Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00369/USCOURTS-azd-2_12-cv-00369-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Declaratory Judgement

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Repwest Insurance Company, 

Plaintiff, 

vs.

Praetorian Insurance Company; QBE

Insurance Group Ltd., and Aon Benfield,

Inc.,

Defendants. 

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No. CV 12-0369-PHX-JAT

ORDER

Pending before the Court are: (1) Defendant Praetorian’s Motion to Dismiss or Stay

Proceedings and Compel Arbitration (Doc. 11); (2) Defendant QBE Insurance Group Ltd’s

Motion to Dismiss (Doc. 16); (3) Plaintiff’s Motion to Stay Arbitration (Doc. 34); and (4)

Defendant Aon Benfield, Inc.’s Motion to Dismiss, or in the Alternative Motion to Stay

(Doc. 40). The Court now rules on the Motions.

I. BACKGROUND

On February 23, 2012, Plaintiff Repwest Insurance Company (“Plaintiff” or

“Repwest”) filed its First Amended Complaint (the “Complaint”) against Defendants. In its

Complaint, Plaintiff alleged claims of breach of contract and breach of the duty of good faith

and fair dealing against Defendants Praetorian Insurance Company (“Praetorian”), QBE

Insurance Group Ltd. (“QBE”), and Aon Benfield Inc. (“Aon”). As relief, Plaintiff seeks,

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1

 The Quota Share Agreement is attached to the Complaint as Exhibit A. (See Doc.

7, Exhibit A). 

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among other things, declaratory judgments and punitive damages. All of the following facts

are as alleged in the Complaint.

Plaintiff Repwest is a corporation that insures property, casualty, and excess workers’

compensation risks in the United States. (Doc. 7 at ¶ 1). Defendant Praetorian is a

corporation that is licensed to write admitted insurance business in all 50 states. (Id. at ¶ 2).

Defendant QBE is a foreign corporation with a principal place of business in Sydney,

Australia, that, Plaintiff alleges upon information and belief, purchased the assets and

liabilities of Defendant Praetorian in December 2006 for $800 million. (Id. at ¶ 4).

Defendant Aon is a corporation that, Plaintiff alleges upon information and belief, purchased

the assets and liabilities of Benfield, Inc. (Id. at ¶ 6). 

Plaintiff Repwest issues excess workers’ compensation insurance policies, and,

beginning in 1988, Repwest entered into a series of reinsurance agreements with Defendant

Praetorian designed to provide reinsurance coverage for losses incurred under workers’

compensation insurance policies issued by Repwest. (Id. at ¶¶ 11-12). 

On May 1, 1991, Repwest entered into a Excess Workers’ Compensation Quota Share

Agreement (the “Quota Share Agreement”) with various companies, including Praetorian

(previously known as the Insurance Company of Hanover) and Conestoga Casualty Insurance

Company (“Conestoga”).1

 (Id. at ¶¶ 13-15). The Quota Share Agreement provided, in part,

that Repwest would be indemnified for an agreed percentage of any losses within the original

risk under the workers’ compensation policies it issued to its insureds. (Id. at ¶ 14).

Defendant Praetorian and Conestoga are named as Reinsurers in the Quota Share Agreement,

which obligates each to individually indemnify Plaintiff for a certain percentage of Plaintiff’s

losses paid on workers’ compensation insurance policies issued by Repwest. (Id. at ¶ 15).

In exchange for Plaintiff’s right to indemnification from Defendant Praetorian and

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2

 The Aggregate Contract is attached to the Complaint as Exhibit B. (See Doc. 7,

Exhibit B). 

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Conestoga, Plaintiff ceded a premium to Defendant Praetorian and Conestoga and that

premium was accepted and never disputed. (Id. at ¶ 17). 

Article V of the Quota Share Agreement set forth six categories of reinsurance that

Plaintiff was required to maintain, including Aggregate Excess of Loss reinsurance. (Id. at

¶ 23). Pursuant to Article V of that Agreement, Plaintiff, on behalf of itself and Defendant

Praetorian and Conestoga, entered into an Aggregate Loss Reinsurance Contract effective

May 1, 1991 (the “Aggregate Contract”). (Id. at ¶ 26).2

 Under the Aggregate Contract,

Plaintiff, Defendant Praetorian, and Conestoga are the “ceding Company” and Defendant

Praetorian is the sole reinsurer. (Id. at ¶ 28). The Aggregate Contract provided that Repwest

and Conestoga would be indemnified by Defendant Praetorian “for the amount by which the

Company’s losses incurred exceed[ed] its retention,” after the Company’s losses equaled

70% of its net earned premium for the same contract year, not to exceed 170% of the

Company’s net earned premium for the contract year. (Id. at ¶ 29). 

Article XI of the Aggregate Contract provided that the Company could elect to

commute the losses of “one or both” of Repwest’s Reinsurers and, in the event of such

commutation, the Reinsurer would pay the Company an amount equal to 65% of ceded

premiums less paid losses plus interest, all for the period being commuted. (Id. at ¶ 34).

Plaintiff alleges that Article XI’s use of the term “Company” requires assent of all three

parties to effectively commute Praetorian or Conestoga’s liability under the Aggregate

Contract. (Id. at ¶ 36). Under Article XI of the Aggregate Contract, Defendant Praetorian

was required to establish and maintain a commutation fund to remit to the Company in the

event of such commutation. (Id. at ¶ 35). 

