LEECH v. NATIONAL INTERSTATE INSURANCE COMPANY et al
Filing
91
REPORT AND RECOMMENDATIONS - Based on the foregoing, the Court finds that it may exercise specific personal jurisdiction over Economical in Indiana. As such, the Magistrate Judge recommends Economical Mutual Insurance Company's Motion to D ismiss Plaintiff's Amended Complaint for Declaratory Judgment [Dkt. 59 ] be DENIED. Any objections to the Magistrate Judge's Report and Recommendation shall be filed with the Clerk in accordance with 28 U.S.C. § 636(b)(1) and Fed. R. Civ. P. 72(b), and failure to timely file objections within fourteen days after service shall constitute a waiver of subsequent review absent a showing of good cause for such failure (SEE REPORT AND RECOMMENDATION FOR ADDITIONAL INFORMATION). Signed by Magistrate Judge Mark J. Dinsmore on 8/7/2018.(DWH)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
MICHAEL LEECH, JR., as Personal
Representative of the Estate of Michael Jay
Leech, Sr., Deceased, and DEBBIE MARSHALL,
as Court-Appointed Conservator of the Estate of
and Next Friend of A.L., a Minor,
Plaintiffs,
v.
NATIONAL INTERSTATE INSURANCE
COMPANY, INTACT INSURANCE
COMPANY, ECONOMICAL MUTUAL
INSURANCE COMPANY, KAMALJEET
SANGRA, and J&R LOGISTICS, INC.,
Defendants.
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No. 2:17-cv-0508-WTL-MJD
REPORT AND RECOMMENDATION
This matter is before the Court on Economical Mutual Insurance Company’s Motion to
Dismiss Plaintiff’s Amended Complaint for Declaratory Judgment. [Dkt. 59.] Defendant
Economical Mutual Insurance Company (“Economical”) seeks an order dismissing Plaintiffs’
Amended Complaint [Dkt. 22] for lack of personal jurisdiction. On July 16, 2018, District Judge
William T. Lawrence designated the undersigned Magistrate Judge to issue a report and
recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). [Dkt. 89.] For the reasons set below, the
Magistrate Judge recommends that Economical’s Motion be DENIED.
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I.
Background
The following facts are not necessarily objectively true. But as required when reviewing
a motion to dismiss, the Court accepts as true all factual allegations in the Amended Complaint
and draws all reasonable inferences in favor of the Plaintiffs as the non-moving
parties. See Bielanski v. Cty. of Kane, 550 F.3d 632, 633 (7th Cir. 2008).
On December 29, 2016, Kamaljeet Sangra was transporting goods by semi-tractor trailer
in his capacity as a driver for J&R Logistics, Inc. (“J&R”). [Dkt. 22 at 2.] While transporting
these goods, he drove in the wrong direction in the north-bound lanes of Indiana State Road 63
near Cayuga, Indiana. Id. By driving south in the north-bound lanes, Sangra negligently caused a
head-on collision with a vehicle operated by Michael Jay Leech, Sr., who was properly driving
north in the north-bound lanes. Id. As a result of the collision, Leech, Sr., died, and A.L., a minor
who was also in the vehicle, sustained personal injuries. Id.
According to Plaintiffs, there are three insurance companies involved, all of whom
insured J&R and, by extension, Sangra. National Interstate Insurance Company (“NIIC”) is an
insurance company organized under the laws of Ohio and is registered to do business in Indiana.
[Dkt. 26 at 1.] Intact Insurance Company (“Intact”) is a Canadian insurance company organized
under the laws of Ontario, Canada. [Dkt. 26 at 1.] Economical is an insurance company
organized under the laws of Waterloo, Ontario, Canada. [Dkt. 22 at 1.] Plaintiff Michael Jay
Leech, Jr., as the Personal Representative of the Estate of Michael Jay Leech, Sr., brings this
action seeking a court order declaring which Defendant insurance company has primary
coverage for the automobile accident and which Defendant insurance company has secondary
coverage. [Dkt. 22 at 3, ¶ 14.] Plaintiff Michael Jay Leech, Jr., has asserted negligence and
wrongful death claims against Sangra and J&R in a state court action for damages resulting from
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the motor vehicle accident. [Dkt. 29.] Similarly, Plaintiff Debbie Marshall has asserted in state
court negligence claims on behalf of A.L. against Sangra and J&R for damages resulting from
the accident. [Dkt. 30.]
II.
