Birmingham Fire Ins. Co. v. KOA Fire & Marine Ins.

• Decision Date: 22 July 1983
• Docket Number: No. 81 Civ. 6717 (RLC).,81 Civ. 6717 (RLC).
• Citation: 572 F. Supp. 962
• Parties: BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA and Belgian General Insurance Company, Plaintiffs, v. KOA FIRE & MARINE INSURANCE CO., LTD., Defendant. KOA FIRE & MARINE INSURANCE CO., LTD., Third-Party Plaintiff, v. AMERICAN AGENCY UNDERWRITERS, INC., et al., Third-Party Defendants.
• Court: U.S. District Court — Southern District of New York

572 F. Supp. 962

BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA and Belgian General Insurance Company, Plaintiffs, v. KOA FIRE & MARINE INSURANCE CO., LTD., Defendant.

KOA FIRE & MARINE INSURANCE CO., LTD., Third-Party Plaintiff, v. AMERICAN AGENCY UNDERWRITERS, INC., et al., Third-Party Defendants.

No. 81 Civ. 6717 (RLC).

United States District Court, S.D. New York.

July 22, 1983.

Kroll, Pomerantz & Cameron, New York City, for defendant and third-party plaintiff; Roy E. Pomerantz, Raymond L. Mylott, Jr., Alan J. Brill, New York City, of counsel.

Kirlin, Campbell & Keating, New York City, for third-party defendant LeBlanc; James J. Higgins, Jane Elizabeth Lawson, New York City, of counsel.

OPINION

ROBERT L. CARTER, District Judge.

Pierre LeBlanc (International) and Co., Ltd. ("LeBlanc"), an insurance brokering firm which is a third-party defendant in this action, now moves, pursuant to Rule 12(b)(2), F.R.Civ.P., to dismiss for lack of in personam jurisdiction.

On October 30, 1981, the Birmingham Fire Insurance Company of Pennsylvania ("Birmingham") and the Belgian General Insurance Company ("Belgian") sued the KOA Fire & Marine Insurance Co., Ltd. ("KOA"), for allegedly refusing to indemnify them pursuant to certain reinsurance agreements to which KOA had been committed by American Agency Underwriters, Inc. ("AAU"). Birmingham and Belgian had obtained reinsurance for certain risks through a pooling arrangement established by AAU, and AAU had used KOA as a front reinsurer. AAU had issued certificates of facultative reinsurance to Birmingham and Belgian, naming KOA as liable for 100 percent of each risk. AAU also purportedly arranged for a pool of retrocessionaires — entities that reinsure reinsurers — to indemnify KOA. KOA asserts, however, that it never agreed to be liable for 100 percent of each risk, maintaining instead that its exposure was limited to only two percent in 1977 and one percent in 1978 and 1979. When Birmingham and Belgian presented claims to KOA seeking 100 percent reimbursement, KOA refused to pay, and this lawsuit followed.

On February 8, 1982, KOA commenced a third-party action against AAU, LeBlanc and 59 other reinsurance companies and reinsurance intermediaries. LeBlanc was one of five foreign reinsurance brokers or intermediaries that helped to establish the AAU pool. LeBlanc, a French corporation with its principal place of business in Paris, contacted KOA, a Japanese corporation with a branch office in New York, and other reinsurers with regard to their participating in the pool. In its complaint, KOA alleges that LeBlanc and the four other reinsurance intermediaries breached fiduciary duties to KOA by failing to "collect and/or receive and remit to the account of KOA said recoverables from the participating retrocessionaires and reinsurers." Third-Party Complaint ¶ 85.

DETERMINATION

"The amenability of a defendant corporation to suit in a federal diversity action is governed by the law of the state in which the federal court sits, unless it should be found not to comply with constitutional requirements." Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116, 119 (2d Cir.), cert. denied, 390 U.S. 996, 88 S.Ct. 1198, 20 L.Ed.2d 95 (1967). The plaintiff of course bears the burden of proving that the court has jurisdiction over the defendant. Wisehart, Friou & Koch v. Hoover, 473 F.Supp. 945, 948 (S.D.N.Y.1978) (Tenney, J.); China Union Lines, Ltd. v. American Marine Underwriters, Inc., 454 F.Supp. 198, 199 (S.D. N.Y.1978) (Broderick, J.).

"If a plaintiff's proof of jurisdictional facts is limited to written materials, it is necessary only for these materials to demonstrate facts which support a finding of jurisdiction in order to avoid a motion to dismiss." Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 (9th Cir.1977) (emphasis added). Because both sides have submitted papers that go beyond the pleadings, LeBlanc's motion will be treated as one for summary judgment, pursuant to Rule 56, F.R.Civ.P.

