Case Title: Ex parte Thomas M. Reindel, Tommy N. Kellogg and Victoria J. Seeger. PETITION FOR WRIT OF MANDAMUS: CIVIL (In re: Alabama Hospital Corporation et al. v. General Reinsurance Corporation et al. and Baptist Health Systems, Inc. v. General Reinsurance Corporation et al.)

Citation: 

Docket Number: 1051021

State: alabama

Court: Alabama Supreme Court

Date: 2007-03-02T00:00:00Z

Document:
REL: 03/02/07 Thomas M. Reindel
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
242-4621), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2006-2007
_________________________
1051021
_________________________
Ex parte Thomas M. Reindel, Tommy N. Kellogg, and Victoria
J. Seeger
PETITION FOR WRIT OF MANDAMUS
(In re:  Alabama Hospital Association et al.
v.
General Reinsurance Corporation et al.
and
Baptist Health System, Inc.
v.
General Reinsurance Corporation et al.)
(Montgomery Circuit Court, CV-2004-1172; CV-2004-1757)
1051021
This action was commenced in April 2004.
1
According to AHAT's 223-page tenth amended and restated
2
complaint, the statutory scheme in § 22-21-240 et seq.
"authorizes hospitals to enter into a trust agreement ... to
contribute funds to the trust for the purpose of self-insuring
the member hospitals against professional and general public
liability claims, based upon acts or omissions of such
hospitals, including ... claims based upon malpractice."
This action was commenced in July 2004.
3
2
WOODALL, Justice.
Thomas M. Reindel, Tommy N. Kellogg, and Victoria J.
Seeger petition this Court for a writ of mandamus directing
the Montgomery Circuit Court to vacate its order denying their
motion to dismiss the plaintiffs' claims against them in
consolidated actions pending in that court on the basis of
lack of in personam jurisdiction.  We deny the petition.
The plaintiffs in the first-filed action, CV-2004-1172,1
are the Alabama Hospital Association and 33 Alabama hospitals,
which, at all relevant times, were members of the Alabama
Hospital Association Trust ("the trust"), organized pursuant
to Ala. Code 1975, § 22-21-240 et seq.  The Alabama Hospital
Association and the 33 member hospitals are hereinafter
referred to collectively as "AHAT."   The plaintiff in the
2
second-filed action, CV-2004-1757,  is Baptist Health System,
3
1051021
3
Inc. ("BHS"), an Alabama corporation that operates hospitals,
which was also a member of the trust.  The two actions have
been consolidated in the trial court.
The petitioners, defendants below, are vice presidents of
General Reinsurance Corporation ("Gen Re") and residents of
Connecticut.  Although Gen Re, a Delaware corporation with its
principal place of business in Connecticut and licensed to do
business in Alabama, is also a defendant, it is not a party to
this mandamus proceeding.
I. Procedural Background 
The 
allegations 
in 
the 
complaints 
center 
on 
the
petitioners' dealings with Reciprocal of America ("ROA") -- a
Virginia-based reciprocal insurer, which provided insurance
and 
reinsurance 
to 
hospitals, physicians, and lawyers
throughout the South and Midwest until January 29, 2003, when
ROA was placed in receivership by the Circuit Court of the
City of Richmond, Virginia.  The complaints accuse the
petitioners of engaging in what is essentially a two-part
conspiracy to defraud AHAT and BHS.  They allege that the
petitioners conspired with other defendants to induce AHAT and
BHS to exchange their equity interests in the trust for "ROA
1051021
The exchange essentially resulted in the merger of the
4
trust with ROA.
4
securities,"  and that, through a series of transactions with
4
ROA between January 2001 and June 2002, AHAT and BHS lost
approximately $50 million and $5.6 million, respectively, as
a result of the financial collapse of ROA.  The initial
transaction was embodied in a document entitled "Acquisition
of Assets and Assumption of Liabilities Agreement," effective
January 31, 2001.  In June 2002, some of the hospitals were
allegedly induced to make additional capital contributions to
ROA ("the capital calls").  We refer to this aspect of the
alleged enterprise as the "investment-fraud conspiracy."  
According to the plaintiffs, the petitioners also
allegedly conspired to deceive state insurance regulators and
a prominent insurance-company rating agency by essentially
falsifying data and records regarding ROA's financial status
and its relationships with Gen Re and various other entities
in order to encourage investments in ROA by the plaintiffs and
others similarly situated.  We refer to this part of the
alleged 
enterprise 
as 
the 
"financial-reporting-fraud"
conspiracy, a term coined by AHAT. 
1051021
5
The petitioners challenged the exercise of the trial
court's jurisdiction over them with supporting affidavits.
They each averred that they have never lived in Alabama and
that 
they 
do 
not 
conduct 
business 
in 
this 
State.
