Summary
alleging breach of contract action against Aviva relating to asbestos liability coverage
Summary of this case from Flintkote Co. v. Aviva P.L.C.Opinion
No. C 04-01827 MHP.
September 7, 2004
MEMORANDUM AND ORDER Re: Motion to Dismiss
On April 14, 2004, Flintkote Company filed an action in San Francisco Superior Court against defendants General Accident Assurance Company of Canada and General Accident Fire and Life Assurance Corporation, predecessors of Aviva Insurance Company of Canada. The state complaint alleged breach of contract for defendants' failure to defend or indemnify plaintiff for claims covered under its insurance policy. See Pl.'s Opp.'n at 5. Following the filing of plaintiff's Chapter 11 bankruptcy petition on May 1, 2004, defendants removed the action to this court and, on May 14, 2004, filed a motion to dismiss for lack of personal jurisdiction. Id. at 6. The court has considered the parties' arguments fully, and for the reasons set forth below, the court rules as follows.
BACKGROUND
Now in bankruptcy proceedings, plaintiff Flintkote manufactured and distributed building materials until approximately 1984; many of these materials contained asbestos fibers, substances that have since been discovered to cause lung illnesses and, subsequently, have spawned myriad lawsuits. To protect against the risks of its operations, Flintkote purchased a number of liability insurance policies, including some from defendants.See Pl.'s Opp.'n at 3. The policies involved in this action span the period from 1951 to 1960. Defendant General Accident Fire Life Assurance underwrote Comprehensive Liability Policy No. C.L. 2037 and Comprehensive Liability Policy No. L. 6265, and defendant General Accident Assurance underwrote Certified Policies No. L 90-4672 and No. L. 90-5010. See, e.g., Bay Decl., Ex. A at 5, Exh. C at 5. Both insurers were later acquired by Aviva Canada (formerly CGU Insurance Co. of Canada), a subsidiary of Aviva PLC, the seventh largest insurer worldwide. See Pl.'s Opp.'n at 3.
Because both plaintiff's and defendant's moving papers refer to defendant by the company's current name, Aviva Insurance Company of Canada (or the shorthand "Aviva"), the court uses the same appellation. However, despite the parties' agreement on the name "Aviva," defendant's exact identity remains unclear. Defendant denies responsibility for two of the four policies sued upon here, because it eschews affiliation with the issuer of those policies, General Accident Fire and Life Assurance Corporation Limited. See Def.'s Reply at 1-2. To the contrary, plaintiff alleges that General Accident Fire and Life followed the same "path of ownership" as General Accident Assurance, Aviva's undisputed predecessor. See Pl.'s Opp.'n at 3. The uncertainty surrounding defendant's obligations for the two challenged policies does not infect its authorship of the two unchallenged policies. Defendant retains responsibility for those policies admittedly issued by his predecessor. With respect to these policies, then, defendant remains subject to the court's personal jurisdiction.
The policies issued by Aviva Canada (hereinafter "Aviva") cover occurrences or accidents occurring within Canada or the United States, its territories or possessions. See, e.g., Bay Decl., Ex. A at 5, Exh. C at 5. The policies further stipulate the insurer's duty to indemnify the insured for covered losses, as well as to defend the insured against suits potentially seeking covered damages occurring in the coverage territory. See id., Ex. A at 3-4, Exh. C at 4-5. More than 100,000 asbestos-related cases are currently pending against Flintkote in American courts, many of which have been or are being heard in California courts regarding events that took place in California during the period covered by defendant's insurance policies. See Pl.'s Opp.'n at 5. Indeed, taking judicial notice of this District's docket the court finds approximately 240 cases that have been or are pending in this District.
