Opinion
CIVIL ACTION NO. 97-543 (REF NO. 01-2338) SECTION "L"(5)
December 13, 2002
ORDER REASONS
Before the Court in this consolidated action is the motion of defendant Munich Reinsurance Company ("Munich") to reconsider this Court's ruling of April 17, 2002 denying Munich's motion to dismiss on grounds of forum non conveniens. Also before the Court are the motions of defendants Polembros Shipping, Ltd. ("Polembros") and General Reinsurance Corporation ("General Reinsurance") to dismiss for forum non conveniens. For the following reasons, the Court GRANTS Munich Reinsurance Company's motion to reconsider the Court's April 17, 2002 ruling, and GRANTS Polembros Shipping, Ltd. and General Reinsurance Corp.'s motions to dismiss for forum non conveniens. Further, the Court, finding that another jurisdiction is the proper forum for this case, DISMISSES WITHOUT PREJUDICE the claims of plaintiff, American Guarantee and Liability Insurance Company ("American Guarantee").
Defendants GE Frankona Reinsurance, Ltd., Global Capital Reinsurance, Ltd., and New Reinsurance Co. have also filed a motion in support of General Reinsurance Corp.'s motion to dismiss for forum non conveniens.
I. BACKGROUND
On February 20, 1997, the M/V THEOGENNITOR, a vessel owned by Tankertrade Marine Ltd. Co. ("Tankertrade") and operated by Polembros, allided with Zen-Noh's No. 1 loading tower while the vessel was departing her berth at Zen-Noh Grain Corporation's ("Zen-Noh") facilities near Convent Louisiana. The allision caused extensive damage to the facility, and, as a result of the allision, Zen-Noh instituted a civil action against Tankertrade, Polembros, and the vessel, in rem, which resulted in the arrest of the M/V THEOGENNITOR. The vessel's PI insurer, Ocean Marine, requested that American Guarantee post a surety bond to secure release of the vessel.
This action was captioned Zen-Noh Grain Corp. v. M/V THEOGENNITOR, et al. and was docketed as Civil Action No. 97-543.
In August 1999, Polembros and Tankertrade directed their attorneys to enter into a settlement with Zen-Noh for the amount of the surety posted by American Guarantee. This Court entered judgment on October 25, 1999, in favor of Zen-Noh against Tankertrade and Polembros, in personam, and against the M/V THEOGENNITOR, in rem, in the amount of $5,362,500. To satisfy the judgment, this Court then entered judgment against American Guarantee as surety in the amount of the bond plus interest, totaling $6,223,733. The entire judgment amount was satisfied by the surety bond posted by American Guarantee.
At the time of this action, defendants Munich, General Reinsurance, and other named reinsurance entities operated under a contract of reinsurance with Ocean Marine. The reinsurance contract between Ocean Marine and the reinsurers contained a "cut through" clause providing for reimbursement of any surety paid on behalf of the vessel to prevent its arrest. The meaning of this "cut through" clause and its application to American Guarantee in this litigation is a principal issue in this litigation.
American Guarantee subsequently filed suit in this Court seeking indemnity from both Tankertrade and Polembros for the value of the surety as well as from Ocean Marine's reinsurers (Munich, General Reinsurance, etc.) based upon the language of the "cut through" clause of the reinsurance contract. Munich Reinsurance, the main underwriter of the reinsurance contract, subsequently filed a motion with this Court for dismissal of the action based upon the doctrine of forum non conveniens, asserting that London, England was the appropriate forum for this case because an action was already pending in that jurisdiction regarding the reinsurance issue and the "cut through" clause.
This action was captioned American Guarantee and Liability Insurance Co. v. Munich Reinsurance Co., et al. and was assigned civil action docket number 01-2338. This case was subsequently consolidated with the Zen-Noh case for administrative purposes.
The London proceeding arises out of the same reinsurance contract that is the subject of American Guarantee's claim in this Court against Munich, General Reinsurance, and Ocean Marine's other reinsurers. At issue in the proceeding is what amount, if any, the various reinsurers are bound to pay to Ocean Marine for the value of the surety. Also at issue is the meaning of the "cut through" clause and its effect on American Guarantee. Pursuant to the terms of the reinsurance contract, Munich delivered the value required under the reinsurance contract with its broker Marsh, Ltd. That money is currently being held by Marsh in an interest-bearing account in London. Ocean Marine subsequently entered into liquidation proceedings and has instituted suit in London seeking dispersal of the money being held in the account, as well as any other amounts owed to it through the reinsurance contract. General Reinsurance subsequently filed the English-law equivalent of a third party complaint against American Guarantee seeking a declaration that American Guarantee is not entitled to indemnity from the reinsurers and that the reinsurers are entitled to the money.
