Compagnie Des Bauxites De Guinea v. Insurance Company of North America

651 F.2d 877
CourtCourt of Appeals for the Third Circuit
DecidedJuly 7, 1981
Docket80-2416
StatusPublished
Cited by149 cases

This text of 651 F.2d 877 (Compagnie Des Bauxites De Guinea v. Insurance Company of North America) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Compagnie Des Bauxites De Guinea v. Insurance Company of North America, 651 F.2d 877 (3d Cir. 1981).

Opinions

OPINION OF THE COURT

ALDISERT, Circuit Judge.

The question presented for review is whether the district court erred in enjoining the defendants from pursuing an action in England’s High Court of Justice, Queens Bench Division, which sought to rescind excess insurance contracts covering business interruptions of a Delaware corporation doing business in an African country. A threshold inquiry requires us to decide if the district court had jurisdiction over the defendants. We conclude that the court properly exercised personal jurisdiction over eighteen of twenty-one insurance companies and reverse the grant of the injunction.

I.

This is an unfortunate case filed in the district court in 1975 which still admits of no resolution on the merits but bears the scars of over five years of pre-trial skirmishing.1 The appellee, Compagnie des [880]*880Bauxites de Guinea (CBG), a Delaware Corporation owned by Halco (Mining), Inc. (51%) and the Republic of Guinea (49%), mines and sells bauxite. CBG operates only in Guinea; it is not registered to do business in Pennsylvania and conducts no business in the United States.

Acting as an agent for CBG, Halco obtained insurance coverage through the Pittsburgh office of Marsh & McLennan, an insurance brokerage firm. The coverage insured against losses up to $20,000,000 from business interruptions caused by breakdowns at CBG’s processing plant in Guinea. The Insurance Company of North America, not a party to this appeal, insured the first $10,000,000 of loss; the appellants, a group of twenty-one foreign insurance companies, provided excess coverage of $10,000,000 on contracts issued through a London broker.

As is customary in London, the lead underwriter circulated a “placing slip” among representatives of interested insurance companies indicating the risks to be covered and the total coverage requested. The representatives then initialed the placing slip, indicating the percentage of risk their companies were willing to assume. After the coverage was fully subscribed the London broker prepared a “cover note” listing briefly the details of the risk and the premium. An actual policy is seldom issued at this stage and none was issued here. Instead, the excess insurers adopted the form of the INA policy “as far as applicable.” App. at 136a.

Because of damage to its bauxite crushing plant, CBG presented a claim on its insurance coverage and the insurers refused to pay. CBG filed a complaint in December, 1975, in the Western District of Pennsylvania against all the insurance companies, asserting jurisdiction based on diversity of citizenship. 28 U.S.C. § 1332(a). Almost four years later, while still participating in the pre-trial stages of this case, the excess insurers filed suit in England on March 22, 1979, seeking to rescind the excess insurance contract alleging that CBG failed to disclose material facts relating to the contract. CBG then moved the district court to enjoin the carriers from pursuing the English suit on the ground that it raised issues identical to those in the case at bar. After a hearing, the district court granted the motion, providing the order that is the subject of this appeal under 28 U.S.C. § 1292(a)(1).

II.

A district court must have personal jurisdiction over a party before if can enjoin its actions. See Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 100, 112, 89 S.Ct. 1562, 1570, 23 L.Ed.2d 129 (1969). The lack of jurisdiction is the initial question raised by the excess insurers.2 The district court found personal jurisdiction under two independent theories. First, it held that the appellants’ activities placed them within reach of the Pennsylvania long-arm statute. 42 Pa.Cons.Stat.Ann. §§ 8301-8311 (repealed June 27, 1978; current version at 42 Cons.Stat.Ann. § 5322). Alternatively, the district court took as established, pursuant to Fed.R.Civ.P. 37(b)(2)(A), that it had personal jurisdiction as a sanction for the insurers’ failure to comply with the court’s order compelling discovery. The rule provides that “[i]f a party ... fails to obey an order to provide or permit discovery, . . . the court in which the action is pending may make . . . [a]n order that .. . designated facts shall be taken to be established for the purposes of the action. . . . ”

A defendant’s challenge to the court’s in personam jurisdiction imposes on the plaintiff the burden of “compng] forward with facts, by affidavit or otherwise, in support of personal jurisdiction.” DiCesare-Engler Productions, Inc. v. Mainman Ltd., 81 F.R.D. 703, 705 (W.D.Pa.1979); see [881]*881also Amba Marketing Systems, Inc. v. Jobar International, Inc., 551 F.2d 784, 787 (9th Cir. 1977). CBG had the ultimate burden of proving that the activities of the insurance companies brought them within the scope of the Pennsylvania long-arm statute.

The long-arm statute sets forth two independent tests for the assertion of in personam jurisdiction over foreign corporations. A court may exercise jurisdiction over a foreign corporation found to be doing business in Pennsylvania as the statute defines doing business. Alternatively, the assertion of jurisdiction over a foreign corporation is permitted so long as that assertion does not contravene the due process clause prohibition against assertions of jurisdiction that “offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940)); see generally World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed. 2d 490 (1980). Only minimal contacts with the forum state are required to satisfy due process. See McGee v. International Life Insurance Co., 355 U.S. 220, 222-23, 78 S.Ct. 199, 200-201, 2 L.Ed.2d 223 (1957); Aldens, Inc. v. Packel, 524 F.2d 38, 42-44 (3d Cir. 1975), cert. denied, 425 U.S. 943, 96 S.Ct. 1684, 48 L.Ed.2d 187 (1976).

III.

CBG sought by means of discovery to obtain evidence to meet its burden of proving either that the insurers were doing business in Pennsylvania or that there were sufficient contacts to satisfy due process. On August 9, 1976, it began what was to become a three-year discovery odyssey by serving a request on each defendant for copies of all business interruption insurance policies issued between January 1,1972 and December 31,1975, as well as all documents related in any way to the claim being made here. App. at 66a-69a.

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Bluebook (online)
651 F.2d 877, Counsel Stack Legal Research, https://law.counselstack.com/opinion/compagnie-des-bauxites-de-guinea-v-insurance-company-of-north-america-ca3-1981.