The term of the Quota Share Agreement began as of 12:01 a.m. PST on May 1, 1991

and remained continuously effective until cancelled. (Id. at ¶ 20). The Quota Share

Agreement was terminated with respect to Conestoga through a Termination Agreement on

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3

 Arizona Revised Statutes section 20-486.02 provides provisions that are required

to be in the contract between the reinsurance intermediary broker and the insurer it

represents. See Ariz. Rev. Stat. Ann. § 20-486.02. 

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November 15, 1996. (Id. at ¶ 25). Likewise, the Quota Share Agreement was terminated

with respect to Defendant Praetorian through a Termination Agreement on September 1,

1997. (Id.). 

During the drafting and execution of the Aggregate Contract and the Quota Share

Agreement, Defendant Aon acted as Repwest’s reinsurance intermediary broker and entered

into a contract to that end (the “Broker Contract”).3

 (Id. at ¶ 41). 

On November 6, 1998, Defendant Aon communicated Conestoga’s wish to commute

its interests and liabilities under the Aggregate Contract to both Repwest and Praetorian. (Id.

at ¶ 44). In that communication, Defendant Aon and/or Conestoga acknowledged that it

needed the approval of all parties to the Aggregate Contract as a prerequisite for a valid

commutation. (Id. at ¶ 45). On June 21, 1999, Defendant Praetorian asked Defendant Aon

if Plaintiff had agreed to the commutation and, the next day, Aon informed Defendant

Praetorian that Plaintiff had not yet given its approval. (Id. at ¶¶ 47-48). On July 8, 1999,

Defendant Aon “erroneously stated that it had received ‘verbal approval’ from [Plaintiff], but

would follow-up in writing by fax,” but no approval for commutation was ever received from

Plaintiff. (Id. at ¶ 49). 

Plaintiff alleges that, despite acting as Plaintiff’s reinsurance intermediary broker,

Defendant Aon failed to obtain Plaintiff’s approval for the proposed commutation, failed to

inform Plaintiff of any risks associated with the proposed commutation, and facilitated and

negotiated the proposed commutation between Conestoga and Defendant Praetorian. (Id. at

¶¶ 50-52). Plaintiff further alleges that Defendant Aon unilaterally determined that

Plaintiff’s authorization of the proposed commutation was unnecessary. (Id. at ¶ 53).

Plaintiff alleges that, despite failing to obtain Plaintiff’s written approval, Defendant

Praetorian and Conestoga “intentionally and willfully violated the terms of the Aggregate

Contract by proceeding to bi-laterally commute a portion of Defendant Praetorian’s liability

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4

 The Commutation Agreement is attached to the Complaint as Exhibit C. (See Doc.

7, Exhibit C). Plaintiff refers to this Agreement as a “retrocession agreement.” Plaintiff

argues that, because Praetorian and Conestoga failed to obtain Repwest’s consent, the

attempt at commutation was instead a retrocession agreement. Plaintiff’s conclusion that the

Agreement is a retrocession agreement is not a fact, but is rather a legal conclusion. Because

the Agreement itself is entitled “Commutation Agreement,” the Court will refer to it as such

for the purposes of this Order. The Court expresses no opinion as to the merits of Plaintiff’s

claim that the Agreement in fact operates as a retrocession agreement. 

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to ‘the Company’ in complete disregard” of Defendant Praetorian’s duties to Plaintiff. (Id.

at ¶¶ 54-55). 

Plaintiff alleges that, without Plaintiff’s consent or knowledge, Defendant Praetorian

and Conestoga entered into an agreement (the “Commutation Agreement”),4

 which purported

to commute Praetorian’s liability to Conestoga as reinsurer under the Aggregate Contract.

(Id. at ¶ 60).

In the summer of 2008, Plaintiff sent Defendant Praetorian, through Defendant Aon,

a billing related to amounts due and owing by Praetorian under the Aggregate Contract. (Id.

at ¶ 67). Thereafter, Defendant Praetorian denied that it owed such amount because of the

Commutation Agreement. (Id. at ¶¶ 68-71). Defendant Praetorian then sent a letter of credit

demand to Plaintiff, as was provided for in a 2001 Reinsurance Contract. (Id. at ¶¶ 63-66,

72). Plaintiff declined to post the letter of credit on the basis of its claim that Defendant

Praetorian still owed past due amounts under the Aggregate Contract. (Id. at ¶ 75). 

As a result of these allegations, Plaintiff claims that Defendant Praetorian (and QBE)

violated its duty of good faith and fair dealing (Count II), Defendant Praetorian (and QBE)

have breached and continue to breach their obligations under the Aggregate Contract and

Quota Share Agreement (Count III), and Defendant Aon breached its obligations under the

Broker Contract, by soliciting and negotiating the Commutation Agreement between

Defendant Praetorian and Conestoga (Count VI). 

As relief, Plaintiff seeks: compensatory damages, a declaratory judgment as to

Defendants Praetorian and QBE (Count I) that (1) the word “Company” in the Aggregate

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Contract includes Repwest, Praetorian (and QBE), and Conestoga collectively; (2) that

Defendants breached the Aggregate Contract and, by inference, the Quota Share Agreement;

(3) that Praetorian’s (and QBE’s) unjustifiable and bad faith conduct prejudiced Plaintiff, (4)

that Praetorian (and QBE) violated its duty of good faith and fair dealing, punitive damages

(Count IV), and a declaratory judgment (Count V) as to Defendant Aon that (1) Aon’s

conduct constituted a breach of contract that existed between Aon and Repwest pursuant to

Arizona Revised Statutes section 20-486.02, reasonable attorneys’ fees and costs, and prejudgment and post-judgment interest. 

