In re August
| Decision Date | 04 February 1982 |
| Docket Number | Bankruptcy No. 81-01316-R,Adv. No. 81-0261-R. |
| Citation | 17 BR 628 |
| Parties | In re Scott Richard AUGUST, Sharon Irene August, Debtors. Scott Richard AUGUST, et al., Plaintiffs, v. HBA LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Virginia |
Nathan A. Nelson, Chenault, Brumley & Chenault, Aylett, Va., for plaintiffs.
Fred W. Palmore, III, Mays, Valentine, Davenport & Moore, Richmond, Va., for defendant.
This matter comes on upon the filing by Scott Richard August and Sharon Irene August (Augusts), the Debtors herein, of a complaint for turnover of property against HBA Life Insurance Company (HBA), the Defendant herein. HBA filed a motion pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure to dismiss the Plaintiffs' complaint for turnover of property on the basis that this Court lacks jurisdiction over the disputed property because the Virginia judgment which granted the Plaintiffs' right to that property is void for want of personal jurisdiction over the Defendant. Upon the submission of briefs and after hearing the Court makes the following determination.
The Augusts entered into an agreement with HBA in the State of Arizona by which HBA agreed to provide health insurance for the Augusts. Shortly thereafter in September, 1977 the Augusts moved to Virginia and continued to pay premiums to HBA for the insurance policies. In December, 1977 the Augusts made a claim for benefits under the HBA insurance policy for reimbursement for medical expenses. HBA denied the request for reimbursement in February, 1978.
The Augusts filed suit against HBA in the Circuit Court for King and Queen County, Virginia and recovered a default judgment against HBA in the amount of $10,000.00 plus interest and costs on April 13, 1981.
The Augusts filed a petition in bankruptcy with this Court for relief under Title 11, Chapter 13 of the United States Code on July 31, 1981.
HBA has no representatives in Virginia and sells no insurance policies to residents of Virginia. HBA is an Arizona insurance company and is present in this suit because persons it insured moved from Arizona to Virginia.
28 U.S.C. § 1471(e) provides that bankruptcy courts have exclusive jurisdiction of all of a debtor's property wherever located as of the commencement of the case. HBA argues that it possesses none of the Debtors' property because the judgment which the Augusts obtained in the Circuit Court of King and Queen County is void for lack of jurisdiction.
Certain minimum contacts are necessary in order to subject a defendant to a judgment in personam if he is not present within the territory of the forum in order that the maintenance of the suit not offend traditional notions of fair play and substantial justice. International Shoe Company v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). The U.S. Supreme Court has stated that a single transaction is a sufficient contact if it gives rise to the liability asserted in the suit. McGee v. International Life Insurance Company, 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957). The Augusts asserted personal jurisdiction over HBA under the Virginia longarm statute codified in Virginia Code, § 8.01-328.1 which provides in pertinent part "a court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the persons: (1) transacting any business in this state . . ." The purpose of the Virginia longarm statute is to assert jurisdiction over nonresidents to the extent permissible under the due process clause of the United States Constitution. Danville Plywood Corporation v. Plain and Fancy Kitchens, Inc., 218 Va. 533, 238 S.E.2d 800, 802 (1977). Due process requires that there be more than a simple connection between the contract which is being sued upon and the state asserting jurisdiction. The U.S. Supreme Court in Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958) stated that ". . . it is essential in each case that there be 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." The Virginia Supreme Court has held in light of Hanson that a defendant corporation must "purposely avail itself of the privilege of conducting business activities in Virginia" to be subject to the jurisdiction of Virginia courts. Kolbe, Inc. v. Chromodern, Inc., 211 Va. 736, 180 S.E.2d 664 at 668.
In McGee, a decision later qualified by Hanson, the court found the California court had jurisdiction over a Texas insurance company where the insurance contract was delivered in California, premiums were mailed from California and the insured was a resident of California at the time of death. The Texas insurance company never solicited or did any insurance business in California apart from the policy sued upon in the case. The court found that the contract had a substantial connection with ...
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