Domtar, Inc. v. Niagara Fire Ins. Co.

• Decision Date: 16 June 1995
• Docket Number: No. CX-93-2449,CX-93-2449
• Citation: 533 N.W.2d 25
• Parties: DOMTAR, INC., Respondent, v. NIAGARA FIRE INSURANCE CO., et al., Defendants, and Canadian General Insurance Co., petitioner, Appellant.
• Court: Minnesota Supreme Court

Page 25

533 N.W.2d 25

DOMTAR, INC., Respondent, v. NIAGARA FIRE INSURANCE CO., et al., Defendants and Canadian General Insurance Co., petitioner, Appellant.

No. CX-93-2449.

Supreme Court of Minnesota.

June 16, 1995.

Rehearing Denied July 25, 1995.

Syllabus by the Court

A Canadian insurer purposefully established minimum contacts with Minnesota by allegedly agreeing to defend its insured against liability arising from an insured risk located in Minnesota.

Because Minnesota is the situs of the accident creating liability that the Canadian insurer allegedly agreed to defend its insured against, the insured's coverage claim against the insurer arises out of or relates to the insurer's minimum contacts with Minnesota, thereby supporting the assertion of specific personal jurisdiction over the insurer in Minnesota.

Subjecting the Canadian insurer to specific personal jurisdiction in Minnesota is reasonable.

Larry A. Hanson, Leonard W. Glewwe, Moore, Costello & Hart, St. Paul, for appellant.

Douglas L. Skor, Kathleen E. DiGiorno, Briggs & Morgan, St. Paul, and Paul E. Zevnik, Zevnik, Horton, Guibord & McGovern, Washington, DC, for respondent.

Thomas A. Pearson, Arthur, Chapman, McDonough, Ketterling & Smetak, P.A., Minneapolis, for Niagara Fire Ins. Co., et al.

Geoffrey J. Alexander, Joseph G. Manta, David S. Florig, Manta & Welge, Philadelphia, PA, for Allstate Ins. Co. of Canada.

Margaret J. Orbon, Amy Rich Paulus, Clausen, Miller, Caffrey & Witous, P.C., Chicago, IL, Margie R. Bodas, Lommen, Nelson, Cole & Stageberg, P.A., Minneapolis, for American Home Assur. Co., et al.

John M. Anderson, Michael A. Klutho, Bassford, Heckt, Lockhart, Truesdell & Briggs, P.A., Minneapolis, for Federal Ins. Co., et al.

John E. Castor, Richard J. Schroeder, Castor, Klukas, Scherer & Lofgren Chartered, Minneapolis, for Gerling Global Reinsurance Corp.

Bradley M. Jones, Stacy A. Broman, Meagher & Geer, Minneapolis, for Columbia Cas. Co.

Thomas P. Kane, Kenneth H. Podpeskar, Oppenheimer, Wolff & Donnelly, St. Paul, Gary W. Westerberg, Leisa Hamm, Lord Bissell & Brook, Chicago, IL, for Certain Underwriters at Lloyd's of London, et al.

Joseph W. Anthony, Leslie Sinner McEvoy, Fruth & Anthony, P.A., Minneapolis, for Allstate Canada (local counsel).

Timothy S.B. Danson, Danson Recht & Freedman, Toronto Ontario M5G 1K2 Canada, for Halifax Ins. Co.

Garrett E. Mulrooney, Maun & Simon, St. Paul, for Zurich Ins. Co. Thomas Jensen, Ted E. Sullivan, Lind Jensen & Sullivan, Minneapolis, and Richard M. Shusterman, Christopher M. Mikson, White & Williams, Philadelphia, PA, for CIGNA Ins. Co. of Canada.

Heard, considered and decided by the court en banc.

OPINION

KEITH, Chief Justice.

The Minnesota Pollution Control Agency ("MPCA") issued to Domtar, Inc. a Request For Response Action ("RFRA") relating to the release or threatened release of hazardous substances at an environmentally contaminated property located in Duluth, Minnesota. Domtar commenced against its alleged insurers the declaratory judgment action underlying this appeal. Domtar sought a judgment declaring that defendants are obliged to defend Domtar against the MPCA's allegations and to reimburse Domtar for investigation costs it has incurred.

Canadian General Insurance Company, one of three alleged primary insurers in the underlying declaratory judgment action, moved to dismiss Domtar's claims based on lack of personal jurisdiction. The district court denied Canadian General's motion, concluding that Canadian General was subject to personal jurisdiction in Minnesota. The Minnesota Court of Appeals affirmed. Domtar, Inc. v. Niagara Fire Ins. Co., 518 N.W.2d 58, 63 (Minn.App.1994). Because we hold that Canadian General is subject to specific personal jurisdiction in Minnesota, we affirm.