Procedural History
Michael Leech, Jr., as personal representative of the Estate of Michael Jay Leech, Sr.,
brought suit in Vermillion County state court against Intact, NIIC, J&R, and Sangra. [Dkt. 1-2 at
1.] Intact and NIIC removed the case to federal court [see Dkt. 1] and properly pleaded subject
matter jurisdiction pursuant to the Court’s Order regarding their jurisdictional allegations [Dkt.
88]. Plaintiff Leech, Jr., moved to amend his initial Complaint in order to add Economical as a
defendant in the case. [Amended Complaint, Dkt. 22.] Intact moved to join Debbie Marshall as
an additional Plaintiff pursuant to Rule 19 of the Fed. R. Civ. P. [Dkt. 27.] Debbie Marshall, as
the Conservator of the Estate of and Next Friend of A.L., had brought a negligence action arising
out of the same incident involving Sangra and Leech, Sr., on behalf of A.L., a minor. [Dkt. 27 at
30.] The Court granted Intact’s joinder motion [Dkt. 47].
Economical has now moved to be dismissed as a party, asserting that this Court lacks
personal jurisdiction over Economical. [Dkt. 59.] In support of its motion, Economical asserts
that it is domiciled and has its principal place of business in Waterloo, Ontario, Canada. [Dkt. 60
at 2; Dkt. 60-1 at 1.] Economical further asserts that it has not “maintained an office in Indiana,
maintained a registered agent in Indiana, conducted print, radio, or television advertisement in
Indiana, or owed or had to pay taxes in Indiana” and also is not “authorized to do business in
Indiana.” [Dkt. 60 at 2.] Therefore, according to Economical, this Court may not exercise either
general or specific jurisdiction over Economical in this case.
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III.
Legal Standard
A motion to dismiss under Rule 12(b)(2) is a pre-answer motion asserted by defendants
who wish to challenge a district court’s exercise of personal jurisdiction over the defendant as a
party. Typically for a Rule 12(b) motion to dismiss, a court must “accept all well-pleaded
allegations in the plaintiff’s complaint as true and draw all reasonable inferences in favor of the
plaintiff.” Tobin for Governor v. Ill. State Bd. of Elections, 268 F.3d 517, 521 (7th Cir. 2001).
However, a court ruling on a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction
“must decide whether any material facts are in dispute.” Hyatt Int’l Corp. v. Coco, 302 F.3d 707,
713 (7th Cir. 2002). If there any material facts are in dispute and if the court rules on the motion
based on written materials and affidavits submitted rather than on an evidentiary hearing, then
the plaintiff must make out a prima facie case of proper personal jurisdiction. Purdue Research
Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). Under the prima facie
standard, “the plaintiff is entitled to have any conflicts in the affidavits (or supporting materials)
resolved in its favor.” Id. at 783.
IV.
Discussion
Because this is a case removed to federal court based on diversity jurisdiction [see Dkt.
6], this Court may only exercise personal jurisdiction over Economical if a state court in Indiana
would have jurisdiction over Economical as well. Purdue Research Found., 338 F.3d at 779; see
also Fed. R. Civ. P. 4(k)(1)(A) (“Serving a summons or filing a waiver of service establishes
personal jurisdiction over a defendant who is subject to the jurisdiction of a court of general
jurisdiction in the state where the district court is located.”). This requires a two-step inquiry.
First, the Court must determine whether Indiana’s long-arm statute, Indiana Trial Rule 4.4(A),
subjects Economical to in personam jurisdiction. Id. Second, the Court must determine “whether
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the exercise of jurisdiction over [Economical] comports with the requirements of federal due
process.” Id. Whether this Court’s exercise of personal jurisdiction over Economical comports
with the requirements of federal due process requires an analysis of both general jurisdiction and
specific jurisdiction. Hyatt Int’l Corp., 302 F.3d at 713. If the Court determines that Indiana’s
long-arm statute reaches Economical and that Economical is subject to either general or specific
jurisdiction, then this Court may exercise personal jurisdiction over Economical, and the Motion
must be denied.
A.
Indiana’s Long-Arm Statute
Indiana’s long-arm statute, codified in Indiana Trial Rule 4.4, governs the jurisdiction of
courts within Indiana over anyone who is “a nonresident of this state, a resident of this state who
has left the state, or a person whose residence is unknown.” Plaintiff Debbie Marshall
specifically points to Indiana Trial Rule 4.4(A)(1), (4), and (6), which state that such
nonresidents submit to the jurisdiction of Indiana courts “as to any action arising from the
following acts committed by him or her or his or her agent”:
(1) doing any business in this state;
...