Subsequently, AHAT filed a "notice of service of discovery
documents ... related to personal jurisdiction issues."  The
trial court denied the petitioners' motions to dismiss,
holding that AHAT's "complaint set forth allegations that
establish sufficient contacts with this state to confer on
this court personal jurisdiction over [the petitioners]."  The
petitioners have challenged that holding by petitioning for a
writ of mandamus.  AHAT and BHS have agreed to a stay of
discovery, which the petitioners sought pending resolution of
the jurisdictional issues by this Court.  Consequently, the
assertion of personal jurisdiction by AHAT and BHS rests
entirely on the allegations in their complaints.
In that connection, we note that the claims against the
petitioners in the consolidated complaints of AHAT and BHS are
similar.  However, AHAT's "tenth amended and restated
complaint" is more detailed than the last amended complaint of
BHS.  The parties have focused their arguments on the
1051021
"'[A] petition for a writ of mandamus is the proper
5
device by which to challenge the denial of a motion to dismiss
for lack of in personam jurisdiction.'" Ex parte Troncalli
Chrysler Plymouth Dodge, Inc., 876 So. 2d 459, 463 (Ala.
2003)(quoting Ex parte Dill, Dill, Carr, Stonbraker &
Hutchings, P.C., 866 So. 2d 519, 525 (Ala. 2003)). See also Ex
parte McInnis, 820 So. 2d 795 (Ala. 2001); Ex parte Paul
Maclean Land Servs., Inc., 613 So. 2d 1284, 1286 (Ala. 1993).
6
sufficiency of the jurisdictional allegations in AHAT's
complaint.  Indeed, in its briefs to this Court, BHS expressly
incorporates the facts and arguments set forth in AHAT's
briefs "[i]n an effort not to be redundant."  Therefore, we
will restrict our discussion to the jurisdictional sufficiency
of the more comprehensive tenth amended and restated complaint
of AHAT.5
II. Discussion
Procedurally, 
jurisdiction 
over 
an 
out-of-state 
defendant
is obtained pursuant to the "long-arm" rule, Ala. R. Civ. P.
4.2(b), as amended August 1, 2004.  A person or entity is
subject to jurisdiction under Rule 4.2(b) when that "person or
entity has such contacts with this state that the prosecution
of the action against the person or entity in this state is
not inconsistent with the constitution of this state or the
Constitution of the United States ...."  Rule 4.2(b) now
1051021
7
embodies the "catchall" clause that was found in subparagraph
(I) of Rule 4.2 before it was amended. "The structure of
former 4.2 included a 'laundry list' of types of conduct that
would 
subject 
an 
out-of-state 
defendant 
to 
personal
jurisdiction in Alabama, as well as the 'catchall' clause now
contained in new 4.2(b)."  Committee Comments to Amendment to
Rule 4.2 Effective August 1, 2004. "[S]ubparagraph (I) [was]
but a restatement of the current definition of the federal
constitutional 
standard." 
 
Committee 
Comments 
on 
1977 
Complete
Revision to Rule 4.2.  
That 
standard 
"'is 
the 
minimum-contacts 
standard
elucidated in International Shoe [Co. v. Washington, 326 U.S.
310 (1945)],'" and its progeny.  Bearden v. Byerly, 494 So. 2d
59, 61 (Ala. 1986) (quoting Shaffer v. Heitner, 433 U.S. 186,
207 (1977)).  Under that standard, "[a] physical presence in
Alabama is not a prerequisite to personal jurisdiction over a
nonresident."  Sieber v. Campbell, 810 So. 2d 641, 644 (Ala.
2001).  What is required, however, is that the defendant have
such contacts with Alabama that it "'should reasonably
anticipate being haled into court [here].'"  Dillon Equities
v. Palmer & Cay, Inc., 501 So. 2d 459, 462 (Ala. 1986)
1051021
8
(quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
297 (1980)).  
The 
standard 
is 
met 
where 
"the 
defendant 
[has]
'purposefully availed' itself of conducting activity in the
forum state, by directly targeting its [activities at] the
state."   Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446,
454 (3d Cir. 2003).  "'This purposeful-availment requirement
assures that a defendant will not be haled into a jurisdiction
as a result of "'the unilateral activity of another person or
a third person.'"'"  Ex parte Dill, Dill, Carr, Stonbraker &
Hutchings, P.C., 866 So. 2d 519, 525-26 (Ala. 2003) (quoting
Elliott v. Van Kleef, 830 So. 2d 726, 731 (Ala. 2002), quoting
in turn Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
(1985)).  Thus, the ultimate question under Rule 4.2(b) is the
same as under former Rule 4.2(a)(2)(I), namely, whether the
out-of-state defendants have  "some minimum contacts with this
state [that] ... it is fair and reasonable to require [them]
to come to this state to defend an action."  (Emphasis added.)
