Maryatt et al v. American Casualty Company of Reading Pennsylvania et al, No. 3:2006cv05011 - Document 51 (W.D. Wash. 2006)
Court Description: ORDER granting in part and denying in part 7 American Casualty Company of Reading PA's Motion: GRANTING American Casualty's Motion to Dismiss Plaintiffs' claims regarding the Washington site; GRANTING American Casualty's Motion to Transfer the remaining action re the California site to the Federal Court for the Northern District of California; and DENYING American' Casualty's Motion to Strike Plaintiffs' bad faith claim. Signed by Judge Ronald B. Leighton.(DN, )
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Maryatt et al v. American Casualty Company of Reading Pennsylvania et al Case 3:06-cv-05011-RBL Document 51 Doc. 51 Filed 03/10/2006 Page 1 of 6 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 8 9 10 CHARLES MARYATT and KATHLEEN MARYATT, husband and wife, 11 Plaintiffs, 12 13 14 15 16 17 18 No. C06-5011RBL ORDER ON DEFENDANT AMERICAN CASUALTY COMPANY OF READING PA’S MOTION TO DISMISS, MOTION TO STRIKE, AND MOTION FOR CHANGE OF VENUE v. AMERICAN CASUALTY COMPANY OF READING PA; FEDERAL INSURANCE COMPANY, a corporation; GRANITE STATE INSURANCE COMPANY, a corporation; PROTECTIVE NATIONAL INSURANCE COMPANY OF OMAHA, a corporation; WESTCHESTER FIRE INSURANCE COMPANY, a corporation; TRAVELERS INDEMNITY COMPANY, a corporation, Defendants. 19 20 21 This matter is before the Court on Defendant American Casualty Company of Reading PA’s 22 23 24 25 26 27 28 (“American Casualty”) Motion to Dismiss, Motion to Strike, and Motion for Change of Venue [Dkt. #7]. American Casualty seeks to dismiss portions of Plaintiffs’ complaint under the doctrine of res judicata, and to transfer the remaining portion of the complaint for adjudication in the Northern District of California. American Casualty also seeks to strike Charles Maryatt and Kathleen Maryatt’s (“Plaintiffs”) allegations of bad faith. For the reasons discussed below, these motions are GRANTED in part and DENIED in part. ORDER 1 Dockets.Justia.com Case 3:06-cv-05011-RBL Document 51 Filed 03/10/2006 Page 2 of 6 1 2 FACTUAL BACKGROUND 3 This case concerns insurance coverage for a dry cleaning company called American Linen. 4 5 American Linen was established in the 1920s, when Plaintiff Charles Maryatt’s father opened shop at 771 6 Valley Street in Seattle, Washington (“Washington site”). In the 1940s, the company expanded its 7 operations to open other stores, including a site in California (“California site”). When Plaintiff Charles 8 9 10 Maryatt’s father died in 1980, stock in the company transferred to Charles and his brother. In 1992, Charles’ brother, David, became the sole shareholder of American Linen. In 1992, American Linen submitted a report in compliance with Washington law to the Washington 11 12 State Department of Ecology (“DOE”) informing the DOE that it had discovered contamination due to 13 past practices at its Washington site. The DOE informed the company that an owner or operator of a 14 15 16 contaminated facility is a potentially liable person under the Washington State Model Toxics Control Act (“MTCA”) and advised the company to clean up the site in accordance with applicable regulations. In 1993, American Linen filed a lawsuit seeking a declaration that its American Casualty insurance 17 18 policy1 covered environmental liabilities arising from the Washington site. Prior to trial, the parties entered 19 a “Confidential Settlement Agreement and Release” (“settlement agreement”). On June 28, 1994, this 20 Court recognized the settlement agreement and dismissed the complaint with prejudice. 21 In the settlement agreement, the parties, American Casualty and American Linen, expressed their 22 23 “desire to resolve and settle all issues of insurance coverage, defense, and indemnity among them arising 24 from and concerning the . . . Declaratory Action, the Seattle Facility2 . . . and any claims for insurance 25 coverage for Site Contamination at or arising from the Seattle Facility . . . .” The agreement applies to all 26 27 28 ORDER 1 The parties do not explain when American Linen obtained this policy. 2 This references the Washington site. 2 Case 3:06-cv-05011-RBL 1 4 5 6 Declaration of Robert Salmon, attached as Exhibit A, at pp. 9-10. 