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denying severance, observing that the plaintiff's negligence claim against the hotel and the hotel's third-party claim against its cleaning and maintenance company centered on the plaintiff's trip and fall over a rug in hotel elevator, and that even though the third-party action involved claims arising from a maintenance agreement, the claims involved "almost the same set of facts and [were] based on at least one similar theory of relief"
Summary of this case from Graham-Johnson v. City of AlbanyOpinion
98 CV 2633 (RCC).
April 24, 2002
Opinion and Order
This lawsuit involves a personal injury sustained by plaintiff Estella Colonomos ("Mrs. Colonomos") in one of the hotels owned by the defendant Ritz-Canton Hotel Company ("Ritz-Carlton"). Mrs. Colonomos and her husband, Mark Colonomos ("Mr. Colonomos"), (collectively referred to as "Plaintiffs") bring suit against defendants Ritz-Carlton and Marriott [nternational (collectively referred to as "Defendants"). In turn, Defendants/third-party plaintiffs have filed a third-party complaint against third-party defendant Falcon Marble Maintenance Company ("Falcon"). The parties are before the Court on motions: to dismiss for lack of personal jurisdiction over Falcon; to sever the third-party suit; to apply Virginia substantive law; and to transfer the case to the Eastern District of Virginia. A motion to vacate sanctions is also pending. For the reasons stated below, the motion to sever is denied, the motion to transfer to the Eastern District of Virginia is granted, the motion to dismiss is rendered moot the motion to apply Virginia law is left for resolution by the Virginia court, and the motion to vacate sanctions is granted.
I. BACKGROUND
This action arises from personal injuries allegedly sustained by Mrs. Colonomos on December 6, 1997. First Amended Complaint [1st Am. Compl.] ¶ 22. Mrs. Colonomos claims that she tripped and fell over a rug in the elevator of a Virginia hotel owned by Ritz-Carlton ("Hotel"). Id.
Plaintiffs commenced a lawsuit in the Supreme Court of New York, on or about March 17, 1998, and the case was removed to this Court on the basis of diversity on April 13, 1998. Affidavit of William Scher, dated June 11, 2001 [Scher Aff.] ¶¶ 2, 4; Amended Affidavit of Alan Leonard Levy, dated July 2, 2001 [A.Levy Aff.] ¶ 6. Plaintiffs filed their first amended complaint on July 8, 1998, sounding in negligence. Subsequently, Defendants moved this Court to dismiss and transfer Plaintiffs' complaint based on 28 U.S.C. § 1404 venue provisions. A. Levy Aff. ¶¶ 6. Judge Sotomayor denied the motion on July 24, 1998 and discovery was conducted through 1998 and 1999. Id. ¶¶ 8, 10.
Besides the negligence claims made on behalf of Mrs. Colonomos, Mr. Colonomos also made a claim for loss of consortium. See 1st Am. Compl. ¶¶ 51-54. In their second amended complaint, Plaintiffs added an additional claim for diminished earnings and lost profits. See Second Amended Complaint [2d Am. Compl.] ¶¶ 51-85.
After Judge Sotomayor was elevated to the Second Circuit, the case was reassigned to this Court.
In November 1999 however, Plaintiffs signed a stipulation permitting Defendants to join Falcon as third-party defendant. Id. Falcon was the company that performed cleaning and maintenance work in the Hotel. Affidavit of Robert McCarthy, dated June 15, 2001 [McCarthy Aff] ¶ 4. Plaintiffs' counsel alleges that Defendants' counsel represented: that Falcon was subject to the personal jurisdiction of this Court as well as the venue provisions; and that Falcon was amenable to suit in this Court. A.Levy Aff. ¶ 10. On or about November 2, 1999, Defendants filed a third-party complaint against Falcon, asserting causes of action for negligence and breach of contract. McCarthy Aff. ¶ 7.
In the third-party complaint, Defendants allege: that as a result of Falcon's negligence, Defendants are entitled to indemnification and contribution from Falcon; and that Falcon failed to perform and breached the "Building Maintenance Service Contract" it had with Defendants. See Third-Party Complaint [3rd Party Compl.].