According to the petitioners, dismissal "is required
because [AHAT's] complaint does not contain a single
allegation describing any act committed by Reindel, Kellogg,
1051021
In other words, AHAT and BHS allege that contacts with
6
Alabama that are related to the alleged conspiracy give rise
to specific, as opposed to general, personal jurisdiction.
See Elliott v. Van Kleef, 830 So. 2d at 730-31 (discussing the
difference between general personal jurisdiction and specific
personal jurisdiction).
9
or Seeger that occurred in Alabama, that was expressly aimed
at Alabama, or that was directed [at] any identified or
identifiable Alabama plaintiff."  Reply brief, at 11 (emphasis
added).  AHAT and BHS implicitly concede that the petitioners
have not personally performed such overt acts.  Their theory
of jurisdiction, however, is that the petitioners were members
of a "conspiracy in which they not only knew but directed
their co-conspirators' actions in Alabama in furtherance of
the goals of the conspiracy, which caused [AHAT and BHS] to
suffer injury."  AHAT's brief, at 5.   Moreover, according to
6
AHAT, the trial court properly refused to dismiss the claims
against the petitioners, because, AHAT argues, they  failed to
"rebut the key conspiracy allegations [of AHAT's complaint]
upon [which] the circuit court's personal jurisdiction over
them is based."  AHAT's brief, at 5-6 (some emphasis added).
A. Key Conspiracy Allegations
AHAT's 
complaint 
describes 
purported 
activities 
conducted
by more than 18 individuals and entities from approximately
1051021
FVR has also been placed in receivership.  The complaint
7
describes FVR as an "offshore captive affiliate" of ROA.   
10
1991 to 2002 that are best characterized as a two-phased
conspiracy.  The phase constituting the bulk of the
allegations of the complaint is the financial-reporting fraud.
1. Financial-reporting fraud
The 
alleged 
financial-reporting 
fraud 
principally
consists of 13 or 14 interrelated but distinct "schemes,"
which AHAT identifies in its brief by the selective grouping
of paragraphs from its complaint.  Only a few such schemes,
however, are specifically alleged to be applicable to the
petitioners.      
For example, AHAT alleges that the petitioners conspired
with codefendants Kenneth R. Patterson, Carolyn B. Hudgins,
and John William Crews, executive officers of ROA, to enter
into a number of agreements involving Gen Re, ROA, and First
Virginia 
Reinsurance, 
Ltd. 
("FVR"). 
 
FVR, 
a 
Bermuda
corporation, was allegedly created "to serve as a reinsurer of
all of ROA's retained share of risk on [its] physician and
lawyer business."   Amended and Restated Complaint, at ¶ 116.
7
AHAT alleges that these agreements included sham risk-transfer
arrangements, "variously referred to as 'aggregate stop
1051021
11
loss/funding cover,' ... 'noncontractual understandings,' and
'finite 
contracts,' 
.... 
masquerad[ing] 
as 
legitimate 
business
arrangements 
while 
serving [the] improper purposes of
manipulating the reported financial condition of ROA ... and
underreporting [ROA's] liabilities," which "transactions were
actually loans from Gen Re to FVR ..., guaranteed by ROA."
Amended and Restated Complaint, ¶ 156 (emphasis added).
Another such scheme allegedly involved a plan that
allowed Gen Re to "pass ROA business," that is, "FVR-reinsured
risk," through Gen Re "to FVR pursuant to retrocession
agreements between Gen Re and FVR ['the retrocession
agreements']."  FVR's performance under the retrocession
agreements was secured by assets held in Bermuda financial
institutions under trust agreements to which FVR and Gen Re
were allegedly parties ("the Bermuda trusts").  AHAT alleges
that the petitioners, along with Patterson and Hudgins,
"conspired to make a disguised transfer of $10 million from
ROA to the Bermuda trusts," which had become underfunded.  ¶
204.  According to AHAT, the transfer was "fraudulently
accounted for as a prepayment of reinsurance premiums to Gen
1051021
See, e.g., the Alabama Risk-Based Capital for Insurers
8
Act, Ala. Code 1975, § 27-2B-1 et seq., which mandates
progressively 
comprehensive 
managerial 
control 
by 
the
Commissioner of Insurance, inversely proportional to the ratio
of the insurer's "total adjusted capital" to its risk-based
capital, §§ 27-2B-5 to -7, as indicated in the insurer's
annual "adjusted RBC report." § 27-2B-3.
12
Re, ... thereby inflating ROA's surplus to policyholders by
$10 million."  ¶ 205 (emphasis added). 
