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Plaintiff Zurich American Insurance Company ("Zurich American"), by and through the
ACE American Insurance Company's Motion to Transfer Venue (Doc. No. 19).
INTRODUCTION
ACE American Insurance Company ("ACE") belatedly brings this motion to transfer
venue under 28 U.S.C. §1404 after the parties filed their pleadings, fully joined the issues for
adjudication here in North Carolina, and submitted to the Court a joint discovery plan in which
nothing is mentioned about ACE wanting to challenge Zurich American's North Carolina choice
of forum. Now ACE decides to take the position that this case belongs in California. Its logic is
that all the witnesses and evidence supposedly are located in California, even though the
pertinent testimony of all such witnesses has already been preserved in depositions, all pertinent
documents are likely in the possession of the Charlotte counsel for each defendant, and none of
the parties are even west of the Mississippi. ACE cannot meet its heavy burden to overcome the
forum choice of Zurich American. The effect of this motion will only be to delay the ultimate
coverage dispute. The interests of justice dictate that this case be adjudicated in this Court
where the localized dispute over a North Carolina insurance contract is centered. ACE's motion
Zurich American filed the instant declaratory judgment action against Compass Holdings,
Inc. ("Compass"), Crothall Services Group ("Crothall"), and ACE on March 5, 2010. (See
Complaint) (Doc. No.1). Zurich American seeks a judicial declaration of its rights and
obligations under a commercial general liability policy ("Zurich Policy") in connection with a
settled underlying personal injury action, entitled Rosie Mae Weathersby v. JohnsonDiversy,
Inc., Unisource Worldwide, Inc., Procter and Gamble Distributing LLC, and Crothall Services
Group, United States District Court for the Central District of California, Case No. 2:08 cv
001196 (the "underlying action"). (Id. at ~l). Compass is the named insured under the Zurich
Policy, and Crothall is listed also as a named insured. (Id. at ~9). ACE is an excess insurer for
Compass and Crothall for the policy period subsequent to the period of the Zurich Policy. (See
April 5, 2010. (See ACE's Answer/Counterclaim) (Doc. No.9). The answer contained no
motion to transfer venue under 28 U.S.C. § 1404. In its counterclaim against Zurich American,
ACE seeks indemnification, contribution and declaratory relief. (Id.). Zurich answered the
counterclaim on April 26, 2010, denying liability and reiterating its claims for declaratory
judgment in its favor. (See Zurich American's Answer) (Doc. No. 12). Compass and Crothall
filed their combined answer to the Complaint on June 7, 2010. (See Compass/Crothall's Answer)
The parties held their initial attorneys conference on June 30, 2010 and filed the
Certification of the Initial Attorneys' Conference and Discovery Plan the same day. (See Joint
Discovery Plan) (Doc. No. 18). ACE filed its motion to transfer venue on July 29,2010. (Doc.
No. 19).
STATEMENT OF FACTS
Zurich American issued the liability policy to Compass and other named insureds such as
Crothall for the policy period of September 30, 2004 to September 30, 2005. (See Affid. ofKelli
Belpedio, Exh. 1 attached). In the underlying action, Rosie Mae Weathersby ("Ms.
Weathersby") alleged that on August 7, 2006 she suffered an acute exposure to her lungs from
the mixture of two chemical cleaning products -- Crew and Comet -- while cleaning a nurse's
station sink at Cedars-Sinai Medical Center (Cedars-Sinai) in Los Angeles, California. (See
Complaint ,-r17; also Weathersby Dep., p. 189-190, Exh. 2 attached). In that case, she testified
in deposition that in order to clean sinks at Cedars-Sinai she mixed Crew and Comet from March
h
2006 up until the August i incident. (See Weathersby Dep., p. 84-85, 143-144,204-206, Exh. 2
attached). Her expert witnesses testified in deposition that her interstitial lung disease was
caused by her inhalation of the chlorine gas generated from the Comet-Crew mixture in the
August i h incident. (See, for example, Dr. Crystal Dep., p. 25-28, Exh. 3 attached). After the
expert depositions were taken, James Wilson of the Risk Management Department of Compass
in Charlotte wrote to Zurich American, ACE and others on December 8, 2009, stating: "In light
of the fact that the plaintiffs experts have now focused entirely on the August 7, 2006 event as
the sole cause of the plaintiff s injuries it is the position of Compass/Crothall that coverage under
To support her motion for summary judgment filed on December 7, 2009, Ms.