Three mediation proceedings were held between March 16, 2000 and April 18, 2001 but the parties were unable to reach a settlement of the claims. A.Levy Aff. ¶ 12. The parties are now before the Court on: a motion to dismiss for lack of personal jurisdiction by Falcon, which is opposed by Defendants; motions to sever by Falcon and Plaintiffs, which are opposed by Defendants; motions to apply Virginia law by Falcon and Defendants, which are opposed by Plaintiffs; and a motion to transfer to the Eastern District of Virginia by Falcon, which is opposed by Plaintiffs. A motion to vacate sanctions, which were imposed on Plaintiffs' attorneys by the Magistrate Judge, is also pending.
Falcon originally informed the Court that it intended to move to dismiss based on lack of personal jurisdiction during a status conference on March 31, 2000, four months after being joined as third-party defendant. Before setting a briefing schedule, the Court directed the parties to complete their mediation efforts. When the mediation attempts fell through after more than one full year, the parties returned for a status conference on April 20, 2001 and the Court granted the parties leave to file their respective motions.
II. DISCUSSION
The Court will address each of the motions individually.
1. Motion to Dismiss for Lack of Personal Jurisdiction
Third-party defendant, Falcon, moves for dismissal due to lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). Defendants appear to concede that the Court lacks personal jurisdiction over Falcon but oppose the motion by arguing that the Court should exercise supplemental jurisdiction over Falcon, pursuant to 28 U.S.C. § 1367(a).
Falcon also moves to dismiss the third-party action based on improper venue. Because the Court determines that it lacks personal jurisdiction, it does not reach the venue argument.
A. Standard of Review
On a Rule 12(b)(2) motion, "the [third-party] plaintiff bears the burden of showing that the court has jurisdiction over the defendant."Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). The third-party plaintiffs burden depends on the procedural posture of the litigation. If there has been no discovery. "a [third-party] plaintiff may defeat a motion to dismiss based on legally sufficient allegations of jurisdiction." Id. But where there has been discovery regarding personal jurisdiction, the third-party plaintiffs burden is to make a prima facie showing which "must include an averment of facts that, if credited by the ultimate trier of fact, would suffice to establish jurisdiction over the [third-party] defendant." Id. at 567 (citation omitted). If the court relies on the pleadings and affidavits alone, rather than a full-blown evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdiction in order to defeat the motion to dismiss. Welinsky v. Resort of World D.N.V., 839 F.2d 928, 930 (2d Cir. 1988). Moreover, the pleadings and affidavits are construed in the light most favorable to the plaintiff and all doubts are resolved in its favor. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986) (citation omitted).
B. Personal Jurisdiction
Personal jurisdiction over a defendant in a diversity action is determined by referring to the relevant statutes of the forum state. Id.
Under New York law, the Court must follow a two-step procedure in order to determine whether there is personal jurisdiction over a defendant: the Court must determine whether New York Civil Practice Law and Rules ("CPLR") §§ 301 302 provide a basis for personal jurisdiction, and if they do, the Court must conduct a constitutional inquiry to determine whether the exercise of personal jurisdiction over the defendant would offend due process . . .Laumann Mfg. Corp. v. Castings USA, Inc., 913 F. Supp. 712, 715 (E.D.N.Y. 1996). Here, because there is no evidence of personal jurisdiction under §§ 301 or 302, the Court heed not undertake the constitutional analysis.
Under New York law, personal jurisdiction may be exercised over a non-domiciliary corporation: if the corporation "does business" in New York, pursuant to CPLR § 301; or if the corporation falls under New York's long-arm statute, CPLR § 302. King v. Best Western Country Inn, 138 F.R.D. 39 (S.D.N.Y. 1991);
The New York Court of Appeals has explained the "doing business" test in the following manner: "A foreign corporation is amenable to suit in our courts if it is engaged in such a continuous and systematic course of "doing business' here as to warrant a finding of its "presences in this jurisdiction." Frummer v. Hilton Hotels International, Inc., 227 N.E.2d 851 (N.Y. 1967) (citations omitted).
In the present case, Falcon does not "do business in New York. Falcon appears to be a small company, with under thirty employees, that provides cleaning and housekeeping services. Affidavit of Bruce White [White Aff.] ¶ 2. Its President and sole shareholder swears in his affidavit that: Falcon was incorporated in the Commonwealth of Virginia; its principal place of business is in McLean, Virginia; and it conducts business in that state only. Id. ¶¶ 2-3. Falcon represents further that: it has no offices, manufacturing facilities, bank accounts or employees in New York; it neither transacts business in New York nor contracts to supply services in New York; and it is not authorized to business in New York.Id., ¶ 5. Moreover, Defendants do not provide any evidence whatsoever to dispute Falcon's factual assertions.
