Opinion
Civ. No. 04-1666 (RHK/AJB).
March 30, 2005
Darren P. Knight, Knight Hayano, PA, Plymouth, Minnesota, for Plaintiffs.
Matthew R. Smith and Jerome Brian Abrams, Abrams Smith, Minneapolis, Minnesota, for Defendants Greening Aviation Claims, Inc., Paul Greening, and Gerling Canada Insurance Company.
Shanda K. Pearson, Rider Bennett LLP, Minneapolis, Minnesota, for Defendant Marsh Canada Limited.
MEMORANDUM OPINION AND ORDER
INTRODUCTION
This action involves a dispute under an insurance policy. Plaintiffs have sued their Canadian insurance provider and a Canadian claims adjuster alleging claims arising from property damage to Plaintiffs' insured airplane while it was stored in Canada. Defendants now move to dismiss Plaintiffs' Amended Complaint for lack of personal jurisdiction. For the reasons set forth below, the Court will grant the Motion.
The moving defendants are Greening Aviation Claims, Inc., Paul Greening, and Gerling Canada Insurance Company. For purposes of this Motion, the Court will refer to the moving defendants as "Defendants," although Defendant Marsh Canada Limited has not moved to dismiss the Amended Complaint.
BACKGROUND
I. Factual Background and Procedural History
Plaintiffs Z Plane, Inc. ("Z Plane") and North of Sixty Flying Services, Inc. ("North of Sixty") are associated with North of Sixty Fishing Camps, a fly-in fishing camp located approximately 1,000 miles northwest of Winnipeg, Manitoba. Z Plane is a Florida corporation with its corporate headquarters in Minnesota. North of Sixty is a Canadian corporation with its corporate headquarters in Minnesota. Ray Zitzloff, not a party in this action, is a United States citizen, the secretary and a shareholder of North of Sixty, and the president and a shareholder of Z Plane.
At the time of the events giving rise to this action, North of Sixty was insured by Gerling Canada Insurance Company n/k/a GCAN Insurance Company ("GCAN"), a Canadian corporation. Marsh Canada Limited ("Marsh") was the broker for North of Sixty's GCAN Policy (the "Policy"). The Policy insured North of Sixty against loss and damage to aircraft and related equipment the company owned. The Policy defined the "Geographical Limits" of coverage as the "Western Hemisphere but Worldwide in respect of Products Liability." (Zitzloff Aff. Ex. 1 at 1.) It listed North of Sixty as the "Insured" and listed North of Sixty's Canadian address as the insured's address. (Id.) The Policy also contained a "Law and Jurisdiction" clause stating: "This Policy shall be governed by the laws of Canada whose courts shall have jurisdiction in any dispute arising hereunder." (Id. at 25.)
One covered aircraft under the Policy was a DHC-3 Single Otter C-FTOK 207 (the "Otter"). In May 2000, while Plaintiffs were storing the Otter at the La Ronge airport in Saskatchewan, Canada, the aircraft was damaged. Plaintiffs filed a claim under the Policy, asserting that the Otter was damaged because it was not properly stored or secured at the airport. GCAN hired claims adjuster Paul Greening, the president of Greening Aviation Claims, Inc. ("Greening Aviation"), to investigate Plaintiffs' claim. Greening is a Canadian citizen, and Greening Aviation is a Canadian corporation (referred to collectively as "the Greening Defendants"). Greening concluded that a windstorm, not improper storage, caused the damage to the Otter. Based on this conclusion, GCAN rejected Plaintiffs' claim. Plaintiffs then initiated the instant action to recover under the Policy and Defendants have moved to dismiss the Amended Complaint based on the lack of personal jurisdiction.
II. Defendants' Contacts with Minnesota
The facts pertinent to this Motion concern Defendants' contacts with Minnesota — the forum state. The record does not indicate what contacts, if any, the Greening Defendants have with Minnesota. The only apparent involvement that they had with the events underlying this case was the inspection of the Otter in Canada. According to Greening, neither he nor the company advertises or solicits "business from individuals located in the State of Minnesota." (Greening Aff. ¶ 13.) Plaintiffs do not allege that the Greening Defendants do business in Minnesota.
