Posner v. Essex Ins. Co., Ltd.
| Decision Date | 25 June 1999 |
| Docket Number | No. 97-5760,97-5760 |
| Citation | 178 F.3d 1209 |
| Parties | Victor POSNER, Security Management Corporation, Plaintiffs-Appellants, v. ESSEX INSURANCE COMPANY, LTD., Salem Corporation, Salem Group, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Joshua D. Lerner, Rumberger, Kirk & Caldwell, Miami, FL, Jean Reed Haynes, Peter A. Bellacosa, Kirkland & Ellis, New York City, for Plaintiffs-Appellants.
Gerald F. Richman, Richman, Greer, Weil, Brumbaugh, Mirabito & Christensen, PA, Miami, FL, Mark Anthony Romance, Richman, Greer, Weil, Brumbaugh, Mirabito & Christensen, P.A., West Palm Beach, FL, Gerald Wald, Murai, Wald, Biondo & Moreno, Miami, FL, for Salem Corp. and Salem Group, Inc.
Appeal from the United States District Court for the Southern District of Florida.
Before TJOFLAT and EDMONDSON, Circuit Judges, and KRAVITCH, Senior Circuit Judge.
Plaintiffs Victor Posner and Security Management Corporation ("SMC") appeal the district court's order dismissing with prejudice their claims against Defendants Salem Corporation ("Salem") and Essex Insurance Company ("Essex") arising out of a bonus dispute with Salem; dismissing with prejudice their claims against Salem and Essex arising out of alleged financial mismanagement; 1 and dismissing without prejudice their claims against Salem and Essex arising out of Essex's failure to pay Posner's claims on certain insurance policies issued by Essex. We conclude that the district court generally was correct that it had personal jurisdiction over Salem with respect to the claims arising out of Essex's failure to pay Posner's insurance policy claims but not with respect to Posner's allegations against Salem regarding failure to resolve the bonus dispute or SMC's claims against Salem for mismanagement of Essex. Although the district court correctly decided to dismiss the latter two sets of claims, it erred by dismissing them with, rather than without, prejudice. In addition, the district court should have dismissed the count alleging civil conspiracy against Essex for failure to state a claim upon which relief can be granted. Finally, the district court should not have dismissed the remaining claims due to international abstention but should have stayed them instead.
The complaint set out seven counts, some of which incorporated multiple claims. For clarity, we begin by setting out the correct disposition for each of the claims Plaintiffs presented:
I. Breach of Contract against Essex on the policies: stayed on international abstention
II. Bad Faith Refusal to Pay against Essex on the policies: stayed on international abstention
III. Tortious Interference against Salem on the policies: stayed on international abstention
IV. Breach of Contract against Salem on the bonus: dismissed on personal jurisdiction
V. Breach of Fiduciary Duty against Salem:
a. on the policies: dismissed on personal jurisdiction
b. on the bonus: dismissed on personal jurisdiction
c. on finances: dismissed on personal jurisdiction
VI. Accounting
a. against Salem on finances: dismissed on personal jurisdiction
b. against Essex on finances: stayed on international abstention
VII. Civil Conspiracy
a. against Salem on the policies: dismissed on personal jurisdiction
b. against Essex on the policies: dismissed for failure to state a claim
c. against Salem on the bonus: dismissed on personal jurisdiction
d. against Essex on the bonus: dismissed for failure to state a claim
All dismissals are without prejudice. We affirm in part, reverse in part, and remand to the district court. 2
Essex, a Bermuda insurance corporation, was at the time of the litigation 65% owned by Salem, a Pennsylvania corporation, and 35% owned by SMC, a privately held Maryland corporation with corporate offices in Florida. Victor Posner is the majority shareholder of SMC and a 49% owner of Salem.
