Opinion
01-CV-6615 (CJS)(B)
March 3, 2003
Paul J. Yesawich, III, Esq., Harris, Beach Wilcox, Pittsford, New York, for plaintiff.
Kenneth J. Kelly, Esq., Epstein Becker Green, P.C., New York, New York, for defendants, Willis Limited and Willis Faber And Dumas:
DECISION AND ORDER
INTRODUCTION
This is a diversity action involving a construction contract and related insurance contracts. Now before the Court is a motion (Docket No. 22) to dismiss the complaint, pursuant to Fed.R.Civ.P. 12(b)(2), for lack of personal jurisdiction, filed by two of the named defendants, Willis Limited and Willis Faber and Dumas ("Willis Limited" or "Willis"). For the reasons that follow, the motion to dismiss is denied.
Willis Limited was formerly known as Willis Faber Dumas.
STANDARDS OF LAW
In order to defeat a motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2), where, as here, the Court is relying solely upon pleadings and affidavits, a plaintiff need only make a prima facie showing of facts which establish the Court's jurisdiction over the defendant. Cutco Indus., Inc. v. Naughton, 806 F.2d 361, 364 (2d Cir. 1986); Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996) ("Prior to discovery, a plaintiff may defeat a [Rule 12(b)(2)] motion to dismiss based on legally sufficient allegations of jurisdiction.") (citations omitted), cert. denied, 519 U.S. 1006 (1996). All pleadings and affidavits must be viewed in the light most favorable to the plaintiff, and all doubts resolved in plaintiff's favor. Cutco Industries, Inc., 806 F.2d at 365.
A federal court in a diversity action must look to the forum state's general jurisdictional or long-arm jurisdictional statute to determine whether in personam jurisdiction exists over a nonresident defendant. See, Savin v. Ranier, 898 F.2d 304, 306 (2d Cir. 1990) (citing Arrowsmith v. United Press Int'l, 320 F.2d 219, 222-25 (2d Cir. 1963) (en banc)). If the relevant statute allows the court to exercise jurisdiction, the court must then determine "whether the exercise of jurisdiction comports with due process." Id. (citation omitted). In that regard,
[t]he due process test for personal jurisdiction has two related components: the "minimum contacts" inquiry and the "reasonableness" inquiry. The court must first determine whether the defendant has sufficient contacts with the forum state to justify the court's exercise of personal jurisdiction. For purposes of this initial inquiry, a distinction is made between "specific" jurisdiction and "general" jurisdiction. Specific jurisdiction exists when "a State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum"; a court's general jurisdiction, on the other hand, is based on the defendant's general business contacts with the forum state and permits a court to exercise its power in a case where the subject matter of the suit is unrelated to those contacts. Because general jurisdiction is not related to the events giving rise to the suit, courts impose a more stringent minimum contacts test, requiring the plaintiff to demonstrate the defendant's "continuous and systematic general business contacts."
The second stage of the due process inquiry asks whether the assertion of personal jurisdiction comports with "traditional notions of fair play and substantial justice" — that is, whether it is reasonable under the circumstances of the particular case. The Supreme Court has held that the court must evaluate the following factors as part of this "reasonableness" analysis: (1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies. While the exercise of jurisdiction is favored where the plaintiff has made a threshold showing of minimum contacts at the first stage of the inquiry, it may be defeated where the defendant presents a compelling case that the presence of some other considerations would render jurisdiction unreasonable.
Metro. Life Ins. Co., 84 F.3d at 567-68.
In the instant case, the New York jurisdictional statutes upon which plaintiff relies are New York Civil Practice Law and Rules ["CPLR"] Sections 301 and 302. CPLR § 301 is a general jurisdiction statute which provides for personal jurisdiction over a defendant who "does business" in New York. It is well settled that
[u]nder New York law, a foreign corporation is subject to general personal jurisdiction in New York if it is 'doing business' in the state. A corporation is 'doing business' and is therefore 'present' in New York and subject to personal jurisdiction with respect to any cause of action, related or unrelated to the New York contacts, if it does business in New York not occasionally or casually, but with a fair measure of permanence and continuity. In order to establish that this standard is met, a plaintiff must show that a defendant engaged in continuous, permanent, and substantial activity in New York.
Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 95 (2d Cir. 2000) (citations and internal quotations omitted), cert. denied, 532 U.S. 941 (2001). In this regard,
New York courts have focused on a traditional set of indicia: for example, whether the company has an office in the state, whether it has any bank accounts or other property in the state, whether it has a phone listing in the state, whether it does public relations work there, and whether it has individuals permanently located in the state to promote its interests.
Id. at 98 (citations omitted). On the other hand, the mere fact that "a foreign corporation has a website accessible in New York is insufficient to confer jurisdiction under CPLR § 301." In re Ski Train Fire in Kaprun, Austria on November 11, 2000, 230 F. Supp.2d 403, 408 (S.D.N.Y. 2002) (citation omitted).
Also, the defendant itself need not be doing business in the state in order to be subject to personal jurisdiction. See, Wiwa v. Royal Dutch Petroleum Co., 226 F.3d at 95. In Volkswagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir. 1984), the Second Circuit noted that "the presence of a local corporation does not create jurisdiction over a related, but independently managed, foreign corporation." (emphasis added). However, the Court held that personal jurisdiction may be exercised over the related foreign company, where it exercises sufficient control over the local company that the local company is a "mere department" of the foreign company. Id. In determining whether or not a subsidiary is a "mere department" of the parent company, the Court should consider four factors: 1) whether or not the subsidiary is owned by the parent company; 2) whether or not the subsidiary is financially dependent on the parent company; 3) the degree to which the parent company interferes in the selection and assignment of the subsidiary's executive personnel, and fails to observe corporate formalities; and 4) the degree to which the parent controls the marketing and operational policies of the subsidiary. Id. at 120-22. Significantly, for purposes of this action, some courts have also found that, "[c]onversely, jurisdiction exists over a subsidiary that is a mere department of a parent corporation which has a presence in New York." In re Ski Train Fire, 230 F. Supp.2d at 409 (citation omitted).
CPLR § 302, on the other hand, is a specific jurisdiction statute, which provides:
(a) Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary, or his executor or administrator, who in person or through an agent:
1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or
2. commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; or
3. commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce;
NEW YORK CIVIL PRACTICE LAW RULES § 302 (McKinney's 2001). The test for determining whether or not the "transacts business" prong of CPLR § 302(a)(1) is satisfied has been set forth by the Second Circuit Court of Appeals as follows:
The long-arm statute gives New York personal jurisdiction over a nondomiciliary if two conditions are met: first, the nondomiciliary must 'transact business' within the state; second, the claim against the nondomiciliary must arise out of that business activity. A nondomiciliary 'transacts business' under CPLR 302(a)(1) when he 'purposefully avails [himself] of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its law. No single event or contact connecting defendant to the forum state need be demonstrated; rather, the totality of all defendant's contacts with the forum state must indicate that the exercise of jurisdiction would be proper.
Cutco Indus., Inc., 806 F.2d at 365 (citations omitted). The Second Circuit has further held that, in conducting this analysis, the court should only consider those contacts which are "jurisdictionally significant." For example, trips by the defendant to the forum state for business are jurisdictionally significant. Id. at 367-68 (Noting that a visit which "create[s] the likelihood of a more solid business relationship between the parties" and which may result in additional business has jurisdictional significance). As for the requirement, under 302(a)(1), that the claim arise out of the business transacted in New York, the Second Circuit has held that "[a] claim arises out of a defendant's transaction of business in New York when there exists a substantial nexus between the business transacted and the cause of action sued upon." Agency Rent A Car System, Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 31 (2d Cir. 1996) (citations omitted).
As for the "contracts anywhere" prong of CPLR § 302(a)(1), the Second Circuit has noted that,
even if a defendant never enters the state to negotiate one of these contracts, to complete performance or for any other reason, the second prong of § 302(a)(1) can provide long-arm jurisdiction over a defendant who has minimal contacts with the state and who has entered a contract anywhere to supply goods or services in the state.
Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 779, 789 (2d Cir. 1999) (citations omitted).
BACKGROUND
Factual Background
The lengthy factual history of this case was set forth in the Court's Decision and Order (Docket No. 44) in case number 01-CV-6217 (CJS), Frontier-Kemper Constructors, Inc. et al. v. American Rock Salt Company. Accordingly, the Court will here set forth only those facts that are relevant to the instant motion to dismiss. This action arises from a contract for the construction of the Hampton Corners Salt Mine Project in Mt. Morris, New York, between American Rock Salt Company LLC ("ARSCO"), the owner of the mine, and Frontier-Kemper Constructors, Inc. and Flatiron Constructors LLC d/b/a Frontier-Kemper/Flatiron Joint Venture ("FK/F"), the contractor hired to build the mine. On October 30, 1998, the parties signed a construction contract, which they agreed would be enforced in accordance with the laws of the State of New York. In the contract, FK/F agreed to complete the project within twenty-five months, and agreed to pay ARSCO up to $3 million in liquidated damages if certain milestones were not met.
Plus an additional twenty days for shaft wall drying and grouting.
During the negotiation of the contract, ARSCO had wanted FK/F to agree to pay up to $7 million in liquidated damages if FK/F failed to timely perform the contract. However, since FK/F would only agree to pay up to $3 million in liquidated damages, ARSCO decided to purchase an additional $4 million in insurance for itself. ARSCO and FK/F then approached FK/F's insurance broker, defendant Willis Corroon Corporation of Missouri ("Willis Missouri"), about purchasing a total of $7 million in liquidated damages insurance, with each party paying its pro-rata share of the premium. Willis Missouri is a foreign corporation authorized to do business in the State of New York, with its principal place of business in Missouri. Willis Missouri, however, could not obtain the coverage in the United States, so it contacted defendant Willis Limited, then known as Willis Faber and Dumas, to see if Willis Limited could obtain the insurance in Europe. Willis Limited is a foreign corporation with its principal place of business in London, England.
A representative of Willis Limited named Paul Cook, together with a representative of Willis Missouri, then met with representatives of ARSCO and FK/F in New York City. The meeting was held in New York City at the suggestion of Cook, who was already there on other business. ARSCO contends that, during that meeting, the parties entered into a contract. Specifically, ARSCO's complaint alleges as follows:
Prior to the execution of the [Construction] Agreement, ARSCO and FK/F and defendants Willis [Missouri], Willis Limited and Willis Faber (collectivelly "Willis"), agreed upon a plan designed to obtain liquidated damage insurance coverage to insure both FK/F and ARSCO.
* * *
ARSCO, FK/F and Willis, entered into an agreement under which FK/F and Willis agreed to procure insurance coverage for liquidated damages which may be incurred on the Project (the "LD Insurance Agreement").
* * *
Pursuant to the LD Insurance Agreement, Willis and FK/F were to procure insurance coverage for the $3,000,000 in liquidated damages which could be assessed against FK/F pursuant to paragraph 6.3 of the Agreement, plus an additional $4,000,000 in coverage for delay damages which could be suffered by ARSCO in the event of FK/F's failure to timely perform the Agreement. The LD Insurance Agreement, therefore, called for a total of $7,000,000.00 in coverage for liquidated damages.
(Complaint [#1], ¶¶ 26-27, 30)
Subsequently, on January 28, 1999, Willis Missouri issued an insurance binder for the full $7 million in insurance. However, Willis Limited ultimately obtained only $3 million of coverage through a European underwriter, defendant Lloyd's. The parties do not presently agree why that happened. Despite the fact that it issued a $7 million binder, Willis Missouri contends that the parties never agreed on the full $7 million in coverage, and that neither ARSCO or FK/F ever provided sufficient information to enable the European underwriters to issue the $4 million in insurance to be purchased by ARSCO. Alternatively, Willis Missouri contends that the premium for the $4 million of coverage was never paid. FK/F alleges that ARSCO never paid its pro-rata share of the premium. ARSCO, meanwhile, maintains that Willis Limited had all the necessary information required to obtain the insurance, and that it paid its portion of the premium to FK/F.