Yet another scheme allegedly involved Patterson, Hudgins,
and the petitioners in the formulation of an "unreported side
agreement" in the year 2000 between Gen Re and ROA, which was
designed "to limit or eliminate Gen Re's reinsurance risk of
loss, while maintaining the illusion that Gen Re continued to
bear a substantial insurance risk of net loss under the Gen
Re/ROA reinsurance treaties." ¶ 183.  The agreement allegedly
contemplated "a cap in the amount of $140 million on Gen Re's
aggregate liability to ROA."  ¶ 186.  According to AHAT, this
agreement was not disclosed to insurance regulators in "ROA's
annual statement for the year 2000," ¶ 199, and was intended
to "arrest and improve ROA's deteriorating financial condition
while evading the enhanced regulatory monitoring[ ] that would
8
be triggered if ROA's RBC [risk-based capital] were to fall
1051021
"Best is one of five organizations designated as a
9
Nationally Recognized Statistical Rating Organization by the
United States Securities and Exchange Commission.  A.M. Best
issues financial strength ratings that measure an insurance
company's ability to pay claims."  Fleet Global Servs., Inc.
v. Republic Western Ins. Co. (Ms. 6:04-CV-954-ORL18JGG, Nov.
7, 2006) note 2 (M.D. Fla. 2006)(not published in F.Supp.2d).
13
below 200% of ACL [authorized control level], or Company
Action Level RBC."  ¶ 185 (emphasis added).
The essence of all the schemes forming the basis of the
financial-reporting-fraud allegations against the petitioners
is that the petitioners conspired with other defendants,
particularly officers of ROA, to conceal and misrepresent the
progressively precarious financial status of ROA.  Among the
alleged objects of this fraud were various state departments
of insurance, including those of Tennessee, Virginia, and
Alabama, which allegedly would have initiated regulatory
measures had they been given accurate information.  
Another alleged object of the fraud was the insurance-
rating company, A.M. Best Company, Inc. ("Best").   According
9
to AHAT, ROA was rated "A" by Best in January 2001, and
certain defendants used this rating as an incentive for AHAT
and BHS to invest in ROA.  More specifically, AHAT alleges
that "if ROA's and its affiliates' difficulties and problems
1051021
Olzacki has not been made a defendant in this action.
10
14
and true condition had been timely disclosed to Best, among
others, such ratings would not have been issued at the levels
they were issued, and the Plaintiffs would not have entered
into the transactions with the Defendants described in [the]
complaint."  ¶ 28 (emphasis added).  In other words, the
schemes constituting the financial-reporting fraud set the
stage for the alleged investment-fraud conspiracy.
2. Investment fraud
The investment fraud allegedly occurred when certain
defendants induced AHAT and BHS to invest in ROA, beginning in
January 2001 and thereafter, through the exchange of AHAT's
and BHS's equity in the trust for ROA securities and the
subsequent capital calls.  For example, AHAT's complaint
alleges:
"On September 14-17, 2000, at a meeting of the
Trustees and Board[] of ... [the trust] ...,
Patterson made [a] presentation to induce Plaintiffs
to merge or combine with ROA, which included some or
all of [the] aforesaid material misrepresentations
regarding the financial condition of ... [ROA and]
FVR. ... Also attending this meeting were ...
Hudgins ... and James Olzacki,[
] Executive Vice
10
President of Gen Re."
¶ 57.  It also alleges:
1051021
15
"With regard to the ... three individual Gen Re
defendants (Reindel, Seeger ... and Kellogg), they
were intimately involved for a period of many years
in the conspiratorial schemes which were intended
to, and did, deceive and mislead the Alabama
[Department of Insurance] and persons in Alabama
doing business with ROA and its units ..., with
respect to ROA's ... financial condition and
operations, and with their knowledge and consent
their co-conspirators, such as Crews, Patterson, ...
Hudgins, and others at ROA did business with and
carried on contacts with the Plaintiffs and others
in Alabama, as part of carrying out the joint
conspiratorial schemes.  Moreover, their actual and
de facto agents, such as ... Ken Patterson of ROA,
personally came to Alabama to make presentations to
the Plaintiffs with respect to Gen Re, in the
context of AHAT doing business with ROA."
¶ 36(ii) (emphasis added).  Finally, it alleges:
"Gen Re (1) regularly did large amounts of
business in Alabama, including dealings with various
Plaintiffs and reinsurance provided by Gen Re to
AHAT, ... (2) made substantial amounts of premiums,
profits and other benefits off of doing business
with and for both Plaintiffs and ROA and its
affiliated entities and [Patterson, Crews, and
Hudgins]; ... [and 3] knew and foresaw that its
widely publicized reinsurance backing of ROA would
be relied upon by passive investors and equity
subscriber interest holders like [AHAT]. ... Gen Re,
acting 
through 
individual 
defendants 
Reindel,
Kellogg and Seeger, was not only aware of but fully
approved the AHAT acquisition and the resulting
inclusion of Plaintiffs' surplus in ROA's financial
system, and the resulting issuance of subscriber
equity accounts to Plaintiffs, and, through such
individual defendants, it was also aware of and
fully approved the making of the 2002 capital call
offers to the Plaintiffs. ..."
