G.E. Co. v. California Ins. Guar. Ass'n

• Citation: 997 S.W.2d 923
• Parties: (Tex.App.-Beaumont 1999) GENERAL ELECTRIC COMPANY, Appellant v. CALIFORNIA INSURANCE GUARANTY ASSOCIATION, DELAWARE INSURANCE GUARANTY ASSOCIATION, ILLINOIS INSURANCE GUARANTY FUND and TENNESSEE INSURANCE GUARANTY ASSOCIATION, Appellees NO. 09-97-481 CV
• Decision Date: 31 August 1999
• Court: Court of Appeals of Texas

Page 923

997 S.W.2d 923 (Tex.App.-Beaumont 1999)

GENERAL ELECTRIC COMPANY, Appellant v. CALIFORNIA INSURANCE GUARANTY ASSOCIATION, DELAWARE INSURANCE GUARANTY ASSOCIATION, ILLINOIS INSURANCE GUARANTY FUND and TENNESSEE INSURANCE GUARANTY ASSOCIATION, Appellees

NO. 09-97-481 CV

In The Court of Appeals Ninth District of Texas at Beaumont

Submitted May 20, 1999

Decided August 31, 1999

On Appeal from the 136th District Court Jefferson County, Texas, Trial Cause No. D-156,875-A

[Copyrighted Material Omitted]

Before Walker, C.J., Burgess and Stover, JJ.

OPINION

Walker Chief Justice.

This is an appeal from the trial court's granting of special appearances filed by each of the four appellees. The special appearances complained of the lack of in personam jurisdiction. Appellees consist of the California Insurance Guarantee Association (CIGA), Delaware Insurance Guaranty Association (DIGA), Illinois Insurance Guaranty Fund (IIGF), and the Tennessee Insurance Guaranty Association (TIGA). For simplification, we shall refer to appellees collectively as the Guaranty Funds. Initially, appellant, General Electric Company (G.E.) filed an original action seeking a declaratory judgment that appellees, among others, be obligated to defend and/or indemnify G.E. against third-party asbestos claims due to the fact that certain of G.E.'s primary insurers had become insolvent. Following the granting of the special appearances, that portion of the lawsuit was severed from the remainder of the litigation and this appeal was prosecuted.

The Guaranty Funds' special appearances were submitted separately to the trial court. In support of each special appearance, the record before us contains a copy of the enabling legislation from each of the four states and an affidavit from a representative of each states' guaranty fund. Each of the Guaranty Funds also submitted answers to interrogatories per requests from G.E. An examination of the record before us indicates that G.E. provided no evidence in the form of testimony or affidavits contradicting any of the factual assertions made by each of the Guaranty Funds' representatives. G.E. did file a variety of sworn pleadings and oppositions to the various special appearances. Generally, however, pleadings are not competent evidence, even if sworn or verified. Laidlaw Waste Systems (Dallas), Inc. v. City of Wilmer, 904 S.W.2d 656, 660 (Tex. 1995); Hidalgo v. Surety Sav. & Loan Ass'n, 462 S.W.2d 540, 545 (Tex. 1971). As such, we initially observe that the evidence in support of the Guaranty Funds' special appearances is before us uncontested.

While we have stated that the standard for review of a trial court's decision regarding a plea to the jurisdiction is that of factual sufficiency, see Cadle v. Graubart, 990 S.W.2d 469, 471 (Tex. App.--Beaumont 1999, no pet.), if a special appearance is based on undisputed or otherwise established facts, an appellate court shall conduct a de novo review of the trial court's order granting the special appearance. Conner v. ContiCarriers and Terminals, Inc., 944 S.W.2d 405, 411 (Tex. App.--Houston [14th Dist.] 1997, no writ). A careful examination of G.E.'s responsive pleadings in opposition to the special appearances will indeed indicate an alleged assertion of "fact" to the effect that the Guaranty Funds stand in the shoes of their insolvent insurers for all purposes, including in personam jurisdiction. As we will clarify later, this assertion by G.E. is not a fact established of record but a question of law to be determined by the courts.

