Memorial Hosp. System v. BLUE CROSS & BLUE SHIELD

• Decision Date: 26 August 1993
• Docket Number: Civ. A. No. H93-912.
• Citation: 830 F. Supp. 968
• Parties: MEMORIAL HOSPITAL SYSTEM, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF ARKANSAS, Defendant.
• Court: U.S. District Court — Southern District of Texas

830 F. Supp. 968

MEMORIAL HOSPITAL SYSTEM, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF ARKANSAS, Defendant.

Civ. A. No. H93-912.

United States District Court, S.D. Texas, Houston Division.

August 26, 1993.

John O. Brentin, Sullins, Johnston, Rohrbach, Magers & Herbert, Houston, TX, for plaintiff.

Patrick J. McGettigan, Jr., McGettigan, Gill & Hargis, L.L.P., Houston, TX, for defendant.

MEMORANDUM AND ORDER OF DISMISSAL

WERLEIN, District Judge.

Before the Court is Defendant Blue Cross and Blue Shield of Arkansas's ("Blue Cross") Motion to Dismiss for Lack of Jurisdiction (Document No. 3). Having considered the motion, response, arguments, and authorities submitted by the parties, the Court is of the opinion that the motion should be GRANTED.

I. Background

Plaintiff Memorial Hospital System ("Memorial"), a health care provider located in Houston, Texas, brought this action against Blue Cross, a foreign insurance company located in Little Rock, Arkansas. Memorial alleges that this Court has in personam jurisdiction over Defendant by reason of a single long distance telephone conversation between an employee of Memorial in Houston, Texas, and a Blue Cross employee in Little Rock, Arkansas. Specifically, Plaintiff alleges that on February 12, 1992, a Memorial employee contacted Defendant by long distance telephone to inquire about possible insurance coverage for the proposed treatment of Carolyn Harkey ("Harkey"), a Memorial patient.¹ During the telephone conversation, an agent of Defendant allegedly represented to the caller (1) that a $300 deductible applied; (2) that Harkey was covered for 80% of the hospitalization charges until she incurred $5,000.00 in out-of-pocket costs; and (3) that Harkey's coverage would pay 100% thereafter, up to a maximum of $1,000,000.² In reliance on these alleged representations, Memorial treated Harkey from February 12, 1992 through February 20, 1992. Thereafter, Memorial filed with Blue Cross a claim for $10,070.00, such amount being the total charges for Harkey's hospitalization and treatment. See Affidavit of John Sheeks, Attached as Exhibit A to Plaintiff's Original Petition. Despite Memorial's demand, Blue Cross refused to pay.

Defendant Blue Cross is an Arkansas corporation, licensed and doing business only in the state of Arkansas, with its principal place of business in Little Rock, Arkansas. The record is undisputed that Blue Cross maintains no place of business in Texas; does not engage and has not engaged in any business here, has no office, agents or employees in Texas; is not registered to do business in Texas; does not advertise or otherwise solicit any business or offer any insurance products in Texas; owns no real estate in Texas; and neither the Chief Operating Officer, nor any other corporate officer of Defendant, resides in Texas. Consequently, jurisdiction over Defendant, if any, must arise from the single alleged telephone conversation which, as Plaintiff concedes, is Defendant's only contact with this forum.

II. Discussion

The exercise of jurisdiction over a nonresident defendant must not offend "traditional notions of fair play and substantial justice" of the due process clause of the Fourteenth Amendment. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). The due process clause in this context has been held to require: (1) the nonresident must have some minimum contacts with the forum state resulting from an affirmative act or acts on its part; and (2) it must not be unfair or unreasonable to require the nonresident to defend the suit in the forum state. Growden v. Ed Bowlin and Associates, Inc., 733 F.2d 1149, 1150 (5th Cir.1984). Crucial to this due process analysis is "the relationship among the defendant, the forum, and the litigation." Stuart v. Spademan, 772 F.2d 1185, 1190 (5th Cir.1985), citing Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 413, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984), Shaffer v. Heitner, 433 U.S. 186, 202-204, 97 S.Ct. 2569, 2579-80, 53 L.Ed.2d 683 (1977). Moreover, the "defendant's conduct with the forum must be such that he should reasonably anticipate being haled into court there." Stuart, 772 F.2d at 1191, citing World Wide Volkswagen v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). No defendant should be haled into a jurisdiction solely as a result of "`random,' `fortuitous,' or `attenuated'" contacts. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 486, 105 S.Ct. 2174, 2189, 85 L.Ed.2d 528 (1985) quoting World Wide Volkswagen, 444 U.S. at 299, 100 S.Ct. at 568.

