Vantage Commodities Fin. Servs. I, LLC v. Assured Risk Transfer PCC, LLC

• Decision Date: 06 August 2018
• Docket Number: Case No. 1:17-cv-01451 (TNM)
• Citation: 321 F.Supp.3d 49
• Parties: VANTAGE COMMODITIES FINANCIAL SERVICES I, LLC, Plaintiff, v. ASSURED RISK TRANSFER PCC, LLC, et al., Defendants.
• Court: U.S. District Court — District of Columbia

321 F.Supp.3d 49

VANTAGE COMMODITIES FINANCIAL SERVICES I, LLC, Plaintiff,

v.ASSURED RISK TRANSFER PCC, LLC, et al., Defendants.

Case No. 1:17-cv-01451 (TNM)

United States District Court, District of Columbia.

Signed August 6, 2018

James Sumter Carter, John Albert Gibbons, Blank Rome LLP, Washington, DC, for Plaintiff.

David A. Berger, Michael S. Vogel, Vera Zolotaryova, James Richard Schiffer, Allegaert Berger & Vogel LLP, Christopher J. St. Jeanos, Maxwell A. Bryer, Willkie Farr & Gallagher, LLP, Mary Ann D'Amato, Mendes & Mount, New York, NY, Elizabeth J. Bower, Willkie Farr & Gallagher, LLP, William A. Davis, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Alanna Clair, G. Richard Dodge, Jr., Dentons US LLP, Brian D. Netter, Madeleine L. Hogue, Mayer Brown LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

TREVOR N. MCFADDEN, U.S.D.J.

Vantage Commodities Financial Services I, LLC won a multi-million dollar arbitration award against Assured Risk Transfer PCC, LLC, or ART. Now Vantage wants the money. Although the arbitration award represents the proceeds of a credit insurance policy that ART sold to Vantage, ART says it cannot pay by itself because it counted on help from reinsurance companies. And the companies that reinsured ART's liability under the insurance policy have refused to help. So Vantage has sued ART and the reinsurance companies. It has also sued Willis Limited, Willis Re Inc., and Willis Towers Watson Management (Vermont), Ltd.—related companies that Vantage says offered ART their services in captive insurance management and as reinsurance brokers and intermediaries. The reinsurance companies and the Willis companies have filed Motions to Dismiss. Because Vantage failed to establish the Court's personal jurisdiction over the reinsurance companies, their Motions to Dismiss will be granted. And because Vantage did not state a contract claim but has stated several negligence claims against the Willis Defendants, their Motion to Dismiss will be granted in part and denied in part.

I. BACKGROUND

This case began with a series of related financial transactions. First, Vantage extended $44 million in credit to an energy company. Compl. ¶ 93. Second, ART insured Vantage against the risk that the energy company would default, up to $22 million. Id. ¶ 17. Third, the Willis companies helped ART reinsure 90% of its liability by brokering reinsurance contracts with several other companies, including the seven reinsurance companies that are defendants here.¹ Then the energy company defaulted and went bankrupt. Id. ¶¶ 82, 89.

Vantage submitted proof of loss to ART to collect on its insurance policy, but ART denied the claim based on Vantage's purported failure to comply with a collateralization requirement in that policy. Id. ¶¶ 19, 94. So Vantage presented its claim to an arbitration panel, which determined that Vantage had met its collateralization obligations and that ART owed Vantage $22 million in damages, plus several million in interest and costs. Id. ¶¶ 20-21, 136. The Supreme Court of New York confirmed the award in the amount of $26,288,351.80 plus post-judgment interest that continues to accrue. Id. ¶ 22.

Vantage has not received the funds. Id. ¶ 24. ART told Vantage that the only assets it has to pay the judgment are a $2.2 million letter of credit and its reinsurance policies. Id. ¶ 134. And the Reinsurer Defendants have refused to pay ART, claiming that ART and the Willis companies violated the terms of the reinsurance agreements by failing to provide them prompt notice of Vantage's loss. Id. ¶¶ 139-142. The Reinsurer Defendants have also rebuffed Vantage's efforts to collect, claiming that Vantage has no contractual right to demand payment directly from them. Id. ¶ 150.

Vantage has now turned to federal court, filing a Complaint that names ART, the seven Reinsurer Defendants, and the three Willis companies as defendants.² Vantage asserts breach of contract claims against the Reinsurer Defendants and asks the Court for declaratory judgment establishing their contractual obligations. Id. ¶¶ 152-54, 162. It also asserts breach of contract and negligence claims against the Willis Defendants. Id. ¶¶ 163-187.³ The Reinsurer Defendants have filed two Motions to Dismiss, and the Willis Defendants have filed one.

