The Phoenix Insurance Company, et al. v. The Cincinnati Indemnity Company

Filing 2

MEMORANDUM AND ORDER accepting the 18 Report and Recommendations and granting in part 7 Motion to Dismiss; this case is transferred to the Eastern District of Michigan- So Ordered by Chief Judge William E. Smith on 7/13/2017. (Barletta, Barbara) [Transferred from rid on 7/14/2017.]

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
)
)
Plaintiffs,
)
)
v.
)
)
THE CINCINNATI INDEMNITY COMPANY, )
)
Defendant.
)
___________________________________)
THE PHOENIX INSURANCE COMPANY
and PDS ENGINEERING AND
CONSTRUCTION, INC.,

C.A. No. 16-223 S

MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
I. Background
This litigation arises out of an incident that occurred at
Electric Boat Corporation’s property in North Kingstown, Rhode
Island, in which an employee of a subcontractor performing work on
the

property

sustained

fatal

injuries

while

engaged

in

his

employment duties. The employee’s widow initiated a wrongful death
action against Electric Boat and PDS Engineering & Construction,
Inc. in Washington County Superior Court.

PDS had been hired by

Electric Boat to make improvements to Electric Boat’s property;
PDS had subcontracted part of the project to International Door,
Inc.

(the

decedent’s

employer).

International

Door

held

an

insurance policy issued by The Cincinnati Indemnity Company, under

which

PDS

and

Electric

Boat

claim

to

have

been

included

as

additional insureds; Cincinnati Indemnity, however, has refused to
defend and indemnify PDS and Electric Boat in the state court
litigation.
PDS

and

its

insurer,

The

Phoenix

Insurance

Company

(“Plaintiffs”), have initiated a separate cause of action in this
Court

against

Cincinnati

Indemnity

(“Defendant”)

seeking

a

declaratory judgment that International Door’s insurance policy
includes

PDS

and

Electric

Boat

as

additional

insureds

under

International Door’s commercial general liability and umbrella
liability coverages. Plaintiffs are also alleging that Defendant
breached its contractual obligations to them.
Defendant (an Ohio-based company) filed a motion to dismiss
for lack of personal jurisdiction and improper venue, or, in the
alternative, to transfer the cause of action to the United States
District Court for the Eastern District of Michigan.
argued

that

Michigan

would

be

the

proper

venue

Defendant
because

International Door, its insured, is incorporated in Michigan and
the policy was issued in Michigan.

Plaintiffs were granted leave

to conduct jurisdictional discovery, and Magistrate Judge Lincoln
D. Almond held a hearing before issuing a Report & Recommendation.
In the R&R, the Magistrate Judge found that the District of Rhode
Island has neither general nor specific personal jurisdiction over
2

Defendant and that this District is therefore an improper venue.
Rather than recommending dismissal of the case, however, the
Magistrate

Judge

recommended

transferring

it

District of Michigan, as requested by Defendant.

to

the

Eastern

Plaintiffs filed

a timely objection to the R&R.
II. Standard of Review
Pursuant to Rule 72(b)(3) of the Federal Rules of Civil
Procedure, the Court reviews de novo any part of an R&R addressing
a dispositive motion to which an objection has been properly filed.
III. Discussion
Plaintiffs object to the R&R on the bases that the Magistrate
Judge erred by (1) finding no general personal jurisdiction in
Rhode Island over Defendant, and (2) recommending transfer of the
cause

of

action

to

the

Eastern

District

of

Michigan

as

the

appropriate disposition of the motion.
A. General jurisdiction
Plaintiffs argue that the Magistrate Judge overlooked the
evidence showing that Defendant consented to general personal
jurisdiction when it signed the Uniform Consent to Service of
Process form in 2007 and again in 2015. 1

1

Plaintiffs assert that

Copies of these forms were included as Exhibit 4 to
Plaintiffs’ Opposition to the Motion to Dismiss. See ECF No. 155.
3

these forms have the effect of waiving all challenges to personal
jurisdiction.