With respect to GCAN, Plaintiffs allege that Marsh and GCAN "solicited and/or contacted" them in Minnesota regarding insurance coverage "no less than 50 times." (Zitzloff Aff. ¶ 15.) Plaintiffs also assert that the Otter was "stored periodically at Crystal Airport in Minnesota . . . [and] periodically flown in the United States by pilots approved by" GCAN. (Id. ¶ 9.) One of the pilots approved under the Policy to fly the Otter was Zitzloff, who was licensed to fly the Otter in the United States. According to Plaintiffs, GCAN was aware that the Otter would be flown in the United States and it also insured another aircraft owned by Zitzloff (the "Cessna") that was registered in the United States and was periodically flown and stored in the United States and Minnesota.
Plaintiffs have provided correspondence sent to Zitzloff in Minnesota from Marsh and GCAN. (Zitzloff Aff. Ex. 3.) It appears from the correspondence that Marsh was the primary contacting party. Although Plaintiffs assert that GCAN "sent correspondence directly" to North of Sixty's office in Minnesota, it is unclear how often correspondence was sent directly from GCAN to Minnesota. (Id. ¶ 16.) Furthermore, Plaintiffs only identify Fred Kueber and Elaine Betterton, Marsh employees, as making contact with them in Minnesota. (Id. ¶¶ 13, 14.)
It is undisputed that neither Greening Aviation nor GCAN has a registered office, address or agent in Minnesota, is registered as a foreign corporation with the Minnesota Secretary of State, nor has a certificate of authority to conduct business in Minnesota. (Baker Aff. ¶¶ 7-9; Greening Aff. ¶¶ 9-11.)
STANDARD OF REVIEW
"To survive a motion to dismiss for lack of personal jurisdiction a plaintiff need only make a prima facie showing of personal jurisdiction over the defendant." Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 561 (8th Cir. 2003) (citation omitted). The evidence is viewed in the light most favorable to the plaintiff and all factual conflicts are resolved in the plaintiff's favor. Id. "In order to defeat a plaintiff's prima facie showing of jurisdiction, a defendant must present a compelling case demonstrating `that the presence of some other considerations would render jurisdiction unreasonable.'" OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).
The Court may "assume jurisdiction over a foreign defendant only to the extent permitted by [Minnesota's] long-arm statute and by the Due Process Clause of the Constitution." Ferrell v. West Bend Mut. Ins. Co., 393 F.3d 786, 790 (8th Cir. 2005) (internal quotation omitted). Because Minnesota interprets its long-arm statute, Minn. Stat. § 543.19 (2004), to extend personal jurisdiction to the fullest extent permitted by due process,see Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 29 (Minn. 1995), "the inquiry collapses into the single question of whether exercise of personal jurisdiction [in this case] comports with due process," Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir. 1994) (citation omitted).
"The Due Process Clause requires the existence of `minimum contacts' between a defendant and the forum State." Ferrell, 393 F.3d at 790 (citation omitted). "The requisite minimum contacts must be based upon `some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Id. (quoting Burger King, 471 U.S. at 475). "In addition, even where `minimum contacts' are established, the Due Process Clause also forbids the exercise of personal jurisdiction where it nonetheless would be inconsistent with `traditional notions of fair play and substantial justice.'" Id. (quotingAsahi Metal Indus. Co. v. Superior Court of Calif., 480 U.S. 102, 113 (1987).
With these principles in mind, the Court looks to five distinct factors: (1) the nature and quality of the contacts with the forum state, (2) the quantity of those contacts, (3) the relation of the cause of action to the contacts, (4) the interest of the forum state in providing a forum for its residents, and (5) the convenience of the parties. Pecoraro, 340 F.3d at 562 (citation omitted). "The first three factors are closely related and are of primary importance, while the last two factors are secondary."Id. (citation omitted).
