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Shanze Enterprises, Inc. v. American Casualty Co. of Reading, PA

United States District Court, E.D. California

March 5, 2015



KIMBERLY J. MUELLER, District Judge.

American Casualty Company of Reading, PA (ACCO or defendant) has moved to transfer this case to the Northern District of Texas. (Def.'s Mem. P.&A. Supp. Mot. Transfer at 1, ECF No. 14.) The court heard arguments on the matter on January 30, 2015. David Gauntlett appeared for Shanze Enterprises, Inc. (Shanze or plaintiff), and Robert Christensen appeared for ACCO. After considering the parties' briefing and arguments at the hearing, the court GRANTS the motion.


A. Procedural Background

Shanze, a Texas Corporation with its principal place of business in Dallas, Texas, does business as Baja Auto Insurance. (Compl. ¶ 1, ECF No. 1.) ACCO is a Pennsylvania corporation with its principal place of business in Reading, Pennsylvania. (Id. ¶ 2.) In October 2014, Baja Insurance Services, Inc. filed a complaint in this district and alleged trademark infringement claims against Shanze. (Id. ¶¶ 9-10; id. Ex. 2; see also Baja Ins. Servs. Inc. v. Shanze Enters., Inc. dba Baja Auto Ins., No. 14-2423 (E.D. Cal. filed Oct. 15, 2014)). For convenience, the court refers to this action as the " Baja action." Shanze then sent a letter requesting representation to ACCO, from whom it had purchased a series of commercial general liability policies. (Compl. ¶ 7, giving notice of the Baja action, id. ¶ 11.) On October 29, 2014, ACCO returned the correspondence and advised Shanze it would not provide coverage against the allegations in the Baja action. (Id. ¶ 12; id. Ex. 3.) Shanze sought reconsideration from ACCO on November 3, 2014 ( id. ¶ 14; id. Ex. 4), but ACCO did not agree to provide the coverage Shanze requested ( id. ¶ 15).

A few days later, Shanze filed the complaint in this case against ACCO, seeking declaratory judgment that ACCO must defend it in the Baja action, and seeking damages, costs, and other relief. (Id. at 14-15.) Before ACCO appeared or filed a responsive pleading, Shanze filed a notice of related cases, alerting the court to the Baja action. (Not. Rel. Case, ECF No. 4.) The court related the Baja action to this case on November 18, 2014, finding reassignment to the undersigned would effect substantial savings of judicial effort and serve the convenience of the parties. (Order 1-2, ECF No. 5.) ACCO answered the complaint on December 5, 2014. (ECF No. 10.) On December 12, 2014, Shanze moved for partial summary judgment (ECF No. 12), and ACCO moved to transfer the case to the Northern District of Texas (ECF No. 13). On December 30, 2014, at the same time it opposed Shanze's motion for partial summary judgment (ECF No. 24), ACCO also moved for partial summary judgment in its favor (ECF No. 25). Because the court grants the motion to transfer, it does not reach the parties' summary judgment motions.

B. Factual Background

This action concerns interpretation of the parties' commercial liability policy agreement. ( See generally Compl.) Shanze alleges venue is appropriate in this district because the Baja action will be litigated here, because ACCO sells insurance in California and defends lawsuits in this district, and because this district "is the place of performance under the Policy and California law governs ACCO's obligations to Baja." (Id. ¶¶ 4-6.) Shanze does not allege it does business in California, and its motion papers identify no connection to this district other than the Baja action. ACCO has submitted the declaration of Stephen Kuntz, the underwriting director responsible for the policy in question. (Kuntz Decl. ¶¶ 1-4, ECF No. 16.) Kuntz's declaration attaches copies of several forms contained in the ACCO policies issued annually to Shanze since February 2009. Each shows ACCO provided coverage through its agent, Legacy Insurance Partners, in Carrollton, Texas, and each policy shows it was issued by ACCO's Dallas Branch. ( See, e.g., id. at 1.) The forms include "Schedules of Locations and Coverage" listing several locations in Texas ( see, e.g., id. at 3-16), and "Additional Interest Schedules" listing entities located in Texas to be notified of any change in a policy ( see, e.g., id. at 17-21). The forms include endorsements modifying the policy in ways specific to Texas ( see, e.g., id. at 22-25), and describe "Important Information for Texas Policyholders" ( see, e.g., id. at 26-27). Each of the above facts is also true of the policy Shanze attached to its complaint.[1] Shanze does not dispute these characterizations. It notes only that the business owners liability coverage form applies to "personal and advertising injury' caused by an offense arising out of your business... committed in the coverage territory' during the policy period, " and that the policy defines "coverage territory" to include the United States, Puerto Rico, Canada, and in some cases, "International waters or airspace, " or even "[a]ll other parts of the world." (Compl. Ex. 1, at 132, ECF No. 1-1.) Neither party has drawn the court's attention to any insurance policy or form that mentions California specifically.


A district court may transfer a case to another district in which the action could have been brought "[f]or the convenience of the parties and witnesses" and "in the interest of justice." 28 U.S.C. § 1404(a). Unlike 28 U.S.C. § 1406(a) and Rule 12(b)(3), which apply when the original venue is "wrong" or "improper, " Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Tex., ___ U.S. ___, 134 S.Ct. 568, 579 (2013), section 1404(a) grants district courts discretion "to adjudicate motions for transfer according to 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 v. Barrack, 376 U.S. 612, 622 (1964)). To make this "individualized, case-by-case consideration, " the Ninth Circuit has suggested a non-exclusive list of wide-ranging public and private factors for courts to consider. See Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). ("For example, the court may consider (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[, ]" (9) "the presence of a forum selection clause[, ] if any, " and (10) "the relevant public policy of the forum state[.]" Id. The party seeking transfer bears the burden to make a "strong showing" these factors weigh in its favor. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).


At the outset, the court notes the very similar nature of this suit to another recent case in the Central District of California. See Global Decor, Inc. v. Cincinnati Ins. Co., No. 11-2602, 2011 WL 2437236, at *2 (C.D. Cal. June 16, 2011). In Global Decor, the plaintiff was sued in California, and its out-of-state commercial liability insurer denied coverage for the suit under an agreement negotiated and executed in the Northern District of Illinois. Id. at *1. The plaintiff then sought to compel its insurer to provide coverage, and the defendant insurer moved to transfer the case to the District of Illinois. Id. The Central District court granted the motion to transfer, rejecting each argument the plaintiff in this action makes before this court. Id. ACCO cited Global Decor in its motion, but Shanze did not address it. At the hearing, Shanze argued Global Decor was distinguishable. The court finds Global Decor persuasive, while conducting its own independent analysis of each factor prescribed by the Ninth Circuit.

1. Whether Case Could Have Been Brought in Texas

The first determination this court must make is whether Shanze could have brought this action in the Northern District of Texas. ACCO maintains a local branch in Dallas and placed the policies in question with Shanze through an agent in Dallas, so personal jurisdiction would have proved no barrier. Federal subject matter jurisdiction is based on diversity jurisdiction, 28 U.S.C. § 1332, and the parties would remain diverse in the Northern District of Texas. The general venue provisions of 28 U.S.C. § 1391(b) apply: "A civil action may be brought in... a judicial district where any defendant resides, if all defendants reside in the same [s]tate...." 28 U.S.C. § 1391(b). For purposes of that section, 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 in question." Id. § 1391(c)(2). ...

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