918 F.2d 1039 (2nd Cir. 1990), 1371, Landoil Resources Corp. v. Alexander & Alexander Services, Inc.
|Docket Nº:||1371, Docket 90-7061.|
|Citation:||918 F.2d 1039|
|Party Name:||LANDOIL RESOURCES CORPORATION, Plaintiff, v. ALEXANDER & ALEXANDER SERVICES, INC., Alexander & Alexander Inc., and Alexander & Alexander of New York Inc., Defendants, ALEXANDER & ALEXANDER SERVICES, INC., Alexander & Alexander Inc., and Alexander & Alexander of New York Inc., Third-Party Plaintiffs-Appellants, v. CERTAIN UNDERWRITERS AT LLOYD'S OF|
|Case Date:||November 13, 1990|
|Court:||United States Courts of Appeals, Court of Appeals for the Second Circuit|
Argued June 8, 1990.
As Amended Jan. 2, 1991.
Wilson, Elser, Moskowitz, Edelman & Dicker, New York City (Thomas W. Hyland, Jonathan C. Thau, Thomas A. Leghorn, Jeffrey A. Sims, Michael Schwartzberg, of counsel), for third-party plaintiffs-appellants.
Cleary, Gottlieb, Steen & Hamilton, New York City (George Weisz, Mitchell A. Lowenthal, Michael I. Verde, Joshua H. Rawson, of counsel), for third-party defendants-appellees.
Before OAKES, Chief Judge, PRATT, Circuit Judge and SPRIZZO, District Judge. [*]
SPRIZZO, District Judge:
Third-party plaintiffs-appellants Alexander & Alexander Services Inc., Alexander & Alexander Inc., and Alexander & Alexander of New York Inc. (collectively "Alexander & Alexander") appeal from an order dated December 19, 1989, which dismissed the third-party complaint against third-party defendants-appellees Sedgwick International, Limited ("Sedgwick International") and Sedgwick Marine & Cargo, Limited ("Sedgwick Marine") (collectively the "Sedgwick defendants"). For the reasons that follow, we affirm the decision of the district court.
The Underlying Action
In November of 1987 plaintiff Landoil Resources Corporation ("Landoil") sued Alexander & Alexander for breach of several contracts, fraud and misrepresentation, violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Secs. 1961-1965 (1988), and civil conspiracy. That action arose out of a series of transactions whereby Alexander & Alexander, insurance brokers, agreed to procure political risk insurance for Landoil, which was engaged in the construction and management of various roadway, housing, port, and airport projects in Iraq, Libya, Saudi Arabia, Kuwait, and the United Arab Emirates. Accordingly, Alexander & Alexander and a London affiliate, Alexander Howden Insurance Brokers Limited, concluded a contract effective July 1, 1982 with the third-party defendant Underwriters at Lloyd's of London ("the Underwriters") pursuant to which the Underwriters agreed to provide $50 million in political risk coverage to Landoil. However, the Underwriters voided the contract ab initio on July 29, 1982 on the ground that Landoil had failed to
disclose material facts regarding the risks to be insured.
Subsequently, Alexander & Alexander attempted to negotiate with the Underwriters to have the coverage reinstated. In order to do so, they began a process known as "vetting," which entailed investigating Landoil's contracts so that Landoil or its brokers could present additional facts to the Underwriters. This process continued from September to December 1982. In addition, during August of 1982, Alexander & Alexander retained the Sedgwick defendants to act as its brokers with the Underwriters.
While the vetting process proceeded, Alexander & Alexander entered into another insurance contract with the Underwriters which reinstated the terms of the first contract effective September 30, 1982. This contract was formally issued by the Underwriters on January 18, 1983, and the premiums were paid in accordance with its terms. Between March 1983 and September 1983, Landoil submitted four claims to the Underwriters under this contract. However, on or about September 21, 1983, the Underwriters notified Alexander & Alexander that they would not renew the policy and, thereafter, on October 18, 1983, they voided the policy ab initio on the ground that Landoil had misrepresented and/or failed to disclose material facts about its risks.
