Morales v. Puerto Rico Marine Management, Inc.

• Decision Date: 16 July 1979
• Docket Number: Civ. No. 77-1428.
• Citation: 474 F. Supp. 1172
• Parties: Ruben MORALES, Plaintiff, v. PUERTO RICO MARINE MANAGEMENT, INC., Puerto Rico Maritime Shipping Authority, and "X" Insurance Company, Defendants and Third Party Plaintiffs, v. JACKSONVILLE PORT AUTHORITY and the Travelers Insurance Companies, Third Party Defendants.
• Court: U.S. District Court — District of Puerto Rico

474 F. Supp. 1172

Ruben MORALES, Plaintiff, v. PUERTO RICO MARINE MANAGEMENT, INC., Puerto Rico Maritime Shipping Authority, and "X" Insurance Company, Defendants and Third Party Plaintiffs, v. JACKSONVILLE PORT AUTHORITY and the Travelers Insurance Companies, Third Party Defendants.

Civ. No. 77-1428.

United States District Court, D. Puerto Rico.

July 16, 1979.

Harry A. Ezratty, San Juan, P. R., for plaintiff.

Herbert W. Brown, III, Francisco Bruno Rovira, San Juan, P. R., for defendants and third party plaintiffs.

OPINION AND ORDER

TORRUELLA, District Judge.

Plaintiff initiated this action on September 27, 1977 against the Puerto Rico Marine Management, Inc. and Puerto Rico Maritime Shipping Authority, owners and operators of the vessel SS GUAYAMA. The action was based on the general maritime claim of unseaworthiness¹ and on a negligence claim under Section 33 of the Jones Act. 46 U.S.C. 688. Succinctly, the complaint alleges that Plaintiff, who was a seaman on the SS GUAYAMA, suffered an accident while the vessel was docked at Jacksonville, Florida on August 10, 1977. He assertedly fell through an excavation on the pier which was the result of certain construction work being carried on by the Jacksonville Port Authority.

On September 14, 1978 the Defendants brought a third-party complaint against the Jacksonville Port Authority (hereinafter referred to as "the Authority"). It was therein alleged that the Authority owned, controlled, managed and otherwise maintained the pier facilities in which Plaintiff suffered the aforesaid accident, and that the injuries allegedly suffered by Plaintiff were due to its negligence. Service of process on third party Defendant was attempted through the Secretary of State of the Commonwealth of Puerto Rico, in accordance with the Puerto Rico Long Arm Statute, Rule 4.7 of the P.R. Rules of Civ.P., 32 L.P.R.A. App. II. The petition for substitute service was grounded on the assertion that the Authority, although not domiciled within this district, has carried business activities in the jurisdiction.

On January 12, 1979 the Authority made a special appearance contesting service of process and requesting that the same be quashed. An affidavit by its Managing Director, John R. MacKroth, was submitted in support of third party defendant's Motion.

The third party Plaintiffs, apparently conceding that in personam jurisdiction over the authority cannot be obtained, proceeded to file an amended third party complaint setting forth a direct action against the Authority's insurer, The Travelers Insurance Company (hereinafter referred to as "the insurer") pursuant to Section 20.030 of the Insurance Code of Puerto Rico. 26 L.P.R.A. 2003. Service was made upon an officer of the insurer's claims Department at its office in Santurce, Puerto Rico.

The insurer has also challenged the in personam jurisdiction of this Court. Additionally, dismissal of the claims against it is requested on the ground that the complaint fails to state a claim for relief under the direct action statute of Puerto Rico, supra.

We rule, at the outset, that the Authority's challenge to the substitute service of process must be upheld. The Defendants never controverted the facts attested to in the MacKroth's affidavit. Said sworn statement specifically disclaims each and every one of the factors which would permit substitute service under the Long Arm Statute of Puerto Rico. There is simply no significant connection between the alleged actions of the Authority and the Commonwealth of Puerto Rico as would satisfy the applicable statutory and constitutional prerequisites to the exercise of long arm jurisdiction.² See, International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). McGee v. International Life Insurance Company, 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957). Absent any of those sine qua non requirements, the process attempted to be served upon the Authority through the Secretary of State of Puerto Rico must be, and the same is hereby quashed. See, Medina v. Tribunal Superior, 104 D.P.R. 346, 354 (1975); Cf. Claudio v. Casillas Mojica, 100 D.P.R. 761, 772 (1972).

