NH Youth Football v. Zurich Amer. Ins

2007 DNH 074

• Court: District Court, D. New Hampshire
• Decided: June 11, 2007
• Docket: CV-06-342-PB
• Status: Published

Opinion

NH Youth Football v . Zurich Amer. Ins CV-06-342-PB 6/11/07

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

NH Youth Football & Spirit Conference et a l .

v. Case N o . 06-cv-342-PB Opinion N o . 2007 DNH 074 Zurich American Insurance Co. and Gagliardi Insurance Services, Inc.

v.

J.R. Olsen Bonds & Insurance Brokers, Inc. Third Party Defendant

MEMORANDUM AND ORDER

This case arises from an insurance contract dispute.

Plaintiff, New Hampshire Youth Football and Spirit Conference et

a l . (“NH Youth Football”), seeks a declaratory judgment against

Zurich American Insurance Company (“Zurich”) and has sued

Gagliardi Insurance Services, Inc. (“GIS”) for breach of

contract, negligence, and deceptive and unfair trade practices.

GIS has filed a third-party complaint against J.R. Olsen Bonds &

Insurance Brokers, Inc. (“J.R. Olsen”). J.R. Olsen now moves to

dismiss the third-party complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). Because I

hold that this court lacks personal jurisdiction over J.R. Olsen,

I grant its motion to dismiss.

I. FACTUAL OVERVIEW1

GIS provides brokerage services to youth, amateur, and

professional sports organizations throughout the United States.

J.R. Olsen is a wholesale bond and insurance broker, and over 90

percent of its customers are insurance agents and brokers such as

GIS. J.R. Olsen processes approximately 20,000 bonds each year,

of which approximately ten to twelve relate to some form of

commercial or non-profit activity in New Hampshire.

NH Youth Football, a youth football and cheerleading

organization based in New Hampshire, has purchased insurance

coverage from GIS for many years. This coverage has included

non-profit director, officer, and employee liability protection

(“D&O coverage”). J.R. Olsen, in its role as an insurance

broker, acted as an intermediary between GIS and Zurich and

1 The facts in this section are drawn primarily from GIS’s objection to J.R. Olsen’s motion to dismiss. I accept facts submitted by GIS as true for purposes of deciding J.R. Olsen’s motion to dismiss.

-2- obtained D&O coverage from Zurich for San Gabriel Valley, J r .

All-American Football Conference, Inc. for the policy year

running from July 1 5 , 2004 to July 1 5 , 2005 (“the San Gabriel

Policy”). Appendix A to that policy amended the policy’s

definition of “Company” (insured) so as to include each of the

more than 340 youth football organizations listed in the

Appendix, including fifteen organizations from New Hampshire,

many of which became part of NH Youth Football in 2005. For each

such youth football organization, J.R. Olsen received

compensation reflecting a percentage of the premium. When GIS

submitted its brokers agreement to J.R. Olsen, GIS advised J.R.

Olsen of the various states — including New Hampshire — in which

GIS does business.

In May 2005, GIS solicited NH Youth Football’s renewal of

its then-existing insurance coverage in accordance with the “2005

Youth Football Insurance Package” and provided the necessary

forms for NH Youth Football to apply for various insurance

policies. The application materials included forms for the

renewal of NH Youth Football’s coverage through the San Gabriel

Policy. In July 2005, NH Youth Football returned to GIS the

completed 2005 Youth Football Insurance Package, along with a

-3- check to cover the cost of the insurance policies. The check

included an amount for the cost of D&O coverage for the period

from July 1 5 , 2004 to July 1 5 , 2005. After receiving the

paperwork associated with NH Youth Football’s renewal application

for D&O coverage, and in accordance with the parties’ practice in

prior years, GIS sent the appropriate paperwork to J.R. Olsen for

J.R. Olsen to secure such coverage from Zurich Insurance.

NH Youth Football was sued by the New Hampshire Pop Warner

Football Conference in early 2006. GIS subsequently learned that

Zurich denied that NH Youth Football had any D&O coverage for the

period from July 1 5 , 2005 to July 1 5 , 2006, asserting that: (1)

Zurich lacked any record of NH Youth Football being added to the

D&O insurance policy as an insured; (2) NH Youth Football is not

listed on the schedule of additional insureds submitted by Zurich

to J.R. Olsen; (3) NH Youth Football is not listed on the

schedule of additional insureds endorsed to the policy; and (4)

Zurich neither billed nor received any premium representing

coverage for NH Youth Football.

In September 2006, NH Youth Football filed suit against

Zurich and GIS in this court, seeking a declaratory judgment

against Zurich and asserting breach of contract, negligence, and

-4- deceptive trade practices causes of action against GIS. In

November 2006, GIS filed a third party complaint against J.R.

Olsen, asserting breach of contract, negligence, contribution,

and indemnification claims. In support of its claims, GIS

alleges that if Zurich’s reasons for denying D&O coverage to NH

Youth Football are correct, then J.R. Olsen failed to take

appropriate steps to secure the D&O coverage from Zurich despite

its having received the renewal application and paperwork from

GIS. J.R. Olsen now moves to dismiss GIS’s third party action

for lack of personal jurisdiction pursuant to Fed. R. Civ. P.

12(b)(2).

II. LEGAL OVERVIEW

A. Standard Of Review

When a defendant contests personal jurisdiction under Rule

12(b)(2), the plaintiff bears the burden of showing that a basis

for asserting jurisdiction exists. Mass. Sch. of Law at Andover,

Inc. v . Am. Bar Ass’n, 142 F.3d 2 6 , 34 (1st Cir. 1998). Because

I have not held an evidentiary hearing, GIS need only make a

prima facie showing that the court has personal jurisdiction over

-5- J.R. Olsen. See Sawtelle v . Farrell, 70 F.3d 1381, 1386 n.1 (1st

Cir. 1995)(citing United Elec., Radio, & Mach. Workers v . 163

Pleasant Street Corp., 987 F.2d 3 9 , 43 (1st Cir. 1993).

To make a prima facie showing of jurisdiction, a plaintiff

may not rest upon the pleadings. Rather, the plaintiff must

“adduce evidence of specific facts” that support its

jurisdictional claim. See Foster-Miller, Inc. v . Babcock &

Wilcox Canada, 46 F.3d 1 3 8 , 145 (1st Cir. 1995). I take the

facts offered by the plaintiff as true and construe them in the

light most favorable to its claim. See Mass. Sch. of Law, 142

F.3d at 3 4 .

I do not act as a fact-finder when considering whether a

plaintiff has made a prima facie showing of personal

jurisdiction. Rather, I determine “whether the facts duly

proffered, [when] fully credited, support the exercise of

personal jurisdiction.” Rodriguez v . Fullerton Tires Corp., 115

F.3d 8 1 , 84 (1st Cir. 1997). While the prima facie standard is

liberal, I need not “credit conclusory allegations or draw

farfetched inferences.” Mass. Sch. of Law, 142 F.3d at 34

(quotation omitted). I also consider facts offered by the third-

party defendant, but only to the extent that they are

-6- uncontradicted. See id.

B. The Law Governing Personal Jurisdiction

Federal Rule of Civil Procedure 4(k)(1)(A) provides that

“[s]ervice of a summons or filing a waiver of service is

effective to establish jurisdiction over the person of a

defendant who could be subjected to the jurisdiction of a court

of general jurisdiction in the state in which the district court

is located . . . .” Thus, when assessing personal jurisdiction

over a non-resident defendant in a diversity of citizenship case

such as this one, the federal court “‘is the functional

equivalent of a state court sitting in the forum state.’”

Sawtelle, 70 F.3d at 1387 (quoting Ticketmaster-New York, Inc. v .

Alioto, 26 F.3d 2 0 1 , 204 (1st Cir. 1994)). Because New

Hampshire's long-arm statute, N.H. Rev. Stat. Ann. § 293-A:15.10,

authorizes jurisdiction to the full extent permitted by the

federal Constitution, the sole inquiry is “whether the exercise

of personal jurisdiction comports with federal constitutional

standards.” Id. at 1388.

The Due Process Clause precludes a court from asserting

jurisdiction over a defendant unless “the defendant’s conduct and

connection with the forum State are such that [it] should

-7- reasonably anticipate being haled into court there.” World-Wide

Volkswagen Corp. v . Woodson, 444 U.S. 286, 297 (1980). The

“constitutional touchstone” for personal jurisdiction is “whether

the defendant purposefully established ‘minimum contacts’ in the

forum State.” Burger King Corp. v . Rudzewicz, 471 U.S. 4 6 2 , 474

(1985) (quoting Int’l Shoe C o . v . Washington, 326 U.S. 3 1 0 , 316

(1945)). The inquiry into “minimum contacts” is necessarily

fact-specific, “involving an individualized assessment and

factual analysis of the precise mix of contacts that characterize

each case.” Pritzker v . Yari, 42 F.3d 5 3 , 60 (1st Cir. 1994). A

defendant cannot be subjected to a forum state’s jurisdiction

based solely on “random,” “fortuitous,” or “attenuated” contacts.

Burger King, 471 U.S. at 475 (quotations omitted). Rather, “‘it

is essential in each case that there be some act by which the

defendant purposefully avails itself of the privilege of

conducting activities within the forum State, thus invoking the

benefits and protections of its laws.’” Id. (quoting Hanson v .

Denckla, 357 U.S. 235, 253 (1958)).

A court may assert authority over a defendant by means of

either general or specific jurisdiction. Mass. Sch. of Law, 142

F.3d at 3 4 . “The standard for evaluating whether . . . contacts

-8- satisfy the constitutional general jurisdiction test ‘is

considerably more stringent’ than that applied to specific

jurisdiction questions.” Noonan v . Winston Co., 135 F.3d 8 5 , 93

(1st Cir. 1998) (quoting Glater v . Eli Lilly & Co., 744 F.2d 213,

216 (1st Cir. 1984)). A defendant who has engaged in continuous

and systematic activity in a forum is subject to general

jurisdiction in that forum with respect to all causes of action,

even those unrelated to the defendant's forum-based activities.

Phillips Exeter Acad. v . Howard Phillips Fund, Inc., 196 F.3d

284, 288 (1st Cir. 1999). In order to establish general

jurisdiction, two criteria must be met: (1) “‘continuous and

systematic general business contacts’” must exist between the

defendant and the forum; and (2) the exercise of jurisdiction

must be reasonable as demonstrated by certain “gestalt factors.”

United States v . Swiss Am. Bank, Ltd., 274 F.3d 6 1 0 , 619 (1st

Cir. 2001) (quoting Helicopteros Nacionales de Colombia, S.A. v .

Hall, 466 U.S. 4 0 8 , 416 (1984)).

In contrast, a court may exercise specific jurisdiction only

when the cause of action arises from, or relates t o , the

defendant's contacts with the forum. Id. The First Circuit

divides the constitutional analysis of specific jurisdiction into

-9- three categories: “relatedness, purposeful availment, and

reasonableness.” Daynard v . Ness, Motley, Loadholt, Richardson &

Poole, P.A., 290 F.3d 4 2 , 60 (1st Cir. 2002). As to the first

requirement, “[t]he evidence produced to support specific

jurisdiction must show that the cause of action either arises

directly out o f , or is related t o , the defendant’s forum-based

contacts.” Harlow v . Children's Hosp., 432 F.3d 5 0 , 60-61 (1st

Cir. 2005). “[T]he defendant's in-state conduct must form an

important, or at least material, element of proof in the

plaintiff's case.” Id. at 61 (quotation and brackets omitted).

With respect to the second requirement, “the defendant’s in-state

contacts must represent a purposeful availment of the privilege

of conducting activities in the forum state, thereby invoking the

benefits and protections of that state’s laws and making the

defendant’s involuntary presence before the state’s courts

foreseeable.” Daynard, 290 F.3d at 61 (quoting Foster-Miller, 46

F.3d at 1 4 4 ) . “The cornerstones upon which the concept of

purposeful availment rests are voluntariness and foreseeability.”

Id. (quoting Sawtelle, 70 F.3d at 1391). Finally, the exercise

of jurisdiction must be reasonable in light of certain “Gestalt

factors.” Id. at 62 (citing World-Wide Volkswagen Corp, 444 U.S.

-10- at 292 (listing factors) and quoting Foster-Miller, 46 F.3d at

144).

III. ANALYSIS

GIS bases its jurisdictional argument solely on specific

jurisdiction. Thus, the First Circuit’s tri-partite analysis of

relatedness, purposeful availment, and reasonableness applies,

and I focus my analysis accordingly. Because I conclude that GIS

cannot satisfy the relatedness component of the specific

jurisdiction test, I analyze only this requirement.

The relatedness component of the specific jurisdiction test

ensures that a defendant with only limited contacts with a forum

state will not be subject to suit in the state’s courts without

“fair warning that a particular activity may subject [the

defendant] to the jurisdiction of a foreign sovereign . . . .”

Burger King, 471 U.S. at 472 (citation omitted). The relatedness

requirement serves this purpose by requiring the existence of a

nexus between a defendant’s contacts with the forum and the

plaintiff’s cause of action. See Ticketmaster, 26 F.3d at 206-

07.

The relatedness requirement is analyzed in light of the

-11- particular claims asserted. See Phillips Exeter Acad., 196 F.3d

at 289. In determining relatedness in contract cases, a court

“must look to the elements of the cause of action and ask whether

the defendant's contacts with the forum were instrumental either

in the formation of the contract or in its breach.” Id.

(citations omitted). In tort cases, a court must examine the

causal nexus between the defendant's contacts and the plaintiff's

cause of action. Id. In terms of the causal nexus analysis, “an

in-forum effect of an extra-forum breach” is “inadequate to

support a finding of relatedness.” See id. at 291 (citations

omitted).

Here, GIS alleges in its contract claim that it was party to

a contract with J.R. Olsen to obtain D&O coverage for NH Youth

Football from Zurich. According to GIS, J.R. Olsen breached this

contract by failing to secure the coverage. GIS concedes,

however, that there was no contact between J.R. Olsen and NH

Youth Football, and that all of the contacts between GIS and J.R.

Olsen relating to the matter took place in California. Further,

J.R. Olsen’s alleged failure to forward the paperwork to Zurich

did not take place in New Hampshire. To be sure, forum-state

contacts need not involve physical presence to be constitution-

-12- ally significant. See id., 196 F.3d at 290 (quoting Burger King,

471 U.S. at 4 7 6 ) . However, “[t]he relatedness requirement is not

met merely because a plaintiff's cause of action arose out of the

general relationship between the parties; rather, the action must

directly arise out of the specific contacts between the defendant

and the forum state.” Phillips Exeter Acad., 196 F.3d at 290

(citation and internal quotation marks omitted). Such specific

contacts between J.R. Olsen and New Hampshire are lacking here.

GIS has alleged only that its breach of contract cause of action

arose out of a general relationship between J.R. Olsen, GIS, and

NH Youth Football and therefore has not demonstrated that J.R.

Olsen had contacts with New Hampshire that were instrumental in

the contract’s breach or formation. Thus, GIS’s contract claim

fails to satisfy the relatedness component of the personal

jurisdiction analysis.

Similarly, GIS has failed to demonstrate a sufficient causal

nexus for its negligence, contribution, or indemnification

claims. GIS’s primary negligence argument is that J.R. Olsen

breached its duty to GIS to take reasonable and appropriate steps

to secure D&O coverage for NH Youth Football. J.R. Olsen's

failure to secure this coverage, however, is at most an in-forum

-13- effect of an extra forum breach which, as discussed above, is

inadequate to support a finding of relatedness.

Because GIS has not demonstrated that a sufficient nexus

exists between the defendants’ forum state activities and its

causes of action, it has failed to satisfy the relatedness

requirement of the specific personal jurisdiction test.

IV. CONCLUSION

For the reasons discussed above, I hold that this Court

cannot exercise personal jurisdiction over J.R. Olsen as GIS has

not shown that J.R. Olsen’s forum-based activities satisfy due

process requirements. Therefore, I grant J.R. Olsen’s motion to

dismiss for lack of personal jurisdiction (Doc. N o . 2 0 ) .

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge June 1 1 , 2007

cc: Randall Block, Esq. Timothy Gudas, Esq. Christopher Hawkins, Esq. Mark Howard, Esq. Edward Kaplan, Esq. John Kissinger, Esq. Veena Mitchell, Esq.

-14- Danielle Pacik, Esq. Michael Ramsdell, Esq.

-15-