Pac. Employers Ins. Co. v. Axa Belgium S.A. F/K/A Royale Belge Incendie Reassurance

• Citation: 785 F.Supp.2d 457
• Decision Date: 27 April 2011
• Docket Number: Civil Action No. 09–5211.
• Parties: PACIFIC EMPLOYERS INSURANCE COMPANY, Plaintiff,v.AXA BELGIUM S.A. f/k/a Royale Belge Incendie Reassurance, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

785 F.Supp.2d 457

PACIFIC EMPLOYERS INSURANCE COMPANY, Plaintiff,

v.AXA BELGIUM S.A. f/k/a Royale Belge Incendie Reassurance, Defendant.

Civil Action No. 09–5211.

United States District Court, E.D. Pennsylvania.

April 27, 2011.

Daryn E. Rush, Thomas Klemm, Gibbons P.C., Philadelphia, PA, for Plaintiff.Alan R. Lyons, Elliott M. Kroll, James M. Westerlind, Arent Fox LLP, New York, NY, for Defendant.

MEMORANDUM OPINION

GOLDBERG, District Judge.

The dispute between the parties in this case involves an alleged breach of a reinsurance contract Before the Court is Defendant's motion to dismiss Plaintiffs complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) or, in the alternative, under the doctrine of forum non conveniens. For the reasons set forth below. I will grant Defendant's motion,

I. BACKGROUNDA. Facts Pertinent to Jurisdiction

Plaintiff, Pacific Employers Insurance Company (PEIC), is a Pennsylvania company whose current principal place of business is in Philadelphia, Pennsylvania. As will be detailed below, PEIC's previous place of business was Los Angeles, California, (Pl.'s Mem. 1.) ¹ Defendant, AXA Belgium, S.A. (AXA Belgium), is an insurer and reinsurer organized under the laws of the Kingdom of Belgium with office headquarters located in Brussels, Belgium. (Def.'s Mem. 5.)

The business relationship between the parties began in 1978 when PEIC and AXA Belgium entered into a reinsurance agreement referred to as the Quota Share Agreement. At the lime this agreement was negotiated and entered into, PEIC was a California domiciled insurance company with its principal place of business in California.² (Pl.'s Mem. L) PEIC's managing general agent, Montgomery and Collins, Inc. (M & C), who negotiated the Quota Share Agreement on PEIC's behalf, was also located in California. (Def.'s Mem. 1.) PEIC alleges that under this agreement. AXA Belgium was obligated to reimburse PEIC for 5% of a portion of loss and/or loss expense payments made with respect to insurance policies written by M & C on PEICs behalf (the Reinsured Policies). (Pl.'s Mem. 2.) While in force, all dealings under the Quota Share Agreement, including underwriting, took place through correspondence between AXA Belgium in Brussels and M & C, acting as PEICs agent, in California. (Def.'s Mem. 7.) The Quota Share Agreement did not in any way limit the geographic scope of the Reinsured Policies. (Pl.'s Mem. 2.)

The terms of the Quota Share Agreement were never formalized into a written reinsurance agreement. Consequently, the parties never agreed to terms regarding exclusive jurisdiction in the event of a legal dispute nor did they agree on service of suit, choice of law, forum selection or arbitration. (Def.'s Mem. 7.)

AXA Belgium terminated its participation under the Quota Share Agreement effective January 31, 1985. However, PEIC has alleged that AXA Belgium's rights and obligations did not end at that time, and that AXA remains liable to reimburse PEIC for a portion of PEIC's loss and loss expense payments with respect to the Reinsured Policies written by M & C during the life of the Quota Share Agreement. Indeed, PEIC claims that AXA Belgium's obligations to reimburse PEIC continue to this day and will continue into the future. (Pl.'s Mem. 2.)

The facts offered by PEIC in support of jurisdiction in this district are wide ranging and extend over a lengthy time period. PEIC acknowledges that prior to 1992/1993, reinsurance reporting, billing and collection under the Quota Share Agreement was handled on their behalf by personnel in California through CIGNA, who had acquired PEIC.³ However, PEIC notes that after 1992/1993, responsibility for handling direct claims under the Reinsured Policies and the reinsurance reporting, billing and collection under the Quota Share Agreement was transferred from California to CIGNA personnel in Philadelphia. Consequently, PEIC stresses that since 1992/1993, all of PEIC's billings to AXA Belgium have been sent from Philadelphia and all payments have been made to Philadelphia, (Pl.'s Mem. 2–3.) In 1996, PEIC re-domesticated to Pennsylvania, where it is presently incorporated. (Def.'s Mem. 5.) AXA Belgium does not dispute these facts but points out that it only made a total of thirty-one claim payments to PEIC in Pennsylvania between 1992 and 2007. (Declaration of Beverly McClure.) ⁴