Landoil then filed its action against Alexander & Alexander, alleging that it had breached its agreements to procure insurance, that it failed to make adequate disclosures to the underwriters on its behalf, and that it failed to advise Landoil of certain material facts that had to be disclosed. Additionally, Landoil alleged that Alexander & Alexander misrepresented its competence and expertise as insurance brokers in the field of political risk insurance. Alexander & Alexander initially moved to dismiss the entire complaint. That motion was denied. Subsequently, on January 9, 1989, Alexander & Alexander filed a third-party complaint against the Sedgwick defendants and the Underwriters. 1
The third-party complaint alleged as against the Sedgwick defendants that if Alexander & Alexander is liable to Landoil, then such liability was caused by the negligence and/or breach of contract of the Sedgwick defendants in failing to disclose information provided to them by Alexander & Alexander to the Underwriters. The Sedgwick defendants initially moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction; to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(3) on the ground of forum non conveniens; or alternatively for a severance of the third-party action from the main action. The district court denied the motion but permitted the parties to conduct discovery on the issue of personal jurisdiction for the eighteen-month period beginning one year prior to the filing of the third-party complaint, i.e., from January 1, 1988 to July 31, 1989.
Following discovery, the Sedgwick defendants renewed the motion and both parties supplemented their motion papers. Judge Knapp then issued a memorandum and order dated December 19, 1989, where, after "view[ing] the facts in the light most favorable to [Alexander & Alexander]," he found that it had failed to establish by a preponderance of the evidence that the Sedgwick defendants were " 'doing business' in New York within the rule set forth by the New York Court of Appeals in Frummer v. Hilton Hotels Int'l, Inc. (1967) 19 N.Y.2d 533, 281 N.Y.S.2d 41, 227 N.E.2d 851, cert. denied (1967) 389 U.S. 923, 88 S.Ct. 241, 19 L.Ed.2d 266."
The Sedgwick Defendants' Contacts with New York
Viewed in the light most favorable to Alexander & Alexander, the evidence submitted to the district court established the following facts. Both Sedgwick Marine and Sedgwick International are corporations organized and existing under the laws of England and do business there. Both companies act as insurance and reinsurance brokers and are subsidiaries of the Sedgwick Group, p.l.c., a publicly held English corporation that is not a party to this action. There is no dispute that neither company has ever been incorporated or licensed to do business in the State of New York; that neither company has designated agents for service of process in the State of New York; that neither company has offices, bank accounts, telephone listings, or mailing addresses in the State of New York, or employees or agents residing there; that neither company owns, leases or has any interest whatsoever in any real property in New York; that neither company possesses assets or personal property in the State of New York; and that neither company has ever paid taxes in the State of New York.
The affidavits and deposition testimony further established that representatives of Sedgwick Marine and Sedgwick International traveled to New York for business purposes several times during the eighteen-month period referred to above. Specifically, Sedgwick International sent representatives to New York eight times during that time period, and Sedgwick Marine sent representatives five times. 2 These meetings involved service to several existing clients and solicitation of new business. None of those visits to New York were made in connection with the transactions involved in this litigation. Moreover, as the district court noted, there is no suggestion that the Sedgwick representatives conducted their business from a permanent locale or that they were provided office space in New York. Nor did the meetings referred to above occur in the same place or involve the same individuals.
The record also established that both of the Sedgwick defendants placed insurable interests through New York brokers. Sedgwick International placed risks through New York brokers on at least 146 occasions, earning commissions of $3,315,955.64. 3 Sedgwick Marine placed risks through brokers in New York twelve times and earned $619,122.07 in commissions from those transactions. Both companies acknowledged that these placements were sent to New York, when they were unable to place them on the London market, because of the capacity of the New York insurance market. However, the risks were not always placed in New York. Often the New York broker would obtain insurance for those risks elsewhere. Further, both companies utilized Sedgwick International Marketing Services ("SIMS"), a sister company located in New York, as their New York broker to place the insurance for a vast majority of these transactions. Sedgwick International used SIMS 143 out of 146 times; Sedgwick Marine used SIMS four out of twelve times.
In addition, both Sedgwick Marine and...
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