Segregated Account of Ambac Assurance Corp. v. Countrywide Home Loans, Inc.

Decision Date30 June 2017
Docket NumberNo. 2015AP1493,2015AP1493
Citation376 Wis.2d 528,2017 WI 71,898 N.W.2d 70
Parties The SEGREGATED ACCOUNT OF AMBAC ASSURANCE CORPORATION (the "Segregated Account") and Ambac Assurance Corporation ("Ambac"), Plaintiffs-Appellants, v. COUNTRYWIDE HOME LOANS, INC. ("Countrywide"), Defendant-Respondent-Petitioner.
CourtWisconsin Supreme Court

For the defendant-respondent-petitioner, there were briefs filed by Thomas M. Pyper, Lisa M. Lawless, and Husch Blackwell LLP, Madison, with whom on the briefs were Joseph M. McLaughlin and Simpson Thacher & Bartlett LLP, New York. Oral argument by Joseph M. McLaughlin.

For the plaintiffs-appellants, there was a brief filed by Erik H. Monson, Karen M. Gallagher, and Coyne, Schultz, Becker & Bauer, S.C., Madison, with whom on the brief were Barbara A. Neider, Jeffrey A. Mandell, and Stafford Rosenbaum LLP, Madison. Oral argument by Barbara A. Neider.

An amicus curiae brief was filed on behalf of Civil Procedure Law Professors by John Franke and Gass Weber Mullins LLC. Oral argument by John Franke.

An amicus curiae brief was filed on behalf of Wisconsin Manufacturers and Commerce Association and The Chamber of Commerce of the United States of America by Kevin M. St. John and Bell Giftos St. John LLC, Madison, with whom on the brief were Daniel Domenico and Kittredge LLC, Denver.

An amicus curiae brief was filed on behalf of The Coalition for Litigation Justice by Kathryn A. Keppel and Gimbel, Reilly, Guerin & Brown LLP, Milwaukee.


¶1 This case implicates the authority of Wisconsin courts to exercise general jurisdiction over a foreign corporation. Countrywide Home Loans, Inc. petitioned this court for review of an unpublished decision of the court of appeals,1 which held that Countrywide consented to general personal jurisdiction in Wisconsin when it appointed a registered agent pursuant to Wis. Stat. § 180.15072015-16).2 Because the text of § 180.1507 does not even mention jurisdiction, much less consent, Countrywide's compliance with the statute does not, on its own, confer jurisdiction. We therefore hold that compliance with § 180.1507 does not subject Countrywide to general jurisdiction in Wisconsin; accordingly, we reverse the decision of the court of appeals and remand the matter to the court of appeals for further proceedings consistent with this opinion.3


¶2 Countrywide is a New York corporation with its principal place of business in California. Prior to the Great Recession, Countrywide was a leading home mortgage loan insurer, but its home mortgage activity ended after the housing market collapsed. Authorized to do business in Wisconsin since 1986, Countrywide appointed CT Corporation System, a Wisconsin corporation, as its registered agent for service of process in 2014. Prior to commencement of this action, Countrywide did not maintain any offices, employees, or business presence within the state.

¶3 Ambac Assurance Corporation is a Wisconsin corporation with its principal place of business in New York. As an insurer of financial instruments, Ambac issued policies in 2005 insuring against losses stemming from residential mortgage-backed securities containing Countrywide mortgage loans. Neither the policies nor the contracts were negotiated in Wisconsin, but the underlying securities did include mortgage loans made to Wisconsin residents and secured by property here. When many of the mortgage loans underlying the securities defaulted during the Great Recession, the policies obligated Ambac to pay claims worth hundreds of millions of dollars. Because of Ambac's significant liabilities under the policies, the Wisconsin Commissioner of Insurance approved a plan in March 2010 establishing the Segregated Account of Ambac Assurance Corporation. Ambac transferred its policies into the Segregated Account, which now owns the policies. The Segregated Account entered statutory rehabilitation pursuant to Wis. Stat. §§ 645.31 -32,4 and rehabilitation proceedings remain ongoing.5

¶4 Ambac and the Segregated Account6 filed this suit against Countrywide in December 2014 and served CT Corporation System with the summons and complaint in January 2015. The complaint alleged that Ambac incurred substantial liability under the insurance policies only because Countrywide fraudulently misrepresented the quality of the mortgages underlying the securities.7 Countrywide moved to dismiss the complaint for lack of personal jurisdiction. Ambac opposed the motion, arguing that Countrywide consented to general jurisdiction in Wisconsin when it appointed a registered agent under Wis. Stat. §§ 180.1507 and 180.1510.

