Connell Ltd. P'ship v. Associated Indem. Corp.
| Decision Date | 06 January 2023 |
| Docket Number | Civil Action 1:22-cv-10639-IT |
| Parties | CONNELL LIMITED PARTNERSHIP, Plaintiff, v. ASSOCIATED INDEMNITY CORPORATION and THE AMERICAN INSURANCE COMPANY, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
This action is an insurance coverage dispute brought by Plaintiff Connell Limited Partnership (“Connell”) against Defendants Associated Indemnity Corporation (“Associated Indemnity”) and The American Insurance Company (“American Insurance”). Pending before the court is Defendants' Motion to Dismiss for Lack of Jurisdiction, or Alternatively, for Venue Transfer (“Motion”) [Doc. No. 9]. For the following reasons, the court has personal jurisdiction over Defendants based on Connell's claim that they violated Mass. Gen. Laws c. 176D but will transfer the action to the Northern District of Illinois where venue is more appropriate. Accordingly, Defendants' Motion [Doc. No. 9] is GRANTED IN PART and DENIED IN PART.
Associated Indemnity, a California insurance company with its principal place of business in Illinois, sold two comprehensive general liability insurance policies for the periods July 1973 to July 1978 to Danly Machine Corporation (“Danly Machine”), a manufacturer of power presses and other metalworking machinery. Compl. ¶¶ 11, 13 [Doc. No 1-1]. American Insurance, organized under the laws of Ohio with its principal place of business in Illinois, sold a comprehensive general liability policy for the period of July 1978 to July 1981 to Danly Machine. Id. at ¶¶ 12, 14. These policies are referred to here as the “Insurance Policies.”
Throughout the 1980's, Danly Machine underwent a series of corporate restructurings, purchases, sales, and acquisitions. Id. at ¶ 15. In 1987, Connell, a Delaware entity with its principal place of business in Boston, Massachusetts, purchased the assets and assumed the liabilities of Danly Machine, including, all rights under the Insurance Policies. Id. at ¶¶ 10, 15.
Beginning in the early 2000's, numerous lawsuits were brought against Danly Machine, Connell and/or the Danly Machine Division of Connell, alleging bodily injury resulting from exposure to asbestos allegedly manufactured, distributed, or supplied by Danly Machine (the “Underlying Actions”). Id. at ¶¶ 2-3. Connell and/or Danly Machine timely notified Associated Indemnity and American Insurance of the Underlying Actions. Id. at ¶ 17. From 2001 until October 2020, Defendants defended and indemnified Connell under the Insurance Policies with respect to the Underlying Actions. Id. at ¶ 4. During that time, Defendants affirmed that the Underlying Actions were covered by the eight separate insurance policy periods (1973-1981), that the policies had occurrence and aggregate annual limits of $1 million for bodily injury, and that the limits of liability of the Insurance Policies had not been reached. Id. at ¶¶ 5, 19.
In October 2020, Defendants stated that the limits of liability of the Insurance Policies had been exhausted. Id. at ¶ 6. Defendants' agent asserted that the occurrence limit of liability applies only once per each of the three Insurance Policies and not annually, and that the total limit of liability for the Underlying Actions is only $3 million, and not $8 million. Id. at ¶ 25.
Despite demands from Connell to reconsider, Defendants refused to defend and indemnify Connell under the Insurance Policies with respect to the Underlying Actions going forward. Id. at ¶ 7. Due to Defendants' change in position, Connell funded part of the October 2020 settlements related to the Underlying Actions with its own funds. Id. at ¶ 26.
Connell filed this action in the Massachusetts Superior Court seeking a declaratory judgment on the duty to defend (Count I) and duty to indemnify (Count II), damages for breach of insurance policy (Count III) and breach of the implied covenant of good faith and fair dealing (Count IV), and damages, multiple damages, and attorneys' fees for violation of Mass. Gen. Laws Chapters 93A and 176D (Count V). Compl. ¶¶ 32-63 [Doc. No. 1-1]. Defendants removed the action to this court, Notice of Removal [Doc. No. 1], and filed the pending Motion, [Doc. No. 9].
The exercise of personal jurisdiction over a defendant must be authorized by statute and consistent with the due process requirements of the United States Constitution. Nowak v. Tak How Inves., Ltd., 94 F.3d 708, 712 (1st Cir. 1996); see also Barrett v. Lombardi, 239 F.3d 23, 26 (1st Cir. 2001). When a defendant challenges personal jurisdiction, the plaintiff bears the burden of establishing that jurisdiction exists. See Cossart v. United Excel Corp., 804 F.3d 13, 18 (1st Cir. 2015).
