SULZER PUMPS US INC v. PACIFIC INDEMNITY COMPANY (2010)

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Lane Powell, Stephen McCarthy and Jo-Ann Horn Maynard for Real Parties in Interest Certain Underwriters at Lloyd's London and Certain London Market Insurance Companies.

Defendant and petitioner Sulzer Pumps (US) Inc. (Sulzer) seeks a writ of mandate directing respondent superior court (1) to vacate its order denying Sulzer's motion to dismiss or stay the instant litigation on the ground of forum non conveniens and to enter a new order dismissing this action in favor of an action pending in Oregon;  and (2) to vacate its order granting a motion by real parties in interest Certain Underwriters at Lloyd's, London and Certain London Market Insurance Companies (collectively, London) to lift a stay of these proceedings and to enter a new order denying London's motion.

Based on our review of the record, we perceive no abuse of discretion in the trial court's refusal to dismiss or stay the action and in its lifting of a previously entered stay.   Therefore, the petition for writ of mandate is denied.

FACTUAL AND PROCEDURAL BACKGROUND

1. The policies.

Atkinson's principal place of business was in Lafayette, California, and Pacific Indemnity's home office was in Los Angeles.

2. Sulzer's acquisition of assets from Atkinson.

Pursuant to a purchase and sale agreement in 1986 and another transaction in 1988, Sulzer acquired the property known as the Portland Plant, previously owned by a division of Atkinson.   The Portland Plant consists of 24 acres in Portland, Oregon, bordering the Willamette River.

3. The prior declaratory relief action in the Los Angeles Superior Court, resulting in a 2005 declaratory judgment that Sulzer was not entitled to benefits under the Policies due to the lack of consent by Pacific Indemnity to any assignment of the Policies.

Sulzer was faced with thousands of personal injury claims, principally in Mississippi, arising out of exposure to asbestos from products made by Atkinson.   Sulzer claimed it was entitled to the benefits of the Policies issued by Pacific Indemnity to Atkinson.

In 2003, Pacific Indemnity filed an action in the Los Angeles Superior Court against Sulzer and various insurer defendants for declaratory relief and contribution.   Pacific Indemnity alleged it was not obligated under the Policies to defend or indemnity Sulzer in the asbestos litigation because Sulzer was not a named insured or an additional insured under the Policies;  however, in the event the court determined Pacific Indemnity owed Sulzer a duty to defend, Pacific Indemnity was entitled to contribution from other insurers.

That action was resolved in 2005 on summary judgment by Judge Paul Gutman.   (Pacific Indemnity Co. v. Sulzer Pumps (US), Inc., LASC Case No. BC294571.)   Relying in large part on Henkel Corp. v. Hartford Accident & Indemnity Co. (2003) 29 Cal.4th 934, Judge Gutman held Sulzer had not received any valid assignment of policy rights from Atkinson due to a lack of consent by the insurer, and therefore Sulzer had no rights under the Policies.

In that action, Sulzer further contended Oregon law should apply because Oregon has a governmental interest in protecting Sulzer, a corporation doing business in Oregon.   Judge Gutman rejected Sulzer's contention that Oregon law should apply, and found no basis upon which Sulzer could assert a choice of law analysis regarding Oregon as opposed to California law.

Sulzer did not appeal that decision, which became a final judgment.

4. Sulzer sues in Oregon, again seeking coverage under Atkinson's Pacific Indemnity Policies;  Pacific Indemnity files this action in California, again seeking declaratory relief.

In December 2008, Sulzer filed suit in Oregon against Pacific Indemnity and other insurers.   In the Oregon action, Sulzer seeks coverage under the Atkinson Policies for certain environmental liabilities Sulzer faces concerning the Portland Harbor Superfund site.   Sulzer subsequently added ATKN as a defendant in the Oregon action.   Like Sulzer, ATKN is being pursued as a potentially responsible party (PRP) at the Portland Superfund site.   Sulzer claims the bulk of sediment contamination adjacent to the Sulzer site was principally, if not entirely, caused by operations and waste disposal practices of Atkinson at the site prior to the 1986/1988 sale of an Atkinson division to Sulzer.