(4) having supplied or contracted to supply services rendered or to be rendered or
goods or materials furnished or to be furnished in this state;
. . . [or]
(6) contracting to insure or act as surety for or on behalf of any person, property or
risk located within this state at the time the contract was made[.]
In addition, Indiana Trial Rule 4.4(A) states that “a court of this state may exercise jurisdiction
on any basis not inconsistent with the Constitutions of this state or the United States.” The
Indiana Supreme Court’s interpretation of the state’s long-arm statute facilitates the analysis. The
statute “reduce[s] analysis of personal jurisdiction to the issue of whether the exercise of
personal jurisdiction is consistent with the Federal Due Process Clause.” LinkAmerica Corp. v.
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Cox, 857 N.E.2d 961, 967 (Ind. 2006). Therefore, the only determination that must be made is
whether this Court’s exercise of personal jurisdiction over Economical violates the Due Process
Clause.
B.
General Jurisdiction
With both general and specific jurisdiction, a defendant must “have certain minimum
contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional
notions of fair play and substantial justice.’” Int’l Shoe Co. v. State of Wash., Office of
Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311
U.S. 457, 463 (1940)). A corporate defendant’s contacts are deemed to be sufficient for general
jurisdiction purposes if it is incorporated in that state or if it has its principal place of business in
that state. Dailer AG v. Bauman, 571 U.S. 117, 137 (2014). In addition, if a corporate
defendant’s contacts with a state are so “‘continuous and systematic’ as to render them
essentially at home in the forum State,” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564
U.S. 915, 919 (2011) (quoting Int’l Shoe Co., 326 U.S. at 317), then a court may constitutionally
“justify suit against it on causes of action arising from dealings entirely distinct from those
activities.” Int’l Shoe Co., 326 U.S. at 318. This means that if Economical is subject to general
jurisdiction in Indiana, “it can be sued for essentially any cause of action in [Indiana].” Martin v.
Maurer, No. 1:15-cv-01471-RLY-MJD, 2016 WL 3198117, at *2 (S.D. Ind. Feb. 3, 2016).
In the present case, Economical has presented affidavits to show that it is neither
incorporated in Indiana nor is its principal place of business in Indiana. [See Dkt. 60-1, Dkt. 602.] It is uncontested that Economical is based out of Canada and is organized under Canadian
law. [See Amended Complaint, Dkt. 22 at 1; Economical Mutual Insurance Company’s Brief
Support Motion Dismiss Plaintiff’s Amended Complaint for Declaratory Judgment, Dkt. 60 at 2.]
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Neither are Economical’s contacts with Indiana so “‘continuous and systematic’ as to
render them essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v.
Brown, 564 U.S. at 919 (quoting Int’l Shoe Co., 326 U.S. at 317). The affidavits show that
Economical has little contact within Indiana outside of the insurance policy issued to Sangra and
J&R. [See Dkt. 60-1 (stating that Economical has not maintained an office in Indiana, maintained
a registered agent in Indiana, conducted print, radio, or television advertisement directed to
Indiana, owned or leased real or personal property in Indiana, or paid any taxes in Indiana); Dkt.
60-2 (stating that none of Economical’s representatives have traveled to Indiana, conducted any
activities in Indiana for reasons related to J&R’s insurance policy, or have sent to or received
from Indiana any policy-related communications).] In response, Plaintiffs state that Economical
has “purchase[d] some goods and/or services from the United States” and maintains a website
that it accessible to persons located in the United States. [Dkt. 77 at 5.] Plaintiffs also state that
Economical has filed lawsuits in the United States in the past ten years [Dkt. 77 at 5] and that
Economical’s business model relies on issuing insurance policies to trucking companies involved
in interstate commerce in the United States [Dkt. 77 at 2]. “The threshold for general jurisdiction
is quite high,” and the facts here do not support a finding that Economical has enough contacts
with Indiana for this Court to consider Economical essentially at home in Indiana. Felland v.
Clifton, 682 F.3d 665, 673 (7th Cir. 2012).
Aside from the written materials and affidavits that do not support a finding of general
jurisdiction, Plaintiff Michael Jay Leech, Jr., recognizes that general jurisdiction in Indiana likely
does not apply to Economical and consequently spends the entirety of his brief addressing
specific jurisdiction. [Dkt. 77.] Similarly, Plaintiff Debbie Marshall, although not specifically
distinguishing between general and specific jurisdiction, argues for this Court’s exercise of
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personal jurisdiction by addressing Economical’s contacts in Indiana arising out of the
underlying action, which points to an argument for specific jurisdiction rather than general
jurisdiction. [Dkt. 80.] Consequently, Plaintiffs fail to make a prima facie case for general
jurisdiction.
