Reassure America Life Ins. Co. v. Midwest Res.

• Decision Date: 14 June 2010
• Docket Number: Civil Action No. 09-5590.
• Citation: 721 F.Supp.2d 346
• Parties: REASSURE AMERICA LIFE INSURANCE COMPANY, Plaintiff, v. MIDWEST RESOURCES, LTD., Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

721 F.Supp.2d 346

REASSURE AMERICA LIFE INSURANCE COMPANY, Plaintiff,

v.MIDWEST RESOURCES, LTD., Defendant.

Civil Action No. 09-5590.

United States District Court,E.D. Pennsylvania.

June 14, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Lawrence R. Scheetz, Jr., Stephen C. Baker, Drinker Biddle & Reath LLP, Philadelphia, PA, for Plaintiff.

William J. Murray, Jr., Vaira and Riley, P.C., Stephen C. Baker, Drinker Biddle & Reath LLP, Philadelphia, PA, for Defendant.

Memorandum

YOHN, District Judge.

Plaintiff, Reassure America Life Insurance Company (“Reassure”), brings this declaratory judgment action to determine its obligation to pay out benefits on a life insurance policy on the life of Samuel L. Miller, who transferred his interest in the policy to defendant, Midwest Resources, Ltd. (“Midwest”), in 2001. Defendant moves to dismiss the complaint due to lack of personal jurisdiction and venue, or, in the alternative, to transfer the action to the Northern District of Illinois, where defendant has its principal place of business.

I conclude that defendant purposefully directed its activities at this district by purchasing an interest in the insurance policy that is the subject of this action, which was issued in Pennsylvania and insured the life of a Pennsylvania resident, and by maintaining subsequent contacts with Pennsylvania residents in furtherance of its interest in the policy. As a result, defendant is subject to personal jurisdiction in this district for the purposes of this action. I further conclude that venue is proper in this district pursuant to 28 U.S.C. § 1441(a), which governs venue for removal actions, because the action was removed from a state court located in this district. Even if venue were governed by 28 U.S.C. § 1391(a), which concerns venue for diversity actions initially brought in federal court, venue would be proper because defendant is subject to personal jurisdiction, and therefore resides for venue purposes, in this district and because a substantial part of the events giving rise to plaintiff's claim occurred in this district. Moreover, defendant's interest in transferring this action to the Northern District of Illinois does not clearly outweigh other considerations that favor retention of this action in this district such as the convenience of plaintiff's key witness and Pennsylvania's public policy interest in regulating life insurance policies issued in this state. I will therefore deny defendant's motion to dismiss or transfer this action.

I. Factual Background

For the purposes of this motion, the following facts are not disputed.

On November 6, 2000, Miller applied for a $1 million life insurance policy with The Midland (“Midland”), plaintiff's predecessor in interest. (Compl. ¶ 7; id. Ex. A at 9.) ¹ At the time, Miller was seventy-five years old and had three existing life insurance policies with face values totaling $450,000. ( Id. ¶¶ 8, 11.) Miller disclosed in the Midland application that he had four pending applications for life insurance policies with face values totaling $4 million. ( Id. ¶ 12.) Miller further disclosed in the Midland application that he had a net worth of $1.4 million and had an annual unearned income of $85,000. ( Id. ¶¶ 14-15.)

Miller amended his application to Midland on December 8, 2000, decreasing the face amount of the requested policy to $500,000 and changing the intended beneficiary from the “Samuel W. Miller Irrevocable Trust” to the “Samuel W. Miller Revocable Trust.” ( Id. ¶¶ 16-18.) That day, Midland issued a $500,000 life insurance policy (the “Miller Policy”) to Miller. ( Id. ¶ 19.)

In April 2001, Miller contacted Darlene Erlandsen, the CEO of defendant, offering to sell the Miller Policy. (Erlandsen Aff. ¶¶ 8-9.) Miller had previously sold his interest in another $200,000 insurance policy on his life to Beneficial Assistance, Inc. on April 25, 2000-only months before his initial application to Midland-for $27,500. (Compl. ¶ 5.) According to Erlandsen, the negotiations over the sale of the Miller Policy were very brief and were conducted exclusively over the telephone. (Erlandsen Aff. ¶ 10.) Erlandsen was located at the time at defendant's only office, which is in Elgin, Illinois. ( Id. ¶ 3.)

After the negotiations were complete, Erlandsen mailed a “settlement offer” to Miller's address in Ambler, Pennsylvania, offering to pay $12,155 for the Miller Policy. (Pl.'s Opp'n Ex. C.) The offer was contingent on receipt of numerous documents outlined in the offer letter. ( Id.)