Turning now to § 302, New York's long-arm statute permits a court to exercise personal jurisdiction if the non-domiciliary corporation:
1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or
2. commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; or
3. commits a tortious act without the state causing injury to person or property within the state . . . if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or
4. owns, uses or possesses any real property situated within the state.
N.Y.C.P.L.R. § 302(a).
Here, there is no evidence that Falcon transacts any business in New York or that it owns property in this state as required by §§ 302(a)(1) (4). In fact, Falcon provides a sworn affidavit stating that neither is true. See White Aff. ¶ 5. Furthermore, Defendants have made no allegation that Falcon committed a tortious act within the state. The only applicable section of the long-arm statute, therefore, is § 302(a)(3), which permits a court to assert personal jurisdiction if the non-resident defendant commits a tort outside the state, but causes injury to a New York state resident. Again however, there is no evidence that, in the state of New York, Falcon: regularly does or solicits business; engages in other persistent course of conduct; or derives substantial revenue from goods used or consumed or services rendered. Nor is there any assertion that Falcon derives any, let alone substantial, revenue from interstate or international commerce.
As explained below, there is some dispute about whether Plaintiffs are residents of New York. See infra Section II.3.
Defendants' failure to provide any evidence to contradict Falcon's assertions leads this Court to conclude that Defendants are unable to meet their burden of making a prima facie showing as to the Court's ability to assert personal jurisdiction over Falcon. However, Defendants argue that the Court should exercise its discretion and assert supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a).
C. Supplemental Jurisdiction
The supplemental jurisdiction statute, § 1367(a), provides in relevant part:
Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.28 U.S.C. § 1367(a) (emphasis added).
Defendants also cite to Estate of Bruce v. City of Middletown, 781 F. Supp. 1013 (S.D.N.Y. 1992), to support their proposition that the Court may assert pendent party jurisdiction, under § 1367(a), over Falcon even where there is no basis for personal jurisdiction. Defendants are simply wrong.
"Supplemental jurisdiction deals with subject matter jurisdiction, not personal jurisdiction." Huff v. Chandris SA, 1994 WL 414467, *4 (S.D.N.Y. Aug. 8, 1994); see also Doppelt v. Perini Corp., 2002 WL 392289, *4 (S.D.N.Y. Mar. 13, 2002). "Even assuming arguendo that the Court has supplemental jurisdiction over the claims brought by [the defendant], the Court still must have personal jurisdiction over [the third-party] defendant in order to adjudicate the claims brought against [the third-party] defendant. Doppelt, 2002 WL 392289, at *4 (dismissing defendants where there is no personal jurisdiction over them).
The Court notes that under the doctrine of "pendent personal jurisdiction," "where a federal statute authorizes nationwide service of process, and the federal and state claims `derive from a common nucleus of operative fact,' the district court may assert personal jurisdiction over the parties to the related state law claims even if personal jurisdiction is not otherwise available." IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1056 (2d Cir. 1993) (citing Gibbs, 383 U.S. at 725). Because Plaintiffs in this case have brought state claims against Defendants, who in turn have brought state law claims against Falcon, there is no federal statute authorizing national service of process at issue, and pendent personal jurisdiction does not apply.
In Estate of Bruce, the court held the doctrine of "pendent party jurisdiction" permitted the court to exercise "subject matter jurisdiction" over state claims, if those claims were part of the same claim or controversy that included a federal claim. See 781 F. Supp. 1015. It did not address personal jurisdiction however.
The doctrine of supplemental jurisdiction involves many intricacies. The Supreme Court has explained that "in a federal-question case, where the federal claim is of sufficient substance, and the factual relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional case, pendent jurisdiction extends to the state claim."Aldinger v. Howard, 427 U.S. 1, 9 (1976) (emphasis added) (citing United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966)). In that scenario, therefore, a plaintiff may bring both a federal claim and a state claim against the same defendant because the court asserts federal question jurisdiction over the Federal claim and pendent claim jurisdiction over the state claim, even if the federal court would not have had subject matter jurisdiction over the state law claim alone.