Weathersby filed what she considered to be uncontroverted facts and one of them was that she
"openly used Comet and Crew SC together to clean sinks, toilets, and showers on a daily basis at
Cedar-Sinai Medical Center from March 2006 to August 2006." (See Weathersby
Uncontroverted Facts, p. 7, Exh. 5 attached). In opposing the motion, Crothall disputed the
word "openly" in the uncontroverted fact and stated that Weathersby "attributes her injury to
using two chemicals together, i.e. Comet and Crew." (See Crothall Controverted Facts, p. 9-11,
Exh. 6 attached; also Crothall Statement of Genuine Issues, p. 2, Exh. 7 attached). Another
uncontroverted fact in support of summary judgment, as argued by Ms. Weathersby, was that as
a result of Crothall's negligent supervision of Ms. Weathersby, she suffers from lung disease
caused by her exposure to chlorine gas created by her combined use of Crew and Comet to clean
Exh. 5 attached).
On February 12,2010, Ms. Weathersby filed multiple motions in limine in the underlying
action setting forth her theory for trial. Four motions in limine specifically identify the August
2006 incident as the cause of her injuries, such as Motion No. 13, which stated:
(See Weathersby Motion No. 13, p. 6, Exh. 8 attached; also other 3 motions attached in Exh. 8).
reaction between Comet and Crew as the origin of Ms. Weathersby's injuries, such as Motion
(See Weathersby Motion No. 32, p. 3, Exh. 9 attached; also other 6 motions attached in Exh. 9).
On March 5, 2010, prior to any trial, notice was filed in the underlying action that
Crothall and Ms. Weathersby had settled the case. (See Notice, Exh. 10 attached).
Meanwhile, Zurich American had been unaware of Ms. Weathersby's injuries and the
underlying action until Zurich American received notice of the suit in November 2009, almost
two years after Ms. Weathersby filed her action in December 2007. (See Complaint, ,-r35-36; also
Belpedio Affid., Exh. 1 attached). Subsequent to the receipt of notice by Zurich American, the
depositions of Ms. Weathersby's expert witnesses were taken, at which the experts focused on
the August i h incident as the cause of Ms. Weathersby's injuries. In response, Compass and
Crothall wrote to Zurich American, ACE, and others that:
With the medical testimony clearly pointing to a loss date of August 7, 2006,
the Compass/Crothall position is that this claim should be viewed as one
occurrence and subject to one Self-Insured Retention. Zurich will not be
placed on notice of this claim and Compass/Crothall agrees to tender the
remaining portion of their $lM SIR to Chartis for settlement purposes."
Consequently, the settlement in March 2010 did not include any payment from Zurich
American. (See Complaint, ,-r21-23). Crothall agreed to pay Ms. Weathersby the sum of
ACE seeks to recover from Zurich American the $1,000,000 limit of the Zurich Policy as
reimbursement for ACE's settlement payment. (ACE's Answer/Counterclaim, ~80, 82, 85 and
92). Compass and Crothall are now doing a reversal and praying for relief in their Answer that
"the Court declare that the Zurich American Policy provides coverage for the Weathersby claim;
... [and] that Zurich American indemnify ACE American up to the limit of the Zurich Policy."
In its Complaint, Zurich American seeks declaratory relief on four grounds. First, Zurich
American contends coverage for its policy was not triggered by Weathersby's injuries as alleged
in the underlying action. (See Complaint, ~25). The bodily injuries of Ms. Weathersby did not
occur until after Zurich American's policy period of September 30,2004 to September 30,2005.
(Id. at ~27). Second, if the Court determines the Zurich Policy is triggered for coverage, Zurich
American contends it has no liability for coverage unless and until Compass pays the $1,000,000
self-insured retention ("SIR") under the Zurich Policy. ilil at ~28-33). The Self-Insured
Retention Endorsement in the policy states that Zurich American "shall be liable only for the
amounts of our share of 'pro rata defense costs' and damages in excess of the 'self-insured
retention' amounts, as applicable, shown in the Schedule above, ... " which SIR amount is
"$1,000,000 per occurrence." (Id. at ~28-33). Third, should the Court determine the Zurich
Policy is triggered, Zurich American contends it has no liability for coverage because Compass
and Crothall breached the notice conditions of the policy by giving late notice of Weathersby's
injuries and the underlying action to Zurich American. (Id. at ~34-43). Fourth, if the Court rules
there is coverage under the Zurich Policy, Zurich American seeks a proper allocation of liability
between and among the parties herein, with due consideration being given to the fact that the
Sinai, over five months before Ms. Weathersby even first mixed the two chemicals that would
later combine to injure her, and over 10 months before she was exposed to the chlorine gas
during the August 7,2006 catastrophic incident at the nurses' station sink. (Id. at ,-r44-46).
