Opinion
00 Civ. 2473 (RO).
December 6, 2000.
James W. Carbin, Esq., Evan A. Showell, Esq., Duane, Morris Heckscher LLP, Newark, New Jersey, for Plaintiff.
Edward M. Cuddy III, Esq., Snow Becker Krauss P.C., New York, New York, for Defendant.
OPINION ORDER
Royal and other marine insurance underwriters initiated this diversity and admiralty action for a judgment declaring that the underwriters are under no duty to satisfy a 1998 claim for engine or other damage submitted by Resolve, the owner of various tugs and barges and provider of towage/salvage services in the Caribbean. Defendant now moves to dismiss the complaint for lack of personal jurisdiction or, alternatively, to transfer this action to the United States District Court for the Southern District of Florida. The facts set forth below, based on the pleadings and affidavits, are construed in the light most favorable to Royal with all doubts resolved in its favor. See Landoil Resources Corp. v. Alexander Alexander Serv., Inc., 918 F.2d 1039, 1043 (2d Cir. 1990).
Royal is an underwriter of marine insurance with its principal place of business in Charlotte, North Carolina, and also conducts business from its New York offices. Royal and two other New York underwriters, Gerling Insurance and Albany Insurance, issued a combined Marine Hull and Protection and Indemnity policy to Resolve effective March 30, 1998 to March 30, 1999. The policy covered, in part. against certain risks of hull and machinery damage to the tug "SEAWITCH." Frenkel Co., an insurance broker licensed and based in New York, was also involved in the procurement and issuance of the policy. In April 1998, the SEA WITCH sustained damages for which Resolve submitted claims to its underwriters, including Royal, that are the subject matter of this litigation. Royal asserts that Frenkel acted as Resolve's agent, transacted business in New York on Resolve's behalf and therefore concludes that this Court has personal jurisdiction over Resolve on the basis of the New York long-arm statute, CPLR § 302(a)(1), which states, "A court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent. . . transacts any business within the state."
The determination of personal jurisdiction is a two step process. First, I look to the law of the forum state to determine whether the exercise of personal jurisdiction is appropriate. If it is, then I must assess whether such exercise of jurisdiction "comports with the requisites of due process." Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997). However, assuming Frenkel's New York brokering activities constitute a prima facie agency relationship with Resolve, thus making application of the New York long-arm statute appropriate, it does not follow a fortiori that an assertion of personal jurisdiction over this defendant comports with the due process clause. The New York statute casts a wide net by using the word "any" in the phrase "transacts any business." Such broad language provides New York courts with great flexibility to patrol virtually "any" business contact with New York. but also demands adequate case-by-case determinations of whether an assertion ofin personam jurisdiction is appropriate. Not all applications of the net cast by the broad term "any" comport with the tenets of due process — that is, not every application of this broad standard is fair and reasonable. The due process requirement for personal jurisdiction protects a person without meaningful ties to the forum state from being subjected to binding judgments within its jurisdiction. See Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996) (emphasis added). A state may only exercise personal jurisdiction over a non-resident defendant with whom it has certain "minimum contacts . . . such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice."See Fort Knox Music, Inc. v. Baptiste, 203 F.3d 193, 196 (2d Cir. 2000) (internal marks omitted). I must consider the relationship among the defendant, the forum and the litigation in determining whether minimum contacts exist. See id.
Royal must show that its claim arises out of or relates to Resolve's contacts with New York to establish the minimum contacts necessary to justify this "specific" assertion of long-arm jurisdiction. See id. at 243. Royal must, furthermore, show that Resolve "purposefully availed" itself of the privilege of doing business in New York and that Resolve could foresee being "haled into court" in this forum. Id. (internal marks omitted).
As the Second Circuit, collecting Supreme Court authority, noted in Metropolitan Life, "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 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." Metropolitan Life, 84 F.3d at 567-568 (internal marks omitted). The instant case involves specific jurisdiction because the attempt to exercise jurisdiction over the defendant arises out of and relates to Resolve's employment of a New York insurance broker to obtain a marine insurance policy, and not allegations of a continued course of conduct or general business presence in the forum which would involve general jurisdiction.
The due process inquiry also requires an examination, beyond minimum contacts, of whether an assertion of jurisdiction over a non-resident defendant comports with traditional notions of fair play and substantial justice — that is, whether the exercise of jurisdiction is reasonable under the circumstances of this case.See Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 99 (2d Cir. 2000) (internal marks omitted). Whether it is reasonable to exercise jurisdiction in a particular case depends. among other things, on: (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. See Chaiken v. VV Publ'g Corp., 119 F.3d 1018, 1028 (2d Cir. 1997), cert. denied, 522 U.S. 1149 (1998).
This is the rare case where even if the facts justify an assertion of jurisdiction under the state long-arm statute, such an assertion does not pass constitutional muster because the defendant's relationship with the forum does not satisfy the minimum contacts and reasonableness prongs of the due process inquiry. Resolve did not purposefully avail itself of the opportunity to do business in New York or seek out benefits that would flow from this forum. Defendant simply sought out a marine insurance broker to obtain a policy to cover its activities in international waters and, at best, exercised some control over the broker's actions in New York through telephone calls from Florida. This is not soliciting and negotiating shipping or transportation contracts for Resolve's towage/salvage services in the Carribean or taking reservations from New York customers for passage aboard Resolve's watercrafts. The foregoing activities are the types of business contacts that would render it liable to suit in the forum. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-472 (1985) (internal marks omitted). I need not, therefore, decide whether such an assertion of jurisdiction is reasonable because the constitutionally necessary first-tier minimum is lacking. See Metropolitan Life, 84 F.3d at 569-569 (citing with approval First Circuit decisions holding "[a] reviewing court must first examine the defendant's contacts with the forum. If the [contacts] do not exist in sufficient abundance, that is, if the constitutionally necessary first-tier minimum is lacking, the inquiry ends.").
Accordingly, defendant's motion to dismiss the complaint for lack of personal jurisdiction is granted. The temporary restraining order dated November 29, 2000 is hereby dissolved and the hearing on the order to show cause scheduled for December 8, 2000 is cancelled.
So ordered.