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Federal Court Denies Transfer of Venue Applying Jumara Balancing Test

Posted In Jurisdiction
Ace Capital v. Varadam Foundation, 392 F.Supp.2d. 671 (D.Del. 2005). This action arose under the admiralty and maritime jurisdiction of the Federal Court. Marine insurers Ace Capital filed in the United States District Court for the District of Delaware for declaratory judgment against the insured, Varadam Foundation, a Delaware corporation, and Jaime Jalife, the owner of the vessel, a citizen of Mexico. The suit was filed to seek a determination that the marine policy between the parties excluded coverage for damages sustained by the insured's vessel. Defendant Varadam moved to transfer the venue to Florida pursuant to 28 U.S.C. § 1404(a). The Court denied the motion applying the Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995) balancing test. Applying the Jumara standard for transfer of venue motions, the Court held that the factors governing the review of such a motion is not limited to the three enumerated factors in §1404(a); rather, the Court observed that a determination "whether, on balance, the litigation would more conveniently proceed and the interests of justice would be better served by a transfer to a different forum," by the balancing of six private and five public interests was required. The defendants contended that the "Service of Suit" clause in their policy permitted their choice of venue. The Court observed that while Third Circuit precedent permitted the Service of Suit clause to "waive the defendant-insurer's right to remove the case" when an insured sues the insurer as permitted by Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207, 1216-17 (3d Cir. 1991), cert. denied, 502 U.S. 908 (1991), the same clause would not allow an insured to prevent, by a subsequent filing in another Court, "the insurer's otherwise valid action for declaratory judgment." Examining the relevant clause under contract interpretation rules, the Court held that the language of the Service of Suit clause was not ambiguous and did not prevent the insurer from bringing suit against the insured. Further, it did not prescribe specific forums in which he could do so. The Court held that an interpretation which permitted blocking an insurer's valid declaratory judgment action in one jurisdiction by merely filing a later lawsuit in another would be unreasonable and deprive such an insurer its right to seek such remedies. Additionally, the Court accepted the plaintiffs argument that the defendants had not demonstrated clearly that the action could have been originally brought in the Southern District of Florida. The Defendants had only asserted that Defendant Jaime did business in Florida; there was no assertion that Defendant Varadam would have been similarly subject to an action in that jurisdiction. Further, the Court examined the public and private Jumara factors and held that their balancing tipped the scales in favor of denying transfer of the action to Florida. Significantly, the defendants had not specifically shown that any witnesses would be unable to appear in Delaware or that documents relied upon would be difficult to ship to Delaware. Citing Third Circuit precedent, the Court held that defendants had not discharged their burden of showing that "the balance of convenience of the parties and witnesses strongly favor[ed]" them and had not demonstrated that jurisdiction in Delaware presented any unique or otherwise imposed any unusual burden on defendant's operations. Authored by: Raj Srivatsan 302-888 6831 Share


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