The allegations here encompass three separate categories of conduct brought together for the purpose of this lawsuit. The first category involves four homeowner's insurance policies that Posner purchased from Essex in 1991 covering four separate properties in Florida. In 1992, those properties were damaged by Hurricane Andrew, and Posner filed claims for recovery under the policies. At the alleged request of its parent corporation, Salem, Essex denied these claims. Essex then filed a declaratory judgment action in Bermuda seeking a ruling on the validity of the insurance policies issued to Posner. 3
The second category of allegations involves a 1993 shareholder derivative suit brought against Salem and its directors, which resulted in a court-ordered settlement. As part of that settlement, Posner agreed to return an unspecified portion of a bonus he had received from Essex when he was an officer of the corporation. Salem eventually determined that the amount to be repaid was $155,850. Although Posner contested this figure, he contends that he sent a $150,000 check to Essex to be held in escrow pending resolution of the dispute. According to Posner, this money was not held in escrow, and neither Salem nor Essex ever made good faith efforts to resolve the dispute.
The third category of allegations arose from SMC's capital contributions to Essex in 1986 and 1993 in an amount totaling $297,500. In the following years, according to Posner, Essex's financial condition deteriorated significantly under the management of Gus Fornatoro, President of Essex and President and Chief Operating Officer of Salem. This deterioration allegedly operated to the detriment of minority shareholder SMC.
In 1996, Posner and SMC filed this lawsuit against Essex and Salem. In early 1997, Essex and Salem each moved to dismiss the complaint. Salem claimed that the district court lacked personal jurisdiction over it; Essex asserted that the international abstention doctrine compelled the court to dismiss or stay the action. In the alternative, both parties contended that Plaintiffs failed to state claims on some of the counts in the complaint. 4 On Salem's jurisdictional issue, the district court dismissed with prejudice the counts relating to the bonus dispute. 5 With respect to all remaining claims against Salem and all claims against Essex, the district court dismissed the case under the international abstention doctrine. Having disposed of the entire case on one of these two grounds, the district court declined to address Defendants' alternative assertion that Plaintiffs failed to state a claim upon which relief could be granted.
We consider the jurisdictional issue first. 6 A federal court sitting in diversity may properly exercise jurisdiction over a defendant only if two requirements are met: (1) the state long-arm statute, and (2) the Due Process Clause of the Fourteenth Amendment. See Sculptchair, Inc. v. Century Arts Ltd., 94 F.3d 623, 626 (11th Cir.1996). A plaintiff seeking to obtain jurisdiction over a nonresident defendant initially need only allege sufficient facts to make out a prima facie case of jurisdiction. See Electro Eng'g Prods. Co. v. Lewis, 352 So.2d 862, 864 (Fla.1977). The plaintiff bears the burden of proving "by affidavit the basis upon which jurisdiction may be obtained" only if the defendant challenging jurisdiction files "affidavits in support of his position." Venetian Salami Co. v. Parthenais, 554 So.2d 499, 502 (Fla.1989). It is undisputed that Salem challenged Plaintiffs' jurisdictional allegations with an affidavit from one of its officers, David Struth ("the Struth Affidavit") (reproduced as Appendix A, infra) and that Plaintiffs did not produce any evidence to contradict the Struth Affidavit. 7
Despite Plaintiffs' failure to rebut it, we find the Struth Affidavit of little significance to the jurisdictional question. The affidavit primarily explains Salem's corporate structure and status; summarily asserts that Salem never has done business in or directed contacts into Florida; admits certain peripheral connections with the state; and denies in a conclusory way any other actions that would bring Salem within the ambit of the Florida long-arm statute. For example, paragraph five covers three-quarters of a page and contends, by reciting the long-arm statute essentially verbatim, that the jurisdictional statute does not apply to Salem. Such statements, although presented in the form of factual declarations, are in substance legal conclusions that do not trigger a duty for Plaintiffs to respond with evidence of their own supporting jurisdiction. See Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir.1994) (); cf. Benton-Volvo-Metairie, Inc. v. Volvo Southwest, Inc., 479 F.2d 135, 139 (5th Cir.1973) (). The Struth Affidavit's conclusory assertions of ultimate fact are insufficient to shift to the Plaintiffs the burden of producing evidence supporting jurisdiction.
For this reason, we consider only those portions of the Struth Affidavit that set forth specific factual declarations within the affiant's personal knowledge. To the extent such statements in the Struth Affidavit do not contradict Plaintiffs' pleadings, we accept the allegations stated in the complaint as true for purposes of resolving the jurisdictional issue under the requirements of the Florida long-arm statute and the Due Process Clause. See Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir.1990) (...
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