LEGAL STANDARD
Federal courts sitting in California may exercise personal jurisdiction over any nonresident to the extent permitted by due process. See Harris Rutsky Co. Ins. Serv., Inc, 328 F.3d 1122, 1129 (9th Cir. 2003) (citing Cal. Civ. Proc. Code § 410.10). To comport with due process, the defendant must have sufficient minimum contacts with the forum state, and maintenance of the suit must not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
Personal jurisdiction may be based on either general or specific jurisdiction. See Gator.com Corp. v. L.L. Bean, Inc., 341 F.3d 1072, 1076 (9th Cir. 2003). General jurisdiction exists when the defendants' contacts with the state are "substantial" or "continuous and systematic," and it requires that the defendants' contacts approximate physical presence within the state. Bancroft Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (citing Helicopteros Nacionales de Columbia, SA v. Hall, 466 U.S. 408, 415 (1984)). When determining if general jurisdiction exists, courts look to "whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there." Id.
Plaintiff alleges that defendant is subject to general personal jurisdiction because defendant (Aviva Canada) is a subsidiary of a company (Aviva PLC), whose American subsidiary maintains a license to sell insurance in California, advertises in the state, and has a designated agent located in the state. Pl.'s Opp.'n at 7-8. According to plaintiff, these contacts demonstrate that defendants' activities within the state are "substantial" and "continuous and systematic." Id. Alternatively, plaintiff asserts general jurisdiction based on the broader inquiry into defendant's nationwide contacts that is required once an action becomes amalgamated with a party's bankruptcy case. See id. at 8; see also 20 U.S.C. § 1334(b). The court need not explore the appropriateness of exercising general jurisdiction, because there is clear specific jurisdiction over this defendant.
By contrast, specific jurisdiction exists where (1) the nonresident performs some act or consummates some transaction which purposefully avails her of the privilege of conducting activities in the forum so as to invoke the benefits and protections of the state's laws; (2) the claim arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction is reasonable. See Cybersell v. Cybersell, 130 F.3d 414, 416 (9th Cir. 1997). The purposeful availment requirement is satisfied if the defendant takes some deliberate action within the forum state or creates continuing obligations to forum residents. Id. at 417. The defendant need not be physically present in the forum state, "provided that his efforts are purposefully directed toward forum residents." Id. (quoting Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)). If a plaintiff wishes to establish that her claim arises out of or relates to the defendants' forum-related activities, the plaintiff must demonstrate that the contacts constituting purposeful availment gave rise to the current suit. See Bancroft Masters, 223 F.3d at 1088. In order to satisfy this requirement, the plaintiff must show that "but for" the defendants' forum-related conduct, the injury would not have occurred. See Myers v. Bennett Law Offices, 238 F.3d 1068, 1075 (9th Cir. 2000); Panavision Int'l L.P. v. Toeppen, 141 F.3d 1316, 1322 (9th Cir. 1998). The contacts must also be "sufficiently related to the underlying causes of action" and "have some degree of proximate causation to be considered for purposes of jurisdiction." Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 423 F. Supp. 2d 1073, 1085 (C.D. Cal. 2003) (citing Doe v. American Nat'l Red Cross, 112 F.3d 1048, 1051-52 (9th Cir. 1997)).
In all cases, the defendant bears the burden of demonstrating that personal jurisdiction is unreasonable and must put on a "compelling case." Bancroft Masters, Inc., 223 F.3d at 1088 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985)). To determine reasonableness, the court must consider (1) the extent of the defendant's purposeful interjection into the forum state, (2) the burden on the defendant of defending in the forum state, (3) the extent of the conflict with the sovereignty of the defendant's state, (4) the forum state's interest in adjudicating the dispute, (5) the most efficient resolution of the controversy, (6) the importance of the forum to the plaintiff's interest in convenient and effective relief, and (7) the existence of an alternative forum. Id. Where no evidentiary hearing is held, the plaintiff need only make a prima facie showing of jurisdiction. See Harris Rutsky, 328 F.3d at 1129. While the plaintiff cannot rely solely on the complaint to establish personal jurisdiction, the court must take uncontroverted allegations as true and resolve conflicts between the facts contained in the parties' affidavits in favor of the plaintiff.See Gator.com Corp., 341 F.3d at 1075-76 (quoting ATT v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)).