The following month, on January 22, 2009, Pacific Indemnity filed the instant action in the Los Angeles Superior Court for declaratory relief and contribution.   Pacific Indemnity named as defendants Sulzer, ATKN Company,¹ ATKN Company of California as well as various insurers, namely, London, as well as Insurance Company of the State of Pennsylvania, St. Paul Fire & Marine Insurance Company, Continental Insurance Company, Employers Insurance Company of Wausau, United States Fidelity & Guaranty Company, Travelers Casualty & Surety Company, f/k/a Aetna Casualty & Surety Company, Central National Insurance Company of Omaha, and Fireman's Fund Insurance Company (collectively, the Insurers).   Insurers filed cross-complaints for declaratory relief, asserting Sulzer was not entitled to defense or indemnity.²

In the instant action, Pacific Indemnity asserts California is the proper forum for the claims being made by Sulzer and it seeks a declaration the 2005 judgment precludes Sulzer's claim.   Pacific Indemnity also asserts other reasons why it is not obligated to defend or indemnify Sulzer.

5. Oregon rulings.

On April 10, 2009, the Oregon court issued an order granting Sulzer's motion for an anti-suit preliminary injunction.   It ordered Pacific Indemnity to discontinue the instant California action and to file a motion to stay or dismiss the California action by April 16, 2009.   The Oregon court directed Pacific Indemnity to file a motion for summary judgment in the Oregon case, and that if Pacific Indemnity were to prevail on said motion, the court would dissolve the injunction.

On June 25, 2009, the Oregon court denied Pacific Indemnity's motion for summary judgment.   It found the 2005 California judgment had no preclusive effect on the Oregon action.   The Oregon court ruled that giving due respect to full faith and credit, Judge Gutman's decision was not binding because the earlier litigation involved “coverage claims created by contract assumption.   In the later case here, ․ what's involved are insurance coverage claims for CERCLA and perhaps other liabilities created by operation of law.”

The Oregon action is set for trial on June 1, 2010.

6. Pertinent proceedings in the instant superior court action.

Sulzer moved to dismiss the instant litigation on grounds of forum non conveniens;  in the alternative, Sulzer sought to stay the litigation, pending completion of the Oregon case.

ATKN separately moved to stay the instant action.

London moved to lift a previously entered stay of the proceedings.

On January 26, 2010, the three motions came on for hearing.   On February 2, 2010, in a 16-page ruling, the trial court (Hon. Carl J. West) (1) denied Sulzer's motion to dismiss or stay the action on grounds of forum non conveniens, (2) denied ATKN's motion to stay the proceedings, and (3) granted London's motion to lift an existing stay, enabling this case to proceed.

On February 18, 2010, Sulzer filed the instant writ petition.   This court issued an order to show cause.

CONTENTIONS

Sulzer contends the trial court erred (1) in denying its motion to dismiss on the ground of forum non conveniens and (2) in granting London's motion to lift the stay of proceedings.

DISCUSSION

1. Trial court acted within its discretion in denying Sulzer's motion for forum non conveniens.

a. General principles.

“Forum non conveniens is an equitable doctrine invoking the discretionary power of a court to decline to exercise the jurisdiction it has over a transitory cause of action when it believes that the action may be more appropriately and justly tried elsewhere.”  (Stangvik v. Shiley Inc. (1991) 54 Cal.3d 744, 751 (Stangvik ).)   In determining whether to grant a motion based on forum non conveniens, the trial court must first determine whether a suitable alternate forum exists.  (Ibid.) A forum is suitable if another court has jurisdiction, and there is no statute of limitations bar to the action.  (American Cemwood Corp. v. American Home Assurance Co. (2001) 87 Cal.App.4th 431, 437.)

If a suitable forum exists, “the next step is to consider the private interests of the litigants and the interests of the public in retaining the action for trial in California.   The private interest factors are those that make trial and the enforceability of the ensuing judgment expeditious and relatively inexpensive, such as the ease of access to sources of proof, the cost of obtaining attendance of witnesses, and the availability of compulsory process for attendance of unwilling witnesses.   The public interest factors include avoidance of overburdening local courts with congested calendars, protecting the interests of potential jurors so that they are not called upon to decide cases in which the local community has little concern, and weighing the competing interests of California and the alternate jurisdiction in the litigation.  [Citations.]”  (Stangvik, supra, 54 Cal.3d at p. 751.)   The defendant, as the moving party (here, Sulzer), bears the burden of proof.   (Ibid.)

b. Deferential standard of review.

“The granting or denial of a forum non conveniens motion lies within the court's sound discretion.  [Citation.]  A court has exercised its discretion appropriately when ‘the act of the lower tribunal is within the range of options available under governing legal criteria in light of the evidence before the tribunal.’  [Citation.]  In exercising its discretion, however, the court must bear in mind that the moving party bears the burden of proving that California is an inconvenient forum.  [Citation.]  There thus must be evidence - not merely bald assertions - to support the trial court's determination.  [Citation.]”  (Ford Motor Co. v. Insurance Co. of North America (1995) 35 Cal.App.4th 604, 610 (Ford ).)

