Western World Insurance Company v. Nonprofits' Insurance Alliance of California

Filing 26

OPINION AND ORDER by Magistrate Judge Kimberly E. West: granting 11 Defendant NIAC's Motion to Dismiss for Lack of Jurisdiction. (case terminated). (neh, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA
WESTERN WORLD
INSURANCE COMPANY,

)
)
)
)
)
)
)
)
)
)
)

Plaintiff,
v.
NONPROFITS’ INSURANCE
ALLIANCE OF CALIFORNIA,
Defendant.

Case No. CIV-13-216-KEW

OPINION AND ORDER
This matter comes before the Court on Defendant’s Motion to
Dismiss for Lack of In Personam Jurisdiction (Docket Entry #11).
Defendant Nonprofits’ Insurance Alliance of California (“NIAC”)
contends this Court lacks both specific and general personal
jurisdiction over it such that this action cannot be maintained in
this District.
Plaintiff Western World Insurance Company’s (“Western World”)
initiated

this

action

on

May

21,

2013,

seeking

equitable

contribution and/or equitable subrogation from NIAC. In accordance
with the Complaint filed in this action, Western World is alleged
to have issued a commercial insurance policy to Narconon of
Oklahoma, Inc. (“Narconon”).
rehabilitation

services

to

Narconon provides drug and alcohol
clients,

operating

a

facility

in

Pittsburg County, Oklahoma.
Narconon International, a 501(c)(3) nonprofit organization
located in Los Angeles, California, is provided coverage by Western

World as an additional insured. NIAC is a liability insurance pool
established for 501(c)(3) tax-exempt nonprofit organizations in
California. NIAC’s principal place of business is located in Santa
Cruz, California.

NIAC issued a commercial general liability

insurance policy (the “Policy”) to insure Narconon International.
The Complaint further alleges Heather Landmeier (“Landmeier”)
sought drug rehabilitation services from Narconon on multiple
occasions.

Ultimately, Western World alleges that on March 4,

2008, Narconon demanded she leave the facility because she had
begun using drugs again.

On March 5, 2008, Landmeier overdosed,

resulting in injury.
On March 2, 2010, Valerie Landmeier, as guardian of Landmeier,
an incapacitated adult, filed a Petition in the District Court in
and for Pittsburg County, Oklahoma alleging various claims against
both Narconon and Narconon International.

Western World contends

it has provided a defense to those entities under a reservation of
rights but NIAC has refused to do the same.

Western World seeks

equitable contribution and/or equitable subrogation from NIAC for
the cost of defending Narconon International in the Landemeier
lawsuit.
Through its Motion to Dismiss, NIAC contends it lacks the
necessary minimum contacts with the State of Oklahoma for this
Court to assume in personam jurisdiction.
clause

in

the

insurance

contract

2

between

Even if the coverage
NIAC

and

Narconon

International establishes minimum contacts, NIAC contends the
analysis for the reasonableness of exercising personal jurisdiction
mandated by the Tenth Circuit weighs in favor of declining in
personam jurisdiction.
In regard to the first argument, NIAC alleges that this Court
lacks personal jurisdiction, both specific and general, since
Western World cannot establish the necessary minimum contacts
between NIAC and the State of Oklahoma.

In support of this

proposition, NIAC provides evidence that it (1) is a charitable
risk pool rather than an insurance company and that membership in
NIAC requires that an entity be organized and based in California.
Entities that have physical operations outside of the State of
California are not eligible for NIAC membership and not eligible
for coverage issued by NIAC; (2) Narconon International’s policy
was executed and delivered in California; (3) the policy was issued
through an independent broker in California; (4) NIAC is not
licensed to do business in Oklahoma and has never issued a policy
of insurance in Oklahoma; (5) NIAC has never solicited to insure or
insured any individual or entity within the State of Oklahoma, does
not advertise for or solicit business in Oklahoma, and does not
recruit employees from within Oklahoma; (6) NIAC has never had any
offices, employees, or operations in Oklahoma and has never had an
Oklahoma mailing address or telephone listing; (7) NIAC has never
registered

with any Oklahoma state agency and has never paid any

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taxes to the State of Oklahoma or been required to do so; (8)

NIAC

has never owned or leased any real or personal property within
Oklahoma and never maintained any company files or records within
this state; (9) NIAC has never had a registered service agent for
service of process in Oklahoma; (10)
website,

NIAC

has

not

directed

any

although it maintains a
advertising

or

marketing

materials to any person or entity in Oklahoma; and (11) NIAC’s
board of directors is made up of individuals from California.
Initially, Western World bears the burden of establishing
personal jurisdiction over NIAC.