DISCUSSION
Defendant has now filed a motion to dismiss for lack of personal jurisdiction. In support of this motion, defendant makes six factual claims: 1) the company is not incorporated in California; 2) no Aviva Canada employees reside in or are domiciled in California; 3) the company does not maintain branch offices, mailing addresses, or telephone numbers in the state; 4) it does not hold bank accounts or real property in the state; 5) it has not directed advertising to California residents; and 6) its officers have not conducted or attended meetings in the state. See Def.'s Mot. at 3-5. Aviva asserts that a Canadian court, venued in Ontario (where, on May 10, 2004, it filed a complaint against Flintkote) is the better forum for resolving the dispute over defendant's duty to defend plaintiff. Id. at 5, 7
Defendants' claims do not establish lack of personal jurisdiction. Rather, the court finds the exercise of specific jurisdiction over Aviva as a defendant in this action entirely proper because defendant has purposefully availed itself of the privileges of doing business in California, because the claim at issue here arises out of defendant's business contacts, and because defendant has not made a case that jurisdiction would be unreasonable.
Plaintiff alleges that defendant does, in fact, hold a license to sell insurance in California and maintains an agent in the state for service of process. See Pl.'s Opp.'n at 7-8.
Defendant also argues that plaintiff's action must be dismissed because, as defendants construe the insurance contracts' language, the policies exclude coverage for products liability. See Def.'s Reply at 1. Interpretation of the policy exclusions might establish that some of the cases pending against Flintkote are not covered. However, the meanings of specific policy provisions do not pertain to the court's inquiry into personal jurisdiction, but are more properly dealt with in a motion for summary judgment at the appropriate time.
I. Purposeful Availment
Contrary to Aviva's assertion that it has done "nothing to reach out to the forum state," Def.'s Mot. at 8, the company has purposefully availed itself of the benefits and protections of California law. It has issued a number of insurance policies to a company based principally in California. These policies explicitly covered events occurring within the entire continental United States. Cf. Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 913 (9th Cir. 1990) (holding that a Canadian insurer's underwriting of a policy that covered events in the forum state made it subject to suit in that state's courts); Southeastern Express Sys. v. Southern Guar. Ins. Co. of Ga., 34 Cal. App. 4th 1, 9 (1995) (finding that insurers of interstate businesses ought reasonably expect to be haled into foreign courts). Because the "minimum contacts" analysis depends not on the place of contracting or performance, but on the contract terms and the consequences of the assumed obligations,see Burger King Corp., 471 U.S. at 478-79, it does not matter that the contract at issue here was formed outside California. Likewise, because a company can purposefully avail itself of the advantages of doing business in a state by taking foreign actions that have effects in the forum state, see Farmers, 907 F.2d at 913, it is irrelevant that defendant has neither established a physical presence nor acquired tangible property in California. Defendant's contractual agreement to defend and indemnify its policy purchasers against all covered liabilities arising within the policy's defined territory suffices to satisfy the purposeful availment requirement for creating personal jurisdiction within that territory. See id. at 914 (holding that "litigation requiring the presence of the insurer [in the forum where injury occurred] is not only foreseeable, but . . . purposefully contracted for by the insurer.")
II. Relation of Claim to Contacts
The second requirement for establishing personal jurisdiction is that plaintiff's claim arise out of or relate to defendant's purposeful contacts with the forum. Id. An action arises out of contacts with the forum if, "but for" those contacts, the suit would not have arisen. Id. Here, the purposeful contacts — the insurance policies — are the sine qua non prompting plaintiff's action alleging defendant's breach of contractual duty in failing to defend plaintiff against the underlying asbestos claims. There is no question, then, that plaintiff's claims arise out of defendant's purposeful contacts with California. Defendant makes much of the absence of allegations in the complaint regarding acts, injuries or claims arising in California. While it would be the better practice to allege the specific actions or reference them in some way in the complaint, that deficiency can be righted by a other pleadings or papers. In determining issues of personal jurisdiction the court may look beyond the four corners of the complaint. See, e.g., Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). In this case plaintiff's Vice-President and Insurance Counsel, John Bay, has averred in his declaration that "[a] very substantial number of these cases are pending in California." Bay Decl. at ¶ 10. As set forth above the records of this very court point out the large number of cases in this District alone.
