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Hopeman Brothers, Inc. v. Continental Casualty Co.

United States District Court, E.D. Virginia, Newport News Division

April 17, 2017

HOPEMAN BROTHERS, INC., Plaintiff,
v.
CONTINENTAL CASUALTY COMPANY, and LEXINGTON INSURANCE COMPANY, Defendants.

          OPINION AND ORDER

          MARK S. DAVIS UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on a Motion to Enjoin the Second-Filed Action, filed by Plaintiff Hopeman Brothers, Inc. ("Hopeman"), ECF No. 12, as well as a Motion to Transfer Venue, ECF No. 14, and a Motion for Extension of Time to File Answer, ECF No. 17, both filed by Defendants Continental Casualty Company and Lexington Insurance Company (collectively "Continental and Lexington" or "Defendants"). For the reasons set forth below, the Court: (1) DENIES the Motion to Transfer Venue, (2) GRANTS the Motion to Enjoin Continental and Lexington from prosecuting the second-filed action, but DENIES the Motion to Enjoin the Second-Filed Action as it relates to the New York co-plaintiffs, and (3) GRANTS Defendant's Motion for Extension of Time to File Answer.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On December 27, 2016, Hopeman filed a complaint in this Court (the "Virginia action"), seeking "declaratory judgment and ancillary relief and for damages for breach of contract." Compl. ¶ 1, ECF No. 1. In the complaint, Hopeman "seeks a determination of the nature and scope of its rights under certain liability insurance policies issued by Defendants with respect to pending, past, and future asbestos-related bodily injury claims that have or will be asserted against Hopeman, " together with "damages to recover the amounts it has paid as a result of Defendants' breach of the insurance contracts that they issued." Id. Hopeman alleges that venue is proper in this District "because both Defendants are subject to personal jurisdiction in this District and because a substantial part of the events or omissions giving rise to the claims alleged herein occurred in this District, including because a substantial portion of the underlying asbestos-related bodily injury claims against Hopeman were filed in the geographic area encompassed by this District." Id. ¶ 7; 28 U.S.C. § 1391. The complaint was served on Continental and Lexington on December 29, 2016. ECF No. 11.

         On January 4, 2017, Continental and Lexington, along with several other insurers, filed a declaratory judgment action in the Supreme Court of the State of New York (the "New York action") against Hopeman concerning the same policies that are at issue in the Virginia Federal Action. ECF No. 15, at 1. On January 18, 2017, Plaintiffs in the New York action filed an amended complaint, adding two additional plaintiffs. Id. at 1-2; see also N.Y. Am. Compl., ECF No. 10-1, Ex. A. On January 19, 2017, Defendants filed a motion to dismiss the Virginia action based upon the Colorado River abstention doctrine, ECF No. 8, and filed a motion to stay, as an alternative request to the motion to dismiss, ECF No. 9. On January 30, 2017, Hopeman removed the case to federal court in the Southern District of New York ("S.D.N.Y") and filed its answer. Continental Casualty Co. et al. v. Hopeman Brothers, Inc., No. 1:17-cv-00688 (S.D.N.Y.).

         On February 1, 2017, Hopeman filed the pending motion to enjoin the second-filed New York action. ECF No. 12. On February 7, 2017, Defendants filed a motion to transfer the Virginia action to the S.D.N.Y so that this case could be consolidated with the second-filed New York action, ECF No. 14, and filed a motion requesting an extension of time to file responsive pleadings until after the Court has disposed of all motions affecting this Court's jurisdiction, venue, and the parties before the Court, ECF No. 17. On February 10, 2017, Hopeman opposed Defendant's request for an extension of time to file. ECF No. 21. On February 15, 2017, Defendants responded to Hopeman's motion to enjoin the New York action, ECF No. 23, and filed a reply in support of their motion for extension of time, ECF No. 24. Hopeman filed a response opposing Defendant's motion to transfer on February 17, 2017, ECF No. 25, and filed a reply in support of their motion to enjoin on February 21, 2017, ECF No. 26. Defendants filed their reply to the motion to transfer on February 23, 2017, ECF No. 27, and withdrew their motion to dismiss and the alternative motion to stay on February 28, 2017. ECF No. 28. Thus, currently pending before the Court is Hopeman's Motion to Enjoin the Second-Filed Action, ECF No. 12, Defendants' Motion to Transfer Venue, ECF No. 14, and Defendants' Motion for Extension of Time to File Answer, ECF No. 17. Having been fully briefed, these matters are ripe for review.

         II. LEGAL STANDARD

         Title 28 of the United States Code, Section 1404, establishes that, w[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 or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). Such statute "is intended to place discretion in the district court to adjudicate motions for transfer of venue 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)) .

