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Civil Procedure – Venue Transfer – Builder Insurance – Chinese Drywall

Deborah Elkins//July 26, 2010

Civil Procedure – Venue Transfer – Builder Insurance – Chinese Drywall

Deborah Elkins//July 26, 2010

A Richmond U.S. District Court declines to transfer venue to the Eastern District of Louisiana of an insurance company’s declaratory judgment action denying coverage to a developer on a resident’s claim for damages arising from the use of Chinese drywall in his residential unit.

The developer’s situation is not uncommon. Numerous property owners are currently filing lawsuits or joining class actions against developers, alleging property damage and personal injury as a result of developers installing defective Chinese drywall in various structures. The Multidistrict Litigation Panel opted to consolidate actions alleging injury from installation of such drywall in the Eastern District of Louisiana,. On Feb. 10, 2010, plaintiff resident in the underlying action, Ricky Edmonds, joined other plaintiffs in bringing a products liability suit in the Eastern District of Louisiana. On March 8, 2010, Edmonds as a defendant in this suit filed a motion to transfer venue in the instant action, requesting this court to transfer the action to the Eastern District of Louisiana.

Previously this court stayed this action, pending a decision by the MDL Panel, but the court now finds it appropriate to rule on the instant motion at this time.

The insurance company, Builders Mutual, argues it could not have sought its declaratory judgment action in the Eastern District of Louisiana because that court would have lacked personal jurisdiction over defendants in the action.

Based on an analysis of the pertinent three-part test from the 4th Circuit, Edmonds has failed to satisfy his burden of showing that the Eastern District of Louisiana could have exercised personal jurisdiction over defendants in this action at the time it was filed. It appears the Eastern District of Louisiana would have, in effect, needed to ignore due process requirements in order to exercise personal jurisdiction over defendants in the absence of waiver by defendants.

Edmonds does not articulate any facts that demonstrate a connection between the Eastern District of Louisiana and the acts or omissions forming the basis of this lawsuit. The insurance policies at issue were purchased by Virginia residents. The installation of the allegedly defective drywall – the underlying basis of the action – took place at a residence in Virginia. Edmonds originally filed his lawsuit against the developer in a Virginia circuit court.

Failure to demonstrate that Builders Mutual could have established personal jurisdiction and proper venue in the Eastern District of Louisiana at the time it filed the instant action is grounds to deny Edmonds’ motion.

Even if Edmonds is deemed to have carried that burden, granting his motion to transfer is nevertheless inappropriate. Builders Mutual’s choice of venue is afforded great weight and Edmonds fails to show that granting his motion improves witness convenience and access.

Motion to transfer venue denied.

Builders Mutual Ins. Co. v. Parallel Design & Development LLC (Dohnal, J.) No. 4:10cv00068, June 17, 2010; USDC at Richmond, Va. VLW 010-3-332, 18 pp.

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