ARGUMENT
ACE brings its motion to transfer venue under 28 U.S.C. § 1404. Parties seeking a
change of venue should act with "reasonable promptness" and not delay. See Peetet v. Dow
Chemical Co., 868 F.2d 1428, 1436 (5 th Cir. 1989), cert. denied, 493 U.S. 935 (1989) (quoting
15 C Wright, Miller & Cooper, Federal Practice & Procedure §3844, at 335-37 (1986)).
Pursuant to 28 U.S.c. § 1404, "[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." The district court must consider "all relevant factors to determine
whether or not on balance the litigation would more conveniently proceed and the interests of
justice be better served by transfer to a different forum." Peetet, 868 F.2d at 1436 (quoting
Wright, Miller & Cooper. §3847, at 370). The court should consider:
1. The plaintiffls'] choice offorum; 2. The residence of the parties; 3. The relative
ease of access of proof; 4. The availability of compulsory process for attendance
of witnesses and the costs of obtaining attendance of willing witnesses; 5. The
possibility of a view; 6. The enforceability of a judgment, if obtained; 7. The
relative advantages and obstacles to a fair trial; 8. Other practical problems that
make a trial easy, expeditious, and inexpensive; 9. The administrative difficulties
of court congestion; 10. The interest in having localized controversies settled at
home and the appropriateness in having the trial of a diversity case in a forum that
is at home with the state law that must govern the action; and 11. The avoidance
of unnecessary problems with conflict oflaws.
Rice v. Bellsouth Adver. & Pub. Corp., 240 F. Supp. 2d 526, 529 (W.D.N.C. 2002) (citing Jim
"A court should analyze each of these factors both quantitatively and qualitatively." Id. (citing
McDevitt & Street Co. v. Fidelity & Deposit Co. of Md., 737 F. Supp. 351, 354 (W.D.N.C.
1990)). In considering a change of venue, the court must weigh the factors involved and
"'unless the balance is strongly in favor of the defendant, the plaintifrs choice of forum
should rarely be disturbed.'" Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984)
(emphasis added) (quoting Gulf Oil Corp v. Gilbert, 330 F.Supp. 719, 721 (M.D.N.C. 1993)).
"A defendant moving for a transfer of forum from a district in which venue is proper carries a
particularly heavy burden." Commercial Equip., Inc. v. Barclay Furniture Co., 738 F. Supp.
II. WEIGHING THE FACTORS FAVORS KEEPING THE CASE HERE IN NORTH
CAROLINA.
Zurich American's choice to file this action in the United States District Court for the
Western District of North Carolina should be given great weight when balancing the factors.
"As this Court has noted several times, it is 'black letter law', that 'a plaintiffs choice of a
proper forum is a paramount consideration in any determination of a transfer request, and that
choice should not be lightly disturbed.'" Western Steer-Mom 'N' Pop's, Inc. v. FMT Inv., Inc.,
578 F.Supp. 260, 265 (W.D.N.C. 1984) (quoting Scott Paper Co. v. Scott's Liquid Gold, Inc.,
374 F.Supp. 184, 191 (D. Del. 1974)). See also Phillips v. S. Gumpert Co., Inc., 627 F.Supp. 725,
726-727 (W.D.N.C. 1986) ("If a transfer would merely shift the inconvenience from the
Defendant to the Plaintiff, or if the equities lean but slightly in favor of the Defendant after all
factors are considered, the Court should not disturb the Plaintiffs choice of forum."); Bates v.
it weighs heavily against ACE's motion. The Court should give Zurich American's choice of
the Western District of North Carolina paramount consideration and Zurich American's choice
should not be lightly disturbed. See, e.g, Commercial Equip., Inc., 738 F. Supp. at 976 ("This
Court long has recognized that in considering a motion to transfer pursuant to section 1404(a), a
court ordinarily should accord the plaintiffs choice of forum great weight."). Even if the action
is not filed in the district where the plaintiff resides, "if the plaintiff s choice of forum relates to
its legitimate, rational concerns then the plaintiff s choice of forum is still accorded substantial
weight." Waste Distillation Tech., Inc.v. Pan American Resources, Inc., 775 F.Supp. 759, 764-65
(D.Dei. 1991); see also Ashmore v. Northeast Petroleum Division of Cargill, Inc., 925 F.Supp.
36, 39 (D.Me. 1996) (deference still given to plaintiffs choice); Editorial Musical Latino
Americano, S.A. v. Mar. Int'l Records, Inc., 829 F.Supp. 62,66-67 (S.D.N.Y. 1993) (still accord
great weight to plaintiff s forum choice when other factors make the forum convenient, despite
suit not filed where plaintiff resides); In re M.L. Lee Acquisition Fund II, LP, 816 F .Supp. 973,
976 (D.Dei. 1993) (plaintiffs choice "is still of paramount consideration" where the action has
Zurich American filed suit in this forum because it has the strongest relationship to the
parties and the dispute. The Zurich Policy was issued to the named insured Compass in this
district. (See Belpedio Affid., Exh. 1 attached). Zurich American maintains a regional office in
this district and the office handles claims, underwriting and other business matters. (Id.).