On May 16, 2001, Miller executed a sales agreement transferring his interest in the Miller Policy to defendant. ( Id. Ex. D.) He also executed on that same date a “Release and Consent to Change Beneficiary of Life Insurance Policy” ( id. Ex. E) and an authorization for release of medical information to defendant ( id. Ex. F). All three documents were executed in Montgomery County, Pennsylvania, and were either notarized by a Pennsylvania notary or witnessed by Pennsylvania residents. In addition, Miller's wife, Patricia Miller, executed on that same date a consent to change of beneficiary, which was also executed and notarized in Montgomery County, Pennsylvania. ( Id. Ex. H.) Miller requested that defendant deposit its payment for the Miller Policy directly into his account at a bank in Dresher, Pennsylvania. ( Id. Ex. G.)

After purchasing Miller's interest in his life insurance policy, defendant continued to contact Miller about twice each year in order to verify his contact information and that of his treating physician. ( Id. Ex. I.) Miller was also contractually obligated to name three individuals who would agree to notify defendant upon his death. ( Id. Ex. J.)

Miller passed away on January 13, 2009. (Compl. ¶ 25.) Defendant submitted a claim for benefits to plaintiff on February 26, 2009. ² ( Id. ¶ 26.) Upon receipt of the claim for benefits, plaintiff unsuccessfully attempted to interview Mrs. Miller, who continues to reside in Ambler, Pennsylvania, in order to ascertain whether Miller “knowingly and willingly procured the Miller Policy for the purpose of selling it to a stranger investor who did not have an insurable interest in his life” as part of a “STOLI” ³ scheme. ( Id. ¶¶ 27-32; Pl.'s Surreply 4.) Plaintiff contends that if Miller obtained the policy with the intention of selling his interest to defendant, the policy would be void ab initio under Pennsylvania law. ( See Pl.'s Opp'n 1.) Unable to determine informally whether the policy was valid, plaintiff sued defendant for declaratory judgment in the Montgomery County Court of Common Pleas. ⁴

Defendant removed the action to this court and now moves to dismiss or, alternatively, to transfer for improper venue. Defendant alleges that it is an Illinois corporation, that it has never maintained an office in Pennsylvania or solicited business from Pennsylvania residents, and that it “has not purchased any other life insurance policies from any resident of Pennsylvania.” (Erlandsen Aff. ¶¶ 4-7, 14.) Defendant further alleges that no representative of defendant traveled to Pennsylvania to conduct business relating to the Miller life insurance policy, that it paid all premiums on the Miller policy to Midland in Illinois and to plaintiff in Indiana, and that all of its business dealings with Midland and Reassure took place outside of Pennsylvania. ( Id. ¶¶ 10, 12-13.)

II. Standard of Review A. Personal Jurisdiction

Once a defendant has objected to personal jurisdiction, “the burden falls upon the plaintiff to come forward with sufficient facts to establish that jurisdiction is proper.” Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir.1992). “The plaintiff meets this burden ... by ‘establishing with reasonable particularity sufficient contacts between the defendant and the forum state.’ ” Id. (quoting Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Assoc., 819 F.2d 434, 437 (3d Cir.1987)). A motion contesting personal jurisdiction is “inherently a matter which requires resolution of factual issues outside the pleadings” and plaintiff must establish jurisdictional facts “through sworn affidavits or other competent evidence.” Time Share Vacation Club v. Atl. Resorts, Ltd., 735 F.2d 61, 66 n. 9 (3d Cir.1984). Nevertheless, the court “must accept all of the plaintiff's allegations as true and construe disputed facts in favor of the plaintiff.” Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 142 n. 1 (3d Cir.1992).

B. Venue

When a defendant moves for dismissal of a plaintiff's claims under Federal Rule of Civil Procedure 12(b)(3), it bears the burden of proving that venue is improper. Myers v. Am. Dental Ass'n, 695 F.2d 716, 724-25 (3d Cir.1982). In general, when federal jurisdiction is based on diversity, venue is proper in “(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.” 28 U.S.C. § 1391(a). For actions removed from state court, however, venue is governed by 28 U.S.C. § 1441(a), which requires that such actions be removed to “the district court of the United States for the district and division embracing the place where [the state court] action is pending.” See Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 665-66, 73 S.Ct. 900, 97 L.Ed. 1331 (1953).

Even if venue is properly laid in the district where an action is pending, “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.”...