Sonoco Prods. Co. v. ACE Ina Ins.

• Decision Date: 11 July 2012
• Docket Number: Civil Action No. 4:11–cv–02366–RBH.
• Citation: 877 F.Supp.2d 398
• Court: U.S. District Court — District of South Carolina
• Parties: SONOCO PRODUCTS COMPANY and Sonoco Canada Corporation, Plaintiffs, v. ACE INA INSURANCE, ACE American Insurance Company, National Union Fire Insurance Company of Pittsburgh d/b/a Chartis Insurance, Westport Insurance Corporation d/b/a Industrial Risk Insurers, and Munich Reinsurance America, Inc., Defendants.

877 F.Supp.2d 398

SONOCO PRODUCTS COMPANY and Sonoco Canada Corporation, Plaintiffs,

v.ACE INA INSURANCE, ACE American Insurance Company, National Union Fire Insurance Company of Pittsburgh d/b/a Chartis Insurance, Westport Insurance Corporation d/b/a Industrial Risk Insurers, and Munich Reinsurance America, Inc., Defendants.

Civil Action No. 4:11–cv–02366–RBH.

United States District Court,

D. South Carolina,

Florence Division.

July 11, 2012.

Sarah Spruill, Haynsworth Sinkler Boyd, Columbia, SC, Thomas Chester Hildebrand, Jr., Haynsworth Sinkler Boyd, Charleston, SC, for Plaintiffs.

Brian James Kern, Robert H. Hood, Robert H. Hood, Jr., Hood Law Firm, Charleston, SC, Sean P. Mahoney, Thomas Scott Brown, Gibbons PC, Philadelphia, PA, for Defendants.

ORDER

R. BRYAN HARWELL, District Judge.

Plaintiffs Sonoco Products Company (“Sonoco Products”) and Sonoco Canada Corporation (“Sonoco Canada”) (collectively, “Plaintiffs”) filed this lawsuit alleging that Defendants, various insurance companies, failed to insure Plaintiffs for a loss covered under two separate polices. This matter is before the Court on Defendants' Motion to Dismiss, which seeks the dismissal of Defendant ACE INA Insurance (“ACE INA”) under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(5), and seeks the dismissal of the entire action pursuant to the doctrine of forum non conveniens. For the reasons stated below, Defendants' Motion to Dismiss is granted in part and denied in part. Specifically, ACE INA is dismissed from this action for lack of personal jurisdiction, while the remaining Defendants' request to dismiss this case on the ground of forum non conveniens is denied.¹

Background

Sonoco Products is a South Carolina corporation, while Sonoco Canada is a Canadian corporation. Sonoco Canada, a subsidiary of Sonoco Products, is a corporate entity separate and apart from its parent corporation. According to the Complaint, Sonoco Products is a global supplier of industrial and consumer packaging. Sonoco has facilities located in several foreign countries, including the Sonoco Canada Trent Valley Mill facility in Toronto, Canada, where the loss at issue occurred.

Each year from its South Carolina headquarters, Sonoco Products solicits property insurance to cover its global operations. It does so by means of one submission for insurance coverage which provides an explicit set of terms and conditions. The submission contemplates that one carrier will be the lead, or fronting insurer, for a worldwide policy, and that other carriers will be bound to a participation share and will follow the fortunes of the fronting insurer. The submission goes on to provide that the fronting insurer is responsible for procuring local policies in certain countries, including Canada, where Sonoco subsidiaries do business.

As formulated, the insurance program consisted of a U.S. Master Policy (“Master Policy”) and numerous locally admitted policies issued in certain foreign countries. Therefore, certain international property, such as the Trent Valley Mill where the loss at issue occurred, is covered under both the Master Policy and a separate locally admitted policy originating from the country in which the property is located.

Based on Sonoco Products' submission, ACE American Insurance Company (“ACE American”), a corporation headquartered outside of South Carolina, submitted a proposal to front the property insurance program to Sonoco Products for 2010–11, the coverage year at issue. Sonoco Products ultimately reached an agreement with ACE American, who in turn became the fronting insurer for the Master Policy. As the fronting insurer, ACE American arranged for ACE INA to issue policy No. ST02810 to Sonoco Canada (the “Canadian Policy”). The only parties to the Canadian Policy were Sonoco Canada and ACE INA. Although ACE INA is an affiliate of ACE American, it is a distinct corporate entity located in Canada and organized under Canadian law.

On July 16, 2010, a roof collapsed at Sonoco Canada's Trent Valley Mill. Because the Canadian property was insured under both the Master Policy and the Canadian Policy, both Sonoco Products and Sonoco Canada made a claim under their respective policies. The insurers that issued the Master Policy, fronted by ACE American, denied all claims under that policy. ACE INA also denied Sonoco Canada's claims under the Canadian Policy.

