Opinion
C.A. No. 02C-05-040.
Submitted: March 21, 2003.
Decided: May 7, 2003.
Upon Defendant IWIF's Motion to Dismiss. Denied.
Walt F. Schmittinger, Esquire of Schmittinger Rodriguez, P.A., Dover, Delaware, attorneys for the Plaintiff.
Daniel P. Bennett, Esquire of Heckler Frabizzio, Wilmington, Delaware, attorneys for the Defendant The Injured Workers' Insurance Fund.
ORDER I. Introduction
Before this Court is Defendant's motion to dismiss for lack of personal jurisdiction. After reviewing the motion, answer, oral argument and supplemental memoranda, Defendant's Motion to Dismiss is denied.
II. Background
This case arises out of a work-related injury sustained by Plaintiff Martin Smack. The Plaintiff is a resident of Delaware. On August 3, 1994, Plaintiff Smack was employed by one of the Maryland Cut `Em Up businesses, and was working in Seaford, Delaware when he was struck on the head with a tree limb. Smack sustained a crush fracture of his T-6 vertebra, which rendered him paralyzed from the waist down. Plaintiff filed a petition seeking an award of worker's compensation benefits for permanent partial disability benefits before the Industrial Accident Board (IAB). After a hearing, the IAB, by orders dated March 24, 1998 and June 27, 2000, granted the Plaintiff's petition and entered an award of permanent partial disability benefits. The Defendants have failed to make payments pursuant to the Board's award. The Plaintiff, by letters dated July 25, 2000 and March 1, 2001, submitted demands for payment of all workers compensation benefits due. On May 30, 2002, the Plaintiff filed the Com plaint before this Court that is the subject of this cause of action.
Cut'Em Up Tree Care of Delaware, Inc., a Delaware corporation, was initially named as a Defendant in this litigation; however, during oral argument Plaintiff's attorney explained to the Court that he had since learned that the Delaware corporation should not be a party to this particular litigation. Hence, Plaintiff voluntarily dismissed the Delaware corporation from the current litigation. The remaining entities — Glen Kimberly Hayden, Cut'Em Up Contracting and Cut'Em Up Tree Care — are all either Maryland Corporations or Maryland citizens.
On July 17, 2002, the Defendant, Injured Workers' Insurance Fund (IWIF), filed a motion to dismiss for lack of personal jurisdiction pursuant to Superior Court Civil Rule 12. IWIF is a Maryland corporation, and is the insurance company providing worker's compensation insurance coverage for the Maryland Cut `Em Up businesses. On August 16, 2002, this Court heard oral arguments on this motion. This Court at that time reserved decision and required the parties to provide additional submissions. The parties filed their respective supplemental responses on November 7, 2002. In addition, after the oral arguments, this Court in a letter order dated August 27, 2002 required the Plaintiff to meet the requirements of service of process pursuant to Delaware Code Annotated title 10, § 3104. On October 2, 2002, Plaintiff properly served process on the Defendant.
The Court required the Plaintiff to serve process since the 120-day time period for service of process set forth in Superior Court Civil Rule 4 had not yet run.
Plaintiff contends that IWIF should be subject to jurisdiction in Delaware because it issued the insurance policy covering the business activities of Glen Kimberly Hayden and Cut `Em Up Contracting, and that the activities of the insured included activities in Delaware. Plaintiff Smack was injured while working in Delaware and subsequent to the injury IWIF paid benefits to and on behalf of Plaintiff Smack. In addition, IWIF has participated in various activities with reference to this case including: (1) scheduled employer's medical examination for Mr. Smack with Delaware physicians; (2) authorized and paid for certain treatment necessitated by Plaintiff Smack's work-related injuries; and (3) offered vocational rehabilitation services to Plaintiff Smack in connection to his workers' compensation claim. Plaintiff further contends that IWIF has insured other employers who have employees that were injured in Delaware and that IWIF has paid benefits in connection with these claims. In addition, Plaintiff claims that IWIF has participated in litigation before Delaware's IAB concerning workers employed by its insured who were injured within the State of Delaware. IWIF advertises coverage for employees injured out of state on its website. Specifically the website states:
The insurance policy in this case was issued to Maryland residents, Glen Kimberly Hayden and Maryland employers Cut `Em Up Contracting and Cut `Em Up Tree Care.
See Plaintiff's Response to Defendant's Motion to Dismiss and accompanying exhibits.
Coverage in Other States
Coverage for Maryland employees working in other states on an incidental basis is provided under your basic IWIF policy. Employees assigned for extended periods of time or permanently located in another state require a separate policy. If you need other states' coverage, please contact an IWIF underwriter or your insurance agent.
Found at www.iwif.com.
According to the quoted language above, coverage is provided for the "employees working in other states on an incidental basis" as part of the standard contract.
IWIF contends that the out of state coverage provision available for Maryland employers whose employees perform primarily in other jurisdictions can be added to a coverage plan. IWIF admits that if it provides this type of coverage it is submitting to the jurisdiction of the other jurisdiction. However, IWIF contends that no such provision was present in the insurance policy issued to Cut `Em Up. This Court does not have enough information before it at this time to determine if Plaintiff Smack "primarily" worked in Delaware, or if such work was "incidental."
