Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 1 of 26 1

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1 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION CIVIL ACTION NO. 3:10-CV-OOIOl ZURICH AMERICAN INSURANCE COMPANY, ) ) ) ) Plaintiff, ) ZURICH AMERICAN INSURANCE v. ) COMPANY'S MEMORANDUM OF LA WIN ) OPPOSITION TO DEFENDANT ACE ACE AMERICAN INSURANCE COMPANY,) AMERICAN INSURANCE COMPANY'S COMPASS HOLDINGS, INC., and ) MOTION TO TRANSFER VENUE CROTHALL SERVICES GROUP, ) Defendants. ) ) Plaintiff Zurich American Insurance Company ("Zurich American"), by and through the undersigned counsel, respectfully submits this memorandum of law in opposition to Defendant ACE American Insurance Company's Motion to Transfer Venue (Doc. No. 19). INTRODUCTION ACE American Insurance Company ("ACE") belatedly brings this motion to transfer venue under 28 U.S.C after the parties filed their pleadings, fully joined the issues for adjudication here in North Carolina, and submitted to the Court a joint discovery plan in which nothing is mentioned about ACE wanting to challenge Zurich American's North Carolina choice of forum. Now ACE decides to take the position that this case belongs in California. Its logic is that all the witnesses and evidence supposedly are located in California, even though the pertinent testimony of all such witnesses has already been preserved in depositions, all pertinent documents are likely in the possession of the Charlotte counsel for each defendant, and none of the parties are even west of the Mississippi. ACE cannot meet its heavy burden to overcome the forum choice of Zurich American. The effect of this motion will only be to delay the ultimate Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 1 of 26 1

2 resolution of this matter and increase the complexity of this relatively straightforward insurance coverage dispute. The interests of justice dictate that this case be adjudicated in this Court where the localized dispute over a North Carolina insurance contract is centered. ACE's motion to transfer venue should be denied. STATEMENT OF THE CASE Zurich American filed the instant declaratory judgment action against Compass Holdings, Inc. ("Compass"), Crothall Services Group ("Crothall"), and ACE on March 5, (See Complaint) (Doc. No.1). Zurich American seeks a judicial declaration of its rights and obligations under a commercial general liability policy ("Zurich Policy") in connection with a settled underlying personal injury action, entitled Rosie Mae Weathersby v. JohnsonDiversy, Inc., Unisource Worldwide, Inc., Procter and Gamble Distributing LLC, and Crothall Services Group, United States District Court for the Central District of California, Case No. 2:08 cv (the "underlying action"). (Id. at ~l). Compass is the named insured under the Zurich Policy, and Crothall is listed also as a named insured. (Id. at ~9). ACE is an excess insurer for Compass and Crothall for the policy period subsequent to the period of the Zurich Policy. (See Cleaver Affid., attached as Exh. 3 to ACE's Memo.). In response to Zurich American's Complaint, ACE filed an Answer and Counterclaim on April 5, (See ACE's Answer/Counterclaim) (Doc. No.9). The answer contained no motion to transfer venue under 28 U.S.C In its counterclaim against Zurich American, ACE seeks indemnification, contribution and declaratory relief. (Id.). Zurich answered the counterclaim on April 26, 2010, denying liability and reiterating its claims for declaratory judgment in its favor. (See Zurich American's Answer) (Doc. No. 12). Compass and Crothall filed their combined answer to the Complaint on June 7, (See Compass/Crothall's Answer) Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 2 of 26 2

3 (Doc. No. 15). The parties held their initial attorneys conference on June 30, 2010 and filed the Certification of the Initial Attorneys' Conference and Discovery Plan the same day. (See Joint Discovery Plan) (Doc. No. 18). ACE filed its motion to transfer venue on July 29,2010. (Doc. No. 19). STATEMENT OF FACTS Zurich American issued the liability policy to Compass and other named insureds such as Crothall for the policy period of September 30, 2004 to September 30, (See Affid. ofkelli Belpedio, Exh. 1 attached). In the underlying action, Rosie Mae Weathersby ("Ms. Weathersby") alleged that on August 7, 2006 she suffered an acute exposure to her lungs from the mixture of two chemical cleaning products -- Crew and Comet -- while cleaning a nurse's station sink at Cedars-Sinai Medical Center (Cedars-Sinai) in Los Angeles, California. (See Complaint,-r17; also Weathersby Dep., p , Exh. 2 attached). In that case, she testified in deposition that in order to clean sinks at Cedars-Sinai she mixed Crew and Comet from March 2006 up until the August i h incident. (See Weathersby Dep., p , , , Exh. 2 attached). Her expert witnesses testified in deposition that her interstitial lung disease was caused by her inhalation of the chlorine gas generated from the Comet-Crew mixture in the August i h incident. (See, for example, Dr. Crystal Dep., p , Exh. 3 attached). After the expert depositions were taken, James Wilson of the Risk Management Department of Compass in Charlotte wrote to Zurich American, ACE and others on December 8, 2009, stating: "In light of the fact that the plaintiffs experts have now focused entirely on the August 7, 2006 event as the sole cause of the plaintiff s injuries it is the position of Compass/Crothall that coverage under Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 3 of 26 3

