Court Opinion

ID: 8880662
Source: CourtListenerOpinion
Date Created: 2022-11-26 20:26:58.056346+00
Date Added: 2024-06-11T17:06:37.951535
License: Public Domain

On rehearing in banc
Before LUMBARD, Chief Judge, and WATERMAN, MOORE, FRIENDLY, SMITH, KAUFMAN, HAYS, ANDERSON and FEINBERG, Circuit Judges.
FRIENDLY, Circuit Judge, with whom WATERMAN, SMITH, KAUFMAN, HAYS and FEINBERG, Circuit Judges, concur:
After reconsideration in banc on the original and supplemental briefs, the court adheres to the affirmance of these orders.
The burden of the petitions for rehearing is that the previous majority opinion was overly preoccupied with a conception of Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312 (1966), as elaborated in Simpson v. Loehmann, 21 N.Y.2d 305, 287 N.Y.S.2d 633, 234 N.E.2d 669 (1967), motion for reargument denied, 21 N.Y.2d 990, 290 N.Y.S.2d 914, 238 N.E.2d 319 (1968), as “in effect a judicially created direct action statute,”1 at 109. Appellants complain *118we did not adequately focus on the burden to a nonresident of having to defend a personal-injury action in another state, conceivably far from his domicile and the place of the accident, simply because his liability insurer has chosen to do business there.
We find this argument unpersuasive so long as Harris v. Balk, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023 (1905), stands. Balk, a North Carolinian, had no more control over the peregrinations of his fellow-citizen, Harris, which caused the latter to be garnisheed in Maryland by Balk’s alleged creditor, Epstein, than these appellants have over their insurers’ decisions where to do business.2 In contrast, appellants’ problem is significantly less serious than was Balk’s in several respects. Balk had to decide whether to hire a Maryland lawyer to protect his interest in the $180 debt Harris owed him; the appellants are entitled to have lawyers in New York furnished by their insurers without expense. The Maryland judgment deprived Balk of money he could have used for whatever purpose he willed; a Seider judgment would mean simply that liability policies, on which appellants could not have realized for any purpose other than to protect themselves against losses to others, will be applied to the very objective for which they were procured. Whatever Balk’s situation may have been, appellants are assured that they may defend the New York actions without exposing themselves to personal liability and that any recovery by the plaintiffs “is necessarily limited to the value of the asset attached, that is, the liability insurance policy.” Simpson v. Loehmann, 21 N.Y.2d 990, 290 N.Y.S.2d 914, 238 N.E.2d 319 (1968), discussed at 111.
Appellants claim they are worse off than Balk in one respect, namely, that the cooperation condition of the policies forces them to come to New York and participate in the defense of the personal-injury actions, and that this is a serious inconvenience even though they are reimbursed for their expenses and, as we have concluded, will suffer no untoward consequences in the form of liability. We have previously noted that so far as judicially compelled attendance in New York is concerned, appellants are amply protected against undue inconvenience by F.R.Civ.P. 45(d) and (e). We are not required to determine whether refusal by the insured to attend a trial in a foreign state, when such attendance is not required by the applicable procedural law and he is willing to be deposed elsewhere, would constitute a material breach of the duty of cooperation even if a policy literally required him to appear in person. See Appleman, Insurance Law and Practice §§ 4773, 4784 (1962). For, as we understand Simpson v. Loehmann, supra, 21 N.Y.2d 309 n. 2, 287 N.Y.S.2d 635 n. 2, 234 N.E.2d 670 n. 2, the only consequence of such a breach would be to relieve the insurer of liability under the attachment.
We note a further point which at least mitigates some of the many undesirable practical consequences of Seider.3 By *119their very definition actions of the Seider type will generally be removable to the federal courts,4 or indeed can be brought there. Once in federal court, they become subject to the salutary provision of 28U.S.C. § 1404(a) that “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.” Either the district of the defendant’s residence or that of the accident, or both, will qualify for transfer. Whenever a trial in New York would cause true hardship to the defendant, a remedy thus will almost always be at hand. See Farrell v. Wyatt, 408 F.2d 662 (2 Cir. 1968). While an influx of cases of this type into the federal courts is most unwelcome, we have here an unforeseen demonstration of the utility of diversity jurisdiction, by way of removal at the instance of a nonresident, to lessen the impact of an overly enthusiastic but not unconstitutional assertion of jurisdiction by another state. To be sure, if the Constitution demanded that a personal-injury claim be tried only at the place of the accident or the defendant’s residence, the availability of a discretionary transfer by a court to which nearly all such actions can be removed would be an inadequate answer. But the availability of a procedure assuring that in almost all such cases the trial can take place in what a federal district judge deems an appropriate forum bears strongly on the issue whether the Constitution does demand such a general rule. The very fact that the discretion will not always be exercised in favor of transfer — as here in the Stevens case where the judge found that the preponderant issue was the extent of plaintiff’s injury — sufficiently indicates that the places of accident or of defendant’s residence are not always the only convenient fora. Cf. Lykes Bros. S. S. Co. v. Sugarman, 272 F.2d 679 (2 Cir. 1959).
We add in conclusion that in these cases, where the accidents gave rise to what from a practical standpoint were single claims, we are not required to decide whether Seider might produce constitutionally impermissible results if applied so as to prefer one claimant over another in cases of multiple claims where the damages exceed the policy limits and the insured is without funds to pay the excess. We would hope that realization of the complexities of such problems and the considerations urged in our brother ANDERSON’S dissents might stimulate the reexamination of Seider intimated in Simpson v. Loehmann, supra, 21 N.Y.2d at 312, 287 N.Y.S.2d at 638, 234 N.E.2d at 672 (opinion of Chief Judge Fuld), 21 N.Y.2d at 814, 287 N.Y.S.2d at 640, 234 N.E.2d at 674 (concurring opinion of Judge Breitel, before the decision is taken up, perhaps only defensively, by other states.
Affirmed.

