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Lifelast, Inc. v. Charter Oak Fire Insurance Co.

United States District Court, W.D. Washington, Seattle

September 29, 2014

LIFELAST, INC., Plaintiff,
v.
CHARTER OAK FIRE INSURANCE COMPANY and TRAVELERS INDEMNITY COMPANY, Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS OR IN THE ALTERNATIVE TRANSFER VENUE

JAMES L. ROBART, District Judge.

INTRODUCTION

Before the court is Defendants Charter Oak Fire Insurance Company and Travelers Indemnity Company's (collectively, "Travelers") motion to dismiss or transfer this action for lack of proper venue pursuant to 28 U.S.C. § 1406. (Mot. (Dkt # 10).) In the alternative, Defendants move the court to transfer venue to the Central District of Utah pursuant to 28 U.S.C. § 1404, or dismiss or transfer venue pursuant to the doctrine of forum non conveniens or the " Brillhart Abstention Doctrine." ( Id. ) Having considered the parties' briefing, the balance of the record, and the relevant law, the court DENIES Travelers' motion to dismiss or transfer venue.[1]

BACKGROUND

This action arises out of a dispute over an insurance company's decision to deny coverage to its named insured. (Notice (Dkt. # 1) at 2).

A. The Parties

Plaintiff LifeLast, Inc. ("LifeLast") is a Washington corporation whose principal place of business is in Vancouver, Washington. (Notice (Dkt. # 1) Ex. 1 ¶ 1.) LifeLast brings this action as the assignee of Travelers' policy holders, Corrosion Control Technology, Inc. ("CCT") and its executive officer and/or director Jeffery Mattson (collectively "CCT/Mattson"). ( Id. ¶ 5.) CCT is a Utah corporation with its principal place of business in the state of Utah. (Lether Decl. (Dkt. # 11) ¶ 2.)

Travelers is a Connecticut corporation with its principal place of business in Hartford, Connecticut. (Notice Ex. 1 ¶ 2.) Although Travelers is based in Connecticut, the company conducts business in Washington. ( See Mot. at 7.)

B. The Underlying Action

On June 29, 2011, LifeLast filed a lawsuit against CCT/Mattson in the United States District Court for the Central District of Utah ("the Underlying Action"). (Notice Ex. 1 ¶ 9.) Among other claims, LifeLast alleged that CCT/Mattson defamed LifeLast and disparaged its products. ( Id. ) LifeLast's total claimed damages in the Underlying Action exceeded $16 million. ( Id. )

On May 5, 2014, LifeLast and CCT/Mattson resolved all claims between them for the compromised amount of $6, 925, 000 as the result of a formal mediation. ( Id. 29.) CCT/Mattson and Admiral Insurance Company combined to pay $1, 425, 000 of the settlement amount, thereby exhausting the Admiral policy. ( Id. ¶¶ 25, 30.) CCT/Mattson remained liable for the remaining $5, 500, 000. ( Id. ¶ 31.) CCT/Mattson then assigned to LifeLast, without recourse or warrant, all right, title, and interest in and to any cause of action or claim that CCT/Mattson has or may have against its insurer Travelers. ( Id. ¶ 32.) The assignment was conditioned on LifeLast's agreement to never enforce the remaining settlement amount against any of CCT/Mattson's assets, other than the Travelers insurance policies. ( Id. )

C. The Insurance Dispute

CCT/Mattson requested insurance benefits from Travelers against LifeLast's claims in the Underlying Action, including defense and indemnity coverage. ( Id. ¶ 10.) In an October 10, 2011, letter to CCT/Mattson, Travelers denied defense and indemnity coverage to CCT/Mattson. ( Id. ¶ 20.) In the letter, Travelers stated that the policy contained a professional liability exclusion that precluded coverage for this matter. ( Id. ) LifeLast's counsel furnished CCT/Mattson with additional information explaining why LifeLast's claims were arguably covered and requested that Travelers reconsider its denial of coverage. ( Id. ¶ 24.) Travelers allegedly refused to reconsider its denial of coverage. ( Id. ¶ 24.) With no coverage available from Travelers, CCT/Mattson only had $2 million in coverage available under the separate Admiral policy. ( Id. ¶ 25.)

D. The Present Action

One June 18, 2014, LifeLast filed a complaint in King County Superior Court alleging that Travelers breached its separate obligations to defend and indemnify CCT/Mattson against the Underlying Action. (Notice at 1-2.) In response, Travelers filed a notice of removal, removing the case to the United States District Court for the Western District of Washington. ( Id. Ex. 10.) Travelers then filed the present motion to dismiss or transfer venue. ( See generally Mot.)

ANALYSIS

Travelers makes various arguments in its motion to dismiss or transfer venue. First, Travelers argues that venue is improper under 28 U.S.C. § 1391(b) and therefore the suit should be dismissed or transferred under 28 U.S.C. § 1406. ( See Mot. at 5-8.) Second, even if venue is proper in the Western District of Washington, Travelers argues that this court should transfer the case to the Central District of Utah pursuant to 28 U.S.C. § 1404(a). ( Id. at 8.) Third, Travelers argues that the matter should be dismissed or transferred under the doctrine of forum non conveniens. ( Id. at 10.) Lastly, Travelers argues that this matter should be dismissed or transferred under the " Brillhart Abstention Doctrine." ( Id. at 14.)

A. Travelers' Motion to Dismiss or Transfer Venue for Improper Venue

Travelers asks this court to either dismiss or transfer this case to a different district pursuant to 28 U.S.C. § 1406 for lack of proper venue under 28 U.S.C. § 1391. ( See id. at 5-8.) Section 1406 allows a court in a district with improper venue to dismiss the case or transfer it to a different district:

The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any ...

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