Th Agriculture & Nutrition v. Ace European Group

• Decision Date: 12 June 2007
• Docket Number: No. 06-3105.,06-3105.
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: TH AGRICULTURE & NUTRITION, LLC, Plaintiff-Appellant, v. ACE EUROPEAN GROUP LIMITED; AGF Insurance, Ltd.; AXA Global Risks (UK), Ltd.; AXA Schade N.V.; CGU International Insurance PLC; Chubb Insurance Company of Europe S.A.; Fortis Corporate Insurance N.V.; Generali Schadeverzekering Maatschappij, N.V.; Gerling-Konzern Allgemeine Versicherungs-AG; HDI Verzekeringen N.V.; Royal & Sun Alliance Insurance (Global) Ltd.; Winterthur Schadeverzekering Maatschappij N.V.; XL Insurance Company Limited, Defendants-Appellees.

488 F.3d 1282

TH AGRICULTURE & NUTRITION, LLC, Plaintiff-Appellant, v. ACE EUROPEAN GROUP LIMITED; AGF Insurance, Ltd.; AXA Global Risks (UK), Ltd.; AXA Schade N.V.; CGU International Insurance PLC; Chubb Insurance Company of Europe S.A.; Fortis Corporate Insurance N.V.; Generali Schadeverzekering Maatschappij, N.V.; Gerling-Konzern Allgemeine Versicherungs-AG; HDI Verzekeringen N.V.; Royal & Sun Alliance Insurance (Global) Ltd.; Winterthur Schadeverzekering Maatschappij N.V.; XL Insurance Company Limited, Defendants-Appellees.

No. 06-3105.

United States Court of Appeals, Tenth Circuit.

June 12, 2007.

Kenneth H. Frenchman, Dickstein Shapiro Morin & Oshinsky LLP, New York, N.Y. (Robin L. Cohen, Dorothy A. Thomas, and Andrew N. Bourne, Dickstein Shapiro Morin & Oshinsky LLP, New York, NY, and Michael J. Abrams, Lathrop & Gage, LLC, Kansas City, MO, with him on the briefs), appearing for Plaintiff-Appellant.

Thomas W. Brunner, Wiley Rein & Fielding LLP, Washington, DC (Richard A. Ifft and Karalee C. Morell, Wiley Rein & Fielding LLP, Washington, DC; Dan Biles, Gates Biles Shields & Ryan P.A., Overland Park, Kansas; Norman C. Kleinberg, Derek J.T. Adler, William J. Beausoleil, Hughes Hubbard & Reed, New York, NY, Michael G. Norris, Norris & Keplinger, L.L.C., Overland Park, Kansas, Richard J. Geddes, Kirk C. Jenkins, and Frank E. Valenti, Sedgwick Detert Moran & Arnold LLP, Chicago, Illinois, and Timothy M. O'Brien and Neely L. Fedde, Shook Hardy & Bacon L.L.P., Overland Park, Kansas, with him on the brief), appearing for Defendants-Appellees.

Before, TACHA, Chief Judge, BALDOCK, and LUCERO, Circuit Judges.

TACHA, Circuit Judge.

Petitioner-Appellant TH Agriculture & Nutrition, LLC ("THAN") filed suit in the District Court against Defendant-Appellee insurance companies ("Insurers"), seeking damages and declaratory relief for the Insurers' alleged breach of insurance policies under which THAN is insured. The District Court granted the Insurers' motions to dismiss based on lack of personal jurisdiction over the Insurers and improper venue. THAN appeals. We exercise jurisdiction pursuant to 28 U.S.C. § 1291. Because we conclude that the District Court lacks personal jurisdiction over the Insurers, we AFFIRM the District Court's ruling and DISMISS THAN's appeal.

I. BACKGROUND

THAN is a limited liability company organized under the laws of Delaware with its principal place of business in Lenexa, Kansas.¹ THAN is a subsidiary of Philips Electronics North America Corporation ("PENAC"), which in turn is a subsidiary of Koninklijke Philips Electronics N.V. ("Philips"), a Dutch corporation. The Defendants are thirteen European insurance companies,² including five with their place of incorporation and principal place of business in the Netherlands, six with their place of incorporation and principal place of business in the United Kingdom, one with its place of incorporation and principal place of business in Germany, and one with its place of incorporation in Belgium and principal place of business in the Netherlands. The Insurers subscribed to primary and excess general liability insurance policies known as the World-Wide Liability Insurance Programme (the "Programme" or "policies"). A Dutch insurance broker, AON Nederland, placed the insurance policies under the Programme with individual insurers, and the Defendant-Insurers subsequently issued the policies to Philips in the Netherlands. The Programme provides worldwide insurance coverage to Philips, the named insured, and its unnamed direct and indirect subsidiaries for the period from December 31, 1997, through December 31, 2001. By virtue of its status as an indirect subsidiary of Philips, THAN is insured under the Programme.

