Spitz v. Starr: Illinois “Most Significant Relationship” Points to the Underlying Litigation Forum in Failure-to-Settle Torts; No Direct Appellate Review of an Out-of-Circuit § 1404(a) Transfer Without a Retransfer Motion

1. Introduction

Parties and setting. Randy Spitz (Oklahoma citizen) was severely injured in a 2016 Oklahoma City tractor-trailer collision involving Nancy Aguilar (Kansas citizen), driving for Real Trucking, Inc. (“RTI”) (Illinois corporation, principal place of business in Illinois). RTI’s commercial auto insurer was Starr Indemnity & Liability Company (Texas corporation, principal place of business in New York).

Underlying case and excess judgment. Spitz obtained an Oklahoma state-court jury judgment of nearly $2.3 million. Starr paid its policy limit (about $990,000), leaving an excess portion of roughly $1.3 million. RTI and Aguilar then assigned to Spitz any claims they had against Starr. Spitz sued Starr in Illinois (removed to the Northern District of Illinois), alleging (i) insurer bad faith for failure to settle within limits and (ii) alternatively, negligence for failure to settle.

Two appellate issues. After the Northern District of Illinois transferred the case to the Western District of Oklahoma under 28 U.S.C. § 1404(a), the Oklahoma federal court dismissed on the pleadings under Fed. R. Civ. P. 12(c), holding Oklahoma law applied and barred Spitz’s assigned claims. On appeal, Spitz challenged:

• Choice of law: Whether Illinois or Oklahoma substantive law governs assigned failure-to-settle tort claims.
• Venue transfer: Whether the Northern District of Illinois erred in transferring the case to Oklahoma.

2. Summary of the Opinion

• Affirmed dismissal. Applying Illinois choice-of-law principles (as required after a § 1404(a) transfer), the Tenth Circuit held Oklahoma has the “most significant relationship” to the tort claims because the underlying litigation, settlement conduct, and relevant interactions occurred in Oklahoma.
• Claims fail under Oklahoma law. Spitz conceded that under Oklahoma law (i) assigned insurer bad-faith claims are prohibited and (ii) there is no standalone negligence cause of action for an insurer’s failure to settle.
• No jurisdiction to review the transfer order directly. The Tenth Circuit held it lacked jurisdiction to directly review an out-of-circuit transfer decision (from the Northern District of Illinois) once the case file was transferred; Spitz’s remedy was to seek a motion to retransfer in the transferee court, which he did not do.

3. Analysis

3.1. Precedents Cited

Transfer and governing law after transfer

• Ferens v. John Deere Co., 494 U.S. 516, 523 (1990): The court relied on Ferens for the rule that a transfer under § 1404(a) does not change the substantive law applicable in a diversity case; therefore, the transferee court must apply the transferor court’s choice-of-law rules. This is the doctrinal gateway for why Illinois choice-of-law rules controlled even though the case ended up in Oklahoma.

Illinois choice-of-law framework for torts

• Carolina Cas. Ins. Co. v. Burlington Ins. Co., 951 F.3d 1199, 1207 (10th Cir. 2020): Cited for the standard of review—choice-of-law determinations are reviewed de novo.
• Wreglesworth ex rel. Wreglesworth v. Arctco, Inc., 738 N.E.2d 964, 971 (Ill. App. Ct. 2000): Used to anchor Illinois’s adoption of the Restatement (Second) “most significant relationship” test for torts under Restatement § 145.
• Townsend v. Sears, Roebuck & Co., 879 N.E.2d 893 (Ill. 2007): Cited repeatedly for Illinois’s methodology and how Illinois weighs the Restatement contacts, including the “wash” characterization when party domiciles are dispersed across states.
• W. Side Salvage, Inc. v. RSUI Indem. Co., 215 F. Supp. 3d 728 (S.D. Ill. 2016), aff’d, 878 F.3d 219 (7th Cir. 2017): The court treated this as a key practical guide to applying Illinois’s tort choice-of-law analysis in the specific context of an insurer’s alleged bad-faith failure to settle—especially (i) defining “place of injury” as the place an economic loss is felt and (ii) tying “place of conduct” to the forum where the underlying litigation and settlement opportunities occurred.

Assignees and which contacts count

• ROC ASAP, L.L.C. v. Starnet Ins., No. CIV-12-461-D, 2014 WL 667833 (W.D. Okla. Feb. 20, 2014) (unpublished): Used for two related propositions: (i) in failure-to-settle litigation, the “conduct causing injury” is often the location toward which claims handling and litigation activities are directed, and (ii) even when the plaintiff sues as an assignee, the assignee may have “no direct relationship” with the insurer for certain relationship-centered contacts. The Tenth Circuit acknowledged ROC ASAP applied Oklahoma choice-of-law rules, but found it informative because Oklahoma and Illinois employ highly similar “most significant relationship” factor sets.