In response to the Complaint, Defendant Praetorian now moves to compel arbitration

of the claims against it and argues that there are arbitration clauses in the Quota Share

Agreement and the Aggregate Contract that require Plaintiff to arbitrate its claims. To that

end, Defendant Praetorian also served an Arbitration Demand on Plaintiff. Plaintiff now

moves to stay that arbitration. Likewise, Defendant Aon moves to stay this action, or, in the

alternative, to dismiss the claims against it. Defendant QBE also moves to dismiss the claims

against it based on (1) insufficient service of process, (2) lack of personal jurisdiction, and

(3) failure to state a claim upon which relief can be granted. The Court will now discuss each

Motion in turn.

II. DEFENDANT PRAETORIAN’S MOTION TO COMPEL 

ARBITRATION (Doc. 11) AND PLAINTIFF’S MOTION TO STAY

ARBITRATION (Doc. 34)

Pursuant to 9 U.S.C. § 4, Defendant Praetorian moves the Court to enforce the

arbitration clauses in the Quota Share Agreement and the Aggregate Contract and compel

Plaintiff to submit to arbitration all claims alleged against Defendant Praetorian in the

Complaint. Praetorian argues that Article XVII of the Quota Share Agreement and Article

XIX of the Aggregate Contract provide that the Parties must arbitrate any disputes arising

out of those agreements. 

Article XVII of the Quota Share Agreement, entitled “Arbitration,” and Article XIX

of the Aggregate Contract, entitled “Arbitration” have identical provisions that provide, in

part:

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5

 In the Tolling Agreement, Plaintiff and Praetorian agreed to toll the statute of

limitations for claims arising out of or relating to the Quota Share Agreement and the

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A. As a condition precedent to any right of action

hereunder, any dispute arising out of this Contract shall be

submitted to the decision of a board of arbitration composed of

two arbitrators and an umpire, meeting in San Francisco,

California unless otherwise agreed. . . . 

D. . . . . The majority decision of the board shall be

final and binding upon all parties to the proceeding. . . . 

G. The decision of the board may be entered in any

court of competent jurisdiction. 

(Doc. 7-1, Exhibit A at Article XVII & Exhibit B at Article XIX). Praetorian argues that the

claims for breach of contract and breach of the duty of good faith and fair dealing alleged

against Praetorian clearly “arise” out of the Quota Share Agreement and the Aggregate

Contract and, therefore, must be litigated pursuant to the arbitration provisions in those

contracts. 

In response, Plaintiff argues that its claims do not “arise” out of the Quota Share

Agreement or the Aggregate Contract. Rather, Plaintiff argues, its claims arise out of the

Commutation Agreement. Plaintiff argues that the fact that its claims arise out of the

Commutation Agreement is proven, in part, by its request for a declaratory judgment that the

Commutation agreement is invalid. Essentially, Plaintiff argues, this suit does not arise from

the breach of the Quota Share Agreement or Aggregate Contract, but rather arises from a

dispute as to the validity of the Commutation Agreement. 

Plaintiff also argues that the arbitration clauses in the Quota Share Agreement and the

Aggregate Contract only provide for arbitration “unless otherwise agreed.” Plaintiff argues

that, on several occasions, the Parties have “otherwise agreed” to litigate disputes arising out

of those contracts, rather than arbitrate them. Plaintiff argues that this “agreement” is

evidenced by (1) provisions in a “Tolling Agreement” entered into between Plaintiff and

Praetorian in November 2010 (the “Tolling Agreement”)5

 that state that “[t]his Agreement

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28 Aggregate Contract. (See Doc. 15-3 at Exhibit E). 

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shall not preclude the commencement or prosecution . . . of any litigation, or the assertion

of any rights, claims, causes of action or remedies, by an party to the Agreement against the

other party to the Agreement; provided, however, that no litigation or other proceeding shall

be commenced during the term of this Agreement . . .” (Doc. 15-3, Exhibit E at ¶ 4); and (2)

a mandatory litigation provision in a 2011 Commutation and Release Agreement (Doc. 15-3,

Exhibit L) (the “Release Agreement”). Plaintiff also argues that, in the Parties’ efforts to

settle these matters, Praetorian never discussed arbitration as a requirement for dispute

resolution and, thus, waived its right to arbitration. 

For the reasons that follow, the Court finds that Plaintiff must arbitrate its claims

against Defendant Praetorian pursuant to the arbitration clauses in the Quota Share

Agreement and the Aggregate Contract (collectively the “1991 Agreements”). The Court

will now discuss each of Plaintiff’s arguments that these claims are not subject to arbitration

in turn.

A. Whether Plaintiff’s Claims Arise out of the Quota Share Agreement

and the Aggregate Contract 

Plaintiff argues that its claims do not “arise” out of the Quota Share Agreement or the

Aggregate Contract, but rather arise out of the Commutation Agreement. Plaintiff argues that

its breach of contract and breach of the duty of good faith and fair dealing claims do not arise

out of the 1991 Agreements because the parties do not dispute the applicability of the 1991

Agreements, but rather dispute the Commutation Agreement’s validity. (Doc. 14 at 11).