1051021
16
¶ 435 (emphasis added).  Under AHAT's theory of jurisdiction,
"the actions and omissions of [individuals such as] Crews,
[Patterson, and Hudgins] are imputed and attributable to [all]
the other defendants," such as the petitioners. ¶ 395
(emphasis added).
The petitioners contend that the exercise of jurisdiction
on the basis of such a theory does not comport with the due-
process requirements of International Shoe Co. v. Washington,
326 U.S. 310 (1945), and its progeny.  More specifically, they
contend that AHAT's theory unconstitutionally dispenses with
the "'purposeful availment requirement[, which] assures that
a defendant will not be haled into a jurisdiction as a result
of "'the unilateral activity of another person or a third
person.'"'"  Ex parte Dill, Dill, Carr, Stonbraker &
Hutchings, P.C., 866 So. 2d at 525-26 (quoting Elliott, 830
So. 2d at 731, quoting in turn Burger King Corp., 471 U.S. at
475).  For that proposition, they cite cases from other
jurisdictions 
refusing 
to 
recognize 
conspiracy-based
jurisdiction.  See, e.g., Karsten Mfg. Corp. v. United States
Golf Ass'n, 728 F. Supp. 1429, 1434 (D. Ariz. 1990); Mansour
1051021
"Alabama recognizes [civil conspiracy] as a substantive
11
tort."  Purcell Co. v. Spriggs Enters., Inc., 431 So. 2d 515,
522 (Ala. 1983).  "In essence, civil conspiracy is a
combination of two or more persons to do: (a) something that
is unlawful; [or] (b) something that is lawful by unlawful
means."  Id.  See also Eidson v. Olin Corp., 527 So. 2d 1283,
1285 
(Ala. 
1988). 
 
"In 
a 
conspiracy, 
the 
acts 
of
coconspirators are attributable to each other."  Williams v.
Aetna Fin. Co., 83 Ohio St. 3d 464, 476, 700 N.E.2d 859, 868
(1998). 
17
v. Superior Court, 38 Cal. App. 4th 1750, 46 Cal. Rptr. 2d 191
(1995).
AHAT and BHS rely on general principles of conspiracy
liability;
 on cases from other jurisdictions, see, e.g.,
11
United Phosphorous, Ltd., v. Angus Chem. Co., 43 F. Supp. 2d
904 (N.D. Ill. 1999); Kentucky Speedway, LLC v. National Ass'n
of Stock Car Auto Racing, Inc., 410 F. Supp. 2d 592 (E.D. Ky.
2006); Chenault v. Walker, 36 S.W.3d 45 (Tenn. 2001); and on
recent cases in which this Court recognized, at least in
theory, the concept of conspiracy jurisdiction.  See Ex parte
United Ins. Cos., 936 So. 2d 1049 (Ala. 2006); Ex parte
Bufkin, 936 So. 2d 1042 (Ala. 2006); and Ex parte McInnis, 820
So. 2d 795 (Ala. 2001).
United Insurance involved claims by Patricia Jackson
against her health insurer, MEGA Life and Health Insurance
Company ("MEGA"), and various foreign entities, which, she
1051021
18
alleged, had conspired with MEGA to mislead Jackson regarding,
among other things, the "'true nature of the relationship
between the Defendants, [and] ... the full and true nature and
manner in which premiums and premium increases would be
determined and/or calculated for [Jackson].'"  936 So. 2d at
1051.  The alleged foreign conspirators sought a writ of
mandamus directing the trial court to "vacate its order
denying their motions to dismiss the complaint against them
and to grant their motions to dismiss for lack of personal
jurisdiction."  936 So. 2d at 1052.  We denied the petition,
holding that Jackson's complaint pleaded the existence of a
conspiracy with sufficient specificity to entitle her to
engage in jurisdictional discovery.  936 So. 2d at 1056.
The result in Bufkin was similar.  That case arose out of
an automobile accident in Tennessee involving George Roberts,
and John Bufkin, a Mississippi resident, who, at the time of
the accident, was operating a vehicle belonging to Alabama
resident Byron Williamson.  936 So. 2d at 1044.  Roberts's
complaint against Bufkin and Williamson alleged that "'[a]t
the time of the accident complained of, [the foreign
defendant] was the agent, servant or employee of [the Alabama
1051021
19
defendant] and/or was involved in a joint venture with [the
Alabama defendant].'"  936 So. 2d at 1046 (emphasis added).
Bufkin sought a writ of mandamus directing the trial court to
vacate its order denying his motion to dismiss for lack of
personal jurisdiction.  We denied the petition, concluding
that Roberts had "'at least alleg[ed] facts that would support
a colorable claim of jurisdiction,'" 936 So. 2d at 1047, and
was, therefore, entitled to discovery on the jurisdictional
issue. In neither Bufkin nor United Insurance were we
compelled to define the contours of conspiracy jurisdiction.