C.
Specific Jurisdiction
As both Plaintiffs’ and Economical’s briefs recognize, a determination based on specific
jurisdiction is the more appropriate analysis in this case because the underlying cause of action
“arise[s] out of” the collective Defendants’ activities in Indiana. Helicopteros Nacionales
de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984). Like general jurisdiction, a finding of
specific jurisdiction requires first that the defendant have “certain minimum contacts with [the
forum state].” Int’l Shoe Co., 326 U.S. at 316. Minimum contacts are established for the
purposes of specific jurisdiction “where (1) the defendant has purposefully directed his activities
at the forum state or purposefully availed himself of the privilege of conducting business in that
state, and (2) the alleged injury arises out of the defendant's forum-related activities.” Tamburo v.
Dworkin, 601 F.3d 693, 702 (7th Cir. 2010) (citing Burger King Corp. v. Rudzewicz, 471 U.S.
462, 472 (1985)). Second, these minimum contacts must “comport with traditional notions of fair
play and substantial justice as required by the Fourteenth Amendment's Due Process Clause.” Id.
(citing Int’l Shoe Co., 326 U.S at 316).
1.
Minimum Contacts
The minimum contacts analysis in this case is different for the various defendants. While
Plaintiff Debbie Marshall brings negligence claims against Sangra and J&R for their role in the
vehicular collision, Plaintiff Michael Jay Leech, Jr., seeks to have the Court determine the
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maximum policy coverage payout for Sangra and J&R and which Defendant insurance company
is liable for that coverage.
While Sangra and J&R are being haled into court for their role in the vehicular collision,
Economical is being haled into court as one of the Defendant insurance companies. If this Court
can properly exercise personal jurisdiction over Economical, the exercise of jurisdiction must be
in relation to the claims brought against it. In this case, Plaintiffs ask the Court to reject
Economical’s Motion to Dismiss because Economical must be a party to this action if a proper
adjudication of insurance liability arising from the automobile accident is to be determined.
As this Court has noted in the past, “[t]he minimum contact analysis is different
depending upon the types of claims alleged.” Martin, 2016 WL 3198117, at *4. Depending on
the type of claim brought, the minimum contact analysis turns on whether the defendant “has
purposefully directed his activities at the forum state” or whether the defendant has
“purposefully availed himself of the privilege of conducting business in that state.” Tamburo,
601 F.3d at 702. In cases of intentional torts, the Court looks at whether the defendant’s actions
as they relate to the suit were purposefully directed at the forum state. See Martin, 2016 WL
3198117, at *4 (“In cases such as this one involving an intentional tort, however, the inquiry
focuses on whether the conduct underlying the claims was purposely directed at the forum
state.”). However, for breach of contract claims, “personal jurisdiction . . . generally turns on
whether the defendant purposefully availed himself of the privilege of conducting business in the
forum state.” Felland, 682 F.3d at 674. While the present case does not involve any breach of
contract claims, a finding of personal jurisdiction over Economical would arise out of the
insurance policy it issued to J&R and its employee Sangra since the policy is a type of contract.
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In their briefs in opposition, both Plaintiffs assert that Economical could foresee being
haled into court in Indiana. [See Dkt. 77 at 2; Dkt. 80 at 4.] Plaintiff Debbie Marshall cites Eli
Lilly & Co. v. Home Ins. Co., 794 F.2d 710, 721 (D.C. Cir. 1986), in support of her personal
jurisdiction claims:
The commercial interest of the insurer in knowing of the contacts of its insured with
the forum state provides the rationale for the rule that an insurer should foresee
being sued in a jurisdiction where its insured has substantial contacts. . . . In this
case there can be no question but that Eli Lilly’s insurers were aware of the nationwide scope of Lilly’s product distribution. They cannot now claim that it was
somehow unforeseeable that they would be haled into court in a jurisdiction where
Lilly would likely be subject to suit.
In response, Economical points out that “‘foreseeability’ alone has never been a sufficient
benchmark for personal jurisdiction under the Due Process Clause.” [Dkt. 84 at 5 (quoting
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980)).] Economical claims that
it has not “purposefully availed” itself of the privilege of conducting business in Indiana as
contemplated by the Supreme Court in cases like Hanson v. Deckla and Burger King Corp. v.