Pendent party jurisdiction, as compared to pendent claim jurisdiction, involves the assertion of "jurisdiction over parties not named in any claim that is independently cognizable by the federal court." Finley v. U.S., 490 U.S. 545, 549 (1989) (emphasis added). There are limitations to the availability of pendent party jurisdiction where the original federal jurisdiction is founded solely on diversity, and the plaintiff is attempting to make claim against persons joined in the action. Herrick Co., Inc. v. SCS Communications, Inc., 251 F.3d 315, 326 n. 7 (2d Cir. 2001).
On the other hand, when a party other than plaintiff, such as the defendant, attempts to assert state claims over another party, such as the third-party defendant, and the court does not have either federal question or diversity jurisdiction over those added state claims, the doctrine of ancillary jurisdiction may support defendant's claims.Federman v. Empire Fire and Marine Ins. Co., 597 F.2d 798, 810 (2d Cir. 1979); Bank of India v. Trendi Sportswear, Inc., 239 F.3d 428 (2d Cir. 2000) (stating that "ancillary jurisdiction involves claims made by parties other than the plaintiff which have no independent subject matter jurisdictional basis . . ."); see Aldinger, 427 U.S. at 10-11 (discussingSupreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356 (1921) and Fulton Bank v. Hozier, 267 U.S. 276 (1925)).
"With the enactment of 28 U.S.C. § 1367, Congress codified the doctrine of pendent and ancillary jurisdiction under the collective doctrine `supplemental jurisdiction.'" Rubinbaum LLP v. Related Corporate Partners V. L.P., 154 F. Supp.2d 481, 489 (S.D.N.Y. 2001).
Nonetheless, all these separate doctrines of supplemental jurisdiction relate to the courts' subject matter jurisdiction and not personal jurisdiction. They are therefore inapplicable to Falcon's motion to dismiss.
Because another federal court might be able to assert personal jurisdiction over Falcon and motions to sever and/or transfer are also before this Court, the Court will not decide whether a dismissal of the third-party action is warranted until those other motions are resolved.See Piper Aircraft Company v. Reyno, 454 U.S. 235, 240 n. 4 (1981) (discussing the lower court s decision not to dismiss a defendant for lack of personal jurisdiction and to transfer the case instead); Goldlawr v. Heiman, 369 U.S. 463, 467 (1962) (citation omitted) (explaining that the interest of justice may require that the complaint not be dismissed but rather that it be transferred in order that the plaintiff not be penalized by . . . time-consuming and justice-defeating technicalities.").
Under ordinary circumstances, having decided that it lacked personal jurisdiction over a party, the Court would decline to decide other pending motions. However, the motion to sever has been made by Plaintiffs, over whom the Court does have personal jurisdiction, as well as Falcon. Based in part on the conclusion that severance in not warranted in this case, in addition to this Court's lack of personal jurisdiction over Falcon, the Court decides that the interest of justice requires that the entire case be transferred. Accordingly, the Court will address the merits of the motion to sever.
Plaintiffs and Falcon both move to sever the third-party action from the main action, or alternatively, for separate trials. Falcon makes its motion pursuant to Federal Rules of Civil Procedure 14(a) and 42(b), arguing that the issues in the third-party action are different from those in the main action and that the actions are in different stages of the discovery process. Plaintiffs' motion is made pursuant to Rules 20(a) and 21 and is based on the premise that there are no common questions of law or fact between the main action and the third-party action. The Court disagrees with both parties.
Although Plaintiffs and Falcon make their motions to sever pursuant to different Rules, the distinction makes no difference for purposes of this opinion. As Judge Sweet explained in German v. Federal Home Loan Mortgage Corp., 896 F. Supp. 1385 (S.D.N.Y. 1995):
Technically, Rule 21 deals with severance of parties, while Rule 42(b) deals with separation of trials. The distinction is that separate trials result in one judgment unless the Court orders otherwise pursuant to Fed.R.Civ.P. 54(b), whereas severance results in two judgments. The same considerations are implicated, however, under either rule, namely, the convenience of the parties, avoidance of prejudice to either party, and promotion of the expeditious resolution of the litigation.Id. at 1400 n. 6.
