328 F.3d 1122 (9th Cir. 2003), 01-57053, Harris Rutsky & Co. Ins. Services, Inc. v. bell & Clements Ltd.

Docket Nº:01-57053
Citation:328 F.3d 1122
Party Name:Harris Rutsky & Co. Ins. Services, Inc. v. bell & Clements Ltd.
Case Date:May 12, 2003
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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328 F.3d 1122 (9th Cir. 2003)

HARRIS RUTSKY & CO. INSURANCE SERVICES, INC., d/b/a American Special Risk Insurance Services, a California corporation, Plaintiff-Appellant,


BELL & CLEMENTS LIMITED; Bell & Clements (London) Limited, Defendants-Appellees.

No. 01-57053.

United States Court of Appeals, Ninth Circuit

May 12, 2003

Argued and Submitted Dec. 4, 2002.

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Stephen F. Harbison, Argue Pearson Harbison & Myers, LLP, Los Angeles, CA, argued the cause for the appellant. Thomas R. Schalow, Argue Pearson Harbison & Myers LLP, Los Angeles, CA, and Andrew M. Polinsky, Dorais & Grattan, Goleta, CA, were on the briefs.

Phillip J. Eskenazi, Los Angeles, CA, argued the cause for the appellee. Barry A. Chasnoff and Laura A. Hernandez, Akin Gump Strauss Hauer & Feld, LLP, were on the brief.

Appeal from the United States District Court for the Central District of California;

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Ronald S.W. Lew, District Judge, Presiding. D.C. No. CV-01-07661-RSWL.

Before REINHARDT, O'SCANNLAIN and PAEZ, Circuit Judges.


O'SCANNLAIN, Circuit Judge.

We are asked to decide whether a federal district court in California can properly exercise personal jurisdiction over London, England-based entities alleged to have interfered with a California corporation's contractual and business relations by their actions in Europe.


Harris Rutsky & Co., dba American Special Risk Insurance Services ("ASR") is a California corporation, whose principal place of business is Woodland Hills, California. ASR is an insurance brokerage firm, licensed and regulated under the laws of California. ASR customarily enters into agreements with nonadmitted foreign surplus line insurers. Such a contract--the industry parlance is 'coverholder agreement'--allows ASR, acting as the foreign insurer's agent, to bind the foreign insurer to coverage in California. The foreign insurer thereby gains access to California's lucrative insurance markets, from which it is otherwise barred.

Sometime prior to 1996, ASR entered into a coverholder agreement with Zurich Reinsurance (London) Limited ("Zurich"), a London-based surplus lines insurer. The agreement called for a Lloyd's-affiliated insurance broker to act as an intermediary between the parties. The intermediary under this agreement was Byas Mosley, Ltd. David Doe was the representative at Byas Mosley who worked with ASR. Through its relationship with Doe, ASR had worked to cultivate its relationship with Zurich, and with other London-based insurers.

In 1996, David Doe left Byas Mosley and associated himself with Bell & Clements, Ltd., a United Kingdom corporation ("B & C"), and a Lloyd's-affiliated insurance broker. B & C is wholly owned by Bell & Clements London, Ltd. ("B & C-London"), a United Kingdom holding company. Both B & C and B & C-London are run by the same senior officers and directors, they share the same offices and utilize many of the same staff, at the same location in London, England.

Doe avers that B & C sought to associate with Doe to acquire his North American clients, and in particular Doe's "most important" client, ASR. After Doe joined B & C, principals at B & C communicated with ASR by facsimile. B & C stated it was pleased that David Doe was joining them, and that it looked forward to its relationship with ASR, and introduced those B & C employees who would work on day-to-day broker tasks for ASR. Doe and B & C agreed to set up a subsidiary--Bell, Clements & Doe, Ltd. ("BC & D"). BC & D was sixty percent owned by B & C-London, and its purpose was to provide equity for Doe in consideration for the business he brought with him when he joined B & C, including the ASR account. Doe himself made certain prior to joining B & C that ASR would transfer its business to B & C, which it did.