7 Sometime between 1993 and 2005, Plaintiffs faced additional problems with contamination at the 8 11 12 13 Page 3 of 6 [American Casualty] and American Linen . . . do hereby release, forever discharge and covenant not to sue each other, their trustees, agents, officers, directors, attorneys, affiliated companies, predecessors, successors, and assigns, from and for all injuries, losses, liabilities or claims of any kind . . . including, but not limited to, all claims of . . . environmental damage . . . and claims of . . . clean up costs . . . [or] Site Contamination at, or in any way arising from [] the Seattle Facility . . . . 3 10 Filed 03/10/2006 future environmental and cleanup claims with regard to the Washington site: 2 9 Document 51 Washington site and tendered liability to American Casualty.3 On November 23, 2005, in the Superior Court of California in San Mateo County, American Casualty filed a complaint for declaratory relief, seeking an answer to the question of whether Charles and Kathleen Maryatt are entitled to insurance coverage for contamination at the California site. Discovery is underway in that case. 14 Plaintiffs commenced this case on December 7, 2005, in the Superior Court of Washington in 15 Pierce County, seeking insurance coverage for contamination at the California and Washington sites. 16 American Casualty removed the case to this Court on January 9, 2006. Presently, Plaintiffs are officers, 17 directors, and shareholders of American Linen. 18 Defendant American Casualty moves to dismiss the portion of Plaintiffs’ claim regarding the 19 20 Washington site and to transfer the remaining claim regarding the California site to the Northern District of 21 California. They also seek to strike Plaintiffs’ bad faith claim. 22 23 DISCUSSION A. Motion to Dismiss 24 Defendant American Casualty moves to dismiss that portion of Plaintiffs’ complaint seeking 25 26 damages and insurance coverage with respect to the Washington site. It argues that under the doctrine of 27 28 3 Although Plaintiffs discuss their tender for liability with respect to the California site, neither party explains how or when Plaintiffs tendered liability to American Casualty with respect to the Washington site. ORDER 3 Case 3:06-cv-05011-RBL 1 2 3 4 Document 51 Filed 03/10/2006 Page 4 of 6 res judicata, that portion of Plaintiffs’ claim is barred by the parties’ settlement agreement, because the settlement agreement served as a final judicial adjudication of its contractual liability for environmental contamination at the Washington site. The doctrine of res judicata (or claim preclusion) prevents the relitigation of issues that have been 5 6 settled by judicial decision. Three elements are necessary to establish a res judicata defense. There must 7 be (1) an identity of claims, (2) a final judgment on the merits, and (3) privity between parties. Tahoe 8 9 10 11 Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 322 F.3d 1064, 1077 (9th Cir. 2003). The parties do not dispute that the first element is met. The second element is also met. Judgment based on a settlement between parties has full res judicata effect with respect to claims that were, or should 12 have been, decided in a prior proceeding. Hadley v. Cowan, 60 Wn. App. 433, 439, 804 P.2d 1271 (1991). 13 See also LeBire v. Dep’t of Labor & Indus., 14 Wn.2d 407, 418, 128 P.2d 308 (1942) (“[A] final order of 14 judgment, settled and entered by agreement or consent of the parties, is no less effective as a bar or 15 16 estoppel than is one which is rendered upon contest and trial.”) 17 The third element, privity between parties, is disputed by the parties. Privity is defined as 18 “the connection or relationship between two parties, each having a legally recognized interest in the same 19 subject matter.” Black’s Law Dictionary (8th ed. 2004). See also Stratosphere Litigation L.L.C. v. Grand 20 Casinos, Inc., 298 F.3d 1137, 1142 n. 3 (9th Cir. 2002) (quoting In re Schimmels, 127 F.3d at 881) 21 22 (“Privity between parties exists when a party is so identified in interest with a party to former litigation that 23 he represents precisely the same right in respect to the subject matter involved.”). Plaintiffs argue that 24 there is no privity between Plaintiffs and American Linen because although Plaintiffs