ANALYSIS
Plaintiffs contend that this Court has personal jurisdiction over Defendants because Defendants have the requisite minimum contacts with Minnesota and it would be unduly burdensome for Plaintiffs to litigate this dispute in Canada. Defendants maintain that they do not have minimum contacts with Minnesota, and convenience and state interests dictate that Canada is the proper forum. For the reasons set forth below, the Court concludes that it does not have personal jurisdiction over Defendants and it will grant their Motion to Dismiss.
I. The Greening Defendants
As to the Greening Defendants, Plaintiffs have not shown that minimum contacts exist between Greening and Minnesota. Plaintiffs' Memorandum states that "Greening and . . . Greening Aviation were retained by [GCAN], who had solicited insurance business from North of Sixty in the State of Minnesota, through Defendant Marsh." (Mem. in Opp'n at 4.) It appears that Plaintiffs are attempting to impute Marsh and GCAN's contacts to the Greening Defendants. Such a showing, however, is irrelevant for purposes of personal jurisdiction over the Greening defendants. See Pecoraro, 340 F.3d at 562 ("Whether [one defendant] could be held vicariously liable for [another defendant's] conduct is irrelevant to the issue of personal jurisdiction."). Plaintiffs have not alleged any facts to suggest that the Greening Defendants, "based solely on [their] activity . . . should reasonably expect to be haled into court in [Minnesota]." Id. at 562-63. Rather, the only apparent involvement that the Greening Defendants had with this action was the inspection of the Otter in Canada. Accordingly, because the quality and the quantity of Greening Defendants' contacts with Minnesota are non-existent, the Court determines that it does not have personal jurisdiction over them and it will grant their Motion to Dismiss.
II. GCAN
GCAN's contacts with Minnesota require more detailed consideration. Plaintiffs argue that minimum contacts sufficient to provide personal jurisdiction have been established between GCAN and Minnesota. They focus on (1) the Geographical Limits clause of the Policy, which insures "against loss or damage in Minnesota and areas beyond the confines of Canada," (2) the fact that the Otter and the Cessna were "periodically flown and stored in the State of Minnesota," and (3) the fact that GCAN and Marsh "solicited insurance business from Plaintiffs in the State of Minnesota" and "contacted the Plaintiffs at least 50 times in the State of Minnesota." (Mem. in Opp'n at 7-9.) Plaintiffs also contend that the Policy's Law and Jurisdiction clause is invalid and unenforceable. GCAN responds that the contacts Plaintiffs point to are insufficient to subject it to personal jurisdiction in Minnesota and the Law and Jurisdiction clause is valid and enforceable. The Court determines that, while the Policy's Geographical Limits clause creates some weak connection between GCAN and Minnesota, the lack of other strong contacts, combined with traditional notions of fair play and substantial justice, weigh against exercising personal jurisdiction over GCAN. The Court will begin with an analysis of GCAN's Minnesota contacts and then turn to the consideration of whether personal jurisdiction is reasonable in light of those contacts.
A. GCAN's Minnesota Contacts
1. The Geographical Limits clause
The Policy's Geographical Limits clause provides for coverage in the "Western Hemisphere but Worldwide in respect of Products Liability." There is limited support for Plaintiffs' position that this expansive territory of coverage provides GCAN with the requisite minimum contacts with Minnesota. See, e.g., Ferrell, 393 F.3d at 791 (holding that a "nationwide territory-of-coverage clause . . . included in [the defendant's insurance policy with the plaintiff] establishes sufficient minimum contacts with [the forum state] to satisfy due process" (citation omitted)). The effect of the Policy's Geographical Limits clause on the instant analysis, however, will not ultimately carry the day for Plaintiffs.