When Doe joined B & C in 1996, it succeeded Byas Mosley as authorized broker pursuant to the ASR-Zurich agreement, and acted in that capacity until 1999, when ASR and Zurich entered into a new agreement. The 1999 agreement was drafted by B & C. B & C mailed the contract to ASR in California, already signed by Zurich, and ASR ratified the new agreement by executing it in California and returning it to B & C. The contract

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named B & C as the recognized broker for the parties "on behalf of BC & D." B & C was due a five percent commission on net premiums in their capacity as the intermediary. The contract further provided that all communications between ASR and Zurich, including account advices, were to go through B & C. All claims were to be "notified by American Special Risk to Insurers via Bell & Clements Limited." 1999 Contract Agreement, at 17. A service of suit clause required the underwriters--ASR--to "submit to the jurisdiction of a Court of competent jurisdiction within the United States" at the request of an insured, and a Los Angeles, California law firm was designated as the service of suit nominee.

David Doe and B & C's affiliation lasted for approximately five years, from 1996 to November, 2000. During that time, ASR paid premiums to B & C from insureds--the majority of which were Californian--totaling approximately $45 million. B & C's commission on those premiums exceeded $2 million. ASR and B & C communicated with each other frequently during this time period, via fax, phone and mail. All communications from B & C were on B & C letterhead.

London-based B & C employees visited California approximately eight times per year for business purposes during the relevant time period. The B & C representatives never met with ASR, but Doe avers that the trips comprised a regular part of B & C's business, and that they were instrumental in creating new lines of business for B & C with California-licensed brokers like ASR, willing to act as agents for foreign surplus line insurers. B & C apparently acts as an intermediary for several other California-licensed brokers. In addition to the visits to California, B & C has an "American Division" link on its website, which claims B & C is a "market leader in the provision and management of binding authorities for wholesale underwriting intermediaries and managing general agents in the American insurance industry." Doe estimates that twenty percent of B & C's overall business comes from California.

In November 2000, David Doe left B & C and joined another London broker--Alwen-Hough, Ltd. ASR alleges Doe was forced out of the company in a deliberate effort to disrupt the various relationships ASR had with London insurers, and specifically their relationship with Zurich. A month later, Zurich terminated its agreement with ASR. ASR alleges that it did so at the behest of B & C and B & C-London. ASR further alleges that early in 2001, B & C and B & C-London approached other London insurers with whom ASR had relationships, and urged them to cease doing business with ASR, which they did.

ASR filed suit against B & C and B & C-London in California state court, alleging state law claims for tortious interference with contract, tortious interference with prospective economic advantage, breach of fiduciary duties, and unfair competition. B & C and B & C-London subsequently removed the case to federal district court on the basis of diversity, and filed a motion to dismiss for lack of personal jurisdiction, or alternatively for forum non conveniens. ASR moved for jurisdictional discovery, which was denied. The district court then granted the motion to dismiss for lack of personal jurisdiction. ASR timely appeals.


We review de novo the district court's decision to dismiss for lack of personal jurisdiction. Ochoa v. J.B. Martin and Sons Farms, Inc., 287 F.3d 1182, 1187 (9th Cir. 2002). It is ASR's burden to establish the district court's personal jurisdiction

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over the defendants. Doe, I v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (per curiam).

Here, the district court acted on the defendant's motion to dismiss without first holding an evidentiary hearing. In such a case, the plaintiff need only make a prima facie showing of jurisdiction to avoid the defendant's motion to dismiss. Id. ASR "need only demonstrate facts that if true would support jurisdiction over the defendant." Id. (quoting Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)). Unless directly contravened, ASR's version of the facts is taken as true, and "conflicts between the facts contained in the parties' affidavits must be resolved in [ASR's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists." Doe, I, 248 F.3d at 922 (quoting AT & T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)); see also Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082, 1087 (9th Cir. 2000) ("Because the prima facie jurisdictional analysis requires us to accept the plaintiff's allegations as true, we must adopt [plaintiff]'s version of events for purposes of this appeal.").

Where, as here, there is no applicable federal statute governing personal jurisdiction, the law of the state in which the district court sits applies. Core-Vent Corp. v. Nobel Industries AB, 11 F.3d 1482, 1484 (9th Cir. 1993). California's long-arm statute allows courts to exercise personal jurisdiction over defendants to the extent permitted by the Due Process Clause of the United States Constitution. See Cal.Code Civ. Pro. § 410.10 ("A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States."); Core-Vent, 11 F.3d at 1484. Hence, we "need only determine whether personal jurisdiction in this case would meet the requirements of due process." Brainerd v. Governors of the Univ. of Alberta, 873 F.2d 1257, 1258 (9th Cir. 1989).

Due process requires "that in order to subject a...

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