were listed as insured 25 on the policy, they were not a party to the settlement agreement and were not shareholders at the time the 26 agreement was finalized. American Casualty emphasizes that the settlement language encompassing the 27 28 parties’ “trustees, agents, officers, directors, attorneys, affiliated companies, predecessors, successors, and assigns” was designed to preclude parties asserting the same claims as those resolved in the agreement. ORDER 4 Case 3:06-cv-05011-RBL 1 2 3 4 5 8 9 10 Filed 03/10/2006 Page 5 of 6 The Court agrees that the settlement agreement precluded Plaintiffs from bringing a second insurance claim for contamination at the Washington site. The Court therefore concludes that res judicata bars Plaintiffs’ claim regarding the Washington site and GRANTS American Casualty’s motion to dismiss. B. Motion for Change of Venue Defendant American Casualty moves under 28 U.S.C. § 1404(a) to transfer this action to the 6 7 Document 51 Federal District Court for the Northern District of California. It argues that because the California site is the only site at issue, the action should be transferred there in order to more easily and efficiently access documents and witnesses associated with the site. Under 28 U.S.C. § 1404(a), the District Court has broad discretion to adjudicate motions for 11 12 transfer according to case-by-case consideration of convenience and fairness. 28 U.S.C. § 1404(a); 13 Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S. Ct. 2239, 101 L. Ed. 2d 22 (1988). 14 There are eight factors a court may consider when deciding whether to transfer venue: 15 (1) location where the relevant agreements were negotiated and executed; (2) the state that is most familiar with the governing law; (3) the plaintiff’s choice of forum; (4) the respective parties’ contacts with the forum; (5) the contacts relating to the plaintiff’s cause of action in the chosen forum; (6) the differences in the costs of litigation in the two forums; (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses; and (8) the ease of access to sources of proof. 16 17 18 19 20 21 22 Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). In light of the fact that the Plaintiffs’ remaining claim concerns damages and insurance coverage at 23 24 the California site, the balance of these factors supports transfer of this action to the Northern District of 25 California. Even though the disputed insurance policy was apparently executed in Washington with 26 Washington residents, nearly all other witnesses and documents are likely to reside in California, the 27 28 presumably applicable law of California will be more adequately adjudicated there, and the respective ORDER 5 Case 3:06-cv-05011-RBL 1 2 3 4 Document 51 Filed 03/10/2006 Page 6 of 6 parties appear to have sufficient contacts to dispute their claims there.4 This Court therefore concludes that transfer is appropriate and GRANTS American Casualty’s motion to transfer the action. C. Motion to Strike Plaintiffs claim that American Casualty acted in bad faith when it sought a declaratory judgment in 5 6 the San Mateo County Superior Court. American Casualty moves to strike this allegation, contending that 7 an insurer acts within its rights when it seeks a judicial declaration as to its obligations to the insured. 8 9 10 Because this question is more appropriate for the Federal Court in California, this Court DENIES the motion. *** 11 12 The Court GRANTS Defendant American Casualty’s Motion to Dismiss Plaintiffs’ claims 13 regarding the Washington site, GRANTS American Casualty’s Motion to Transfer the remaining action 14 15 16 regarding the California site to the Federal District Court for the Northern District of California, and DENIES American Casualty’s Motion to Strike Plaintiffs’ bad faith claim [Dkt. #7]. 17 IT IS SO ORDERED. 18 DATED this 10th day of March, 2006. 19 20 A 21 22 RONALD B. LEIGHTON UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 4 Although Plaintiffs are in their 80s, there is no evidence that they are unable to travel. If it is true that Plaintiffs have a vacation home in Southern California, that would suggest that Plaintiffs are capable of traveling to California for other purposes, including trial. ORDER 6
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