Specific Concerns: Insurance Coverage Denials and Specific Personal Jurisdiction

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Insurance companies operate nationwide, no pun intended, and with that area of coverage comes more than their fair share of litigation. Common to each and every case is the consideration of whether the court has personal jurisdiction over the parties. With regard to insureds suing their insurance companies for denial of coverage, establishing a court’s personal jurisdiction over the insurance company is accomplished by showing either (1) general personal jurisdiction; or (2) specific personal jurisdiction. However, as the following will show, specific personal jurisdiction is the likely path forward for many plaintiffs in the coming years.

The Supreme Court of the United States decided Goodyear Dunlop Tires Operations, S.A. v. Brown in 2011 and, in that opinion, reiterated that companies are only subject to general personal jurisdiction where they are “essentially at home in the forum state.”[1] For a corporation to be sufficiently “at home,” it must either be incorporated in the state or have its “principal place of business” in the state.[2]

Courts are clear, since the SCOTUS opinion in Goodyear, that while widespread, continuous activity may well have satisfied the standards for general personal jurisdiction in the days of International Shoe v. Washington, 326 U.S. 310 (1945), they will no longer serve to establish general personal jurisdiction over insurers.[3] However, these developments have not deterred plaintiff insureds from seeking jurisdiction over their insurance carriers when the insureds’ claims have been denied. Instead, insureds are turning, with some success, to establishing specific personal jurisdiction over the insurers based on those insurers’ denial of the insureds’ claims.

Specific personal jurisdiction is based on the connection between a defendant’s “contacts” with the forum state and the alleged “injury” caused to the plaintiff. Where a defendant has contacts with a forum state, and those contacts cause a recoverable injury to the plaintiff, a defendant can be subject to specific personal jurisdiction in that forum.[4]  Insureds are now using certain elements of their insurance policy, and the underlying matters potentially implicating those policies, to rope their insurers into courts in certain forums – even when the insured’s policy was not issued in the forum state – on the basis of specific personal jurisdiction.

Most third-party insurance policies include that the insurance company has a duty to defend and/or indemnify it's insured or otherwise assist the insured in appropriate settlement negotiations. Some courts are finding that, where an insurer has contractually promised to provide such protections and is later sued for alleged failure to uphold those obligations, courts in the state where such “breach” occurred have the requisite specific personal jurisdiction over the defendant.[5] In Roldan, the plaintiff insured (“Nash”) was issued an auto insurance policy in her home state of Kansas.[6] Subsequently, her father had a wreck in Missouri while driving the covered automobile and the insurer denied coverage to Nash and the injured party (“Wright”) who was seeking coverage.[7] After arbitration, Wright and Nash then filed suit in the appropriate county in Missouri, alleging the insurer had refused to settle the claims in bad faith.[8] Pursuant to Missouri’s long-arm statute, which allowed for personal jurisdiction over “tortious actions,” the Missouri Supreme Court held that the insurer’s tortious conduct in allegedly refusing to settle in bad faith was, “by itself,” enough to satisfy Due Process in establishing specific personal jurisdiction.[9]

Similarly, the claims in Sodexo, 2021 WL 254240 (S.D. Cal. 01/26/2021), arose out of an insurance policy that was issued in Minnesota by an insurance company incorporated in Pennsylvania with its principal place of business in Illinois.[10] Plaintiff, in that case, alleged, inter alia, that Defendant had breached its contract in its failure to defend and indemnify the plaintiff in underlying actions, and alleged breach of the duties of good faith and fair dealing.[11] California’s long-arm statute, like those of many states (including Alabama), extends its jurisdiction to the “full extent” of Due Process allowance.[12] Ultimately, the Court found that California appropriately had specific personal jurisdiction over the insurance company because it had allegedly violated its contractual duties to the Plaintiff and such breach occurred in California. [13]

While courts are closing the door on general personal jurisdiction arguments regarding insurers, the window of specific personal jurisdiction seemingly remains open. Thus, it is critical for insurers to evaluate the language of their policies and to understand how those policies might subject the insurers to litigation in various foreign forums. It is not safe to assume that, just because the policy was issued in a certain state, suits on that policy must be brought either in that forum state or where the insurer is “essentially at home.” Instead, insurers should plan ahead and contact counsel to determine how prepared the insurer is across various forums where they might be subject to specific personal jurisdiction.

[1] 564 U.S. 915, 919 (2011).

[2] Id. at 924.

[3] See generally, e.g., Rosado v. State Farm Mutual Automobile Ins. Co. , 2020 WL 3887880, C.A. No. N19C-12-242 (Del. Super. 2020); Rawls v. Old Republic General Ins. Group, Navistar, Inc. et al, 2020 WL 6374621, Civ. No. 5:19-cv-00159 (S.D. Tex. 2020) (no general personal jurisdiction in Texas despite the auto-dealer defendant’s business and physical presence in Texas, its registration to do business in Texas, and the presence of a registered agent in Texas).

[4] See generally, Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., ––– U.S. ––––, 137 S.Ct. 1773, 1780, 198 L.Ed.2d 395 (2017)).

[5] State ex rel. Key Insurance Company v. Roldan, 587 S.W.3d 638, 642-43 (Mo. 2019); Sodexo Mgt., Inc. v. Old Republic Ins. Co. et al , 2021 WL 254240, *6 (S.D. Cal. 01/26/2021).

[6] Id. at 640.

[7] Id. at 640-41.

[8] Id.

[9] Id. at 642-43.

[10] Sodexo, 2021 WL 254240 at *2.

[11] Id.

[12] Id. at *3; see also (http://euro.ecom.cmu.edu/program/law/08-732/Jurisdiction/LongArmSurvey.pdf) for a starting point on your state’s long-arm statute.

[13] Id. at *6 (stating “. . . but for [defendant’s] alleged breach of its promise to defend and indemnify its insureds and additional insureds who contract with its insureds for bodily injury . . . this suit would not have arisen. The Court concludes that [plaintiff] has made a prima facie showing that this suit arises out of [defendant’s] contacts with the forum state.” Id.).

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