4 the Zurich policy that expired on [9/30/05] would not be triggered." (See Wilson , Exh. 4 attached; also Belpedio Affidavit, Exh. 1 attached). To support her motion for summary judgment filed on December 7, 2009, Ms. Weathersby filed what she considered to be uncontroverted facts and one of them was that she "openly used Comet and Crew SC together to clean sinks, toilets, and showers on a daily basis at Cedar-Sinai Medical Center from March 2006 to August 2006." (See Weathersby Uncontroverted Facts, p. 7, Exh. 5 attached). In opposing the motion, Crothall disputed the word "openly" in the uncontroverted fact and stated that Weathersby "attributes her injury to using two chemicals together, i.e. Comet and Crew." (See Crothall Controverted Facts, p. 9-11, Exh. 6 attached; also Crothall Statement of Genuine Issues, p. 2, Exh. 7 attached). Another uncontroverted fact in support of summary judgment, as argued by Ms. Weathersby, was that as a result of Crothall's negligent supervision of Ms. Weathersby, she suffers from lung disease caused by her exposure to chlorine gas created by her combined use of Crew and Comet to clean a nurse's sink at Cedars-Sinai in August (See Weathersby Uncontroverted Facts, p. 1, Exh. 5 attached). On February 12,2010, Ms. Weathersby filed multiple motions in limine in the underlying action setting forth her theory for trial. Four motions in limine specifically identify the August 2006 incident as the cause of her injuries, such as Motion No. 13, which stated: In her First Cause of Action for Negligence against Defendant, Crothall Services Group, Plaintiff alleges that Crothall had a legal duty to supervise Plaintiff during her use of cleaning chemicals at Cedars-Sinai Medical Center, that Crothall breached this duty to supervise Plaintiff, and that this breach of duty was a substantial factor in causing Plaintiff s interstitial lung disease resulting from her exposure to chlorine gas created during the combined use of Crew SC and Comet when cleaning a nurse's station sink in August (See Weathersby Motion No. 13, p. 6, Exh. 8 attached; also other 3 motions attached in Exh. 8). Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 4 of 26 4

5 Seven other motions in limine refer to the inhalation of chlorine gas created from the chemical reaction between Comet and Crew as the origin of Ms. Weathersby's injuries, such as Motion No. 32, which stated: This is a toxic Injury suit for an occupational disease which Plaintiff contracted in the course of her employment as an EVS Technician at Cedars Sinai Medical Center. Plaintiff alleges and will prove at trial that she suffers from interstitial lung disease as a result of her occupational exposure to chlorine gas resulting from the chemical reaction between Crew SC and Comet that she used in her work, and that such injury was caused by the negligent training, supervision, and product selection of Defendant Crothall Services Group. (See Weathersby Motion No. 32, p. 3, Exh. 9 attached; also other 6 motions attached in Exh. 9). On March 5, 2010, prior to any trial, notice was filed in the underlying action that Crothall and Ms. Weathersby had settled the case. (See Notice, Exh. 10 attached). Meanwhile, Zurich American had been unaware of Ms. Weathersby's injuries and the underlying action until Zurich American received notice of the suit in November 2009, almost two years after Ms. Weathersby filed her action in December (See Complaint,,-r35-36; also Belpedio Affid., Exh. 1 attached). Subsequent to the receipt of notice by Zurich American, the depositions of Ms. Weathersby's expert witnesses were taken, at which the experts focused on the August i h incident as the cause of Ms. Weathersby's injuries. In response, Compass and Crothall wrote to Zurich American, ACE, and others that: With the medical testimony clearly pointing to a loss date of August 7, 2006, the Compass/Crothall position is that this claim should be viewed as one occurrence and subject to one Self-Insured Retention. Zurich will not be placed on notice of this claim and Compass/Crothall agrees to tender the remaining portion of their $lm SIR to Chartis for settlement purposes." (See Wilson , Exh. 4 attached). Consequently, the settlement in March 2010 did not include any payment from Zurich American. (See Complaint,,-r21-23). Crothall agreed to pay Ms. Weathersby the sum of Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 5 of 26 5

6 $3,900,000, with ACE contributing $2,593,735 of the settlement sum. (Id.; also Cleaver Affid.). ACE seeks to recover from Zurich American the $1,000,000 limit of the Zurich Policy as reimbursement for ACE's settlement payment. (ACE's Answer/Counterclaim, ~80, 82, 85 and 92). Compass and Crothall are now doing a reversal and praying for relief in their Answer that "the Court declare that the Zurich American Policy provides coverage for the Weathersby claim;... [and] that Zurich American indemnify ACE American up to the limit of the Zurich Policy." (See Compass/Crothall's Answer, p. 14). In its Complaint, Zurich American seeks declaratory relief on four grounds. First, Zurich American contends coverage for its policy was not triggered by Weathersby's injuries as alleged in the underlying action. (See Complaint, ~25). The bodily injuries of Ms. Weathersby did not occur until after Zurich American's policy period of September 30,2004 to September 30,2005. (Id. at ~27). Second, if the Court determines the Zurich Policy is triggered for coverage, Zurich American contends it has no liability for coverage unless and until Compass pays the $1,000,000 self-insured retention ("SIR") under the Zurich Policy. ilil at ~28-33). The Self-Insured Retention Endorsement in the policy states that Zurich American "shall be liable only for the amounts of our share of 'pro rata defense costs' and damages in excess of the 'self-insured retention' amounts, as applicable, shown in the Schedule above,..." which SIR amount is "$1,000,000 per occurrence." (Id. at ~28-33). Third, should the Court determine the Zurich Policy is triggered, Zurich American contends it has no liability for coverage because Compass and Crothall breached the notice conditions of the policy by giving late notice of Weathersby's injuries and the underlying action to Zurich American. (Id. at ~34-43). Fourth, if the Court rules there is coverage under the Zurich Policy, Zurich American seeks a proper allocation of liability between and among the parties herein, with due consideration being given to the fact that the Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 6 of 26 6