Neither are we compelled to do so in this case.  This is so,
because, as AHAT points out, although "the petitioners
submitted affidavits in support of their motions, ... the
affidavits did not rebut, or even address, the key factual
allegations on which [AHAT's] argument for jurisdiction is
based."  AHAT's brief, at 19 (emphasis added).  AHAT and BHS
argue, in essence, that they met their threshold showing that
jurisdiction is proper and that the petitioners failed to make
their prima facie showing that the exercise of jurisdiction
would be improper.  We agree. 
1051021
20
B. Threshold Showings
The affidavit filed by Reindel stated, in toto:
"1. I have been employed by [Gen Re] in
Stamford, Connecticut[,] since 1983.
"2. I have personal knowledge of the facts
stated in this Affidavit and am competent to testify
to the same.
"3. I live and work in Fairfield County,
Connecticut.  I have never resided, or maintained a
place of employment, in Alabama.
"4.  I do not conduct business in Alabama.  In
particular, I:
"•
do not maintain, and have never had,
an office in Alabama;
"•
do not own or possess, and have never
owned or possessed, any real property
or hold any mortgages or liens in
Alabama;
"•
do not have, and have never had, any
bank accounts in Alabama;
"•
do not have, and have never had, any
telephone listings in Alabama;
"•
do not have, and have never had, any
employees or authorized agents in
Alabama;
"•
have never been a litigant in the
courts of Alabama or availed myself of
the courts of Alabama;
"•
have not incurred or paid taxes in
Alabama; and,
1051021
21
"•
have not derived any income from
business in Alabama.
"5.  In the last ten years, I have not visited
Alabama for any reason.
"6.  I had no dealings with the Plaintiffs of
any kind relating to their decision to pursue the
business combinations and capital calls referred to
in the Complaint in the above-captioned action.  In
particular, I was in no way involved in negotiating
or 
promoting 
the 
'Acquisition 
of 
Assets 
and
Assumption of Liabilities Agreement' between AHAT
and ROA referred to in ¶ 3 of the Complaint.  I was
also in no way involved in negotiating, soliciting
or promoting the voluntary capital contributions of
June 2002 referred to in ¶ 4 of the Complaint.
"7.  I have never contracted to supply or obtain
services or goods to or from Alabama.
"8.  Given my lack of contacts with the State of
Alabama, I have never expected that I could properly
be sued therein."
Kellogg's affidavit was identically worded, except to say that
he had worked for Gen Re in Greenwich, Connecticut, "from
1968 to May 2001," and had not visited Alabama in the last
seven years.  Seeger's affidavit was also identically worded,
except for paragraphs 1, 3, and 5, which stated:
"1.  I am employed by General Star ('GenStar')
in Stamford, Connecticut.  I have been employed with
GenStar since February 2002.  From October 1986
through January 2002, I was employed by [Gen Re] in
Stamford, Connecticut.
"....
1051021
22
"3.  I live and work in Stamford, Connecticut.
I have never resided, or maintained a place of
employment, in Alabama.
"....
"5.  I have traveled to Alabama only once.  The
trip did not involve meeting with, or communicating
with, the Plaintiffs."
None of these affidavits deny the existence of a
conspiracy, or the affiant's participation therein.  The
affidavits are addressed, instead, to more conventional bases
of jurisdiction, such as those embodied in the "laundry-list"
provisions of Rule 4.2 before its 2004 amendment.  However,
the fact that a jurisdictional basis is not found within the
laundry list "does not prevent a threshold finding of
jurisdiction under the conspiracy theory," pursuant to Rule
4.2(b).  McLaughlin v. Copeland, 435 F. Supp. 513, 532 (D. Md.
1977). 
The petitioners concede, as they must, that the defendant
must "make[] a prima facie evidentiary showing that the court
has no personal jurisdiction [before] 'the plaintiff is ...
required to substantiate the jurisdictional allegations in the
complaint by affidavits or other competent proof.'"  Petition,
at 12-13 (emphasis added).  Our cases say as much.  See Ex
1051021
23
parte United Ins. Cos., 936 So. 2d at 1053 ("'"[I]f the
defendant makes a prima facie evidentiary showing that the
Court has no personal jurisdiction, 'the plaintiff is then
required to substantiate the jurisdictional allegations in the
complaint by affidavits or other competent proof ....'"'");
Bufkin, 936 So. 2d at 1045 ("'However, if the defendant makes
a prima facie evidentiary showing that the Court has no
personal jurisdiction, "the plaintiff is then required to
substantiate the jurisdictional allegations in the complaint
by affidavits or other competent proof ...."'").  
To be sure, the conspiracy averments in the complaint
must exceed "bald speculation" and mere conclusory assertions.