Rudzewicz. Economical asserts that Plaintiffs fail the first part of a specific jurisdiction finding
because it believes that Plaintiffs cannot establish that Economical has the requisite minimum
contacts with Indiana.
Economical is correct in asserting that foreseeability alone has never been enough to
establish the requisite minimum contacts since the Supreme Court has stated such on several
occasions. See, e.g., Burger King Corp, 471 U.S. at 474 (“[T]he Court has consistently held that
this kind of foreseeability is not a ‘sufficient benchmark’ for exercising personal jurisdiction.”).
Rather, foreseeability relates to whether the defendant would “reasonably anticipate being haled
into court” in the forum state. World-Wide Volkswagen Corp., 444 U.S. at 297. For claims
arising out of a contract such as this one, a defendant’s minimum contacts with the forum state
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would mean that the defendant should anticipate being haled into court there because the
defendant has purposefully availed itself of the privilege of doing business in the state. Id. The
Seventh Circuit, following Supreme Court precedent, has stated that for contract purposes,
minimum contacts must be established taking a “highly realistic” approach; the court must “take
into account prior negotiations, contemplated future consequences, the terms of the contract and
the parties' course of actual dealing with each other.” Purdue Research Found., 338 F.3d at 781
(citing Burger King Corp., 471 U.S. at 478–79). Thus, Plaintiffs must make a prima facie
showing of minimum contacts based on Economical’s contractual dealings with J&R and the
other Defendant insurance companies.
Economical asserts that “[a] foreign insurer does not purposefully avail itself of
conducting business within a single state just by issuing an insurance policy with a coverage
territory that includes the United States.” [Dkt. 84 at 5 n.3.] Citing Ninth Circuit precedent,
Economical claims that while “an insurer purposefully avails itself of a state when ‘[i]ts policy
coverage extends into [the state] and an “insured event” occurs there,’” Economical was not
insuring J&R at the time of the vehicular collision. [Id. (quoting Farmers Ins. Exch. v. Portage
La Prarie Mut. Ins. Co., 907 F.2d 911, 913 (9th Cir. 1990)).] According to Economical, “the
auto involved in the accident was removed from coverage under Economical’s Policy before the
accident” and J&R was insured by another company at the time of the vehicular collision. [Dkt.
84 at 5–6 n.3.] Because this is a Rule 12(b)(2) motion, any conflict in factual allegations must be
resolved in favor of the Plaintiffs as the non-moving parties. Purdue Research Found., 338 F.3d
at 782. Plaintiff’s Amended Complaint states that J&R and its employee Sangra were insured by
Economical. [Dkt. 22 at 2.] The accident occurred on December 29, 2016 [Dkt. 22 at 2], and
Plaintiff Michael Leech, Jr., offered a policy statement issued by Economical to J&R as an
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exhibit [Dkt. 22-2]. The policy statement states that it is effective from June 30, 2016, to June 20,
2017, showing that J&R was insured by Economical at the time of the vehicular collision. [Dkt.
22-2 at 1.]
For the purposes of this Motion, the Court must resolve this conflict in factual allegations
in favor of Plaintiffs, meaning that the Court must decide this Motion as if Economical was
insuring J&R and Sangra at the time of the underlying accident. This means that if Economical
has purposefully availed itself of doing business in Indiana, it must stem from its insurance
policy with J&R and Sangra. Economical cites Florida and Pennsylvania state court cases in
support of its assertion that issuing a policy with a coverage territory of the United States is
insufficient to establish minimum contacts. [See Dkt. 84 at 6.] Insurance companies typically
agree to indemnify and represent their clients in court if they are sued over anything involving
their insurance policy. However, the issue of whether these insurance companies are amenable to
suits themselves for claims in state court arising out of the underlying suit is a different analysis,
and the federal circuit courts have approached it with largely the same analysis but with different
results due to different fact patterns. While Economical is correct in stating that Plaintiffs
“conflate issues of coverage with issues of personal jurisdiction” in their briefs [Dkt. 84 at 5 n.3],
there is no singular answer to the issue, parties point to no Seventh Circuit authority, and the
Court is unaware of any controlling authority in this particular situation.
