Safeco Ins. Co. of America v. Miller

• Decision Date: 01 August 1984
• Docket Number: Civ. No. Y-83-3432.
• Citation: 591 F. Supp. 590
• Parties: SAFECO INSURANCE COMPANY OF AMERICA v. Ronald H. MILLER.
• Court: U.S. District Court — District of Maryland

591 F. Supp. 590

SAFECO INSURANCE COMPANY OF AMERICA v. Ronald H. MILLER.

Civ. No. Y-83-3432.

United States District Court, D. Maryland.

August 1, 1984.

Albert D. Brault, Rockville, Md., and Jerome V. Bales, Overland Park, Kan., for plaintiff.

C. Bruce Works, Topeka, Kan., and William C. Staley, Rockville, Md., for defendant.

MEMORANDUM

JOSEPH H. YOUNG, District Judge.

The plaintiff, an insurance company incorporated and headquartered in the state of Washington, has filed this declaratory judgment action against Ronald H. Miller, a resident of Kansas at the time of filing, asking this Court to rule on the limits of a disputed portion of the defendant's insurance coverage. Before the Court are the defendant's motion to dismiss or to transfer and the plaintiff's motion for summary judgment.

FACTUAL BACKGROUND

Certain facts are undisputed. In 1969, the defendant, then a resident of Maryland, applied for and received an automobile insurance policy issued by the plaintiff through a Maryland insurance agent, the Kirkman Insurance Company of Gaithersburg. The defendant renewed the policy semi-annually by paying the premiums required by the plaintiff.

In March, 1982, the defendant was temporarily reassigned by his employer to Topeka, Kansas. The defendant moved to Topeka, but his family remained in Gaithersburg. Sometime in the spring of 1982, the plaintiff mailed the premium notice for the period from April 27, 1982, through October 27, 1982, to the defendant's address in Gaithersburg, and the premium was paid.

In June, 1982, the defendant moved his family to Topeka, presumably because his temporary assignment became permanent. On June 1, 1982, the defendant called his insurance agent, A. Gwinn Kirkman, and informed him that he would be moving to Kansas. The defendant maintains that, during the telephone conversation, Kirkman informed him that "he didn't think there was any significant difference in the laws between Kansas and Maryland to require Miller to transfer his policy immediately" (Defendant's Opposition to Plaintiff's Motion for Summary Judgment, "Statement of Disputed Facts," Doc. No. 16, at ¶ 1). The defendant, however, maintains that "Mr. Kirkman urged Mr. Miller to get in touch with a Kansas agent in order to determine whether or not he needed to change his insurance" (Plaintiff's Memorandum in Support of Motion for Summary Judgment, Doc. No. 15, at p. 2). In July, the defendant informed Kirkman of his new address in Kansas, and the plaintiff issued a "change of address" form to the defendant which reflected this new address, effective July 29, 1982.

On August 31, 1982, the plaintiff sent the defendant a notice informing him that his insurance policy would be canceled effective October 27, 1982, because of his move from Maryland to Kansas. The defendant applied for and was issued a new Safeco auto insurance policy by a Kansas agent, to become effective after the expiration of the one issued by the Maryland insurance agent. However, two days before the expiration of the Maryland policy, the defendant was seriously injured while riding in a car driven by a fellow employee just south of Topeka (it appears from the police report that the driver fell asleep at the wheel). The defendant claims damages amounting to more than $850,000 from the accident. The driver of the car was insured to a maximum of $50,000 for personal injury liability.

The plaintiff argues that it is not liable to the defendant, since the driver's maximum for personal liability exceeded the $20,000 maximum per person recovery under the "underinsured and uninsured" provisions of the policy issued in Maryland. The defendant maintains that Kansas law requires that insurance agents offer those purchasing automobile insurance the opportunity to reject coverage for un- and under-insured motorists equivalent to the amount of personal injury liability coverage included in the policy. Because the original Maryland policy issued by the plaintiff contains $300,000 worth of personal injury liability coverage, the defendant contends, Safeco should have offered the defendant the opportunity to accept or reject coverage for underinsured motorists in that amount, and since it did not, the policy is presumed, under Kansas law, to include that coverage for $300,000.