At this time, it is unclear why Willis Missouri issued the binder.
Prior to the commencement of this lawsuit, ARSCO and FK/F had agreed that Willis Limited was at fault for failing to provide the full $7 million insurance coverage. (See, Cohen Affidavit, Exhibits H K).
Strangely, although Willis Missouri contends that it never had sufficient information from FK/F or ARSCO, Willis Missouri admits that it issued a binder purportedly showing coverage for the full $7 million, and that it sent invoices for the full $7 million of insurance to ARSCO and FK/F. (Docket No. 11)
FK/F has alleged that ARSCO attempted to defraud it into believing that it had paid its proper share of the premium. Specifically, FK/F contends that Willis Missouri sent two separate invoices to ARSCO for the $7 million liquidated damages insurance. The initial one was an invoice for the first $3 million of insurance, showing a premium due of $256,250, and the second was an invoice for the next $4 million in coverage, showing a premium due of $215,250. FK/F contends that ARSCO somehow hid the fact that there were two separate invoices, and fraudulently misrepresented that the invoice for $256,250 was for all $7 million of insurance. FK/F further contends that ARSCO then reimbursed FK/F for only a portion of the $256,250.
In any event, FK/F eventually failed to complete the construction of the mine within the time allowed under the contract, which triggered the liquidated damages provision. As a result of Willis Limited's failure to obtain the full $7 million in liquidated damages insurance, ARSCO is now asserting causes of action against Willis Missouri and Willis Limited for breach of the LD Insurance Agreement, as well as for negligent misrepresentation.
Willis Limited's Motion to Dismiss
Willis Limited is moving to dismiss, on the grounds that it is not subject to personal jurisdiction in the State of New York. In support of the motion, it has submitted affidavits alleging the following facts: 1) Willis Limited has a bank account in New York, but maintains that it only uses that account for receiving payments in U.S. dollars; 2) Willis Limited is not licensed to do business in New York; 3) Willis Limited is a subsidiary of Willis Faber Limited, based in London, which is itself a subsidiary of Willis Group Holdings Limited ("WGHL"), which has a registered office in Bermuda; 4) WGHL is a holding company, with no employees, and does not transact business in New York, although it has a New York subsidiary, Willis of New York, Inc., with offices in New York City; and 5) WGHL is also listed on the New York Stock Exchange.
The affidavits are by Paul Cook, Divisional Director in Construction Risks for Willis Limited. (Docket Nos. 24 36)
Willis admits that its representative, Mr. Cook, met with representatives of FK/F and ARSCO in New York City to discuss insurance prior to the execution of the construction agreement. However, Willis contends that, contrary to ARSCO's claims, no agreement was reached at the meeting. Instead, Willis downplays the significance of that meeting, claiming that "[t]he purpose of the [New York City] meeting was to discuss the feasibility of insurance solutions for the [salt mine] project," and that during the meeting, the parties merely discussed the liquidated damages and force majeure provisions of the proposed agreement between ARSCO and FK/F, as well as a plan for "putting together an insurance program for the project." (Cook Affidavit [#24], ¶ 9). Nonetheless, Willis acknowledges that, following the meeting, it worked to procure the liquidated damages insurance from underwriters in the United Kingdom and Switzerland, and ultimately obtained $3 million in coverage. Willis further admits that, subsequent to the execution of the construction agreement, Cook and another of its representatives, Mr. Willcocks, traveled to the mine site in Livingston County, New York, "to gain necessary underwriting information in order to enable the policy limits to be extended." (Id., ¶ 13) However, Willis Limited contends that it only attended those meetings in order to assist its "client," Willis Missouri. In that regard, Willis Limited insists that it provided services only to Willis Missouri, not FK/F or ARSCO. Willis Limited further contends that it corresponded "almost exclusively" with Willis Missouri, or with FK/F's office in Indiana, although it acknowledges that on two or three occasions it sent correspondence directly to ARSCO's attorneys in New York. In that regard, Willis Limited indicates that it bypassed Willis Missouri in situations "where time was of the essence, and communicating through Willis Missouri would have delayed matters." (Cook Aff. [#36], ¶ 20)
American Rock Salt's Response to the Motion to Dismiss
In response to that motion, ARSCO has submitted affidavits which allege the following facts: 1) WGHL is a network of related companies; 2) all of WGHL's subsidiaries, including Willis Limited, "are controlled through the ownership of a majority voting interest" (Yesawich Aff.[#30], ¶ 11); 3) in WGHL's 2001 Annual Report, for financial purposes, all of WGHL's related companies, including Willis Limited, are treated as a single entity; and 4) WGHL's stock is traded on the New York Stock Exchange, and its annual shareholder's meeting is held in New York City.
