Insurance companies operate nationwide, no pun intended, and with that area of coverage comes more than their fair share of litigation. Common to each and every case is the consideration of whether the court has personal jurisdiction over the parties. With regard to insureds suing their insurance companies for denial of coverage, establishing a court’s personal jurisdiction over the insurance company is accomplished by showing either (1) general personal jurisdiction or (2) specific personal jurisdiction. However, as the following will show, specific personal jurisdiction is the likely path forward for many plaintiffs in the coming years.
General Personal Jurisdiction
The U.S. Supreme Court decided Goodyear Dunlop Tires Operations, S.A. v. Brown in 2011, reiterating that companies are only subject to general personal jurisdiction where they are “essentially at home in the forum state.”1 For a corporation to be sufficiently “at home,” it must either be incorporated in the state or have its “principal place of business” in the state.2
Courts are clear, since the opinion in Goodyear, that while widespread, continuous activity may well have satisfied the standards for general personal jurisdiction in the days of International Shoe Co. v. Washington,3 it will no longer serve to establish general personal jurisdiction over insurers.4 Some courts have even held that being licensed and doing business in a state would not give rise to general personal jurisdiction—even if that business includes maintaining some 80 dealer locations and service centers throughout the given forum.5
Specific Personal Jurisdiction
However, these developments have not deterred plaintiff insureds from seeking jurisdiction over their insurance carriers when the insureds’ claims have been denied. Indeed, “[i]n recent years, the concept of a state’s jurisdiction over foreign corporations, including insurance companies, has been greatly expanded by decisions” of federal and state courts alike where those courts have often pointed to language in the insurance contract covering national travel.6 Now, insureds in certain forums with broadly written long-arm statutes are turning, with some success, to establishing specific personal jurisdiction over the insurers based on those insurers’ denial of the insureds’ claims. “The most common scenario arises where (1) the insurance policy imposes a duty to defend or to settle claims, and (2) the underlying claim or action was made or litigated in the forum state.”7
Specific personal jurisdiction is based on the connection between a defendant’s “contacts” with the forum state and the alleged “injury” caused to the plaintiff. Where a defendant has contacts with a forum state, and those contacts cause a recoverable injury to the plaintiff, a defendant can be subject to specific personal jurisdiction in that forum.8 Insureds are now using certain elements of their insurance policies, and the underlying matters potentially implicating those policies, in roping their insurers into courts in certain forums—even when the insured’s policy was not issued in the forum state—on the basis of specific personal jurisdiction.
Most third-party insurance policies provide that the insurance company has a duty to defend and/or indemnify its insured or otherwise assist the insured in appropriate settlement negotiations. Some courts are finding that, where an insurer has contractually promised to provide such protections and is later sued for alleged failure to uphold those obligations, courts in the state where such “breach” occurred have the requisite specific personal jurisdiction over the defendant.9
For example, in State ex rel. Key Insurance Co. v. Roldan, the plaintiff insured (Nash) was issued an automobile insurance policy in her home state of Kansas.10 Subsequently, her father had a wreck in Missouri while driving the covered automobile, and the insurer (Key) denied coverage to Nash and the injured party (Wright) who was seeking coverage.11 After arbitration, Wright and Nash then filed suit in the appropriate county in Missouri, alleging that Key had refused to settle the claims in bad faith.12 Pursuant to Missouri’s long-arm statute, which allowed for personal jurisdiction over “tortious actions,” the Missouri Supreme Court held that Key’s tortious conduct in allegedly refusing to settle in bad faith was, “by itself,” enough to satisfy due process in establishing specific personal jurisdiction.13 Indeed, that court made clear that “[a] single tortious act is sufficient to support personal jurisdiction consistent with due process standards.”14
Similarly, the claims in Sodexo Management, Inc. v. Old Republic Insurance Co. arose out of an insurance policy that was issued in Minnesota by an insurance company incorporated in Pennsylvania with its principal place of business in Illinois.15 The plaintiff in that case alleged that the defendant had breached its contract in its failure to defend and indemnify the plaintiff in underlying actions that took place in California courts, and alleged breach of the duties of good faith and fair dealing.16 California’s long-arm statute, like those of many states, extends its jurisdiction to the “full extent” of due process allowance.17 Ultimately, the court found that California appropriately had specific personal jurisdiction over the insurance company because it had allegedly violated its contractual duties to the plaintiff and such breach occurred in California.18
In certain jurisdictions, this application of specific personal jurisdiction to insurers’ denials of coverage has been a battleground for decades. In Farmers Insurance Exchange v. Portage La Prairie Mutual Insurance Co., Portage, a Canadian insurer with no contacts in Montana, issued a vehicle insurance policy for a vehicle that was later involved in a wreck in Montana.19 Despite the policy’s provision for indemnification for any person driving with the consent of the insured, Portage denied the insured’s requests for coverage.20 Portage, when sued by a coinsurer for its failure to defend and indemnify the underlying matter, alleged that it had not taken any action that brought it within the purview of Montana’s long-arm statute.21 In finding that Portage’s actions did bring it within reach of Montana’s long-arm statute and satisfied the “arising out of” prong of specific personal jurisdiction, the court stated: “But for Portage’s alleged breach of promise to defend its insured for injuries caused in Montana, this suit would not have arisen. The second prong is satisfied.”22 The court ultimately held that Portage was subject to personal jurisdiction in Montana.
The Path Forward
While courts are closing the door on general personal jurisdiction arguments regarding insurers, the window of specific personal jurisdiction seemingly remains open. Therefore, this issue is likely to continue arising for insurers, particularly in states with broad long-arm statutes. In some states, the long-arm statutes provide that “a single act giving rise to a cause of action, either in tort or in contract, is deemed ‘doing business’ within the state for purposes of the service of process on the corporation.”23 Moreover, commentators have noted that state long-arm statutes generally apply where a contract is to be performed, in whole or in part, in the given forum.24 Thus, it is critical for insurers to evaluate the language of their policies and to understand how those policies might subject the insurers to litigation in various foreign forums. It is not safe to assume that, just because the policy was issued in a certain state, suits on that policy must be brought either in that forum state or where the insurer is “essentially at home.” For certain jurisdictions, like Missouri, the threshold for exercising specific personal jurisdiction is extraordinarily low, requiring only “a single tortious act,”25 which can include the alleged bad faith denial of coverage for an action occurring in the given forum.
1. 564 U.S. 915, 919 (2011).
2. Id. at 924.
3. 326 U.S. 310 (1945).
4. See, e.g., Rosado v. State Farm Mut. Auto. Ins. Co., No. N19C-12-242, 2020 WL 3887880 (Del. Super. Ct. July 9, 2020); Rawls v. Old Republic Gen. Ins. Grp., Inc., 489 F. Supp. 3d 646 (S.D. Tex. 2020) (finding no general personal jurisdiction in Texas despite the automobile dealer defendant’s business and physical presence in Texas, its registration to do business in Texas, and the presence of a registered agent in Texas).
5. See, e.g., MSP Recovery Claims Series, LLC v. Nationwide Mut. Ins. Co., No. 20-21573-Civ-Scola, 2021 WL 355133, at *3 (S.D. Fla. Feb. 2, 2021); Rawls, 489 F. Supp. 3d 646.
6. 16A Steven Plitt et al., Couch on Insurance § 228:22 (3d ed.); see also Samelko v. Kingstone Ins. Co., 184 A.3d 741 (Conn. 2018) (concluding that an automobile liability insurer, a company domiciled in New York, had minimum contacts with Connecticut sufficient to justify a Connecticut court’s exercise of personal jurisdiction under the due process clause, since the insurer drafted the insurance policy that expressly covered nationwide travel).
7. Richard Mason, Obtaining General Jurisdiction over Out-of-State Insurers, Law360 (Feb. 26, 2021), https://www.law360.com/articles/1358428/obtaining-general-jurisdiction-over-out-of-state-insurers.
8. See Bristol-Myers Squibb Co. v. Superior Court of Cal., 137 S. Ct. 1773, 1780 (2017).
9. See, e.g., State ex rel. Key Ins. Co. v. Roldan, 587 S.W.3d 638, 642–43 (Mo. 2019); Sodexo Mgmt., Inc. v. Old Republic Ins. Co., No. 20-cv-1517-WQH-BGS, 2021 WL 254240, at *6 (S.D. Cal. Jan. 26, 2021).
10. 587 S.W.3d at 640.
11. Id. at 640–41.
13. Id. at 642–43.
14. Id. at 643 (quoting State ex rel. William Ranni Assocs., Inc. v. Hartenbach, 742 S.W.2d 134, 139 (Mo. 1987) (adding that “Missouri courts may still assert personal jurisdiction over a non-domiciliary defendant corporation without violating due process if that entity has at least one contact with this state and the cause of action being pursued arises out of that contact” (citing State ex rel. Cedar Crest Apartments, LLC v. Grate, 577 S.W.3d 490, 496 n.5 (Mo. 2019)))).
15. No. 20-cv-1517-WQH-BGS, 2021 WL 254240, at *2 (S.D. Cal. Jan. 26, 2021).
17. Id. at *3. For a starting point on your state’s long-arm statute, see Vedder, Price, Kaufman & Kammholz, P.C., Long-Arm Statutes: A Fifty-State Survey (2003), http://euro.ecom.cmu.edu/program/law/08-732/Jurisdiction/LongArmSurvey.pdf.
18. Sodexo, 2021 WL 254240, at *6 (“[B]ut for [the defendant’s] alleged breach of its promise to defend and indemnify its insureds and additional insureds who contract with its insureds for bodily injury . . . , this suit would not have arisen. The Court concludes that [the plaintiff] has made a prima facie showing that this suit arises out of [the defendant’s] contacts with the forum state.”).
19. 907 F.2d 911, 912 (9th Cir. 1990).
21. Id. at 912–13.
22. Id. at 914–15.
23. 36 Am. Jur. 2d Foreign Corporations § 272 (footnotes omitted); see also Andersen v. Nat’l Presto Indus., Inc., 135 N.W.2d 639 (Iowa 1965) (commission of a tort “in whole or in part” against a resident of the state; making a contract with a resident of the state to be performed in whole or in part by either party within the state); Stisser v. SP Bancorp, Inc., 174 A.3d 405 (Md. Ct. Spec. App. 2017).
24. 36 Am. Jur. 2d Foreign Corporations § 273.
25. State ex rel. Key Ins. Co. v. Roldan, 587 S.W.3d 638, 643 (Mo. 2019).