Bohreer v. Erie Ins. Exchange

• Decision Date: 16 August 2007
• Docket Number: No. 1 CA-CV 06-0277.,1 CA-CV 06-0277.
• Citation: 165 P.3d 186,216 Ariz. 208
• Parties: Maxine BOHREER; Tricia King; Northern Virginia Funeral Choices, Inc., a foreign corporation, Plaintiffs-Appellants, v. ERIE INSURANCE EXCHANGE, a foreign corporation, Defendant-Appellee.
• Court: Arizona Court of Appeals

165 P.3d 186

216 Ariz. 208

Maxine BOHREER; Tricia King; Northern Virginia Funeral Choices, Inc., a foreign corporation, Plaintiffs-Appellants, v. ERIE INSURANCE EXCHANGE, a foreign corporation, Defendant-Appellee.

No. 1 CA-CV 06-0277.

Court of Appeals of Arizona, Division 1, Department C.

August 16, 2007.

Page & Hommel, L.L.P. By James R. Page, Scottsdale, The Vakula Law Firm, P.C. By Thomas A. Germuska, Jr., Phoenix, Attorneys for Plaintiffs-Appellants.

Cavanagh Law Firm, P.A. By Frank M. Fox, Thomas C. Hall, Christopher Robbins, Phoenix, Attorneys for Defendant-Appellee.

OPINION

KESSLER, Judge.

¶ 1 This case presents the question whether Arizona has general personal jurisdiction over a foreign corporation which, at the time of the events leading to a lawsuit, had ceased doing business in Arizona, but had not withdrawn its appointment of the Director of Insurance ("Director") as an agent for service of process until after it had been served with the complaint. We hold Arizona has general personal jurisdiction of the defendant pursuant to Arizona Revised Statutes ("A.R.S.") section 20-221(A) (2002) and the exercise of such jurisdiction comports with due process under Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93, 37 S.Ct. 344, 61 L.Ed. 610 (1917), and its progeny. We reverse the order dismissing this action for lack of personal jurisdiction and remand for further proceedings consistent with this decision.

FACTUAL AND PROCEDURAL HISTORY¹

¶ 2 In July 2005, Maxine Bohreer ("Bohreer"), Tricia King ("King") and Northern Virginia Funeral Choices, Inc. ("NVFC"), (collectively "Plaintiffs") filed this action against Erie Insurance Exchange ("Erie"), a reciprocal insurance exchange organized under Pennsylvania law and related insurance companies. The complaint alleged that in 2002, Bohreer and King had sued Anatomic Gift Foundation and NVFC in Maricopa County Superior Court alleging that NVFC, incorporated and located in Virginia, had cremated Marion Jay Bohreer without written consent of Maxine Bohreer and shipped the remains to Bohreer labeled as "Family Pet Cremations". The cremains were either not those of Marion Bohreer or were commingled with an animal's cremains. The complaint further alleged that Erie had issued a commercial liability insurance policy to NVFC which insured for the alleged misconduct, and that in November 2002 Erie had denied coverage to NVFC, leading to NVFC's bankruptcy. NVFC, Bohreer and King entered into a Damron agreement, by which NVFC agreed to entry of a judgment against it and assigned all of its rights against Erie to Bohreer and King.² The bankruptcy court approved the agreement and a judgment based thereon was entered. Bohreer, King and NVFC then brought this action against Erie alleging breach of an insurance contract, breach of the covenant for good faith and fair dealing, and bad faith. Bohreer and King asked the court to reform the insurance contract, declare that the policy covered the conduct on which the judgment was based and award them compensatory and punitive damages.

¶ 3 Erie moved to dismiss for lack of personal jurisdiction. Erie conceded it had at one time done business in Arizona and it had previously designated the Director as its authorized agent for purposes of service of process. Erie argued that it had ceased doing business in Arizona in 2001 and had received its last premium from Arizona in 2001. It argued that since its alleged acts leading to the complaint occurred in late November 2002, Arizona lacked personal jurisdiction over it because by November 2002 it had no contacts with the State, was not doing business in Arizona and its consent to jurisdiction by appointing a statutory agent became ineffective when it ceased doing business in the state.

¶ 4 Plaintiffs responded, in part, that pursuant to statute, Erie had consented to jurisdiction for all purposes by irrevocably appointing the Department as its agent for service of process. They attached Erie's 1997 power of attorney appointing the Director for service of process and what they contended was an August 30, 2005, printout from the Department of Insurance's records showing Erie was still authorized to do business in Arizona.

