law, "[i]f there is a valid question of coverage, i.e., the claim is 'fairly debatable,' the insurer bears no liability for bad faith." Wacker-Ciocco v. Gov't Emps. Ins. Co., 110 A.3d 962, 967 (N.J. Super. Ct. App. Div. 2015) (quoting Pickett v. Lloyd's, 621 A.2d 445, 453-54 (N.J. 1993)) ("[T]he insured who alleges bad faith by the insurer must establish the merits of his or her claim for benefits."); (see Mot. at 19.)
Selective has failed to identify an actual conflict with respect to this claim. Instead, Selective shows that New Jersey imposes on bad faith claims a precondition that Washington does not impose on such claims. (See Mot. at 16-17.) This difference constitutes a conflict between Washington and New Jersey law on bad faith claims, not breach of contract claims. (See id. at 18-19 (discussing the same difference between Washington and New Jersey law in arguing that the laws of these states conflict with respect to T-Mobile's bad faith claim).) Accordingly, the court denies Selective's motion for application of New Jersey law to T-Mobile's breach of contract claim. See Erwin, 167 P.3d at 1120.
2. Bad faith, IFCA, and CPA claims
The parties agree that Washington and New Jersey law conflict regarding bad faith, IFCA, and CPA claims. (See Mot. at 18-22; Resp. at 23 ("There is a conflict between the law of Washington and New Jersey on the issue of bad faith."), 25 (omitting any discussion of whether an actual conflict exists with respect to the IFCA and CPA claims and instead arguing that, under the same choice-of-law analysis applicable to the bad faith claim, Washington law applies).) The parties also agree that the same choice-of-law or "most significant relationship" analysis applies for each of these claims, as all of them sound in tort. (See Mot. at 19-20, 22-24.) Accordingly, the court conducts one choice-of-law analysis for these claims.
Washington courts follow the Restatement (Second) of Conflict of Laws § 145 to determine which state's law governs tort, IFCA, and CPA claims. Tilden-Coil Constructors, Inc. v. Landmark Am. Ins. Co., 721 F. Supp. 2d 1007, 1016 (W.D. Wash. 2010) (citing Rice, 875 P.2d at 1217, and analyzing choice of law for tort and CPA claims); Polygon Nw. Co. v. Nat'l Fire & Marine Ins. Co., No. 11-92Z, 2011 WL 2020749, at *5-6 (W.D. Wash. May 24, 2011) (analyzing choice of law for IFCA and CPA claims).
Section 145 of the Restatement (Second) of Conflict of Laws directs the court to determine the state with the most significant relationship to the occurrence and the parties under the general principles stated in Section 6. See Restatement (Second) of Conflict of Laws § 145(1) (Am. Law Inst. 1971). In doing so, the court should take into account the following four contacts: (a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicil, residence, nationality, place of incorporation, and place of business of the parties; and (d) the place where the relationship, if any, between the parties is centered. Id. § 145(2). These contacts must be evaluated according to their relative importance with respect to the issue at hand. Id. The most important Section 6 factors for torts claims are the needs of the interstate and international systems, the relevant policies of the forum, the relevant policies of other interested states and particularly of the state with the dominant interest in the determination of the particular issue, and ease in the determination and application of the law to be applied. Id. cmt. b.
Selective argues that T-Mobile's injury, if any, occurred not in Washington, where T-Mobile is headquartered, but in New York, "where defense costs have been paid and a potential indemnity obligation may exist." (Mot. at 20.) This court has already held, however, that "[l]ogically, when an insurance company acts in bad faith or violates IFCA or CPA, its insured will experience that injury where the insured is located." MKB Constructors v. Am. Zurich Ins. Co., 49 F. Supp. 3d 814, 833 (W.D. Wash. 2014) (concluding that the place where the injury occurred was both Alaska (where the construction problems and contract dispute giving rise to the insured's claim for benefits took place) and Washington (where the insured was located)). Nonetheless, the court acknowledges that another court in this district has held, in a case similar to this one, that the additional insured's injury, "the cost of having to defend itself in the [underlying] litigation in Oregon state court, took place in Oregon[,]" not in the additional insured's home state of Washington. Polygon, 2011 WL 2020749, at *6. Here, the court concludes that the injury occurred in both Washington and New York and that this contact tips slightly in favor of applying Washington rather than New Jersey law. See MKB, 49 F. Supp. 3d at 833; see also Costco Wholesale Corp. v. Nationwide Mut. Ins. Co., No. C11-1550 RAJ, 2012 WL 4320715, at *3 (W.D. Wash. Sept. 20, 2012) (concluding this factor was neutral as between California and Washington where the underlying claims against the additional insured arose in a variety of states, including California, but the insurer's alleged tortious conduct took place while the insured "was a resident of Washington").