In this regard, the Tenth Circuit's decision in OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086 (10th Cir. 1998) is instructive. In OMI, the Tenth Circuit considered an insurance policy (issued by a Canadian defendant) with a territory-of-coverage clause that provided coverage of "legal proceedings brought in the Courts of the United States . . . or the Courts of any of the states of the United States." 149 F.3d at 1092. It held that "by contracting to defend the insured in the forum state, the [defendant] insurer creates some contact with the forum state." Id. at 1095. Personal jurisdiction over the Canadian defendant was lacking, however, in part because "sole reliance on the territory of coverage clause creates contacts which are qualitatively low on the due process scale."Id. In determining that the defendant was not subject to personal jurisdiction in Kansas, the court noted that Canadian law governed the insurance policy at issue in the case, and that the defendants "issued insurance policies in Canada to a Canadian company in accordance with Canadian law." Id. at 1096.
The Eighth Circuit considered these issues in Ferrell, but found that personal jurisdiction did exist over the defendant insurance company. 393 F.3d at 791. The facts in Ferrell, however, differ in significant respects from those here and inOMI. First, the defendant insurance company in Ferrell was not based outside of the country — rather, it was based in Wisconsin. Id. at 790. Second, prior to the Ferrell litigation, the Wisconsin-based defendant had participated in a related action in the forum state (Arkansas) and "the burden of litigating in Arkansas rather than Wisconsin was not unreasonable." Id. at 791. Finally, the damage underlying the claim against the insurance company occurred in Arkansas, to Arkansas plaintiffs, on Arkansas land. Id. Accordingly, in determining that personal jurisdiction over the defendant was proper in Arkansas, the Eighth Circuit distinguished OMI, stating: "[o]ur situation is quite different from the circumstances of the Kansas lawsuit in OMI, where the defendants were Canadian, `the forum state ha[d] virtually no interest in litigating the case, the dispute [was] governed by Canadian law, and Kansas would not provide a more efficient forum in which to litigate.'" Ferrell, 393 F.3d at 791 (quotingOMI, 149 F.3d at 1096 n. 2).
The facts of this case parallel OMI in precisely the areas that the Eighth Circuit found significant in Ferrell. Here, Defendants are Canadian, Canadian law governs any dispute under the Policy, the insured corporation is Canadian, and the alleged wrong (damage to the Otter, and subsequent rejection of Plaintiffs' claim thereon) occurred in Canada. Despite the presence of some contacts due to the Geographical Limits clause, Plaintiffs' showing of a connection with Minnesota is too weak to sustain this Court's exercise of personal jurisdiction over GCAN.
2. Location of the aircraft and correspondence-contacts
With respect to the occasional presence of the Otter and the Cessna in Minnesota and the correspondence to Zitzloff in Minnesota, neither establish the contacts necessary for this Court's exercise of jurisdiction. First, that the Otter and the Cessna were occasionally flown and stored in Minnesota does not convincingly counter the fact that all of the damage to the Otter underlying the present action occurred in Canada. The Otter or Cessna's location at times previous to the events giving rise to this action does not relate to the facts of this case and it is not a sufficient contact to establish general jurisdiction over GCAN.
Second, the correspondence-contacts Plaintiffs allege between GCAN and Minnesota are quite modest. It does not appear that GCAN had significant communications with Zitzloff in Minnesota; rather, the majority of correspondence regarding the Policy came from Marsh. However, even considering the correspondence from both Marsh and GCAN, such "contacts with Minnesota appear at best as inconsequential rather than substantial" where, as here, all of the events underlying an action are centered in another country. See Digi-Tel Holdings v. Proteq Telecomms., Ltd., 89 F.3d 519, 523, 525 (8th Cir. 1996) ("Although letters and faxes may be used to support the exercise of personal jurisdiction, they do not themselves establish jurisdiction.") Accordingly, neither the quality nor the quantity of these contacts is sufficient for the Court to exercise jurisdiction based on them.
3. The Law and Jurisdiction clause
Both parties also refer to the Law and Jurisdiction clause of the Policy in their arguments to the Court. A choice-of-law and/or forum selection clause in an underlying contract may be instructive in considering the requirement that the defendant purposefully avails itself of the privilege of conducting activities within the forum. See International Technologies Consultants, Inc. v. Euroglas S.A., 107 F.3d 386, 395-96 (6th Cir. 1997) (quoting Burger King, 471 U.S. at 475). Here, the Law and Jurisdiction clause provides:
But see Deprenyl Animal Health, Inc. v. University of Toronto Innovations Found., 297 F.3d 1343, 1354 (Fed. Cir. 2002) (holding personal jurisdiction existed despite foreign choice of forum and choice of law provisions in a license agreement for a United States patent; stating that "choice of law provisions [are] merely one factor a court must consider in determining whether a party to the agreement purposefully availed itself of the law of that forum" and "[a]t most, the inclusion of choice of law and forum provisions is merely one factor to consider").
This policy shall be governed by the laws of Canada whose courts shall have jurisdiction in any dispute arising hereunder.
Plaintiffs argue that this clause is not enforceable because it is unreasonable to expect Plaintiffs to travel to Canada to litigate the instant dispute and because the clause was not specifically mentioned by Defendants during the contract negotiations. (Mem. in Opp'n at 5-6.) GCAN responds that the clause is enforceable and implies that the Law and Jurisdiction clause mandates that the Amended Complaint be dismissed for improper venue. While the Court will not dismiss the Amended Complaint based solely on the Law and Jurisdiction clause, it determines that the clause weighs against exercising jurisdiction over GCAN.
"Forum selection clauses are prima facie valid and are enforced unless they are unjust or unreasonable or invalid for reasons such as fraud or overreaching. They are enforceable unless they would actually deprive the opposing party of his fair day in court." M.B. Restaurants, Inc. v. CKE Restaurants, Inc., 183 F.3d 750, 752 (8th Cir. 1999) (citations omitted). In the instant case, the Law and Jurisdiction clause is clearly worded and located in the main body of the Policy. "[T]hat the individual clauses were not actually negotiated does not render the clause per se unenforceable."Id. at 753 (citation omitted); see Sun World Lines, Ltd. v. March Shipping Corp., 801 F.2d 1066, 1067-68 (8th Cir. 1986) (where forum selection clause was enforceable despite the fact that it "was not the subject of negotiations between the parties"). Furthermore, there is no merit to Plaintiffs' contention that the clause is unenforceable because it is unreasonable to expect them to travel to Canada to litigate, as "inconvenience to a party is an insufficient basis to defeat an otherwise enforceable forum selection clause." M.B. Restaurants, 183 F.3d at 753 (citation omitted). Thus, the Court determines that the Law and Jurisdiction clause is valid and enforceable.
While the parties do not directly address the issue, the Court must also consider whether the clause is mandatory or permissive. If the clause is mandatory, any action on the Policy must be maintained in Canada; if it is permissive, an action may be maintained in other forums where personal jurisdiction exists.Dunne v. Libbra, 330 F.3d 1062 (8th Cir. 2003). The Court determines that the forum selection aspect of the Law and Jurisdiction clause ("[Canadian] courts shall have jurisdiction in any dispute arising hereunder") is permissive because it "authorize[s] jurisdiction in a designated forum, but [does] not prohibit litigation elsewhere." K V Scientific Co., Inc. v. Bayerische Motoren Werke Aktiengesellschaft, 314 F.3d 494, 498 (10th Cir. 2002). Furthermore, where the operative language in the clause ("shall have jurisdiction") has been considered, it has been found to be permissive. See, e.g., id. at 499 (citing cases).
As a valid part of the Policy, the Law and Jurisdiction clause counsels against this Court exercising personal jurisdiction over GCAN. See, e.g., Burger King, 471 U.S. at 482 ("Nothing in our cases, however, suggests that a choice-of-law provision should be ignored in considering whether a defendant has `purposefully invoked the benefits and protections of a State's laws' for jurisdictional purposes." (emphasis in original)); see also St. Jude Med., Inc. v. Lifecare Int'l, Inc., 250 F.3d 587, 591 (8th Cir. 2001) (stating that "[t]he terms of the contract must be taken into account" in determining whether personal jurisdiction exists). The clause specifically provides that Canadian law controls the Policy's provisions and the Canadian courts have jurisdiction over any disputes involving the Policy.
It also appears that all of GCAN's contacts with Minnesota involved the Policy. Where, as here, all communications between the parties were about a policy governed by foreign law, courts have found it doubtful that a defendant's actions constituted purposeful availment. See, e.g., Marathon Oil Co. v. A.G. Ruhrgas, 182 F.3d 291, 295 (5th Cir. 1999) (noting that the defendant "could not reasonably have expected to be brought into Texas courts because of its presence at the meetings inasmuch as the meetings and related communications dealt with . . . a contract governed" by foreign law); Sea Lift, Inc. v. Refinadora Costarricense De Petroleo, S.A., 792 F.2d 989, 994 (11th Cir. 1986) ("In a case involving parties of presumably equal bargaining power, the choice of English law to govern the agreement is in itself an indication that [the defendant] did not avail itself of the benefits and protections of Florida law."). Thus, the Court determines that GCAN did not purposefully avail itself of the benefits of Minnesota law.
B. Reasonableness
Even if Plaintiffs established some minimum contacts between GCAN and Minnesota, the Court's personal jurisdiction analysis does not stop there. Where the minimum contacts threshold is met, "personal jurisdiction may be defeated if its exercise would be unreasonable considering such factors as (a) the burden on the defendant; (b) the interest of the forum State; (c) the plaintiff's interest in obtaining relief; (d) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (e) the shared interest of the several states in furthering fundamental substantive social policy." St. Jude Med., 250 F.3d at 591 (citing Asahi, 480 U.S. at 113-14). These factors "may be so weak that even though minimum contacts are present, subjecting the defendant to jurisdiction in that forum would offend due process." OMI, 149 F.3d at 1095-96 (citation omitted).
The burden on GCAN of litigating the instant case in Minnesota weighs against exercising personal jurisdiction over it. That GCAN is a Canadian corporation heightens the significance of this factor, and bolsters the Court's conclusion, as "[g]reat care and reserve should be exercised when extending our notions of personal jurisdiction into the international field." Digi-Tel, 89 F.3d at 525 (quoting Asahi, 480 U.S. at 115). Accordingly, this factor counsels against forcing GCAN to litigate this matter in Minnesota.
The fact that North of Sixty — the insured company under the Policy — is also a Canadian corporation weighs against the Court's exercise of jurisdiction; such a fact calls into question the validity of Plaintiffs' claim that litigating this matter in Canada would be overly burdensome for Plaintiffs. Nor have Plaintiffs provided the Court with any convincing evidence that they would be unable to obtain relief in Canada. Thus, Plaintiffs' interest in obtaining relief and the judicial interest in an efficient resolution of this dispute do not weigh in favor of exercising jurisdiction over GCAN.
Finally, the fact that the Otter was stored in Canada, was damaged in Canada, and Greening's investigation took place in Canada lessens the State of Minnesota's interest in the case. It is also undisputed that GCAN does not have a registered office, address or agent in Minnesota; is not registered with the Minnesota Secretary of State; and does not have a certificate of authority to conduct business in Minnesota. Accordingly, the Court determines that the contacts that do exist between GCAN and Minnesota are outweighed by other considerations in the jurisdictional analysis and personal jurisdiction over GCAN is lacking.
CONCLUSION
Based on the foregoing, and all the files, records and proceedings herein IT IS ORDERED that Defendants' Motion to Dismiss (Doc. No. 32) is GRANTED and the Amended Complaint (Doc. No. 21) is DISMISSED WITHOUT PREJUDICE as to defendants Greening Aviation Claims, Inc., Paul Greening, and Gerling Canada Insurance Company.
As noted earlier, Defendant Marsh Canada Limited has not moved to dismiss the Amended Complaint, and this action will proceed as to it.