We bear in mind “the plaintiff's choice of forum is entitled to great weight . ․ ‘[U]nless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.’  [Citations.]”  (Ford, supra, 35 Cal.App.4th at pp. 610-611, italics added.)   Thus, Sulzer “bore the burden of producing sufficient evidence to overcome the strong presumption of appropriateness attending plaintiff's choice of forum.   That is, the inquiry is not whether [Oregon] provides a better forum than does California, but whether California is a seriously inconvenient forum.”  (Id. at p. 611, certain italics added.)

c. The first element of the test;  no dispute that Oregon is a suitable alternative forum.

The trial court found Oregon qualifies as a suitable alternative forum, in that Oregon has jurisdiction over all the parties involved in the litigation and Oregon law provides a remedy for the claim being sued upon, namely, the declaratory relief claim.   The trial court concluded “the ‘suitable’ alternative forum is a low threshold to satisfy under the facts of this case, and this factor weighs in favor of a forum non conveniens finding.”

Real parties do not dispute that Oregon is a suitable alternative forum for addressing this insurance coverage dispute.

We now turn to the private and public factors to determine whether the trial court properly denied Sulzer's motion for forum non conveniens.

d. Balancing of public and private interests.

“ ‘The private interest factors are those that make trial and the enforceability of the ensuing judgment expeditious and relatively inexpensive, such as the ease of access to sources of proof, the cost of obtaining attendance of witnesses, and the availability of compulsory process for attendance of unwilling witnesses.   The public interest factors include avoidance of overburdening local courts with congested calendars, protecting the interests of potential jurors so that they are not called upon to decide cases in which the local community has little concern, and weighing the competing interests of California and the alternate jurisdiction in the litigation.’  [Citation.]  No single factor is predominant.   Instead, all factors should be weighed together.  [Citation.]”  (Chong v. Superior Court (1997) 58 Cal.App.4th 1032, 1037.)

(1) Trial court's ruling.

In applying the balancing test, the trial court ruled as follows:  “Sulzer (US) and ATKN maintain their principal places of business in Oregon, and the underlying events involving the EPA's action occurred at the Portland Superfund Site in Oregon.   While there would be costs if Oregon-based witnesses were required to travel to California and if documentary evidence relating to the underlying litigation had to be transported to California, the coverage issues presented relate primarily to the interpretation of the insurance policies at issue and not the details of the contamination-related litigation pending in Oregon.   In all likelihood, the pendency of the underlying environmental claims will be an undisputed fact that will not require the testimony of Oregon based witnesses.

“On the other hand, given the nature of this case as a coverage action, documentary evidence and witnesses relating to the policies issued to Guy Atkinson in California will be found in California.   In considering the convenience of the alternative forums, this Court finds that the burden would likely be placed on the California litigants due to the costs associated with obtaining attendance of California-based witnesses in the Oregon court and conducting discovery of documents and witnesses located in California.   A determination of the present coverage issue would likely involve witnesses present at:  1) the place of contracting;  2) the place of negotiation of the contract;  3) the place of performance of the contract;  and 4) the location of the subject matter of the contract.  (Robert McMullan & Son, Inc. v. U.S. Fidelity & Guaranty Co. (1980) 103 Cal.App.3d 198, 204-205.)   With the exception of the fourth factor, these factors clearly support litigation of the coverage claims in California.

“Again, while the situs of the underlying environmental contamination is in Oregon, the evidence before the Court indicates that the McMullan factors are present in this California declaratory relief action.   In particular, all of the London policies at issue were subscribed to by the London Market Insurers to a California insured, Guy F. Atkinson;  of the London Policies for which documentation was found, each policy was subscribed to in the name of the assured Guy F. Atkinson Co. of California, or Guy F. Atkinson;  Guy F. Atkinson Co. of California was headquartered in California;  Guy F. Atkinson Co. of California's domestic broker for each of the London Policies was Cravens Dargan & Co., of 350 California St., San Francisco, CA;  each policy was negotiated through Atkinson's domestic broker, Cravens Dargan & Co.;   each policy was delivered to the assured by Guy F. Atkinson in California by its domestic broker, Cravens Dargan & Co.;   and Guy F. Atkinson agreed to accept service of any lawsuit brought against it under most of the London Policies at the offices of Cravens Dargan & Co. in San Francisco, California.  [¶] Similarly, the [Insurance Company of the State of Pennsylvania] policies at issue were negotiated, executed and delivered in California by a San Francisco-based, California broker (either Christensen & Gutman, Inc. or Cravens, Dargan & Co.) to Atkinson.