On July 15, 2011, Sonoco Products and Sonoco Canada ultimately filed the lawsuit at issue in South Carolina state court, alleging claims against ACE INA relating to the Canadian Policy, and claims against the remaining Defendants as insurers of the Master Policy. Defendants removed the action to this Court on September 20, 2011. Sometime after Plaintiffs filed their lawsuit in state court, ACE INA filed a separate lawsuit in a Canadian court, seeking a declaration of its rights and obligations under the Canadian Policy as against Sonoco Canada.

Discussion

Defendants have moved to dismiss ACE INA for lack of jurisdiction and lack of service of process, and have moved to dismiss the case as to all Defendants on the basis of forum non conveniens. This Court will begin by discussing the Motion to Dismiss as it relates to ACE INA.

I. Dismissal is appropriate as to ACE INA

This Court lacks personal jurisdiction over Defendant ACE INA. Further, even if this Court were able to exercise personal jurisdiction, the doctrine of forum non conveniens would nonetheless require dismissal of the claims against ACE INA.

A. Personal jurisdiction

1. Standard of review

When a court's personal jurisdiction is properly challenged by motion under Federal Rule of Civil Procedure 12(b)(2), the jurisdictional question thereby raised is one for the judge, with the burden on the plaintiff ultimately to prove grounds for jurisdiction by a preponderance of the evidence. Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.1993) (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989); Dowless v. Warren–Rupp Houdailles, Inc., 800 F.2d 1305, 1307 (4th Cir.1986)). “Yet when, as here, the district court decides a pretrial personal jurisdiction dismissal motion without an evidentiary hearing, the plaintiff need prove only a prima facie case of personal jurisdiction.” Id. (citing Combs, 886 F.2d at 676). “In deciding whether a plaintiff has proven a prima facie case of personal jurisdiction, a court may consider all parties' “pleadings, affidavits, and other supporting documents presented to the court” and must construe them “in the light most favorable to plaintiff, drawing all inferences [and] resolving all factual disputes in his favor,” and “assuming[plaintiff's] credibility.” Masselli & Lane, PC v. Miller & Schuh, PA, No. 99–2440, 2000 WL 691100, at *1 (4th Cir. May 30, 2000); Mylan Labs., 2 F.3d at 62;Combs, 886 F.2d at 676. A court, however, need not “credit conclusory allegations or draw farfetched inferences.” Masselli, 2000 WL 691100, at *1 (quoting Ticketmaster–New York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir.1994)). A plaintiff must also base his claim for personal jurisdiction “on specific facts set forth in the record.” Magic Toyota, Inc. v. Se. Toyota Distribs., Inc., 784 F.Supp. 306, 310 (D.S.C.1992).

Although personal jurisdiction over an out-of-state defendant may be either general or specific, Plaintiffs allege only specific jurisdiction in this case. [Pls.' Resp., Doc. # 6, at 7.] A court may exercise specific jurisdiction when “the out-of-state defendant engage[s] in some activity purposely aimed toward the forum state and ... the cause of action arise[s] directly from that activity.” ESAB Group, Inc. v. Centricut, LLC, 34 F.Supp.2d 323, 331–32 (D.S.C.1999); seeS.C. Code Ann. § 36–2–803. Minimal, isolated or unsolicited contacts, however, do not give rise to the required purposeful connection between an out of state defendant and the forum state. Umbro USA, Inc. v. Goner, 825 F.Supp. 738, 741 (D.S.C.1993).

A district court may exercise personal jurisdiction “if (1) an applicable state long-arm statute confers jurisdiction and (2) the assertion of that jurisdiction is consistent with constitutional due process.” Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1199 (4th Cir.1993). The Supreme Court of South Carolina has interpreted South Carolina's long-arm statute, S.C. Code Ann. § 36–2–803, to extend to the outer limits of Fourteenth Amendment due process. Foster v. Arletty 3 Sarl, 278 F.3d 409, 414 (4th Cir.2002). “Because South Carolina treats its long-arm statute as coextensive with the due process clause, the sole question becomes whether the exercise of personal jurisdiction would violate due process.” Cockrell v. Hillerich & Bradsby Co., 363 S.C. 485, 491, 611 S.E.2d 505, 508 (2005).

The Due Process Clause is satisfied for personal jurisdiction purposes if a defendant has “purposefully availed itself of the privilege of conducting business in the forum state” by establishing sufficient “minimum contacts” “such that maintenance of the suit does not offend traditional notions of “fair play and substantial justice.” Burger King v. Rudzewicz, 471 U.S. 462, 475–76, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). A defendant has sufficient minimum contacts with a state when “the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” Woodson, 444 U.S. at 297, 100 S.Ct. 559.

The Fourth Circuit has synthesized the due process requirements for asserting specific personal jurisdiction into a three-part test that considers “(1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiffs' claims arise out of those activities directed at the State; and (3) whether the exercise of...