On the other hand, IWIF contends that it should not be subjected to personal jurisdiction in Delaware because it does not fall within the ambit of the long-arm statute and it does not have sufficient minimum contacts with Delaware to pass constitutional muster. IWIF's primary purpose is to provide worker's compensation benefits for Maryland employers and their employees hired and working in Maryland. According to IWIF, it does not issue any workers' compensation insurance within Delaware. IWIF issued the insurance policy to Maryland residents, Glen Kimberly Hayden, and a Maryland employer, Cut `Em Up Contracting. IWIF claims that they have not transacted any business within this State relative to this incident, nor engaged in any regular course of conduct in Delaware. IWIF further claims that all compensation benefits paid by IWIF to Plaintiff Smack were paid pursuant to Maryland worker's compensation law. In addition, IWIF claims it was neither a party, nor did it participate in the proceedings before the Industrial Accident Board for the State of Delaware. IWIF does admit that it paid compensation benefits to Plaintiff Smack, but it states that these payments have been paid pursuant to Maryland worker's compensation law. Therefore, IWIF argues that these payments do not mean that it agreed to consent to Delaware's jurisdiction. Defendant further explains that it did communicate with the Plaintiff, in Delaware, and it did provide vocational rehabilitation services and payment of medical treatment in Delaware. Nevertheless, Defendant claims that "It offends the sense of fairness and justice to attempt to claim that the generosities extended to a Delaware resident while providing Maryland worker's compensation benefits submits the carrier to the jurisdiction of the state."
Defendant's Supplemental Memorandum in Support of Motion to Dismiss.
III. Analysis
Defendant is moving to have this cause of action dismissed pursuant to Superior Court Civil Rule 12. Under Rule 12(b)(2) lack of jurisdiction over a person is one of the six defenses that can be made, as was done in this case, by motion. The existence of personal jurisdiction depends on the application of two independent considerations — (1) the long arm statute and (2) due process. The first step requires an application of the long arm statute, and satisfying this step merely means that the legislative and court requirements of service of process have been met. Under the second step, the court will analyze the constitutional dimension of personal jurisdiction. When in personam jurisdiction is challenged by a motion to dismiss, the plaintiff has the burden to show a basis for long-arm jurisdiction; however, this burden is met by a threshold prima facie showing that jurisdiction is conferred by Delaware's long-arm statute. All factual inferences must be viewed in a light most favorable to the plaintiff.A. Delaware's Long Arm Statute
To determine the applicability of Delaware's long arm statute, Delaware Code Annotated title 10, § 3104(c) is to be "broadly construed to confer jurisdiction to the maximum extent possible under the Due Process Clause." Under § 3104(c) a Delaware court may exercise personal jurisdiction over any nonresident if the cause of action arises from any of the acts enumerated in this statute including"(6) Contracts to insure or acts as surety for, or on, any person, property, risk, contract, obligation or agreement located, executed or to be performed within the State at the time the contract is made, unless the parties otherwise provide in writing." In this case, IWIF insured Plaintiff's employer for workers' compensation liability and Plaintiff's employer engaged in work within the State of Delaware. Therefore, it appears that the jurisdictional criteria under the long-arm statute has been satisfied.B. Due Process
Next, this Court must determine if subjecting IWIF to personal jurisdiction in Delaware is constitutionally permitted. The Supreme Court has stated:
The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations. By requiring that individuals have fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign, the Due Process Clause gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal citations omitted).
To determine whether subjecting the nonresident defendant to jurisdiction in Delaware violated the Due Process Clause of the Fourteenth Amendment, this Court must utilize a two-part inquiry. This Court is required first to determine whether IWIF has the requisite minimum contacts with Delaware, and then whether asserting personal jurisdiction over the defendant is fair and reasonable.
Boone, 724 A.2d at 1158 (citing Asahi, at 1030-1033).
1. Minimum Contacts
The constitutional touchstone in a personal jurisdiction inquiry "remains whether the defendant purposefully established minimum contacts with the forum state." The defendant need not be physically present in the state; nevertheless, there must be some indication that the defendant "purposefully availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." To determine if the minimum contacts are such that the defendant should be compelled to defend itself in Delaware, the quality and nature of the defendant's activities control.IWIF advertises on its website that it provides coverage under the standard contract for injuries that occur when the employee works out of state on an incidental basis. IWIF has paid benefits to other employees that were injured in Delaware. Further, concerning this particular case, IWIF has had numerous contacts with the Plaintiff in Delaware while trying to resolve this claim. Therefore, IWIF has sufficient minimum contacts with Delaware to subject it to the jurisdiction of this Court.
2. Fairness and Reasonableness
In addition to showing that the defendant had minimum contact with the State of Delaware, there also must be a determination that exercising jurisdiction over the defendant would be fair and reasonable. Under the Due Process Clause, the defendant's contacts with the forum state "must be such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." In analyzing the fairness and reasonableness of jurisdiction the court must consider several factors including-burden on the defendant; the interest of the forum state in adjudicating the dispute; the plaintiff's interest in obtaining relief; the interest of the interstate judicial system efficiently resolving disputes and the combined interest of the sovereigns in advancing substantial social policies. In essence, this prong of the Due Process analysis requires that the parties have fair warning that a particular activity may subject it to jurisdiction in a given state.
World-Wide Volkswagen, 444 U.S at 292.
Boone (citing World-Wide Volkswagen, 444 U.S. at 292).
Outokumpu, 685 A.2d at 731.
In the case at bar, IWIF is located in Maryland, a bordering state, and IWIF has not advanced an argument that would indicate that it would be unduly burdensome to require it to defend in Delaware. Furthermore, Delaware has an interest in adjudicating the rights of a Delawarian who was injured while performing work duties in Delaware. This case was already adjudicated before Delaware's IAB; thus, in the interest of efficiency, this Court should resolve the current dispute. Therefore, it is both fair and reasonable for this Court to obtain in personam jurisdiction over IWIF.
IV. Conclusion
In conclusion, in this case both the statutory and constitutional aspects of personal jurisdiction have been satisfied conferring jurisdiction on this Court. Therefore, Defendant IWIF's motion to dismiss for lack of personal jurisdiction is denied.
IT IS SO ORDERED.