The St. Louis River/Interlake/Duluth Tar Site ("the Site") is located in the city of Duluth, St. Louis County, Minnesota. The Site, which encompasses approximately 230 acres of land and river embayment, is located on the north bank of the St. Louis River, approximately four miles upstream from Lake Superior.

For decades, various entities used parts of the Site for industrial purposes. In 1924, Dominion Tar and Chemical Company, Ltd., which ultimately changed its name in 1977 to Domtar, Inc. ("Domtar"), began operating a tar processing or manufacturing plant on a part of the Site. American Tar and Chemical Company, a subsidiary of Domtar, was created in 1930 and continued operating the tar plant until 1948, when it ceased manufacturing operations. Domtar sold its part of the Site in 1955.

In August 1987, the MPCA initiated a remedial investigation of the Site. The MPCA determined that hazardous substances had been released or threatened to be released at the Site, thereby contaminating soil and groundwater. To further evaluate the environmental and health effects of the contamination and to select the appropriate remediation technology, the MPCA concluded that additional investigations of the extent of the contamination needed to be conducted. Therefore, after identifying Domtar as a party responsible for the release or threatened release of hazardous substances at part of the Site, the MPCA issued to Domtar a RFRA.

Domtar, incorporated under the laws of Canada with its principal place of business located in Montreal, Quebec, Canada, then brought an action against its primary and excess general liability insurers, including Canadian General. Domtar alleges that Canadian General issued to Domtar general liability policies whose coverage periods extended from October 1, 1956 through February 18, 1965. Canadian General has not retained any of Domtar's applications for insurance coverage, any of the policies issued to Domtar, or any of the underwriting materials presumably gathered or generated at the time it issued the policies to Domtar.

Through discovery efforts, one Canadian General policy has been located, allegedly insuring Domtar against liability from January 1, 1960 through January 1, 1963. The policy provides comprehensive general liability coverage for claims arising out of accidents occurring in "Canada and the United States of America." ¹ Although the parties were able to locate only one policy, covering 1960-63, that policy indicates that it is a replacement or renewal of a prior policy. The district court concluded that circumstantial evidence indicated that Canadian General insured Domtar from 1956-1965. ²

Canadian General is a Canadian corporation whose principal place of business is located in Scarborough, Ontario, Canada. Canadian General is not now and never has been licensed to do business in Minnesota. Canadian General asserts that it does not maintain, and never has maintained, any offices, employees, or agents in Minnesota. Canadian General asserts that it has no bank accounts in Minnesota and owns no real or personal property in Minnesota. Finally, Canadian General asserts that it has not issued any policies of insurance to any residents of Minnesota.

After the parties completed discovery on the issue of personal jurisdiction, the district court denied Canadian General's motion to dismiss for lack of personal jurisdiction. The court held that Canadian General created a relationship with Minnesota by contracting to insure Domtar against liabilities in Minnesota, and that relationship provided Minnesota courts with personal jurisdiction over Canadian General in suits arising out of or relating to that relationship.

In a split decision, the court of appeals affirmed, holding Canadian General subject to personal jurisdiction in Minnesota because Domtar's cause of action against Canadian General arose out of Canadian General's agreement to insure Domtar's Minnesota activities. Domtar, Inc., 518 N.W.2d at 63. The court of appeals reasoned that Canadian General's underwriting practice should have alerted it to the possibility that Domtar could be sued in Minnesota for environmental contamination caused by a manufacturing facility that Domtar had operated in the state for 30 years. Id. at 62. Furthermore, the court of appeals reasoned, "Canadian General should have expected coverage disputes to be resolved in the same forum as the underlying action." Id. In its appeal to this court, Canadian General contends that its contacts with Minnesota are constitutionally insufficient to subject it to personal jurisdiction in Minnesota.

I.

To sustain personal jurisdiction over a foreign corporation, this court must find both that personal jurisdiction is authorized by the Minnesota long-arm statute and that the exercise of such jurisdiction does not violate the due process requirement that the nonresident defendant have certain "minimum contacts" with the forum state. Minn.Stat. § 543.19 (1994); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). The quality of these contacts must be such that the assertion of jurisdiction comports with " 'traditional notions of fair play and substantial justice.' " International Shoe, 326 U.S. at 316, 66 S.Ct. at 158 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342-43, 85 L.Ed. 278 (1940)).

The Minnesota long-arm statute, Minn.Stat. § 543.19 (1994), permits courts to assert jurisdiction over defendants to the extent that federal constitutional requirements of due process will allow. Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410 (Minn.1992). If the personal jurisdiction requirements of the federal constitution are met, the requirements of the long-arm statute will necessarily also be met. Id. at 411. Therefore, we need only consider whether it is consistent with federal constitutional requirements of due process for a Minnesota court to assert personal jurisdiction over Canadian General. Id.

The Due Process clause of the Fourteenth Amendment limits the power...