Accelerant Specialty Ins. Co. v. Tran

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ACCELERANT SPECIALTY INSURANCE COMPANY, Plaintiff, v. THERESA TRAN, CHICAGO AQUALEISURE, LLC and JOSEPH NEVERAUSKAS, Defendants.

No. 6:23-cv-134-PGB-LHP

United States District Court, M.D. Florida, Orlando Division

November 7, 2023

ORDER

PAUL G. BYRON UNITED STATES JUDGE

This cause comes before the Court on:

1. The Court's Order to Show Cause (Doc. 60) and Plaintiff Accelerant Specialty Insurance Company's (“Plaintiff”) Response (Doc 61);

2. Defendant Joseph Neverauskas's (“Neverausakas”) Motion to Dismiss Crossclaims (Doc. 56) and Defendant/Cross-Plaintiff Theresa Tran's (“Tran”) Response (Doc. 59); and

3. Neverauskas's Motion to Dismiss Plaintiff's Amended Complaint (Doc. 46) and Plaintiff's Response (Doc. 57).

Upon due consideration, the Court finds that venue is improper in the Middle District of Florida and Plaintiff did not join necessary parties over whom the Court lacks personal jurisdiction, and thus, the entire action should be dismissed.

I. BACKGROUND

On August 13, 2022, a chartered mini-yacht insured by Plaintiff-sailing on a portion of Lake Michigan near Chicago-backed over bathers Marija Velkova, Lana Batochir and Jacob Houle, causing serious injuries. (Doc. 21, ¶¶ 13, 16-20; Doc. 46, p. 2). Captain Neverauskas was piloting the boat, which is owned and managed by Chicago AquaLeisure and Tran. (Doc. 21, ¶ 17; Doc. 21-1). Velkova, Batochir, and Houle (collectively, the “Injured Bathers”) sued all three of the aforementioned parties for their injuries. (Docs. 46-1, 46-2, 46-3). Accordingly, all three Defendants seek coverage under the boat's insurance policy-an eroding policy that provides $75,000.00 in hull coverage and a $1,000,000.00 combined single limit for third-party liability coverage, from which funds to defend a claim are deducted. (Doc. 21, ¶¶ 12, 21; Doc. 21-1.)

Looking to avoid coverage, Plaintiff sued Defendants seeking declaratory judgment that the insurance policy is void. (Doc. 21). As grounds, Plaintiff alleges Defendants breached the policy's Fire Suppression Warranty (Count I), Survey Compliance Warranty (Count II), the doctrine of uberrimae fidei (Count III), and General Condition against misrepresenting material facts (Count IV). (Id. at ¶¶ 2570). Plaintiff additionally alleges Neverauskas provided late notice of the loss, presenting a complete defense to coverage (Count V). (Id. at ¶¶ 71-77). Chicago AquaLeisure and Tran answered Plaintiff's Amended Complaint with counterclaims for breach of contract and declaratory judgment, contesting venue.

(Doc. 33, pp. 12-18; Doc. 34, pp. 11-18). Both additionally filed crossclaims for negligence against Neverauskas. (Doc. 33, pp. 19-23; Doc. 34, pp. 19-23).

Neverauskas moved to dismiss Plaintiff's Amended Complaint under Federal Rule of Civil Procedure 12(b)(7) for failure to join the Injured Bathers, who are allegedly indispensable parties. (Doc. 46). Plaintiff replied that the Injured Bathers are not required parties because they lack a sufficient interest in the litigation. (Doc. 57). Neverauskas also moved to dismiss Tran's crossclaim. (Doc. 56). Tran responded by requesting the Court transfer the crossclaim to Illinois as a more convenient venue under 28 U.S.C. § 1404(a). (Doc. 59). The Court additionally ordered Plaintiff to show cause why venue in the Middle District of Florida is proper. (Doc. 60). Plaintiff replied that it is enough that Defendants' insurance agent resides in Florida and, alternatively, Defendants waived improper venue in various ways. (Doc. 61). With briefing complete, the matters are ripe.

II. Analysis

A. Improper Venue

The Court raises the issue of venue sua sponte as to Plaintiff's Amended Complaint. (Doc. 60). Objecting to defective venue is a defendant's procedural right that may be waived or, in the absence of waiver, raised by the Court on its own motion. Lipofsky v. New York State Workers Comp. Bd., 861 F.2d 1257, 1258 (11th Cir. 1988). Venue is proper when a case was filed in either:

(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.