7 Zurich Policy expired 19 days after Ms. Weathersby started working as a technician at Cedars- Sinai, over five months before Ms. Weathersby even first mixed the two chemicals that would later combine to injure her, and over 10 months before she was exposed to the chlorine gas during the August 7,2006 catastrophic incident at the nurses' station sink. (Id. at,-r44-46). ARGUMENT I. ACE CANNOT SATISFY THE HEAVY BURDEN TO JUSTIFY TRANSFER OF VENUE UNDER 28 U.S.C ACE brings its motion to transfer venue under 28 U.S.C Parties seeking a change of venue should act with "reasonable promptness" and not delay. See Peetet v. Dow Chemical Co., 868 F.2d 1428, 1436 (5 th Cir. 1989), cert. denied, 493 U.S. 935 (1989) (quoting 15 C Wright, Miller & Cooper, Federal Practice & Procedure 3844, at (1986)). Pursuant to 28 U.S.c. 1404, "[f]or 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." The district court must consider "all relevant factors to determine whether or not on balance the litigation would more conveniently proceed and the interests of justice be better served by transfer to a different forum." Peetet, 868 F.2d at 1436 (quoting Wright, Miller & Cooper. 3847, at 370). The court should consider: 1. The plaintiffls'] choice offorum; 2. The residence of the parties; 3. The relative ease of access of proof; 4. The availability of compulsory process for attendance of witnesses and the costs of obtaining attendance of willing witnesses; 5. The possibility of a view; 6. The enforceability of a judgment, if obtained; 7. The relative advantages and obstacles to a fair trial; 8. Other practical problems that make a trial easy, expeditious, and inexpensive; 9. The administrative difficulties of court congestion; 10. The interest in having localized controversies settled at home and the appropriateness in having the trial of a diversity case in a forum that is at home with the state law that must govern the action; and 11. The avoidance of unnecessary problems with conflict oflaws. Rice v. Bellsouth Adver. & Pub. Corp., 240 F. Supp. 2d 526, 529 (W.D.N.C. 2002) (citing Jim Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 7 of 26 7

8 Crockett Promotions, Inc. v. Action Media Group, Inc., 751 F.Supp. 93, 96 (W.D.N.C.1990)). "A court should analyze each of these factors both quantitatively and qualitatively." Id. (citing McDevitt & Street Co. v. Fidelity & Deposit Co. of Md., 737 F. Supp. 351, 354 (W.D.N.C. 1990)). In considering a change of venue, the court must weigh the factors involved and "'unless the balance is strongly in favor of the defendant, the plaintifrs choice of forum should rarely be disturbed.'" Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984) (emphasis added) (quoting Gulf Oil Corp v. Gilbert, 330 F.Supp. 719, 721 (M.D.N.C. 1993)). "A defendant moving for a transfer of forum from a district in which venue is proper carries a particularly heavy burden." Commercial Equip., Inc. v. Barclay Furniture Co., 738 F. Supp. 974,976 (W.D.N.C. 1990) (emphasis added). II. WEIGHING THE FACTORS FAVORS KEEPING THE CASE HERE IN NORTH CAROLINA. 1. Zurich American's Choice of Forum Zurich American's choice to file this action in the United States District Court for the Western District of North Carolina should be given great weight when balancing the factors. "As this Court has noted several times, it is 'black letter law', that 'a plaintiffs choice of a proper forum is a paramount consideration in any determination of a transfer request, and that choice should not be lightly disturbed.'" Western Steer-Mom 'N' Pop's, Inc. v. FMT Inv., Inc., 578 F.Supp. 260, 265 (W.D.N.C. 1984) (quoting Scott Paper Co. v. Scott's Liquid Gold, Inc., 374 F.Supp. 184, 191 (D. Del. 1974)). See also Phillips v. S. Gumpert Co., Inc., 627 F.Supp. 725, (W.D.N.C. 1986) ("If a transfer would merely shift the inconvenience from the Defendant to the Plaintiff, or if the equities lean but slightly in favor of the Defendant after all factors are considered, the Court should not disturb the Plaintiffs choice of forum."); Bates v. J.C. Penny Co., Inc., 624 F.Supp. 226,227 (W.D.N.C. 1985). Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 8 of 26 8