The Texas long-arm statute extends personal jurisdiction to nonresidents when the action arises from the nonresidents' business in the state, and doing business includes committing a tort in Texas. Tex.Civ.Prac. & Rem.Code Ann. §§ 17.042-.043. Because the Texas long-arm statute extends to the constitutional limits of due process, U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 762 (Tex.1977), cert. denied, 434 U.S. 1063, 98 S.Ct. 1235, 55 L.Ed.2d 763 (1978), the principal question at hand is whether an assertion of jurisdiction by this Court over Defendant Blue Cross is constitutionally permissible.³

Procedurally, when a defendant files a motion to dismiss for lack of personal jurisdiction, the general rule is that the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident. Bullion v. Gillespie, 895 F.2d 213, 216-217 (5th Cir.1990); Stuart v. Spademan, 772 F.2d 1185, 1191 (5th Cir.1985); Thompson, 755 F.2d at 1165; D.J. Investments, Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 545 (5th Cir.1985). When the district court decides the defendant's motion without an evidentiary hearing, the plaintiff's burden is met by presenting a prima facie case for personal jurisdiction. In that respect, "the allegations of the complaint, except insofar as controverted by opposing affidavits, must be taken as true, and all conflicts in the facts must be resolved in favor of the plaintiffs for purposes of determining whether a prima facie case for personal jurisdiction has been established." Thompson, 755 F.2d at 1165, citing DeMelo v. Toche Marine, Inc., 711 F.2d 1260, 1270-71 (5th Cir.1983); Black v. Acme Markets, Inc., 564 F.2d 681, 683 n. 3 (5th Cir.1977).

Accepting all of Plaintiff's factual allegations as correct, the Court concludes that an assertion of jurisdiction over Defendant Blue Cross would not comport with federal due process considerations. Plaintiff relies upon a Texas case, Siskind v. Villa Foundation for Education, Inc., 642 S.W.2d 434 (Tex.1982) for its contention that "in a misrepresentation case, even if the misrepresentation occurs outside the state of Texas, a tort is committed in Texas, if reliance thereon occurred in Texas." (Plaintiff's Response to Defendant's Motion to Dismiss, Document No. 5 at 3). While as a general rule a federal court should defer to a state court's interpretation of a state statute, Erie R.R. Co. v. Thompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), a federal court is not bound by the decision of a state court regarding the requirements of federal due process. See, e.g., Green v. USF & G Corp., 772 F.Supp. 1258, 1262 (S.D.Fla.1991); Hopper v. Mayeaux, 545 F.Supp. 1174, 1177 (S.D.Tex. 1982). Federal law determines whether an assertion of jurisdiction over a defendant comports with notions of due process. In any event, however, Siskind is quite different from the case at bar because there the Arizona defendant intentionally solicited business in Texas by (1) advertising in national publications that were circulated in Texas; (2) advertising in Texas telephone directories; and (3) mailing informational packets, applications for admission, invitations to reenroll, and enrollment contracts to Texas residents. No such affirmative conduct is alleged here, and Plaintiff in fact concedes that its own employee, from Texas, initiated to Arkansas the sole phone call from which this lawsuit arose.

Nonetheless, Plaintiff maintains that if an out-of-state tortfeasor such as Blue Cross knows that the brunt of the injury will be felt by a Texas resident, the tortfeasor must reasonably foresee being haled into a Texas court to answer for such actions. Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984); see also Brown, infra. Foreseeability is indeed relevant to a jurisdictional analysis, but the type of foreseeability that is critical to establishing in personam jurisdiction over an out-of-state defendant is that the defendant's own purposeful acts have some effect in the forum. Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112, 107 S.Ct. 1026, 1032-33, 94 L.Ed.2d 92 (1987). Thus, in Calder, the plaintiff, a California resident, was the subject of an allegedly libelous magazine article written and edited in Florida by defendants, both Florida residents, and published in the National Enquirer, a magazine with its largest circulation in California. The Court held that jurisdiction in California over the Florida defendants was proper because their "actions were expressly aimed at California," Id. 465 U.S. at 789, 104 S.Ct. at 1487, and "intentionally directed at a California resident." Id. The Court also noted that one of the defendants had gathered information contained in the article by phone calls to California sources, and that this same defendant, shortly before publication, called the plaintiff's home and read to her husband a draft of the article so as to elicit his comments. Id. at 786, 104 S.Ct. at 1485. On the other hand, negligently answering in Arkansas a single, long-distance telephone inquiry initiated by a Texas hospital to ascertain the availability of insurance coverage, does not compare with such circumstances, and would therefore not rise to the level of an act or acts by the Arkansas insurer that can be regarded as purposefully...