Plaintiff also argues that its claim for breach of the duty good faith and fair dealing cannot

arise out of any contract because it is imposed on insurers by law. 

Plaintiff relies on Cape Flattery Ltd. v. Titan Maritime, LLC, 647 F.3d 914 (9th Cir.

2011) to support its argument that the claims in this case do not arise out of the Quota Share

Agreement or the Aggregate Contract. In Cape Flattery, the Ninth Circuit Court of Appeals

held that language in an arbitration agreement applying to claims that “arise under” the

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contract are interpreted more narrowly than arbitration provisions that encompass claims

arising under or relating to the contract. 647 F.3d at 922. However, the Court also construed

the phrase “arising hereunder” as intended to cover disputes “relating to the interpretation

and performance of the contract itself.” Id. at 922 (quoting Mediterranean Enterprises, Inc.

v. Ssangyong Corp., 708 F.2d 1458, 1464 (9th Cir. 1983)). 

Plaintiff’s argument that the claims in this case do not arise out of the 1991

Agreements, but rather arise out of a dispute as to the validity of the Commutation

Agreement is belied by the allegations in Plaintiff’s Complaint. Plaintiff alleges that

Praetorian breached the Quota Share Agreement and the Aggregate Contract when it entered

into the Commutation Agreement. The fact that a breach may not have occurred but for

Praetorian entering into the Commutation Agreement does not change the fact that the breach

of contract claim in this case relates to and turns on the interpretation of and performance

under the Quota Share Agreement and the Aggregate Contract. Likewise, Plaintiff’s claim

that Praetorian breached the duty of good faith and fair dealing, as alleged in the Complaint,

is dependent on interpretation of the Quota Share Agreement and the Aggregate Contract.

The fact that part of the relief Plaintiff requests, a declaratory judgment that the

Commutation Agreement is invalid, relates to the Commutation Agreement does not change

the fact that Plaintiff’s claims arise out of Defendant Praetorian’s alleged breach of the Quota

Share Agreement and the Aggregate Contract. Accordingly, Plaintiff’s claims against

Defendant Praetorian arise out of the Quota Share Agreement and the Aggregate Contract

and are subject to the arbitration provisions of those contracts, unless the Parties otherwise

agreed to waive their rights to arbitration or waived their right to arbitration by inconsistent

conduct.

B. Whether Plaintiff and Praetorian Agreed not to Arbitrate this

Dispute

As noted above, both the Quota Share Agreement and the Aggregate Contract provide

that “any dispute arising out of this Contract shall be submitted to the decision of a board of

arbitration . . . unless otherwise agreed.” Plaintiff argues that it is clear that Plaintiff and

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Praetorian agreed not to litigate the claims against Praetorian in this case based on provisions

in the Tolling Agreement and Provisions in the Release Agreement. 

1. Provisions of the Tolling Agreement

Plaintiff argues that the Parties agreed to litigate this dispute in the Tolling

Agreement. Plaintiff argues that this agreement is evidenced by the language of the Tolling

Agreement, which solely refers to litigation and not arbitration. Plaintiff further argues that

the Tolling Agreement demonstrates that the Parties agreed to litigate the dispute because the

only reason to toll the statute of limitations is for litigation and tolling the statute of

limitations would not be applicable in arbitration. 

In response, Defendant Praetorian argues that the language of the agreement does not

limit future dispute resolution to litigation, but rather seeks to toll the statute of limitations

for any future dispute resolution, including arbitration. Defendant Praetorian also contends

that statute of limitation issues can be addressed by an arbitrator and, thus, Plaintiff’s

argument that the very existence of the Tolling Agreement demonstrates that the Parties

intended to litigate the dispute is erroneous. 

The Court agrees with Defendant Praetorian. There is no language in the Tolling

Agreement that suggests that the Parties intended to expressly agree to waive their rights to

arbitration. Further, while the Tolling Agreement does contain language referencing tolling

the limitations period with regard to litigation, the language does not limit such tolling solely

to litigation. For instance, the Tolling agreement states “no litigation or other proceeding

shall be commenced during the terms of this Agreement.” (Doc. 15-3, Exhibit E at ¶ 4)

(emphasis added). Accordingly, Plaintiff’s argument that the sole intention of the Tolling

Agreement was to toll litigation, thus evidencing the Parties’ intent only to litigate their

dispute, is contradicted by the language of the Tolling Agreement. Further, the Tolling

Agreement appears to envision a possible arbitration between the Parties, as it provides,

“[t]he Agreement may be disclosed to a Court in a lawsuit brought to enforce its terms or in

any arbitration proceeding in which it is relevant.” (Id. at ¶ 6). 

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Further, Plaintiff has cited to no cases and the Court is aware of no cases that hold that

a statute of limitations defense would not apply in arbitration proceedings. On the other

hand, Defendant Praetorian has cited to two United States Supreme Court decisions and a

Ninth Circuit Court of Appeals decision that suggest it is appropriate for an arbitrator to

determine a statute of limitations issue. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S.

79, 84 (2002), Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25

(1983), United States v. Park Place Assocs., Ltd., 563 F.3d 907, 921-22 (9th Cir. 2009). 