The motion to dismiss was heard by the Court with oral argument on April 17, 2002, with the Court ruling from the bench. The Court denied Munich's motion citing the lack of clarity as to whether Polembros and Tankertrade would be subject to the jurisdiction of the High Court in London. Munich has now moved this Court to reconsider its earlier ruling refusing to dismiss this case, contending that the issue of whether Polembros and Tankertrade are subject to the jurisdiction of the High Court has been settled and dismissal is justified. General Reinsurance Co. and Polembros Shipping, Ltd. have also filed individual motions for forum non conveniens dismissal, which were not initially considered by the Court at the time it ruled on Munich's motion. However, these motions are properly before the Court at this time and the Court will address the motions of all defendants to dismiss.
II. FORUM NON CONVENIENS ANALYSIS
A. Overview of Forum Non Conveniens
The doctrine of forum non conveniens "rests upon a court's inherent power to control the parties and the cases before it and to prevent its process from becoming an instrument of abuse or injustice." In re Air Crash Disaster Near New Orleans v. Pan American World Airways, Inc., 21 F.2d 1147, 1153, 54 (5th Cir. 1987) ( en banc), vacated on other grounds sub nom., Pan Am World Airways, Inc. v. Lopez, 490 U.S. 1032 (1989), opinion reinstated on other grounds, 883 F.2d 17 (5th Cir. 1989) (en banc). Through this doctrine, a federal court may decline to exercise jurisdiction over a controversy, regardless of whether it has good jurisdiction and venue, "where it appears that the convenience of the parties and the court and the interests of justice indicate that the action should be tried in another forum." Id. (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 250 (1981)).
In an action to dismiss proceedings for forum non conveniens, the burden of establishing the elements of the doctrine rests on the defendant. Id. at 1164. The first step in determining whether to invoke the doctrine requires that the defendant establish that the foreign forum is both adequate and available for all defendants. Id. If the moving defendant carries this initial burden, he must then show that both private and public interests weigh in favor of trial in a foreign forum. Id. Private interest factors that are to be considered include: the relative ease of access to sources of evidence, the availability of compulsory process for attendance of unwilling witnesses, the cost of attendance of willing witnesses, as well as any other factors that the court deems relevant in making trial expeditious and inexpensive. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947). The public interest factors that should be taken into consideration include, but are not limited to: administrative difficulties that could result from congestion of the courts, the interests in having local disputes determined in local forums, avoidance of conflicts of law problems associated with the application of foreign law, the burdening of citizens in an unrelated forum with jury duty, and the desire to have diversity cases decided in a forum that is familiar with the law. Id. at 508-09. The defendants have the burden of persuasion as to all elements of the analysis. See In re Air Crash Disaster, 21 F.2d at 1164.
B. The Availability and Adequacy of the London Forum
The first inquiry in a motion to dismiss for forum non conviens is whether an available and adequate foreign forum exists in which the controversy may be heard. Id. This is a two-pronged test requiring that the defendant show both availability and adequacy. The plaintiff, American Guarantee, asserts that Munich has not satisfied this burden noting that both Tankertrade and Polembros are absent from the proceeding in London. General American relies on the Fifth Circuit's decision in Syndicate 420 at Lloyd's of London v. Early American Ins. Co., 796 F.2d 821 (5th Cir. 1986) to support its proposition that a foreign forum is not available unless all of the parties are actually involved in the foreign proceedings. However, American Guarantee misinterprets that decision. The court in Syndicate held that an alternate forum is available "when the entire case and all the parties are within the jurisdiction of that forum." Id. at 1165. Explained further by the Fifth Circuit in In re Air Crash Disaster, 21 F.2d at 1165 (citing Syndicate, 796 F.2d at 830), a "foreign forum is available when the entire case and all the parties can come within the jurisdiction of that forum." (emphasis added).