With respect to the second factor, courts generally hold that in the insurance context the location where the conduct causing the injury occurred is where the insurer makes its coverage decisions. Costco, 2012 WL 4320715, at *3 (citing Lange v. Penn Mut. Life Ins. Co., 843 F.3d 1175, 1179 (9th Cir. 1988), and Polygon, 2011 WL 2020749, at *6). Here, that location is New Jersey. Selective made its decision to deny a defense and coverage to T-Mobile in New Jersey. (See Eber Decl. ¶ 6; Parlin Decl. ¶ 6; see also RoR Letter at 1.) Selective also communicated that decision to T-Mobile from New Jersey. (See Parlin Decl. ¶ 3; 2/26/15 Parlin Email.) Moreover, T-Mobile did not purchase an insurance policy from Selective in Washington. Instead, T-Mobile allegedly required Innovative, a New Jersey company, to add T-Mobile as an additional insured on Innovative's New Jersey insurance policy. (See Eber Decl. ¶ 7; PSA; FSA; Policy; Compl. ¶¶ 6-8, 11-12.) Accordingly, the location of the injury-causing conduct favors New Jersey. See Costco, 2012 WL 4320715, at *3.
With respect to the third factor, the contacts point to both Washington and New Jersey. T-Mobile's headquarters and principal place of business is Washington. (Bauer Decl. ¶ 3.) Selective is incorporated and has its principal place of business in New Jersey. (Eber Decl. ¶ 2.) As such, this factor is neutral.
In determining the center of the parties' relationship, "courts look to the location where the insurer makes coverage decisions, where the contract of insurance was requested and issued, and where the underlying liability occurred and is being litigated." Costco, 2012 WL 4320715, at *3 (citing Lange, 843 F.3d at 1180, and Polygon, 2011 WL 2020749, at *6). T-Mobile alleges that the PSA and FSA required Innovative to add T-Mobile as an additional insured on the Policy. (See Resp. at 12-13 (citing PSA and FSA).) Innovative is a New Jersey company that used a New Jersey broker to acquire the Policy from Selective—a New Jersey insurer. (See Eber Decl. ¶¶ 2, 7; Policy.) T-Mobile further alleges that Innovative added T-Mobile as an additional insured on the Policy, and that T-Mobile qualifies as an additional insured under the Policy's EGLE. (See Compl. ¶¶ 8, 11-12; Resp. at 3-4.) T-Mobile did not seek insurance through a Washington broker or enter into an insurance contract in Washington.
Pursuant to agreements with T-Mobile, Innovative performed work on a construction project in New York City. (See Resp. at 3; T-Mobile 3dP Compl. ¶¶ 1, 15, 45; Compl. ¶¶ 10-11.) In April 2013, a New York entity filed suit against T-Mobile and Omnipoint for property damage arising out of that project. (See Underlying Compl.) T-Mobile later tendered its defense of the underlying litigation to Selective, a New Jersey corporation. (See Tender; Eber Decl. ¶ 2.) Selective decided, in New Jersey, to reject T-Mobile's tender. (See Eber Decl. ¶ 7; Parlin Decl. ¶¶ 3-6; 2/26/15 Parlin Email.) Selective communicated that decision to T-Mobile in Washington. (See 2/26/15 Parlin Email; Bauer Decl. ¶¶ 3-4, 6-10.)
T-Mobile contends that the parties' relationship is centered in Washington (Resp. at 24); however, the only circumstance supporting that contention is that T-Mobile received Selective's claims-related communications in Washington, where T-Mobile has its headquarters. (See 2/26/15 Parlin Email; Bauer Decl. ¶¶ 3-4, 6-14.) The PSA and FSA are not contracts between T-Mobile and Selective. (See PSA; FSA.) Moreover, even if the court considered those agreements as contacts with Washington concerning the parties' relationship, the court would nevertheless conclude that the parties' relationship was centered in New Jersey where the Policy was issued, where T-Mobile was allegedly added as an additional insured, and where coverage determinations were made. See Costco, 2012 WL 4320715, at *4.
Balancing the four factors, the court finds that the most significant contacts between T-Mobile and Selective occurred in New Jersey. T-Mobile argues that the court should also consider Washington's interests and public policies. (See Resp. at 24-25.) However, Washington courts reach such considerations only when the relevant contacts are "evenly balanced." Myers v. Boeing Co., 794 P.2d 1272, 1278 (Wash. 1990) ("[T]he court must first look to the contacts each forum has with the case. If the contacts are evenly balanced, the court then looks to which forum has a greater interest in the determination of the particular issue."). Because the court concludes the contacts are not evenly balanced, the court does not consider Washington's interest in the application of Washington law. See id. Accordingly, the court grants Selective's motion for application of New Jersey law to T-Mobile's bad faith, IFCA, and CPA claims.
For the foregoing reasons, the court GRANTS in part and DENIES in part Selective's motion to transfer venue and for application of New Jersey law (Dkt. # 9). The court DENIES Selective's request to transfer this case to the District of New Jersey and for application of New Jersey law to T-Mobile's breach of contract claim. The court GRANTS Selective's motion for application of New Jersey law to T-Mobile's bad faith, CPA, and IFCA claims.
Dated this 14th day of April, 2016.
JAMES L. ROBART
United States District Judge