ARSCO further contends that all of Willis Limited's actions in connection with this case pertained to insuring against a risk in New York. That is, Willis Limited met with ARSCO and FK/F in New York City, for the purpose of providing insurance in New York. At the New York City meeting, Willis Limited and Willis Missouri "presented themselves as a 'team' which would be able to put together the insurance coverage which FK/F and ARSCO were seeking." (Cohen Aff. [#31], ¶ 5) Also at the New York City meeting, Willis Limited told ARSCO and FK/F what they would need to do in order to obtain the insurance. This included obtaining an engineering "due diligence" report. Willis Limited directed ARSCO and FK/F to retain the New York City engineering firm O'Brien Kreitzberg, with whom Willis Limited had ongoing business relationships, to "study the mine project." (Yesawich Aff.[#30], ¶ 3(a)) Although ARSCO paid for the engineering report, O'Brien Kreitzberg provided the completed report to Willis Limited, not ARSCO. In 1999, Willis Limited requested documents directly from FK/F, ARSCO, and ARSCO's attorneys, located in Rochester, New York. ARSCO's attorneys responded by sending the documents directly to Willis Limited. In January 2000, Willis Missouri forwarded to FK/F a "cover note" on Willis Limited's letterhead. This "cover note," which is the equivalent of an insurance binder, revealed that Willis Limited had obtained only $3 million in coverage from Lloyd's. FK/F and ARSCO then demanded that Willis Limited obtain the full $7 million in coverage, as agreed. Willis Limited subsequently arranged to have a London law firm, Clifford Chance, prepare an opinion letter regarding the agreement between ARSCO and FK/F. Further, as noted above, in April 2000, two representatives from Willis Limited inspected the mine site in Livingston County, New York, and participated in a three-hour business meeting at the mine. During that meeting, Mr. Cook "indicated that he would be meeting again in New York City with Mr. Zegers [a Swiss Re underwriter] in connection with the liquidated damage coverage issues." (Cohen Aff. [#31], ¶ 15) (emphasis added). On April 20, 2000, one of Willis Limited's representatives, Mr. Willcocks, wrote to ARSCO's attorney, to provide him with copies of the engineering and legal reports which had previously been supplied only to Willis Limited, despite the fact that ARSCO had paid for them. In that same letter, Mr. Willcocks indicated that Mr. Cook, would be meeting with Mr. Zegers, the Swiss Re underwriter, in New York in May "to resolve the outstanding issues." (Cohen Aff. [#31], 16). On December 2000, Willis Limited retained the New York City office of the O'Brien Kreitzberg engineering firm to prepare a second report on the mine project. In a letter dated December 12, 2000, Willis Limited wrote to FK/F, requesting that it forward its letter to ARSCO, so that ARSCO could contact Willis Limited directly to discuss the insurance issue.
The cover note was actually on the letterhead of Willis Limited's predecessor, Willis Faber Dumas.
