Allianz Global Corporate & Specialty Marine Ins. Co. v. Watts Regulator Co.

• Decision Date: 25 February 2015
• Docket Number: No. 4:14–cv–00253.,4:14–cv–00253.
• Parties: ALLIANZ GLOBAL CORPORATE AND SPECIALTY MARINE INSURANCE COMPANY, Plaintiff, v. WATTS REGULATOR CO., Defendant.
• Court: U.S. District Court — Southern District of Iowa

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ALLIANZ GLOBAL CORPORATE AND SPECIALTY MARINE INSURANCE COMPANY, Plaintiff
v.
WATTS REGULATOR CO., Defendant.

No. 4:14–cv–00253.

United States District Court, S.D. Iowa, Central Division.

Signed Feb. 25, 2015.

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Brian G. Cunningham, Foran Glennon Palandech, Ponzi & Rudloff PC, Chicago, IL, J. Michael Weston, Lederer Weston Craig PLC, Cedar Rapids, IA, Benjamin Michael Weston, Lederer Weston Craig PLC, West Des Moines, IA, for Plaintiff.

Kevin J. Caster, Dana L. Oxley, Shuttleworth & Ingersoll P.L.C., Cedar Rapids, IA, Seth Bryan Goldberg, Shari Claire Lewis, Rivkin Radler LLP, Uniondale, NY, for Defendant.

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ORDER

ROBERT PRATT, District Judge.

Before the Court is Watts Regulator Co.'s (“Watts” or “Defendant”) Motion to Dismiss (“Motion”) for lack of personal jurisdiction, filed September 12, 2014. Clerk's No. 7. Allianz Global Corporate and Specialty Marine Insurance Company (“Allianz” or “Plaintiff”) was granted two unresisted extensions of time to file a response to the Motion (see Clerk's Nos. 9, 19), and filed a response on January 9, 2015 (Clerk's No. 21). Watts replied on January 26, 2015. Clerk's No. 28. A hearing on the Motion was held on February 10, 2015. Clerk's No. 35. The matter is fully submitted.

I. FACTUAL AND PROCEDURAL BACKGROUND

Allianz is an Illinois corporation in the business of providing insurance and financial services to customers across the United States, including in Iowa. Am. Compl. ¶ 1 (Clerk's No. 3). Allianz insured a property in West Des Moines that was owned by Wright Service Corporation (“Wright”), an Iowa corporation that provides vegetation management and utility services. Id. ¶¶ 2–3. Watts designs, manufactures, and sells plumbing products, and is a Massachusetts corporation with its primary place of business in Massachusetts. Id. ¶ 4.

On March 17, 2013, Wright's property suffered significant flooding and water damage. Id. ¶ 8. An Allianz adjuster concluded that the flooding was caused by a failed “strainer valve on the backflow system.” Clerk's No. 21–18 at 4. The failed strainer was identified as a Watts Regulator Bronze Series Wye Strainer manufactured between 2001 and 2007.¹ Clerk's No. 22–1 at 4. The wye strainer was manufactured and designed by a Watts subsidiary in Taiwan, and distributed by Watts. Am. Compl. ¶ 7; Hr'g Tr. at 18.² Pursuant to Wright's insurance policy, Allianz paid approximately $628,183.71 for damages caused by the event. Am. Compl. ¶ 9.

Allianz now asserts four claims against Watts in connection with the allegedly faulty wye strainer: (1) negligence; (2) products liability; (3) breach of the implied warranty of merchantability; and (4) breach of the implied warranty of fitness for a particular purpose. Id. ¶¶ 10–29. Allianz seeks to recover the $628,183.71 it paid under Wright's insurance policy. Id. Watts moved to dismiss the case for lack of personal jurisdiction, and the parties conducted limited jurisdictional discovery. See Clerk's Nos. 7, 9.

II. LAW AND ANALYSIS

“To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must state sufficient facts in the complaint to support a reasonable inference that the defendant[ ] can be subjected to jurisdiction within the state. Once jurisdiction has been controverted or denied, the plaintiff has the burden of proving such facts.” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir.2004) (internal quotation omitted). When the Court holds an evidentiary hearing on the issue of personal jurisdiction, the plaintiff bears the burden of proving the existence of jurisdiction by a preponderance of the evidence. See Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991). The plaintiff's burden is tested “not by the pleadings alone, but by the affidavits and

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exhibits presented with the motions and in opposition thereto.” Dever, 380 F.3d at 1072 (internal quotation omitted).

