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Brit UW, Ltd. v. Manhattan Beachwear, LLC

United States District Court, District of Columbia

January 26, 2017

BRIT UW, LIMITED, Plaintiff,
MANHATTAN BEACHWEAR, LLC, Defendant. Re Document No. 7


          RUDOLPH CONTRERAS, United States District Judge.


         Plaintiff Brit UW, Limited (Brit) seeks declaratory relief to establish that it need not pay Defendant Manhattan Beachwear, LLC (MBW) under a professional liability insurance policy that Brit provided. MBW's involvement in this controversy began when it retained Clyde Hettrick, a partner at Dickstein Shapiro LLP (Dickstein), to represent it in an insurance matter. During the representation, Mr. Hettrick left Dickstein to form his own firm, and took MBW with him as a client. MBW later came to regret this decision, to the extent that it fired Mr. Hettrick and sued him (and his new firm) for malpractice. Brit-one of several insurers on Dickstein's professional liability policy-declined coverage of the malpractice suit.

         MBW, through a variety of legal machinations, both received a judgment for $63, 888, 486.49 against the defendants in the malpractice action, and obtained assignment of the defendants' claims against Dickstein's insurers, including Brit. Noting that MBW was poised to sue it for millions, Brit filed this action seeking, inter alia, a declaration of non-coverage over the malpractice claims. Now before the Court is MBW's motion to dismiss this action for lack of personal jurisdiction, lack of subject matter jurisdiction, failure to join a party, lack of venue, and forum non conveniens. The Court concludes that it does not have personal jurisdiction over MBW under either specific or general jurisdiction, and thus dismisses the action in its entirety without reaching the other issues.

         II. BACKGROUND[1]

         This case involves an insurance dispute between plaintiff Brit, an insurer, and defendant MBW, [2] an erstwhile[3] swimwear manufacturer. Brit was one of several insurers that issued a professional liability insurance policy to Dickstein, and MBW was one of Dickstein's clients.

         The origins of this case began to germinate in 2007, when MBW claimed that it lost $11, 459, 421 due to a fire and theft in Indonesia. Soura Decl. ¶ 8, ECF No. 7-1; Compl. ¶ 17, ECF No. 1. MBW disagreed with its insurer's handling of the claim, and hired Clyde Hettrick-then a partner at Dickstein in the Los Angeles office-to represent it in the Indonesia matter. Soura Decl. ¶ 9. The retainer agreement was negotiated in California, mailed from California, and contained a California arbitration provision. Soura Decl. ¶ 9. Brit and several other London insurers provided professional liability insurance to Dickstein at the time.[4] Compl. ¶¶ 1, 7; see also Primary Professional Liability Insurance Policy, ECF No. 1-1, Ex. A. After submitting a claim package on MBW's behalf in the Indonesia matter, Mr. Hettrick left Dickstein and started his own law firm, Compl. ¶ 18; Soura Decl. ¶ 10, retaining MBW as a client, Compl. ¶ 18; Soura Decl. ¶ 10.

         Relations between Mr. Hettrick and MBW soon soured. In June of 2011, MBW replaced Mr. Hettrick with lawyers from Dickstein's Los Angeles office for the Indonesia matter, Soura Decl. ¶ 12, and in 2012 MBW sued Mr. Hettrick for malpractice in Los Angeles Superior Court, Compl. ¶ 28; see also Complaint for Legal Malpractice, Manhattan Beachwear, LLC v. Hettrick Law, P.C., No. BC497520 (Cal. Super. Ct. Dec. 14, 2012), ECF No. 1-3, Ex. C. Dickstein's insurers, including Brit, were not named in the malpractice case. See Complaint for Legal Malpractice, Manhattan Beachwear, LLC v. Hettrick Law, P.C., No. BC497520 (Cal. Super. Ct. Dec. 14, 2012). Brit declined to provide coverage in the malpractice suit. Compl. ¶ 31.

         The malpractice case was ongoing when Mr. Hettrick died in 2013. Following his death, MBW took an unorthodox approach[5] to resolving the matter. First, MBW reached a settlement with Mr. Hettrick's estate and Hettrick's new law firm. See generally Settlement Agreement, ECF No. 1-4, Ex. D. Instead of disposing of the court case, however, the settlement provided that the case would proceed to a bench trial but the estate would not contest MBW's allegations on damages or culpability. Settlement Agreement ¶ 3 (“The ESTATE . . . agree[s] not to contest the nature or amount of any claims made by MB against the ESTATE. Liability and the extent of MB's damages against the ESTATE will be determined . . . in an uncontested prove-up hearing . . . . and shall be entered as a judgment against the ESTATE in the ACTION”). The estate further agreed to assign[6] any claims it might have against Brit (or Dickstein's other insurers) to MBW. Compl. ¶ 33; Soura Decl. ¶ 16; Settlement Agreement ¶ 4 (“[T]he ESTATE shall assign to MB . . . any and all assignable claims against [the professional liability insurers]”). In exchange for these concessions, MBW agreed not to collect on the judgment from Hettrick's estate. See generally Settlement Agreement.