Therefore, the proper inquiry is not whether Tankertrade and Polembros are parties to the foreign action, but whether Tankertrade and Polembros could be parties in a foreign action. Munich and General Reinsurance assert, and Polembros stipulates in its memorandum in support of Munich's motion to reconsider, that Polembros is in fact a company incorporated in the United Kingdom subject to process there. Thus, London is an available forum for all defendants because Polembros could be made a party to the London action.
Tankertrade, however, presents a different issue. American Guarantee has taken a default judgment against Tankertrade, and Tankertrade was actually liquidated prior to the current proceedings. As such, inquiry as to the availability of the London forum with regard to Tankertrade would be irrelevant. Munich, General Reinsurance, and Polembros have carried their burden of establishing that London is an available forum.
The next step in the forum non conveniens analysis is whether the London forum is adequate. A foreign forum is adequate "when the parties will not be deprived of all remedies or be treated unfairly." Id. at 1165. Neither Munich, Polembros, General Reinsurance, nor American Guarantee, have asserted that the London forum would deprive any party of any remedy that would be available in the American forum. There does not appear to be any reason to believe that a London court would treat American Guarantee unfairly, and, further, it does not appear that American Guarantee would be deprived of any remedies as a result of litigating the controversy in England. Therefore, London is also an adequate forum.
C. Public and Private Factors
Because the London forum would be both adequate and available to all of the parties involved in the current litigation, the Court must next balance the private and public interest factors in order to determine whether the case should be dismissed in favor of that forum. Id. at 1165. Private interests include such factors as the relative ease of access to sources of evidence, the availability of compulsory process for attendance of unwilling witnesses, the cost of attendance of willing witnesses, as well as any other factors that the court deems relevant in making trial expeditious and inexpensive. Gilbert, 330 U.S. at 508.
Considering access to evidence, the Court finds that this case will primarily be a law and document case, with the main issues being that of the liability of Polembros under the surety and the meaning of the "cut through" clause in the reinsurance contract. As such, most evidence would appear to be records and documents maintained by the parties and the testimony of the employees who handled the situations directly. Munich and General Reinsurance assert that the primary sources of evidence and proof as to the meaning of the "cut through" clause would be found in London where its offices and brokers are located. However, while it may be true that a majority of witnesses and evidence pertaining to Munich and General Reinsurance' s liability may be located in London, it is equally true that, in the Polembros action, many witnesses and evidence will be present in the United States thus causing an inconvenience to American Guarantee if the present action were dismissed in favor of the London forum. The surety posted by American Guarantee was secured through its broker in the United States. The negotiations for that surety took place in the United States. The contract was entered into in the United States. American Guarantee operates and is licensed to do business in Louisiana. As such, the witnesses with appropriate knowledge as to the details of the contracting process, as well as, physical evidence would be located in the United States.
Munich and General Reinsurance fail to address this issue in their motions. The fact that Munich and General Reinsurance may be inconvenienced by the need to present evidence in the United States should not be grounds to shift that inconvenience to American Guarantee by requiring that they present their evidence in London. Munich also points out the elevated cost of maintaining legal counsel in both the current action and in the pending London action, where both Munich and American Guarantee are represented by counsel. However, this factor alone would not be sufficient to warrant dismissal on forum non conveniens grounds. Further, American Guarantee has retained counsel in the London proceedings solely for the purpose of contesting the propriety of the London proceedings. The "plaintiffs choice of forum should rarely be disturbed [and] dismissal [is] necessary if the balance of public and private interests is strongly in favor of the defendant[s] choice of a different forum." Perusahaan Umum Listrik Negara Pusat v. M/V Tel Aviv, 711 F.2d 1231, 1235 (5th Cir. 1983). Munich and General Reinsurance have failed to show that private interest factors weigh strongly in favor of dismissal. While it is true that it may be more convenient for Munich and General Reinsurance to proceed in London, both parties have failed to address the fact that it would be equally inconvenient for American Guarantee to proceed in the London forum against Polembros. The private interest factors are nearly in balance; therefore, analysis of those factors does not strongly support depriving American Guarantee of its choice of forum.