Plaintiffs also argue that, because Defendant has

maintained a license to sell insurance in Rhode Island since 2007,
it has had sufficient contacts with Rhode Island for this District
to exercise jurisdiction over it.
Defendant
contentions

responds

that

the

to

Plaintiffs’

Magistrate

Judge

objection
squarely

with

the

addressed

Plaintiffs’ argument regarding consent and concluded that the
Uniform Consent to Service of Process form does not equate to
consent to personal jurisdiction in Rhode Island.

Defendant also

asserts that Plaintiffs’ consent argument is waived because it was
raised during oral argument before the Magistrate Judge and not in
Plaintiffs’

initial

memorandum

in

opposition

to

Defendant’s

motion.
Defendant, as a foreign company, was required by statute to
designate

the

insurance

commissioner

for

Rhode

Island

as

individual upon whom service of process could be served. 2
template form states that the “Applicant Company”:
does hereby consent that any lawful action or proceeding
against it may be commenced in any court of competent
jurisdiction and proper venue within the State(s) so
designated; and agrees that any lawful process against
it which is served under this appointment shall be of

2

See R.I. Gen. Laws § 27-2-13.
4

an
The

the same legal force and validity as if served on the
entity directly. 3
The form is clearly titled a “Uniform Consent to Service of
Process” and is designed to fulfill that purpose in addition to
complying with the statutory mandate in § 27-2-13. 4

The form

provides that the “Applicant Company’s” consent to service of
process on the designated state officer shall have the same effect
as if service was made directly on the entity, but qualifies its
acknowledgement of litigation to a properly initiated cause of
action or proceeding with “any court of competent jurisdiction”
and “proper venue.”

This form does not, therefore, include a

general consent to personal jurisdiction in every state in which,
in compliance with the relevant state statute, a business entity
must designate a state officer as lawful receiver of service of
process on behalf of the entity.

3

Pl.’s Opp’n to Mot. to Dismiss Ex. 4, ECF No. 15-5.

4

R.I. Gen. Laws § 27-2-13 states, in pertinent part, that:

No insurance company not incorporated under the
authority of this state shall directly or indirectly
issue policies, take risks, or transact business in this
state until it has first appointed, in writing, the
insurance commissioner of this state to be the true and
lawful attorney of the company in and for this state,
upon whom all lawful process in any action or proceeding
against the company may be served with the same effect
as if the company existed in this state.

5

Moreover, this Court has previously concluded that consent to
personal

jurisdiction

defendant

had

was

registered

not
in

established
Rhode

Island

simply
for

because
a

the

contractor

renovation license and had appointed an agent to receive service
of process. 5

The Court refused to “presume that [a] [d]efendant

consented to personal jurisdiction where there is no indication
that either the Rhode Island legislature, or [the] [d]efendant
itself,

intended

that

corporate

registration

would

serve

as

consent to personal jurisdiction in Rhode Island.” 6
Even though Plaintiffs presented this Uniform Consent to
Service of Process form as proof that Defendant had consented to
jurisdiction

for

the

first

time

during

oral

argument,

the

Magistrate Judge addressed the argument directly in his R&R:
“[Defendant’s] license to transact insurance business in Rhode
Island and its designation of Rhode Island’s Superintendent of
Insurance as its agent to accept service of process do not tip the
balance in favor of asserting general jurisdiction.” 7
agrees.

The Court

The Uniform Consent to Service of Process form does not

5

Harrington v. C.H. Nickerson & Co., Inc., No. 10-104-ML,
2010 WL 3385034, at *2, *5 (D.R.I. Aug. 25, 2010).
6

Id. at *4.

7

R&R 7, ECF No. 18.
6

demonstrate Defendant’s consent to general personal jurisdiction
in Rhode Island.
In

addition,

“[c]onstitutional

as

the

limitations

First
on

the

Circuit

has

exercise

of

noted,
personal

jurisdiction over out-of-state defendants are rooted in principles
of ‘fundamental fairness.’” 8

The First Circuit has also stated

that “[c]orporate registration . . . adds some weight to the
jurisdictional analysis, but it is not alone sufficient to confer
general jurisdiction.” 9