The insurer's "Motion to Dismiss for Lack of In Personam Jurisdiction and for Failure to State a Claim Upon Which Relief Can Be Granted" does present novel and interesting questions of law which have not been addressed by the Supreme Court of Puerto Rico. To those we shall now turn our attention.

Movant contends that an assertion of jurisdiction over the insurer would contravene the applicable principles of "fair play and substantial justice", since this Court lacks jurisdiction over the insured and the insurance contract was issued outside of Puerto Rico. It is further argued that the sphere of application of the Puerto Rico direct action statute cannot be extended to an insurance company where, as here, the accident and the contract take place elsewhere.

Defendants retort that since the insurer does business in Puerto Rico and service was effectuated upon one of its agents here, there exists in personam jurisdiction over this third party Defendant. Moreover, Defendants advance the proposition that the Commonwealth has an interest in actions involving insurance policies written outside of the jurisdiction and accidents occurring not within its confines by reason of the domicile in Puerto Rico of the injured party. Hence, according to Defendants, the third party claims against the insurer can be brought directly pursuant to 26 L.P.R.A. 2003 under the factual circumstances of the case at bar.

We will discuss each of the two aspects raised by the insurer's Motion in turn. PERSONAL JURISDICTION OVER THE INSURER:

Pursuant to the authority granted in F.R.Civ.P. 4(d)(7), the summons and complaint in this case were served upon a local officer of the insurer in the manner prescribed by Rule 4.4(e) of the P.R.Rules of Civ.P.³ No question of extraterritorial or substitute service upon a non-resident Defendant is thus presented as regards this party, since the insurer concededly does business in Puerto Rico. Rather, our inquiry shall center on whether the Commonwealth has provided for the exercise of judicial power over a foreign corporation which does business in Puerto Rico, where the cause of action sued upon is entirely unrelated to its business activities in this jurisdiction.

Since the last century, the United States Supreme Court approved the practice of considering a foreign corporation doing business in a State to have consented to being sued in that State. Pennoyer v. Neff, 95 U.S. 714, 735-736, 24 L.Ed. 565 (1878); see Lafayette Ins. Co. v. French, 59 U.S. (18 How.) 404, 15 L.Ed. 451 (1856). The doctrinal basis for this view was thereafter explained by reasoning that a corporation doing business in a State could be deemed "present" in the State, and thus subject to service of process there. See, Philadelphia & Reading R. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710 (1917); International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479 (1914); cf. Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927).

Subsequent judicial developments denoted a departure from the presence test as enunciated in the above-cited decisions. The test for determining whether a State had jurisdiction over a foreign corporation was amplified and required an elucidation of whether there had been "such contacts of the corporation with the State of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there." International Shoe Co. v. Washington, supra, 326 U.S. at 317, 66 S.Ct. at 158. The "quality and nature of the (Defendant's) activity" became a primary yardstick. Id. at 319, 66 S.Ct. 154; also, McGee v. International Life Ins. Co., supra. However, this new framework of analysis was couched in terms of increasing the ability of the state tribunals to extend their reach over nonresident defendants, Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), and did not substantially lessen the vitality of the "presence" test in appropriate factual situations.

Thus, in Perkins v. Benquet Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952), the Supreme Court specifically held that the Due Process Clause of the Fourteenth Amendment does not prevent a State from subjecting a foreign corporation who carries on continuous and systematic, though limited, business activities within the State to the jurisdiction of its Courts, even where, as in this case, the cause of action sued upon does not arise within the State nor does it relate to the corporation's activities there. In Perkins, service was effectuated upon the corporation's president while he was engaged in business in the forum state. The Court expressed that actual notice was given to the corporation through regular service of summons upon its president while he was in the State acting in that capacity. Therefore, the Court found no unfairness in subjecting the corporation to the jurisdiction of the courts of that State through such service of process. 342 U.S. at 444, 72 S.Ct. 413.

The Court, however, took care in pointing out that States are free to close their courts to actions against foreign business entities under circumstances resembling those presented in the case at bar. Id., at 440-441, 72 S.Ct. 413. See also, International Shoe Co. v. Washington, supra, 326 U.S. at 318, 66 S.Ct. 154.

Against this background, we must ascertain the ambit accorded by the Legislature of Puerto Rico to the power of courts to subject foreign insurance companies doing business in Puerto Rico to their jurisdiction, where neither the insured, the contract nor the casualty are related to the Commonwealth in any substantial way.

In order to obtain a certificate of authority to do business in Puerto Rico, any...