In the D.C. Circuit, the court found that D.C. courts could exercise jurisdiction over a
drug manufacturer’s insurers for claims arising out of a suit brought against the drug
manufacturer by plaintiffs whose daughters had developed cancer in connection to one of the
manufacturer’s drugs made for pregnant women. Eli Lilly & Co., 794 F.2d at 712–13. The
insurers had issued policies to Eli Lilly that provided for indemnity and representation in any
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state in the country if Eli Lilly was sued in relation to its policy coverage. Id. The court, relying
largely on foreseeability, ruled that the insurers could be amenable to suit in any state where Eli
Lilly also conducted business related to the insurance policy. Id. at 720–21.
In a similar fact pattern to the present case, the Fourth Circuit ruled that an Illinois
insurance company could be held amenable to suit in Virginia following an auto accident in
Virginia that resulted in injuries to one Virginia woman and the death of another Virginia
woman. Rossman v. State Farm Mut. Auto. Ins. Co., 832 F.2d 282 (4th Cir. 1987). On appeal,
State Farm challenged the district court’s exercise of personal jurisdiction over the insurance
company in the plaintiffs’ declaratory judgment action to determine the rights and obligations of
the involved insurance carriers. Id. at 284. The Fourth Circuit upheld the district court’s
jurisdiction, saying that State Farm intentionally marketed a national auto insurance policy to
make it more appealing and that State Farm could have foreseen being haled into court in any
state where an insured held a State Farm policy. Id. at 286–87. Because the underlying accident
occurred in Virginia and therefore the insured was liable to suit where the underlying accident
occurred, State Farm could be held liable in Virginia where it had to defend its insured. Id.
In the Ninth Circuit, a California insurance company Farmers Insurance Exchange
brought suit in a Montana federal court against Canadian insurance company Portage La Prairie
Mutual Insurance Company for an insurance breach of contract dispute. Farmers Ins. Exch., 907
F.2d at 912. The Canadian insurance company appealed the district court’s exercise of personal
jurisdiction over it as a defendant, arguing that the court may not exercise jurisdiction over the
Canadian company because its only contacts with Montana stemmed from its issuance of the
insurance policy to one of the drivers involved in the underlying auto accident. Id. The Ninth
Circuit upheld the district court’s jurisdiction, finding that the dispute between the two insurance
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companies arose out of each company’s agreement to defend injuries in any state, including
Montana, that it was foreseeable that Portage would be haled into court in any state, and that it
was reasonable under the Ninth Circuit’s personal jurisdiction factor test to adjudicate a dispute
between the two insurance companies. Id. at 912–15.
The Tenth Circuit has been more hesitant to rely heavily upon foreseeability when it
comes to holding an insurance company amenable to suit in any state in which it agrees to
defend an insured. In OMI Holdings, Inc. v. Royal Ins. Co. of Canada, OMI Holdings, an Iowa
corporation with its principal place of business in Minnesota, sued several insurance companies
over the insurance companies’ refusal to defend OMI Holdings in an underlying patent suit. 149
F.3d 1086, 1089–90 (10th Cir. 1998). Two of the Canadian insurance companies appealed the
Kansas district court’s exercise of personal jurisdiction. The Tenth Circuit disagreed with the
other circuit courts’ analysis by finding that minimum contacts had been established for the
purposes of personal jurisdiction but that such an exercise of jurisdiction violated the Due
Process Clause. Id. at 1090. According to the Tenth Circuit, other circuit courts relied too heavily
on foreseeability; while it may be foreseeable for an insurance company to be haled into any
state’s court where the insurance company has agreed to defend an insured, it does not mean that
the insurance company has agreed to subject itself to suit in any state as a result of issuing those
insurance policies. Id. at 1095. Instead, the Tenth Circuit relied upon the Supreme Court’s factor
test set forth in Burger King Corp. v. Rudzewicz, finding that OMI Holdings offered insufficient
evidence to outweigh Canada’s interest in adjudicating this suit over its domestic insurance
companies. Id. at 1096–98.
The Eighth Circuit returned to the arguments set forth by other circuit courts of appeals in
finding that the District Court for the Western District of Arkansas could exercise personal
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jurisdiction over a Wisconsin insurance company. Ferrell v. West Bend Mut. Ins. Co., 393 F.3d
786 (8th Cir. 2005). In an action by a creditor seeking to enforce a judgment against West Bend
Mutual Insurance Company as the commercial general liability insurer for a company that had
sold faulty manufactured farming tools, the Eighth Circuit stated that West Bend’s insurance
policy’s territory-of-coverage clause, which included the whole country, established minimum
contacts, and the district court did not violate West Bend’s due process rights by exercising
personal jurisdiction for reasons of foreseeability and appropriateness of the litigating forum. Id.
at 790–91. West Bend relied on the Tenth Circuit’s argument in OMI Holdings in asserting that
the district court could not exercise jurisdiction over it, and in response, the Eighth Circuit stated
that the Tenth Circuit’s analysis concluding that such an exercise of personal jurisdiction
violated the Due Process Clause was limited to the facts of that case. Id. at 791.