Based on the foregoing, the Tolling Agreement does not evidence any agreement of

the Parties to waive their right to arbitration as provided for in the 1991 Agreements. 

2. The “Mandatory Litigation Provision” in the Release

Agreement

Plaintiff next argues that the Parties agreed to litigate this dispute in the Release

Agreement. In 2011, Plaintiff and Defendant Praetorian entered into a Commutation and

Release Agreement. Article VI of this Release Agreement contains a “Dispute Resolution”

provision, which provides that 

[a]ny disputes between the parties that arise out of or in any way

relate to this Agreement (including, but not limited to, any

disputes regarding the meaning or the scope of the release

contained herein) shall be tried in a state or federal court located

in Los Angeles, California, which courts shall have exclusive

jurisdiction over lawsuits to enforce the terms and conditions of

this Agreement and to resolve disputes of any type or nature

arising out of or relating in any way to this Agreement. 

(Doc. 15-3, Exhibit L at Article VI). 

The Release Agreement also contains a section entitled “Excluded Contracts and

Claims,” which provides “[n]otwithstanding anything else contained in this Agreement, the

following Contracts, claims and defenses are not settled, resolved, commuted, waived, or

otherwise affected by this Agreement.” (Id. at Article II, ¶ 5). The 1991 Agreements are

listed as two of the Excluded Contracts. (Id.). The Dispute Resolution Article (Article VI)

further provides that “[t]his Article shall have no application nor admissibility in any dispute

on the merits pertaining to Excluded Contracts and Claims.” (Id. at Article VI). 

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Plaintiff claims that its breach of contract claims against Praetorian “relate in any

way” to the Release Agreement as contemplated by the Dispute Resolution provision in the

Release Agreement “since they relate in any way to payments owing under the 1991

Agreements.” (Doc. 14 at 13). 

In response, Defendant Praetorian argues that this case does not relate in any way to

the Release Agreement because the 1991 Agreements are clearly excluded contracts not

subject to the Dispute Resolution Provision in Article VI, as that Article expressly precludes

application of that Article to Excluded Contracts and Claims. 

The Court agrees with Defendant Praetorian. First, there is no express agreement in

the Release Agreement to waive the Parties’ right to arbitration as contemplated by the 1991

Agreements. Further, this dispute does not appear to arise out of or relate in any way to the

Release Agreement. Plaintiff appears to argue that this case relates to the Release Agreement

because the Release Agreement mentions the 1991 Agreements when it lists them as

“Excluded Contracts and Claims.” This interpretation ignores the express language of the

Release Agreement which clearly excludes the application of Article VI’s Dispute Resolution

Provision to the 1991 Agreements. 

Accordingly, the Release Agreement does not evidence any agreement of the Parties

to waive their right to arbitration as provided for in the 1991 Agreements. 

C. Whether Praetorian Waived its Right to Arbitration through

Inconsistent Conduct

 Plaintiff also argues that, in the Parties’ efforts to settle these matters, Praetorian

never discussed arbitration as a requirement for dispute resolution and thus, waived its right

to enforce the arbitration provisions in the Quota Share Agreement and the Aggregate

Contract. 

The right to arbitration, like any other contract right, can be

waived. See Van Ness Townhouses v. Mar Indus. Corp., 862

F.2d 754, 758-59 (9th Cir. 1988). However, we have

emphasized that “waiver of the right to arbitration is disfavored

because it is a contractual right, and thus ‘any party arguing

waiver of arbitration bears a heavy burden of proof.’” Id. at 758

(quoting Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693

F.2d 1023, 1025 (11th Cir. 1982)). To demonstrate waiver of the

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right to arbitrate, a party must show: “(1) knowledge of an

existing right to compel arbitration; (2) acts inconsistent with

that existing right; and (3) prejudice to the party opposing

arbitration resulting from such inconsistent acts.” Fisher v. A.G.

Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986).

U.S. v. Park Place Assocs., Ltd., 563 F.3d 907, 921 (9th Cir. 2009)

It is unclear to the Court how Praetorian’s failure to discuss arbitration in settlement

discussions suggests that Praetorian waived its right to enforce the arbitration provisions in

the Quota Share Agreement and Aggregate Contract. Praetorian never denied that the

arbitration clauses existed, nor has Plaintiff presented any facts that Praetorian suggested that

litigation was the only option for the dispute resolution of the claims in this case. Defendant

Praetorian’s mere failure to discuss arbitration and its occasional reference to “litigation,”

do not constitute “acts inconsistent” with the right to arbitration. Accordingly, Plaintiff has

failed to carry its heavy burden of proof in showing that Defendant Praetorian waived its

right to arbitration.

D. The Motion to Compel is Granted

Based on the foregoing, Plaintiff must arbitrate the claims raised in its Complaint

against Defendant Praetorian and Defendant Praetorian’s Motion to Compel is granted. 

E. Additional Issues Raised in Plaintiff’s Motion to Stay Arbitration

On February 28, 2012, Defendant Praetorian served an arbitration demand on

Plaintiff. In addition to the issues raised in this lawsuit, the arbitration demand also seeks

rescission of reinsurance contracts entered into between Praetorian and Repwest based on

Repwest’s (and its agent’s) alleged failure to provide accurate loss information to Praetorian

during the period that the reinsurance contracts were in effect. Specifically, Praetorian

contends that the failure to provide accurate loss information “entitle[s] Praetorian to rescind

all the reinsurance treaties that it entered into in reliance on the fraudulently set reserves and

all reinsurance coverage for insurance contracts that were entered into after the

misrepresentations commenced.” (Doc. 34-1, Exhibit A at 2). 

