United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
CAROL E. JACKSON, District Judge.
This matter is before the court on defendant's motion to transfer under 28 U.S.C. § 1404(a) or, in the alternative, to dismiss under Fed.R.Civ.P. 12(b)(6). Plaintiff has filed a response in opposition to the motion and the issues are fully briefed.
Plaintiff Union Electric Company (Union Electric) owns and operates the Taum Sauk hydroelectric power plant in Missouri. On December 14, 2005, the upper reservoir experienced a sudden catastrophic breach, causing extensive damage to the surrounding area. Plaintiff sought coverage from defendant Energy Insurance Mutual Limited (EIM), pursuant to a second-layer excess liability policy with a coverage limit of $100 million. Defendant paid $68 million. In this action, plaintiff asserts claims for breach of contract and vexatious refusal to pay, seeking damages as well as declaratory and injunctive relief.
Defendant moved to dismiss plaintiff's complaint on two bases: First, the contract requires the parties to engage in a "mini-trial" as a condition precedent to bringing suit. Second, defendant argued that venue in this district was improper because the parties' contract contains the following forum selection clause:
To the extent that any claim or controversy between the Insured and the Company hereunder is not subject to arbitration for any reason whatsoever, the United States District Court for the Southern District of New York shall have exclusive jurisdiction hereof.
Relevant to the present motion, the court held that the forum-selection clause was valid and enforceable. On appeal, the Eighth Circuit held that: (1) the court was correct in applying the standard articulated in M/S Bremen v. Zapata Off-Shore Co. , 407 U.S. 1 (1972), to the question of whether to enforce a forum selection clause through dismissal; but (2) the court incorrectly applied the Bremen standard by failing to give "due consideration" to Missouri public policy. Union Elec. Co. v. Energy Ins. Mut. Ltd. , 689 F.3d 968, 973-74 (8th Cir. 2012). Specifically, the appellate court held that it was error not to address whether "enforcement of the forum selection clause in favor of New York courts would result in enforcement of the mandatory arbitration provision, thereby contravening Missouri's public policy against the enforcement of such provisions." Id. at 974 (citing Sturgeon v. Allied Professionals Ins. Co. , 344 S.W.3d 205, 210 (Mo.Ct.App. 2011)).
On remand, the court conducted the public-policy analysis under Bremen. "A contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or judicial decisions." Bremen , 407 U.S. at 15. Missouri deems arbitration agreements in insurance contracts to be unenforceable, § 435.350, Mo.Rev.Stat., and the Missouri Court of Appeals has held that it is against the state's public policy to enforce a contractual choice-of-law provision that would allow for the enforcement of an arbitration clause in an insurance policy. Sturgeon v. Allied Professionals Ins. Co. , 344 S.W.3d 205, 210 (Mo.Ct.App. 2011). The court determined that enforcement of the forum selection provision in this case would result in the application of New York law and enforcement of the contract's arbitration provision, in violation of Missouri law. The court accordingly held that Missouri's public policy against the enforcement of mandatory arbitration provisions in insurance contracts invalidated the forum-selection clause in this contract.
Defendant now moves to transfer under 28 U.S.C. § 1404(a) or, in the alternative, to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), citing the Supreme Court decision in Atlantic Marine Const. Co., Inc. v. U.S. Dist. Ct. for the W. Dist. of Texas, ___ U.S. ___ , 134 S.Ct. 568 (2013). Plaintiff argues that defendant's motion is untimely and therefore should be denied. The court disagrees. Due to the parties' extensive litigation regarding the proper forum, the case remains at an early stage-there has been no discovery nor entry of a scheduling order and defendant has not yet filed an answer.
A. Atlantic Marine
At issue in Atlantic Marine was a clause in a construction contract designating the state and federal courts of Norfolk, Virginia, as the venue for litigation. Id. at 575. Despite the forum-selection clause, the subcontractor J-Crew Management, Inc., filed suit in the Western District of Texas, where the construction site was located. Atlantic Marine moved to dismiss the suit pursuant to 28 U.S.C. § 1406(a) and Fed.R.Civ.P. 12(b)(3). The district court denied the motion to dismiss, determining that § 1404(a) is the exclusive mechanism for enforcing a forum-selection clause that designated another federal forum. Id. at 576. The court then determined that Atlantic Marine bore the burden of proving that transfer was appropriate under § 1404(a) under a "nonexhaustive list of public and private interest factors, " and that the forum-selection clause was "only one such factor." Id . (quoting United States ex rel . J-Crew Management, Inc. v. Atlantic Marine Constr. Co., 2012 WL 8499879, at *5 (W.D. Tex., Apr. 6, 2012)). The district court found that Atlantic Marine had failed to carry its burden under § 1404(a). The Fifth Circuit Court of Appeals denied Atlantic Marine's petition for a writ of mandamus, finding, in relevant part, that the district court had not clearly erred in refusing to transfer the case after completing the balancing-of-interests analysis under § 1404(a). Id.
The Supreme Court reversed. The court first clarified that the proper means to enforce a forum-selection clause is through a motion to transfer under 28 U.S.C. § 1404(a), rather than a motion to dismiss under § 1406(a) and Fed.R.Civ.P. 12(b)(3). Atlantic Marine , 134 S.Ct. at 579-80. Moreover, "a proper application of § 1404(a) requires that a forum-selection clause be ...