Compass has its corporate headquarters here. (See Compass/Crothall's Answer, ,-r4, 5). Crothall
parent corporation is located, i.e. in this district. ACE regularly conducts business in this district,
sold its excess policy to Compass (presumably in this district), and is subject to this Court's
jurisdiction. (See Cleaver Affid.; also ACE's NC license status, Exh. 12 attached).
North Carolina law controls the interpretation of the insurance policy at issue. The
Zurich Policy was delivered in North Carolina and insures a company headquartered in this state.
The address on the declarations page of the policy for Compass is 2400 Y orkmont Road,
Charlotte, North Carolina 28217 and the producer Aon Risk Services is located at 121 Trade
Street, Charlotte, North Carolina 28202. (See Belpedio Affid., Exh. 1 attached). Thus, the law
of North Carolina must be used in interpreting the insurance policy provisions because this
policy was issued in North Carolina. See N.C. Gen. Stat. § 58-3-1 ("All contracts of insurance on
property, lives, or interests in this State shall be deemed to be made therein, and all contracts of
insurance the applications for which are taken within the State shall be deemed to have been
made within this State and are subject to the laws thereof.").
Zurich American chose this venue, in large part, because of this Court's familiarity in the
application of North Carolina law and the convenience of the parties. Zurich American's choice
is based on which forum had the strongest connection to the issues and the parties. No party is
unduly prejudiced by Zurich American's choice of forum, and ACE does not raise any undue
this forum to adjudicate this action should be given great weight. This factor weighs heavily in
1 ACE has alleged that Crothall's principal place of business is in Pennsylvania. (See ACE's
Answer/Counterclaim, ~5). Crothall's website lists its address as 955 Chesterbrook Blvd, Wayne,
Pennsylvania. (See website printout, Exh. 11 attached).
All parties are corporations and are deemed to reside in their state of incorporation and
where their principal place of business is located. Zurich is a New York corporation with its
principal place of business in Illinois. (See Complaint, ~2; and Belpedio Affid., Exh. 1
attached). Compass is a Delaware corporation, with its principal place of business in Charlotte.
appears its principal place of business may be in Charlotte, although it could be in Pennsylvania.
ACE is a Pennsylvania corporation with its principal place of business in Pennsylvania. (See
All parties reside east of the Mississippi River. None of the parties reside in California.
ACE conveniently ignored this fact in its memorandum. ACE did not even mention the parties'
residence as a relevant factor when giving the legal standard. (See ACE"s Memo., p. 6). The
parties' residences are geographically closer to this district than to the Central District of
California. Suit in North Carolina is more convenient for the parties than in California. All of
the parties are sophisticated businesses, acquainted with and able to pay for business travel.
matters little that Ms. Weathersby resides in California. She is not a party to this action, and her
litigation has concluded in any event. To the extent ACE is inconvenienced by the distance
between this forum and its residence of Pennsylvania, its inconvenience would only increase as
the distance between ACE's residence and the transferee forum is far greater. As between
Zurich American and ACE, no party has a "home field advantage" in this district. But one of
the named insured parties, Compass, appropriately is in its "home" forum, and Crothall may also
be in its "home" forum here if its principal place of business is in this district. Additionally, ACE
Western District of North Carolina. Should the Court transfer this action to California, none of
the parties would be litigating this case in a forum where they reside. This factor favors Zurich
This is a contract dispute in North Carolina, not a tort claim in California. ACE's chief
argument for transferring this action to the Central District of California is the assumption that
this insurance coverage dispute requires a near complete re-litigation of the underlying tort
action. That assumption is incorrect. The parties are not destined to engage in such a
burdensome process because the exhaustive discovery and filings in the underlying case are
available and can be utilized to support the claims and defenses in the instant action.
A key witness in this case is Ms. Weathersby. She was deposed in the underlying action
over the course of seven days, and there are close to 700 pages of transcripts. (See cover pages
for deposition, Exh. 2 attached)? Her deposition was videotaped. (See Belpedio Affid., ~6, Exh.
1 attached). She testified to facts supporting Zurich American's position that she mixed Crew
and Comet from March 2006 up until the August 7th incident, long after the expiration of the
Zurich Policy. (See Weathersby Dep., p. 84-85, 143-144, 146, 204-206, Exh. 2 attached). She
also testified to facts that ACE, Compass, and Crothall believe could favor their position on
trigger-of-coverage, namely, that Ms. Weathersby coughed when using only Crew from the very
start of her work at Cedars-Sinai, during the final few days of the Zurich Policy. (Id., p. 44, 83,
Other important witnesses in this case are the various expert witnesses used by Ms.
2 Zurich American does not have a copy of the entire transcripts and does not have the cover page for
Volume IV.
pages of depositions of Drs. Crystal, Abraham, Sawyer, and Simmons, Exhs. 3, 13, 14, 15
attached). They gave testimony favoring Zurich American's position that Ms. Weathersby's
lung disease was caused by her inhalation of the chlorine gas generated from the Comet-Crew
h
mixture in the August i incident. (See, for example, Dr. Crystal Dep., p. 25-28, Exh. 3
attached, and Dr. Sawyer Dep., p. 41-42, 44, Exh. 13 attached). But one expert of Ms.