9 ACE fails to address this factor in its Memorandum of Law, choosing to ignore it because it weighs heavily against ACE's motion. The Court should give Zurich American's choice of the Western District of North Carolina paramount consideration and Zurich American's choice should not be lightly disturbed. See, e.g, Commercial Equip., Inc., 738 F. Supp. at 976 ("This Court long has recognized that in considering a motion to transfer pursuant to section 1404(a), a court ordinarily should accord the plaintiffs choice of forum great weight."). Even if the action is not filed in the district where the plaintiff resides, "if the plaintiff s choice of forum relates to its legitimate, rational concerns then the plaintiff s choice of forum is still accorded substantial weight." Waste Distillation Tech., Inc.v. Pan American Resources, Inc., 775 F.Supp. 759, (D.Dei. 1991); see also Ashmore v. Northeast Petroleum Division of Cargill, Inc., 925 F.Supp. 36, 39 (D.Me. 1996) (deference still given to plaintiffs choice); Editorial Musical Latino Americano, S.A. v. Mar. Int'l Records, Inc., 829 F.Supp. 62,66-67 (S.D.N.Y. 1993) (still accord great weight to plaintiff s forum choice when other factors make the forum convenient, despite suit not filed where plaintiff resides); In re M.L. Lee Acquisition Fund II, LP, 816 F.Supp. 973, 976 (D.Dei. 1993) (plaintiffs choice "is still of paramount consideration" where the action has "significant connections" to the forum). Zurich American filed suit in this forum because it has the strongest relationship to the parties and the dispute. The Zurich Policy was issued to the named insured Compass in this district. (See Belpedio Affid., Exh. 1 attached). Zurich American maintains a regional office in this district and the office handles claims, underwriting and other business matters. (Id.). Compass has its corporate headquarters here. (See Compass/Crothall's Answer,,-r4, 5). Crothall is a subsidiary of Compass. (Id.). Crothall denied its principal place of business is in Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 9 of 26 9

10 Pennsylvania Wh at ~5), 1 and thus it appears its principal place of business may be where its parent corporation is located, i.e. in this district. ACE regularly conducts business in this district, sold its excess policy to Compass (presumably in this district), and is subject to this Court's jurisdiction. (See Cleaver Affid.; also ACE's NC license status, Exh. 12 attached). North Carolina law controls the interpretation of the insurance policy at issue. The Zurich Policy was delivered in North Carolina and insures a company headquartered in this state. The address on the declarations page of the policy for Compass is 2400 Y orkmont Road, Charlotte, North Carolina and the producer Aon Risk Services is located at 121 Trade Street, Charlotte, North Carolina (See Belpedio Affid., Exh. 1 attached). Thus, the law of North Carolina must be used in interpreting the insurance policy provisions because this policy was issued in North Carolina. See N.C. Gen. Stat ("All contracts of insurance on property, lives, or interests in this State shall be deemed to be made therein, and all contracts of insurance the applications for which are taken within the State shall be deemed to have been made within this State and are subject to the laws thereof."). Zurich American chose this venue, in large part, because of this Court's familiarity in the application of North Carolina law and the convenience of the parties. Zurich American's choice is based on which forum had the strongest connection to the issues and the parties. No party is unduly prejudiced by Zurich American's choice of forum, and ACE does not raise any undue prejudice suffered by it in litigating in this forum. Accordingly, Zurich American's choice of this forum to adjudicate this action should be given great weight. This factor weighs heavily in Zurich American's favor and against transfer. 1 ACE has alleged that Crothall's principal place of business is in Pennsylvania. (See ACE's Answer/Counterclaim, ~5). Crothall's website lists its address as 955 Chesterbrook Blvd, Wayne, Pennsylvania. (See website printout, Exh. 11 attached). Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 10 of 26 10

11 2. The Parties' Residence All parties are corporations and are deemed to reside in their state of incorporation and where their principal place of business is located. Zurich is a New York corporation with its principal place of business in Illinois. (See Complaint, ~2; and Belpedio Affid., Exh. 1 attached). Compass is a Delaware corporation, with its principal place of business in Charlotte. (See Compass/Crothall's Answer, ~4). Crothall is a Pennsylvania corporation. (Id. at ~5). It appears its principal place of business may be in Charlotte, although it could be in Pennsylvania. ACE is a Pennsylvania corporation with its principal place of business in Pennsylvania. (See ACE's Answer/Counterclaim, ~3, 64). All parties reside east of the Mississippi River. None of the parties reside in California. ACE conveniently ignored this fact in its memorandum. ACE did not even mention the parties' residence as a relevant factor when giving the legal standard. (See ACE"s Memo., p. 6). The parties' residences are geographically closer to this district than to the Central District of California. Suit in North Carolina is more convenient for the parties than in California. All of the parties are sophisticated businesses, acquainted with and able to pay for business travel. None would be prejudiced by economic considerations from proceeding in North Carolina. It matters little that Ms. Weathersby resides in California. She is not a party to this action, and her litigation has concluded in any event. To the extent ACE is inconvenienced by the distance between this forum and its residence of Pennsylvania, its inconvenience would only increase as the distance between ACE's residence and the transferee forum is far greater. Zurich American and ACE, no party has a "home field advantage" in this district. As between But one of the named insured parties, Compass, appropriately is in its "home" forum, and Crothall may also be in its "home" forum here if its principal place of business is in this district. Additionally, ACE Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 11 of 26 11

12 is no stranger to this forum as it conducts its business within the geographical boundaries of the Western District of North Carolina. Should the Court transfer this action to California, none of the parties would be litigating this case in a forum where they reside. This factor favors Zurich American and the denial of the motion to transfer venue. 3. The Relative Ease of Access to Proof This is a contract dispute in North Carolina, not a tort claim in California. ACE's chief argument for transferring this action to the Central District of California is the assumption that this insurance coverage dispute requires a near complete re-litigation of the underlying tort action. That assumption is incorrect. The parties are not destined to engage in such a burdensome process because the exhaustive discovery and filings in the underlying case are available and can be utilized to support the claims and defenses in the instant action. A key witness in this case is Ms. Weathersby. She was deposed in the underlying action over the course of seven days, and there are close to 700 pages of transcripts. (See cover pages for deposition, Exh. 2 attached)? Her deposition was videotaped. (See Belpedio Affid., ~6, Exh. 1 attached). She testified to facts supporting Zurich American's position that she mixed Crew and Comet from March 2006 up until the August 7 th incident, long after the expiration of the Zurich Policy. (See Weathersby Dep., p , , 146, , Exh. 2 attached). She also testified to facts that ACE, Compass, and Crothall believe could favor their position on trigger-of-coverage, namely, that Ms. Weathersby coughed when using only Crew from the very start of her work at Cedars-Sinai, during the final few days of the Zurich Policy. (Id., p. 44, 83, , 194,682, Exh. 2 attached). Other important witnesses in this case are the various expert witnesses used by Ms. 2 Zurich American does not have a copy of the entire transcripts and does not have the cover page for Volume IV. Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 12 of 26 12

