Nautilus Insurance Company v. Outdoorsy, Inc.

Background

The case concerns insurance coverage for a March 2017 single-vehicle accident on the Mauna Kea Access Road on the Island of Hawaii. Audrey Eginard was injured, and Aurelie Vincent died. Eginard had rented a 2001 Nissan Xterra from Shawn Zenor, doing business as Huaka’i Campers, through Outdoorsy’s rental platform. Vincent was driving, and Eginard was a passenger.

In 2018, Eginard and the Estate of Vincent sued Zenor, Huaka’i Campers, and Outdoorsy in Hawaii state court, alleging that the Xterra’s brakes failed. Those cases were consolidated into one underlying Hawaii action. Nautilus had issued an auto liability policy to Outdoorsy and was defending Outdoorsy in that action while reserving the right to seek a declaration about its policy obligations and reimbursement for defense costs involving uncovered claims.

Nautilus’s federal action argued that the Xterra was not covered because it was not being used by a qualifying “named specified operator” or “specified operator” when the accident occurred. Outdoorsy moved under 28 U.S.C. § 1404(a) to transfer the case from the Northern District of California to the District of Hawaii. Progressive Direct Insurance Company had also filed a related declaratory judgment case in the District of Hawaii, which was stayed while the transfer and intervention issues were considered.

Transfer Analysis

Under § 1404(a), a court may transfer a civil case to another district where it could have been brought when transfer would serve the convenience of the parties and witnesses and the interests of justice. The court first determined whether the case could have been filed in the District of Hawaii and then weighed private and public interest factors.

The court rejected Nautilus’s argument that the case was only a California-centered policy-interpretation dispute. It explained that an insurance coverage action looks to the underlying events for which coverage is sought. Determining coverage here would require consideration of the Xterra rental, who was driving, and the Hawaii accident. The court therefore concluded that a substantial part of the events underlying the claim occurred in Hawaii and that the action could have been brought there.

The court gave Nautilus’s choice of the Northern District of California less weight because Nautilus was not a resident of that district and the case had little connection to it. Nautilus was incorporated under Arizona law and had its principal place of business in Arizona. Outdoorsy was incorporated in Delaware and had its principal place of business in Texas. The court found the evidence insufficient to establish that the policy was negotiated or entered into in California; the policy listed addresses connected to several states. That factor was neutral.

The court also found the applicable-law factor neutral. The policy did not contain a choice-of-law provision, and Nautilus had not adequately analyzed why California law would apply. The policy’s coverage territory included the United States and was not limited to a particular state or location.

Convenience of the parties and witnesses strongly favored transfer. Zenor, the only individual party, was a Hawaii resident and had used Outdoorsy’s platform to list vehicles for rent in Hawaii, not California. The court was not persuaded that his role would be minimal because disputes about whether his Xterra was covered, and communications he had with Eginard or Vincent, could be relevant. Eginard could also be an important witness concerning the rental agreement, vehicle, and accident, and she was represented by counsel in the underlying Hawaii action. Nautilus did not provide enough information about its proposed witnesses to show that their convenience outweighed Eginard’s.

Access to documentary evidence was neutral because technology made documents easy to transfer. The court gave limited weight to the possibility of consolidating the case with Progressive’s Hawaii declaratory judgment action, although it agreed that judicial economy would generally favor handling the insurance matters in one forum.

Disposition

After weighing the relevant factors, the court held that transferring the case to the District of Hawaii would serve the convenience of the parties and witnesses and promote the interests of justice. It granted Outdoorsy’s motion to transfer, directed the Clerk to transfer the action to the United States District Court for the District of Hawaii, and directed the Clerk to close the case. The order addressed venue and did not decide the underlying insurance-coverage dispute.