JULIE A. ROBINSON, District Judge.
Before the Court is Defendant Liberty Mutual Insurance Company's ("Liberty") Motion to Transfer (Doc. 11) this case to the United States District Court for the Western District of Pennsylvania. The Court has considered the briefs, as well as the evidence submitted with the briefs, and is prepared to rule. As described more fully below, the Court denies Defendant's motion.
Plaintiff Berkel & Company Contractors, Inc. ("Berkel") is a Kansas corporation authorized to do business in Pennsylvania. Defendant Liberty Mutual Insurance Company ("Liberty") is a Massachusetts stock insurance company. Defendant is licensed and authorized to do business in Kansas. Plaintiff filed suit against Defendant in the District Court of Wyandotte County on June 17, 2015, alleging two claims: (1) a claim on payment bond, and (2) bad faith refusal to pay. Defendant filed a Notice of Removal in this Court on July 21, 2015, based on 28 U.S.C. §§ 1332 and 1441.
The claims at issue arose from a public construction project in McKeesport, Pennsylvania. On June 28, 2011, Galway Bay Corporation ("Galway"), a Pennsylvania corporation, entered into a contract with the Municipal Authority of the City of McKeesport, Pennsylvania ("Municipal Authority"), in order to improve the City of McKeesport sewer system. In accordance with Pennsylvania law, Galway executed a statutory payment bond with Defendant acting as surety to the Municipal Authority as obligee.
Galway entered into a subcontract with Plaintiff in which Plaintiff agreed to perform construction work including installing auger piles and rebar. The final subcontract price was $1,233,575.00. Galway has paid Plaintiff $948,117.80, leaving an outstanding balance of $285,457.20. Galway informed Plaintiff that final payment would be made after completion of the project to ensure credits and additions under the subcontract were satisfied. Following completion of the project, Plaintiff made several requests for payment to Galway which were denied. On November 12, 2014, Plaintiff made a demand on Defendant on the statutory payment bond. Defendant denied the claim on March 20, 2015.
Defendant asserted the Pennsylvania statute of limitations barred the claim because Plaintiff's work on the project was completed by July 23, 2012, and the one-year statute of limitation began to run no later than October 21, 2012. Plaintiff then filed this action on June 17, 2015. Defendant answered, alleging two affirmative defenses: (1) Plaintiff's claims are barred by the statute of limitations, and (2) Plaintiff's claims against Defendant are barred in whole or in part by the doctrine of recoupment or set-off because the Municipal Authority is claiming a credit on the contract with Galway, based on the quality of Plaintiff's work on the project.
Defendant moved to transfer this action to the United States District Court for the Western District of Pennsylvania under 28 U.S.C. § 1404(a). In support, Defendant provided the Affidavit of Gregory R. Maynard, the President of Galway.
The purpose of 28 U.S.C. § 1404(a) is to permit easy change of venue within a unified federal judicial system.
The decision whether to grant a party's motion to transfer is within the sound discretion of the district court.
The Court examines each factor in turn, in considering whether this case should be transferred from its current trial location of Kansas City, Kansas.
Plaintiff has chosen the District of Kansas as the forum for its action against Defendant. A plaintiff's choice of forum is rarely disturbed.
Plaintiff's cause of action is based on a denied claim for payment under a Pennsylvania statutory payment bond based on construction work Plaintiff completed under a sub-contract for a public works project in Pennsylvania. Thus, it would appear most of "the facts giving rise to the lawsuit have no material relation or significant connection to the plaintiff's chosen forum."
Plaintiff argues the facts giving rise to the lawsuit have significant relation to Kansas because the suit involves money due to Plaintiff in Kansas. While Defendant accurately notes the payment may not have been due in Kansas, the location where payment was due is not dispositive of this factor. In order for Plaintiff to prove money was due, regardless of where the payment would be sent, Plaintiff must provide factual support concerning contractually complete performance of the project in Pennsylvania. As such, Plaintiff's choice of forum is entitled to less deference because the facts giving rise to the lawsuit occurred in Pennsylvania and lack a material or significant relation to Plaintiff's chosen forum, Kansas. This factor weighs in favor of transfer.
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 identifies a number of witnesses who reside outside of Kansas: 1) engineers and inspectors for KHL Engineers, Inc., which provided services at the project on behalf of the Municipal Authority, all who reside in Pennsylvania; 2) employees of Galway who reside in Pennsylvania; 3) claims counsel for Liberty who resides in Illinois; 4) employees of Berkel who have knowledge of the project, and live in Kentucky; and 5) an officer and superintendent of the Municipal Authority who reside in Pennsylvania.
Nonetheless, the Court concludes that Defendants have not shown that the majority of key witnesses are unwilling to come to trial, that deposition testimony would be unsatisfactory, or that the use of compulsory process would be necessary. The Court will not presume that the out-of-state witnesses will not voluntarily come to trial, especially given that these witnesses appear to have employment, contractual, or business relationships with Defendant, which could create the necessary incentive to participate in the litigation. Defendant has not demonstrated that it will be hampered by asserting its statute of limitations and recoupment defenses by virtue of proceeding in this venue. Both parties have witnesses located in their respective districts. As previously noted, merely shifting the inconvenience from one side to the other is not permissible justification to change the venue.
As for location of relevant documents, the Court agrees with Plaintiff that "in this era of electronically stored and transmitted information, the location of relevant documents (however voluminous) may carry significantly less weight in the section 1404(a) analysis."
For the convenience of non-party witnesses residing outside of Kansas, it would appear the cost of making necessary proof is greater in the District of Kansas because of expenses these non-party witnesses would incur in travelling to Kansas from Pennsylvania. Plaintiff is correct, however, that Defendant did not offer evidence concerning the potential costs of litigating the case in the current forum. Defendant did provide a list of non-Kansas witnesses who would be forced to incur substantial expense in travelling to Kansas to assist Defendant in making the necessary proof. As the Court noted, however, 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. Given a lack of evidence concerning the cost of making necessary proof in Kansas, this factor weighs against transferring venue.
"When evaluating the administrative difficulties of court congestion, the most relevant statistics are the median time from filing to disposition, median time from filing to trial, pending cases per judge, and average weighted filings per judge."
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.
The parties devote much discussion to the conflict of law factor. In particular, the parties disagree on which states' statute of limitations would apply to the case. While the statute of limitations argument need not be decided here, it is important to note either court would have to conduct an analysis of the other's statute of limitations. Defendant is correct in noting Kansas recognizes an exception to the general rule that Kansas' statute of limitations applies even if the case is transferred when the foreign statute contains a statute of limitations or is so closely related to a statute of limitations that it could be said to be "built in" to the statute.
The parties also disagree on which state has a greater interest in adjudicating a claim on a statutory bond issued in accordance with Pennsylvania law. Defendant argues Pennsylvania law would apply to Plaintiff's claim under the statutory payment bond. When the merits of an action are unique to a particular location, courts favor adjudication by a court sitting in that location.
Having weighed all of the relevant factors under section 1404(a), the Court declines to grant Defendant's motion to transfer this case. The Court finds that Defendant has failed to demonstrate that Plaintiff's chosen forum—Kansas—is sufficiently inconvenient to justify disturbing Plaintiff's choice, or that transfer to the Western District of Pennsylvania is warranted and will promote the interest of justice.