Weathersby also gave testimony and wrote a report that ACE, Compass, and Crothall believe
favors their trigger-of-coverage position that Ms. Weathersby coughed when spraying only Crew
from the very start of her work at Cedars-Sinai. (See Dr. Abraham Dep., p. 27, 31, and expert
report dated 11-6-09, p. 2, Exh. 14 attached). Three of these experts - Drs. Crystal, Abraham
and Sawyer - are based in New York and gave their deposition via video conference. (See cover
The defendants in the underlying action, including Crothall, had the opportunity and the
motivation to cross-examine extensively Ms. Weathersby and her experts on the cause, time, and
extent of Ms. Weathersby's injuries. Compass and ACE were not parties in that case but were
aligned in interest with Crothall in the defense. The defendants in the underlying action
developed the same lines of testimony from Ms. Weathersby and her experts as ACE, Compass,
Crothall, and Zurich American would develop in depositions that could be taken in the instant
action. Zurich American understands that Ms. Weathersby's treating physicians were not
deposed in the underlying action. Their depositions in this action are likely not needed since
their medical findings and conclusions are well-documented in the medical records which were
Therefore, assuming that ACE, Crothall, and Compass would stipulate to the authenticity
such as Crothall and Cedars-Sinai employees, the parties would not need to re-take these
depositions and the depositions could be used for dispositive motions and trial. 3 This would:
expedite discovery; reduce the burden to the parties, Ms. Weathersby, her experts, and other
witnesses; and eliminate the need for travel to California for these depositions, thereby serving
the interest of judicial economy in this case. If ACE, Crothall, and/or Compass decline to so
stipulate, any additional depositions of Ms. Weathersby, her expert witnesses, and other
witnesses would be brief because the parties would only need enough time to authenticate the
prior depositions and ask limited follow-up questions for clarification purposes. The depositions
could even be taken by remote means pursuant to Rule 30(b)(4) of the Federal Rules of Civil
Procedure, which would eliminate the need for extensive travel. This streamlined approach
would limit legal expenses, and the deponents would not be subjected to unnecessary
inconvenience and expense. Surely ACE does not plan to re-depose all of the witnesses in the
underlying action and start from scratch with each person to plow old ground. The depositions
in the underlying action are likely admissible for use in motions for summary judgment and at
trial by virtue of Rule 32 of the Federal Rules of Civil Procedure and Rules 803, 804, and 807 of
the Federal Rules of Evidence. See Dwyer v. General Motors Corp., 853 F.Supp. 690, 694
(S.D.N.Y. 1994) ("Any of the Maryland witnesses' testimony deemed necessary in this case
could be offered to the jury via deposition."). Unless defendants stipulate to authenticity, Zurich
American would need to take a relatively short deposition of Ms. Weathersby'S counsel (perhaps
by telephone) to authenticate certain motions and pleadings filed in the underlying action and
3 The testimony of the Crothall and Cedars-Sinai employees are not needed by Zurich American to prevail
in this action, but to the extent the defendants need such testimony, Zurich American is prepared to
stipulate to the authenticity of their depositions in the underlying case so that they do not need to be re-
deposed in the instant action.
necessary step to preserve such evidence would not be overly burdensome to such counsel and
the parties in our case. Finally, Ms. Weathersby's medical records would be admissible without
the need to depose or call to testify at trial the records custodians of the medical providers if the
parties follow the procedure for the production of medical records set forth in this Court's Local
Rule 45.1.
It makes eminent good sense to streamline the discovery in this action given the extensive
pertinent discovery and filings in the underlying action. There would not be a great need to
Furthermore, as this is an insurance coverage dispute and not Ms. Weathersby's primary
tort claim, only select documents and records are relevant to this action. These documents and
records are already in the possession of ACE, Compass, and Crothall and can be exchanged
easily among the parties through the traditional discovery methods. 5 There is no greater difficulty
in obtaining the relevant documents in the Western District of North Carolina than in the Central
District of California, especially since these documents can be efficiently and inexpensively
exchanged via delivery services, fax, or e-mail or on a CD or flash drive. See Pickler Intern.,
Inc. v. Travelers Indem. Co., 35 F. Supp. 2d 570, 574 (N.D. Ohio 1998) ("Moreover, while the
4 For example, counsel for Ms. Weathersby filed the uncontroverted fact in December 2009 that she
"openly used Comet and Crew SC together to clean sinks, toilets, and showers on a daily basis at Cedar-
Sinai Medical Center from March 2006 to August 2006." (See Weathersby Uncontroverted Facts, p. 7,
Exh. 5 attached), and counsel filed Motion In Limine No.8 in February 2010 that Ms. Weathersby "will
prove at trial that she suffers from interstitial lung disease as a result of her occupational exposure to
chlorine gas resulting from the chemical reaction between cleaning chemicals Crew and Comet that she
used in her work under the instruction ofCrothall." (See Motion No.8, p. 10, Exh. 8 attached).