28 U.S.C. § 1391(b). If it was not, “then venue is improper, and the case must be dismissed or transferred under 28 U.S.C. § 1406(a).” Atl. Marine Const. Co., Inc. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49, 56 (2013). Venue must be established over each defendant. Home Ins. Co. v. Thomas Indus., Inc., 896 F.2d 1352, 1355 (11th Cir. 1990). Plaintiff bears “the burden of showing that venue in its chosen forum is proper.” Maresca v. Marela, LLC, No. 6:09-CV-1386-ORL-19DAB, 2010 WL 745755, at *1 (M.D. Fla. Feb. 26, 2010).

In this case, Plaintiff failed to meet that burden. Venue in the Middle District of Florida does not meet the statutory requirements in § 1391(b)(2)-the only provision under which venue would be proper here since Defendants reside in Illinois. For purposes of § 1391(b)(2), the Eleventh Circuit holds “only those locations hosting a ‘substantial part' of the events” with “a close nexus to the wrong” are to be considered. Jenkins Brick Co. v. Bremer, 321 F.3d 1366, 1371 (11th Cir. 2003). The Court ordered Plaintiff to identify what “substantial part of the events or omissions giving rise to the claim occurred” in Florida. (Doc. 60, p. 3). In response, Plaintiff states only the insurance policy in question “was negotiated and delivered to the insured's agent in Florida,” but nothing else. (Doc. 61, p. 3). According to the Amended Complaint, the cause of action exclusively concerns events that occurred in Illinois, as well as a boat harbored there. (Doc. 21, ¶¶ 33- 41, 48-51, 59, 66). The residence of an insurance agent-who had nothing to do with the boating accident or alleged policy breaches-does not suffice to prove the statutory venue requirements have been met.

That being the case, Plaintiff next argues that venue is not defective because Defendants have waived their objections to it. See Manley v. Engram, 755 F.2d 1463, 1468 (11th Cir. 1985) (holding waiver cures any defect in venue). A district court may not step in sua sponte and dismiss an action under § 1406(a) where a defendant has waived venue. Aero Techs., LLC v. Lockton Cos. Intern. Ltd., 406 Fed.Appx. 440, 441 (11th Cir. 2010). Waiver “is the intentional relinquishment or abandonment of a known right” determined by “the actions of the person who held the right.” Morgan v. Sundance, Inc., 142 S.Ct. 1708, 1713 (2022) (internal quotation omitted). Parties waive objections to venue by failing to assert them in the first motion made under Federal Rule of Civil Procedure 12 or a responsive pleading. See FED. R. CIV. P. 12(h). Venue may also be waived by contract. In re Fireman's Fund Ins. Cos., Inc., 588 F.2d 93, 95 (5th Cir. 1979).^[1]

Plaintiff first asserts that Defendants waived any objections to venue by assenting to the forum-selection clause in the insurance policy. The clause reads:

“It is also hereby agreed that any dispute arising hereunder shall be subject to the exclusive jurisdiction of the Federal courts of the United States of America, in particular, the Federal District court within which You the Assured resides or the Federal District court within which your insurance agent resides.”

(Doc. 21-1, p. 18). “Forum selection clauses are interpreted according to ordinary contract principles” and are frequently categorized as either permissive or mandatory, or a hybrid clause allowing a permissive choice of venue in bringing suit coupled with a provision binding those sued to the forum in which the action is brought. Ocwen Orlando Holdings Corp. v. Harvard Prop. Tr., LLC, 526 F.3d 1379, 1381 (11th Cir. 2008). Forum-selection clauses intending to waive venue usually contain provisions expressly prohibiting any objection to it. E.g., AFC Franchising, LLC v. Purugganan, 43 F.4th 1285, 1296 (11th Cir. 2022) (finding waiver where forum-selection clause required defendant to “waive any objection [he] might have to either the jurisdiction of or venue in those courts”).

In this case, the forum selection clause grants a choice of forum exclusively in federal court in either the district where Defendants reside, or their insurance agent resides. (Doc 21-1, p. 18). But the clause does not contain an explicit waiver of Defendants' ability to object to venue in the selected forum-or even mention venue at all. (Id.) Contractual consent to jurisdiction in multiple fora does not automatically bind a defendant to litigating in the forum where the action is brought. See Glob. Satellite Commc'n Co. v. Starmill U.K. Ltd., 378 F.3d 1269, 1272 (11th Cir. 2004) (finding a clause placing venue in a specific county did not automatically restrict litigation to the state court venue where the action was brought); cf. Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 168 (1939) (noting the historic distinction between jurisdiction and venue); Garay v. BRK Electronics, 755 F.Supp. 1010, 1011 (M.D. Fla. 1991) (noting “a plaintiff's choice of forum is entitled to less consideration where the operative facts underlying the cause of action did not occur within the chosen forum”). Faced with a clause allowing suit in one of two fora, the Court will not read into the insurance policy a provision requiring absolute submission by Defendants to whichever forum the suing party chooses-which Plaintiff,...