II. ANALYSIS

A. The Court Cannot Exercise Personal Jurisdiction Over the Reinsurer Defendants

To hear a claim against a defendant, a court must have personal jurisdiction over that defendant. There are three requirements for a court to exercise personal jurisdiction. First, the state's long-arm statute must reach the defendant. GTE New Media Servs. Inc. v. BellSouth Corp. , 199 F.3d 1343, 1347 (D.C. Cir. 2000). Second, the exercise of jurisdiction must comport with the constitutional requirements of due process. Id. Third, service of summons must take place to assert the court's jurisdiction. Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., Ltd. , 484 U.S. 97, 104, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987). The plaintiff bears the burden of establishing a basis for personal jurisdiction. Crane v. New York Zoological Soc. , 894 F.2d 454, 456 (D.C. Cir. 1990).

1. The District of Columbia's Long-Arm Statute Reaches the Reinsurers

The District of Columbia's long-arm statute authorizes courts to "exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person's ... transacting any business in the District of Columbia." D.C. Code § 13-423(a)(1). It also authorizes jurisdiction over persons defending against claims that arise from "contracting to insure or act as surety for or on any person, property, or risk, contract, obligation, or agreement located, executed, or to be performed within the District of Columbia at the time of contracting, unless the parties otherwise provide in writing." D.C. Code § 13-423(a)(6). Vantage argues that I have jurisdiction over the Reinsurer Defendants under both these prongs of the long-arm. Pl.'s Opp. to Reinsurer Defs.' Mots. Dismiss 12-14.

Under the insurance prong of the statute, Vantage correctly observes that the Reinsurer Defendants contracted to insure ART, a legal person located in the District of Columbia at the time of contracting. Id. at 13. The Reinsurer Defendants do not contest this. Instead, they claim they are beyond the reach of the long-arm statute because Vantage cannot assert rights under their contracts with ART and so can make no claim arising from those contracts. Memo. ISO Mot. Dismiss by Caisse Centrale De Réassurance, Hannover Ruckverishcerung AG, and Partner Reinsurance Europe PLC (First Reinsurer Defs.' Memo. ISO Mot. Dismiss) 14; Reply ISO First Reinsurer Defs.' Mot. Dismiss 5-6.⁴ But this argument goes to the merits rather than to jurisdiction. And in any case, the long-arm's "arising from" requirement is satisfied "when the claim has a discernible relationship" to the District-related activity. IMark Mktg. Servs., LLC v. Geoplast S.p.A. , 753 F.Supp.2d 141, 157 (D.D.C. 2010). Here, Vantage's claim against the reinsurers has a clear relationship to the reinsurers' contracts with ART. It therefore arises from the Reinsurer Defendants' contracts to insure a person in the District and falls within the scope of the District's long-arm statute.⁵

Alternatively, this Court has jurisdiction under the "transacting any business" prong of the statute for the reasons explained in the due process analysis below. See Thompson Hine, LLP v. Taieb , 734 F.3d 1187, 1189 (D.C. Cir. 2013) (holding that the "transacting any business" prong "provide[s] jurisdiction to the full extent allowed by the Due Process Clause").

2. The Exercise of Jurisdiction Comports with Due Process

The Due Process Clause limits a court's jurisdiction to defendants who "have certain minimum contacts with [‘the territory of the forum,’ which is to say, the geographic area under the court's authority,] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Depending on the defendant's forum contacts, a court's personal jurisdiction over a defendant may be general, allowing the court to hear any claim against the defendant, or specific, allowing the court to hear claims against the defendant only if those claims arise from the defendant's forum contacts. Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011).

A district court may exercise general jurisdiction over all claims against a corporate defendant if the corporation's "affiliations with the State are so continuous and systematic as to render [it] essentially at home" in the territory subject to the court's authority.

Daimler AG v. Bauman , 571 U.S. 117, 134 S.Ct. 746, 761, 187 L.Ed.2d 624 (2014). Although the Supreme Court has not foreclosed the possibility of an "exceptional case," courts generally consider a corporation at home only in the place of its incorporation and in its principal place of business. See id. & n.19. Vantage concedes that it does not know of any facts that would give me general jurisdiction over the Reinsurer Defendants. Pl.'s Opp. to Reinsurer Defs.' Mots. Dismiss 12 n.5. And by Vantage's own account, the Reinsurer Defendants are incorporated and have their principal places of business in Germany, Ireland, the United Kingdom, Switzerland, and France. Pl.'s Supp. Filing 4-7. So I do not have general personal jurisdiction over the reinsurers.⁶

A district court that lacks general jurisdiction may still have specific jurisdiction over claims related to acts by which a defendant "purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). Purposeful availment does not require that a defendant...