¶ 5 Erie responded with an affidavit from one of its officers, Margaret A. Porter. The Porter affidavit explained that as an accredited reinsurer, it last received a premium from an Arizona entity in March, 2001. The affidavit confirmed Erie never maintained an office in Arizona, never had employees or officers here and had no property or other assets in the state. Finally, Porter averred Erie had withdrawn from Arizona as an accredited reinsurer on September 23, 2005. Such withdrawal was approximately two months after the complaint in this action had been filed and served on the Director. Erie did not contest that the print-out from the Department showed that as of August 30, 2005, it was still authorized to do business in Arizona. Erie argued that it had not consented to personal jurisdiction in this case because it had ceased doing business in Arizona in 2001.

¶ 6 The superior court granted Erie's motion, concluding, inter alia, that Erie had ceased doing business in Arizona in March 2001 and had not consented to jurisdiction. It accordingly entered a judgment pursuant to Arizona Rule of Civil Procedure 54(b) dismissing the case against Erie and awarding Erie attorneys' fees. Plaintiffs timely appealed. This Court has jurisdiction pursuant to A.R.S. section 12-2101(B) (2003).

DISCUSSION

¶ 7 We review a dismissal based upon lack of personal jurisdiction de novo. Uberti, 181 Ariz. at 569, 892 P.2d at 1358. To avoid dismissal, the non-moving party need only make a prima facie showing of jurisdiction. Id. In this context, a prima facie case means sufficient evidence to avoid a directed verdict. Consol. Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1291 (11th Cir. 2000). Evidence is sufficient to withstand a motion for directed verdict if, taken in a light most favorable to the non-moving party, there is any probative evidence in the record to support an ultimate verdict. Shoen v. Shoen, 191 Ariz. 64, 65, 952 P.2d 302, 303 (App.1997).

¶ 8 Plaintiffs argue that by filing an affidavit irrevocably appointing the Director as an agent for service of process, Erie expressly consented to general personal jurisdiction and its alleged ceasing to do business in Arizona does not serve, without more, as a revocation of such consent. They also contend that such consent is sufficient to find general personal jurisdiction without any minimum contacts analysis.³ Erie contends that once it ceased receiving premiums in Arizona, its appointment of the Director ended. It also contends that given its lack of contacts with Arizona after it ceased receiving premiums, any assertion of general personal jurisdiction would violate due process principles.

¶ 9 In resolving this jurisdictional dispute, we must address two separate issues: (1) The extent of Erie's consent to jurisdiction by appointment of the Director and whether such consent was still in place at the time of Erie's underlying acts in 2002; and (2) If the consent was still in effect, whether an exercise of general personal jurisdiction is constitutional under due process analysis.

Effect of the Appointment

¶ 10 We conclude that Erie's appointment of the Director was in effect until after the suit was filed and served, and was a consent to general jurisdiction over Erie.⁴

¶ 11 Arizona's registration statute provides for an irrevocable appointment of the director of insurance for service of process which remains in effect "as long as there is in force in this state any contract made by the insurer or obligations arising therefrom." A.R.S. § 20-221(A).⁵ Erie's power of attorney is different than the statute, providing the appointment:

shall continue so long as any of its liability remains outstanding in said State, and that its removal from said State or dissolution shall not take away or impair the right to commence any action or legal proceeding against it, in the manner herein provided, upon a liability previously incurred.

Service on the director is the only way to serve a foreign insurer and is just as effective as if there was personal service on the insurer within the state. A.R.S. § 20-221(B); Ariz. R. Civ. P. 4.2(a).

¶ 12 As written, Erie's irrevocable power of attorney has two key elements. First, it provides the appointment shall remain in effect "so long as any of its liability remains outstanding" in Arizona. Second, it provides that even if it removes from Arizona, the appointment "shall not . . . impair the right to commence any action . . . against it, in the manner herein provided, upon a liability previously incurred."

¶ 13 We conclude that the appointment remained in effect after Erie stopped receiving premiums from Arizona. The appointment did not state it would cease once Erie stopped receiving premiums or stopped doing business in Arizona. Rather, it expressly continued if any of Erie's "liability remain[ed] outstanding" in Arizona. Erie had outstanding liability, albeit potential, after it stopped receiving premiums in Arizona. That liability could be this lawsuit or could be on any policy of reinsurance it had issued whether the liability had already been incurred or was simply potential in nature. See A.R.S. § 20-221(A) (appointment would be "in effect as long as there is in force in this state any contract made by the insurer . . ."). Given these facts, Plaintiffs met their prima facie burden of personal jurisdiction.

¶ 14 The second aspect of the appointment, that if Erie removed from Arizona, suit could be brought against it in Arizona "upon a liability previously incurred," does not affect our conclusion. This second aspect could be read as providing that the facts giving rise to liability must have already occurred for the appointment to still be in...