PEIC also alleges that “representatives” of AXA Belgium conducted audits of its files in Philadelphia on two occasions. The first audit was performed by Chiltington International Inc.⁵ in 2004 and the second by AXA Liabilities Managers, Inc. (AXA LM Inc.) ⁶ in 2008. (Pl.'s Mem. 3: Caprice Aff. ¶¶ 21, 22.) PEIC points out that AXA Belgium personnel in Brussels, as well as AXA LM Inc. personnel in New York, allegedly working on AXA Belgium's behalf, have directed “numerous” written communications and made telephone calls to representatives of PEIC in Pennsylvania regarding the Quota Share Agreement. (Pl.'s Mem. 3.) However, no other details regarding these communications have been provided. According to PEIC, there was “at least one” in person meeting in Philadelphia in 2007 that an employee of AXA LM Inc. attended on behalf of AXA Belgium. (Caprice Aff. ¶ 23.) ⁷

In addition to contacts with Pennsylvania which occurred pursuant to the Quota Share Agreement. PEIC details other business transactions entered into by AXA Belgium which allegedly establish jurisdiction. For instance, PEIC points to AXA Belgium's general agency agreement through M & C whereby AXA Belgium authorized M & C to write insurance and reinsurance (excess and surplus line insurance) in the United States on AXA Belgium's behalf (MGA Agreement). (Pl.'s Mem. 4.) ⁸ PEIC was unable to obtain complete information on the number of policies M & C issued on behalf of AXA Belgium to Pennsylvania insureds. However, relying on a document which lists the policies issued pursuant to the MGA Agreement, PEIC asserts that AXA Belgium issued more than 40 policies through M & C's affiliate in Philadelphia. (Pl.'s Mem. 4.) ⁹

PEIC also asserts that in addition to contracts under the MGA Agreement, AXA Belgium entered into a significant number of reinsurance agreements with various insurers in Pennsylvania, including affiliates of PEIC and the ACE group of companies. The document produced by PEIC in support of this contention includes a thirty page list of reinsurance contracts with contract effective dates spanning from 1977 through 1991 and termination dates spanning from 1977 through 1992. (Pl.'s Ex. 1.) Additionally, PEIC notes that AXA Belgium participated in a number of retrocessional contracts (reinsurance company purchases reinsurance) with INA and INA Reinsurance Company, both of which are Pennsylvania companies. (Caprice Aff. ¶ 28.) ¹⁰

All tolled, PEIC claims that in connection with the above referenced insurance and reinsurance contracts. AXA Belgium had “pervasive” contacts, including emails, letters, telephone calls, audits and in person meetings with the representatives of Pennsylvania companies in connection with the MG A Agreement and the reinsurance contracts. (Pl.'s Mem. 4–5.) PEIC further points out that because the reinsurance contracts cover casualty risk. AXA Belgium's obligations under these contracts are long term. (Pl.'s Mem. 11.)

PEIC also stresses that as a result of the obligations stemming from these insurance and reinsurance agreements, AXA Belgium made 74 separate insurance and reinsurance payments in Pennsylvania between January 8, 2001 and September 22, 2010. These payments total $7,182,749.05 (reinsurance claims) and 1,703.88 (direct insurance claims). (Pl.'s Supp. Mem. 2.)

Finally, according to PEIC, the Annual Statements of AXA Belgium's Pennsylvania reinsureds for the year ending December 1, 2008, reflect “reinsurance recoverable” from AXA Belgium totaling nearly $10 million. The reinsurance recoverables, which are the amount of an insurer's incurred losses that will be paid by reinsurers,¹¹ include paid losses—the portion of incurred losses actually paid out by the insured ¹²—as well as reserves. If those reserves ultimately become paid losses, PEIC asserts that AXA Belgium could pay another $10 million to Pennsylvania reinsureds in the future. According to PEIC, this demonstrates that AXA Belgium's claim activity in Pennsylvania will continue into the future. (Pl.'s Supp. Mem. 2.) ¹³

In response to all of this data. AXA Belgium notes that its total amount of claims paid between 2000 and 2009, was over 47.5 billion Euros ($63.6 billion) and the total amount of reserve set by AXA Belgium for 2008 were over 6.1 billion Euros ($8.1 billion). Therefore, the $7.5 million in paid claims in Pennsylvania over the past 10 years that PEIC relies upon, makes up only AC of AXA Belgium's total claims paid.¹⁴ Additionally. VXA Belgium stresses that the $10 million in alleged reserves for Pennsylvania is only 0.123% of its total reserves. (Def.'s Resp. to Pl.'s Supp. Mem. 7–8.)

B. Procedural History

PEIC tiled its complaint in this district on November 9, 2009, alleging breach of contract and seeking declaratory relief. The lawsuit generally involves AXA Belgium's alleged refusal to pay claims under the Quota Share Agreement. On January 13, 2010. AXA Belgium filed the motion at issue, seeking dismissal of the complaint based upon a lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) or, in the alternative, based on the doctrine of forum non conveniens. On March 5, 2010, PEIC filed a motion for expedited discovery, which was granted on September 30, 2010. On November 30, 2010, PEIC filed a supplemental memorandum of law in opposition to Defendant's motion to dismiss addressing the additional evidence produced in discovery. On December 28, 2010. AXA Belgium responded with a supplemental memorandum of law. AXA Belgium's motion is now ripe for decision.

II. APPLICABLE LAWA. Rule 12(...