American Land Program, Inc. v.

Bonaventura Uitgevers Maatschappij, N.V., 710 F.2d 1449, 1454 (10th
Cir. 1983).

However, when a request for dismissal premised upon a

lack of jurisdiction is decided on the basis of affidavits and
other written material alone, Western World need only make a prima
facie showing.

Id.; Behagen v. Amateur Basketball Association of

U.S.A., 744 F.2d 731, 733 (10th Cir. 1984).
The laws governing jurisdiction of the forum state determine
the appropriate standard for establishing jurisdiction over a nonresident defendant in a case based in diversity so long as that
exercise does not offend the due process clause of the Fourteenth
Amendment of the United States Constitution.

Rambo v. American

Southern Ins. Co., 839 F.2d 1415, 1416 (10th Cir. 1988).

In

Oklahoma, the long-arm jurisdictional statute provides that "[a]
court

of

this

state

may

exercise

4

jurisdiction

on

any

basis

consistent

with

the

Constitution

of

this

state

and

of

the

Constitution of the United States." Okla. Stat. tit. 12 § 2004(F).
This language has been interpreted to authorize jurisdiction over
non-resident defendants when such an exercise is consistent with
the Due Process Clause of the United States Constitution. Williams
v. Bowman Livestock Equipment Co., 927 F.2d 1128, 1131 (10th Cir.
1991).

Due

process

and

the

protections

afforded

under

the

Constitutions of both Oklahoma and the United States are satisfied
only

if

the

non-resident

defendant

has

sufficient

"minimum

contacts" with the forum state and the exercise of jurisdiction
would not offend "traditional notions of fair play and substantial
justice." International Shoe Co. v. Washington, 326 U.S. 310, 316,
66 S.Ct. 339, 342, 90 L.Ed. 95, 102 (1945). This "minimum contact"
standard requires that the court determine that the non-resident
defendant "purposefully directed" his activities toward the forum
state, thereby deriving a benefit. Burger King Corp. v. Rudzewicz,
471 U.S. 462, 473 (1985).

This determination concentrates on the

"defendant's conduct and connection with the forum state as such
that he should reasonably anticipate being haled into court there."
Id. at 474 citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980). A non-resident defendant will not be brought into
a jurisdiction solely as a result of "random," "fortuitous" or
"attenuated" contacts or the "unilateral activity of another party
or a third person."

Id. at 475.

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This variety of personal

jurisdiction is frequently referred to as “specific jurisdiction.”
Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 455-57
(10th Cir. 1996).
Western World relies almost exclusively upon the fact that
NIAC

issued

an

insurance

policy

to

an

entity

(Narconon

International) which arguably had some contact or relationship with
another entity (Narconon) in the State of Oklahoma.

Western World

references the “coverage territory” clause within the Policy.

The

Policy provides coverage, including the right and duty to defend,
so

long

as

territory.”

the

“occurrence”

takes

place

in

the

“coverage

Commercial General Liability Coverage Form, Sec.

I(1)(a) and (b).

The term “coverage territory” is defined under

the Policy as
a.

The United
territories
Canada;

b.

International waters or airspace, provided the
injury or damages does not occur in the course of
travel or transportation to or from any place not
included in a. above; or

c.