Based upon the foregoing, plaintiff contends that Willis is subject to personal jurisdiction under CPLR § 301, because it is doing business in New York, or alternatively, under a reverse "mere department" theory. Plaintiff also contends that Willis is subject to jurisdiction under CPLR § 302(a)(1), because it transacted business in New York, and because the subject action arises out of that transaction of business. Finally, plaintiff maintains that Willis is subject to jurisdiction under CPLR § 302(a)(2), because it committed the tort of negligent misrepresentation in New York.
ANALYSIS
Viewing the pleadings and affidavits in the light most favorable to the plaintiff, with all doubts resolved in plaintiff's favor, the Court finds that plaintiff has made a prima facie showing of the following facts: 1) Willis Limited, acting in the capacity of an insurance broker, agreed to meet in New York City with representatives of Willis Missouri, ARSCO and FK/F, to discuss liquidated damages insurance for a construction project in New York; 2) the meeting took place in New York City at the suggestion of Willis Limited's representative, Mr. Cook; 3) at that meeting in New York City, Willis Limited and Willis Missouri orally agreed that, working together, they would obtain $7 million in liquidated damages insurance for FK/F and ARSCO in connection with the proposed construction agreement; 4) Willis Limited, in connection with its efforts to find underwriters, contracted with the New York City engineering firm O'Brien Kreitzberg to prepare two separate engineering reports concerning the construction project; 5) Willis, working from its offices in the United Kingdom, contacted various underwriters in the United Kingdom and Switzerland, and eventually obtained $3 million in coverage from defendant Lloyd's; 6) Willis also sent two of its employees to inspect the mine site in Livingston County, New York, and subsequently had one or two meetings with a representative of Swiss Re insurance underwriters in New York City, in an effort to obtain the additional $4 million in liquidated damages insurance; and 7) Willis communicated directly with ARSCO's attorneys in New York once or twice. Based upon these findings, and considering the totality of Willis Limited's activities in New York, the Court finds that Willis Limited is subject to personal jurisdiction in New York, pursuant to New York CPLR § 302(a)(1). The Court determines that plaintiff has made a prima facie showing that Willis Limited "transacted business" in New York. Specifically, plaintiff has shown, prima facie, that Willis Limited engaged in "purposeful activity in New York directed toward and resulting in the establishment of a contractual relationship," namely, the alleged LD Insurance Agreement. See, George Reiner and Co., Inc. v. Schwartz, 41 N.Y.2d 648, 654 (1977). The Court notes that, during oral argument of this motion, Willis Limited's counsel posited that the affidavit of Neil L. Cohen, a member of the Executive Committee of ARSCO who attended the October 1998 meeting in New York City, demonstrates that no LD Insurance Agreement ever actually existed. Specifically, counsel noted that while Cohen uses phrases such as, "I was certainly led to believe . . . that Willis would be working on our behalf to obtain this coverage," he never expressly uses the terms "contract" or "agreement." However, the Court finds that Mr. Cohen's affidavit is not necessarily inconsistent with the allegations in the complaint that a contract existed.
Willis maintains that it was "the insured," and not Willis, that retained O'Brien Kreitzberg. (See, Cook Reply Aff., ¶ 15). The Court therefore finds it curious that in a letter dated December 12, 2000, FK/F wrote ARSCO's attorney, noting that "Willis has again engaged O'Brien Kreitzberg's New York City Office to report to them independently concerning the status of the project." (Cohen Affidavit, Exhibit M) (emphasis added).
Page 16 of 19 Finally, plaintiff's claims against Willis would clearly arise from that transaction of business.
As an alternative basis for its ruling, the Court also finds jurisdiction under CPLR § 302(a)(1) on the ground that Willis Limited contracted to supply goods or services in New York. More specifically, Willis Limited contracted, in New York or elsewhere, to obtain insurance for a mining project in New York. In this regard, the Court relies upon the case of Armada Supply Inc. v. Wright, 858 F.2d 842 (2d Cir. 1988). In Armada, the Second Circuit stated that, "[c]learly, contracting to insure property located within a jurisdiction, even if the presence of that property is transitory, subjects a foreign marine-insurer to jurisdiction on suits over such insurance." Id. at 849 (citations and internal quotations omitted). As the above quote indicates, Armada involved an actual insurer. However, at least one other case has reached the same conclusion in a case involving an insurance broker who obtains insurance for property located in New York. See, Caronia v. American Reliable Ins. Co., 999 F. Supp. 299, 303 (E.D.N.Y. 1998).
