Opinion
99 Civ. 3022 (MBM).
September 27, 2000.
Richard J. Brightman, Esq., Wright, Pindule Hamelsky, Paramus, NJ, Gail Cohen, Esq., Barger, Wolen, Los Angeles, CA, for Plaintiff.
Paul L. Lincoln, Esq., Hahn Howarth, David K. NG, Esq., Callahan Blaine, Santa Ana, CA, for Defendant.
OPINION ORDER
Plaintiff Paul Revere Life Insurance Co. seeks a judgment declaring that Gordon Segal, M.D. is not disabled under the disability insurance policy issued by Paul Revere to Segal in 1983, and that Paul Revere's decision to discontinue Segal's benefits was reasonable. Plaintiff alleges subject matter jurisdiction pursuant to 28 U.S.C. § 1332, diversity of citizenship. Defendant Segal moves to dismiss for lack of personal jurisdiction and, in the alternative, to transfer venue to the Central District of California. Paul Revere cross-moves to enjoin defendant from pursuing his action filed in the Central District of California. For the reasons set forth below, (i) this court has personal jurisdiction over Segal, and his motion to dismiss is denied; (ii) Segal's motion to transfer to the Central District of California is also denied; and (iii) Paul Revere's motion to enjoin Segal from pursuing the California action is granted.
I.
Paul Revere is a Massachusetts corporation with its principal place of business in Massachusetts. On October 10, 1983, Paul Revere issued a disability insurance policy to Segal, who was then living in California. (Pl. Exh. 1; Segal Decl. ¶ 2) On January 29, 1989, Segal submitted a "total disability" claim under the policy. (Pl. Exh. 2; Segal Dep., at 14) Paul Revere approved Segal's claim and began paying him benefits. (Segal Decl. ¶ 6) After several years of making monthly benefit payments to Segal, Paul Revere determined, pursuant to an independent medical examination, that Segal was no longer disabled under the terms of the policy. Paul Revere sent Segal a letter on June 3, 1997, denying him further benefits and closing his claim. (Pl. Exh. 4) Segal disputed Paul Revere's decision and submitted a medical evaluation performed by another doctor. (Pl. Exh. 16) Segal repeatedly requested that Paul Revere reconsider its determination, and threatened suit. (Ng Supp. Decl. Exh. B, C, D, E, F) On April 26, 1999, Paul Revere filed this claim seeking a declaratory judgment that Segal is not currently disabled under the terms of the policy, and that the company's decision to discontinue his benefits was reasonable. (Compl. at 6) On April 29, 1999, Segal sued Paul Revere in the Central District of California for breach of contract, breach of the covenant of good faith and fair dealing, and a declaration that he is disabled under the terms of the policy. (Ng Decl., Exh. B)
II.
Segal moves to dismiss this case for lack of personal jurisdiction. Plaintiff bears the burden of establishing jurisdiction. If no discovery has been conducted, a plaintiff need only present legally sufficient allegations of jurisdiction. If an evidentiary hearing is held, the plaintiff must prove jurisdiction by a preponderance of the evidence. In this case, the parties have conducted extensive discovery, but no hearing has been held. Therefore, Paul Revere must produce facts that, if credited by the trier of fact, would establish jurisdiction over the defendant. See Metropolitan Life Ins. Co. v. Robestson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996) (citing Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)). When a federal court's subject matter jurisdiction is based on diversity of citizenship, the court applies the law of the forum state to determine whether it has personal jurisdiction over a defendant. See Omni Capital Int'l Ltd. v. Rudolph Wolff Co., 484 U.S. 97, 105-10 (1987). Paul Revere alleges jurisdiction over Segal pursuant to three provisions of New York law. Plaintiff argues that Segal is a New York domiciliary, that he is "doing business" in New York, and that he "transacted" business in New York that gave rise to the cause of action. See N.Y. C.P.L.R. §§ 301, 302(a)(1), 313 (McKinney's 1990); see also United States v. Costello, 222 F.2d 656, 661 (2d Cir. 1955).
Domicile requires physical presence in a place and an intention to make that place ones s "fixed and permanent home." In re Newcomb's Estate, 192 N.Y. 238, 250, 84 N.E. 950, 954 (1908); see also Gutierrez v. Fox, 141 F.3d 425, 428 (2d Cir. 1998). Segal was physically present in New York beginning in 1989 until at least February 1998. Therefore, Seqal's intent determines his domicile.
