Cogswell v. American Transit Ins. Co.

• Decision Date: 22 May 2007
• Docket Number: No. 17547.,17547.
• Citation: 282 Conn. 505,923 A.2d 638
• Court: Connecticut Supreme Court
• Parties: Susan F. COGSWELL, Insurance Commissioner v. AMERICAN TRANSIT INSURANCE COMPANY.

923 A.2d 638

282 Conn. 505

Susan F. COGSWELL, Insurance Commissioner v. AMERICAN TRANSIT INSURANCE COMPANY.

No. 17547.

Supreme Court of Connecticut.

Argued October 27, 2006.

Decided May 22, 2007.

Daniel J. Krisch, with whom were Wesley W. Horton, Hartford, and, on the brief, Jay H. Sandak, Stamford, Brendon P. Levesque, Hartford, and Ronald Crawley, legal intern, for the appellant (defendant).

William J. Prensky, assistant attorney general, with whom, on the brief, was Richard Blumenthal, attorney general, for the appellee (plaintiff).

BORDEN, NORCOTT, KATZ, PALMER and ZARELLA, Js.

KATZ, J.

The defendant, American Transit Insurance Company, a New York based and licensed livery insurance company, appeals¹ from the summary judgment of the trial court rendered in favor of the plaintiff, Susan F. Cogswell, the insurance commissioner of the state of Connecticut. In this enforcement action, the plaintiff seeks to compel the defendant's compliance with a subpoena she had issued pursuant to her investigative powers as insurance commissioner under General Statutes § 38a-16.² On appeal, the defendant claims that the trial court improperly concluded that it had personal jurisdiction over the defendant and improperly rendered summary judgment in favor of the plaintiff because disputed issues of fact remain concerning the extent of the defendant's activities in Connecticut to support jurisdiction as well as the burdensomeness of the subpoena. We conclude that the exercise of jurisdiction in the present case would violate due process. Accordingly, the trial court lacked jurisdiction over the defendant and, therefore, we reverse the judgment.

The facts of this case are largely undisputed. The present conflict arose after one of the defendant's insureds, a livery driver, was involved in a traffic accident with Mickey Reavis, a Connecticut resident, on a Connecticut highway. After receiving a claim from Reavis, the defendant arranged for a Connecticut licensed appraiser to inspect Reavis' car and to provide an estimate of damages. The defendant then mailed a letter to Reavis in Connecticut containing an itemized damage estimate and an offer to settle his claim. Thereafter, Reavis and a representative of the defendant spoke on the telephone to discuss his claim. Although the identity of the person to whom Reavis spoke as well as the content of that conversation are subject to debate by the parties, it is undisputed that Reavis was dissatisfied with the result of his communication with the defendant and thereafter filed a complaint with the Connecticut department of insurance.

In response to and after a preliminary investigation of Reavis' complaint, the plaintiff initiated an investigation of the defendant. In the course of her investigation the plaintiff determined that neither the defendant nor its internal claims adjusters are licensed to do insurance business in Connecticut.³ The plaintiff also obtained information that the appraisal company that had evaluated Reavis' vehicle allegedly had performed other appraisals in Connecticut for the defendant. On October 9, 2003, the plaintiff served the defendant with an investigative subpoena, via the Connecticut secretary of the state, under the long arm jurisdiction conferred by General Statutes § 38a-273.⁴ The subpoena directed the defendant to produce specified documents from the period of January 1, 1998, through October 9, 2003, that the plaintiff considered relevant to her investigation into insurance practices by the defendant for claims arising in Connecticut.

On October 31, 2003, pursuant to § 38a-8-65 of the Regulations of Connecticut State Agencies,⁵ the defendant mailed a letter to the plaintiff to contest the jurisdiction of the state department of insurance over the defendant, claiming that it is a New York insurance company that neither solicits nor transacts business in Connecticut and requesting a hearing on the issue of jurisdiction. In a letter dated November 21, 2003, the plaintiff responded that she had the authority to issue the investigative subpoena and directed the defendant to comply with the terms of the subpoena by November 28, 2003.