Forfeiture, waiver, and plain-error review on appeal

• Richison v. Ernest Grp., Inc., 634 F.3d 1123 (10th Cir. 2011): Central to the panel’s refusal to consider new, unpreserved arguments about Restatement § 6 policy factors. Richison supplies the rule that unraised theories are forfeited and require a plain-error argument on appeal; failure to argue plain error ends the issue.
• United States v. Eddings, 158 F.4th 1133 (10th Cir. 2025): Cited to reinforce that vague or shifted theories do not preserve an issue; changing theories on appeal does not suffice for preservation.

Appellate jurisdiction over out-of-circuit transfer decisions

• Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509 (10th Cir. 1991): The jurisdictional backbone of the venue portion. Chrysler Credit states that once a case file is physically transferred, the transferor court loses jurisdiction, and the transferee circuit generally cannot directly review the transfer order. It also frames the law-of-the-case restraint on transferee courts, while recognizing limited power to correct an erroneous transfer through a retransfer motion.
• N.E.L. v. Gildner, 780 F. App’x 567 (10th Cir. 2019) (unpublished): Cited for the practical remedial path: a dissatisfied party can file a motion to retransfer in the transferee court; absent that, direct review is unavailable.
• F.D.I.C. v. McGlamery, 74 F.3d 218 (10th Cir. 1996): Reinforces that “indirect review” of transfer orders can be obtained via a motion to retransfer in the transferee court.
• McGeorge v. Cont’l Airlines, Inc., 871 F.2d 952 (10th Cir. 1989): Cited to emphasize territorial limits on circuit jurisdiction—because the transferor court lies outside the Tenth Circuit, the statute leaves no room for the Tenth Circuit to review the transferor court’s decision directly.
• United States v. B.N.M., 107 F.4th 1152 (10th Cir. 2024): Cited for the proposition that unpublished opinions are used for persuasive value only, not as binding authority.

3.2. Legal Reasoning

A. Why Illinois choice-of-law rules applied in Oklahoma

Because the case was transferred under 28 U.S.C. § 1404(a), the Tenth Circuit applied Ferens v. John Deere Co. to hold that the transferee court (W.D. Okla.) must apply the transferor court’s (N.D. Ill.) substantive law, including Illinois choice-of-law principles.

B. Illinois “most significant relationship” analysis under Restatement § 145 (tort)

The panel walked through the four Restatement § 145(2) contacts as Illinois courts do (per Wreglesworth ex rel. Wreglesworth v. Arctco, Inc. and Townsend v. Sears, Roebuck & Co.):

1. Place of injury. The claimed injury was an economic loss from an excess judgment. Drawing on W. Side Salvage, Inc. v. RSUI Indem. Co., the court held this factor was neutral because RTI had not paid the excess judgment; instead, Spitz conceded the assignment “effectively shield[ed]” RTI and Aguilar from personal liability. With no out-of-pocket payment by the insured, the “place where the economic consequence is felt” did not meaningfully point to Illinois.
2. Place of conduct causing injury. The court treated the conduct as centered where the underlying litigation and settlement opportunities occurred. Because the underlying case was filed, tried, and resulted in an excess judgment in Oklahoma—and the settlement communications were undertaken in that Oklahoma litigation—the court held this factor points to Oklahoma. Spitz’s argument that Starr used a Texas-based law firm did not alter the analysis; the alleged misconduct was tied to counsel’s conduct in an Oklahoma case.
3. Domicile / incorporation / principal place of business. With Spitz in Oklahoma, Aguilar in Kansas, RTI in Illinois, and Starr incorporated in Texas with its principal place of business in New York, the court—consistent with Townsend v. Sears, Roebuck & Co.—treated this factor as a “wash” (neutral). Importantly, the court rejected Spitz’s attempt to disregard the assignee’s domicile; it found no authority to omit the assignee from the analysis and cited ROC ASAP, L.L.C. v. Starnet Ins. as consistent with considering the plaintiff-assignee’s domicile.
4. Place where the relationship is centered. Even if one focuses on the insurer/insured relationship (rather than Spitz/Starr), the court adopted W. Side Salvage, Inc. v. RSUI Indem. Co.’s framing that the relevant relationship in this tort setting concerns “interactions between the parties during the trial,” not where the policy was issued or premiums paid. Those interactions occurred in Oklahoma litigation, so this factor favored Oklahoma.

Balancing these contacts “according to their relative importance,” the panel concluded Oklahoma had the most significant relationship: the core settlement conduct, litigation interactions, and excess judgment all arose in Oklahoma, while Illinois’s primary connection was RTI’s Illinois incorporation and principal place of business—insufficient to outweigh the Oklahoma-centered tort conduct.

C. Restatement § 6 policy factors: forfeiture on appeal

Spitz attempted to argue the Restatement § 6 policy factors more fully on appeal. The court refused to consider those arguments because they were not presented to the district court. Applying Richison v. Ernest Grp., Inc. (and reinforced by United States v. Eddings), the panel held the arguments were forfeited and could only be reviewed under plain error; Spitz did not argue plain error, ending the inquiry.

