Hill v. Assuranceforeningen Skuld (Gjensidig) & Skuld Mut. Prot. & Indem. Ass'n (Bermuda) Ltd.
| Decision Date | 04 April 2016 |
| Docket Number | CIVIL CASE NO. CV 15-00025 |
| Parties | AMY HILL, as Personal Representative of the Estate of DAVID HILL, deceased, and in Amy Hill's capacity as an individual, Plaintiff, v. ASSURANCEFORENINGEN SKULD (Gjensidig) and SKULD Mutual Protection and Indemnity Association (Bermuda) Ltd. Defendants. |
| Court | U.S. District Court — District of Guam |
re Defendants' Motion to Dismiss [Fed. R. Civ. P. 12(b) and Forum Non Conviens], or in the Alternative, to Compel Arbitration [9 U.S.C. § 206]
Before the court is a motion filed by defendants Assuranceforeningen Skuld (Gjensidig) and Skuld Mutual Protection and Indemnity Association (Bermuda) Ltd. (collectively, the "Defendants") to dismiss Plaintiff's Complaint filed herein on August 6, 2015. See ECF No. 23. The motion was referred to the undersigned on December 21, 2015, for a Report and Recommendation. See ECF No. 44. The court set the motion for hearing on January 14, 2016 but continued the hearing to January 28, 2016. On the continued hearing date, the court heard oral arguments from the parties and took the matter under advisement.
The court, having reviewed Defendants' motion to dismiss Plaintiff's Complaint, Plaintiff's opposition to the motion, and Defendants' reply to the opposition, now renders its decision in this Report and Recommendation.1
On August 6, 2015, Plaintiff filed her complaint against Defendants seeking to recover a multi-million dollar judgment2 that remained unpaid because the judgment debtor's insurance company (Defendants) refused to pay the claim or post any security to adequately stay execution of the judgment. See Compl. at ¶1, ECF No. 1.
Defendants have moved the court to dismiss the Complaint. See ECF No. 23. In support of the motion, Defendants provided the Declaration of Jonathan Hare, ECF No. 25; the Declaration of Gaute Gjelsten, ECF No. 26; the Declaration of Mona Eivindsen, ECF NO. 27; the Declaration of Kristoffer Kohmann, ECF No. 28; and the Declaration of Elyze Iriarte, ECF No. 29. Plaintiff filed her opposition to the motion to dismiss on November 26, 2015. See ECF No. 39. Defendants filed their reply to the opposition on December 15, 2015. See ECF No. 41.
Defendants raise the following arguments in support of their motion to dismiss:
A. Dismissal is warranted under Fed. R. Civ. P. 12(b)(5) because Plaintiff's service of process upon the Director of the Department of Revenue and Taxation ("DRT") and Attorney Iriarte did not constitute proper service upon the Defendants; B. Dismissal is warranted under Fed. R. Civ. P. 12(b)(2) because the court does not have personal jurisdiction - whether general or specific - over Defendants;
C. Dismissal is warranted under Fed. R. Civ. P. 12(b)(6) because the Complaint fails to state a claim against them under Guam's Direct Action statute;
D. The Complaint should be dismissed under the doctrine of forum non conveniens; and
E. Dismissal is warranted because the laws of Guam and the New York Convention require the Plaintiff to arbitrate her claims against Defendants in Norway.
Rule 12(b)(5) allows a party to move for dismissal of an action for insufficient service of process. "Once service is challenged, plaintiffs bear the burden of establishing that service was valid under Rule 4." Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). If the plaintiff is unable to satisfy its burden of demonstrating effective service, the court has discretion to either dismiss or retain the action. See Stevens v. Sec. Pac. Nat'l Bank, 538 F.2d 1387, 1389 (9th Cir. 1976). The court may consider evidence outside the pleadings in resolving a Rule 12(b)(5) motion. See Alphin v. Peter K. Fitness, LLC, No. 13-CV-01338-BLF, 2014 WL 2961088, *2 (N.D. Cal., Mar. 24, 2015) (). The issue before the court is whether Defendants had been properly served with process.