The following factors are relevant to deciding whether a person intends to remain in a particular state: where a person resides; whether he owns or rents a home; where his family and personal belongings are located; where he maintains affiliations with religious and social organizations; where he transacts business and financial matters; where he pays personal taxes; and where he obtains a driver's license. See Brignoli v. Balch, Hardy Scheinman, Inc., 696 F. Supp. 37, 41 (S.D.N.Y. 1986); see also Boston Safe Deposit Trust v. Morse, 779 F. Supp. 347, 349 (S.D.N.Y. 1991). Paul Revere points to the following facts to establish that Segal intended to make New York his fixed and permanent home. Segal resided in New York from 1989 to February 1998. (Segal Decl. ¶ 7; Segal Dep., at 68-69) In 1994, Segal purchased an apartment in New York that he has not sold. (Segal Decl. ¶ 12) Segal opened a New York bank account in 1994 or 1995 that remains active. (Segal Dep., at 44) Segal also continues to maintain two investment accounts opened in New York. (Id. at 48-51) He voted in New York in 1992 or 1996. (Id. at 79) He was treated regularly by New York physicians, and received his disability benefits in New York. (Segal Decl. ¶ 7; Segal Dep., at 14) Paul Revere has presented enough facts to establish that New York was Segal's domicile beginning, at the latest, in 1996. See Gutierrez, 141 F.3d at 428.
Segal objects to much of the evidence presented by Paul Revere, arguing that domicile is determined on the date of filing, and therefore events occurring prior to April 26, 1999 are irrelevant. (Reply to Opp., at 3-6; Obj. to Evid.) Facts that occurred prior to filing are relevant to determine whether Segal had an intent to make New York his fixed and permanent home. Therefore, to the extent facts objected to are relied on in this opinion, Segal's objections are overruled.
Segal's long-term New York domicile is presumed to continue unless he can prove a change by clear and convincing evidence.See Katz v. Goodyear Tire Rubber Co., 737 F.2d 238, 243 (2d Cir. 1984) (explaining that a long term domicile is presumed to continue and any change must be proved by clear and convincing evidence) (citing In re Newcomb's Estate, 192 N.Y. at 251, 84 N.E. at 954). Segal asserts that, in February 1998, he "moved permanently from New York and changed domicile to California." (Segal Decl. ¶ 13) A party's statements concerning his intent are relevant, but they are given little weight when contradicted by the party's behavior. See Bevilaqua v. Bernstein, 642 F. Supp. 1072, 1074 (S.D.N.Y. 1986) (Weinfeld, J.).
In support of his claim that he has changed domicile, Segal explains that, since February 1998, he has leased his New York apartment to Kale Brown. However, this lease is pursuant only to an oral month-to-month lease. (Brown Decl. ¶¶ 3, 4) The telephone line remains in Segal's name, and his furnishings remain in the apartment. (Segal Dep., at 39) Segal claims that he now permanently resides at 3850 Kim Lane, Encino, California. (Segal Decl. ¶ 13) Segal does not own or rent the home at 3850 Kim Lane. Rather, the home is owned by Arnold Prince. (Prince Decl. ¶ 3) Segal pays no rent to Prince, and has no lease agreement. (Segal Dep., at 128-29) Segal does claim to have moved his clothes to Prince's house. (Segal Dep., at 129-30) He has a telephone line at Prince's house that he "uses as his own, but is not in his name. (Segal Dep., at 130) Segal's lease of the New York apartment to Kale Brown is informal and easily terminable, which seriously undermines his asserted intent to leave New York permanently. Segal's further claim that he intends to remain permanently in California is not supported by his residence in someone else's home without a lease agreement or rent payments.
Segal further tries to bolster his change in domicile by noting that he registered to vote in California in 1999. (Segal Decl., Exh. B) However, he provided no evidence of actually voting there. See Boston Safe, 779 F. Supp. at 349 (giving little weight to voter registration absent the showing of an existing voting pattern). Segal also claims to have paid taxes in California in 1998. However, the forms produced by Segal are not signed or dated, which suggests that they were never in fact submitted. See Brignoli, 696 F. Supp. at 42 (drawing the negative inference that tax returns were not filed when no forms were produced). Segal's voter registration and alleged 1998 California tax filing provide little support for his asserted intention to remain in California permanently.