13 Weathersby in the underlying action. At least four of those experts were deposed. (See cover pages of depositions of Drs. Crystal, Abraham, Sawyer, and Simmons, Exhs. 3, 13, 14, 15 attached). They gave testimony favoring Zurich American's position that Ms. Weathersby's lung disease was caused by her inhalation of the chlorine gas generated from the Comet-Crew mixture in the August i h incident. (See, for example, Dr. Crystal Dep., p , Exh. 3 attached, and Dr. Sawyer Dep., p , 44, Exh. 13 attached). But one expert of Ms. Weathersby also gave testimony and wrote a report that ACE, Compass, and Crothall believe favors their trigger-of-coverage position that Ms. Weathersby coughed when spraying only Crew from the very start of her work at Cedars-Sinai. (See Dr. Abraham Dep., p. 27, 31, and expert report dated , p. 2, Exh. 14 attached). Three of these experts - Drs. Crystal, Abraham and Sawyer - are based in New York and gave their deposition via video conference. (See cover pages from depositions, Exhs. 3,13,14 attached). The defendants in the underlying action, including Crothall, had the opportunity and the motivation to cross-examine extensively Ms. Weathersby and her experts on the cause, time, and extent of Ms. Weathersby's injuries. Compass and ACE were not parties in that case but were aligned in interest with Crothall in the defense. The defendants in the underlying action developed the same lines of testimony from Ms. Weathersby and her experts as ACE, Compass, Crothall, and Zurich American would develop in depositions that could be taken in the instant action. Zurich American understands that Ms. Weathersby's treating physicians were not deposed in the underlying action. Their depositions in this action are likely not needed since their medical findings and conclusions are well-documented in the medical records which were relied upon by Ms. Weathersby's expert witnesses. Therefore, assuming that ACE, Crothall, and Compass would stipulate to the authenticity Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 13 of 26 13

14 and admissibility of the depositions of Ms. Weathersby, her experts, and any other witnesses such as Crothall and Cedars-Sinai employees, the parties would not need to re-take these depositions and the depositions could be used for dispositive motions and trial. 3 This would: expedite discovery; reduce the burden to the parties, Ms. Weathersby, her experts, and other witnesses; and eliminate the need for travel to California for these depositions, thereby serving the interest of judicial economy in this case. If ACE, Crothall, and/or Compass decline to so stipulate, any additional depositions of Ms. Weathersby, her expert witnesses, and other witnesses would be brief because the parties would only need enough time to authenticate the prior depositions and ask limited follow-up questions for clarification purposes. The depositions could even be taken by remote means pursuant to Rule 30(b)(4) of the Federal Rules of Civil Procedure, which would eliminate the need for extensive travel. This streamlined approach would limit legal expenses, and the deponents would not be subjected to unnecessary inconvenience and expense. Surely ACE does not plan to re-depose all of the witnesses in the underlying action and start from scratch with each person to plow old ground. The depositions in the underlying action are likely admissible for use in motions for summary judgment and at trial by virtue of Rule 32 of the Federal Rules of Civil Procedure and Rules 803, 804, and 807 of the Federal Rules of Evidence. See Dwyer v. General Motors Corp., 853 F.Supp. 690, 694 (S.D.N.Y. 1994) ("Any of the Maryland witnesses' testimony deemed necessary in this case could be offered to the jury via deposition."). Unless defendants stipulate to authenticity, Zurich American would need to take a relatively short deposition of Ms. Weathersby'S counsel (perhaps by telephone) to authenticate certain motions and pleadings filed in the underlying action and 3 The testimony of the Crothall and Cedars-Sinai employees are not needed by Zurich American to prevail in this action, but to the extent the defendants need such testimony, Zurich American is prepared to stipulate to the authenticity of their depositions in the underlying case so that they do not need to be redeposed in the instant action. Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 14 of 26 14

