JULIE A. ROBINSON, District Judge.
This case comes before the Court on Defendant/Counter-Claimant Universal Underwriters Insurance Company's Motion to Transfer Venue to the Central District of California (Doc. 18). The motion is fully briefed, and the Court is prepared to rule. For the reasons explained in detail below, the Court denies Defendant's motion.
This is an insurance coverage dispute filed by AKH Company, Inc. ("AKH") against Universal Underwriters Insurance Company ("UUIC"), arising out of a trademark infringement action against AKH which UUIC defended and settled under a reservation of rights. AKH is a California corporation with its principal place of business in California. It sells and installs tires through its retail garages and internet website under the name "Discount Tire Centers." In May of 2010, The Reinalt-Thomas Corporation dba Discount Tire filed a civil action against AKH in the District of Arizona, alleging that AKH infringed upon and diluted its trademark under state and federal law. AKH in turn filed its own civil action against Reinalt-Thomas in the Central District of California and successfully moved to transfer venue of the first action to the Central District of California. The two lawsuits were consolidated ("the R-T lawsuits") and ultimately settled in December of 2012.
In this case, AKH seeks declaratory relief that UUIC breached its duties to defend, settle, and act fairly and in good faith. UUIC brings counterclaims for declaratory relief and breach of contract arising out of its defense and settlement of the R-T lawsuits.
The parties dispute whether UUIC is an Illinois or Kansas corporation with its principal place of business in the same state. UUIC asserts that it is an Illinois corporation with its principal place of business in Schaumburg, Illinois. AKH challenges those assertions, stating that UUIC has done nothing more than obtain permission from the Kansas Commissioner of Insurance to redomesticate itself as an Illinois insurer effective as of December 31, 2012, and that obtaining regulatory oversight beginning in — from the Illinois Department of Insurance has no bearing on UUIC's corporate citizenship or on this lawsuit. Furthermore, AKH asserts that the Secretaries of State of both Illinois and Kansas still list UUIC as a Kansas corporation with its principal office in Kansas. UUIC contends that the records of the Secretaries of State are of no import because insurance companies are subject to the exclusive regulation and supervision of the Department of Insurance. UUIC submits that its principal place of business since at least 2007 has been and is Schaumburg, Illinois, but it does not deny that it maintains an office in Overland Park, Kansas.
This Court has jurisdiction over the claims pursuant to 28 U.S.C. § 1332.
While the parties agree that venue is proper in this district pursuant to 28 U.S.C. § 1391, UUIC denies that this venue is convenient. UUIC has filed a motion to transfer this case to the Central District of California pursuant to 28 U.S.C. § 1404 for the convenience of the parties and the witnesses and in the interest of justice.
Motions to transfer venue are governed by 28 U.S.C. § 1404(a), which provides in relevant part 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." Section 1404(a) affords the district court broad discretion to adjudicate motions to transfer based on a case-by-case review of convenience and fairness.
In determining whether transfer is appropriate under Section 1404(a), the Court should consider the plaintiff's choice of forum, the accessibility of witnesses and other sources of proof, the cost of making the necessary proof, questions as to the enforceability of a judgment if one is obtained and relative advantages and obstacles to a fair trial, difficulties that may arise from congested dockets, the possibility of the existence of questions arising in the area of conflict of laws, the advantage of having a local court determine questions of local law, and "all other considerations of a practical nature that make a trial easy, expeditious and economical."
Courts generally hold that the plaintiff's choice of forum weighs against transfer.
Moreover, "[c]ourts also accord little weight to a plaintiff's choice of forum `where the facts giving rise to the lawsuit have no material relation or significant connection to the plaintiff's chosen forum.'"
The parties devote much space in their respective briefs to their disagreement as to whether UUIC is a Kansas or Illinois corporation. A careful reading of UUIC's supporting documents and the relevant state statutes leads the Court to conclude that UUIC is a Kansas corporation, its reference to its relationship to the state of Illinois is a red herring, and its purported evidence does not advance its argument that this case should be transferred to the Central District of California. The Court first notes the various ways in which UUIC describes itself.
With respect to Plaintiff's characterization of UUIC, Plaintiff does not allege in its complaint that UUIC is "domiciled" in Kansas. Rather, Plaintiff states that "Universal is a Kansas corporation with its principal place of business in Overland Park, Kansas."
A civil action may be brought in —
The statute also defines corporate "residency" as follows:
By admitting that personal jurisdiction is proper in the District of Kansas, UUIC thereby acknowledges that it is a "resident" of Kansas as that word is defined in Section 1391. UUIC does not contend that venue does not lie in this district. Instead, by filing a motion pursuant to 28 U.S.C. § 1404, UUIC asserts that the Central District of California would be more convenient to the parties and witnesses. Given UUIC's admission and the Court's findings below, it is clear that UUIC's relationship to the state of Illinois has no relevance to the instant motion.