5 The parties could stipulate to the authenticity of the medical records of Ms. Weathersby in the
possession of ACE, Crothall, and Compass, having obtained them through discovery in the underlying
action, and thus eliminate the need to subpoena the records from medical providers and comply with the
Court's Local Rule 45.1. Zurich American has yet to see any of the medical records.
documentary evidence is a minor consideration. Documents may easily be sent through the mail,
Not all of the relevant documents and testimony to this action will come from the
underlying action. Zurich American intends to take the deposition of Compass' James Wilson
and the Rule 30(b)(6) deposition ofCrothall and Compass in Charlotte, North Carolina. And the
Rule 30(b)(6) deposition of ACE would likely be taken in Pennsylvania. Assuming defendants
desire to take a Rule 30(b)(6) deposition of Zurich American, the deposition would likely occur
in the Illinois offices of Zurich American. The vast majority of documents relevant to the
insurance coverage issues should be located in Charlotte (at Compass' office and the offices of
ACE's counsel and Compass/Crothall's counsel) and in Pennsylvania (at ACE's offices and
possibly Crothall's offices). Therefore, much of the evidence that will support the claims and
defenses in this action will come from this district and other locations and not from the Central
District of California. To the extent the parties need additional documents from Crothall's
California defense counsel in the underlying action, there should be no difficulty obtaining such
documents since counsel was reporting regularly to Crothall, Compass, ACE and others at times
during the case. 6 Obtaining the testimony of Crothall's California defense counsel should not be
needed by anyone since the focus of the instant dispute is on the evidence and theories being
presented by Ms. Weathersby to prove her case against Crothall and how such evidence and
theories apply to the contract trigger-of-coverage dispute. It should matter little that Crothall
6 In or about December 2009, after Zurich American received notice of the underlying action, Crothall's
defense counsel sent Zurich American copies of certain documents, including reports he had sent to
Compass, Crothall, ACE and others at various times during the case. (See Belpedio Affid., Exh. 1
attached).
not bind this action to that district, especially when the primary issue here is of contract
interpretation, not a determination of the underlying tort liability for Ms. Weathersby's injuries.
The issue is not whether Crothall is liable in negligence for Ms. Weathersby's injuries. The
settlement payment of $3,900,000 to Ms. Weathersby eliminates that issue. Rather, a threshold
issue here is whether coverage under the Zurich Policy is triggered by Weathersby's injuries, i.e.
whether Crothall's legal liability for $3,900,000 results from bodily injuries first occurring in the
final nineteen days of the Zurich Policy in September 2005 or first occurring in March 2006
when Ms. Weathersby began mixing Comet and Crew and breathing the resulting chlorine gas or
first occurring from her catastrophic exposure to chlorine gas on August 7, 2006. Duplicative
discovery and re-litigating tort issues in California, for which ACE appears to argue, can be
avoided, while at the same time the parties can litigate the coverage dispute in this Court and
thereby preserve the dual goals of a speedy and just resolution of their rights and obligations.
On balance, some evidence is in the Central District of California, and some evidence is
elsewhere in this coverage dispute. Any inconvenience is essentially equal to all parties, but
more importantly there are clear solutions to minimize the inconvenience while adjudicating the
case in North Carolina. Thus, this factor does not favor any party with regard to the motion to
transfer venue.
The representatives of the parties - whether they are in North Carolina, Pennsylvania,
Illinois, or California - are subject to the compulsory process of the Western District of North
Carolina. Testimony of non-parties such as Ms. Weathersby and her expert witnesses can be
obtained by the admission of their prior deposition testimony in the underlying action (if the
and can be used for summary judgment and at trial pursuant to Rule 32(a)(4) of the Federal
Rules of Civil Procedure. No matter where a deponent resides, that deponent is subject to
compulsory process in the district where they reside, so the parties will be able to compel the
has no problem relying on depositions to present trial testimony here if necessary. That said,
trial may not even be needed. Zurich American presently believes this case can be decided on
summary judgment and thus any concerns about having live witnesses at trial may not be a
material consideration. This factor favors Zurich American and denying the motion to transfer.
Zurich American does not anticipate that a view will be sought by any party; therefore,
A judgment rendered by this Court will be enforceable by and/or against each party. This
factor favors Zurich American and the denial of the motion to transfer.