In the Eleventh Circuit, the question was presented on appeal “whether a forum state . . .
can properly exercise personal jurisdiction over an insurer . . . whose only relevant contacts with
the forum are (1) the inclusion of the forum state within the covered territory of the insurer's
policy and (2) the occurrence of the relevant accident in the forum state.” McGow v. McCurry,
412 F.3d 1207, 1214 (11th Cir. 2005), abrogation on other grounds recognized by Diamond
Crystal Brands, Inc. v. Food Movers Int’l, Inc., 593 F.3d 1249 (11th Cir. 2010). The court held
that the District Court for the Northern District of Georgia had properly exercised jurisdiction
over a Michigan insurance company, explicitly stating its agreement with the other circuit courts
of appeals in the cases previously mentioned here. Id. According to the court, “not only was it
foreseeable that [the insurer] might be sued in Georgia in connection with an accident in Georgia
covered by its policy, but the ‘expectation of being haled into court in a foreign state is an
express feature of its policy.’” Id. at 1215 (quoting Rossman, 832 F.2d at 456).
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In the present case, the Court agrees with the majority of federal circuit courts in finding
that minimum contacts have been established by Economical’s territory-of-coverage clause in its
contract with J&R. In its insurance policy issued to J&R, Economical states that:
1.2
Where You Are Covered
This policy covers you and other insured persons for accidents occurring in Canada,
the United States of America and any other jurisdiction designated in the Statutory
Accident Benefits Schedule, and on a vessel travelling between ports of those
countries. All of the dollar limits described in this policy are in Canadian funds.
[Dkt. 80-2 at 23.] While Section 1.2 sets out the territory-of-coverage clause, Section
3.3.1 sets out the policy’s liability coverage where Economical agrees to defend J&R in
jurisdictions covered by the territory-of-coverage clause:
3.3.1
If Someone Sues You
By accepting this policy you and other insured persons irrevocably appoint us to
act on your or their behalf in any lawsuit against you or them in Canada, the United
States of America or any other jurisdiction designated in the Statutory Accident
Benefits Schedule arising out of the ownership, use or operation of the automobile.
[Dkt. 80-2 at 40.] On the next page, Economical states that it will “provide a defence and cover
the costs of that defence” for any suit arising out of Section 3.3.1. [Dkt. 80-2 at 41.] Section 1.2
is substantively the same sort of territory-of-coverage clause that other circuits have found
established minimum contacts with the adjudicating District Court for the purposes of personal
jurisdiction. Economical is in the business of insuring trucking companies involved in interstate
commerce, and it agreed to defend J&R if J&R were sued in any state’s court as the suit relates
to the insurance policy. While Economical may not have expressly agreed to be haled into any
state’s court in connection with the insurance policy, it is still foreseeable that Economical would
have to act on the insured’s behalf in any court in the United States.
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Because in this case the underlying suit involves J&R as the defendant in an action
arising out of an automobile accident in Indiana, Economical would have to litigate in the
Southern District of Indiana pursuant to its agreement with J&R. Economical agreed to litigate
on behalf of J&R in Indiana under Section 3.3.1, it purposefully issued a policy that included
coverage in Indiana under Section 1.2, and it profited from having a broad territory-of-coverage
clause in its agreement with J&R. [See generally Dkt. 80-2.] Therefore, Plaintiffs have made a
prima facie showing of Economical establishing minimum contacts with Indiana as the forum
state.
2.