Under the Programme, the Insurers agree to indemnify the insured against product liability claims involving "personal or bodily injury, including death." The policies provide:

The Insurers will, subject to the Limits of Liability, indemnify the Insured in respect of their liability at law for compensation and claimants['] costs and expenses, incurred by the Insured, arising out of Injury to any person, Damage to property, or Financial Loss and occurring during the Period of Insurance.

In addition, the Insurers reserve the right to control any litigation involving claims covered by the policies. Under a subsection entitled "Control of Claims," the Programme states: "The Insured shall not incur any expense in litigation or otherwise make any payment, settlement, arrangement or admission of liability in respect of any claim for which the Insurers would be liable hereunder without authority of the Insurers." The subsection also provides: "The Insurers shall in respect of any claim insured hereunder be entitled to use the name of the Insured in the bringing, defending, enforcing or settling of legal proceedings for the benefit of the Insurers and shall have absolute conduct and control of such proceedings."

The policies also include the following "Jurisdiction" clause that addresses the parties' choice of law and choice of forum:

Any dispute concerning the interpretation of the terms, conditions, limitations and/or exclusions contained in this Policy is hereby understood and agreed by both the Insured and the Insurers to be subject to the law of the Netherlands. Each party agrees to submit to the jurisdiction of any court of competent jurisdiction within the Netherlands and to comply with all requirements necessary to give such Court jurisdiction. All matters arising hereunder shall be determined in accordance with the law and practice of such Court.

From at least 1961 to 1981, THAN's predecessor company and a Philips subsidiary, Thompson Hayward Chemical Company of Kansas City, Missouri, distributed raw asbestos. The majority of the company's operations were sold to third parties prior to 1985, since which time THAN's primary function has been to satisfy the company's existing liabilities and to perform environmental remediation services in connection with its environmental liabilities. THAN has been named as a defendant or co-defendant in more than 14,000 claims filed in state and federal courts across the United States alleging bodily injury and wrongful death for exposure to asbestos allegedly distributed by Thompson Hayward. One such claim was filed in Kansas, and THAN's regular business activities with respect to the asbestos claims take place in Lenexa, Kansas.

Philips first provided notice of the asbestos claims to the Programme on November 21, 2002. Thereafter, the Insurers purportedly rescinded their policies, claiming Philips failed during negotiations over the Programme to disclose relevant information known to it regarding the asbestos claims. On August 10, 2005, twelve of the thirteen Insurers (all but XL Insurance Company Limited) brought suit against Philips, PENAC, and THAN in the Netherlands, seeking declaratory relief and confirmation of their rescission of the Programme. On September 29, 2005, THAN brought the instant action in the District Court, seeking damages for breach of contract and a declaratory judgment that the Insurers are obligated to indemnify THAN for losses resulting from the asbestos claims and to pay the costs of defending against these claims.

II. DISCUSSION

"We review de novo [a] district court's dismissal for lack of personal jurisdiction." Benton v. Cameco Corp., 375 F.3d 1070, 1074 (10th Cir.2004) (quotation omitted). When, as here, a district court enters a dismissal without an evidentiary hearing, the plaintiff need only make a prima facie showing of personal jurisdiction. Id. "The plaintiff may make this prima facie showing by demonstrating, via affidavit or other written materials, facts that if true would support jurisdiction over the defendant." OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir.1998). In deciding whether the plaintiff has made the necessary prima facie showing, we resolve any factual disputes in the plaintiff's favor. Benton, 375 F.3d at 1074. In order to defeat a prima facie showing of jurisdiction, the defendant must demonstrate "that the presence of some other considerations would render jurisdiction unreasonable." OMI Holdings, Inc., 149 F.3d at 1091 (quotation omitted).

"To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment." Pro Axess, Inc. v. Orlux Distrib'n, Inc., 428 F.3d 1270, 1276 (10th Cir.2005) (quotation omitted). "Because the Kansas long-arm statute is construed liberally so as to allow jurisdiction to the full extent permitted by due process, we proceed directly to the constitutional issue." OMI Holdings, Inc., 149 F.3d at 1090 (quotation omitted). THAN does not assert that the District Court may exercise general jurisdiction over the Insurers based on their "continuous and systematic general business contacts" with the forum state. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 415, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). We therefore ask whether the exercise of specific personal jurisdiction over the Insurers would offend due process.

Our specific jurisdiction inquiry involves two steps. First, we ask whether the nonresident defendant has "minimum contacts" with the forum state such "`that he should reasonably anticipate being haled into court there.'" OMI Holdings, Inc., 149 F.3d at 1091 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). Second, if the defendant has sufficient minimum contacts, we ask whether the court's "exercise of personal jurisdiction over the defendant offends `traditional notions of fair play and substantial justice.'" Id. (quoting Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 113, 107 S.Ct. 1026, ...