Under Rule 14(a), "any party to a litigation may move for a severance or separate trial of a third-party claim." Flair Broadcasting Corp. v. Powers, 1995 WL 507314, *2 (S.D.N.Y. Aug. 28, 1995). "Rule 42(b) vests the district court with broad discretion to sever a third-party claim for a separate trial. It provides that the district court may order a separate trial of a third-party claim if such severance will be `in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy.'" Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir. 1984) (citing FED. R. Civ. P. 42(b)), cert. denied, 469 U.S. 1072 (1984). Rule 21 "permits a court to add or drop parties to an action when doing so would serve the ends of justice and further the prompt and efficient disposition of the litigation." German v. Federal Home Loan Mortgage Corp., 896 F. Supp. 1385, 1400 (S.D.N.Y. 1995) (citing E.I. Du Pont Dc Nemours Co. v. Fine Arts Reproduction Co., 1995 WL 312505, at *1-*2 (S.D.N.Y. May 22, 1995)).
"In deciding a severance motion, a court considers: (I) whether the issues sought to be tried separately are significantly different from one another, (2) whether the separable issues require the testimony of different witnesses and different documentary proof, (3) whether the party opposing the severance will be prejudiced if it is granted and (4) whether the party requesting the severance will be prejudiced if it not granted.German, 896 F. Supp. at 1400. In Flair Broadcasting, the court looked to one additional factor as well, "whether the posture of discovery as to the respective issues favors separate trials . . ." 1995 WL 507314, *2.
Under Rule 21, a misjoinder of parties arises when one of the conditions for permissive joinder under Rule 20(a) is not satisfied.Benson v. RMJ Securities, 683 F. Supp. 359, 377 (S.D.N.Y. 1988). Rule 20(a) provides in relevant part:
All persons . . . may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any questions of law or fact common to all defendants will arise in the action.
FED. R. Civ. P. 20(a).
The moving parties in the instant case, Plaintiffs and Falcon, argue that the claims in the two actions are markedly different; that proof of the claims will require different witnesses and documents; that they are in different stages of litigation; and that they will be prejudiced if the claims are not severed.
While the main action and the third-party action may have been in different stages of the discovery process when their motions were filed, that is no longer the case. In a status conference on March 15, 2002, the parties informed this Court that they had essentially completed discovery and had one expert deposition remaining only.
As for their argument that the claims are markedly different, in both actions, the claims arise out of almost the same set of facts and are based on at least one similar theory of relief In the main action, Plaintiffs are alleging that Ritz-Carlton was negligent, and that Mr. and Mrs. Colonomos experienced various harms as a result. In the third-party action, Defendants are also alleging negligence, although on the part of Falcon, as a result of which Mr. and Mrs. Colonomos suffered various harms and that Defendants are therefore entitled to indemnification and contribution. The third-party action does involve additional claims arising from the "Building Maintenance Service Agreement" but those additional claims are not particularly complicated, such that a jury would have difficulty understanding them.
The main action is a straight-forward personal injury action, which will require the parties to present evidence as to the injuries suffered by Plaintiffs as well as evidence related to the rug in the Hotel elevator. Presumably, the evidence regarding the rug will address: whether it was fastened, whether it caused a dangerous condition, who placed it there, whether there had been earlier problems, and whether the rug was placed improperly on the date of incident, amongst other issues. Similarly, in the third-party action, the evidence will probably go to: whether the rug was placed in the same position as usual on the date of the incident, who placed it there on that date, and whether an unfastened rug is inherently a dangerous condition, for example. The fact that there will be some difference in the testimony relevant to both actions — in the main action, there will be additional testimony about Plaintiffs' injuries while in the third-party action there will be additional testimony and documentary evidence regarding the contract provisions — does not negate the fact that much of the relevant testimony will revolve around the rug in the Hotel elevator.
Clearly, the two actions share more than one common question of law or fact, the minimum requirement under Rule 20(a) for permissive joinder, and the issues are not so significantly different that they cannot be tried together. The claims all arise from Mrs. Colonomos's alleged trip and fall in the elevator.
Lastly, Plaintiffs and Falcon argue that they will suffer prejudice if the claims are not severed; this argument holds little water. Plaintiffs argue that they will have to endure being cross-examined by two attorneys. Obviously, this is true whenever there are more than two parties to a lawsuit. However, Falcon argues that, in the event that the action is not severed, it will have to defend itself through trial even though the jury may not find Defendants liable, causing Falcon to engage in unnecessary expense. of course, if the action were severed and Defendant were found liable for Plaintiffs' injuries, then Defendants would need to undergo the unnecessary expense of trying a second case. Accordingly, the Court cannot conclude that either of the moving parties will be unduly prejudiced if the actions are not severed.
