No. 02 C 3566 Page 4

the witnesses; and the convenience to the parties of litigation. Brandon Apparel, 42 F.Supp.
2d at 833. While a plaintiff's choice of forum should be given substantial deference,
particularly if it is its home forum, it will not defeat an otherwise well-founded motion to
transfer. Jd. The movant has the burden of establishing that the transferee forum is clearly
more convenient. Coffey, 796 F.2d at 219-20.

Neither forum is clearly more convenient than the other. Plaintiffs argue that, because
Household is an Illinois-based corporation and many records relating to the sales of policies
in Illinois are located here, this court is more convenient. While this is true, it only goes so far.
Neither Beneficial nor Westchester has any connection to this state, and the parties fail to
name a witness or piece of evidence for which either forum would be more convenient. The
material events leading to this litigation (the negotiation and execution of the insurance
contracts) took place throughout the country. While Household has elected to sue in its home
forum, this is not the home forum of Beneficial, who earlier elected to file suit in Delaware to
determine the extent of coverage.

Interests of Justice
In analyzing the interests of justice we look to the efficient functioning of the court

system rather than the private interests of the parties. Coleman Co., Inc. v. Black & Decker

Corp., 1996 WL 41484, *6 (N.D.IH. 1996). The possibility of consolidation with other litigation

is one factor that the court should consider. Jd. Transfer may be appropriate where litigation

has been ongoing in the transferee venue and common questions of law and fact exist. Id.
The interests of justice favor transferring this case to Delaware. While the claims

brought in this court differ from those in the original Beneficial litigation, there will


No. 02 C 3566 Page3

convenience of the parties and the interests of justice favor disposition of this case in Delaware.
Courts should not encourage the simultaneous litigation of two essentially identical

claims in separate federal courts. Asset Allocation & Management Co. v. Western Employers

Ins. Co., $92 F.2d 566, 573 (7" Cir. 1989). There is a rebuttable presumption that the first-filed
action should go forward and the second-filed action should be abated. Jd. There is little
debate that the Delaware action is virtually identical to this one. Defendant’s claim essentially
asks the Delaware court to declare that it is not liable for the claims that plaintiffs bring in this
court.’ At the heart of this dispute is a construction of the contract language. The question for
this court becomes, where should the litigation proceed?

“For 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.” 28 U.S.C. § 1404(a). Transfer is proper if (1) venue is proper in both courts; (2)
transfer is for the convenience of the parties and witnesses; and (3) transfer is in the interest

of justice. Brandon Apparel Group, Inc. v. Quitman Mfg. Co., Inc., 42 F.Supp. 2d 821, 833

(N.D.IIL 1999). The final determination and the weight of each factor is within the sound

discretion of the trial judge. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7" Cir. 1986).

The parties do not contest that venue would be proper in either court.
Convenience of the Parties
In evaluating the convenience of each venue, the court should consider the plaintiff's

choice; the situs of material events; the relative ease of access to evidence; the convenience of

‘Defendants has also asked the Delaware court to declare that plaintiffs are not covered by the
policies for subsequent claims. Plaintiffs do not dispute this and, in fact, this declaration may help plaintiffs
in advancing their fraud claims.


No. 02 C 3566 Page 5

undoubtedly be many common issues raised in this litigation. At issue in this case will be an
interpretation of the insurance contracts, an issue which the Delaware court has already
addressed. The Delaware court is in a better position to interpret its prior opinion and deal
with parties who have already appeared before that court.

Plaintiffs argue that Illinois is the proper forum because there is a strong state interest
in question, the claims are dependent on Illinois law, and the litigation is likely to proceed
faster in INinois. Again, while Illinois does have an interest in protecting its consumers from
fraud, the contract negotiations took place in various locations and Illinois is merely one of
many states that has an interest in this litigation. We have no doubt that the Delaware court
can adequately apply Illinois state law where appropriate. Finally, the Delaware court, which
has already dealt with many of the issues and the parties in this case, should be able to resolve
the outstanding issues as efficiently as this court. It appears that Judge Farnon is prepared
to proceed immediately, pending the resolution of these motions.

Plaintiffs finally argue that public policy disfavors the filing of a duplicate action
(particularly declaratory judgment actions) in order to transfer to a more favorable venue.

See Martin v. Graybar Elec. Co., 266 F.2d 202, 204 (7" Cir. 1959). While such action by

defendants is generally disfavored, this case is distinguishable in that Beneficial, one of the
plaintiffs, initially chose to litigate these policies in the Delaware court. Following an
unfavorable result there, plaintiffs chose to file a second action, surrounding the execution of
the contracts, in a second venue.

The similarity of this case to the previous Beneficial litigation cannot be denied, even

if the actual allegations of the plaintiffs are different. We find that because of this similarity,


+ Minute Otder Form (06/97)

United States District Court, Northern District of Illinois

(0)

fine of Assigned Jud 4 Sitting Judge if O
Va or Magistrate Judge James B. Moran than Anigned Sudge
i“ CASE NUMBER 02 C 3566 DATE 10/10/2002
CASE Household Internat’], Inc. et al. Vs. Westchester Fire Insurance Co.
TITLE

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.}

ce)

MOTION:
Memorandum Opinion and Order
DOCKET ENTRY:
(1) o Filed motion of [ use listing in “Motion” box above.]
(2) im} Brief in support of motion due
(3) Oo Answer brief to motion due___. Reply to answer briefdue___.
(4) o Ruling/Hearingon set for_—_att
(5) o Status hearing[held/continued to] [set for/re-set for]on____—sset for saat_—
(6) Qo Pretrial conference[held/continued to] [set for/re-set for]on__—_ssetfor_——aat_
(7) a Trial[set for/re-set for]on___—_at
(8) Oo [Bench/Jury trial] [Hearing] held/continuedto at .
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
QFRCP4(m) ClLocal Rule 41.1 OFRCP41(a)(1) OO FRCP41(a\(2).
(10) Mi [Other docket entry] Enter Memorandum Opinion and Order. Defendant’s motion to transfer venue

to the District of Delaware is granted and plaintiffs’ motion to enjoin prosecution is denied.

| [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required.

anther nol
Notices maited by judge's staff.
Notified counsel by telephone. date docket
Docketing to mail notices.

NV Yoteres.
Mail AO 450 form. Leics : te Sere cuty Wicals

of

Copy to judge/magistrate judge.

date maited notice

courtroom.
WAH deputy’s
initials

Date/time received in 7
central Clerk’s Office ailing deputy initials



No. 02 C 3566 Page 6

the interests of justice outweigh the plaintiffs’ choice of forum and any issues of convenience,
and these interests dictate that the Delaware court ultimately resolve this dispute.
CONCLUSION
For the foregoing reasons, defendant’s motion to transfer venue to the District of

Delaware is granted and plaintiffs’ motion to enjoin prosecution is denied.

JAMES B. MORAN
Stnior Judge, U. S. District Court
Oh. JO, 2002.



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

HOUSEHOLD INTERNATIONAL, INC., )

et al., )

)

Plaintiffs, )

)

Vs. ) No. 02 C 3566

)

WESTCHESTER FIRE INSURANCE )
COMPANY, ) DOCKETED

)
Defendant. ) oct ii 2002

MEMORANDUM OPINION AND ORDER

Plaintiffs brought this action alleging common law and statutory fraud and unjust
enrichment arising out of the sales of liability insurance by defendant. Defendant filed an
action in federal district court in Delaware seeking a declaratory judgment that plaintiffs have
no cause of action and that they are not covered for additional claims. Plaintiffs now move to
enjoin prosecution of the Delaware action and defendant moves to transfer venue to the
Delaware court. For the following reasons, defendant’s motion to transfer is granted and
plaintiffs’ motion to enjoin prosecution is denied.

BACKGROUND

Plaintiffs Household International, Inc., Household Retail Services, Inc., Household
Bank (SB), N.A. (collectively, Household) and Beneficial National Bank USA (Beneficial) are
consumer lenders who separately purchased umbrella liability insurance from defendant
Westchester Fire Insurance Company (Westchester) between 1986 and 1997. Following a

merger in 1998, Household became Beneficial’s ultimate corporate parent.



No. 02 C 3566 Page 2

Beginning in 1995, numerous individuals filed lawsuits against Household and
Beneficial arising out of various consumer financing arrangements. Household and Beneficial
subsequently filed claims with Westchester under their liability policies, which Westchester
denied, arguing that plaintiffs were not covered for the lawsuits.

Beneficial filed suit against Westchester in federal district court in Delaware in March
1998 to compel Westchester to cover the claims. The district court granted summary judgment
in favor of Westchester on October 13, 2000, holding that Beneficial was not covered by the
policy and that ruling was affirmed by the Third Circuit on October 11, 2001. The dispute
between Household and Westchester also resulted in litigation in Illinois state court, which was
eventually settled by the parties.

Plaintiffs filed this suit together on May 17, 2002, alleging common Jaw fraud, statutory
fraud under both the Illinois Consumer Fraud Act and the New J ersey Consumer Fraud Act,
and unjust enrichment arising out of the sales of the insurance Policies. Following failed
settlement negotiations, defendant filed suit in federal district court in Delaware on July 24,
2002, seeking a declaratory judgment decreeing that Household and Beneficial have no cause
of action arising out from the sales. This case was assigned to Judge Farnon, who heard the
earlier dispute between Beneficial and Westchester, and he agreed to stay the Delaware
proceedings pending resolution of these motions.

DISCUSSION

Plaintiffs seek to enjoin defendant from prosecuting the action in Delaware, arguing

that the first-to-file rule, the convenience of the parties, and the interests of justice favor

maintaining the complaint here while defendant seeks to transfer venue arguing that the