Hanover Insurance v. Paint City Contractors, Inc.

299 F. Supp. 2d 554, 2004 U.S. Dist. LEXIS 252, 2004 WL 51316
CourtDistrict Court, E.D. Virginia
DecidedJanuary 7, 2004
Docket2:03CV723
StatusPublished
Cited by4 cases

This text of 299 F. Supp. 2d 554 (Hanover Insurance v. Paint City Contractors, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hanover Insurance v. Paint City Contractors, Inc., 299 F. Supp. 2d 554, 2004 U.S. Dist. LEXIS 252, 2004 WL 51316 (E.D. Va. 2004).

Opinion

OPINION AND ORDER

REBECCA BEACH SMITH, District Judge.

This matter comes before the court on the motion of defendants Paint City Contractors, Inc., GSPM Corporation, and Panagiotis Forakis to transfer venue to the United States District Court for the District of Maryland. For the reasons stated below, defendants’ motion is DENIED.

This lawsuit arises out of a contract between the United States Department of the Navy (“the Navy”) and defendant Paint City Contractors, Inc. (“Paint City”) to repair and paint eight oil tanks owned by the Navy and located in Portsmouth, Virginia. Plaintiff Hanover Insurance Company (“Hanover”) issued a performance bond (“Bond”) guaranteeing Paint City’s performance under the contract in May, 1997. As a condition of the Bond, all defendants entered into an indemnity agreement with Hanover, promising to hold Hanover harmless against costs in *556 curred in the event that Paint City did not complete the contract. On July 30, 2002, the Navy terminated Paint City’s right to proceed with the contract to repair and paint the tanks, allegedly for deficient performance. Hanover alleges that the Navy then made a demand on the Bond, and that Hanover retained an expert to investigate the Navy’s claim, sought bids to correct the deficiencies, and tendered an alternate contractor to paint and repair the tanks. The difference between the cost of hiring the alternate contractor and the unpaid balance of the contract price was allegedly $1,654,900.

On October 10, 2003, Hanover filed a two-count complaint in the above-captioned matter, seeking $1,654,900 in damages for breach of the indemnity agreement and a declaration that defendants are under a continuing duty and obligation to compensate Hanover for any additional costs it incurs under the Bond. Jurisdiction is based on diversity of citizenship, pursuant to 28 U.S.C. § 1332. Hanover is a New Hampshire company with its principal place of business in Massachusetts. Defendants Paint City and GSPM Corporation are Maryland corporations with their principal places of business in Maryland. Panagiotis Forakis is a resident of Maryland. Hanover alleges that in the indemnity agreement, Georgios and Stavroula Forakis, Panagiotis’s parents, listed their address as 427 Folcroft Street, in Baltimore, Maryland. 1

On November 17, 2003, defendants Paint City, GSPM Corporation, and Panagiotis Forakis filed an answer to the complaint, a motion to transfer venue, and a memorandum in support of its motion. In their answer, defendants admit that Paint City entered into the contract with the Navy, that Hanover issued the Bond in connection with Paint City’s obligations under the contract, that defendants entered into an indemnity agreement with Hanover in connection with the Bond, and that the Navy terminated Paint City’s right to proceed with the contract on July 30, 2002. Defendants dispute the alleged damages incurred by Hanover as a result of the Bond and argue that Hanover did not exercise good faith and diligence in investigating and reviewing Paint City’s termination. On November 26, 2003, Hanover filed a brief in opposition to defendants’ motion to transfer. The time for defendants to file a reply has lapsed. The motion is ripe for review.

Title 28 U.S.C. § 1404(a) states that “for the convenience of the 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.” (emphasis added). The burden is on the movant to show that a transfer is proper. Cognitronics Imaging Sys. v. Recognition Research Inc., 83 F.Supp.2d 689, 696 (E.D.Va.2000). Plaintiffs choice of venue is entitled to substantial weight, unless plaintiff chooses a foreign forum and the cause of action bears little or no relation to that forum. Id. In deciding whether to transfer, the court considers a number of factors, including: (1) ease of access to sources of proof; (2) the convenience of the parties and witnesses and the costs associated with the attendance of witnesses; (3) the interest in having local controversies decided at home; and (4) the interests of justice. Id.

*557 All defendants are residents of Maryland. 2 Accordingly, this lawsuit could have been brought originally in the District of Maryland pursuant to 28 U.S.C. § 1391(a)(1) and is eligible for transfer to that district under 28 U.S.C. § 1404(a). Nevertheless, under the factors set forth above, this court declines to transfer this lawsuit to the United States District Court for the District of Maryland. First, though Hanover is not incorporated in Virginia and does not have its principal place of business here, the cause of action arose in large part from the alleged failure of Paint City to perform under its contract with the Navy to paint eight oil tanks located in Portsmouth, Virginia; which is in the Eastern District of Virginia and within a few miles of the courthouse in Norfolk, Virginia. This cause of , action has a significant relationship to the forum district. Thus, plaintiffs choice of forum is entitled to substantial weight.

Further, ease of access to sources of proof weighs in favor of this court entertaining the suit. Though it appears that the Bond was negotiated, drafted, and executed in Maryland and Massachusetts, the existence and enforceability of the Bond do not appear to be at issue. Rather, the disputed factual issues in this case center around whether Hanover failed to conduct a good-faith investigation into Paint City’s termination, and what damages, if any, Hanover incurred as a result of Paint City’s alleged failure to perform under the contract with the Navy. The relevant evidence is likely to include documents and witness testimony concerning the alleged failure of Paint City to perform under the contract, the amount of money invested in finding and hiring the alternate contractor, and any other costs associated with satisfying the Bond. Relevant documents are no doubt located in a variety of geographic locations, including Virginia, Maryland, Massachusetts, and New Hampshire. There is no reason to suspect that virtually all of these documents are located in one location, and particularly no reason to suspect that they are mostly located in Maryland. The relevant documents are more likely in the possession of Hanover, the Navy, the alternate contractor, and any independent party hired to investigate Paint City’s performance. Moreover, as compared to witnesses, documents are relatively inexpensive to transport from one forum' to another. On the other hand, non-party witnesses such as the Naval officers responsible for overseeing the repair and painting of the tanks, the investigators Hanover allegedly hired, and the alternate contractor allegedly tendered by Hanover, are likely to be concentrated in and around the Portsmouth, Virginia, area. Thus, ease of access to sources of proof weighs against a transfer from the Eastern District of Virginia.

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Bluebook (online)
299 F. Supp. 2d 554, 2004 U.S. Dist. LEXIS 252, 2004 WL 51316, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hanover-insurance-v-paint-city-contractors-inc-vaed-2004.