In a diversity action, the Court may assert jurisdiction over a nonresident defendant only to the extent allowed by Iowa's long-arm statute and the Due Process Clause of the United States Constitution. Id. at 1073. “Because Iowa's long-arm statute ‘provides for the broadest expanse of personal jurisdiction consistent with due process,’ the Court's analysis is limited to whether the exercise of personal jurisdiction comports with due process.” Wells Fargo Fin. Leasing, Inc. v. NCH Healthcare Sys., Inc., 756 F.Supp.2d 1086, 1091 (S.D.Iowa 2010) (quoting State ex rel. Miller v. Grodzinsky, 571 N.W.2d 1, 3 (Iowa 1997) ).

Due process mandates that personal jurisdiction exists only if a defendant has sufficient “minimum contacts” with the forum state, such that summoning the defendant to the forum state would not offend “ ‘traditional notions of fair play and substantial justice.’ ” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940) ). To maintain personal jurisdiction, a defendant's contacts with the forum state must be more than “random,” “fortuitous,” or “attenuated.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Sufficient contacts exist when “the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). In evaluating a defendant's reasonable anticipation, there must be “ ‘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.’ ” Burger King Corp., 471 U.S. at 475, 105 S.Ct. 2174 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958) ). Jurisdiction is proper, therefore, where the contacts proximately result from actions by the defendant that create a “substantial connection” with the forum state. Id.; World–Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559. “The Supreme Court has set forth two theories for evaluating minimum contacts, general jurisdiction and specific jurisdiction.”³ Dever, 380 F.3d at 1073. Allianz asserts that personal jurisdiction is proper under both theories.

A. General Jurisdiction

General jurisdiction stands for the proposition that a defendant's contacts with a State are sufficiently broad so that “due process is not offended” by subjecting

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the defendant to personal jurisdiction in that State “[e]ven when the cause of action does not arise out of or relate to the [defendant's] activities in the forum State.” Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). To establish that general personal jurisdiction exists, Allianz must show that Watts had “continuous and systematic contacts” with Iowa such that Watts is “essentially at home” here. Daimler AG v. Bauman, –––U.S. ––––, 134 S.Ct. 746, 754, 187 L.Ed.2d 624 (2014). For a corporation, “the place of incorporation and principal place of business are ‘paradig[m] ... bases for general jurisdiction.’ ” Id. at 759 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, ––– U.S. ––––, 131 S.Ct. 2846, 2854, 180 L.Ed.2d 796 (2011) ).

Under this standard, it is clear that Watts is not subject to general jurisdiction in Iowa. Watts is incorporated and has its primary place of business in Massachusetts. Am. Compl. ¶ 4. Watts has no property, mailing addresses, bank accounts, phone numbers, employees or branch offices in Iowa. Clerk's No. 7–1 at 7; see Guinness Import Co. v. Mark VII Distrib., Inc., 153 F.3d 607, 614 (8th Cir.1998) (discussing these factors as part of the jurisdiction analysis). Watts does not pay taxes in Iowa, and has no agent for service of process in Iowa. Clerk's No. 7–1 at 7. Allianz argues that Watts utilizes a regional distribution system to “pour its products” into Iowa, such that general jurisdiction is appropriate. See Clerk's No. 21 at 12–13. But although this type of stream of commerce analysis may support the imposition of specific jurisdiction, it is an inadequate basis for the exercise of general jurisdiction. See Viasystems, Inc. v. EBM–Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 597 (8th Cir.2011) (citing Goodyear, 131 S.Ct. at 2851 ). Accordingly, Allianz has not met its burden of proving the Court has general jurisdiction over Watts.

B. Specific Jurisdiction

Specific jurisdiction over a defendant arises when the defendant “purposefully direct[s]” its activities at the forum state, and the plaintiff's injury “ ‘arise[s] out of or relate[s] to’ those activities.” Burger King Corp., 471 U.S. at 472–73, 105 S.Ct. 2174 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984) ). The exercise of jurisdiction must also comport with “traditional notions of fair play and substantial justice.” Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 113–14, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987).

1. Watts “purposefully directed” its actions at Iowa.

Here, Watts' connection to Iowa stems...