NYCPLR section 301, which reaffirms the jurisdictional basis over corporations "doing business" in New York, states that "a court may exercise such jurisdiction over persons ... as might have been exercised heretofore," or in other words as might be constitutionally exercised. Thus, the court must examine the facts of each case using the "minimum contacts" and "traditional notions of fair play and substantial justice" standards set forth in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

Alain Edmond Rimbert, a LeBlanc officer, asserts that his company "is not qualified to do business in New York, does not maintain an office or bank account in New York, does not advertise in New York, and has no agent for service or any other purpose in New York." Rimbert Aff. ¶ 5. He adds that "LeBlanc has intentionally elected to participate in the international reinsurance market outside the United States and it is for this reason that ... LeBlanc is often requested to act as an intermediary to place reinsurance outside the United States with foreign insurers." Rimbert Supplemental Aff. ¶ 4. Thus, LeBlanc maintains that its contacts with New York are so minimal that it cannot be said to be "doing business" in the state. Memorandum of Law in Support of Motion to Dismiss the Third-Party Action ("Memorandum in Support") at 9-12.

Although KOA addresses the point only obliquely, it does appear to maintain that LeBlanc is "doing business" in New York. Memorandum of Law in Opposition to Motion to Dismiss the Third-Party Action ("Memorandum in Opposition") at 11. In its memorandum, KOA argues that LeBlanc "regularly does or solicits business in the international reinsurance market, of which the New York market is one of the largest segments." Id. In addition, KOA maintains that LeBlanc "obtains substantial revenue from the placement of the reinsurance of New York risks." Id.

KOA has utterly failed, however, to provide any evidentiary support to buttress these assertions. All it has submitted is the affidavit of its attorney, Roy E. Pomerantz, whose statement clearly "was not made on personal knowledge of the underlying evidentiary facts." Unicon Management Corp. v. Koppers Co., 250 F.Supp. 850, 852 (S.D.N. Y.1966) (Herlands, J.). Neither in the Pomerantz affidavit nor anywhere else has KOA furnished hard evidence regarding whether LeBlanc solicits business in the New York reinsurance market, exactly what New York risks, if any, LeBlanc has arranged reinsurance for, exactly how much revenue, if any, LeBlanc has obtained from the placement, if any, of the reinsurance of New York risks, or how many and whose premiums, if any, LeBlanc has collected from parties in New York. What is more, KOA has failed to submit any evidence challenging LeBlanc's assertion that it does not do business in New York. "The court must assume that the plaintiff has brought forth all the evidence it desires to or is able to proffer on the doing business issue." Id. at 853.

The record before the court makes clear that KOA has neither presented any facts nor made a prima facie case showing that LeBlanc has "engaged in such a continuous and systematic course of `doing business' here as to warrant a finding of its `presence' in this jurisdiction." Frummer v. Hilton Hotels International, Inc., 19 N.Y.2d 533, 536, 281 N.Y.S.2d 41, 43, 227 N.E.2d 851, 853 (1967), cert. denied, 389 U.S. 923, 88 S.Ct. 241, 19 L.Ed.2d 266 (1968). KOA's logic is flawed when it contends that because LeBlanc does business in the international reinsurance market and because New York is one of the largest segments of that market, the court must find that LeBlanc does business in New York. Inasmuch as KOA has failed to furnish any hard evidence on the issue, the court refuses to take the inferential leap of faith that KOA asks it to take. For these reasons, the court concludes that LeBlanc's infrequent, incidental and attenuated contacts with New York are insufficient to warrant jurisdiction, for section 301 "requires that the defendant be doing business in New York not merely `occasionally, but with a fair measure of permanence and continuity.'" Bush v. Stern Brothers & Co., 524 F.Supp. 12, 13 (S.D.N.Y.1981) (Motley, J.), quoting Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267 115 N.E. 915, 917 (1917).

KOA also argues that the court has jurisdiction over LeBlanc under two different portions of New York's long arm statute, NYCPLR section 302. First, KOA contends that LeBlanc can be reached by section 302(a)(1)¹ on the ground that it supplies services in New York. Memorandum in Opposition at 5-10.

KOA asserts that LeBlanc, in acting as a reinsurance intermediary with regard to the AAU pool, "supplies services" to insurers in New York. In its memorandum, KOA states:

LeBlanc knew that it was a link in a chain of participants in a scheme to effectuate the reinsurance of New York risks. That chain extended from ... Birmingham (which is licensed to do business in New York) and Belgian (which has a U.S. branch office in New York) to North American Managers, Inc. (a New York corporation acting as agent of Birmingham and Belgian) to AAU (a Pennsylvania corporation doing business in New York) to Pierre LeBlanc to KOA (a Japanese corporation with liaison and U.S. branch offices in New York). New York premiums passed up that chain and New York claim payments passed down that chain.... By its participation in that chain, Pierre LeBlanc clearly engaged in supplying services in New York continuously since 1976.

Memorandum in Opposition at 9-10. In his affidavit, Pomerantz, KOA's lawyer, clearly speaking more out of speculation than out of personal knowledge, expanded upon this theory:

It is quite clear that the existence of a reinsurance facility such as that arranged by Pierre LeBlanc enables primary insurance carriers in the United States (and in New York in particular) to conduct business. It

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