“Accordingly, the Court finds the private interest factors weigh in favor of California's interest in this litigation over Oregon's interest.”  (Certain italics added, fns. omitted.)

With respect to the public interest factors, the trial court found “the public interest factors weigh against a forum non conveniens finding.   With respect to the first public interest factor, dismissing the action on forum non conveniens grounds in favor of the Oregon litigation would not have a major impact in avoiding the potential overburdening of the Court's calendar.   It would also not have a significant difference in protecting the interests of local Los Angeles jurors, given the nature of this litigation as a declaratory relief action as to the rights and duties of the parties under the applicable insurance policies.   Again, while the underlying EPA site clean-up is located within Oregon, the insurance coverage dispute centers on interpreting policies issued and negotiated in California.

“Finally, when weighing the competing interests of California and Oregon in the litigation, the Court finds the balance weighs in favor of California.   California's interest in interpreting insurance policies negotiated and subscribed to in this state cannot be understated.   California has a high interest in regulating such insurance transactions conducted within the state.   This interest is paramount, and in the Court's view, outweighs all other competing public interest factors.   Similarly, California has a significant interest in enforcing and interpreting judgments of the courts of this state.   Judge Gutman's ruling in the prior litigation is entitled great weight in the absence of statutorily mandated coverage determinations.   The public interest of the State of Oregon in cleaning the polluted waters of Portland Harbor is not a factor that should influence the coverage determinations at issue in this case.

“Accordingly, the Court finds that the public interest factors weigh in favor of a finding that California has a greater interest in entertaining this litigation than does Oregon.”  (Certain italics added.)

(2) No abuse of discretion appears on this record.

The trial court's application of the above balancing test, viewed in light of the applicable standard of review, was well within the bounds of the trial court's discretion.   We note in particular that California has a substantial interest in determining the impact of Judge Gutman's 2005 decision that Sulzer is not Pacific Indemnity's insured on the issues presented in the instant action.   We note further that notwithstanding Sulzer's potential liability for environmental remediation in Oregon, this instant action is a coverage dispute arising out of policies issued in California by a California insurer to a California insured.   No persuasive reason appears to disturb the trial court's denial of Sulzer's motion for forum non conveniens.

2. Trial court acted within its discretion in granting London's motion to lift the stay in the instant declaratory relief action.

The remaining issue is whether the trial court properly granted London's motion to lift the stay so as to enable this action to proceed.

a. General principles.

“Granting a stay in a case where the issues in two actions are substantially identical [citations] is a matter addressed to the sound discretion of the trial court.  ‘In exercising its discretion the court should consider the importance of discouraging multiple litigation designed solely to harass an adverse party, and of avoiding unseemly conflicts with the courts of other jurisdictions.   It should also consider whether the rights of the parties can best be determined by the court of the other jurisdiction because of the nature of the subject matter, the availability of witnesses, or the stage to which the proceedings in the other court have already advanced.’  “ (Thomson v. Continental Ins. Co. (1967) 66 Cal.2d 738, 746-747, fn. omitted;  accord Caiafa Prof. Law Corp. v. State Farm Fire & Cas. Co. (1993) 15 Cal.App.4th 800, 804.)

b. Trial court's ruling.

With respect to the first factor, the trial court determined Pacific Indemnity's complaint and London's cross-complaint were “not ‘designed solely to harass' Sulzer.   This factor weighs against keeping the stay in place.”

As for the next factor, avoiding unseemly conflicts with the courts of other jurisdictions, the trial court ruled as follows:  “It is apparent that the Oregon Action, seeking, inter alia, declaratory relief of Sulzer's entitlement to proceeds under the policies at issue, also is a central focus of the instant litigation.   Broadly speaking, the claims arise out of the same events -issuance of insurance policies to Guy F. Atkinson Company Co. As such, the Court recognizes that to allow both cases to proceed on a parallel track may present a danger of inconsistent rulings as to the parties litigating both actions.