Segal claims that his dentist is in Malibu, California. (Segal Decl. ¶ 25) However, he has seen the dentist only once, in the summer of 1998. (Segal Dep., at 66) More recently, in June of 1999, he saw a different dentist in Telluride, Colorado, where he owns a condominium. (Id.) Segal also produces evidence that he activated a cell phone in California in March 1999. (Segal Decl. ¶ 15; Pl. Exh. 26) However, the cell phone is billed to Segal in Colorado. (Segal Dep., at 137) From January to February of 1999, Segal was an unpaid consultant for Bioseparations "in California." (Segal Decl. ¶ 30) However, the employee with whom Segal communicated was in Arizona, not in California. (Segal Dep., at 59) Moreover, Bioseparations mailed expense reimbursements to Segal in Colorado, not in California. (Pl. Exh. 31) The existence of Segal's Colorado residence alone does not undermine his claim of California domicile; a person can have multiple residences. See Morrison v. Blitz, 1996 WL 403034, *1 (S.D.N.Y. 1996). However, the significance of the dentist, cell phone, and employment with Bioseparations as California connections is diminished by Segal's use of his Colorado residence.
Segal has three remaining connections to California. He began seeing a doctor in California in March 1999. (Segal Decl. 6 26) Segal has a California driver's license which he obtained sometime in either 1993 or 1994, not upon his alleged change in domicile in 1998. (Segal Decl. ¶ 21, Exh. B) Finally, Segal has held three additional consulting positions with companies located in California. He was an unpaid consultant for Nexcen, later called Cymedix from late 1996 or early 1997 to 1998. (Segal Decl. ¶ 28) He worked for one month for United West Lab from April to June of 1998 and was paid $5,000. (Segal Decl. ¶ 29; Segal Dep., at 117) Segal currently works as an unpaid consultant for Clinical Research Technology II in Los Angeles. (Segal Decl. 6 31) Segal's recent travel between California and Colorado suggests that physical presence in California is not required for his current position with Clinical Research Technology II. (Segal Dep., at 122) In addition, there is no documentation of his employment there. (Pl. Exh. 32) There is no evidence that any of these companies provided an office for Segal, or that any of them intended to make Segal's employment permanent.
I will not consider Segal's California bank account because it was opened after Paul Revere served Segal, and is irrelevant. (Segal Decl. ¶ 22; Pl. Exh. 27) A New York court obtains personal jurisdiction if the person is a domiciliary at the time of service. See N.Y. C.P.L.R. § 313 (McKinney's 1990); Cockrum v. Cockrum, 246 N.Y.S.2d 376, 378, 20 A.D.2d 642, 643 (2d Dep't 1964).
A driver's license, a doctor, one month paid employment, two unpaid positions with no written employment contracts, and free shelter in someone else's home in California do not establish Segal's intent to remain permanently in California. Segal has failed to prove a change in domicile with clear and convincing evidence. His New York domicile is presumed to continue, and he is subject to personal jurisdiction here. Because he is a New York domiciliary, it is unnecessary to decide whether this court has jurisdiction pursuant to N.Y. C.P.L.R. § 301 ("doing business") or § 302 ("transacting business"). Absent any other reason to dismiss or transfer this case, Paul Revere may press its claim in this court.
III.
It is well settled law in the Second Circuit that, when there are two competing lawsuits, the first has priority unless the balance of convenience or special circumstances justify giving priority to the second. See First Nat'l Bank Trust Co. v.Simmons, 878 F.2d 76, 79 (2d Cir. 1989) (citations omitted) Paul Revere's action was filed first. Segal argues that the first filed rule should not be followed here because Paul Revere was forum shopping, a special circumstance. See William Gluckin Co. v. International Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1969) (citing Rayco Mfg. Co. v. Chicopee Mfg. Co., 148 F. Supp. 588 (S.D.N.Y. 1957)). Declaratory judgment claims motivated by forum shopping, filed under a threat of imminent litigation, have been referred to as improper anticipatory filings. See 800 Flowers, Inc. v. Intercontimental Florist, Inc., 860 F. Supp. 128, 132 (S.D.N.Y. 1994), aff'd 573 F.2d 1288 (2d Cir. 1978).