15 thus authenticate the statements about facts and contentions made in those documents. 4 But this necessary step to preserve such evidence would not be overly burdensome to such counsel and the parties in our case. Finally, Ms. Weathersby's medical records would be admissible without the need to depose or call to testify at trial the records custodians of the medical providers if the parties follow the procedure for the production of medical records set forth in this Court's Local Rule It makes eminent good sense to streamline the discovery in this action given the extensive pertinent discovery and filings in the underlying action. There would not be a great need to spend weeks taking depositions in California. Furthermore, as this is an insurance coverage dispute and not Ms. Weathersby's primary tort claim, only select documents and records are relevant to this action. These documents and records are already in the possession of ACE, Compass, and Crothall and can be exchanged easily among the parties through the traditional discovery methods. 5 There is no greater difficulty in obtaining the relevant documents in the Western District of North Carolina than in the Central District of California, especially since these documents can be efficiently and inexpensively exchanged via delivery services, fax, or or on a CD or flash drive. See Pickler Intern., Inc. v. Travelers Indem. Co., 35 F. Supp. 2d 570, 574 (N.D. Ohio 1998) ("Moreover, while the 4 For example, counsel for Ms. Weathersby filed the uncontroverted fact in December 2009 that she "openly used Comet and Crew SC together to clean sinks, toilets, and showers on a daily basis at Cedar Sinai Medical Center from March 2006 to August 2006." (See Weathersby Uncontroverted Facts, p. 7, Exh. 5 attached), and counsel filed Motion In Limine No.8 in February 2010 that Ms. Weathersby "will prove at trial that she suffers from interstitial lung disease as a result of her occupational exposure to chlorine gas resulting from the chemical reaction between cleaning chemicals Crew and Comet that she used in her work under the instruction ofcrothall." (See Motion No.8, p. 10, Exh. 8 attached). 5 The parties could stipulate to the authenticity of the medical records of Ms. Weathersby in the possession of ACE, Crothall, and Compass, having obtained them through discovery in the underlying action, and thus eliminate the need to subpoena the records from medical providers and comply with the Court's Local Rule Zurich American has yet to see any of the medical records. Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 15 of 26 15

16 location of evidence is generally a relevant factor in the 1404(a) analysis, the location of documentary evidence is a minor consideration. Documents may easily be sent through the mail, copied or even faxed to a remote location."). Not all of the relevant documents and testimony to this action will come from the underlying action. Zurich American intends to take the deposition of Compass' James Wilson and the Rule 30(b)(6) deposition ofcrothall and Compass in Charlotte, North Carolina. And the Rule 30(b)(6) deposition of ACE would likely be taken in Pennsylvania. Assuming defendants desire to take a Rule 30(b)(6) deposition of Zurich American, the deposition would likely occur in the Illinois offices of Zurich American. The vast majority of documents relevant to the insurance coverage issues should be located in Charlotte (at Compass' office and the offices of ACE's counsel and Compass/Crothall's counsel) and in Pennsylvania (at ACE's offices and possibly Crothall's offices). Therefore, much of the evidence that will support the claims and defenses in this action will come from this district and other locations and not from the Central District of California. To the extent the parties need additional documents from Crothall's California defense counsel in the underlying action, there should be no difficulty obtaining such documents since counsel was reporting regularly to Crothall, Compass, ACE and others at times during the case. 6 Obtaining the testimony of Crothall's California defense counsel should not be needed by anyone since the focus of the instant dispute is on the evidence and theories being presented by Ms. Weathersby to prove her case against Crothall and how such evidence and theories apply to the contract trigger-of-coverage dispute. It should matter little that Crothall vigorously challenged Ms. Weathersby every step of the way. 6 In or about December 2009, after Zurich American received notice of the underlying action, Crothall's defense counsel sent Zurich American copies of certain documents, including reports he had sent to Compass, Crothall, ACE and others at various times during the case. (See Belpedio Affid., Exh. 1 attached). Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 16 of 26 16

17 The fact that Ms. Weathersby's injuries occurred in the Central District of California does not bind this action to that district, especially when the primary issue here is of contract interpretation, not a determination of the underlying tort liability for Ms. Weathersby's injuries. The issue is not whether Crothall is liable in negligence for Ms. Weathersby's injuries. The settlement payment of $3,900,000 to Ms. Weathersby eliminates that issue. Rather, a threshold issue here is whether coverage under the Zurich Policy is triggered by Weathersby's injuries, i.e. whether Crothall's legal liability for $3,900,000 results from bodily injuries first occurring in the final nineteen days of the Zurich Policy in September 2005 or first occurring in March 2006 when Ms. Weathersby began mixing Comet and Crew and breathing the resulting chlorine gas or first occurring from her catastrophic exposure to chlorine gas on August 7, Duplicative discovery and re-litigating tort issues in California, for which ACE appears to argue, can be avoided, while at the same time the parties can litigate the coverage dispute in this Court and thereby preserve the dual goals of a speedy and just resolution of their rights and obligations. On balance, some evidence is in the Central District of California, and some evidence is elsewhere in this coverage dispute. Any inconvenience is essentially equal to all parties, but more importantly there are clear solutions to minimize the inconvenience while adjudicating the case in North Carolina. Thus, this factor does not favor any party with regard to the motion to transfer venue. 4. The Availability of Compulsory Process for the Attendance of Witnesses and the Cost of Obtaining Attendance of Willing Witnesses The representatives of the parties - whether they are in North Carolina, Pennsylvania, Illinois, or California - are subject to the compulsory process of the Western District of North Carolina. Testimony of non-parties such as Ms. Weathersby and her expert witnesses can be obtained by the admission of their prior deposition testimony in the underlying action (if the Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 17 of 26 17