At this point we emphatically state that the scope of this appeal is limited to the issue of the propriety of exercising personal jurisdiction over the nonresident defendants only. We shall not address the concept of "covered claims" or what persons or entities may or may not be subject to "covered claims." Based upon the affidavits from their respective representatives, as well as the language of each state's enabling legislation, we recognize that the Guaranty Funds are unincorporated associations created by statutes promulgated by each Guaranty Fund's respective state legislature.¹ The apparent purpose for the creation of each of these Guaranty Funds is to provide protection for certain statutorily designated claimants in the event of the insolvency of certain statutorily designated insurers. All fifty states currently have enacted legislation creating property and casualty insurance guaranty associations patterned wholly or in large part after the National Association of Insurance Commissioners "Post-Assessment Property and Liability Insurance Guaranty Association Model Act" (Model Act). This is the extent of our discussion of the historical bases of the Guaranty Funds.

THE LAW OF PERSONAL JURISDICTION

A court may assert personal jurisdiction over a nonresident defendant only if the requirements of both the Due Process Clause of the Fourteenth Amendment to the United States Constitution and the Texas long-arm statute are satisfied. See U.S. CONST. amend. XIV, 1; Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 413-14, 80 L.Ed.2d 404, 410-11, 104 S.Ct. 1868 (1984); CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex. 1996). The long-arm statute allows a court to exercise personal jurisdiction over a nonresident defendant that does business in Texas. CRS Ltd., 925 S.W.2d at 594. In addition to a discrete list of activities that constitute doing business in Texas, the statute provides that "other acts" by the nonresident can satisfy the requirement. Id.; Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991); TEX. CIV. PRAC. & REM. CODE ANN. 17.042 (Vernon 1997). The Texas Supreme Court has repeatedly interpreted this broad statutory language "to reach as far as the federal constitutional requirements of due process will allow." CSR Ltd., 925 S.W.2d at 594; Guardian Royal, 815 S.W.2d at 226; U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 762 (Tex. 1977). Consequently, the requirements of the Texas long-arm statute are satisfied if the exercise of personal jurisdiction comports with federal due process limitations. CSR Ltd., 925 S.W.2d at 594.

In Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 94 L.Ed.2d 92, 107 S.Ct. 1026 (1987), we find a very detailed discussion of the scope of due process vis-a-vis the exercise of personal jurisdiction over a nonresident defendant. We quote liberally from the case:

"[T]he constitutional touchstone" of the determination whether an exercise of personal jurisdiction comports with due process "remains whether the defendant purposefully established 'minimum contacts' in the forum State." Burger King Corp. v Rudzewicz, 471 US 462, 474, 85 L Ed 2d 528, 105 S Ct 2174 (1985), quoting International Shoe Co. v Washington, 326 US 310, 316, 90 L Ed 95, 66 S Ct 154, 161 ALR 1057 (1945). Most recently we have reaffirmed the oft-quoted reasoning of Hanson v Denckla, 357 US 235, 253, 2 L Ed 2d 1283, 78 S Ct 1228 (1958), that minimum contacts must have a basis in "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws. [citation omitted] "Jurisdiction is proper . . . where the contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum state." [citations omitted]

. . . .

The "substantial connection," [citations omitted] between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State. [citations omitted] The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.

Asahi Metal Industry Co., 480 U.S. at 108-09, 112, 94 L.Ed.2d at 102, 104. [emphases in original]

In the instant case, there exists no evidence of any actions by any of the Guaranty Funds directed toward Texas. The evidence before us clearly establishes that none of the Guaranty Funds do any business in Texas. They have no offices in Texas; they have no property in Texas; they do not advertise in Texas or otherwise solicit any business in Texas. Indeed, based upon their respective enabling legislation, we find that the Guaranty Funds are not in "business" at all, as that term is generally understood in the world of commercial enterprise. Typical of the evidence before us is contained in the following portion of the affidavit of Lawrence E. Mulryan, Executive Director of the California Insurance Guarantee Association. Mr. Mulryan's affidavit contains the following facts:

2. CIGA is not an insurance company and is not licensed as an insurance company in Texas or in any other state. CIGA does not issue insurance policies and is not a party to any insurance contract issued by an insolvent insurer. CIGA does not now have and has never had any policyholders. Member insurers of CIGA are not themselves authorized to act on behalf of CIGA. CIGA is not the agent of its member insurers. It does not act on its member insurers behalf, nor does it control the activities of its member insurers with respect to their conduct of their insurance business.

3. Contrary to the...