United States District Court, District of Columbia
April 23, 2003
THE MEGA LIFE AND HEALTH INSURANCE COMPANY; ANTHEM LIFE INSURANCE COMPANY; AND RESOLUTION REINSURANCE INTERMEDIARIES, LLC; PLAINTIFFS,
ROBERT FLEMING INSURANCE BROKERS LIMITED; AND ROBERT FLEMING NORTH AMERICA NON-MARINE LIMITED, DEFENDANTS.
The opinion of the court was delivered by: Joseph Anderson, Chief Judge, District
ORDER DENYING MOTION TO DISMISS
FOR LACK OF PERSONAL JURISDICTION
The matter before the court is the motion by the defendants Robert Fleming Insurance Brokers Limited and Robert Fleming North America Non-Marine Limited (collectively "Fleming") to dismiss the plaintiffs' complaint for lack of personal jurisdiction. This case was originally before United States District Judge Dennis W. Shedd,*fn1
who denied Fleming's original motion to dismiss. Judge Shedd found that plaintiffs had made a prima facie case for personal jurisdiction, but he bifurcated the issue of personal jurisdiction and allowed discovery on that subject. Fleming has now re-filed its motion to dismiss. However, because the court in this order has considered evidence outside of the pleadings, Fleming's motion is automatically converted into one for summary judgment.
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). It is well established that summary judgment should be granted "only when it is clear that there is no dispute concerning either the facts of the controversy or the inferences to be drawn from those facts." Pulliam Inc. Co. v. Cameo Properties, 810 F.2d 1282, 1286 (4th Cir. 1987).
The party moving for summary judgment has the burden of showing the absence of a genuine issue of material fact, and the court must view the evidence before it and the inferences to be drawn therefrom in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). When the defendant is the moving party and the plaintiff has the ultimate burden of proof on an issue, the defendant must identify the parts of the record that demonstrate the plaintiff lacks sufficient evidence. The nonmoving party, here the plaintiff, must then go beyond the pleadings and designate "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
A party "cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another." Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985). Therefore, "[m]ere unsupported speculation . . . is not enough to defeat a summary judgment motion." Ennis v. National Ass'n of Bus. & Educ. Radio, Inc., 53 F.3d 55, 62 (4th Cir. 1995).
The court assumes the following from the facts that are on the record, viewing all facts and inferences therefrom in a light most favorable to the non-moving parties.
This action was brought by the plaintiffs against Fleming for negligence in connection with the placement and administration of reinsurance. There are three plaintiffs in this action: Mega Life and Health Insurance ("Mega Life"), Anthem Life Insurance ("Anthem") and Resolution Reinsurance Intermediaries ("Resolution Re"). Anthem and Mega are out-of-state companies, but they are both licensed by the South Carolina Department of Insurance to write health insurance here in South Carolina. Resolution Re is a South Carolina company, and the defendant Fleming is based in London, England.
Anthem provided some medical stop loss insurance polices in 1997 and Mega provided some medical stop loss insurance policies in 1997, 1998, and 1999. Resolution Re is a reinsurance manager and broker. Anthem and Mega Life retained Resolution Re in 1997 to act as their agent in obtaining reinsurance on the above-mentioned medical stop loss policies, which included polices covering insureds located in South Carolina. Resolution Re contacted the defendant about placing reinsurance on Anthem and Mega Life's policies. Fleming placed reinsurance on Anthem and Mega Life with Pan-American Life Insurance company ("Pan-American"). Fleming, a reinsurance broker, provided Anthem and Mega Life (through Resolution Re) with reinsurance agreements signed by Syndicated Underwriters, Inc. ("SUI"), apparently an agent for Pan-American. This reinsurance agreement was effective April 1, 1997, and was to continue until cancelled.
Pan American has now refused to pay reinsurance related to the polices at issue, alleging that SUI was not authorized to bind Pan American to the reinsurance contract and that Fleming had not forwarded reports and information about the agreement to Pan American. Plaintiffs then brought this action against Fleming, alleging that Fleming has breached its contractual and fiduciary duties as the plaintiffs' agent. Defendant Fleming has moved to dismiss the action, asserting that this court has no personal jurisdiction over it.
Once personal jurisdiction is contested, the plaintiff has the burden of showing that jurisdiction is proper. Umbro U.S.A. v. Goner, 825 F. Supp. 738, 739 (D.S.C. 1993). In order to establish jurisdiction over a nonresident defendant, the court must look first to the State's long-arm statute to determine a basis for the exercise of jurisdiction, and second, to federal law to ensure that such an exercise of jurisdiction comports with the parameters of the Due Process Clause of the Fourteenth Amendment. See generally, Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939 (4th Cir. 1994) (detailing the evolution of Constitutional jurisdictional standards). In considering a jurisdictional challenge, the court must construe all pleadings, evidence, and inferences in the light most favorable to the exercise of jurisdiction. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989); Wolf v. Richmond County Hosp. Auth., 745 F.2d 904, 908 (4th Cir. 1984), cert. denied, 474 U.S. 826 (1985).