18 defendants will so stipulate) or by a deposition in the federal judicial district where they reside and can be used for summary judgment and at trial pursuant to Rule 32(a)(4) of the Federal Rules of Civil Procedure. No matter where a deponent resides, that deponent is subject to compulsory process in the district where they reside, so the parties will be able to compel the attendance of witnesses at their deposition. See Fed.R.Civ.Pro. 45(a)(2)(B). Zurich American has no problem relying on depositions to present trial testimony here if necessary. That said, trial may not even be needed. Zurich American presently believes this case can be decided on summary judgment and thus any concerns about having live witnesses at trial may not be a material consideration. This factor favors Zurich American and denying the motion to transfer. 5. The Possibility of a View Zurich American does not anticipate that a view will be sought by any party; therefore, this factor is neutral. 6. The Enforceability of a Judgment, If Obtained A judgment rendered by this Court will be enforceable by and/or against each party. This factor favors Zurich American and the denial of the motion to transfer. 7. The Relative Advantages and Obstacles to a Fair Trial ACE does not and cannot argue that the Western District of North Carolina will not be a neutral forum where each party will have its day in court. Party representatives will be able to testify at trial in this Court. Each party will have access to its evidence and witnesses (live or through deposition) to fully support the claims and defenses in the Western District of North Carolina. This factor favors Zurich American and weighs against transfer. 8. Other Practical Problems That Make a Trial Easy, Expeditious, and Inexpensive Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 18 of 26 18

19 ACE's apparent discovery and litigation strategy in the Central District of California would duplicate the discovery efforts in the underlying action and certainly would not make the pre-trial process and trial of the instant action easy, expeditious, and inexpensive. However, litigating this case in the Western District of North Carolina, by relying on the relevant and complete discovery performed in the underlying action, would make both the pre-trial process and the trial easy, expeditious, and inexpensive. In this district, the parties have conferred and agreed on a discovery schedule that conforms to the Local Rules of this district, and submitted the joint discovery plan to the Court on June 30, The parties built into the discovery plan a 9-month discovery period, after which "the parties may attempt to submit stipulations of facts for motions for summary judgment." (Doc. No. 18). Should this action be transferred to the Central District of California, the parties would have to begin anew on negotiating a discovery plan. Furthermore, the parties by virtue of the locations of their corporate headquarters will have easier travel to trial in the Western District of North Carolina than the Central District of California. Communications during the trial from the defendants' representatives in this North Carolina forum would not have to contend with time zone changes. These practical considerations will aid in making the trial easy, expeditious and inexpensive. This factor favors Zurich American and denying the motion to transfer. 9. The Administrative Difficulties of Court Congestion. Based on the latest statistics from the Administrative Office of the United States Courts for the year ending September 30, 2009, actions per judgeship in the Western District of North Carolina were 347 compared to 578 in the Central District of California. (see Administrative Office of the United States Courts, Federal Court Management Statistics 2009 District Courts, Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 19 of 26 19

20 Exh. 16 attached). Pending actions per judgeship in the Western District of North Carolina were 249 compared to 439 in the Central District of California. (ld.) In 2009, the total number of filings was 1,737 in the Western District of North Carolina compared to 16,170 in the Central District of California. (ld.) The Western District of North Carolina had 22 cases over three years old (2.7% of total cases) while the Central District of California had 774 cases over three years old (7.6% of total cases). (ld.) While the Western District of North Carolina saw a 2.8% decrease in filings in 2009, the Central District of California saw a 6.8% increase in filings over the same time. (ld.) By these statistics alone, the Central District of California appears to be a significantly more congested district than the Western District of North Carolina. Even though the times from filing an action to its disposition and from filing an action to its trial are comparable in both districts, the judges in the Central District of California have almost double the caseload of the judges in the Western District of North Carolina. Transferring this case to the Central District of California may affect the efficient administration of justice in that district by placing additional strain on that district's judicial resources. Therefore, this factor favors Zurich American and denying the motion to transfer. 10. The Interest In Having Localized Controversies Settled at Home and the Appropriateness in Having the Trial of a Diversity Case in a Forum That Is at Home With the State Law That Must Govern the Action. North Carolina has the strongest interest in this insurance coverage dispute. It involves a policy delivered in North Carolina which insures a company headquartered here. (See Belpedio Affid., Exh. 1 attached). California has little, if any, interest in this controversy. Its resident, Ms. Weathersby, has received the relief she sought in a settlement and she has no interest in the dispute between the insurers. Therefore, California's interest in assuring that injuries and losses Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 20 of 26 20

21 suffered in the state are afforded insurance coverage has been satisfied. The case does not belong in California. Although Zurich American does not dispute that the Central District of California would have personal jurisdiction over the parties, the localized controversy is in North Carolina and the interests of public policy and judicial economy would be better served here in this Court. Furthermore, as stated above, North Carolina law must be used in interpreting the Zurich Policy because the policy was issued in North Carolina. See N.C. Gen. Stat The Western District of North Carolina is much better versed in the application of North Carolina law than is the Central District of California. See FUL Incorporated v. UnifiedSchool District Number 204, 839 F.Supp. 1307, 1313 (N.D.Ill. 1993) (transferor court "more conversant" with law of district). In its Memorandum of Law, p. 9, supporting the motion to transfer, ACE equates ease of access to the body of North Carolina law to the skilled application of North Carolina law. While all courts have access to other jurisdiction's laws, a court that applies its jurisdiction's laws every day gains a familiarity with the particulars of that jurisdiction's law that better serves the litigants before it. Certainly the Western District of North Carolina is more practiced in the application of North Carolina law than is the Central District of California. Compass is entitled to have its interests under the Zurich Policy interpreted under the law of its home state as applied by a home state court. If the Court determines the Zurich Policy is triggered, Compass has a strong interest in having the North Carolina court decide whether Compass is responsible for payment of its $1,000,000 self-insured retention for the 9/30/04-9/30/05 policy period prior to any payment by Zurich American under its policy. As indicated in the December of Compass' James Wilson, Compass committed to paying the SIR for the 9/30/05-9/30/06 policy period under the Chartis general liability policy (See Wilson e- Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 21 of 26 21