With respect to corporations, service of process may be effectuated by delivering a copy of the summons and complaint in a judicial district to "an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process" or an internationally agreed method for effective service such a the Hague Convention if service of process is at a place not within any judicial district of the United States. Fed. R. Civ. P. 4(h). It is Defendants' position herein that service can only be proper against Defendants if it complies with the Hague Convention.
In this case, Plaintiff contends that service was proper because she served a copy of the summons and complaint on John P. Camacho, the Director of the Department of Revenue and Taxation ("DRT") and on Elyze Iriarte.
Plaintiff contends that service upon the Director of DRT was proper because the DRT Director is an agent authorized by Guam law to receive service of process on behalf of foreign corporations that transact business in Guam. Plaintiff cites to Title 18, Guam Annotated Code, Section 7113(e) for this proposition. A foreign corporation which transacts business in Guam without having been authorized to transact business on Guam submits itself to the jurisdiction of the courts of Guam and further designates the DRT Director as its agent for service of process. Plaintiff asserts that Skuld did business in Guam when it issued a policy of insurance in Guam, to a business with its principal place of business on Guam that has its headquarters in Guam, that operated a fishing vessel in and out of Guam with a fishing vessel home ported in Guam.
Section 7102(a) of Title 11, Guam Code Annotated provides that a foreign corporation shall not transact business in Guam until it obtains a business license and a certificate of authority to do so from the DRT Director. Similarly, 11 GCA § 70130 requires all persons "engaging in, transacting, conducting, continuing, doing, or carrying on a business have business licenses." Section 7102(c) lists activities which do not constitute transacting business within the meaning of 11 GCA § 7102(a). Similarly, 11 GCA § 70103 (e) defines what is "engaging in, transacting, conducting, continuing, doing or carrying on a business."
Defendants are foreign corporations. Are their activities within Guam such that service of process upon them may be made upon the DRT Director?
Under corporate law, a corporation is a person. It is clear under Guam law that a foreign corporation may engage in certain activities and yet not be considered as "transacting business within Guam" or "engaging in, transacting, conducting, continuing, doing or carrying on a business" within Guam. These activities, among other activities, include the following:
Defendants assert that they were not transacting business in Guam so that their activities do not trigger the application of 18 GCA § 7113(e). They argue that Majestic Blue engaged a broker in London to solicit and negotiate its insurance policy with them. See Eivindsen Decl. at ¶3, ECF No. 27. Defendants also state that they underwrote and executed the policy in Norway and delivered the Certificate of Entry to Majestic Blue's broker, Besso, in London. Thus, Defendants contend that it was not "transacting business in Guam" as set forth in Section 70102 or "engaging in, transacting, conducting, continuing, doing or carrying on a business" within Guam as set forth in Section 70103.
The court agrees. The court finds that Defendants engaged in an activity exempt from the application of the statute because Defendants solicited or procured the insurance contract with Majestic Blue which required that the policy be accepted outside of Guam before it became a binding contract. Thus, service of process upon the DRT Director under 18 GCA § 7113(e) was not proper.
Plaintiff also contends that service upon Defendants was proper because it served Elyze Iriarte with the summons and complaint. Plaintiff asserts that service on Ms. Iriarte was proper because she officially serves as Defendants' correspondent and she was designated by them in their website as their agent for notice in Guam.
Defendants respond to Plaintiff's arguments by pointing out that the website that lists their correspondents also set forth Correspondent Guidelines which state that the firms that appear on the list are not agents of the Club. More importantly, a correspondent has no authority to bind the Club unless specifically approved by an authorized member of the Club or staff of the Club.
Ms. Iriarte has also filed a Declaration that states she has not been authorized by Defendants to accept service of process on their behalf in this case. Iriarte Decl. at ¶¶3-4, ECF No. 29. She also states that Majestic Blue did not solicit legal or correspondent services from her with respect to the sinking of the Majestic Blue vessel. Id. at ¶5.
Based upon the response by Defendants and Ms. Iriarte's Declaration, the court finds that service of the complaint and summons upon Ms. Iriarte was not proper service upon the Defendants. Although Plaintiff has not...
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