Ex parte McInnis, 820 So. 2d at 806-07.  However, this burden
is not heavy, especially "[w]hen determination of the
jurisdictional 
facts 
is 
intertwined 
with 
and 
may 
be
dispositive of questions of ultimate liability."  McLaughlin
v. Copeland, 435 F. Supp. at 530.  This is so, because "[t]o
require a more substantial showing in a case alleging a civil
conspiracy would be ... 'harsh, if not impossible' in view of
the difficulties of pleading and proving a conspiracy."  Id.
1051021
24
(quoting Mandelkorn v. Patrick, 359 F. Supp. 692, 696 (D.D.C.
1973)).  
Moreover, 
until 
"controverted 
by 
the 
defendant's
affidavits," the plaintiff's jurisdictional allegations must
be considered as true.  Wenger Tree Serv. v. Royal Truck &
Equip., Inc., 853 So. 2d 888, 894 (Ala. 2002)(emphasis added).
Thus, 
where 
the 
complaint 
alleges 
conspiracy-based
jurisdiction with particularity, failure to deny by affidavit
or deposition the existence of, or participation in, a
conspiracy will result in a denial of a motion to dismiss for
lack of jurisdiction.  See McLaughlin, supra; Mandelkorn,
supra.  AHAT's complaint meets the specificity threshold.
As illustrated previously in this opinion, AHAT alleges
facts purporting to show that the petitioners, in the
financial-reporting-fraud phase, conspired with Patterson,
Hudgins, Crews, and others to conceal and to misrepresent the
progressively precarious financial condition of ROA by, among
other things, (1) underreporting the liabilities of ROA, and
(2) inflating the surplus of ROA, in order to avoid
intervention by various state insurance departments, and,
ultimately, to present ROA to AHAT and BHS in a posture
1051021
25
conducive 
to 
investment 
through 
the 
investment-fraud
conspiracy.  Relative to the investment fraud, the complaint
alleges that the petitioners -- in the historical context of
Gen Re's relationships with, and reinsurance of, AHAT -- knew
and approved of the negotiations with AHAT for its investments
in ROA, which were conducted by and through their alleged co-
conspirators, Patterson, Crews, and Hudgins.  It further
alleges that some of these negotiations occurred in Alabama.
Without 
doubt, 
the 
petitioners 
were 
required 
to
controvert 
by 
affidavit 
or 
deposition 
these 
specific
allegations.  However, their affidavits did not do so.  They
reveal nothing material to the conspiracy theory on which
jurisdiction purports to stand.  Defendants contesting in
personam 
jurisdiction 
cannot 
meet 
their 
prima 
facie
evidentiary burdens with affidavits having nothing to do with
the relevant issues.  At this stage in the litigation,
therefore, it is not unfair or unreasonable to require the
petitioners "to answer here for their roles in the alleged
course of events."  Mandelkorn v. Patrick, 359 F. Supp. at
696-97 ("Assuming as true the unchallenged allegations of
conspiracy, ... [there is] no injustice in requiring ... the
1051021
Indeed, the petitioners do not contend that jurisdiction
12
may not, under any circumstances, be based on conspiracy
allegations and imputed conduct.
26
New York and Florida Defendants to submit to suit [in the
District of Columbia].").
In that connection, it must be remembered that "[a]
denial of a ... motion to dismiss for want of personal
jurisdiction is interlocutory and preliminary only."  Ex parte
McInnis, 820 So. 2d at 798.  "After such a denial, the
continuation of personal jurisdiction over a defendant who
appropriately persists in challenging it in [an] answer to the
complaint and by motion for summary judgment or at trial
depends on the introduction of substantial evidence to prove
the ... jurisdictional allegations in the ... complaint."  Id.
III. Summary
In summary, the trial court did not err in denying the
petitioners' motions to dismiss the claims against them.  This
Court has previously recognized -- albeit in the abstract --
that personal jurisdiction may be grounded on a conspiracy
theory of imputed conduct.   We do not exclude the possibility
12
that, 
under 
some 
circumstances, 
imputing 
conduct 
to 
an 
alleged
coconspirator who has personally performed no overt act in
1051021
27
Alabama might violate principles of due process as set forth
in International Shoe and its progeny.  However, in light of
the procedural posture of this case, it is unnecessary to go
beyond AHAT's, and hence BHS's, threshold showing of
jurisdiction, because the petitioners have not made a prima
facie evidentiary showing of the absence of jurisdiction.  For
these reasons, the petition is denied.
PETITION DENIED.
Cobb, C.J., and See, Lyons, Stuart, Smith, Bolin, and
Parker, JJ., concur.
Murdock, J., concurs in the rationale in part and concurs
in the result.
1051021
28
MURDOCK, Justice (concurring in the rationale in part and
concurring in the result).