Plaintiff argues that this claim is not arbitrable because it does not arise out of the

1991 Agreements. In response, Defendant Praetorian argues that this claim does arise out

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of the 1991 Agreements because “resolution of these claims will require the interpretation

of the contracts and the evaluation of Repwest’s performance under the contracts.” (Doc. 42

at 8). 

At the outset, the Court notes that both Parties refer to this claim as Defendant

Praetorian’s “rescission claim.” Because rescission is not a claim, but rather a remedy, the

Court has had a difficult time determining the underlying legal theory that is the basis for this

claim. Defendant Praetorian included an underlying factual basis for its “rescission claim”

in both its Arbitration Demand (Doc. 34-1 at Exhibit A) and its Response to Plaintiff’s

Motion to Stay (Doc. 42). However, Defendant Praetorian fails to state the legal theory or

theories that it contends arise from this factual basis. 

Plaintiff has independently determined, based on its reading of the Arbitration

Demand, that Praetorian’s legal theories are negligent misrepresentation and fraudulent

inducement. (See Doc. 45). While this is a fair reading of Defendant Praetorian’s

Arbitration Demand, it also appears that Defendant Praetorian has attempted to frame a

breach of contract claim or a related claim by arguing that the “resolution of these claims will

require the interpretation of the contracts and the evaluation of Repwest’s performance under

the contracts.” However, Defendant Praetorian fails to point to any specific provision(s) of

the 1991 Agreements that Plaintiff has allegedly breached. Accordingly, the Court analyzes

whether there is a claim on which a rescission remedy would be appropriate that arises out

of the 1991 Agreements.

“[U]nder an arbitration agreement covering disputes ‘arising under’ the agreement,

only those disputes ‘relating to the interpretation and performance of the contract itself’ are

arbitrable.” Cape Flattery, 647 F.3d at 924 (quoting Mediterranean Enters., Inc. v.

Ssangyong Constr. Co., 708 F.2d 1458, 1464 (9th Cir. 1983)). Further, “when a tort claim

constitutes an ‘independent wrong from any breach’ of the contract it ‘does not require

interpretation of the contract and is not arbitrable’” and a “tort claim is not arbitrable just

because it would not have arisen ‘but for’ the parties’ agreement.” Id. (quoting Tracer

Research Corp. v. Nat’l Envl. Servs. Co., 42 F.3d 1292, 1295 (9th Cir. 1994)). 

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Based on the information provided by the Parties, in this case, claims for negligent

misrepresentation and fraudulent inducement do not turn on interpretation of any clause in

the contract. It is not clear whether these claims would turn on Repwest’s performance under

the contract. However, because Praetorian has failed to point to any provisions or language

in the contract that demonstrate that Repwest failed to perform under the contract in a manner

that would give rise to claims for negligent misrepresentation and fraudulent inducement, the

Court finds that these claims do not turn on Repwest’s performance under the contract.

Accordingly, to the extent Praetorian is trying to arbitrate tort claims for negligent

misrepresentation and fraudulent inducement, these claims do not “arise out” of the contract

and Plaintiff is not required to arbitrate these claims. 

Nonetheless, to the extent that Defendant Praetorian seeks rescission based on a

breach of the 1991 Agreements, such a breach would arise out of the contracts and would be

arbitrable. Because it is not clear what legal theories Defendant Praetorian seeks to assert

in the arbitration that would entitle it to rescission, the Court cannot foreclose the possibility

that some legal theories that would entitle Defendant Praetorian to rescission that would arise

out of the contract. However, Defendant Praetorian is precluded from arbitrating claims for

negligent misrepresentation and fraudulent inducement because such claims are outside the

scope of the arbitration agreement. Thus, Plaintiff Repwest’s Motion to Stay Arbitration is

granted to the extent it seeks to prohibit Defendant Praetorian from arbitrating claims for

fraudulent inducement and negligent misrepresentation. 

III. DEFENDANT AON’S MOTION TO STAY OR DISMISS (Doc. 40)

 As discussed above, in its Complaint, Plaintiff alleges that Defendant Aon breached

its obligations under the Broker Contract by soliciting and negotiating the Commutation

Agreement between Defendant Praetorian and Conestoga (Count VI). As a result, Plaintiff

seeks a declaratory judgment (Count V) as to Defendant Aon that (1) Aon’s conduct

constituted a breach of contract that existed between Aon and Repwest pursuant to Arizona

Revised Statutes section 20-486.02, compensatory damages, reasonable attorneys’ fees and

costs, and pre-judgment and post-judgment interest. 

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Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendant Aon moves to

dismiss Plaintiff’s claims against it. Alternatively, pursuant to 9 U.S.C. § 3, Defendant Aon

requests that the Court stay this case pending the completion of Plaintiff and Praetorian’s

arbitration proceedings. 

