Sirius America Ins. Co. v. Scpie Indem. Co., 05Civ.7923 (BSJ)(GWG).
| Citation | 461 F.Supp.2d 155 |
| Decision Date | 01 November 2006 |
| Docket Number | No. 05Civ.7923 (BSJ)(GWG).,05Civ.7923 (BSJ)(GWG). |
| Parties | SIRIUS AMERICA INSURANCE COMPANY, Plaintiff, v. SCPIE INDEMNITY COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Michael H. Goldstein, Mound Cotton Wollan & Greengrass, New York City, for Plaintiff.
David John McLean, Latham & Watkins LLP, Newark, NJ, for Defendant.
After having reviewed Magistrate Judge Gabriel W. Gorenstein's Report and Recommendation dated September 13, 2006, and having received no objections thereto, I hereby confirm and adopt the Report in its entirety, having been satisfied that there is no clear error on the face of the record. See Nelson v. Smith, 618 F.Supp. 1186, 1189 (S.D.N.Y.1985). Accordingly, Defendant SCPIE Indemnity Company's motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) is DENIED.
SO ORDERED.
REPORT AND RECOMMENDATION
On August 12, 2005, plaintiff Sirius America Insurance Company ("Sirius") filed a motion for summary judgment in lieu of a complaint in the Supreme Court of the State of New York, New York County. The motion alleged that defendant SCPIE Indemnity Company ("SCPIE") had failed to make payment to Sirius that SCPIE had guaranteed under a reinsurance agreement between Sirius and American Health care Indemnity Company ("AHI"). SCPIE removed the action to this Court and now moves to dismiss under Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. For the following reasons, SCPIE's motion should be denied.
The following facts are taken from the motion papers Sirius filed in state court to commence their action. We assume them to be true for purposes of the motion to dismiss.
On April 1, 2002, Sirius and AHI entered into a Bond Quota Share Reinsurance Agreement ("Share Agreement") pursuant to which AHI agreed to pay 25% of the losses and loss adjustment expenses paid by Sirius in connection with a program of criminal bail bond business managed by Capital Bonding Corporation, Inc. See Affidavit of Jean Marie Cho in Support of Summary Judgment in Lieu of Complaint, dated Aug. 11, 2005 ("Cho Aff."), ¶ 3. Prior to entering into the Share Agreement, Sirius had entered into a "Guarantee Agreement." Under this agreement, SCPIE had guaranteed "any and all sums payable to [Sirius] by AHI in accordance with the terms of any contract of Reinsurance entered into between [AHI and Sirius]." Guarantee Agreement ("Guarantee Agreement"), ¶ 2.
As of the date of Sirius's motion for summary judgment, AHI owed Sirius $1,018,304 in losses and loss adjustment expenses under the Share Agreement. AHI has refused to pay any of that amount. See Cho Aff. ¶ 6. On July 13, 2005, counsel for Sirius sent a letter to SCPIE demanding that it honor the terms of the Guarantee Agreement and pay the money owed to Sirius by AHI. On July 26, 2005, counsel for SCPIE responded by rejecting Sirius's demand. See Cho Aff. ¶ ¶ 7-8.
On August 12, 2005, Sirius filed in New York County Supreme Court a summons and motion for summary judgment in lieu' of a complaint, as is permitted by New York Civil Practice Law and Rules ("C.P.L.R.") § 3213. See Notice of Motion, filed Aug. 12, 2005 ; Cho Aff.; Plaintiffs Memorandum of Law in Support of Summary Judgment in Lieu of Complaint, filed Aug. 12, 2005 ("Pl.Mem."). Sirius alleged that SCPIE was subject to personal jurisdiction in the New York courts pursuant to C.P.L.R. § 302(a)(1). See Cho Aff. ¶ 10.
On September 12, 2005, SCPIE filed a notice of removal, removing the action to this Court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. See Removal Not. On September 19, 2005, SCPIE moved to dismiss the action for lack of personal jurisdiction. See Notice of Motion to Dismiss for Lack of Personal Jurisdiction, filed Sept. 19, 2005 (Docket # 4) ("Def.Mot."); Declaration of Timothy C. Rivers, dated Sept. 16, 2005 (attached to Def. Mot.) ("Rivers Decl."); Memorandum of Law in Support of Defendant SCPIE Indemnity Company's Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2), dated Sept. 19, 2005 (attached to Def. Mot.) ("Def.Mem.").