Section 36-2-803 of the South Carolina Code confers specific jurisdiction over nonresident defendants in seven enumerated instances.*fn2 The South Carolina Supreme Court has interpreted this statute to reach to the limits of due process. See Southern Plastics Co. v. Southern Commerce Bank, 423 S.E.2d 128, 130 (S.C. 1992); Atlantic Soft Drink Co. v. South Carolina Nat'l Bank, 336 S.F.2d 876, 878 (S.C. 1985). Although the South Carolina long-arm statute extends to the limits of due process, the South Carolina courts have nevertheless applied the language of the statute in analyzing personal jurisdiction questions. Aviation Assoc. & Consultants, Inc. v. Jet Time, Inc., 402 S.E.2d 177 (S.C. 1991).
There are two types of personal jurisdiction that can be exercised over a defendant by using the long-arm statute: specific and general. This distinction is important because it is a factor in determining whether the assertion of jurisdiction violates due process, the second part of the analysis. A court can assert specific jurisdiction over a party in the situations designated in S.C. Code Ann. § 36-2-803(1)(a)-(h). If any of these subsections are applicable, then the court has jurisdiction over that party but only for the particular conduct that is delineated in the statute. General jurisdiction subjects a defendant to jurisdiction in South Carolina for any purpose. The general jurisdiction statute is S.C. Code Ann. § 36-2-802: "A court may exercise personal jurisdiction over a person domiciled in, organized under the laws of, doing business, or maintaining his or its principal place of business in, this State as to any cause of action." This court finds that it has both specific and general personal jurisdiction over the defendant.
The court first explains its power to assert specific jurisdiction over the defendant under three different provisions of the South Carolina long-arm statute.
1. § 36-2-803(1)(a) (transacting business in South Carolina)
Fleming has admitted that it met with Resolution Re in South Carolina at least six times. In fact, Fleming specifically requested a meeting in South Carolina to meet with Resolution Re and discuss the Mega and Anthem reinsurance business that lies at the heart of plaintiffs suit. Fleming came and met in South Carolina for two days to discuss the Mega and Anthem business.
Fleming's business in South Carolina also includes an eight-year relationship with Arcadian (another South Carolina company) from 1990 to 1998. Arcadian, like Resolution Re, is an insurance broker that used Fleming as its broker to assist in placing reinsurance. Fleming admits that it earned $2.4 million in revenue from this relationship. Fleming also admits that its representatives traveled to South Carolina at least eight times from 1995 to 1998 to meet with Arcadian. Arcadian, however, estimates that Fleming made as many as 18 separate visits to South Carolina during the two companies' business relationship.
The plaintiff has put evidence on the record that Fleming has attempted to solicit additional business in South Carolina, including business with the State's own insurance funds. Generally, Fleming has transacted business in South Carolina. Specifically, Fleming has transacted business in anticipation of and pursuant to the reinsurance contracts that are at the heart of the plaintiffs' suit.
2. § 36-2-803(1)(g) (entering into a contract in South Carolina)
Fleming denies that it ever entered into a contract to be performed in whole or part in South Carolina. However, Fleming did receive commission payments as a result of acting as the agent of Resolution Re, a South Carolina company and received relevant information about the reinsurance contracts from Resolution Re. Fleming also sent funds owed to Resolution Re under the reinsurance contract to Resolution Re. Fleming argues that the reinsurance contracts between Anthem and Mega Life and Pan American were not performed in South Carolina. However, plaintiffs correctly note that the "relevant contract" is Resolution Re's contract with Fleming to place reinsurance. This contract necessarily involved partial performance by Resolution Re, a South Carolina company, in South Carolina. "A resident plaintiffs performance of the contract in South Carolina constitutes part performance sufficient to satisfy S.C. Code Ann. § 36-2-803(1)(g) if all parties knew the performance was to take place in South Carolina." Colite Industr., Inc. v. G. W. Murphy Const. Co., Inc., 377 S.E.2d 321 (S.C. 1989 (citations omitted). Fleming has not demonstrated that its brokering contract with Resolution Re, which Fleming visited South Carolina six times to discuss, was not in any way performed in South Carolina, nor that Fleming never thought the contract would be performed in South Carolina. The "entering into a contract" section of the long-arm statute is satisfied to cover the subject matter of the plaintiffs' lawsuit against Fleming.
3. § 36-2-803(1)(d) (injury in South Carolina arising from defendant's out-of-state act or omission, when defendant regularly does or solicits business in South Carolina or derives revenue from services rendered in South Carolina)
Fleming has done several million dollars of business with South Carolina companies and Fleming has regularly solicited business in the State of South Carolina. The Resolution Re be harmed if Fleming negligently administered its reinsurance brokerage contract with the plaintiff Resolution Re. Thus as a result of Fleming's business and solicitation in South Carolina, revenue from services rendered in South Carolina, and Resolution Re's alleged injury arising from its dealings with Fleming, it appears all of the prongs of this section of the South Carolina long-arm statute have been met.
