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American Home Assurance Co. v. Tutor-Saliba Corporation/O&G Industries, Inc.

United States District Court, N.D. California

May 12, 2015

AMERICAN HOME ASSURANCE COMPANY, Plaintiff,
v.
TUTOR-SALIBA CORPORATION/O&G INDUSTRIES, INC. JV; TUTOR-SALIBA CORPORATION; O&G INDUSTRIES, INC.; and R&L BROSAMER, INC., Defendants.

ORDER DENYING MOTION TO DISMISS AND TRANSFERRING CASE TO THE CENTRAL DISTRICT OF CALIFORNIA

SAMUEL CONTI, District Judge.

I. INTRODUCTION

This is a dispute regarding insurance coverage for the allegedly defective construction of an airport runway in Los Angeles. None of the events giving rise to this lawsuit occurred here, and no party is a citizen of this district. Now before the Court is Defendant R&L Brosamer, Inc.'s ("Brosamer") motion to dismiss for improper venue or, in the alternative, to transfer venue to the Central District of California. The motions are fully briefed, [1] and the Court finds them suitable for disposition without oral argument pursuant to Civil Local Rule 7-1(b). For the reasons set forth below, Brosamer's motion to dismiss is DENIED, but Brosamer's alternative motion to transfer venue is GRANTED, and the Court ORDERS that this action be transferred to the Central District of California.

II. BACKGROUND

In 2003, the City of Los Angeles (the "City") decided to demolish, relocate, and rebuild a runway at Los Angeles World Airport. Compl. ¶¶ 15-16. The City contracted with Defendant Tutor-Saliba Corporation/O&G Industries, Inc. JV[2] (the "Joint Venture") to demolish the old runway and build the new one. Id . ¶ 21. The Joint Venture subcontracted with Defendant Brosamer for concrete and labor. Id . ¶ 25. Construction was complete by 2008. Id . ¶ 19. In 2013, the City filed a lawsuit in California Superior Court alleging that the Joint Venture and Brosamer's construction work was defective. Id . ¶¶ 20, 28-31. Plaintiff American Home issued insurance policies to the City, and Tutor and Brosamer may qualify as insureds under those policies. Id . ¶ 6. Tutor and Brosamer tendered the claims in the underlying action to American Home, which is providing them with defenses in that action under a full reservation of rights. Id . ¶¶ 7-8. American Home then brought this lawsuit, seeking a declaration that it does not owe any defendant a duty to defend the underlying action. Id . ¶¶ 47-50.

III. LEGAL STANDARD

Venue is proper in (1) a judicial district in which any defendant resides, if all defendants are residents of the state in which that district is located; or (2) a judicial district in which a substantial part of the events giving rise to the claim occurred. 28 U.S.C. § 1391(b). If no such district exists, venue is proper in any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to the action. Id . For venue purposes, a defendant entity is a resident of any judicial district in which the defendant is subject to the court's personal jurisdiction with respect to the action in question. Id . § 1391(c).

Federal Rule of Civil Procedure 12(b)(3) allows a defendant to move to dismiss an action for improper venue. On a Rule 12(b)(3) motion, "the pleadings need not be accepted as true, and the court may consider facts outside of the pleadings, " but the court must draw all reasonable inferences and resolve all factual conflicts in favor of the non-moving party. Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). When a case is filed in the wrong district, the court may dismiss it, or, if it is in the interest of justice, transfer it to any proper district. See 28 U.S.C. § 1406(a).

Even if venue is proper where an action is filed, the Court may "[f]or the convenience of parties and witnesses, in the interests of justice... transfer any civil action to any other District... where it might have been brought." 28 U.S.C. § 1404(a). The Court must undertake an "individualized, case-by-case consideration of convenience and fairness." Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). "To support a motion for transfer the moving party must show: (1) that venue is proper in the transferor district; (2) that the transferee district is one where the action might have been brought; and (3) that the transfer will serve the convenience of the parties and witnesses and will promote the interest of justice." Goodyear Tire & Rubber Co. v. McDonnell Douglas Corp., 820 F.Supp. 503, 506 (C.D. Cal. 1992). The Court weighs a series of factors in determining whether the third element is satisfied, including:

(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, and (8) the ease of access to sources of proof.

GNC Franchising, 211 F.3d at 498. Additionally, the Supreme Court has recognized "a local interest in having localized controversies decided at home." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 260 (1981). Thus, where a "case has a significant connection to the Los Angeles area..., the Central District has a much more substantial interest in seeing a resolution of th[e] litigation." Fabus Corp. v. Asiana Exp. Corp., No. C-00-3172 PJH, 2001 WL 253185, at *2 (N.D. Cal. Mar. 5, 2001).

IV. DISCUSSION

The Court begins by analyzing Brosamer's motion to dismiss. Because Brosamer lacks standing to bring that motion, it is DENIED. The Court then turns to the alternative motion to transfer venue and weighs the factors set out in GNC Franchising. The Court concludes that the factors weigh very strongly in favor of transferring this case to the Central District of California.

A. Motion to Dismiss for Improper Venue

Brosamer first argues that venue is improper in this district because Defendant O&G Industries, Inc. ("O&G") is not a resident of California. As a result, Brosamer argues, not all defendants are residents of California and venue is not proper under 28 U.S.C. Section 1391(b)(1). It is undisputed that the events giving rise to this claim - including both the events giving rise to the underlying state court action and the state court action itself - occurred in the Central District of California. Therefore, Brosamer argues, venue is proper in the Central District of California only, pursuant to Section 1391(b)(2).

Brosamer lacks standing to raise a venue objection on O&G's behalf. "[N]either personal jurisdiction nor venue is fundamentally preliminary in the sense that subject-matter jurisdiction is, for both are personal privileges of the defendant, rather than absolute strictures on the court, and both may be waived by the parties." Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979). "Improper venue is a defense personal to the party to whom it applies. Thus one defendant may not challenge venue on the ground that it is improper as to a co-defendant." Pratt v. Rowland, 769 F.Supp. 1128, 1132 (N.D. Cal. 1991). A defendant may bring a motion to dismiss for improper venue only in his first response to a complaint. Id . ("[D]efendants wishing to raise improper venue as a defense must do so in their first defensive move.") (emphasis in original). O&G has answered American Home's complaint and, though O&G denied that all defendants are residents of California, it has not ...


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