On October 4, 2005, Sirius filed opposition papers. See Memorandum of Law of Sirius America Insurance Company in Opposition to SCPIE Indemnity Company's Motion to Dismiss, filed Oct. 4, 2005 (Docket # 5) ("Pl.Opp."); Declaration of Jean Marie Cho, filed Oct. 4, 2005 (Docket # 6) ("Cho Decl."). On October 14, 2005, SCPIE filed its reply. See Reply Memorandum of Law in Further Support of Defendant SCPIE Indemnity Company's Motion to Dismiss Pursuant to Fed. R.Civ.P. 12(b)(2), filed Oct. 14, 2005 (Docket # 8) ("Def.Reply"). Sirius sent a surreply letter to the Court. See Letter from Michael H. Goldstein, dated Oct. 28, 2005 ("Pl.Sur-Reply"). The matter was referred for Report and Recommendation on July 13, 2006.
SCPIE argues that it is not subject to personal jurisdiction under C.P.L.R. § 302(a)(1), and further that any assertion of personal jurisdiction would violate due process because the requisite "minimum contacts" with the forum are absent. See Def. Mem. at 2-6.
The Guarantee Agreement executed by Sirius and SCPIE states in its entirety:
1. This Guarantee is given by SCPIE Indemnity Company, Los Angeles, CA (SCPIE) in favor of Sirius America Insurance Company, New York, N.Y. (Ceding Company) in consideration of the Ceding Company entering into contract(s) of Reinsurance described in clause 2 with American Health care Indemnity Company, Los Angeles, CA (AHI).
2. SCPIE hereby unconditionally and irrevocably guarantees any and all sums payable to the Ceding Company by AHI in accordance with the terms of any contract of Reinsurance entered into between AHI and the Ceding Company from January 1, 2002 to the date of the anniversary of this Guarantee.
3. This Guarantee will be renewed on the anniversary date hereof [for] successive periods of twelve (12) twelve months unless SCPIE gives the Ceding Company ninety (90) days written notice of its intention not to renew. Not withstanding the foregoing, it is understood and agreed that this Guarantee shall remain in full force and effect until all sums owing under any contract of Reinsurance entered into between AHI and the Ceding Company shall have been fully paid or discharged.
4. The maximum sum payable under this Guarantee shall at all times equal the sum of the limits of all unexhausted contracts of Reinsurance entered into by AHI and the Ceding Company.
5. This Guarantee shall be payable by SCPIE on the Ceding Company's first written demand without any or all of the Ceding Company's legal remedies against AHI having first been pursued.
6. Written notices served in accordance with this Guarantee by the Ceding Company or by SCPIE shall be served by Fax or Certified Mail to the numbers or postal addresses set forth below.
7. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflict of law.
See Guarantee Agreement. The agreement was signed by both parties in February 2002. As contemplated by paragraph 6, each party listed an address and fax number. The following was the information listed for Sirius:
Sirius American Insurance Company
375 Park Avenue, Suite 2107
SCPIE listed an address in Los Angeles, California. Id.
SCPIE is a California corporation, is not licensed to do business in New York, and has not maintained any offices or employees in New York. See Rivers Decl. ¶ ¶ 2, 5. Timothy C. Rivers, a Senior Vice President of SCPIE during the pertinent period, executed the Guarantee Agreement on SCPIE's behalf on February 4, 2002, in Summit, New Jersey, see Rivers Decl. ¶ ¶ 1, 3. He then "sent the Guarantee, which I also had drafted in New Jersey, to the office of Maiden Lane Intermediaries USA, Inc. ("MLI") at 600 West Germantown Pike, Suite 270, Plymouth Meeting, Pennsylvania 19462." See id. ¶ 3. MLI in turn forwarded the Guarantee Agreement on February 8, 2004, to Sirius at its New York address for execution. Cho Decl. ¶ 14. Rivers states that See Rivers Decl. ¶ 4.
New York is the only jurisdiction in which Sirius has maintained an office during the relevant events. Cho Decl. ¶ 13.
Sirius contends that SCPIE's motion should be denied because it waived any defense of lack of personal jurisdiction it may have had by removing the action to this Court prior to moving to dismiss. See Pl. Opp. at 4-6. While this proposition is supported by the case cited by Sirius, Lomaglio Assocs. v. LBK Mktg. Corp., 876 F.Supp. 41 (S.D.N.Y.1995), the holding in Lomaglio was in contravention of Supreme Court law. See, e.g., Cain v. Commercial Publishing Co., 232 U.S. 124, 133, 34 S.Ct. 284, 58 L.Ed. 534 (1914) (); accord Morris & Co. v. Skandinavia Ins. Co., 279 U.S. 405, 409, 49 S.Ct. 360, 73 L.Ed. 762 (1929) ( ) (citations omitted). Moreover, the proposition accepted in Lomaglio was rejected by the Second Circuit the following year in Cantor Fitzgerald, L.P. v. Peaslee, 88 F.3d 152,...
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