D. Disposition of the merits under Oklahoma law

Once Oklahoma law was chosen, the outcome followed swiftly: Spitz conceded that Oklahoma law bars the assignment of an insured’s bad-faith claim to a third party and does not recognize a standalone negligence claim for an insurer’s failure to settle. The court therefore affirmed dismissal under Fed. R. Civ. P. 12(c).

E. Why the Tenth Circuit could not review the Illinois transfer order

Spitz asked the Tenth Circuit to review the Northern District of Illinois’s grant of Starr’s transfer motion. The panel held it lacked jurisdiction to do so because the transferor court was outside the Tenth Circuit, and because, under Chrysler Credit Corp. v. Country Chrysler, Inc., once the case file is transferred, direct review by the transferee circuit is not available.

The permissible mechanism is “indirect review” through a motion to retransfer filed in the transferee district court (as described in N.E.L. v. Gildner and F.D.I.C. v. McGlamery). Only after the transferee court rules on retransfer can the transferee circuit potentially review whether the transferee court properly applied law-of-the-case constraints. Spitz did not seek retransfer, so the appellate court declined to reach the transfer issue.

3.3. Impact

• Choice-of-law gravity in failure-to-settle cases. For tort-framed bad-faith/failure-to-settle claims litigated under Illinois choice-of-law rules, the decision underscores that the forum of the underlying litigation—where settlement opportunities were presented, negotiated, and allegedly mishandled—can dominate the Restatement § 145 analysis, even when the policyholder is headquartered elsewhere.
• Assignee’s contacts are not automatically ignored. The court rejected the notion that an assignee’s domicile is irrelevant, signaling that assignment does not necessarily “freeze” the choice-of-law contacts at the assignor level. This can matter in multi-state insurance disputes where assignment is used to create a plaintiff with different forum ties.
• Preservation discipline for Restatement § 6 arguments. Litigants who expect to win on nuanced policy-factor balancing must build that record in the district court; appellate courts applying Richison v. Ernest Grp., Inc. will not entertain newly developed policy theories absent a plain-error framework.
• Procedural roadmap for challenging an out-of-circuit transfer. The venue portion functions as a cautionary procedural rule: if a party wants appellate review in the transferee circuit of an allegedly erroneous out-of-circuit transfer, it must file a motion to retransfer in the transferee district court first. Without that step, the issue is effectively unreviewable in the transferee circuit.

4. Complex Concepts Simplified

• Rule 12(c) (judgment on the pleadings). A device for resolving a case based on the pleadings alone (complaint + answer), when no material facts are in dispute and one party is entitled to judgment as a matter of law—similar in practical effect to a Rule 12(b)(6) dismissal, but brought after the pleadings close.
• § 1404(a) transfer. A discretionary transfer for convenience and in the interest of justice, moving a case to a different federal district where it could have been brought.
• Transferor vs. transferee law after transfer. Under Ferens v. John Deere Co., a convenience transfer does not change the applicable substantive law in diversity cases; the transferee court must apply the transferor court’s choice-of-law rules.
• Restatement (Second) § 145 “most significant relationship.” A balancing test that asks which state has the most meaningful connection to the tort issue, focusing on where the injury and conduct occurred, where parties are domiciled, and where their relationship is centered—then weighting those contacts by importance to the specific issue.
• Restatement (Second) § 6 policy factors. A second layer of analysis looking at broader policy goals (forum policies, other states’ interests, justified expectations, and predictability). Here, those arguments were largely not reached because they were not preserved below.
• Forfeiture vs. waiver; plain error. “Forfeiture” is failure to timely raise an argument; “waiver” is intentional relinquishment. Under Richison v. Ernest Grp., Inc., forfeited arguments require a plain-error showing on appeal; failing to argue plain error typically ends the issue.
• Retransfer motion as the path to review. Under Chrysler Credit Corp. v. Country Chrysler, Inc. and related cases, once a case is transferred out of circuit, the transferee circuit generally cannot directly review the transferor court’s order. The party must ask the transferee district court to retransfer; then appellate review may be possible as to the transferee court’s handling of that request.

5. Conclusion

Spitz v. Starr Indemnity & Liability Company offers a tightly procedural and conflicts-of-law-focused lesson. Substantively, applying Illinois tort choice-of-law rules, the Tenth Circuit concluded that the state hosting the underlying litigation (Oklahoma) held the most significant relationship to a failure-to-settle dispute—rendering the assigned claims nonviable under Oklahoma law. Procedurally, the decision reiterates that appellate review of an out-of-circuit § 1404(a) transfer is not available in the transferee circuit absent a motion to retransfer in the transferee court, and it highlights the importance of preserving Restatement § 6 policy arguments in the trial court.