Even if it were relevant, UUIC has not provided evidence to support its assertion that it is an Illinois corporation. The documents which accompany Ella Liberman's affidavit indicate that UUIC has been redomesticated in Illinois.
UUIC does not deny that it remains duly qualified to transact the business of insurance in Kansas. According to Plaintiff's evidence, the Kansas Secretary of State continues to identify UUIC as a Kansas corporation. The Illinois Secretary of State does not list UUIC as an Illinois corporation, as it could not; the Illinois Department of Insurance has merely exercised its authority to allow UUIC to transact business as an Illinois company under the Illinois Insurance Code.
Although decided in the related context of federal court jurisdiction rather than venue, a line of Supreme Court cases concludes that a corporation does not change its state of incorporation through the act of redomesticating. The Supreme Court first drew a line between the two in an 1896 case deciding whether a foreign railroad corporation that takes advantage of a state's domestication statute thereby becomes a citizen of that state for diversity jurisdiction purposes. In St. Louis & San Francisco Railway v. James,
These cases predate the 1958 amendments to 28 U.S.C. § 1332, the federal diversity statute, which added subsection (c) to define a corporation's citizenship to include both the state in which it has its principal place of business and "any State by which it has been incorporated." Yet this statutory expansion still does not validate UUIC's assertion that it is an Illinois corporation, as the legislative history from the amendments includes the following explanation of the impact of its principal-place-of-business addition:
UUIC remains a Kansas corporation.
The accessibility of witnesses, both party and non-party, is an important factor in a Section 1404(a) analysis. In this circuit, the convenience of witnesses is the single most important factor in deciding a motion to transfer.
Defendant also asserts that the majority of its relevant books and records are in Illinois. Because Illinois is not the location to which Defendant urges transfer, the location of documents in that state is a non-issue. Even if the documents' location in Illinois was pertinent, Defendant offers no explanation as to why the underlying case materials are relevant to a coverage action, particularly if the principal facts concerning coverage are undisputed. Defendant has not met its burden to show that transfer is necessary for the parties to have access to documentary evidence.
Defendant asserts that litigating this case in California would be less expensive than litigating in Kansas because of travel costs for the witnesses and moving costs for documents. Defendant makes this assertion without providing any facts. Defendant's position is totally devoid of evidence of the potential costs of litigating the case in Kansas, and as the Court has noted, Defendant has not demonstrated that the resolution of this case will require that witnesses provide live testimony or that voluminous documents will need to be transported. This factor weighs against transferring venue to the Central District of California.
Defendant argues that, because AKH is a resident of California, Defendant could easily enforce any judgment it might obtain on its counter-claim. If a judgment were to be entered in Kansas, however, Defendant contends that enforcing it would require additional procedures and expenses. Defendant does not make a similar argument with respect to AKH's claims. Curiously, Defendant states that "UUIC is a resident of Kansas and California,"
The Court considers this factor neutral. Defendant has not shown that a potential enforcement procedure in Kansas would create a significant inconvenience.
Defendant contends that it could be denied a fair trial if it cannot compel the attendance of witnesses or if a Kansas court does not apply California law to interpret the policy. Such speculative grounds are not compelling. Moreover, Defendant has provided no evidence that it will need to compel the attendance of any witness, and the Court is confident in its ability to determine what state's law should apply. Defendant also argues that an advantage for transfer exists because the Central District of California is practiced at interpreting and applying California law. Just as the Court is confident in its ability to determine the correct law, it foresees no difficulty in interpreting that law, no matter which state's law applies. This factor argues against transfer.
The parties agree that this factor is neutral, as the relevant statistics are split between the District of Kansas and the Central District of California. The median times from filing to disposition and from filing to trial in civil matters are shorter in the Central District of California, but the number of pending cases and average weighted filings per judge are both higher in that district. The Court agrees that this factor is neutral.
Because this is a diversity action and Kansas is the forum state, the substantive laws of Kansas will apply, including its choice of law rules.
Defendant has piggy-backed this issue onto other factors and argues repeatedly that California law should apply to the claims and counterclaims in this action. Plaintiff asserts that Kansas law should apply. Because the record evidence on this issue is not sufficiently developed, the Court concludes that this factor has no bearing on the motion to transfer.
Defendant has not identified any new considerations that it has not already raised in connection with other factors.
The Court has considered the pertinent factors and declines to grant Defendant's motion to transfer this case. The Court gives great weight to Plaintiff's choice of forum — Kansas — and is unable to find that any factor weighs in favor of transferring this case to the Central District of California.