         In order to determine whether a § 1404 transfer of venue is appropriate, "a district court must make two inquires: (1) whether the claims might have been brought in the transferee forum, and (2) whether the interest of justice and convenience of the parties and witnesses justify transfer to that forum." Koh v. Microtek Int'l, Inc., 250 F.Supp.2d 627, 630 (E.D. Va. 2003). The second prong of § 1404(a) requires a court to afford deference to the plaintiff's chosen forum because under the "first-filed" rule a plaintiff "is ordinarily entitled to choose its forum." Ellicott Mach. Corp. v. Modern Welding Co., 502 F.2d 178, 18 0 (4th Cir. 1974). Therefore, unless the balance of factors weighs otherwise, the case "ought to be tried in the district court in which it was first filed." Id. However, an exception to the first-filed rule exists "when the balance of convenience favors the second action." Learning Network, Inc. v. Discovery Commc'ns, Inc., 11 F.App'x 297, 301-02 (4th Cir. 2001) (unpublished) (noting that while plaintiff's choice of forum is an important consideration, courts also disfavor races to the courthouse and forum shopping (citing Myles Lumber Co. v. CNA Financial Corp., 233 F.3d 821, 824 (4th Cir. 2000)).

         In determining whether the convenience of the parties and witnesses, and the interest of justice, support transfer, the district court looks to four principal factors: "(1) plaintiff's choice of forum, (2) convenience of the parties, (3) witness convenience and access, and (4) the interest of justice." Pragmatus AV, LLC v. Facebook, Inc., 769 F.Supp.2d 991, 994-95 (E.D. Va. 2011) (quoting Heinz Kettler GmbH & Co. v. Razor USA, LLC, 750 F.Supp.2d 660, 667 (E.D. Va. 2010)) . Ultimately, the burden of proof is on the movant to show "that transfer does more than merely 'shift the inconvenience to the other party.'" JTH Tax, Inc. v. Lee, 482 F.Supp.2d 731, 736 (E.D. Va. 2007) (quoting DMP Corp. v. Fruehauf Corp., 617 F.Supp. 76, 77 (W.D. N.C. 1985)). "[T]he balance of convenience among the parties and witnesses [must weigh] strongly in favor of the forum to which transfer is sought." Nationwide Mut. Ins. Co. v. The Overlook, LLC, No. CIV. 4:10CV00069, 2010 WL 2520973, at *3 (E.D. Va. June 17, 2010) (emphasis in original) (quoting Nossen v. Hoy, 750 F.Supp. 740, 742 (E.D. Va. 1990)).

         Finally, if the district court determines that transfer is not appropriate, it may enjoin further prosecution of a second-filed action in another court. Learning Network, 11 F.App'x at 301 (applying first-filed rule to allow the first-filed action to proceed and enjoining the second action); Allied-Gen. Nuclear Servs. v. Commonwealth Edison Co., 675 F.2d 610, 611 (4th Cir. 1982) ("Ordinarily, when multiple suits are filed in different Federal courts upon the same factual issues, the first or prior action is permitted to proceed to the exclusion of another subsequently filed." (citing Carbide & Carbon Chemicals Corp. v. United States Industrial Chemicals, Inc., 140 F.2d 47, 49 (4th Cir. 1944))); accord. City of N.Y. v. Exxon Corp., 932 F.2d 1020, 1025 (2d Cir. 1991) (holding that, under the first-filed rule, the "first court has jurisdiction to enjoin the prosecution of the second action").

         III. DISCUSSION

         Hopeman requests that the Court enjoin the New York action and allow the case to proceed in this Court, ECF No. 12, while Defendants requests that the Court transfer this case to the S.D.N.Y. so that it may be consolidated with the second-filed New York case, ECF No. 14. Defendants argue that this Court should transfer the case to the S.D.N.Y because it is the "more comprehensive action." Defs.' Opening Br. 4, ECF No. 15. According to Defendants, transfer would (1) prevent piecemeal litigation and potentially inconsistent rulings; (2) allow a New York court to resolve complex New York insurance coverage issues; and (3) protect all interested parties' interests. Defs.' Reply Br. 1, ECF No. 27. Hopeman argues that (1) enjoining the New York action from proceeding would prevent piecemeal litigation and inconsistent rulings, (2) the Court should not make a decision based upon the potential applicability of New York law because until discovery is complete it is unclear whether New York law or Virginia law will apply, and (3) the interest of all parties' properly before the court may be protected in the instant litigation. See generally PL's Resp. Br., ECF No. 25.

         A. Motion to Transfer

         It is undisputed that the Virginia action was the first-filed case and the New York action was the second-filed case. The S.D.N.Y generally applies a "bright-line rule" to determine which court should resolve forum disputes such as this: "[t]he court before which the first-filed action was brought determines which forum will hear the case." Congregation Shearith Israel v. Congregation Jeshuat Israel, 983 F.Supp.2d 420, 422 (S.D.N.Y. 2014) (internal citations omitted); see Notice of Related First-Filed Action, Continental Casualty Co. et al. v. Hopeman Brothers, Inc., No. 1:17-cv-00688 (S.D.N.Y. Feb. 9, 2017). Therefore, as the ...


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