. The only new point made with respect to the situation of the insurer is that in Watson v. Employers Liability Assurance Corp., 348 U.S. 66, 75 S.Ct. 166, 99 L.Ed. 74 (1954), the insurer had consented in writing to the application of the direct action statute, and the statute had become effective before the insurance contract was made. 348 U.S. at 68-70, 75 S.Ct. 166. However, the Supreme Court made it clear, in upholding a provision of the Louisiana statute that authorized direct action regardless of consent, that “Louisiana has a constitutional right to subject foreign liability insurance companies to the direct action provisions of its laws whether they consent or not.” Id. at 74, 75 S.Ct. at 171. On the basis of this determination, it held there could be no constitutional objection to the supplemental provision requiring consent as a condition to doing business in the state. If we were right in believing that a New York direct action statute in favor of residents *118would be constitutional even as regards out-of-state accidents, the new point would thus be limited on any view to whether achieving the same result by judicial action creates a problem on the score of retroactivity with respect to policies issued before the Seider decision, at least where the insurer had no sufficient opportunity before the accident to withdraw from doing business in New York. Seider plaintiffs would answer, among other things, that the insurers were on notice all along that CPLR § 6202 was applicable. It would be premature to consider such questions in interlocutory appeals where only the insureds have appealed and the facts relevant to the situation of the insurers have not been fully developed.

. While Harris could be in only one place at a time, this would not be true in cases where the debtor was a corporation. Indeed, even in the case of natural persons, the debt might be subject to garnishment at the same time both in the state of their residence and in that of their presence.

. These have recently been catalogued again at some length. See Stein, Juris*119diction by Attachment of Liability Insurance, 43 N.Y.U.L.Rev. 1075 (1968).

. Exceptions would be where the amount claimed did not exceed $10,000; cases, doubtless quite rare, where a New Yorker was joined as a defendant; and perhaps cases where a citizen of the state of defendant’s residence was appointed as a representative of a decedent or minor on whose behalf the action, was brought. See Mecom v. Fitzsimmons Drilling Co., 284 U.S. 183, 52 S.Ct. 84, 76 L.Ed. 233 (1931) ; but cf. McSparran v. Weist, 402 F.2d 867 (3 Cir. 1968), taking a different view with respect to appointment of a resident of another state to create federal jurisdiction.