Defendant asserts that plaintiff's action for declaratory relief is unrelated to defendant's forum-related activities (i.e., the insurance policies) because plaintiff has not submitted any California claims for defendant to defend or indemnify. See Def.'s Reply at 8. Defendant's assertion directly contradicts plaintiff's affidavit that it has unsuccessfully sought indemnification from defendant for lawsuits pending in California and covered by the insurance policies.See Bay Decl. ¶ 10-11. Since, in determining whether a prima facie case for personal jurisdiction exists, factual disputes must be resolved in favor of the non-movant, see ATT v. Compagnie Bruxelles Lambert, 94 F.3d 586 (9th Cir. 1996), the court accepts plaintiff's allegations as true. Further, even had Flintkote not filed claims with defendant regarding judgments pending against the company in California, such omissions would not deprive this court of personal jurisdiction. As long as plaintiff faces liability for damages in California potentially covered by the insurance policies under review, even if it has yet to file claims for these injuries, the "relation" prong of the personal jurisdiction test is satisfied.
III. Reasonableness
Once plaintiff has demonstrated defendant's purposeful availment and minimum contacts with this forum, the court presumes that personal jurisdiction is reasonable. See Roth v. Garcia Marquez, 942 F.2d 617, 625 (9th Cir. 1991). Aviva may only overcome this presumption by making a "compelling case" to show that jurisdiction is unreasonable. Id. Analyzing the seven factors relevant to determining the reasonableness of exercising jurisdiction — purposeful interjection; burden on defendant; conflict with another state's sovereignty, forum state's interest, efficiency of forum, plaintiff's interest, and existence of alternative forum, the court finds that Aviva has not made such a case.
Aviva has purposefully interjected itself into this forum, since it has voluntarily issued, through its predecessors, insurance policies that covered injuries adjudicated by California courts. See Bay Decl., Exs. A-D. As a subsidiary of the seventh-largest insurer in the world, moreover, Aviva Canada undoubtedly possesses the resources to litigate in this forum.See Schulz Decl., Ex. B. Indeed, one of defendant's component companies has previously defended similar actions in California courts. See id., Exs. P, Q. Therefore defendant could readily have contemplated appearing before California courts.
As defendant points out, the court examines objections to personal jurisdiction with great care when the objecting party is foreign. See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 114-15 (1987). However, a defendant's foreignness is "not dispositive because, if given controlling weight, it would always prevent suit against a foreign national in a United States court." Sinatra v. National Enquirer, 854 F.2d 1191, 1199 (9th Cir. 1988). This action does not present delicate issues implicating sovereignty, and there is no reason to believe litigating the dispute in this court would even minutely disturb foreign relations. Cf. Asahi, 480 U.S. at 115.
Moreover, the interests at stake weigh in favor of this court's jurisdiction. The interests of the forum state in enforcing promises that protect its citizens are substantial. Courts have frequently affirmed California's interest in assuring that insurance obligations to businesses operating in the state are honored and that injuries sustained in the state are redressed.See Watson v. Employers Liability Corp., 348 U.S. 66, 72-3 (1954); Southeastern Express Sys., 34 Cal. App. 4th at 7. Also obvious are plaintiff's interests in this forum. Flintkote is a California resident and many of the witnesses in both the action regarding defendant's duty to defend and the underlying asbestos lawsuits live in California. Likewise, much of the evidence (e.g., patient records, documentation of plaintiff's business practices) necessary to deciding this action and the precipitating asbestos actions is located in California.
In addition, the common interest in convenience and efficiency makes this court an appropriate forum for adjudicating this action. Cf. Farmers, 907 F.2d at 915. While a seemingly plausible alternative, Ontario is not a more efficient venue than the present court for hearing this action, given the superior accessibility to witnesses and evidence in California. In fact, the potential additional difficulties that Ontario courts might experience in subpoenaing evidence and witnesses and enforcing Canadian decrees in the United States suggest that defendant's proposed forum is even less well-suited to resolving the dispute between the parties than this court.
Taken together, the seven factors support the finding that this court may reasonably exercise specific personal jurisdiction over defendant. CONCLUSION
For the foregoing reasons, the court DENIES defendants' motion to dismiss Flintkote's claims for lack of personal jurisdiction.
IT IS SO ORDERED.