Borden v. East-European Ins. Co.

• Citation: 921 So.2d 587
• Decision Date: 19 January 2006
• Docket Number: No. SC-04-1737.,SC-04-1737.
• Parties: Victor K. BORDEN, et al., Petitioners, v. EAST-EUROPEAN INSURANCE COMPANY, et al., Respondents.
• Court: Florida Supreme Court

921 So.2d 587

Victor K. BORDEN, et al., Petitioners, v. EAST-EUROPEAN INSURANCE COMPANY, et al., Respondents.

No. SC-04-1737.

Supreme Court of Florida.

January 19, 2006.

COPYRIGHT MATERIAL OMITTED

Nathan G.W. Pieper and David F. Pope of Lau, Lane, Pieper, Conley and McCreadie, P.A., Tampa, FL; John Bond Atkinson and Rebecca A. Brownell of Atkinson and Brownell, Miami, FL; David W. Henry and Barbara R. Smith of Allen, Dyer, Doppelt, Milbrath and Gilchrist, Orlando, FL, for Petitioners.

Steven L. Brannock, Paul Parrish and Maegen E. Peek of Holland and Knight, LLP, Tampa, FL, for Respondents.

PARIENTE, C.J.

We have for review the Second District Court of Appeal's decision in East-European Insurance Co. v. Borden, 884 So.2d 233 (Fla. 2d DCA 2004), which certified conflict with the Third District Court of Appeal's decision in Winterthur International Ltd. v. Palacios, 559 So.2d 1214 (Fla. 3d DCA), review dismissed, 564 So.2d 1088 (Fla. 1990). We have jurisdiction. See art. V, § 3(b)(4), Fla. Const. The certified conflict involves an issue of statutory construction: whether as a matter of law section 626.906(4), Florida Statutes (2005),¹ of Florida's Unauthorized Insurer's Process Law (UIPL), which specifies the acts that will subject unauthorized foreign insurers to the jurisdiction of Florida courts, is available only to Florida residents. We conclude that the Second District in Borden correctly interpreted this statute, and hold that only Florida residents are entitled to utilize the provisions of section 626.906, including subsection (4), to obtain personal jurisdiction over an insurer who is not otherwise authorized to do business in Florida. We approve the decision reached in Borden and disapprove Winterthur.

FACTS AND PROCEDURAL HISTORY

This case arises out of an insurance claim filed by Victor Borden, a resident of Honduras, for the loss of one of his fishing vessels that sank in international waters. Through a chain of brokers, Borden obtained a marine insurance policy from East-European Insurance Company and its successor, Alfa Insurance PLC (collectively referred to as "Alfa"), a Russian corporation. Borden's efforts to procure the insurance policy covering his three fishing vessels began when his daughter, who resides in Florida,² contacted Ocean Insurance Management, Inc. (Ocean), a Florida insurance brokerage firm. Ocean in turn contacted Barnhardt Marine Insurance, Inc. (Barnhardt), also a Florida insurance brokerage firm, which in turn contacted Marine Insurance Consultants International (MICI), an insurance brokerage firm located in Britain. MICI then contacted Southern Seas (UK) Limited (Southern Seas), also an insurance brokerage firm located in Britain. Southern Seas then contacted 2K Shipping & Trading Limited (2K), an insurance brokerage firm located in Turkey. 2K then contacted Alfa, which eventually issued an insurance policy.³

After the insurance policy was issued to Borden, one of the fishing vessels covered under the policy sank in international waters. Borden filed a claim with Alfa seeking to recover for the loss of this vessel. Alfa denied coverage on the basis that the vessel sank in international waters, outside the coverage area. Thereafter, Borden filed suit in Florida state court against Alfa, Ocean, Barnhardt, and Southern Seas. Borden later filed an amended complaint that dropped Southern Seas as a defendant. Barnhardt filed a notice of removal of the case to federal court to which Alfa, Barnhardt's codefendant, consented.⁴ The case was removed to federal court but, based on Borden's unopposed motion, was remanded back to Florida state court.

Upon remand and before the filing of an answer, Alfa filed a motion to quash service of process for lack of personal jurisdiction in response to the initial complaint, and a renewed motion to quash service of process for lack of personal jurisdiction in response to the amended complaint. Alfa asserted by affidavit that Florida courts lacked personal jurisdiction over the insurer because Alfa did not have sufficient minimum contacts with Florida. Alfa also asserted that section 626.906(4) of the UIPL may be invoked only by Florida residents and is therefore unavailable to Borden as a resident of Honduras. In their written responses to Alfa's motion to quash, Borden, Barnhardt, and Ocean argued that service of process and personal jurisdiction were appropriate under section 626.906(4), relying on the Third District's decision in Winterthur. Barnhardt also asserted that Florida courts have personal jurisdiction over Alfa under Florida's general long-arm statute, section 48.193, Florida Statutes (2005). Specifically, Barnhardt argued that personal jurisdiction was available under section 48.193(1)(a), Florida Statutes (2005), based on Alfa's alleged contacts with Florida.