All parts of the world if:
(1)

States of America (including
and possessions), Puerto Rico

its
and

The injury or damage arises out of:
(a)
(b)

(2)

Goods or products made or sold by you in
the territory described in a. above; or
The activities of a person whose home is
in the territory described in a. above,
but is away for a short time on your
business; and

The insured’s responsibility to pay damages is
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determined in a “suit” on the merits, in the
territory described in a. above or in a
settlement we agree to.
Commercial General Liability Coverage Form, Sec. V(4)(a),
(b), and (c).
The

Tenth

Circuit

has

expressly

recognized

that

“[a]n

individual’s contract with an out-of-state party cannot, standing
alone, establish sufficient minimum contacts with the forum state.”
TH Agriculture & Nutrition, LLC v. Ace European Group, Ltd., 488
F.3d 1282, 1287 (10th Cir. 2007) citing Burger King, 471 U.S. at
478.

The court went on to conclude, however, that an insurer

establishes minimum contacts with the forum state when it includes
a worldwide coverage territory-of-coverage clause such as NIAC has
done in this case.

Id. at 1288-91.

This conclusion does not end the required inquiry for specific
jurisdiction. After establishing sufficient minimum contacts exist
to the forum state, the court must then determine whether the
assertion of personal jurisdiction comports with “traditional
notions of fair play and substantial justice.”

Id. at 1292 citing

Asahi Metal Indus. Co. v. Super. Ct. of Calif., 480 U.S. 102, 113
(1987).

The analysis requires a case-specific inquiry into

the

reasonableness of the exercise of personal jurisdiction over a
defendant who has minimum contacts in the forum state.

Id.

In so doing, the Tenth Circuit requires an evaluation of five
factors:
(1) the burden on the defendant, (2) the forum state's
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interest in resolving the dispute, (3) the plaintiff's
interest in receiving convenient and effective relief,
(4) the interstate judicial system's interest in
obtaining the most efficient resolution of controversies,
and (5) the shared interest of the several states in
furthering fundamental substantive social policies.
Intercon, Inc. v. Bell Atlantic Internet Solutions, Inc.,
205 F.3d 1244, 1249 (10th Cir. 2000) citing Burger King,
471 U.S. at 477.
The Tenth Circuit also noted a qualitative difference in the
minimum contacts establishing jurisdiction.
reasonableness

of

asserting

jurisdiction,

In assessing the
a

sliding

scale

is

employed where “the weaker the plaintiff’s showing on [minimum
contacts],

the

less

a

defendant

need

show

in

terms

of

unreasonableness to defeat jurisdiction.” TH Agriculture, 488 F.3d
at 1292 citing OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149
F.3d 1086, 1092 (10th Cir. 1998). As in TH Agriculture, this Court
concludes that the minimum contacts established in this case are
decidedly weak, being based solely upon the worldwide territory-of
coverage clause.

Absolutely no other evidence in the record

suggests any attempt by NIAC to purposely direct activities to the
State of Oklahoma.

From their non-profit structure in California

to their business activities, NIAC painstakingly attempts to limit
its

activities

and

contacts

to

the

State

of

California.

Accordingly, NIAC’s showing on the reasonableness of exercising
jurisdiction over it in this action is minimal.

This Court will

weigh the required factors under the specific facts of this case to
assess the reasonableness of exercising jurisdiction over NIAC.
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Burden on NIAC of Litigating in Oklahoma –
NIAC’s offices, records, employees, and witnesses are all
based in the State of California.

While modern technology and

transportation might minimize the impact of this fact, it does not
tip

the

scales

in

favor

of

Agriculture, 488 F.3d at 1293.

exercising

jurisdiction.

TH

On the other hand, Western World

maintains agents in the State of California and, therefore, has an
established business presence in that state per its website.

This

factor weighs in favor of NIAC.
Forum State’s Interest in Adjudicating the Dispute
Both parties to this litigation are out-of-state entities NIAC with its principal place of business in California and Western
World with its principal place of business in New Jersey. Oklahoma
bears no particular interest in this dispute.
Western World’s Interest in Convenient and Effective Relief
This factor “evaluates whether the plaintiff may receive
convenient and effective relief in another forum.” TH Agriculture,
488 F.3d at 1294 citing OMI Holdings, Inc., 149 F.3d at 1097.
“This factor may weigh heavily in cases where a Plaintiff's chances
of recovery will be greatly diminished by forcing him to litigate
in another forum because of that forum's laws or because the burden
may be so overwhelming as to practically foreclose pursuit of the
lawsuit.”

Id.

Western World can certainly obtain convenient and

effective relief in California or another similarly convenient

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forum.
Interstate
Resolution

Judicial

System’s

Interest

in

Obtaining

Efficient

The fourth factor requires an analysis of “whether the forum
state is the most efficient place to litigate the dispute.” TH
Agriculture, 488 F.3d at 1296 citing OMI Holdings, Inc., 149 F.3d
at 1097. “Key to this inquiry are the location of witnesses, where
the wrong underlying the lawsuit occurred, what forum's substantive
law governs the case, and whether jurisdiction is necessary to
prevent piecemeal litigation.”

Id. (citations omitted).

At the heart of this dispute lies a required examination of
the Policy and its stated coverage.

The contract was formed in

California and its interpretation is governed by California law.
Nothing in Oklahoma bears relevance upon this dispute.
State’s Interest in Furthering Fundamental Substantive Social
Policies
The final factor “focuses on whether the exercise of personal
jurisdiction by [the forum state] affects the substantive social
policy

interests

of

other

states

or

foreign

nations.”

TH

Agriculture, 488 F.3d at 1297 citing OMI Holdings, Inc., 149 F.3d
at 1097.

This factor has little to no applicability to the facts

in this case.
Considering these factors and the relatively low quality of
NIAC’s contact with the State of Oklahoma, this Court concludes it
is not reasonable to exercise specific personal jurisdiction over

10

NIAC in this case. Western World devotes considerable space in its
briefing

on

Narconon

International’s

contacts

with

Oklahoma,

somehow attempting to transfer its relationship to the state and
its residents to NIAC.

This analysis is flawed as it pertains to

this lawsuit which involves little contact with Oklahoma.
in

the

record

indicates

Western

World

will

be

Nothing

particularly

prejudiced by litigating this issue in another forum where both
parties maintain a stronger presence.
The

other

jurisdiction.

type

of

personal

jurisdiction

is

General jurisdiction requires a showing that

has sufficient contacts with the State of Oklahoma to
.

.

.

Kuenzle,

continuous
102

general

F.3d

and
at

systematic
457

citing

general

"constitute

business

Helicopteros

Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984).

NIAC

contacts."

Nacionales

de

In assessing

contacts with a forum, courts have considered such factors as: (1)
whether the defendant solicits business in the state through a
local office or agents;

(2) whether the defendant sends agents

into the state on a regular basis to solicit business;

(3) the

extent to which the defendant holds itself out as doing business in
the forum state, through advertisements, listings or bank accounts;
and (4) the volume of business conducted in the state by the
defendant.

Id. citing Trierweiler v. Croxton & Trench Holding

Corp., 90 F.3d 1523, 1533 (10th Cir. 1996).
In this case, Western World has failed to provide the Court

11

with evidence that NIAC has made any of the type of systematic,
regular, and continuous contacts with the State of Oklahoma which
are required in order to maintain general jurisdiction over it.
Having found that neither specific nor general jurisdiction
exists in this Court, NIAC is entitled to the dismissal of this
action.

Neither party has made the request that the action be

transferred to another jurisdiction which possesses the requisite
jurisdiction.

Western

World

does

make

the

request

in

the

alternative that it be granted “leave to explore in discovery the
nature of Narconon International’s business and other contacts with
the State of Oklahoma.”

Again, this request improperly focuses

upon Narconon International’s contact with Oklahoma - that inquiry
is not this lawsuit.
IT IS THEREFORE ORDERED that Defendant NIAC’s Motion to
Dismiss for Lack of In Personam Jurisdiction (Docket Entry #11) is
hereby GRANTED.

This action is hereby DISMISSED due to a lack of

personal jurisdiction in this Court.
IT IS SO ORDERED this 27th day of March, 2014.

______________________________
KIMBERLY E. WEST
UNITED STATES MAGISTRATE JUDGE

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