Since severance would neither serve the interests of justice nor the prompt and efficient resolution of the claim, both motions to sever, by Falcon and Plaintiffs, are denied.
3. Motion to Transfer
Falcon moves to transfer the case to the Eastern District of Virginia as an alternative to dismissing the third-party action. In a ruling from the bench on July 24, 1998, Judge Sotomayor denied a similar motion, made by Defendants, to dismiss or in the alternative to transfer the case to Virginia. See Exhibit E of A.Levy Aff. However, Falcon was not joined as third-party defendant in this case until November 18, 1999, well after Judge Sotomayor issued her ruling on Defendants' motion, and joinder of Falcon has significantly changed the factual considerations this Court must weigh in deciding a motion to transfer. Moreover, it does not appear that Judge Sotomayor was presented with the full record regarding Plaintiffs' dubious claim to New York residency, as much of that evidence was unearthed during the course of discovery. Accordingly, the Court holds that the law-of-the-case doctrine does not prevent it from deciding Falcon's motion to transfer.
Ordinarily, under the law-of-the-case doctrine, a court will not reopen issues decided in earlier stages of the same litigation. Messenger v. Anderson, 225 U.S. 436, 444 (1912). The Second Circuit had stated that it "will not depart from this sound policy absent "cogent' or "compelling' reasons. The major grounds justifying reconsideration are an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Doe v. New York City Dep't of Soc. Servs., 709 F.2d 782, 789 (2d Cir. 1983) (internal citations and quotations omitted). This doctrine, however, "merely expresses the practice of federal courts generally to refuse to reopen what has been decided, not a limit to their power. United States v. Fernandez, 506 F.2d 1200, 1203 (2d Cir. 1974).
There is substantial dispute between the parties about whether Plaintiffs are residents of New York. Plaintiffs argue that when the suit was commenced they maintained homes in both Connecticut and New York but that they were residents of New York. See Supplemental Affidavit of Susan Levy in Further Opposition, dated March 22, 2002 [S.Levy Supp. Aff. in Opp.], ¶ 5. In support of this argument, Plaintiffs provide evidence that they maintained a bank account in New York and that one of them had a New York state driver's license. See id. ¶ 3. Defendants note, however, that Plaintiffs filed Connecticut state tax returns for 1998 and that while they filed tax returns in New York as well, they did so as non-residents and part-year residents for the 1998 filing year. See Affidavit of William Scher in Further Support of Motion, dated March 18, 2002 ¶¶ 6, 8. Defendants also contend that at various times, including the date of the accident and during her deposition, Mrs. Colonomos stated her residence was 11 Frontier Road, Greenwich, Connecticut. See id. ¶¶ 10-15. It is questionable, therefore, whether the case should have been brought in this district in the first place. In any event, the factual circumstances of this case have changed significantly as a result of Falcon's joinder. The Court cannot assert personal jurisdiction over Falcon and severance of this action would be a waste of judicial resources. Because Judge Sotomayor's ruling was issued almost four years ago, prior Falcon's joinder and the discovery of all the evidence regarding Plaintiffs' residency, the Court concludes that it is proper to decide Falcon's motion to transfer.
28 U.S.C. § 1404(a) provides that "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." A "district or division where it might have been brought" has been interpreted to mean "a district where venue might have been proper and where the defendant would have been subject to process." Dwyer v. General Motors Corp., 853 F. Supp. 690, 691-692 (S.D.N.Y. 1994).
28 U.S.C. § 1391(a) provides that:
[I]n a diversity action, venue is proper in a judicial district (1) where any defendant resides if all defendants reside in the same state, (2) where a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated, or (3) in which defendants are subject to personal jurisdiction at the time the action is commenced.Id. at 692. In the instant case, the accident took place in a hotel located in Virginia. More important however, Falcon and Defendants would all be subject to personal jurisdiciion in Virginia. Therefore, the action could have been commenced in Virginia.
The purpose of § 1404(a) "is to prevent the waste of time, energy and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Id. (internal citations and quotations omitted). "A district court maintains broad discretion in deciding whether to transfer a case `in the interest of justice.'"Mindset Ltd. v. Quality Controlled Biochemicals, Inc., 2000 WL 28167, *5 (S.D.N.Y. Jan 14, 2000) (citing Filmline (Cross-Country) Productions, Inc. v. United Artists Corp., 865 F.2d 513 (2d Cir. 1989)). "The moving party, however, bears the burden of making out a strong case for transfer." Id. (internal citations omitted).