¶5 Dismissing the complaint for lack of personal jurisdiction, the Dane County Circuit Court8 concluded that Wisconsin courts cannot exercise general jurisdiction over Countrywide.9 The circuit court reasoned that "merely having a registered agent and merely having ... one or two foreclosure actions [does] not make you a resident of this state in the same sense that [anyone] ... from Wisconsin could be sued in Wisconsin and could not be heard to complain." Absent explicit contractual consent, the court determined that "the registered agent and the very modest participation in foreclosure proceedings at the time of the filing ... would not sustain jurisdiction under [ Daimler AG v. Bauman , ––– U.S. ––––, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) ]."

¶6 Ambac appealed, and the court of appeals reversed. Segregated Account of Ambac Assurance Corp. v. Countrywide Home Loans, Inc. , No. 2015AP1493, unpublished slip op., 370 Wis.2d 788, 2016 WL 3448707 (Wis. Ct. App. June 23, 2016) (per curiam). Quoting language from this court's decisions in Punke v. Brody , 17 Wis.2d 9, 115 N.W.2d 601 (1962), and Hasley v. Black, Sivalls & Bryson, Inc. , 70 Wis.2d 562, 235 N.W.2d 446 (1975), the court of appeals held that appointing a registered agent for service of process constituted consent to general jurisdiction in Wisconsin. Segregated Account , unpublished slip op., ¶¶11-13. It therefore agreed with Ambac that, "by maintaining a Wisconsin agent to receive service of process ..., Countrywide ‘subjected’ itself to the ‘general jurisdiction’ of Wisconsin courts, and actually consented to personal jurisdiction." Id. , ¶9. The court of appeals rejected Countrywide's argument that the Supreme Court's Daimler decision either directly or indirectly undermined Punkeand Hasley . Id. , ¶¶18-20. Countrywide filed a petition for review, which we granted.


¶7 Whether Wisconsin courts have personal jurisdiction over a foreign corporation is a question of law we review de novo, although we benefit from the analyses of the circuit court and court of appeals. Rasmussen v. Gen. Motors Corp. , 2011 WI 52, ¶14, 335 Wis.2d 1, 803 N.W.2d 623 (first citing Kopke v. A. Hartrodt S.R.L. , 2001 WI 99, ¶10, 245 Wis.2d 396, 629 N.W.2d 662 ; then citing State v. Aufderhaar , 2005 WI 108, ¶10, 283 Wis.2d 336, 700 N.W.2d 4 ).

A. Personal Jurisdiction over Corporations

¶8 A brief review of personal jurisdiction doctrine places our statutory interpretation question in the appropriate context. Shortly after the adoption of the Fourteenth Amendment to the United States Constitution, the Supreme Court decided Pennoyer v. Neff , 95 U.S. 714, 24 L.Ed. 565 (1878), which tied personal jurisdiction to a defendant's presence within the forum state. At the time, service of process on a defendant within the forum cemented personal jurisdiction. Id. at 722-24. This territorial approach, however, limited jurisdiction over corporations; because corporations were not people, their "presence" within a forum state was statutorily defined by the legislature. In most forums, corporations were subject to suit only if incorporated in that state. Cf. State ex rel. Drake v. Doyle , 40 Wis. 175, 197 (1876) ("The corporation, being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created." (quoting Paul v. Virginia , 75 U.S. (8 Wall.) 168, 19 L.Ed. 357 (1869) )); see also Bank of Augusta v. Earle , 38 U.S. (13 Pet.) 519, 588, 10 L.Ed. 274 (1839) ("[A] corporation can have no legal existence out of the boundaries of the sovereignty by which it is created. It exists only in contemplation of law, and by force of the law; and where that law ceases to operate, and is no longer obligatory, the corporation can have no existence.").

¶9 Consequently, foreign corporations could be immune from suit, even if they carried out significant operations within a state. Registration statutes thus arose in part to permit the exercise of jurisdiction over foreign corporations. See Morris & Co. v. Skandinavia Ins. Co. , 279 U.S. 405, 408-09, 49 S.Ct. 360, 73 L.Ed. 762 (1929) ("The purpose of state statutes requiring the appointment by foreign corporations of agents upon whom process may be served is primarily to subject them to the jurisdiction of local courts in controversies growing out of transactions within the State."). The corporation's in-state agent satisfied Pennoyer 's local presence requirement, and some courts discovered an implicit "consent" to personal jurisdiction within the appointment of the agent. See Burnham v. Super. Ct. of Cal. , 495 U.S. 604, 617-18, 110 S.Ct. 2105, 109 L.Ed.2d 631 (1990) (plurality).

¶10 In 1945, however, the Supreme Court decided International Shoe Co. v. Washington , 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), dispensed with the "purely fictional" notions of implied consent and presence-by-agent, and redirected personal jurisdiction doctrine away from the territorial approach that prevailed under Pennoyer . Burnham , 495 U.S. at 618, 110 S.Ct. 2105 (plurality). Two categories of personal jurisdiction have emerged since then. A corporation may be subject to personal jurisdiction in a forum state under a theory of "specific jurisdiction" if it has "certain minimum contacts with [the forum]...

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