ACE does not and cannot argue that the Western District of North Carolina will not be a
neutral forum where each party will have its day in court. Party representatives will be able to
testify at trial in this Court. Each party will have access to its evidence and witnesses (live or
through deposition) to fully support the claims and defenses in the Western District of North
Carolina. This factor favors Zurich American and weighs against transfer.
would duplicate the discovery efforts in the underlying action and certainly would not make the
pre-trial process and trial of the instant action easy, expeditious, and inexpensive. However,
litigating this case in the Western District of North Carolina, by relying on the relevant and
complete discovery performed in the underlying action, would make both the pre-trial process
In this district, the parties have conferred and agreed on a discovery schedule that
conforms to the Local Rules of this district, and submitted the joint discovery plan to the Court
on June 30, 2010. The parties built into the discovery plan a 9-month discovery period, after
which "the parties may attempt to submit stipulations of facts for motions for summary
judgment." (Doc. No. 18). Should this action be transferred to the Central District of California,
the parties would have to begin anew on negotiating a discovery plan. Furthermore, the parties
by virtue of the locations of their corporate headquarters will have easier travel to trial in the
Western District of North Carolina than the Central District of California. Communications
during the trial from the defendants' representatives in this North Carolina forum would not have
to contend with time zone changes. These practical considerations will aid in making the trial
easy, expeditious and inexpensive. This factor favors Zurich American and denying the motion
to transfer.
Based on the latest statistics from the Administrative Office of the United States Courts
for the year ending September 30, 2009, actions per judgeship in the Western District of North
Carolina were 347 compared to 578 in the Central District of California. (see Administrative
Office of the United States Courts, Federal Court Management Statistics 2009 District Courts,
249 compared to 439 in the Central District of California. (ld.) In 2009, the total number of
filings was 1,737 in the Western District of North Carolina compared to 16,170 in the Central
District of California. (ld.) The Western District of North Carolina had 22 cases over three
years old (2.7% of total cases) while the Central District of California had 774 cases over three
years old (7.6% of total cases). (ld.) While the Western District of North Carolina saw a 2.8%
decrease in filings in 2009, the Central District of California saw a 6.8% increase in filings over
more congested district than the Western District of North Carolina. Even though the times from
filing an action to its disposition and from filing an action to its trial are comparable in both
districts, the judges in the Central District of California have almost double the caseload of the
judges in the Western District of North Carolina. Transferring this case to the Central District of
California may affect the efficient administration of justice in that district by placing additional
strain on that district's judicial resources. Therefore, this factor favors Zurich American and
North Carolina has the strongest interest in this insurance coverage dispute. It involves a
policy delivered in North Carolina which insures a company headquartered here. (See Belpedio
Affid., Exh. 1attached). California has little, if any, interest in this controversy. Its resident, Ms.
Weathersby, has received the relief she sought in a settlement and she has no interest in the
dispute between the insurers. Therefore, California's interest in assuring that injuries and losses
belong in California. Although Zurich American does not dispute that the Central District of
California would have personal jurisdiction over the parties, the localized controversy is in North
Carolina and the interests of public policy and judicial economy would be better served here in
this Court.
Furthermore, as stated above, North Carolina law must be used in interpreting the Zurich
Policy because the policy was issued in North Carolina. See N.C. Gen. Stat. § 58-3-1. The
Western District of North Carolina is much better versed in the application of North Carolina law
than is the Central District of California. See FUL Incorporated v. UnifiedSchool District
Number 204, 839 F.Supp. 1307, 1313 (N.D.Ill. 1993) (transferor court "more conversant" with
law of district). In its Memorandum of Law, p. 9, supporting the motion to transfer, ACE
equates ease of access to the body of North Carolina law to the skilled application of North
Carolina law. While all courts have access to other jurisdiction's laws, a court that applies its
jurisdiction's laws every day gains a familiarity with the particulars of that jurisdiction's law that
better serves the litigants before it. Certainly the Western District of North Carolina is more
practiced in the application of North Carolina law than is the Central District of California.
Compass is entitled to have its interests under the Zurich Policy interpreted under the law
of its home state as applied by a home state court. If the Court determines the Zurich Policy is
triggered, Compass has a strong interest in having the North Carolina court decide whether
Compass is responsible for payment of its $1,000,000 self-insured retention for the 9/30/04-
9/30/05 policy period prior to any payment by Zurich American under its policy. As indicated in
the December 2009 e-mail of Compass' James Wilson, Compass committed to paying the SIR
for the 9/30/05-9/30/06 policy period under the Chartis general liability policy (See Wilson e-
SIR under the Zurich Policy. (See Compass/Crothall's Answer). Moreover, Compass has a
strong interest in having the North Carolina court decide whether it breached the notice
provisions of the Zurich Policy. Thus, joinder of Compass in this case has a significant
relevance to the coverage issues, and Compass is far from being a nominal party.
Thus, this factor favors Zurich American and denying the motion to transfer.