Where the court considers a Rule 12(b)(2) motion without holding an evidentiary hearing, the court applies the “prima facie standard.” See Sawtelle v. Farrell, 70 F.3d 1381, 1386 n.1 (1st Cir. 1995). To make a prima facie showing of jurisdiction, a plaintiff cannot rest on the pleadings but must “proffer[] evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction.” Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 675 (1st Cir. 1992). However, “the district court is not acting as a factfinder; rather, it accepts properly supported proffers of evidence by a plaintiff as true and makes its ruling as a matter of law.” United Elec. Radio and Mach. Workers of America v. 163 Pleasant Street Corp., 987 F.2d 39, 44 (1st Cir. 1993).
The due process inquiry requires that there be “minimum contacts” between the defendant and the forum state. Sawtelle, 70 F.3d at 1388 (quoting Int'l Shoe Co. v. State of Wash., 326 U.S. 310, 316 (1945)). A court may exercise general jurisdiction over “a defendant who has maintained a continuous and systematic linkage with the forum state,” and may exercise specific jurisdiction over a cause of action that “relates sufficiently to, or arises from, a significant subset of contacts between the defendant and the forum.” Phillips Exeter Acad. v. Howard Phillips Fund, 196 F.3d 284, 288 (1st Cir. 1999).
“General jurisdiction broadly subjects the defendant to suit in the forum state's courts ‘in respect to all matters, even those that are unrelated to the defendant's contacts with the forum.'” Cossaboon v. Maine Med. Ctr., 600 F.3d 25, 31 (1st Cir. 2010) (quoting Phillips Exeter Acad., 196 F.3d at 288). “To permit the exercise of general jurisdiction, the defendant must ‘engage[ ] in the ‘continuous and systematic' pursuit of general business activities in the forum state.'” Id. at 32 (quoting Glater v. Eli Lilly & Co., 744 F.2d 213, 216 (1st Cir.1984)). “For purposes of the general jurisdiction analysis, [the court] consider[s] all of a defendant's contacts with the forum state prior to the filing of the lawsuit.” Id. at 29 (quoting Harlow v. Children's Hosp., 432 F.3d 50, 65 (1st Cir.2005)).
Connell contends that general jurisdiction exists where Defendants routinely engage in business in Massachusetts and avail themselves of the protections of Massachusetts courts, evidencing prima facie evidence of “continuous and systematic” contacts. Opp'n 6 [Doc. No. 18]. But contacts must not only be “continuous and systematic,” but also such that the corporation is rendered “at home” in the forum state. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). While the Supreme Court has left open “the possibility that in an exceptional case” a corporation might be “at home” elsewhere, Daimler AG v. Bauman, 571 U.S. 117, 139 n.19 (2014), the Court continues to cite a corporation's place of incorporation and principal place of business as the paradigm cases, see Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S.Ct. 1017, 1024 (2021). Here, neither Defendant is incorporated nor maintains a principal place of business in Massachusetts. Compl. ¶¶ 11, 12 [Doc. No. 1-1]; Notice of Removal ¶¶ 13, 14 [Doc. No. 1].
Accordingly, the court finds that general jurisdiction does not exist as to either Defendant in Massachusetts.
“‘Specific personal jurisdiction . . . may only be relied upon ‘where the cause of action arises directly out of, or relates to, the defendant's forum-based contacts.'” Warren Env't, Inc. v. Source One Env't, Ltd., 2020 WL 1974256, at *3 (D. Mass. Apr. 24, 2020) (quoting Pritzker v. Yari, 42 F.3d 53, 60 (1st Cir. 1994)). “The three elements of specific jurisdiction are relatedness (the nexus of plaintiff's claim with the defendant's contact with the forum), purposeful availment (something more than an isolated contact or the unilateral activity of a third person), and the reasonableness of the exercise of jurisdiction (the five Gestalt factors).” Id. (citing Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 35 (1st Cir. 2016).
“As the First Circuit has stated, the relatedness requirement-‘that a suit arise out of, or be related to' [d]efendant's forum activities-‘ensures that the element of causation remains in the forefront.'” Back Bay Farm, LLC. v. Collucio, 230 F.Supp.2d 176, 186 (D. Mass. 2002) (quoting Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 207 (1st Cir. 1994)). “Relatively speaking, the relatedness inquiry is to be resolved under ‘a flexible, relaxed standard.'” Baskin-Robbins, 825 F.3d at 35 (quoting Pritzker, 42 F.3d at 61).
“There is a natural blurring of the relatedness and purposeful availment inquiries in cases (like this one) in which the alleged contacts are less tangible than physical presence; in such circumstances, an inquiring court must determine the extent to which the defendant...
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