Willis nonetheless maintains that in obtaining the insurance, it essentially had no jurisdictionally significant contact with New York. In that regard, the Court finds the case of Birmingham Fire Ins. Co. of Pa. v. KOA Fire Marine Ins. Co., 572 F. Supp. 962 (S.D.N.Y. 1983) instructive. In that case, the defendant, LeBlanc, was a French insurance brokering firm, which acted as an intermediary to obtain reinsurance on risks in the United States from insurers outside the United States. LeBlanc was not qualified to do business in New York, and had no office, employees, or bank accounts in New York. Id. at 964. Nonetheless, the plaintiff in Birmingham Fire argued that,
LeBlanc knew that it was a link in a chain of participants in a scheme to
effectuate the reinsurance of New York risks. . . . It is undisputed that at all times, it was the intention of . . . LeBlanc that the reinsurance . . . would be underwritten and placed in the United States market . . . [and] that New York provides one of, if not the largest, reinsurance market[s] in the world.
Id. at 966. The plaintiff further claimed that
LeBlanc supplied services in New York — even though LeBlanc worked out of its Paris office the whole time, even though [the U.S. companies'] contacts with Leblanc were apparently between Pennsylvania and Paris, and even though the [reinsurance] companies that LeBlanc contacted and persuaded to [provide insurance] were foreign companies.
Id. LeBlanc, on the other hand, claimed that it was "contacted outside the United States," and "performed services only on behalf of foreign reinsurers." Id. LeBlanc further noted that, as the broker, it did not actually insure any of the risk in New York, and that it did not receive compensation from anyone in New York. The district court granted the motion to dismiss for lack of personal jurisdiction under CPLR § 302(a)(1), finding that the plaintiff failed to present proof that LeBlanc knew that the reinsurance involved risks in New York. Id. The Court went on to hold that, even if LeBlanc did know that some of the risk was in New York, that plaintiff had still failed to show that LeBlanc had any direct contact with New York. Id. at 967 (Noting that the plaintiff had failed to show "that the foreign agent [LeBlanc] has had some contact with New York in relation to its agency or that the services that the agent provide[d] the principal [were] more than tangentially related to the principal's doing business in New York.")
Similarly, in the instant case, Willis Limited contends that it essentially worked from its office in London to find underwriters in Europe who were willing to provide liquidated damages insurance to FK/F and ARSCO, using Willis Missouri as a conduit. Moreover, Willis Limited notes that most of its communications, including the issuance of the $3 million "cover note," were with Willis Missouri, not with FK/F or ARSCO in New York. However, Willis Limited's situation is quite different than that of LeBlanc in the Birmingham Fire Ins. case. Most significantly, Willis Limited clearly knew it was obtaining insurance on a risk located in New York. Everything Willis Limited did in connection with this case, regardless of where it did it, was clearly for the purpose of obtaining insurance for a construction project in New York State. Moreover, Willis had significant direct contacts with New York.
Having found that there is a statutory basis for the exercise of personal jurisdiction, the Court also finds that exercising personal jurisdiction over Willis Limited would not violate due process, given the nature of Willis Limited's contacts with the State of New York. Accordingly, the Court finds that the motion to dismiss must be denied. Because the Court finds that plaintiff has demonstrated personal jurisdiction under CPLR § 302(a)(1), it need not address the parties' other arguments regarding CPLR §§ 301 and 302(a)(2).
CONCLUSION
For all of the foregoing reasons, the motion to dismiss for lack of personal jurisdiction (Docket No. 22), filed by named defendants Willis Limited and Willis Faber and Dumas, is denied.
SO ORDERED.