Opinion
Civil Action No. 94-1954, Section "K"
August 23, 2001
MINUTE ENTRY
Before the Court is UMS Genera Marine's (formerly known as Unione Mediterranea di Sicurta) (hereinafter referred to as "UMS") Motion to Dismiss for lack of personal jurisdiction. A.K. Steel's Motion for Summary Judgment regarding jurisdiction, Plaintiff's Motion to Conform Judgment, and A.K. Steel's Motion to Tender Funds. The Court heard oral argument on the jurisdictional issues and has considered the pleadings, memoranda and relevant law and finds for the reasons that follow.
The factual background of this matter has been set forth in several opinions of this Court and the Fifth Circuit and need not be repeated at length. The only issue before the Court at this time is whether or not it can assert personal jurisdiction over UMS. The personal jurisdiction question has been before this Court once before. Prior to trial of this matter, on September 8, 1995, UMS filed a motion to dismiss for lack of personal jurisdiction (rec. doc. 33), which was denied by this Court on January 26, 1996 (rec. doc. 70). This Court held that UMS waived its personal jurisdiction defense because UMS authorized its insured, Duferco, to act on its behalf and because UMS's and Duferco's claims were intimately intertwined. The United States Court of Appeals for the Fifth Circuit disagreed with this finding, and reversed and remanded for this Court to determine whether it can assert general or specific personal jurisdiction over UMS. See Adams et al v. Unione Mediterranea Di Sicurta, et al., 220 F.3d 659 (5th Cir. 2001). Because the resolution of the jurisdiction motions control all others, the Court will examine the jurisdiction issue first.
Defendant UMS argues that the facts reveal it is a foreign business entity with absolutely no contacts with the State of Louisiana or the United States as a whole, making in personam jurisdiction impossible. Defendant argues that as a passive insurer, it has no control over the cargo it insures, and thus cannot be considered to purposefully avail itself of this state. Moreover, defendant argues that even were the Court to find sufficiency, that to exercise jurisdiction in this case would violate Due Process.
A.K. Steel argue that UMS should be amenable to specific jurisdiction because it knew that the insured cargo was bound for Louisiana. Indeed, A.K. Steel makes the argument that the risk itself, the insured steel, was centered in Louisiana. In essence, it argue that an insurance policy should be treated like a manufactured good which is placed in the stream of commerce. In other words, A.K. Steel contends that issuing an insurance policy with no geographic restrictions is a purposeful availment to all jurisdictions not expressly prohibited by the policy. Plaintiffs argue that UMS consented to the jurisdiction of this Court by filing a cross claim in the litigation.
Due process advances a two-pronged test in order for the Court to exercise jurisdiction: (1) the nonresident must have minimal contacts with the forum state and (2) subjecting the nonresident to jurisdiction must be consistent with traditional notions of fair play. Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784 (5th Cir. 1990); International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154 (1945). The minimum contacts prong can be further subdivided into contacts that give rise to specific jurisdiction and those that give rise to general jurisdiction. A court exercises specific jurisdiction when the controversy arises out of or is related to the defendants contacts with the forum state. Helicopteros Nacionales de Columbia. S.A. v. Hall, 466 U.S. 408, 104 S.Ct. 1868 (1984); Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784 (5th Cir. 1990). Where a cause of action does not arise out of a foreign defendant's purposeful contacts with the forum, however, a court may exercise general jurisdiction when the defendant has engaged in "continuous and systematic contacts" in the forum. Id. The second prong of the dues process inquiry requires that the exercise of jurisdiction comply with "fair play" and "substantial justice." When determining the fundamental fairness issue, the court should normally examine: (1) the defendant's burden; (2) the forum state's interest; (3) the plaintiffs interest in convenient and effective relief; (4) the judicial system's interest in efficient resolution of controversies; and (5) the shared interests of the several states in furthering fundamental substantive social policies. Gundle Linina Const. Corp. v. Adams County Asphalt, Inc., 85 F.3d 201, 207 (5th Cir. 1996).