22 mail, Exh. 4 attached) and Compass is vigorously resisting having to pay another $1,000,000 SIR under the Zurich Policy. (See Compass/Crothall's Answer). Moreover, Compass has a strong interest in having the North Carolina court decide whether it breached the notice provisions of the Zurich Policy. Thus, joinder of Compass in this case has a significant relevance to the coverage issues, and Compass is far from being a nominal party. Thus, this factor favors Zurich American and denying the motion to transfer. 11. Avoidance of Unnecessary Problems with Conflicts of Laws If this action remains in the Western District of North Carolina, there should be no issues regarding choice of law. The policy is clearly subject to the rule set forth in N.C.Gen. Stat the policy is a contract of insurance on the interests of Compass in North Carolina and is subject to the laws of North Carolina. As stated in the statute, "[a]ll contracts of insurance on property, lives, or interests in this State shall be deemed to be made therein, and all contracts of insurance the applications for which are taken within the State shall be deemed to have been made within this State and are subject to the laws thereof." N.C. Gen. Stat Should this action be transferred to the Central District of California, a choice-of-law problem would likely arise because, as noted in ACE's Memorandum of Law, footnote 4, "ACE does not concede that North Carolina law applies to this dispute." To be clear, under the rule established by the United States Supreme Court, were this case to be transferred to the Central District of California, "the transferee court must follow the choice-of-law rules that prevailed in the transferor court." Ferens v. John Deere Co., 494 U.S. 516,519, 110 S.Ct. 1274, 1277, 108 L.Ed.2d 443 (1990) (citing, Van Dusen v. Barrack, 376 U.S. 612,84 S.Ct. 805, 11 L.Ed.2d 945 (1964)). In other words, the California federal court would be required to apply the choice-of-law rules of North Carolina, which in this instance would be 58- Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 22 of 26 22

23 3-1. See St. Paul Fire and Marine Ins. Co. v. Hanover Ins. Co., 187 F.Supp.2d 584, 587 (E.D.N.C. 2000) ("Because this is a diversity action, the court must apply the choice oflaw rules of the state in which it sits, North Carolina... Pursuant to , this contract is deemed to have been made in North Carolina, and North Carolina law applies."). If ACE plans to argue its way around upon transfer to the Central District of California, the transfer will have created an unnecessary problem with conflicts of laws. This factor favors keeping the case here in North Carolina. 12. Untimeliness in Bringing Motion ACE unreasonably delayed in the filing of its motion. "After the factors favoring a convenient transfer become evident," a party should move "with reasonable promptness" to file its motion to transfer. Moore's Federal Practice 3d l11.17[2][a] (2007). If the delay would unduly prejudice the party opposing the motion or if the filing of the motion is a dilatory tactic, a district court may deny the motion. See American Standard, Inc. v. The Bendix Corp., 487 F.Supp. 254, (W.D.Mo. 1980); see also McGraw-Edicon Co. v. Van Pelt, 350 F.2d 361, 363 (8 th Cir. 1965) (five months delay after suit filed; transfer denied). Where undue delay and other factors weigh against transfer, denial of transfer is appropriate. See Peetet, 868 F.2d at 1436 (trial court did not abuse its discretion in denying motion to transfer). ACE waited five months after suit was filed before filing its motion to transfer venue under 28 U.S.C The facts underlying ACE's motion to transfer were readily known to ACE from the beginning. Zurich American has been prejudiced by the delay. During that 5- month period, Zurich American incurred legal expenses that it would not have incurred had the motion been timely filed. The Court should consider this delay as yet another factor weighing in Zurich American's favor and against transfer. Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 23 of 26 23

24 CONCLUSION In the final analysis, consistent with the Fourth Circuit's holding in Collins, the balance of the above factors is not at all in favor of transfer, much less even strongly in favor of transfer and therefore Zurich American's choice of forum should not be disturbed. See Collins, 748 F.2d at 921. Not a single factor favors ACE's view that the case should be litigated so far from the parties and from the location ofthe insurance contract that is the subject matter of this litigation. ACE fails to carry its "particularly heavy burden" to defeat the forum choice of the plaintiff. See Commercial Equipment, 738 F.Supp. at 976. This should be the result even if the Court believes that "the equities lean only slightly in favor of [ACE] after all factors are considered." See Phillips, 627 F.Supp. at ACE's primary argument is based on the flawed assumption that the underlying action will have to be largely re-litigated to resolve the instant action. 7 In reality, the exhaustive discovery and filings in the underlying action have already set in stone certain key evidence on the trigger issue in the instant action, and only limited discovery should be needed to decide the trigger issue. North Carolina is the most appropriate and convenient forum for the resolution of the action. This district is home to the main insured party, Compass, and is closer to the parties' residences than the Central District of California. This North Carolina forum will allow the parties the full benefit of any sources of proof, is less congested than the Central District of California, provides a level playing field for all parties, is the most practiced in the application of the controlling North Carolina law, and, most importantly, it was the fair and proper choice of Zurich American. ACE was not reasonably prompt in filing its motion and the delay prejudiced Zurich American. Finally, the litigants in this action are large corporations, well acquainted with 7 It is also highly unusual for a large insurer such as ACE to feel the need, in a coverage dispute, to relitigate a settled underlying suit far from the location ofthe insurance contract. Case 3:10-cv RJC-DCK Document 24 Filed 08/23/10 Page 24 of 26 24