Due Process Clause
The second step of the specific jurisdiction inquiry involves a determination of whether
the district court would violate Economical’s due process rights if the Court exercised personal
jurisdiction over Economical as a defendant. According to the Supreme Court, “[o]nce it has
been decided that a defendant purposefully established minimum contacts within the forum
State, these contacts may be considered in light of other factors to determine whether the
assertion of personal jurisdiction would comport with ‘fair play and substantial justice.’” Burger
King Corp., 471 U.S. at 476 (citing Int’l Shoe Co., 326 U.S. at 320). The Supreme Court has set
forth a factor test to help evaluate whether a defendant’s due process rights would be violated by
an assertion of personal jurisdiction. Id. For the second step of the specific jurisdiction inquiry, a
court may consider “‘the burden on the defendant,’ ‘the forum State's interest in adjudicating the
dispute,’ ‘the plaintiff's interest in obtaining convenient and effective relief,’ ‘the interstate
judicial system's interest in obtaining the most efficient resolution of controversies,’ and the
‘shared interest of the several States in furthering fundamental substantive social policies.’” Id. at
477 (quoting World-Wide Volkswagen Corp., 444 U.S. at 292). In weighing these factors, the
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goal is to ensure that “jurisdictional rules [are] not [] employed in such a way as to make
litigation ‘so gravely difficult and inconvenient’ that a party unfairly is at a ‘severe disadvantage’
in comparison to his opponent.” Id. at 478 (quoting Bremen v. Zapata Off-Shore Co., 407 U.S. 1
(1978)). Each of the Burger King Corp. factors will be considered individually.
The burden on Economical in defending itself in the District Court for the Southern
District of Indiana is small. Economical has already agreed to provide a defense to J&R in any
state in the United States, and regardless of how this Court decides this Motion to Dismiss, the
policy appears to obligate Economical to provide a defense to J&R in the underlying suit in
Indiana. While Economical is a Canadian company, several other circuit courts of appeals have
found it constitutional to hold a foreign insurance company amenable to suit in any state that its
own territory-of-coverage clause reaches. Because Economical is already obligated by the policy
to provide a defense to J&R in Indiana due to the underlying suit, its burden to litigate on its own
behalf here is not great.
Indiana has a great interest in adjudicating this dispute. The underlying automobile
accident occurred in Indiana, and the insurance dispute arising out of that automobile accident
should be decided in the same forum state. In the interest of judicial efficiency, this declaratory
judgment action should be litigated in the same state as the underlying automobile accident
giving rise to the insurance dispute.
Plaintiffs have a great interest in litigating this dispute in the same state the automobile
accident occurred. Evidence relating to the automobile accident between Michael Jay Leech, Sr.,
and Sangra may be relevant to this action involving the several insurance companies. In addition,
for the same reasons outlined by Defendant Intact for joining Plaintiff Debbie Marshall, litigating
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this action in another forum like Canada may result in inconsistent outcomes and the potential
for relitigated issues. [See Dkt. 27 at 4.]
For the reasons given for why Indiana has an interest in adjudicating this dispute, the
interstate judicial system also has an interest in this action remaining in Indiana. This action and
all of its related controversies may be efficiently litigated and adjudicated if this action remains
in Indiana. Given the diverse nature of the Defendants, it is difficult to imagine any forum other
than the location of the accident in which the various insurance companies might be brought
together to adjudicate their respective obligations.
While there are no substantive social policies explicitly at work in this Motion to
Dismiss, the collective states do have an interest in litigating insurance disputes in the same state
where the underlying accident triggering the several insurance provisions occurs. For the same
reasons given in the interest of judicial efficiency, the states share the interest in keeping this
declaratory action in the same state as the other related actions.
Finally, if the goal of this factor test is to ensure no party is unfairly disadvantaged by the
chosen forum, then denying Economical’s Motion to Dismiss ultimately supports that goal. First,
Economical established minimum contacts by issuing insurance policies with broad territory-ofcoverage clauses to interstate truckers in the interest of increasing its business. Second, pursuant
to its agreement with J&R, Economical inevitably has to litigate in Indiana in order to fulfill its
obligations to J&R and defend J&R in the underlying suit. In addition, every factor weighs in
favor of this action remaining in Indiana so the Court may determine the liability of each
insurance company involved in the underlying automobile accident.
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V.
Conclusion
Based on the foregoing, the Court finds that it may exercise specific personal jurisdiction
over Economical in Indiana. As such, the Magistrate Judge recommends Economical Mutual
Insurance Company’s Motion to Dismiss Plaintiff’s Amended Complaint for Declaratory
Judgment [Dkt. 59] be DENIED.
Any objections to the Magistrate Judge's Report and Recommendation shall be filed with
the Clerk in accordance with 28 U.S.C. § 636(b)(1) and Fed. R. Civ. P. 72(b), and failure to
timely file objections within fourteen days after service shall constitute a waiver of subsequent
review absent a showing of good cause for such failure.
Dated: 7 AUG 2018
Distribution:
Service will be made electronically
on all ECF-registered counsel of record
via email generated by the Court’s ECF system.
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