If this action remains in the Western District of North Carolina, there should be no issues
regarding choice of law. The policy is clearly subject to the rule set forth in N.C.Gen. Stat. §58-
3-1 -- the policy is a contract of insurance on the interests of Compass in North Carolina and is
subject to the laws of North Carolina. As stated in the statute, "[a]ll contracts of insurance on
property, lives, or interests in this State shall be deemed to be made therein, and all contracts of
insurance the applications for which are taken within the State shall be deemed to have been
made within this State and are subject to the laws thereof." N.C. Gen. Stat. § 58-3-1. Should
this action be transferred to the Central District of California, a choice-of-law problem would
likely arise because, as noted in ACE's Memorandum of Law, footnote 4, "ACE does not
To be clear, under the rule established by the United States Supreme Court, were this
case to be transferred to the Central District of California, "the transferee court must follow the
choice-of-law rules that prevailed in the transferor court." Ferens v. John Deere Co., 494 U.S.
516,519, 110 S.Ct. 1274, 1277, 108 L.Ed.2d 443 (1990) (citing, Van Dusen v. Barrack, 376 U.S.
612,84 S.Ct. 805, 11 L.Ed.2d 945 (1964)). In other words, the California federal court would be
required to apply the choice-of-law rules of North Carolina, which in this instance would be §58-
(E.D.N.C. 2000) ("Because this is a diversity action, the court must apply the choice oflaw rules
of the state in which it sits, North Carolina.... Pursuant to §58-3-1, this contract is deemed to
have been made in North Carolina, and North Carolina law applies."). If ACE plans to argue its
way around §58-3-1 upon transfer to the Central District of California, the transfer will have
ACE unreasonably delayed in the filing of its motion. "After the factors favoring a
convenient transfer become evident," a party should move "with reasonable promptness" to file
its motion to transfer. Moore's Federal Practice 3d §l11.17[2][a] (2007). If the delay would
unduly prejudice the party opposing the motion or if the filing of the motion is a dilatory tactic, a
district court may deny the motion. See American Standard, Inc. v. The Bendix Corp., 487
F.Supp. 254, 259-60 (W.D.Mo. 1980); see also McGraw-Edicon Co. v. Van Pelt, 350 F.2d 361,
363 (8 th Cir. 1965) (five months delay after suit filed; transfer denied). Where undue delay and
other factors weigh against transfer, denial of transfer is appropriate. See Peetet, 868 F.2d at
1436 (trial court did not abuse its discretion in denying motion to transfer).
ACE waited five months after suit was filed before filing its motion to transfer venue
under 28 U.S.C. §1404. The facts underlying ACE's motion to transfer were readily known to
ACE from the beginning. Zurich American has been prejudiced by the delay. During that 5-
month period, Zurich American incurred legal expenses that it would not have incurred had the
motion been timely filed. The Court should consider this delay as yet another factor weighing in
In the final analysis, consistent with the Fourth Circuit's holding in Collins, the balance
of the above factors is not at all in favor of transfer, much less even strongly in favor of transfer
and therefore Zurich American's choice of forum should not be disturbed. See Collins, 748 F.2d
at 921. Not a single factor favors ACE's view that the case should be litigated so far from the
parties and from the location ofthe insurance contract that is the subject matter of this litigation.
ACE fails to carry its "particularly heavy burden" to defeat the forum choice of the plaintiff. See
Commercial Equipment, 738 F.Supp. at 976. This should be the result even if the Court believes
that "the equities lean only slightly in favor of [ACE] after all factors are considered." See
ACE's primary argument is based on the flawed assumption that the underlying action
will have to be largely re-litigated to resolve the instant action. 7 In reality, the exhaustive
discovery and filings in the underlying action have already set in stone certain key evidence on
the trigger issue in the instant action, and only limited discovery should be needed to decide the
trigger issue. North Carolina is the most appropriate and convenient forum for the resolution of
the action. This district is home to the main insured party, Compass, and is closer to the parties'
residences than the Central District of California. This North Carolina forum will allow the
parties the full benefit of any sources of proof, is less congested than the Central District of
California, provides a level playing field for all parties, is the most practiced in the application of
the controlling North Carolina law, and, most importantly, it was the fair and proper choice of
Zurich American. ACE was not reasonably prompt in filing its motion and the delay prejudiced
Zurich American. Finally, the litigants in this action are large corporations, well acquainted with
7 It is also highly unusual for a large insurer such as ACE to feel the need, in a coverage dispute, to re-
litigate a settled underlying suit far from the location ofthe insurance contract.
prosecution and defense of cases in the forums where they do business and where they are
For the reasons stated above, Zurich American respectfully requests that ACE's motion
VENUE with the Clerk of Court using the CMlECF system, which will send notification of such
Tracy L. Eggleston
Cozen 0' Conner
301 S. College Street, Ste 1200
One Wachovia Center
Charlotte, North Carolina 28202
teggleston@cozen.com
Attorney for ACE American Insurance Company