After the defendant failed to comply, on February 23, 2004, the plaintiff instituted this action for an order to enforce the subpoena pursuant to § 38a-16(a). See footnote 2 of this opinion. On March 29, 2004, the defendant filed a motion to dismiss the action for lack of personal jurisdiction and a motion to quash the investigative subpoena. After oral argument on the motion to dismiss, on August 6, 2004, the trial court, Beach, J., issued a memorandum of decision denying the motion. In its memorandum of decision, the trial court found the following undisputed facts. The defendant is licensed and has its principal place of business in New York. It has no places of business or property in Connecticut, and it does not market or solicit business in Connecticut or insure any Connecticut residents. The trial court additionally determined that the insurance contract underlying the transactions at issue was not executed in Connecticut.

The trial court further noted that the parties were in agreement that the defendant's actions were "`unauthorized' in the sense that it [had] not obtained [an insurance] license in Connecticut." The court determined that the defendant's interaction with Reavis, including at least one letter the defendant had sent to Connecticut from New York and one telephone call the defendant had made from New York to Connecticut, constituted an act of "doing an insurance business" under General Statutes § 38a-271(a),⁶ thereby bringing the defendant under the state's jurisdiction pursuant to the long arm statute, § 38a-273(a), which specifies that "[a]ny act of doing an insurance business, as set forth in subsection (a) of section 38a-271, by any unauthorized person or insurer" shall confer personal jurisdiction over such party. See footnote 4 of this opinion. The trial court further concluded that the plaintiff's exercise of jurisdiction in the present case did not contravene the constitutional requirements of due process.

Thus, the trial court denied the defendant's motion to dismiss for lack of personal jurisdiction.

Thereafter, the defendant filed an answer to the plaintiff's enforcement action and asserted nine special defenses. The special defenses relevant to the present controversy alleged, inter alia, that: (1) the plaintiff had no authority to serve process on the secretary of the state as the defendant's agent because the defendant did not conduct insurance business under § 38a-271(a) as required to allow service of process under § 38a-273(a); (2) to the extent that the subpoena was duly served pursuant to § 38a-273(a), the defendant did not conduct insurance business under § 38a-271(a) as is required for process under § 38a-273(a); (3) the plaintiff's action was barred by the doctrine of unclean hands because she had not granted the defendant's request for a hearing pursuant to § 38a-8-65 of the regulations; and (4) the subpoena was overly broad, would cause undue hardship to the defendant and was unlikely to yield information within the jurisdictional scope of the plaintiff. The plaintiff filed a motion to strike these four special defenses, and, on February 28, 2005, the trial court, Hennessey, J., issued an order, granting the motion in part, striking the first two special defenses on the ground that they already had been decided by Judge Beach in his decision denying the defendant's motion to dismiss, and concluding that the third special defense was premature.⁷ The court did not address the fourth special defense regarding the burdensomeness of the subpoena.

Thereafter, the plaintiff filed a motion for summary judgment on her application to enforce the investigative subpoena, claiming that there remained no genuine issue of material fact and that she was entitled to judgment as a matter of law. On July 18, 2005, after oral argument at which the parties debated extensively the burdensomeness of the subpoena and whether the issue of burdensomeness was a factual or legal matter, the trial court, Hennessey, J., granted the motion and rendered judgment for the plaintiff. Although the defendant's motion to quash the subpoena had raised the issue of personal jurisdiction as well as the burden-someness of the subpoena, the trial court did not reexamine personal jurisdiction, because the parties agreed that Judge Beach's decision on that issue in deciding the motion to dismiss was the law of the case.⁸ This appeal followed. Additional facts will be set forth as necessary.

In its appeal to this court, the defendant makes two claims. First, the defendant claims that the trial court improperly denied its motion to dismiss because the court improperly had concluded that the plaintiff and the court had personal jurisdiction over the defendant. Second, the defendant contends that the trial court improperly granted the plaintiff's motion for summary judgment because a dispute remains over issues of material fact regarding the extent of the defendant's activities in Connecticut to support jurisdiction and the burdensomeness of the investigative subpoena. We conclude that the trial court lacked personal jurisdiction over the defendant, and, therefore, it was improper for the court to render summary judgment for the plaintiff. Accordingly, the case must be dismissed.⁹

We begin with the defendant's claim that the trial court, Beach, J., improperly denied its motion to dismiss because the court improperly had decided that the plaintiff and, in turn the court, had personal jurisdiction over the defendant. The defendant's claim is twofold: first, the plaintiff lacks jurisdiction under the long arm statute, § 38a-273; and second, the defendant lacks the constitutionally mandated minimum contacts with the state sufficient to permit the plaintiff to exercise personal jurisdiction. We note that Judge...