The Court is not restricted to the pleadings in deciding personal jurisdiction, it may review affidavits, interrogatories, depositions, testimony, or any other form of discovery. Jobe v. ATR Marketing, Inc., 87 F.3d 751, 753 (5th Cir. 1996). In this admiralty case, the court can exercise jurisdiction over UMS, when (1) Louisiana could have acquired personal jurisdiction over the defendant on the same cause of action; and (2) the exercise of jurisdiction comports with the Due Process Clause of the Fourteenth Amendment. Adams et al v. Unione Mediterranea Di Sicurta, et al., 220 F.3d 659 (5th Cir. 2001) (citation omitted). These two inquiries merge into one in this matter because Louisiana's law permits jurisdiction on any basis consistent with the scope of the Due Process Clause. Id.
The facts known to the Court at this time are provided through the declaration of Luigi Giovanni, UMS's general manger and leal representative. UMS is an Italian company that provides marine hull and cargo insurance bound from Italy to domestic and foreign ports. It has no branches or offices outside Italy, has no affiliated companies in the U.S., is not qualified to do business in the U.S., does not have an agent for service of process in the U.S., has never employed agents or servants in the U.S., and does not own or have any property in the U.S., has never solicited business or advertised in the U.S.. It claims to have never stipulated an insurance contract in the U.S., and to have no control over the destination of it insured cargo. See Exhibit "B" to UMS Motion to Dismiss. As to its acts more relevant to the cause of action, UMS issued the policy from Italy to a Swiss company, Duferco. Id. The issue before the Court thus becomes whether these facts alone are sufficient to make a jurisdictional determination. Accordingly, the Court will review the apposite caselaw.
In Travelers Indemnity Co. v. Calvert Fire Insurance Co., 798 F.2d 826 (5th Cir. 1986), the United States Court of Appeals rejected plaintiffs contention that a foreign insurer could be amenable to personal jurisdiction based on the contacts of its insured. Making a fact intensive determination the court noted that the insurer did not have any contact with the United States. In reasoning applicable to this matter, the court held that maintaining insurance on some vessels that sometimes enter Louisiana was insufficient to establish general jurisdiction and that specific jurisdiction was also unavailable as the accident occurred off the coast of Panama, not in Louisiana.
However, Calvert does not stand for the blanket proposition that a foreign insurer can never be hailed into Louisiana's courts based upon the acts of its insured. As an initial matter, if that proposition were a rule of law the Court of Appeals would have had no reason to undertake the detailed factual inquiry as to the contacts of the insured. For if those contacts could never establish a basis for jurisdiction, they would have been irrelevant to deciding that issue as to the insurer.
More importantly, Calvert's discussion of those missing
contacts that militated against jurisdiction are logically those facts crucial to finding jurisdiction over a foreign insurer. As to the specific jurisdiction analysis, the court noted that the accident occurred off the coast of Panama, and that "an accident occurring within the forum jurisdiction [is] an important factor tending to support specific jurisdiction." Id. at 833. And as there was no doubt that it was the insured, not the insurer, who was involved in the collision, it is likely that Calvert would have affirmed jurisdiction over the insurer had the accident occurred in Louisiana. With respect to general jurisdiction, the court considered, inter alia, that there was no evidence of the insurer covering any Louisiana resident, of a local firm acting as a general agent for the insurer, of insuring any Louisiana-related risks, or that any insured vessels were "either based in Louisiana or engaged in other than strictly international commerce." Id. at 833.
Throughout its analysis, the Calvert panel contrasted the facts before it with those seen in McKeithen v. M/T FROSTA, 435 F. Supp. 572 (E.D.La. 1977). In that case, Judge Rubin held that a foreign insurer who regularly insures vessels entering Louisiana waters could be subject to jurisdiction in Louisiana based solely on that activity. In that case, 44 vessels entered the Port of New Orleans within the prior year, some of them several times. Id. at 574. As in the matter before this Court, Judge Rubin found that the foreign insurer had no contact with Louisiana other than that with its insureds. Nevertheless, he held that the foreign insurer transacted business in the state sufficient to establish personal jurisdiction based upon its "activities in regularly and repeatedly maintaining insurance on a host of vessels navigating Louisiana territorial waters." Id. at 580. UMS argued at the hearing of this matter that McKeithen was overruled by subsequent Supreme Court decisions, such as Helicopteros. However, as the Fifth Circuit decline to overrule that case in Calvert, this Court considers McKeithen to remain viable for general jurisdiction purposes.