Defendant Aon argues that Plaintiff has failed to state a claim upon which relief can

be granted in its breach of contract claim (Count VI) against Aon because Plaintiff has failed

to allege a specific contract, the terms of that contract that Aon allegedly breached, the

written standards that Aon allegedly failed to follow or how Plaintiff has been damaged by

such breach. Defendant Aon also argues that Plaintiff’s request for declaratory judgment is

inappropriate because it does not seek to declare the Parties’ future rights, but rather seeks

a declaration as to past conduct and is duplicative of Plaintiff’s breach of contract claim. 

To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet the

requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a “short and

plain statement of the claim showing that the pleader is entitled to relief,” so that the

defendant has “fair notice of what the . . . claim is and the grounds upon which it rests.” Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S.

41, 47 (1957)). Also, a complaint must contain sufficient factual matter, which, if accepted

as true, states a claim to relief that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009).

“In an action on a contract plaintiff has the burden of proof to show, 1) a contract, 2)

a breach, and 3) damages.” Thunderbird Metallurgical, Inc. v. Ariz. Testing Labs., 423 P.2d

124, 126 (Ariz. Ct. App. 1967) (internal citation omitted). Defendant Aon argues that

Plaintiff’s allegations that Defendant Aon breached unidentified provisions of an unidentified

contract and failed to comply with certain standards pursuant to Arizona Revised Statutes §

20-486.02 are too conclusory to state a claim for breach of contract. 

In response, Plaintiff argues that Defendant Aon is familiar with contracts it is

required to enter into pursuant to Arizona Revised Statutes section 28-486.02 and knows that

it had a contract with Plaintiff and, thus, Defendant Aon has notice of Plaintiff’s claims. 

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In its Complaint, Plaintiff has failed to plead enough facts regarding an alleged

contract between Plaintiff and Defendant Aon to state a claim for breach of contract that is

plausible on its face. Plaintiff must allege the existence of a contract, the terms of the

contract that Defendant has breached, and the damages suffered from that breach. Plaintiff

has not made these allegations with any detail, but rather makes conclusory assertions that

Defendant Aon breached a contract it had with Plaintiff. Accordingly, Plaintiff’s claim for

breach of contract against Defendant Aon (Count VI) will be dismissed.

It appears from Plaintiff’s Response to Defendant Aon’s Motion to Dismiss that

Plaintiff may be able to plead facts that state a claim for breach of contract. Plaintiff has

requested leave to amend should the Court grant Aon’s Motion to Dismiss. District courts

should grant leave to amend when dismissing a case for failure to state a claim, “unless the

court determines that the pleading could not possibly be cured by the allegations of other

facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (quoting Doe v. United States,

58 F.3d 494, 497 (9th Cir. 1995)). There is a “longstanding rule that ‘[l]eave to amend

should be granted if it appears at all possible that the plaintiff can correct the defect.’” Id.

at 1129 (quoting Balistreri v. Pac. Police Dep’t, 901 F.2d 696, 701 (9th Cir. 1990)). Because

it appears that Plaintiff could plead facts to state a plausible claim for breach of contract

against Defendant Aon, the Court will allow Plaintiff to amend its Complaint to properly

plead claims against Defendant Aon.

Aon also requests that the Court dismiss Plaintiff’s claim for declaratory judgment

(Count V) because it is duplicative of Plaintiff’s breach of contract claim against Aon and

does not seek to determine the future rights of the Parties, but rather seeks a declaration

regarding past conduct that will already be resolved in the lawsuit. Indeed, Plaintiff seeks

a declaration that Aon’s conduct constituted a breach of contract that existed between Aon

and Repwest pursuant to Arizona Revised Statutes section 20-486.02. Declaratory judgment

is a remedy that is dependent on Plaintiff’s success on an underlying cause of action.

Because the Court has dismissed Plaintiff’s only cause of action against Defendant Aon, its

claim for declaratory relief must also be dismissed. 

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Accordingly, Defendant Aon’s Motion to Dismiss is granted and Plaintiff will have

20 days to file an amended Complaint.

IV. DEFENDANT QBE’S MOTION TO DISMISS (Doc. 16)

Pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(4), 12(b)(5), and

12(b)(6), Defendant QBE moves to dismiss the claims against it based on insufficient process

and insufficient service of process, lack of personal jurisdiction, and failure to state a claim

upon which relief can be granted. 

A. Personal Jurisdiction

Defendant QBE argues that this Court lacks personal jurisdiction over it because QBE

lacks sufficient minimum contacts with Arizona to subject it to this Court’s jurisdiction. In

response, Plaintiff argues that QBE’s actions regarding the matters outlined in the Complaint

establish that the Court has personal jurisdiction over QBE. In the alternative, Plaintiff

requests jurisdictional discovery to show that QBE, or one of its related entities is the

properly named party to this action.

1. Legal Standard 

Plaintiff bears the burden of establishing personal jurisdiction. See Schwarzenegger

v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (citing Sher v. Johnson, 911

F.2d 1357, 1361 (9th Cir. 1990)). A defendant may move prior to trial to dismiss a complaint

for lack of personal jurisdiction. Fed.R.Civ.P. 12(b) (2); see, e.g., Data Disc, Inc. v. Sys.

