Most insurance company’s have their main offices located outside of Texas. If you live in Weatherford, Texas, Arlington, Grand Prairie, or the Dallas – Fort Worth area, and you sue an insurance company, how do you know you won’t have to travel to Delaware or some other state to fight the lawsuit?
The United State District Court, Southern District, Houston Division, recently had a case dealing with this issue. The case decision was handed down on January 26, 2010, and was styled, Houston Baptist University, v. Ace American Insurance Company and York Claims Service, Inc.
Houston Baptist University (HBU) had a policy of insurance with Ace American Insurance Company (Ace). HBU suffered losses as the result of Hurricane Ike hitting the Houston area and made a claim against Ace. Ace assigned York Claims Service, Inc. (York) to adjust and inspect the claim. HBU and Ace could not reach an agreement on the value of the claim and HBU filed a lawsuit against Ace and York. The insurance policy had a policy provision that read: Any dispute arising under this policy shall be exclusively subject to the jurisdiction of the federal and state courts located in the Commonwealth of Pennsylvania.
After the lawsuit was filed in Texas, Ace and York filed a motion with the court to have the case transferred to Pennsylvania in accordance with the forum selection clause contained in the policy.
28 U.S.C. Section 1404(a) is the law that governs this area of the law and states: “For 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.” Under this statute, the court “must make an individualized, case-by-case consideration of convenience and fairness.” The court is required to look at two issues. First, the court must determine if the transferee court is one in which the case originally could have been brought. The answer in this case is, yes.
Second, the court must determine whether the convenience of the parties and witnesses and the interest of justice require that the case be transferred. On this issue the court looked closer and said no.
Even though the court is to consider the clause in the policy contract, it is not the determining factor. Consideration is also to be given to convenience of witnesses and those public interest factors of systemic integrity and fairness under the heading of “the interest of justice.” The burden of proving where the case should be litigated is on the party trying to get it moved to another location.
The law requires courts to balance private and public factors in determining if a case should be transferred. Private factors to be considered include: (1) the availability and convenience of witnesses and parties; (2) trial expenses; (3) the location of books and records; (4) the place of the alleged wrong; (5) the plaintiff’s choice of forum; (6) the possibility of delay and prejudice if transfer is granted; and (7) the location of counsel. Public interest factors address broader objectives, such as the fair and efficient administration of the judicial system and the degree of local interest in the matter.
In this matter the court ultimately ruled against allowing the case to be transferred. In making it’s decision the court stated, “Everything related to this case, the witnesses, experts, documents, physical evidence, and the damaged building itself are all located in Houston. The case is governed by Texas law. The city of Houston and the State of Texas have strong interest in this case; Pennsylvania has none.”
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