The main opinion states that "the conspiracy averments in
the complaint must exceed 'bald speculation' and mere
conclusory assertions."  ___ So. 2d at ___ (citing Ex parte
McInnis, 820 So. 2d 795, 806-07 (Ala. 2001)).  The opinion
then states:  "However, this burden is not heavy, especially
'[w]hen 
determination 
of 
the 
jurisdictional 
facts 
is
intertwined with and may be dispositive of questions of
ultimate liability,'"  ___ So. 2d at ___ (quoting McLaughlin
v. Copeland, 435 F. Supp. 513, 530 (D. Md. 1977)).  The
opinion further states that the reason "this burden is not
heavy" is "because '[t]o require a more substantial showing in
a case alleging a civil conspiracy would be ... "harsh, if not
impossible" in view of the difficulties of pleading and
proving a conspiracy,'" id. (again quoting  McLaughlin, 435 F.
Supp. at 530, in turn, quoting Mandelkorn v. Patrick, 359 F.
Supp. 692, 696 (D.D.C. 1973)).
As I read McLaughlin and Mandelkorn, the above-quoted
passages from those cases address the evidentiary showing
required of a plaintiff seeking to base in personam
1051021
29
jurisdiction upon a defendant's involvement in a conspiracy.
That evidentiary showing is, as explained in the main opinion,
something different from the plaintiff's pleading requirement
and, in fact, need not be made unless and until the defendant
makes 
a 
sufficient 
evidentiary 
showing 
to 
rebut 
the
plaintiff's conspiracy allegations.  I therefore am concerned
that the main opinion may be read as suggesting that, in a
case where a plaintiff seeks to rely upon a conspiracy to
establish a court's in personam jurisdiction over a defendant,
the plaintiff's pleading burden is not a relatively "heavy"
one -- insofar as pleading requirements go.  Indeed, as the
full passage from Ex parte McInnis, which is referenced by the
main 
opinion, 
states: 
 
"'"Bald 
speculation" 
or 
a
"conclusionary 
statement" 
that 
individuals 
are 
co-conspirators
is insufficient to establish personal jurisdiction under a
conspiracy theory.  ...  Instead, the plaintiff must plead
with particularity "the conspiracy as well as the overt acts
within the forum taken in furtherance of the conspiracy."'"
820 So. 2d at 806-07 (quoting Jungquist v. Sheikh Sultan Bin
Khalifa Al Nahyan, 115 F.3d 1020, 1031 (D.C. Cir. 1997)
(citations omitted)).
1051021
30
This 
Court, 
in 
McInnis, 
emphasized 
that 
a
"'"'"defendant's conduct and connection with the forum state
[must be] such that he should reasonably anticipate being
haled into court there,"'"'"  820 So. 2d at 803 (emphasis
omitted) (quoting Sudduth v. Howard, 646 So. 2d 664, 667 (Ala.
1994)), and that "'a finding of minimum contacts must come
about by an action of the defendant purposefully directed
toward the forum state,'" 820 So. 2d at 804 (quoting Asahi
Metal Indus. Co. v. Superior Court of California, 480 U.S.
102, 112 (1987)).  Applying these principles, as well as the
above-quoted principle that a complaint must include more than
conclusory assertions, the McInnis Court held that the
allegations of the complaint in that case relating to one of
the named defendants, Borka, were insufficient to make out a
case for in personam jurisdiction over him:
"[W]hile the last cause of action in the plaintiff's
amended complaint expressly alleges that McInnis,
Borka, and Shingleton, as well as other defendants,
conspired together in most aspects of their alleged
tortious conduct, these pleadings do not allege that
they conspired together in marketing the product
within Alabama.  ...  Absent express and sufficient
allegations of either agency ... or a conspiracy
between or among Borka and McInnis, Shingleton, or
both, specifically to develop Alabama as a market,
we cannot impute to Borka for the purpose of
supporting personal jurisdiction over him, either
1051021
31
the intentions and purposes of McInnis or Shingleton
to develop Alabama as a market or their physical
presences in Alabama."
Ex parte McInnis, 820 So. 2d at 806-07 (emphasis added).
It is based upon those allegations of the complaint that,
as described in the main opinion, allege a conspiracy directed
at Alabama and entities in Alabama, and upon the shortcomings
of the petitioners' evidentiary showings in response to those
allegations, that I concur in the result reached by the main
opinion.  In so doing, I would echo what this Court, quoting
Justice Houston's special concurrence in Ex parte Sekeres,
646 So. 2d 640, 642 (Ala. 1994), said in McInnis:  "'It may
well be that in personam jurisdiction of [the petitioners]
exceeds the limits of due process, but I cannot say, based
upon the record now before this Court, that the trial court
clearly erred in denying the motion to dismiss or that [the
petitioners have] a clear and indisputable right  to be
dismissed from this action'" at this stage in the proceedings.
Ex parte McInnis, 820 So. 2d at 806.