For reasons that will become apparent, the chronology of the litigation generated by this dispute is also relevant. This declaratory judgment action was filed in this Court September 29, 1983. The plaintiff's attempt to serve the defendant by mail failed, for reasons which are not apparent. At some point before the plaintiff here was able to effect service, the defendant filed an action in Kansas state court against the driver of the vehicle and against Safeco (although the date that action was filed is unclear, documents attached to the defendant's motion to dismiss, Doc. No. 6, Exhibit B, indicate that process in the Kansas case was served on October 31, 1983). Service in the action before this Court was perfected November 9, 1983.

PRELIMINARY MATTERS

One of the grounds stated in the defendant's motion to dismiss now before this Court is that the plaintiff, Safeco Insurance Companies, is an improper party to this action, since the policy was issued by the Safeco Insurance Company of America, a separate corporate entity. The plaintiff has moved to amend its complaint by interlineation to substitute the appropriate corporate party. The defendant has opposed this motion, claiming that he would be prejudiced, but gives no particulars.

Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend a pleading shall be "freely given when justice so requires." In this instance, the plaintiff seeks to substitute a company that is a member of the plaintiff named in the complaint, a corporation consisting of a group of insurance companies. No prejudice has been shown or is readily apparent, and the motion to amend will be granted. The name of the plaintiff shall be amended to "Safeco Insurance Company of America," and this amendment shall relate back to the filing of this action.

JURISDICTION

Several of the defendant's arguments for dismissing this case may be summarily dispensed with. The defendant argues that the case should be dismissed or that return of service should be quashed because the defendant was improperly served. As the plaintiff points out, the defendant does not explain why process was not properly served, and a review of the file indicates that process was, in fact, properly served. The defendant also claims that this Court lacks subject-matter jurisdiction. However, diversity of the parties has been established and more than $10,000 is at issue, so subject-matter jurisdiction lies in this Court. The defendant also claims that the complaint must be dismissed because his insurance policy was with the Safeco Insurance Company of America, not the named plaintiff (Safeco Insurance Companies). This problem has been resolved by the amendment mentioned above.

The first claim that need be addressed in detail is the defendant's claims that the Court lacks personal jurisdiction over him, because he is a resident of Kansas lacking the requisite personal contacts with this District. The plaintiff contends that this Court has personal jurisdiction under the Maryland "long-arm" statute, Md.Cts. and Jud.Proc. Code Ann., § 6-103 (1984), which provides (in relevant part):

(a) Condition. — If jurisdiction over a person is based solely upon this section, he may be sued only on a cause of action arising from any act enumerated in this section.

(b) In general. — A Court may exercise personal jurisdiction over a person who directly or by an agent:

(1) Transacts any business or performs any character of work or service in the State ...

The question of personal jurisdiction over the defendant is to be decided under the law of the forum state. Midland Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 901 (2d Cir.1981).

As noted by the Maryland Court of Appeals in Geelhoed v. Jensen, 277 Md. 220, 224, 352 A.2d 818 (1975), analyzing personal jurisdiction under a long-arm statute is a two-step process, where the Court must first determine whether "the statute purports to authorize the assertion of personal jurisdiction," and secondly decide "whether an exercise of jurisdiction permitted by the statute violates the Due Process Clause of the Fourteenth Amendment." These inquiries merge under the Maryland long-arm statute, however, since,

as noted repeatedly in the cases, the long arm statute represents an effort by the Legislature to expand the boundaries of permissible in personam jurisdiction to the limits permitted by the Federal Constitution. Id.

In this case, the defendant has two significant links with Maryland. First, he was a domiciliary of this state at the time the contract (the insurance policy effective April 27 through October 27, 1982) was made. And secondly, the contract was made and was expected to be performed in this state. The first link would appear to satisfy the requirements necessary for a state to exercise "general" jurisdiction over the defendant, that is, jurisdiction in cases whose subject matter is not related to the defendant's contacts with the forum state. See Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 447, 72 S.Ct. 413, 419, 96 L.Ed. 485 (1952). As stated in Geelhoed v. Jensen, supra,

One who resides in a state necessarily avails himself of the benefits and protections of its laws. The taking up of residence is, in fact, the quintessential act by which one avails himself of the privilege of conducting activities in the state. 277 Md. at 231, 352 A.2d 818.

But even if this first connection between Maryland and the defendant was insufficient, for "specific jurisdiction" to lie (See J. Martin, Conflict of Laws (1978) at 522), there need be only "minimum contacts" between the defendant and the forum with regard to the cause of action...