Torres v. American Service Mutual Insurance Company

• Decision Date: 15 January 1969
• Docket Number: Civ. No. 150-68.
• Parties: Agustin TORRES and Juanita Maldonado individually; Emilia Torres Maldonado individually and as parent with patria potestad of her minor son Jose Luis Maldonado Torres, Plaintiffs, v. AMERICAN SERVICE MUTUAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Puerto Rico

294 F. Supp. 635

Agustin TORRES and Juanita Maldonado individually; Emilia Torres Maldonado individually and as parent with patria potestad of her minor son Jose Luis Maldonado Torres, Plaintiffs, v. AMERICAN SERVICE MUTUAL INSURANCE COMPANY, Defendant.

Civ. No. 150-68.

United States District Court D. Puerto Rico.

January 15, 1969.

Juan Rivera Torres, Caguas, P. R., for plaintiffs.

Antonio Córdova González, San Juan, P. R., for defendant.

ORDER AND MEMORANDUM OPINION¹

FERNANDEZ-BADILLO, District Judge.

This controversy concerns the Puerto Rico substituted service statute and the direct action statute. Defendant, an Alabama corporation, had issued a liability policy to one Mr. Efraín Class, an Army man stationed at Fort Rucker, Alabama, against claims arising from damages caused by the operation of his private car. The policy sued on was issued and the insurance premiums paid in the State of Alabama. Defendant is not authorized to transact insurance in Puerto Rico, has no agents, office or representatives in this jurisdiction and no solicitation of business by mail has been disclosed.

The cause of action in this case is brought pursuant to the direct action statute which in the part pertinent herein provides:

"Any individual sustaining damages and losses shall have, at his option, a direct action against the insurer under the terms and limitations of the policy, which action he may exercise against the insurer only or against the insurer and the insured jointly. The direct action against the insurer may only be exercised in Puerto Rico." 26 L.P.R.A. § 2003 Subsection (1) as amended May 26, 1966, No. 21.

The complaint charges that minor José Luis Maldonado Torres suffered injuries in Puerto Rico caused by the negligent operation of assured's car which was being driven by his brother with his consent. Service of process was made under Rule 4.7 of the Rules of Civil Procedure of Puerto Rico the applicable portion of which reads as follows:

"(a) Where the person to be served is not within Puerto Rico, the General Court of Justice of Puerto Rico shall have personal jurisdiction over said nonresident as if he were a resident of the Commonwealth of Puerto Rico, if the action or claim arises as a result of the following:

(3) Meets with an accident while by himself or through his agent driving a motor vehicle in Puerto Rico * * *"

Defendant moved to quash service of summons and argued that Rule 4.7 does not include nor was it intended to include within its ambit a foreign insurer under the peculiar circumstances of this case. A hearing was held on May 3, 1968 and briefs from both parties have been filed. Accordingly, the sole issue to be determined mined is whether there is personal jurisdiction over the non-resident defendant. The alleged defect is that plaintiffs pretend to assert jurisdiction over defendant through the local long-arm statute when legally under Rule 4.7 personal jurisdiction can be acquired only upon the non-resident driver himself or his agent who is involved in an automobile accident in Puerto Rico but never over the insurer that is a foreign corporation which has not formally qualified to, nor does it, transact business in Puerto Rico and has no contacts whatsoever with this forum.

Plaintiffs rely heavily on Pugh v. Oklahoma Farm Bureau Mutual Insurance Co. (D.C.La.1958), 159 F.Supp. 155. The facts of that case are strikingly similar to the situation involved in the present action. There was no problem of actual notice and opportunity to defend in either case. But this case is different from Pugh in that there the state of Louisiana had amended her Non-Resident Motorist Statute by extending its application to the non-resident insurer not authorized to do business in the State. The problem before the court was a constitutional attack on the extension of the statute to said insurers. Such is not the status of Puerto Rican process law for Rule 4.7 which provides for process on outsiders makes no mention whatsoever of the non-resident insurer unauthorized to transact business within its borders. The Insurance Code of Puerto Rico, Title 26 of L.P.R.A. provides in § 327 for process on authorized foreign insurers, in § 928 upon nonresident agents or brokers licensed to make transactions in Puerto Rico and in § 1005 for service against unauthorized insurers who deliver, effectuate or solicit any insurance contract by mail or otherwise within Puerto Rico.

The peculiar circumstances of this case are not reached either by Rule 4.7, the general substituted service statute, or by the specific process provisions of the Insurance Code.

We need go no further once it is resolved that the Commonwealth courts would not assume jurisdiction. There is a clear dichotomy to the matter of subjecting a foreign corporation to service. As well stated in Stanga v. McCormick Shipping Corporation (C.A. 5th Cir. 1959), 268 F.2d 544:

"In determining the sufficiency and validity of service of process on a foreign

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