As the Magistrate Judge reasoned in his

R&R, Defendant’s contacts with Rhode Island (obtaining a license
to do business, appointing an agent for service of process, and
receiving
sufficient

premiums
to

from

establish

policies)
general

were

“not

constitutionally

jurisdiction

and

subject

[Defendant] to suit in this District on all matters” 10 when these
undisputed facts were weighed against the additional undisputed
fact that Defendant has no physical presence in the state and the
uncontroverted fact that the premiums received from its business
in

Rhode

Island

are

de

minimis

8

when

compared

to

its

total

Cossaboon v. Maine Med. Ctr., 600 F.3d 25, 32 (1st Cir.
2010) (quoting Phillips Exeter Acad. v. Howard Phillips Fund, Inc.,
196 F.3d 284, 288 (1st Cir. 1999)).
9

Id. at 37.

10

R&R 6.
7

revenues. 11

The Court therefore adopts the Magistrate Judge’s

reasoning and conclusion that Plaintiffs have not established
Defendant is subject to general personal jurisdiction.
B. Specific personal jurisdiction
The Magistrate Judge also engaged in a thorough analysis of
specific jurisdiction and found that the relatedness prong of
specific jurisdiction 12 was not met because Defendant
has very limited contacts with this District, and none
of them relate in any way to Plaintiffs’ contract claim.
. . . [T]here is no evidence that [Defendant] was aware
prior to this coverage dispute of the Electric Boat
project in issue or the contract between PDS and
International Door for work to be performed in this
District. 13
The Magistrate Judge also found that the purposeful availment prong
of specific jurisdiction 14 was not met because “[t]here is no
evidence of any conduct on [Defendant’s] part that would make it
reasonably foreseeable for [it] to anticipate being sued in Rhode

11

See Annual Statements, submitted with Defendant’s reply
memorandum in support of its Motion to Dismiss, ECF No. 16-1.
12

See Bluetarp Fin., Inc. v. Matrix Constr. Co., 709 F.3d 72,
80 (1st Cir. 2013).
13

R&R 9.

14

See Bluetarp Fin., 709 F.3d at 82.
8

Island on a claim related to the interpretation of [a] policy”
issued to a Michigan entity. 15
Plaintiffs

have

not

objected

to

the

Magistrate

Judge’s

findings or conclusions with respect to specific jurisdiction.
After reviewing Plaintiff’s memorandum and materials submitted in
support of its opposition to the Motion to Dismiss, the Court
adopts the Magistrate Judge’s reasoning and accepts the R&R’s
conclusion

that

Plaintiffs

have

failed

to

establish

specific

jurisdiction over Defendant in this case.
C. Venue transfer
Defendant’s Motion to Dismiss proposed an alternative outcome
to dismissing the case for lack of personal jurisdiction and
improper venue: transferring the case to the Eastern District of
Michigan because “this matter revolves around the interpretation
of an insurance policy issued by an Ohio corporation to a Michigan
entity . . . and it would be most effective for the interpretation
of a Michigan insurance policy to be interpreted in Michigan.” 16
Instead of recommending that this case be dismissed for lack of
personal jurisdiction and improper venue, Magistrate Judge Almond
recommends “that the interests of justice would be better served

15
16

R&R 10.
Def.’s Mot. to Dismiss 17, ECF No. 8.
9

by transfer of this action to the Eastern District of Michigan.” 17
The

Magistrate

Judge

commented

that

Defendant’s

alternative

request for transfer of venue was “effectively unopposed” because
Plaintiffs did not specifically address this alternative request.
Plaintiffs conceded as much in their objection to the R&R.
The Court agrees with Defendant’s argument for transferring
venue and with the Magistrate Judge that the interests of justice
would be better served by transferring this case to the Eastern
District

of

especially

Michigan

because

than

Defendant

by

dismissing

has

requested

the

case

this

outright,

transfer

and

Plaintiffs have not opposed transfer to this venue. 18
IV. Conclusion
For the reasons stated herein, the Court ACCEPTS the R&R (ECF
No. 18) and GRANTS IN PART Defendant’s Motion to Dismiss (ECF No.
7).

This case shall be transferred to the Eastern District of

Michigan.
IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: July 13, 2017

17

R&R 11.

18

See 28 U.S.C. § 1406.
10