At the hearing on Alfa's motion to quash, the trial court ruled that Borden "ha[d] satisfied the requirements for in personam jurisdiction" and denied Alfa's motion to quash. Borden, 884 So.2d at 234-35. On appeal, the Second District reversed. The Second District first addressed Barnhardt's assertion that Florida courts had personal jurisdiction over Alfa under sections 48.193(1)(a) and (1)(b), Florida Statutes (2005), and determined that this argument "not only has no merit but also was not raised below and, therefore, is waived." Id. at 235 n. 1. The Second District next addressed whether service of process and personal jurisdiction were available under section 626.906(4). The Second District concluded that section 626.906(4) applies only to claims brought against unauthorized foreign insurers by Florida residents. The Second District certified conflict with Winterthur, which held that section 626.906(4) applies to both residents and nonresidents.⁵

ANALYSIS

The certified conflict issue before this Court is whether as a matter of law section 626.906(4) of the UIPL is available only to Florida residents. This issue involves a question of statutory interpretation and thus is subject to de novo review. See B.Y. v. Dep't of Children & Families, 887 So.2d 1253, 1255 (Fla. 2004). We begin our analysis by discussing the concepts of service of process and personal jurisdiction. We then explore the pertinent provisions in Florida's UIPL. Next, we review the interpretations of section 626.906(4) by the Third District in Winterthur and the Second District in this case. Finally, we discuss why, as a matter of law, section 626.906(4) is available only to Florida residents.

A. Personal Jurisdiction and Service of Process

Under Florida law, service of process and personal jurisdiction are two distinct but related concepts. Both are necessary before a defendant, either an individual or business entity, may be compelled to answer a claim brought in a court of law. Personal jurisdiction refers to whether the actions of an individual or business entity as set forth in the applicable statutes permit the court to exercise jurisdiction in a lawsuit brought against the individual or business entity in this state. See generally § 48.193; White v. Pepsico, Inc., 568 So.2d 886 (Fla. 1990); Venetian Salami Co. v. Parthenais, 554 So.2d 499, 500 (Fla. 1989) (stating that in order to subject a defendant to personal jurisdiction, "due process requires that the defendant have certain minimum contacts with the forum"). Service of process is the means of notifying a party of a legal claim and, when accomplished, enables the court to exercise jurisdiction over the defendant and proceed to judgment. See Shurman v. Atlantic Mortg. & Inv. Corp., 795 So.2d 952, 953 (Fla.2001) ("It is well settled that the fundamental purpose of service [of process] is `to give proper notice to the defendant in the case that he is answerable to the claim of plaintiff and, therefore, to vest jurisdiction in the court entertaining the controversy.'") (quoting State ex rel. Merritt v. Heffernan, 142 Fla. 496, 195 So. 145, 147 (Fla. 1940)). Personal jurisdiction over a nonresident of the state is circumscribed by constitutional considerations of minimum contacts as stated in the seminal case of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny.⁶ As explained in Venetian Salami, two inquiries must be made regarding personal jurisdiction over a nonresident:

First, it must be determined that the complaint alleges sufficient jurisdictional facts to bring the action within the ambit of the statute; and if it does, the next inquiry is whether sufficient "minimum contacts" are demonstrated to satisfy due process requirements.

554 So.2d at 502 (quoting Unger v. Publisher Entry Service, Inc., 513 So.2d 674, 675 (Fla. 5th DCA 1987)). Under Florida Rules of Civil Procedure 1.140(b)(2), (b)(4), and (b)(5), lack of jurisdiction over the person, insufficiency of process, and insufficiency of service of process are defenses that may be raised either in a responsive pleading or by motion.

B. Florida's Unauthorized Insurers Process Law

Chapter 626, Florida Statutes (2005), generally addresses foreign insurers who are unauthorized to do business in Florida. Sections 626.904 through 626.912 are collectively referred to as the "Unauthorized Insurers Process Law." § 626.904, Fla. Stat. (2005). Section 626.905 is entitled "Purpose of Unauthorized Insurers Process Law" and provides:

The purpose of the Unauthorized Insurers Process Law is to subject certain insurers and persons representing or aiding such insurers to the jurisdiction of courts of this state in suits by or on behalf of insureds or beneficiaries under insurance contracts. The Legislature declares that it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in the state by insurers while not authorized to do business in this state, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights...