Free Order to Show Cause - District Court of California - California

Case 3:07-cv-04943-MHP

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Filed 07/31/2008

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1 2 3 4 5 6 7 8 9 10 v. UNITED NATIONAL INSURANCE COMPANY, Defendant.
For the Northern District of California

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

FIREMAN'S FUND INSURANCE COMPANY, Plaintiff,

No. C 07-04943 MHP ORDER TO SHOW CAUSE Re: Transfer to the District of New Mexico

United States District Court

11 12 13 On August 21, 2007 plaintiff Fireman's Fund Insurance Company ("Fireman's Fund") filed 14 an action in the Superior Court of the State of California in the County of Marin regarding an 15 insurance dispute. That action was removed to this court on September 24, 2007 based upon 16 diversity jurisdiction. See 28 U.S.C. §§ 1332(a), 1441. Indeed, the parties are completely diverse 17 and the amount in controversy exceeds $75,000. The court notes, however, that no insurance 18 policies accompanied the notice of removal. See Docket No. 1. 19 Plaintiff Fireman's Fund is a California corporation having its principal place of business in 20 California. Defendant United National Insurance Company ("United") is a Pennsylvania 21 corporation having its principal place of business in Bala Cynwyd, Pennsylvania, located in the 22 Eastern District of Pennsylvania. In its answer and counterclaim, defendant added a cross23 defendant, Interstate Fire and Casualty Company ("Interstate"). Interstate appears to be an Illinois 24 corporation with its principal place of business in Chicago, Illinois. 25 This action concerns monies paid in order to settle a wrongful death claim against the 26 parties' mutual insured, Cirrus Medical Staffing, Inc. ("Cirrus"). The events that led to the 27 underlying action seem to have all occurred in Albuquerque, New Mexico and the underlying action 28 giving rise to the claims here was conducted in the state court in New Mexico. Interstate settled that action for $499,000 and now, in a motion for summary judgment, seeks declaratory relief and /

Case 3:07-cv-04943-MHP

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equitable contribution and/or indemnity from United for defense costs and indemnity expenses it paid on behalf of Cirrus related to the underlying action. At first blush, it seems that this forum, with no connection to the underlying events or the defendant, is an improper venue for this action. Indeed, under 28 U.S.C. section 1391(a), the proper venue seems to be either the Eastern District of Pennsylvania or the District of New Mexico. In removed actions, however, venue is determined by the district embracing the place where the action was pending in state court prior to the removal. See 28 U.S.C. § 1441(a); see also Polizzi v. Cowles Mags., 345 U.S. 663, 665 (1953) ("[t]he venue of removed actions is governed by 28 U.S.C. s 1441(a)" and that section "1391 has no application" in removed cases). This has the curious effect of allowing actions with no connection to the forum to proceed in federal court. This seems to be the case even if venue was improper in the state court in which the action originally was brought, because the nonresident defendant's voluntary application for removal to the district court confers venue and personal jurisdiction over the defendant. Seaboard Rice Milling Co. v. Chicago, R.I. & P.R. Co., 270 U.S. 363, 367 (1926). Thus, venue is proper in this forum. Here, defendant did not contest whether courts located in California have in personam jurisdiction over it. Moreover, the parties do not seem to contest that California law applies in this action. However, other than being the place where the plaintiff is incorporated and seemingly conducts business, California has no connection to this litigation. However, even this connection seems tenuous. The original complaint was filed by Fireman's Fund, but the cross-motions for summary judgment seem to implicate insurance policies issued only by United and Interstate. According to paragraph 6 of Fireman's Fund's complaint, Fireman's Fund issued a claims-made professional liability policy that is the subject of the instant litigation. The court, however, has no evidence of this policy, and consequently, is unable to determine how Fireman's Fund is implicated in this litigation. Further, Interstate and Fireman's Fund seem to be confused about their employees. Compare Joint Statement of Undisputed Facts, ¶ 19 (stating Jennifer Green works for Interstate) with id. Exh. O (stating that Jennifer Green works for Fireman's Fund, in Chicago). It seems that at some point in the litigation, without filing an amended complaint, Interstate began to represent itself as a plaintiff in this action. See, e.g., Docket No. 7. In light of this confusion, Fireman's Fund is 2

United States District Court

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For the Northern District of California

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directed to demonstrate in writing, within fourteen (14) days of the date of this order, its connection to this litigation. At a minimum, Fireman's Fund is ORDERED to submit the policy that it issued to Cirrus. Under 28 U.S.C. section 1404(a), this court may transfer a civil action "in the interest of justice . . . to any other district or division where it might have been brought." (emphasis added). The language of section 1404(a) is broad enough that a district court can order transfer sua sponte. Wright, Miller & Cooper, Federal Practice and Procedure, Jurisdiction 3d § 3844. Here, there are multiple other fora that are better suited for this litigation than the Northern District of California. It is clear that this action could have been brought in the District of New Mexico, where a significant number, if not all, of the events at issue in this litigation occurred. See 28 U.S.C. § 1391(a)(2). Since defendant transacts business in New Mexico, the court assumes that courts in that state will have in personam jurisdiction over defendant. Furthermore, defendant has its principal place of business in the Eastern District of Pennsylvania. Thus, this action could also have been brought there. Id. § 1391(a)(1). In sum, both the District of New Mexico and the Eastern District of Pennsylvania are more appropriate fora for this litigation. For the foregoing reasons, this court ORDERS that the action be transferred, sua sponte, to the District of New Mexico, unless one or more of the parties shows CAUSE in writing within fourteen (14) days of the date of this order why the court should not so act. Parties may also choose to stipulate to transfer this action to either the District of New Mexico or the Eastern District of Pennsylvania, or may argue that the court should transfer to the Eastern District of Pennsylvania instead. In light of this ruling, the currently scheduled hearing date for the cross-motions for summary judgment is VACATED until further notice. As directed by this order to show cause, the parties are to file responsive papers on or before August 13, 2008. IT IS SO ORDERED. Dated: July 30, 2008 MARILYN HALL PATEL United States District Court Judge Northern District of California

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For the Northern District of California

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