In light of the foregoing contacts, this court finds that it has the power to assert specific jurisdiction over the defendant under the South Carolina long-arm statute for the reinsurance brokered by Fleming on behalf of Resolution Re.
If a court finds that it has the power to assert jurisdiction over the defendant, the next step for the court is to determine whether the exercise of jurisdiction over the defendant would violate due process. Due process is met when the nonresident defendant has "certain minimum contacts with [the forum State] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Minimum contacts are based on "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, reh'g denied sub nom. Lewis v. Hanson, 358 U.S. 858 (1958).
The current test for minimum contacts in a general jurisdiction context is found in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987). The first prong of the test involves the purposeful direction of activity to receive the benefits and protections of the forum State or if it is otherwise reasonable to expect litigation in the forum State. Id. at 112. Under the purposeful direction prong, one of the considerations is whether the controversy arose from the defendant's contacts with the forum State. Specifically, the United States Supreme Court has held that the defendant's contacts with the forum State must be "continuous and systematic" to show minimum contacts in the exercise of general jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984); Perkins v. Benguet Consol. Min. Co., 342 U.S. 437, 448 (1952).
The second prong is called the "fairness" test and involves five factors:
1. The burden on the defendant;
2. The forum State's interest in the litigation;
3. The plaintiffs interest;
4. The interest of the interstate system in obtaining
the most efficient resolution of the conflict; and
5. The shared interests of the several States in
furthering fundamental substantive policies
Id. at 113.
Since the long-arm statute is co-extensive with the constitutional limits of due process, the court has already found it has the power to assert specific jurisdiction over Fleming for conduct applicable under the long-arm statute. Furthermore, Fleming's multi-million dollar reinsurance brokerage business and agency relationships with South Carolina companies and with the State of South Carolina, coupled with Fleming's repeated visits to the State, reveal the purposeful direction of Fleming's activities to reap the benefits of doing business in this State. These systematic and continuous contacts with the South Carolina insurance industry make it reasonable for Fleming to anticipate being haled into a South Carolina court. Ruling that Fleming has the requisite minimum contacts for the exercise of both specific and general jurisdiction, the court last considers the "fairness prong" of the due process analysis.
The court weighs the relevant prongs of the fairness test*fn3 and rules that traditional notions of fair play and substantial justice would not be offended by the court's assertion of jurisdiction.
Burden on the Defendant
It is undisputed that Fleming was able to travel to South Carolina numerous times in the past to conduct and solicit business here. Furthermore, Fleming was in South Carolina when it discussed the contracts that are the subject of the plaintiffs' suit. Fleming has not raised the issue of forum non conveniens. The mere fact that a defendant is overseas does not alone make it burdensome to defend a lawsuit in the United States. See, e.g., Massaquoi v. Virgin Atlantic Airways, 945 F. Supp. 58, 61-62 (S.D.N.Y. 1996) ("In light of the speed and convenience of modern transportation . . . the fact that many witnesses and documents relevant to the case are located in London is not enough to favor a trial in England."). If Fleming can do business in South Carolina, it can defend a lawsuit in South Carolina.
Interest of the Forum State
Plaintiffs argue that South Carolina has an adjudicative interest in the case because it involves South Carolina businesses and insureds. They are correct. See Policy Mgmt. Sys. Corp. v. Consumer Ins. Co., 366 S.E.2d 33, 34 (S.C. 1988) ("South Carolina has a legitimate interest in providing the means for its citizens to seek redress against foreign corporations which allegedly breach contracts with its citizens when it was contemplated that such contracts would be performed in whole or in part in this State.") Resolution Re is a South Carolina company, and so are some of the insurance funds covered by the reinsurance agreement at issue in this case. Subjecting Fleming to the jurisdiction of the courts of South Carolina therefore serves South Carolina's adjudicative interest in deciding disputes involving her own citizens.
Interest of the National Judicial System in Obtaining the Most Efficient Resolution of the Controversy
Since the defendant was conducting business in South Carolina and the United States, the federal court system has an interest in resolving the controversies that flow from the defendant's availment of the laws that govern its business in the United States. Fleming argues that since it was in London when it communicated with the plaintiffs regarding the reinsurance at issue, it should not be subject to this court's jurisdiction. For some aspects of the transaction at issue, Fleming was physically located in England. However, Fleming's agents traveled on several occasions to South Carolina in order to discuss its business with Resolution Re. This case is a national dispute involving parties across the country, with one of the plaintiffs located in South Carolina. The dispute must be resolved somewhere, and the plaintiffs have chosen this forum. The court has an interest in resolving this dispute, and compelling Fleming, one party to the case, to defend in the United States is a more efficient than forcing all the plaintiffs to bring an action against Fleming in the United Kingdom.
The plaintiffs have made a satisfactory showing that this court has personal jurisdiction over Fleming. Fleming's motion is therefore denied.
IT IS SO ORDERED.