         A bench trial occurred pursuant to this agreement, and the court issued a judgment of $63, 888, 486.49 in MBW's favor. Compl. ¶ 34; Judgment After Court Trial, Manhattan Beachwear, LLC v. Hettrick Law, P.C., No. BC 497520 (Cal. Super. Ct., August 10, 2015), ECF No. 7-1, Ex. B. Although this judgment was entered against Hettrick's estate, the settlement agreement contemplated that MBW would bring suit against Brit and Dickstein's other insurers to enforce the judgment.[7] Settlement Agreement, ¶ 10, ECF No. 1-4, Ex. D (“Through the Assignment . . . MB . . . shall file an action against [Dickstein's insurers] . . . .”).

         Brit filed this suit seeking declaratory judgment to protect it against MBW's[8] claims.[9]MBW moves to dismiss the complaint for lack of personal jurisdiction, as per Federal Rule of Civil Procedure 12(b)(2). MBW further moves to dismiss for lack of subject matter jurisdiction, as per Rule 12(b)(1); improper venue, as per Rule 12(b)(3); failure to join a party, as per Rule 12(b)(7); and forum non conveniens. See generally Mem. P. & A. Supp. Def.'s Mot. Dismiss (Def.'s Mot. Dismiss), ECF No. 7.

         III. ANALYSIS

         The Court begins, and ends, its analysis by considering MBW's motion to dismiss for lack of personal jurisdiction. Because the Court agrees with MBW that MBW is not subject to either specific jurisdiction on this claim or general jurisdiction in the District, the Court will grant the motion and dismiss the complaint in its entirety.

         Personal jurisdiction requires that the court be able to exercise jurisdiction over a party under both “the applicable long-arm statute” and “the demands of due process.” United States v. Ferrara, 54 F.3d 825, 828 (D.C. Cir. 1995); accord GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1347 (D.C. Cir. 2000). When a case, such as this one, Compl. ¶ 3, is brought in diversity, “the federal district court's personal jurisdiction over the defendant is coextensive with that of a District of Columbia court.” Helmer v. Doletskaya, 393 F.3d 201, 205 (D.C. Cir. 2004).

         The plaintiff bears the burden of establishing that the court may properly exercise personal jurisdiction over each defendant. Crane v. N.Y. Zoological Soc'y, 894 F.2d 454, 456 (D.C. Cir. 1990). The Court will resolve factual discrepancies in favor of the plaintiff, Crane, 894 F.2d at 456, but “[b]are allegations and conclusory statements are insufficient.” Johns v. Newsmax Media, Inc., 887 F.Supp.2d 90, 95 (D.D.C. 2012); see also Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001). In addition to the pleadings, the Court may consider other evidence, such as affidavits. See Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005).

         Personal jurisdiction may be satisfied by either specific or general jurisdiction. D'Onofrio v. SFX Sports Grp., Inc., 534 F.Supp.2d 86, 90 (D.D.C. 2008). Specific jurisdiction requires only sufficient “‘minimum contacts' with [the forum], ” but requires that the plaintiff's claims arise from those contacts. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). General jurisdiction, on the other hand, “sets a high bar, ” requiring that the defendant have “continuous and systematic” contacts with the forum state-but then permits the forum to adjudicate any claims against the defendant, whether or not the claims are related to the defendant's actions in the forum. D'Onofrio, 534 F.Supp.2d at 90 (citation omitted). The Court considers the applicability of each in turn.

         A. Specific Jurisdiction

         MBW argues that neither of its two acts arguably relating to D.C.-retaining lawyers at Dickstein, a firm headquartered in D.C., and taking assignment of the Hettrick estate's claims against Dickstein's insurers-should subject it to personal jurisdiction in D.C. See, e.g., Reply Mem. Supp. Def.'s Mot. Dismiss (Def.'s Reply), ECF No. 14 at 7-11. Brit does not seriously contend that merely hiring Hettrick, a Dickstein attorney residing and working in California, creates personal jurisdiction.[10] Instead, Brit hangs its hat on the argument that MBW accepted D.C. personal jurisdiction by taking assignment of the Hettrick estate's claims against Brit under the professional liability policy, which it argues was a “D.C. contract.” See, e.g., Pl.'s Mem. P. & A. Opp'n Def.'s Mot. Dismiss (Pl.'s Opp'n), ECF No. 13 at 9-13. Because the Court concludes that taking assignment of the contract does not meet the minimum contacts with the forum requirement of the due process clause, exercising specific jurisdiction over MBW is not warranted.

         The District of Columbia's long-arm statute permits a court to “exercise personal jurisdiction over a person” when “a claim for relief aris[es] from the person's . . . transacting any business in the District of Columbia.” D.C. Code § 13-423 (2012). This provision is interpreted “to provide jurisdiction to the full extent allowed by the Due Process Clause” such that “the statutory and constitutional jurisdictional questions . . . merge into a single inquiry: would exercising personal jurisdiction accord with the demands of due process?” Thompson Hine, LLP v. Taieb, 734 F.3d 1187, 1189 (D.C. Cir. 2013) (internal quotation marks and citation omitted).

         Due process is satisfied if the defendant has “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice, '” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)), and that the defendant “should reasonably anticipate being haled into court” in the forum, World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The court analyzes the “quality and nature of the defendant's activity” in the forum to determine if the defendant “purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)); see also IMark Mktg. Servs., LLC v. ...

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