Segal suggests no motive for Paul Revere's alleged forum shopping. Furthermore, "a litigant is 'open to the charge of forum shopping [only when] he chooses a forum with slight connection to the factual circumstances surrounding his suit.'" See Columbia Pictures Indus., Inc. v. Schneider, 435 F. Supp. 742, 746 (S.D.N.Y. 1977) (quoting Rayco Mfg. Co. v. Chicopee Mfg. Co., 148 F. Supp. 588, 593 (S.D.N.Y. 1957)) (alteration in original). The Southern District of New York has more than a "slight connection" to the factual circumstances of the suit. Segal was living, receiving treatment, and being evaluated in New York when Paul Revere decided to close his claim in 1997. All of Segal's treating physicians, since the inception of his disability through Paul Revere's decision, are in New York. Given this significant connection, Paul Revere's decision to request a declaratory judgment in the Southern District of New York was not forum shopping.
Segal argues that the filing was nevertheless improper because it was "triggered" by a threat of imminent litigation. See Factors Etc., Inc. v. Pro Arts Inc., 579 F.2d 215, 219 (2d Cir. 1978) ("When the declaratory judgment action has been triggered by a notice letter, this equitable consideration may be a factor in the decision to allow the later filed action to proceed to judgment in the plaintiff's chosen forum.") Segal cites several letters to Paul Revere. Segal mailed the first on March 11, 1998; the second on April 14, 1998; the third on April 21, 1998; the fourth, almost a year later, on March 24, 1999. The fifth was an undated e-mail. (Ng Supp. Decl. Exh. B, C, D, E, F) However, the March 24, 1999 letter is no more threatening that the letters sent one year earlier. Nothing suggests that it was the "trigger" for Paul Revere's suit. By its nature, a declaratory judgment action is filed in anticipation of litigation. See 800 Flowers, Inc., 860 F. Supp. at 132 ("A party has a right to seek declaratory judgment where a reasonable apprehension exists that if it continues an activity it will be sued by another party."). The letters do show Paul Revere's legitimate concern that it would be sued by Segal if it continued to deny benefits. However, in light of repeated threats over the course of a year, and the three-week interval between the deadline set by Segal in the final letter and Paul Revere's filing, Paul Revere's suit was not an improper anticipatory filing.
The presumption created by the first filed rule can be defeated also if the balance of convenience favors the second forum. The balance of convenience is decided using the same factors that are considered when determining a motion to transfer pursuant to 28 U.S.C. § 1404(a) (1994). See National Patent Dev. v. American Hosp. Supply, 616 F. Supp. 114, 118 (D.C.N.Y. 1984) (Weinfeld, J.). Among the factors to be considered are the convenience of the witnesses; the location of relevant physical evidence; convenience of the parties; the locus of operative facts; the availability of process to compel the testimony of unwilling witnesses; the relative means of the parties; the forum's familiarity with the governing law; the weight afforded plaintiff's choice of forum; trial efficiency and the interests of justice. See id. at 119.
The convenience of the witnesses is often the most important consideration. Stein v. Microelectronic Pkg., Inc., 1999 WL 540443, at *7 (S.D.N.Y. 1999) (citing Viacom Int'l, Inc. v.Melvin Simon Prods., Inc., 774 F. Supp. 858, 868 (S.D.N Y 1991)). The key issues in this dispute between Paul Revere and Segal are whether Segal was disabled under the terms of the policy in 1997, when Paul Revere terminated his benefits, and whether he is now so disabled. Testimony by medical professionals about Segal's condition will be central to deciding this dispute. Only one California physician has treated Segal, beginning January 1999. (Segal Decl. ¶ 26) All of the remaining physicians who have treated Segal over the course of his disability and through Paul Revere's decision to discontinue benefits are in New York. Monthly progress reports regarding Segal's condition were submitted to Paul Revere by three New York doctors, in 1989, in 1991, and from 1990 to 1997, respectively. (Pl. Exh. 9, 10, 11) Another New York doctor first evaluated Segal in New York in 1995, and continues to consult with him. (Pl. Exh. 12) The 1997 independent medical examination was conducted by three more New York doctors. (Pl. Exh. 14, 15) Yet another New York doctor evaluated Segal at his request, also in New York in 1997. (Pl. Exh. 16) Segal's initial disclosure in the California case lists 24 witnesses, seven of whom are in New York, and only one of whom other than Segal is in California. The remainder are in Georgia, Massachusetts, Tennessee, or Colorado, or have no listed address. (Pl. Exh. 17) New York, then, is the most convenient forum for the witnesses. Regarding physical evidence, most of Segal's medical records also are in New York.