In determining whether a transfer is warranted, a district court considers a number of factors, including: (I) the convenience of witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of operative facts; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) the forum's familiarity with the governing law; (8) the weight accorded the plaintiffs choice of forum; and (9) trial efficiency and the interest of justice based on the totality of the circumstances.Clay Paky, S.p.A. v. Vari-Lite, Inc., 2000 WL 977709, *7 (S.D.N.Y. July 14, 2000).
"The `core determination' under § 1404(a) is `the center of gravity of the litigation, a key test of which is the convenience of witnesses. . . . Courts routinely transfer cases when the principal events occurred, and the principal witnesses are located, in another district.'"Clay Paky, 2000 WL 977709, *7 (citing Viacom Int'l. Inc. v. Melvin Simon Prods., Inc., 774 F. Supp. 858, 868 (S.D.N.Y. 1991)).
Here, Falcon states that it intends to call one witness only at trial, its President, Bruce White, who lives in Maryland but works in Virginia.See Affirmation of John E. Headley, dated March 22, 2002. Defendants claim that they intend to call three witnesses from the hospital and the fire department in Virginia. See Affidavit of William Scher, dated March 22, 2002. Defendants also state that they intend to call Bruce White plus three Falcon employees, who live in Virginia. See id. Finally, Plaintiffs represent that they intend to call three doctors, who are Mrs. Colonomos's treating physicians, as well as a CPA, who will be called to testify on the issue of loss of earnings. See Affirmation of Susan Levy in Opposition, dated June 28, 2001 [S.Levy Aff in Opp.], ¶¶ 6-8. Plaintiffs' witnesses state that it would be a burden for them to travel to Virginia, see Exhibit D of S.Levy Aff. in Opp., however, Defendants' witnesses would clearly face the same difficulties in taking time off from work and traveling to New York.
As for the availability of process to compel the testimony of witnesses, Plaintiffs claim that it would be difficult for them to compel the attendance of out-of-state witnesses. See Plaintiffs' Memorandum in Opposition at 22. Although Falcon makes the same claim see Falcon's Memorandum at 14, it does not appear to have any out-of-state witnesses. It does seem, however, that Defendants will have the most difficulty compelling their witnesses to appear in New York. Plaintiffs' witnesses, the doctors and CPA, were all paid by Plaintiffs to provide their services and are under the Plaintiffs' control. As such, they could be paid an additional fee to travel for purposes of trial. Defendants' witnesses, however, are not subject to the subpoena power of this Court under Rule 45(b)(2) because they reside more than one hundred miles outside this district.
Although Falcon is merely a third-party defendant that intends to call one witness only, Defendants intend to call more witnesses than Plaintiffs and Defendants' witnesses include several out-of-state, non-party witnesses to the events. Therefore, these factors weigh in favor of transfer.
In the case at hand moreover, there is no doubt that Virginia is the locus of operative facts since both Mrs. Colonomos's trip and fall and the contract negotiation between Defendants and Falcon took place there. Ordinarily, a plaintiffs choice of forum is accorded great deference and it should not be disturbed unless the balance of several factors is strongly in favor of the defendants. Clay Paky, 2000 WL 977709, *7. However, a plaintiffs choice "is accorded less weight to the degree that the case's operative facts have little or no connection with the transferor forum." Totonelly v. Cardiology Assocs. of Corpus Christi, Inc., 932 F. Supp. 621, 623 (S.D.N.Y. 1996). Here, the operative facts have no connection with New York whatsoever. Therefore, Plaintiffs' choice of forum is entitled to little deference and these factors weigh in favor of transfer.
As for the convenience of the parties, it is apparent that a transfer to Virginia would be most convenient for Falcon, which is both incorporated in and has its principal place of business in Virginia. Defendants are neither incorporated in nor have principal places of business in New York. Moreover, their states of incorporation and principal places of business are all much closer to Virginia than New York and the Hotel is in Virginia. Lastly, Plaintiffs are unable to sufficiently establish that traveling to Virginia for trial would impose a huge burden. It is extremely unclear where Plaintiffs legally reside at present or even which state Plaintiffs were residents of at the time they initiated the lawsuit. At the present time, it is clear that Plaintiffs no longer reside in Connecticut because they sold their Greenwich home in 2001. See S.Levy Supp. Aff. in Opp. ¶ 15. Plaintiffs appear to reside on the West Coast now, although they state that they "intend to return to New York in the near future." Id. ¶¶ 15, 17. However, they cannot argue that traveling to Virginia is far more inconvenient than traveling to New York. While it is true that, as corporations, Defendants may have greater resources than Plaintiffs, Falcon is a small company with approximately thirty employees only. Moreover, Plaintiffs seem to travel a great deal anyhow and traveling to Virginia for a one or two week trial does not constitute an impermissible burden. Accordingly, these factors weigh in favor of transfer to Virginia.