“Nevertheless, as [the Oregon court] previously recognized in the Oregon action, ‘this Court is, duty-bound to give full faith and credit to the rulings of courts of other jurisdictions.’   Moreover, if the Court ultimately determines that the policies at issue are to be interpreted under California law (a determination the Court reserves for a subsequent stage of the proceedings), and if this determination presents conflicts with the Oregon case, it is the Court's view that any potential conflict would be outweighed by the substantial interest of the State of California in allowing the insurance coverage litigation involving policies issued to California residents by California brokers to proceed in California.  [¶] Finally, to the extent there may be conflicts in the discovery produced in the Oregon action and the California action, the parties would be able to coordinate discovery to avoid duplicative production.   California courts have routinely coordinated discovery with cases pending in other jurisdictions, and this case would prove to be no exception.  [¶] For these reasons, this factor weighs in favor of granting the motion to lift the stay.”

As for the third factor, whether the rights of the parties can best be determined by the court of the other jurisdiction because of the nature of the subject matter, the availability of witnesses, or the stage to which the proceedings in the other court have already advanced, the trial court found “the rights of the parties in this declaratory relief action can best be determined by a California court.   Despite the fact that Sulzer (US) and ATKN maintain their principal places of business in Oregon, and that the environmental events leading up to the coverage litigation occurred in Oregon at the Portland Superfund site, the insurance policies at issue were subscribed to by a California insured, Guy F. Atkinson Co. (which was headquartered in California);  and Atkinson's domestic broker (which negotiated and delivered the policies to Atkinson) was located in San Francisco.   Further, the nature of the subject matter at the heart of this litigation - interpretation of insurance policies negotiated and subscribed to in California - is an issue which the complex civil litigation courts in California regularly address.”   (Italics added.)   Further, “[t]here does not appear to be a significant issue with respect to the availability of the witnesses.   Despite the fact Sulzer is headquartered in Oregon, it is apparent that much of the documentary evidence in this case, and many of the witnesses, are located in California.   This factor ․ weighs in favor of lifting the stay.

“Finally, while document production is underway in the Oregon case, and while [the Oregon court] has already issued his Phase I ruling (and has ruled on a number of other motions), the Court does not believe the Oregon case is substantially more advanced at this time, given the relatively limited nature of the declaratory relief issues to be decided.   This too weighs in favor of lifting the stay, and granting [London's] motion to lift the stay.”

For the foregoing reasons, the trial court determined the pertinent factors weighed in favor of lifting the stay and granted London's motion.

c. Trial court acted within the bounds of its discretion in lifting the stay.

Given the good and sufficient reasons set forth above, the trial court's decision lifting the stay, viewed in light of the applicable standard of review, was well within the bounds of the trial court's discretion.

3. The impact of the recent settlement among Sulzer, ATKN and Pacific Indemnity.

Following oral argument, this court requested supplemental briefing with respect to Sulzer's status as Pacific Indemnity's insured.   As discussed above, the forum non conveniens analysis calls for a balancing of the interests of the two forums.   Oregon's interest in this matter was predicated on Sulzer's status as an insured of Pacific Indemnity;  therefore, if Sulzer were not Pacific Indemnity's insured, Oregon's interest would be undermined.

However, this court has now been advised that Pacific Indemnity, Sulzer and ATKN have entered into a settlement.   Therefore, the issue of Sulzer's status as Pacific Indemnity's insured is now moot and obviates the need for further briefing in this matter.

For the reasons stated above, the trial court acted within its discretion in denying Sulzer's motion for forum non conveniens, and in granting London's motion to lift the stay;  therefore, the petition for writ of mandate shall be denied.   However, when the matter returns to the trial court, the trial court is free to consider the impact, if any, of the Sulzer/ATKN/Pacific Indemnity settlement on the instant litigation.   In determining how to proceed, the trial court will also have to consider the impact of the anti-suit injunction issued by the Oregon court on the further prosecution of this action in California.

DISPOSITION

The order to show cause is discharged.   The petition for writ of mandate is denied.   Real parties in interest shall recover their costs in this proceeding.  (Cal. Rules of Court, rule 8.493(a)(1)(A).)

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

FOOTNOTES

FN1. ATKN is concerned about Sulzer's attempt to obtain coverage under the Pacific Indemnity Policies, to the detriment of ATKN's right to coverage under the same policies..  FN1. ATKN is concerned about Sulzer's attempt to obtain coverage under the Pacific Indemnity Policies, to the detriment of ATKN's right to coverage under the same policies.

FN2. In the instant writ proceeding brought by Sulzer, the real parties in interest are Pacific Indemnity and defendant Insurers..  FN2. In the instant writ proceeding brought by Sulzer, the real parties in interest are Pacific Indemnity and defendant Insurers.

CROSKEY, J. ALDRICH, J.