The fact that the private interest factors do not weigh in favor of dismissal does not end the inquiry, however. Even where "the private interest factors are nearly in balance, a trial court has discretion to grant forum non conveniens dismissal upon finding that retention of jurisdiction would be unduly burdensome to the community, that there is little or no public interest in the dispute or that foreign law will predominate if jurisdiction is retained." In re Air Crash Disaster Near New Orleans v. Pan American World Airways, Inc., 821 F.2d 1147 (5th Cir. 1987) ( en banc). The Supreme Court has also noted that another consideration is the desire to have a "local interest in having localized controversies decided at home." Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 509, 67 S.Ct. 839, 843 (1947).
While this Court agrees with American Guarantee that retention of jurisdiction may not be burdensome to this community, the Court does not find that there is any public interest in having this litigation in this particular district. The lengthy litigation arising out of the allision has settled. Further, American Guarantee is not a Louisiana Corporation. The only connection to this district is that the broker who issued the policy was from Louisiana. The main decisions regarding the surety contract were made elsewhere. Thus, the impact on business and other concerns in this district is relatively minor when compared to the interest in England where the re-insurance contracts were confected.
Also, the interpretation of the cut-through clause will concern witnesses located in the United Kingdom. Finally, and in the Court's opinion, most important, is that the funds forming the basis for this lawsuit are in a bank in the United Kingdom. A English court will have a much easier time directing disbursement of those funds than will this Court at the conclusion of this litigation. The Court finds that the primary issue in this litigation will be the cut-through clause negotiated in England. Thus, England, not the Eastern District of Louisiana, has a stronger connection with this case.
The final public factor for this Court to consider is the application of foreign law. It seems that this Court or an English will be faced with applying both American and English law. American law may likely apply to the surety contract, and English law is probably appropriate for the re-insurance contract. In such a case, it would be best for an English court to discuss the intricacies of English re-insurance law, a subject with which those courts would be most familiar. Therefore, this issue is, at best, balanced in favor of both parties to this litigation.
The Court also notes that a dismissal on the grounds of forum non conveniens is appropriate even thought it may result in a foreign jurisdiction applying American law. The Court finds that the Supreme Court's decision in Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252 (1981), provides a useful resolution to this case. The plaintiffs in Piper were Scottish citizens who sued an American airplane manufacturer and the propeller manufacturer after their relatives were killed in a plane crash in Scotland. The district court dismissed the case, finding that Scotland was the better forum; the court of appeals reversed, and the Supreme Court agreed to review the case. The Supreme Court, in examining the public interest factors, noted that the district court had concluded that both American and Scottish law would apply to the case; however, the Supreme Court also noted, the court of appeals was of the opinion that only American law would apply. The Supreme Court refused to determine the conflict-of-laws issue, and instead upheld the dismissal concluding that "[e]ven if the Court of Appeals' conclusion is correct . . . all other public interest factors favored trial in Scotland." Id. at 260, 102 S.Ct. at 268. Similarly, in the present case, this Court has found that the other public interest factors do not favor trial in Louisiana mainly because England has more direct interest in the subject of this case. Thus, this Court need not decide which law will apply, since the Court is of the opinion that England is the better forum for the case.
Further, the Court notes that, in the event only American law applies, several courts have dismissed cases on the basis of forum non conveniens even where American law clearly applied to the cause of action. See, e.g., Contact Lumber Co. v. P. T. Moges Shipping Co., 918 F.2d 1446, 1450-51 (9th Cir. 1990) (affirming dismissal of a case to a foreign jurisdiction despite the application of the Carriage of Goods by Sea Act ("COGSA"); Nippon Fire Marine Ins. Co. v. M/V EGASCO STAR, 899 F. Supp. 164, 169-70 (S.D.N.Y. 1995) (same). Thus, the issue cannot be given determinative weight when other factors are present which militate in favor of dismissal.
III. Conclusion
For the foregoing reasons, IT IS ORDERED that Munich Reinsurance's Motion for Reconsideration of this Court's April 17, 2002 ruling denying Munich's motion to dismiss on grounds of forum non conveniens is GRANTED, the Court finding that England is the better forum for litigation of these issues. IT IS FURTHER ORDERED that General Reinsurance and Polembros' motions for dismissal for forum non conveniens are also GRANTED. IT IS FURTHER ORDERED, therefore, that the plaintiffs claims against all defendants are hereby DISMISSED WITHOUT PREJUDICE.