Segal argues that the claims of Paul Revere relate only to his current status under the terms of the policy. It follows, according to Segal, that the only witnesses with knowledge of his current condition are in California, where he claims he is living. (Def. Mem. in Supp., at 17) However, Paul Revere also seeks a declaration that its decision to terminate Segal's benefits was reasonable. (Compl. at 6) That decision was made initially in 1997 and disputed by Segal while he was being treated exclusively by New York doctors. In addition, the testimony of earlier treating physicians is relevant to his current condition.
The locus of operative facts is New York. Segal was treated by various physicians in New York from 1989 to at least 1998. The 1997 independent medical examination that precipitated Paul Revere's decision to discontinue benefits was conducted in New York. (Pl. Exh. 14, 15) The expert retained by Segal in response to Paul Revere's independent medical examination is also located in New York. (Pl. Exh. 16) Only one California physician has treated Segal. (Segal Decl. ¶ 26) The locus of facts necessary to determine Segal's status under the policy, in 1997 and currently, is New York.
The convenience of the parties does not clearly favor either forum. Paul Revere is a Massachusetts corporation with a principal place of business in Massachusetts. Travel would be required for either forum, although travel to New York would be easier. Segal claims he lives in California, and would therefore be inconvenienced by a suit in New York. However, Segal is currently residing in Colorado until his condominium rents or sells. (Segal Supp. Decl. ¶ 5) He, too, would have to travel regardless of where the suit proceeds, although California would be more convenient to Colorado. Thus, neither forum would clearly be more convenient for both parties.
The forum's familiarity with the governing law is also not a significant factor in this case as the issues involve contract interpretation and breach, not complex or undecided issues of law. See S-Fer Intern, Inc. v. Paladion Partners, Inc., 906 F. Supp. 211, 215-16 (S.D.N.Y. 1995). Segal maintains that trial efficiency and the interests of justice favor transfer to California because the case there has moved beyond the pleading stage and entered discovery. (Ng Decl. ¶¶ 4, 7; Def. Mem., at 19-20) Paul Revere responds with a declaration that the formal discovery has been limited to venue and jurisdiction issues. (Cohen Decl. ¶ 1). Even if the California case has progressed beyond this one, the difference does not outweigh the convenience of the witnesses and locus of operative facts in New York.
When the span of time between filings is negligible, the presumption in favor of the first filed forum is weaker. "[T]emporal precedence is but a factor to consider and is not controlling. It is clear that the 'first filed' rule 'is not to be applied in a mechanical way regardless of other considerations.'" National Patent Dev. Corp., 616 F. Supp. at 118 (quoting Hammet v. Warner Bros. Pictures, Inc., 176 F.2d 145, 150 (2d Cir. 1949)). Segal argues that the first filed rule should not be followed here because the filings were only three days apart. Nonetheless, even though the second claim was filed shortly after this one, the balance of convenience favors the forum where the first claim was filed.
The first filed action in the Southern District of New York is in all respects proper. There are no special circumstances that warrant bypassing the first filed rule. In addition, the balance of convenience favors the Southern District of New York. Paul Revere's motion to enjoin Segal from pursuing the California action is granted. See William Gluckin Co. v. International Playtex Corp., 407 F.2d 177, 180 (2d Cir. 1969) (upholding district court's injunction of Georgia proceeding).
IV.
Segal moves to transfer venue to the Central District of California pursuant to 28 U.S.C. § 1404(a) (1994). The factors considered in a motion to transfer are identical to those considered above. See National Patent Dev. Corp., 616 F. Supp. at 118. Because the balance of convenience favors the Southern District of New York, Segal's motion to transfer is denied.
For the reasons stated above, Segal's motions to dismiss for lack of personal jurisdiction and to transfer to the Central District of California are denied. Paul Revere's motion to enjoin Segal from pursuing the action in the Central District of California is granted.
SO ORDERED: