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No. B136005. COURT OF APPEAL OF
CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION ONE 84 Cal. App. 4th 1430;
101 Cal. Rptr. 2d 524; 2000 Cal. App. LEXIS 898; 2000 Cal. Daily Op. Service
9372; 2000 Daily Journal DAR 12597 November 2, 2000,
Decided SUBSEQUENT HISTORY: [***1] The Publication Status of this Document has been Changed by
the Court from Unpublished to Published November 27, 2000. As Modified November 27,
2000. PRIOR HISTORY: APPEALS from an order of the Superior
Court of Los Angeles County. Super. Ct. Nos. BC187236 and BC205803. Kurt J.
Lewin, Judge. DISPOSITION: The order
is affirmed. SUMMARY: CALIFORNIA OFFICIAL
REPORTS SUMMARY Two insurance
underwriters, who were residents of California and who were associated with an
English company that provided a marketplace for insurance underwriters, brought
separate actions against an English insurance syndicate that reinsured
underwriting losses and an English company that was formed to reinsure certain
underwriting obligations of all underwriters. In each action, the trial court
granted defendants' motion to quash service of summons for lack of personal
jurisdiction. (Superior Court of Los Angeles County, Nos. BC187236 and
BC205803, Kurt J. Lewin, Judge.) The Court of Appeal
affirmed. It held that defendants did not have the requisite contacts with
California to justify the exercise of personal jurisdiction. Both defendants
were formed in England, conducted their business in England, and had no
presence in California. Although the parties offered conflicting evidence whether
defendants solicited reinsurance policies in California, the trial court
impliedly found in favor of defendants. Further, plaintiffs' purchase of
stop-loss insurance was an intermediate step in their attempt to make a profit
in the London insurance market. Plaintiffs pledged their personal assets to
back underwriting risks and obtained insurance through their agent in England
to cover business risks in England. Neither defendant purposefully availed
itself of the privilege of conducting activities within California, thereby
invoking the benefits and protections of its laws. (Opinion by Mallano, J.,
with Ortega, Acting P. J., and Vogel (Miriam A.), J., concurring.) HEADNOTES: CALIFORNIA OFFICIAL
REPORTS HEADNOTES Classified to California
Digest of Official Reports (1) Courts ¤
17--Jurisdiction--In Personam Jurisdiction over Nonresidents--Burden of Proof.
--When a defendant moves the trial court to quash service of summons for lack
of personal jurisdiction, the plaintiff has the initial burden of proving that
sufficient contacts exist between the defendant and California to justify the
exercise of personal jurisdiction. If that burden is met, the burden shifts to
the defendant to demonstrate that the assumption of jurisdiction would be unreasonable.
Where the evidence of jurisdictional facts is not in conflict, the appellate
court independently reviews the trial court's decision. To the extent there are
conflicts in the evidence, the appellate court must resolve them in favor of
the prevailing party and the trial court's order. (2) Courts ¤
17--Jurisdiction--In Personam Jurisdiction over Nonresidents--Long-arm Statute.
--California's long-arm statute extends the jurisdiction of California courts
to the outermost boundaries of due process. A court of California may exercise
jurisdiction on any basis not inconsistent with the Constitution of California
or of the United States. California may not exercise jurisdiction over a
nonresident unless the relationship of that person or entity to the state is
such as to make the exercise of such jurisdiction reasonable. (3) Courts ¤
17--Jurisdiction--In Personam Jurisdiction over Nonresidents--General and
Specific Jurisdiction. --Personal jurisdiction over nonresidents is of two
types: general and specific. General jurisdiction exists when the activities of
a nonresident in the forum state are substantial, continuous, and systematic,
or extensive and wide-ranging. In these circumstances, it is not necessary that
the cause of action be related to the defendant's activities in the forum
state. In contrast, under specific jurisdiction, the lawsuit must arise out of,
or be related to, the defendant's contacts with the forum. (4) Courts ¤
17.2--Jurisdiction--In Personam Jurisdiction over Nonresidents--Due Process.
--The due process clause of the federal Constitution protects an individual's
liberty interest in not being subject to the binding judgments of a forum with
which he or she has established no meaningful contacts, ties, or relations. The
constitutional touchstone is whether the defendant purposefully established
minimum contacts in the forum state. The unilateral activity of those who claim
some relationship with a nonresident defendant cannot satisfy the requirement
of contact with the forum state. The application of this rule will vary with
the quality and nature of the defendant's activity, but 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. This requirement ensures that a
defendant will not be haled into a jurisdiction solely as a result of random,
fortuitous, or attenuated contacts, or of the unilateral activity of another party
or a third person. (5) Courts ¤
17.4--Jurisdiction--In Personam Jurisdiction over Nonresidents--Actions Within
Forum State. --Jurisdiction is proper where a nonresident defendant's contacts
with a state proximately result from actions by the defendant that create a
substantial connection with the forum state. Thus, where the defendant
deliberately has engaged in significant activities within a state or has
created continuing obligations with residents of the forum, the defendant has
availed himself or herself of the privilege of conducting business there.
Because his or her activities are shielded by the benefits and protections of
the forum's laws, it is presumed not to be unreasonable to require the
defendant to submit to the burdens of litigation in that forum. (6a) (6b) Courts ¤
17.8--Jurisdiction--In Personam Jurisdiction over Nonresidents--California
Insurance Underwriters' Actions Against English Entities Formed to Reinsure
Underwriting Obligations. --The trial court properly granted defendants' motion
to quash service of summons for lack of personal jurisdiction in each of two
actions brought by insurance underwriters, who were residents of California and
who were associated with an English company that provided a marketplace for
insurance underwriters, against an English insurance syndicate that reinsured
underwriting losses and an English company that was formed to reinsure certain
underwriting obligations of all underwriters. Both defendants were formed in
England, conducted their business in England, and had no presence in
California. Although the parties offered conflicting evidence whether
defendants solicited reinsurance policies in California, the trial court
impliedly found in favor of defendants. Further, plaintiffs' purchase of stop-loss
insurance was an intermediate step in their attempt to make a profit in the
London insurance market. Plaintiffs pledged their personal assets to back
underwriting risks. Plaintiffs obtained insurance through their agent in
England to cover business risks in England. Correspondence from England to
California did not constitute sufficient contacts. Thus, neither defendant
purposefully availed itself of the privilege of conducting activities within
California, thereby invoking the benefits and protections of its laws. [See 2 Witkin, Cal.
Procedure (4th ed. 1996) Jurisdiction, ¤ 133 et seq.] (7) Courts ¤
17.2--Jurisdiction--In Personam Jurisdiction over Nonresidents--Minimum
Contacts--Existence of Contract. --When determining whether the existence of a
contract between a California resident and a nonresident is a sufficient
contact with California to justify the exercise of personal jurisdiction over
the nonresident, it must be recognized that a contract is ordinarily an
intermediate step serving to tie up prior business negotiations with future
consequences that themselves are the real object of the business transaction.
It is these factors--prior negotiations and contemplated future consequences,
along with the terms of the contract and the parties' actual course of
dealing--that must be evaluated in determining whether the nonresident
purposefully established minimum contacts within the forum. (8) Courts ¤
18--Jurisdiction--In Personam Jurisdiction over Nonresidents--General and
Special Appearance. --In a civil action, nonresident defendants did not waive
their objection to personal jurisdiction by discussing the merits of the case
in their motion to quash service of summons. Special appearances are not proper
occasions for testing the legal or factual merits of a complaint. Nevertheless,
when in personam jurisdiction is claimed on the basis of a foreign defendant's
alleged forum-related activities in connection with the cause of action
pleaded, facts relevant to the question of jurisdiction often bear upon the
basic merits of the complaint. When in personam jurisdiction depends on the
validity of the substantive claim against the foreign defendant, it is to be
expected that the defendant's showing on the motion to quash negates the
existence of that claim. COUNSEL: Baker, Keener &
Nahra, Robert C. Baker, Daniel Patrick Leonard and R. Jeffrey Neer for
Plaintiffs and Appellants. Hancock Rothert &
Bunshoft, Barry L. Bunshoft, Deborah A. Pitts and Jennifer A. Vane for
Defendants and Respondents. JUDGES: Opinion by
Mallano, J., with Ortega, Acting P. J., and Vogel (Miriam A.), J., concurring. OPINIONBY: MALLANO OPINION: [*1434] [**526] MALLANO, J. This case is just one of
many in which individual underwriters at Lloyd's of London have sued English
entities in the United States based on events that occurred in England. The
trial court dismissed the action for lack of personal jurisdiction. We conclude
that defendants did not have the requisite contacts with the State of
California and affirm. BACKGROUND Lloyd's of London,
though not an insurance company itself, provides a marketplace for insurance
underwriters. Underwriters
[***2] at Lloyd's,
including plaintiffs, are known as "Names." They combine in
"syndicates" to underwrite insurance. Each Name has a percentage
share in the syndicates of which he or she is a member. The underwriting
capacity of each syndicate is supplied by the funds advanced by the Names.
Excess losses--those that exceed
[**527] the premiums
paid--are covered by the Names' commitment to pay losses from their personal
assets. As a condition of membership at Lloyd's, the Names execute a
"General Undertaking" by which they acknowledge their unlimited
financial commitment to cover losses. Faced with the
possibility of unlimited liability, many Names procure personal stop-loss
policies, which essentially reinsure the underwriting losses for which a Name
may become liable. In November 1989 and September 1990, respectively,
plaintiffs Thomas E. Malone and Cyril Lucas purchased stop-loss policies
through Holman Wade, a London broker. The policies were underwritten by
defendant Syndicate 872 and provided coverage up to specified limits. During the late 1980's
and early 1990's, unanticipated losses from asbestosis and pollution claims,
together with a string of catastrophic events such [***3] as
Hurricane Hugo and the bombing of Pan Am Flight No. 103, caused losses far
greater than the premiums paid, causing a significant financial burden on the
Names. As losses mounted, intramarket disputes arose. To restore the integrity
of the London insurance market, Lloyd's developed a "Reconstruction and
Renewal Plan" by which a newly formed company, defendant Equitas
Reinsurance Limited, would reinsure the Names for their pre-1993 non-life
underwriting obligations. In exchange for the reinsurance, Equitas would charge
the Names a premium that was based on each Name's proportionate share of the
pre-1993 reserves and losses
[*1435] incurred by the
syndicates in which they were members. If the plan was approved by a majority
of Names, even the dissenting Names would be assessed premiums as authorized by
their commitment to Lloyd's in the General Undertaking. Ninety-four percent of
the Names approved the plan. Plaintiffs were among the 6 percent who dissented
and refused to pay premiums to Equitas. Under the terms of a "Reinsurance
and Run-Off Contract," if a dissenting Name refused to pay the required
premium, Equitas could use the proceeds from that Name's stop-loss policy [***4] to offset the premium owed for the reinsurance. Equitas's
right to assess a premium on the dissenting Names and, by implication, its
right to the benefits under their stop-loss policies, was approved by the
English Court of Appeal, Civil Division in Society of Lloyd's v. Leighs (QBCMI
97/0644/B July 31, 1997). n1 - - - - - - - - - - - -
- - - - - -Footnotes- - - - - - - - - - - - - - - - - - n1 This decicion can be
found at www.casetrack.com/casebase. - - - - - - - - - - - -
- - - - -End Footnotes- - - - - - - - - - - - - - - - - On March 9, 1998, Malone
filed this action against Syndicate 872 and Equitas in Los Angeles County
Superior Court (No. BC187236). On April 1, 1998, Lucas filed a similar action
in San Diego County Superior Court (case No. 719419), which was subsequently
transferred to Los Angeles County Superior Court (case No. BC205803). By order
dated March 30, 1999, the two cases were deemed related and were assigned for
all purposes to Judge Kurt J. Lewin. In May 1999, plaintiffs separately
filed amended complaints, alleging that they had received notice from Lloyd's
that their underwriting losses had exceeded the limits of their stop-loss
policies. [***5] Plaintiffs alleged that they were
entitled to payment under the policies. They further alleged that Syndicate
872, together with Equitas, had "taken the position that it is not
obligated to pay said claim because it had a right to a set off greater than
the amount owed to Plaintiff pursuant to an agreement to which Plaintiff was
not a party[, i.e., the Reinsurance and Run-Off Contract]." At all
pertinent times, plaintiffs were residents of California. On July 9, 1999,
defendants filed separate motions to quash service of summons for lack of
personal jurisdiction. Plaintiffs filed opposition. The trial court heard
argument [**528] on August 9, 1999, and took the matter
under submission. By order dated September 20, 1999, the trial court granted
the motions. Plaintiffs filed a timely appeal. DISCUSSION (1) When a defendant moves
the trial court to quash service of summons for lack of personal jurisdiction,
the plaintiff has the initial burden of
[*1436] proving that
sufficient contacts exist between the defendant and California to justify the
exercise of personal jurisdiction.
[***6] ( Vons Companies,
Inc. v. Seabest Foods, Inc. (1996) 14 Cal. 4th 434, 449 [58 Cal. Rptr. 2d 899,
926 P.2d 1085].) If that burden is met, the burden shifts to the defendant to
demonstrate that the assumption of jurisdiction would be unreasonable. (Ibid.)
Where the evidence of jurisdictional facts is not in conflict, we independently
review the trial court's decision. ( Great-West Life Assurance Co. v. Guarantee
Co. of North America (1988) 205 Cal. App. 3d 199, 204 [252 Cal. Rptr. 363].) To
the extent there are conflicts in the evidence, we must resolve them in favor
of the prevailing party and the trial court's order. ( Floyd J. Harkness Co. v.
Amezcua (1976) 60 Cal. App. 3d 687, 689 [131 Cal. Rptr. 667].) (2) "California's
'long-arm' statute extends the jurisdiction of California courts to the
outermost boundaries of due process. 'A court of this state may exercise
jurisdiction on any basis not inconsistent with the Constitution of this state
or of the United States.' " ( Rocklin De Mexico, S. A. v. Superior Court
(1984) 157 Cal. App. 3d 91, 94 [203 Cal. Rptr. 547].) [***7]
"[T]he forum state may not exercise jurisdiction over a nonresident
unless the relationship of that person or entity to the state is such as to
make the exercise of such jurisdiction reasonable." (3) (See. fn. 2.) (
Boaz v. Boyle & Co. (1995) 40 Cal. App. 4th 700, 716 [46 Cal. Rptr. 2d
888].) n2 - - - - - - - - - - - -
- - - - - -Footnotes- - - - - - - - - - - - - - - - - - n2 Personal jurisdiction
is of two types: general and specific. General jurisdiction exists when the
activities of a nonresident in the forum state are substantial, continuous, and
systematic, or extensive and wide-ranging. ( Boaz v. Boyle & Co., supra, 40
Cal. App. 4th at p. 717.) In such circumstances, it is not necessary that the
cause of action be related to the defendant's forum activities. (Ibid.) In
contrast, under specific jurisdiction, the lawsuit must arise out of, or be
related to, the defendant's contacts with the forum. ( Id. at pp. 716-717.) In
the present case, plaintiffs do not contend that California had general
jurisdiction over defendants. - - - - - - - - - - - -
- - - - -End Footnotes- - - - - - - - - - - - - - - - - [***8] (4) As the United States
Supreme Court explained in Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462
[105 S. Ct. 2174, 85 L. Ed. 2d 528]: "The Due Process Clause protects an
individual's liberty interest in not being subject to the binding judgments of
a forum with which he has established no meaningful 'contacts, ties, or
relations.' . . . By requiring that individuals have 'fair warning that a
particular activity may subject [them] to the jurisdiction of a foreign
sovereign,' . . . the Due Process Clause 'gives a degree of predictability to
the legal system that allows potential defendants to structure their primary
conduct with some minimum assurance as to where that conduct will and will not
render them liable to suit,' . . . . [P] . . . [P] "[T]he
constitutional touchstone remains whether the defendant purposefully
established 'minimum contacts' in the forum State. . . . In defining [*1437] when it is that a potential defendant should 'reasonably
anticipate' out-of-state
[***9] litigation, the
Court frequently has drawn from the reasoning of Hanson v. Denckla, 357 U.S.
235, 253 [78 S. Ct. 1228, 1239-1240, 2 L. Ed. 2d 1283] (1958): 'The unilateral
activity of those who claim some relationship with a nonresident defendant
cannot satisfy the requirement of contact with the forum State. The application
of that rule will vary with the quality and nature of the defendant's activity,
but 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 [**529] State, thus invoking the benefits and
protections of its laws.' "This 'purposeful
availment' requirement ensures that a defendant will not be haled into a
jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated'
contacts, . . . or of the 'unilateral activity of another party or a third
person,' . . . . (5) Jurisdiction is proper, however, where the contacts
proximately result from actions by the defendant himself that create a
'substantial connection' with the forum State. . . . Thus [***10] where the defendant 'deliberately' has engaged in
significant activities within a State, . . . or has created 'continuing
obligations' between himself and residents of the forum, . . . he manifestly
has availed himself of the privilege of conducting business there, and because
his activities are shielded by 'the benefits and protections' of the forum's
laws it is presumptively not unreasonable to require him to submit to the
burdens of litigation in that forum as well." ( Burger King Corp. v. Rudzewicz,
supra, 471 U.S. at pp. 471-476 [105 S. Ct. at pp. 2181-2184], citations, fns.
& original italics omitted.) n3 - - - - - - - - - - - -
- - - - - -Footnotes- - - - - - - - - - - - - - - - - - n3 "Once it has
been decided that a defendant purposefully established minimum contacts within
the forum State, these contacts may be considered in light of other factors to
determine whether the assertion of personal jurisdiction would comport with
'fair play and substantial justice.' . . . Thus courts in 'appropriate case[s]'
may evaluate 'the burden on the defendant,' 'the forum State's interest in
adjudicating the dispute,' 'the plaintiff's interest in obtaining convenient
and effective relief,' 'the interstate judicial system's interest in obtaining the
most efficient resolution of controversies,' and the 'shared interest of the
several States in furthering fundamental substantive social policies.' "
(Burger King, supra, 471 U.S. at pp. 476-477 [ 105 S. Ct. at p. 2181], citation
omitted.) Because we conclude that defendants lacked the requisite minimum
contacts with California, we do not reach the question of whether jurisdiction
over them would comport with fair play and substantial justice. (See Felix v.
Bomoro Kommanditgesellschaft (1987) 196 Cal. App. 3d 106, 117 [241 Cal. Rptr.
670, 69 A.L.R.4th 1].) - - - - - - - - - - - -
- - - - -End Footnotes- - - - - - - - - - - - - - - - - [***11] (6a) In moving to quash
service of summons, Syndicate 872 submitted a declaration from its former chief
underwriter, who stated: (1) the syndicate was formed in 1982, with its
registered office located at 10 Crosswall, London, England, and its principal
place of business at 1 Lime Street, London, England; (2) the syndicate was
organized under the laws of England as an unincorporated association of Names;
(3) the syndicate authorized
[*1438] Holman Wade, a
London broker, to issue stop-loss policies that would indemnify the Names for
losses they incurred while acting as underwriters in the London insurance market;
(4) in accordance with the custom and practice at Lloyd's, plaintiffs, through
their agents, negotiated and procured stop-loss policies from Holman Wade in
London, England; and (5) the syndicate ceased writing insurance in 1993. The declaration also set
forth the usual litany of "no contacts" WITH THE FORUM STATE:
Syndicate 872 was never qualified to do business in California, never
maintained an office, post office box, or telephone listing in California,
never owned or leased any real or personal property in California, never
advertised in California, never paid or was [***12]
assessed taxes or franchise fees in California, never commenced a legal
action in California, and never agreed --whether by contract, appointment of
agents, or otherwise--to submit to the jurisdiction of California. Similarly, Equitas
submitted a declaration from its corporate secretary, stating: (1) Equitas is a
private limited company organized under the laws of England and was
incorporated on December 5, 1995; (2) Equitas's registered and principal place
of business is 33 St. Mary Axe, London, England; (3) Equitas does not have any
place of business outside England; (4) all of the company's officers,
directors, shareholders, and employees reside in England; (5) pursuant to the
Reinsurance and Run-Off Contract, Equitas agreed to reinsure the pre-1993
non-life liabilities, losses, and claims of the Names; (6) the reinsurance
contract was negotiated, executed, and was to be performed in England; (7)
Equitas [**530] was funded in part by premiums to be
paid by the Names based on their proportionate share of the pre-1993
liabilities of the syndicates in which they participated; and (8) under the
reinsurance contract, Equitas had the right to offset those premiums with the
benefits [***13] available under a Name's stop-loss
policy. Finally, like Syndicate 872, Equitas denied any contacts with
California. In opposing the motion
to quash, Malone submitted a declaration, stating: (1) Syndicate 872 had
solicited him to buy stop-loss insurance (as reflected in various
correspondence); (2) on November 24, 1989, he purchased stop-loss coverage from
the syndicate through Holman Wade, a syndicate agent; (3) the insurance policy
was executed, delivered, and renewed in Torrance, California; (4) premiums on
the policy were paid from Malone's personal account in London; (5) the personal
account was administered by an agent of the syndicate; (6) Malone incurred
losses in the London insurance market and made several claims under the policy;
(7) he received two payments, both sent to his Torrance address; and (8) on
March 11, 1997, Equitas informed him by letter that his claims had been
approved but Equitas would [*1439] not make any further payments to him,
as permitted under the Reinsurance and Run-Off Contract. For his part, Lucas
submitted a declaration, stating: (1) Syndicate 872 had solicited him to
purchase stop-loss insurance; (2) he purchased stop-loss coverage in [***14] January 1990 from the syndicate through Holman Wade, an agent
of the syndicate; (3) the insurance policy was executed in England but was
renewed on two occasions from Escondido, California; (4) after Lucas suffered
losses in the London insurance market, he made several claims under the
stop-loss policy; (5) on one claim, he received payment in California; and (6)
on April 7, 1997, Equitas informed Lucas by letter that his claims had been
approved but Equitas would not make any additional payments to him because the
remaining proceeds would be used as an offset under the Reinsurance and Run-Off
Contract. Relying on McGee v.
International Life Ins. Co. (1957) 355 U.S. 220 [78 S. Ct. 199, 2 L. Ed. 2d
223], plaintiffs assert that Syndicate 872 solicited them in California to buy
stop-loss insurance. In McGee, an insurance company in Texas solicited a
California resident by mail to buy life insurance. The resident purchased a
policy and mailed the premiums from California to Texas for six years, until
his death. When the insurer refused to pay on the policy, the beneficiary filed
suit in California and prevailed. The Supreme Court found that personal
jurisdiction [***15] existed because the insurer had
solicited the insured in California, delivered the policy in California, and
accepted premiums mailed from California. Further, the event that triggered the
policy's benefits--the insured's death--occurred in California. ( Id. at pp.
222-223 [78 S. Ct. at p. 201].) As the court held, "[i]t is sufficient for
purposes of due process that the suit was based on a contract which had
substantial connection with [the forum] State." ( Id. at p. 223 [78 S. Ct.
at p. 201.) Here, we cannot say that plaintiffs' stop-loss policies had a
substantial connection with California. For one thing, McGee is
not as expansive as plaintiffs contend. "McGee does not hold that the
simple fact that beneficiaries of an insurance policy issued by a foreign
corporation reside in California is sufficient to establish personal
jurisdiction over that corporation." ( In re Marriage of Martin (1989) 207
Cal. App. 3d 1426, 1435 [255 Cal. Rptr. 720].) "If the question is whether
an individual's contract with an out-of-state party [***16] alone
can automatically establish sufficient minimum contacts in the other party's
home forum, we believe the answer clearly is that it cannot." ( Burger
King Corp. v. Rudzewicz, supra, 471 U.S. at p. 478 [105 S. Ct. at p. 2185].) Further, plaintiffs'
reliance on the solicitation factor goes nowhere. The evidence on that point
was in conflict. Defendants' evidence indicated that, [*1440] in
accordance with "the custom and practice in the London insurance market,
[plaintiffs], through [**531] their agents, negotiated and procured
[stop-loss] policies from Holman Wade in London, England." (Italics
added.) Given this conflict, we defer to the trial court's implied finding in
favor of defendants. (See Floyd J. Harkness Co. v. Amezcua, supra, 60 Cal. App.
3d at p. 689.) That defendants did not
solicit business in California strongly supports the view that personal
jurisdiction was lacking. (See Kulko v. California Superior Court (1978) 436
U.S. 84, 97 [98 S. Ct. 1690, 1699, 56 L. Ed. 2d 132] [no personal jurisdiction
where nonresident defendant did not solicit business from plaintiff]; Hanson v.
Denckla, supra, 357 U.S. at pp. 251-252 [78 S. Ct. at p. 1239] [***17] [no jurisdiction over nonresident who did not solicit
business in forum state]; Travelers Health Assn. v. Virginia (1950) 339 U.S.
643 [70 S. Ct. 927, 94 L. Ed. 1154] [Virginia had jurisdiction over Nebraska
mail-order health insurer who had solicited business in Virginia]; Sher v.
Johnson (9th Cir. 1990) 911 F.2d 1357, 1363 [no jurisdiction over out-of-state
law firm where firm "is solicited in its home state and takes no
affirmative action to promote business within the forum state"].) n4 - - - - - - - - - - - -
- - - - - -Footnotes- - - - - - - - - - - - - - - - - - n4 Plaintiffs sometimes
refer to Syndicate 872 as Lloyd's. The record suggests that the syndicate and
Lloyd's were distinct entities. Regardless, we would reach the same result even
if they were a single entity. On a similar note, plaintiffs argue that, under
the Reinsurance and Run-Off Contract, Equitas "replaced" the
syndicate and that all of the syndicate's contacts with California are imputed
to Equitas. Even if true, that would not make a difference because we find that
the syndicate's contacts were insufficient to support personal jurisdiction. - - - - - - - - - - - -
- - - - -End Footnotes- - - - - - - - - - - - - - - - - [***18] (7) Moreover, the
Supreme Court has "emphasized the need for a 'highly realistic' approach
that recognizes that a 'contract' is 'ordinarily but an intermediate step
serving to tie up prior business negotiations with future consequences which
themselves are the real object of the business transaction.' . . . It is these
factors--prior negotiations and contemplated future consequences, along with
the terms of the contract and the parties' actual course of dealing--that must
be evaluated in determining whether the defendant purposefully established
minimum contacts within the forum." ( Burger King Corp. v. Rudzewicz,
supra, 471 U.S. at p. 479 [105 S. Ct. at p. 2184].) (6b) In the present
case, the purchase of stop-loss insurance was an intermediate step in plaintiffs'
attempt to make a profit in the London insurance market. At the outset, they
pledged their personal assets to back the underwriting risks of the Lloyd's
market. They then purchased stop-loss insurance because of the possibility
that, somewhere down the road, losses might exceed premiums. In short,
plaintiffs obtained [***19] insurance through their agent in
England to cover business risks in England. Correspondence from London to
California--making some payments under the policy and denying others--does not
constitute sufficient contacts. (See Hunt v. Erie Ins. Group [*1441] (9th Cir. 1984) 728 F.2d 1244, 1248.) We therefore conclude
that neither of the defendants " 'purposefully avail[ed] itself of the
privilege of conducting activities within the forum State, thus invoking the
benefits and protections of its laws.' " ( Burger King Corp. v. Rudzewicz,
supra, 471 U.S. at p. 475 [105 S. Ct. at p. 2183].) Our conclusion finds
support in a decision by the Colorado Court of Appeals. In Union Pacific R. Co.
v. Equitas Ltd. (Colo.Ct.App. 1999) 987 P.2d 954, the appellate court agreed
with the findings of the trial court, to wit: " 'Equitas Limited is a
British company which has never done business in the State of Colorado, has no
agents in the State of Colorado, owns no property in the State of Colorado, and
has not solicited business in the State of Colorado. . . . The fact that some
of the Names may be Colorado residents does not mean that Equitas [***20] Limited has purposely availed itself of the privilege of
doing [**532] business in Colorado. . . . Therefore,
the mere fact that Colorado Names entered into an agreement with Equitas
Limited, does not in any way suggest that Equitas Limited has affirmatively
taken advantage of doing business in Colorado. . . . The fact that the
Reinsurance and Run-Off Contract makes it foreseeable that Equitas Limited
would be hiring and directing lawyers in a Colorado lawsuit is insufficient.
Such foreseeability . . . [alone, is not] a sufficient constitutional basis to
give this Court personal jurisdiction over Equitas Limited.' " ( Id. at p.
957.) n5 - - - - - - - - - - - -
- - - - - -Footnotes- - - - - - - - - - - - - - - - - - n5 Plaintiffs cite two
superior court decisions--one from Maine and the other from New Jersey--that
apparently found jurisdiction over Equitas. We decline to follow them. - - - - - - - - - - - -
- - - - -End Footnotes- - - - - - - - - - - - - - - - - (8) In closing, we
reject plaintiffs' argument that defendants waived their objection to personal
jurisdiction by discussing the merits of the case in their motion to quash
service of [***21] summons. "Special appearances are
not proper occasions for testing the legal or factual merits of a complaint.
[Citation.] Nevertheless, when in personam jurisdiction is claimed on the basis
of a foreign defendant's alleged forum-related activities in connection with
the cause of action pleaded, facts relevant to the question of jurisdiction
often bear upon the basic merits of the complaint. . . . When in personam
jurisdiction depends on the validity of the substantive claim against the
foreign defendant[, it is to be expected that the] defendant's showing on the
motion to quash negatives the existence of that claim . . . ." ( Regents
of University of New Mexico v. Superior Court (1975) 52 Cal. App. 3d 964, 970,
fn. 7 [125 Cal. Rptr. 413].) n6 - - - - - - - - - - - -
- - - - - -Footnotes- - - - - - - - - - - - - - - - - - n6 Plaintiffs contend
that the Reinsurance and Run-Off Contract was not a "typical"
indemnity insurance contract but was a reinsurance-to-close contract. On that
issue, we agree with the Colorado Court of Appeals: "Plaintiff asserts
that the contract here is a 'reinsurance to close' contract. However, we are
not aware of any authority to support its assertion that this characterization
is significant and relevant to our analysis." ( Union Pacific R. Co. v.
Equitas Ltd., supra, 987 P.2d at p. 956.) - - - - - - - - - - - -
- - - - -End Footnotes- - - - - - - - - - - - - - - - - [***22] [*1442] DISPOSITION The order is affirmed. Ortega, Acting P. J.,
and Vogel (Miriam A.), J., concurred. On November 27, 2000,
the opinion was modified to read as printed above. |