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Landmark American Insurance Co. v. Rt Patterson Company, Inc.

United States District Court, W.D. Pennsylvania

December 23, 2014

R.T. PATTERSON COMPANY, INC., et al., Defendants.


MARK R. HORNAK, District Judge.

This is an insurance coverage case. The Plaintiff brings an action for a declaratory judgment only, seeking to have this Court say that it owes no duty to defend or to indemnify the Defendant as to claims asserted against the Defendant in a federal civil action now pending in the Northern District of Ohio at Akron, at its docket number 13-cv-2071, captioned Babcock & Wilcox Power Generation Group, Inc. v. KT Patterson Company, Inc., et al. ECF Nos. 1, 1-1.

The Defendant here has moved to stay this case until that Ohio case is resolved. ECF No. 11. The Plaintiff opposes that stay request, pointing out, correctly, that staying this case until the Ohio case is over is really a "win" for the Defendant, as at that point, all of the defense costs will have been paid, and that according to both parties, Pennsylvania insurance law provides that a carrier that pays defense costs that it is ultimately determined they are not obligated to pay has no avenue to recoup them from its insured. ECF No. 17, at 14 (citing Am. & Foreign Ins. Co. v. Jerry's Sport Ctr., Inc., 2 A.3d 526, 546 (2010)).

The Court set this case for oral argument on the stay motion for December 16, 2014, and in the notice of that argument, advised all parties that it was considering transferring this case to the Northern District of Ohio, and that the parties should be prepared to address that at argument. See Text Order dated 12/05/2014.[1]


A. The Parties' Arguments

First, the Plaintiff in this case contends that among the reasons that it owes no defense or indemnity duty to the Defendant are that the claims in the underlying Ohio case must be analyzed and construed, and in doing so, the Court would conclude that no matter how labelled, as a substantive matter, they are really contractual and warranty claims excluded from coverage under the applicable policy. ECF No. 1, at ¶¶ 60-61. Second, the Plaintiff insurance carrier makes a big deal, perhaps with good reason, of what it claims was a failure by the Defendant to give it due and proper notice of the claims ultimately asserted against it in the Ohio case. Id. at ¶¶ 50-58. Third, the Plaintiff in opposing the stay notes that in the Ohio case, the Defendant here has been pushing back on mediation of the Ohio case on the basis that this coverage issue must be resolved by this Court first. ECF No. 17, at 14-15.[2]

As can be seen, each and all of these matters substantially implicate the resolution of the matters before the Court in the Ohio case, namely, applying the applicable substantive law, what is the nature of the claims in the underlying action? Factually, what did the Defendant know about the claims that now make up that Ohio case and when did it know it? See ECF No. 1, at ¶¶ 52, 56. Then, if the resolution of the coverage issue is in actuality or reasonable perception an impediment to getting the Ohio case into mediation or having that process have value, then the resolution of these issues is directly tied to the disposition of both the substantive and procedural issues in the Ohio case. From this Court's perspective, these are all reasons for the transfer of this case to the same Court in which the underlying case is pending, since doing so would by any measure further the "interests of justice" pursuant to 28 U.S.C. § 1404(a).

At oral argument, counsel for both parties extensively addressed these matters. Counsel for the Defendant conceded that this action could have been brought against it in the Northern District of Ohio, since the Defendant would be subject to the exercise of personal jurisdiction in that District, thus making venue over this action permissible under 28 U.S.C. §§ 1391(b)(1), (c)(2). But, it says, sending this case to that District would not be a good idea, mainly because it would put the coverage issue, and the disposition of the underlying liability issues, in the same forum, which it says would be an unjust and impermissible decisional conflict. The Court cannot agree.

First, and importantly, the coverage issue in a declaratory judgment action would be decided by the Court in Ohio just as it would be here, not the fact finder in the underlying civil suit.[3] Second, our Circuit law, applying both federal declaratory judgment law and substantive Pennsylvania law, easily recognizes that both a coverage declaratory judgment action and an underlying liability case can be going on at exactly the same time, and in the same court. See Reiter v. Westport Ins, Corp., 751 F.3d 129 (3d Cir. 2014); State Auto Ins. Companies v, Summy, 234 F.3d 131 (3d Cir. 2000). Thus, no party has pointed to any substantive rule of law that would get in the way of the declaratory judgment action and the underlying case being in the same court, before the same judge.[4]

B. Tranfer of Venue

This Court must consider the factors set out by our Court of Appeals in Jumara v. State Farm Insurance Co., 55 F.3d 873, 879-80 (3d Cir. 1995). Because venue is proper in both this District and in the Northern District of Ohio, see Ziemkiewicz v. R Carriers, Inc., No. 12-1923, 2013 WL 505798, at *2 (D.N.J. Feb. 8, 2013) (explaining that pursuant to 28 U.S.C. § 1404(a) "the Court must first determine whether the alternate venue is one in which the case might have been brought"), and because this Court gave fair notice to the parties prior to the oral argument, and they argued these issues to the Court at that time, see, e.g., Nails v. Coleman Low Federal Institution, 440 F.Appx. 704, 706 (11th Cir. 2011), the Court may consider whether to transfer the action under the Jumara test. The Jumara "test" consists of a number of private and public factors that the transferor court is to consider:

The private interests have included: plaintiffs forum preference as manifested in the original choice; the defendant's preference; whether the claim arose elsewhere; the convenience of the parties as indicated by their relative physical and financial condition; the convenience of the witnesses-but only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).
The public interests have included: the enforceability of the judgment; practical considerations that could make the trial easy, expeditious, or inexpensive; the relative administrative difficulty in the two fora resulting from court congestion; the local interest in deciding local controversies at home; the public policies of the fora; ...

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