In the third-party complaint, Defendants state that during the relevant time period, Ritz-Carlton "was a foreign corporation duly organized in the State of Georgia" and Marriott International "was and is a foreign corporation duly organized in the State of Delaware." 3rd Party Compl. ¶¶ 1-2. In an affidavit attached to their moving papers however, Defendants state that Marriott International "is incorporated in Delaware, with its principal place of business in Washington, D.C." and Ritz-Carlton "is incorporated in Delaware, with it principal place of business in Georgia." Scher Aff. ¶ 9. In any event, it is clear that Defendants would find it more convenient to have the case tried in Virginia, which is closer than New York is to any of these states.
The Court reserves judgment on whether Plaintiffs were legal residents of Connecticut or New York at the time the suit was filed because it is irrelevant to its determination of the "convenience of the parties."
Regarding the location of relevant documents and the relative ease of access to sources of proof, while the third-party action does involve some contractual claims, the main action is a personal injury action and the Court finds it hard to believe that there will be substantial documentary evidence that could not be mailed to any venue with little effort. Moreover, it is unclear whether New York or Virginia law applies in this case. Neither of these factors weighs in any party's favor, therefore.
The parties briefed the issue of whether to apply Virginia substantive law as if New York's choice of law rules apply. Because the Court concludes that transfer is warranted, it would appear that Virginia's choice of law rules should apply instead. The Court notes however, that if Plaintiffs were not New York residents at the time the lawsuit was initiated, it is unlikely that New York substantive law would apply.
For all the foregoing reasons, it appears that a transfer is warranted. In addition, severance has already been deemed inappropriate and the Court lacks personal jurisdiction over Falcon. As a result, a transfer is the only way of ensuring that the case is tried. While the Court is cognizant of Plaintiffs' situation, it should be noted that Plaintiffs consented to and stipulated to the joinder of Falcon as third-party defendant. Plaintiffs may object now to suffering the consequences of that decision but it is not this Court's role to remedy a litigant's own error in strategy. Trial efficiency and the interest of justice, based on the totality of the circumstances, require that the case be transferred to the Eastern District of Virginia. Accordingly, Falcon's motion to transfer is granted.
It appears that the statutes of limitations on Defendants' clams against Falcon have run as well. See Pilkington v. NVC of Vienna, 1999 WL 1499537 (Va.Cir.Ct. Dec. 8, 1999) (stating that the statute of limitations on actions for contribution and indemnification in Virginia is three years); and Parker v. Griffin, 2001 WL 176983, *3 (Shenandoah County Cir. Ct. April 20, 2001) (stating that the statute of limitations on actions for breach of contract in Virginia is five years).
4. Motion to Apply Virginia Substantive Law
When subject matter jurisdiction is based upon diversity of citizenship, a district court must apply the choice of law rules of the forum state. Klaxon Co v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-497 (1941). The parties have briefed this motion as though New York's choice of law rules apply. Because the Court has already held that a transfer of the entire action is warranted, the Court leaves the motion to apply Virginia law for resolution by the Eastern District of Virginia.
5. Motion to Vacate Sanctions
Both orally in court and in writing by letter, Defendants have represented that they withdraw their opposition to Plaintiffs' motion to vacate sanctions that were imposed on Plaintiffs' counsel by Magistrate Judge Fox. Accordingly, Plaintiffs' motion is granted.
IV. CONCLUSION
Plaintiffs' and third-party defendant's motions to sever are DENIED.
Third-party defendant's motion to transfer the case to the Eastern District of Virginia is GRANTED.
Third-party defendant's motion to dismiss based on lack of personal jurisdiction is RENDERED MOOT.
Defendants' and third-party defendant's motions to apply Virginia substantive law are LEFT FOR RESOLUTION BY THE VIRGINIA COURT.
Plaintiffs' motion to vacate sanctions is GRANTED.