In Young v. Britania Steam Ship Insurance Assoc., Ltd., 1994 WL 320972 (E.D. La. June 29, 1994), plaintiff was injured offloading cargo from a vessel docked in the city of New Orleans, Louisiana. The vessel was re-insured by a foreign protection and indemnity club, Britania. The court found that the only contact between the defendant foreign re-insurer and the forum state was that the defendant insured a vessel that could foreseeably travel to Louisiana. Id. Based on those facts, the Court held that there was no specific jurisdiction over defendant because "the unilateral act of the [vessel] entering Louisiana cannot support the requirement of contact with the forum state." Id. (citing Hansen v. Denckla, 78 S.Ct. 1228 (1958), WorldWide Volkswagen Corp. v. Woodson, 100 S.Ct. 559 (1980), and Travellers Indemnity Company v. Calvert Fire Insurance Company, 798 F.2d 826 (5th Cir. 1986)). As to general jurisdiction, the Court found that the defendant was merely a "passive insurer, typical of maritime custom." Id. at *3. The court discounted plaintiffs argument that the re-insurer insured more than 2000 vessels that could potentially enter Louisiana waters. Finding the actions of insureds to be meaningless, the Court held that "contacts relevant to jurisdictional analysis must be affirmative acts on the part of defendant." Id. As such, the court reasoned that plaintiff failed to demonstrate continuous and systematic contacts sufficient to exercise general jurisdiction. See also Louis Dreyfus Corp., v. McShares, Inc., 723 F. Supp. 375 (E.D La. 1989).
It is important to note that the court cites Calvert as applying when an accident occurs in Louisiana. However, as discussed above, the vessel collision in that case took place off the coast of Panama.
The Young court also discounted the viability of McKeithen after the Helicopteros decision. As stated above, this Court findsMcKeithen to be extant.
Other courts have found jurisdiction based on a foreign insurers continuous and systematic contacts with the forum state. See, e.g.,Pacific Employers Insurance Co. v. M/T IVER CHAMPION, 1995 WL 295293 (E.D.La. May 11, 1995). What the above cases, both those finding and rejecting jurisdiction, demonstrate is the jurisdictional issue is a fact intensive determination. At this time, the Court lacks critical factual information necessary to make a comprehensive jurisdictional finding. For instance, the parties even dispute the location of the accident, and the Court, despite the declaration provided, is not fully advised on the scope of UMS' overall activities and connections with Louisiana residents and/or risks or how often any insured risk entered Louisiana waters. As such, the Court finds that additional discovery is necessary. Therefore, it must deny both jurisdiction motions. Accordingly,
For example, UMS has insured over 260 shipments of Duferco products to U.S. ports. Of those shipments 95 were to ports between New Orleans and Baton Rouge.
IT IS ORDERED that the parties are to conduct further fact discovery relevant to the jurisdictional issues. Discovery shall be completed by January 15, 2002. Additionally, the parties shall fully brief the judicial admission issue with respect to the precise location of accident. Such briefing shall be submitted to the Court prior to December 3, 2001.
IT IS FURTHER ORDERED that UMS's Motion to Dismiss (rec. doc. 333) is DENIED; A.K. Steel's Motion for Summary Judgment (rec. doc. 326) is DENIED; Plaintiff's Motion to Conform Judgement (rec. doc. 319) is DENIED WITHOUT PREJUDICE to be reurged after the jurisdictional issue is decided, and; A.K. Steel's Motion to Tender Funds (rec. doc. 317) is GRANTED subject to modification upon resolution of the jurisdiction issue.