Tech. Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977) (citing Rule 12(b)(2)). When a defendant

does so, “the plaintiff is ‘obligated to come forward with facts, by affidavit or otherwise,

supporting personal jurisdiction’” over the defendant. Cummings v. W. Trial Lawyers Assoc.,

133 F.Supp.2d 1144, 1151 (D. Ariz. 2001) (quoting Scott v. Breeland, 792 F.2d 925, 927 (9th

Cir. 1986)). Conflicts over statements contained in the plaintiff’s and defendant’s affidavits

“must be resolved in the plaintiff’s favor.” Schwarzenegger, 374 F.3d at 800 (citing AT&T

v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)).

Because no statutory method for resolving the personal jurisdiction issue exists, the

district court determines the method of its resolution. See Data Disc, 557 F.2d at 1285

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 Arizona Rule of Civil Procedure. 4.2(a) provides, in pertinent part, “A court of this

state may exercise personal jurisdiction over parties, whether found within or outside the

state, to the maximum extent permitted by the Constitution of this state and the Constitution

of the United States.” Ariz. R. Civ. P. 4.2(a).

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(citing Gibbs v. Buck, 307 U.S. 66, 71-72 (1939)). A district court may allow discovery to

help it determine whether it has personal jurisdiction over a defendant. See id. at 1285 n.1

(citing Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir.

1977)).

 In the absence of an evidentiary hearing on the issue of personal jurisdiction, Plaintiff

must only make “a prima facie showing of jurisdictional facts through the submitted

materials” in order to avoid dismissal for lack of personal jurisdiction. Data Disc, 557 F.2d

at 1285.

Further, because no applicable federal statute governing personal jurisdiction exists,

Arizona’s long-arm statute applies to this case. See Terracom v. Valley Nat’l Bank, 49 F.3d

555, 559 (9th Cir. 1995) (citing Core–Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1484

(9th Cir. 1993)). Arizona’s long-arm statute provides for personal jurisdiction to the extent

permitted by the Due Process Clause of the United States Constitution. Ariz. R. Civ. P.

4.2(a);6 see also Uberti v. Leonardo, 892 P.2d 1354, 1358 (Ariz. 1995), cert. denied, 516

U.S. 906 (1995) (stating that under Rule 4.2(a), “Arizona will exert personal jurisdiction over

a nonresident litigant to the maximum extent allowed by the federal constitution”).

Absent traditional bases for personal jurisdiction (i.e., physical presence, domicile,

and consent), the Due Process Clause requires that a nonresident defendant have certain

minimum contacts with the forum state such that the exercise of personal jurisdiction does

not offend traditional notions of fair play and substantial justice. See Doe v. Am. Nat’l Red

Cross, 112 F.3d 1048, 1050 (9th Cir. 1997) (citing Int’l Shoe, 326 U.S. at 316). The Due

Process Clause protects a defendant’s “liberty interest in not being subject to the binding

judgments of a forum with which he has established no meaningful ‘contacts, ties or

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relations.’” Omeluk v. Langsten Slip & Batbyggeri, 52 F.3d 267, 269–70 (9th Cir. 1995)

(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471–72 (1985)).

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.

Id. at 270 (alteration in original) (quoting Burger King, 471 U.S. at 472).

“In determining whether a defendant had minimum contacts with the forum state such

that the exercise of jurisdiction over the defendant would not offend the Due Process Clause,

courts focus on ‘the relationship among the defendant, the forum, and the litigation ’” Brink

v. First Credit Res., 57 F.Supp.2d 848, 860 (D. Ariz. 1999) (citing Shaffer v. Heitner, 433

U.S. 186, 204 (1977)). If a court determines that a defendant’s contacts with the forum state

are sufficient to satisfy the Due Process Clause, then the court must exercise either “general”

or “specific” jurisdiction over the defendant. See Helicopteros Nacionales de Colombia v.

Hall, 466 U.S. 408, 414–15 nn. 8–9 (1984) (internal citations omitted); Doe, 112 F.3d at

1050. The nature of the defendant’s contacts with the forum state will determine whether the

court exercises general or specific jurisdiction over the defendant. Helicopteros, 466 U.S. at

415. 

a. General Jurisdiction

A court may assert general jurisdiction over a nonresident defendant “[i]f the

defendant’s activities in the state are ‘substantial’ or ‘continuous and systematic,’ . . . even

if the cause of action is unrelated to those activities.” Doe, 112 F.3d at 1050–51 (quoting

Haisten v. Grass Valley Med. Reimbursement Fund, Ltd., 784 F.2d 1392, 1396 (9th Cir.

1986)); see Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir.1995). There is a

“fairly high standard” in establishing that defendant’s activities in the state are substantial.

Brand v. Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986) (internal citations omitted).

This requires that “defendant’s contacts be of the sort that approximate physical presence.”

Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (internal

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 The Court notes that Plaintiff has made no attempt to explain to the Court

whether it believes the Court has “general” personal jurisdiction over QBE or “specific”

personal jurisdiction over QBE or both. Rather, Plaintiff makes conclusory assertions that

the Court has personal jurisdiction over QBE without citing to relevant law regarding

personal jurisdiction. 

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citation omitted). “Factors to be taken into consideration are whether the defendant makes

sales, solicits or engages in business in the state, serves the state’s markets, designates an

agent for service of process, holds a license, or is incorporated there.” Id. (internal citation

omitted).

Plaintiff has failed to show that QBE has “substantial” or “continuous and systematic”

contacts with Arizona, so that an exercise of general jurisdiction would be appropriate.7

Plaintiff has not presented any activities that suggest that QBE has a physical presence or has

something akin to a physical presence in Arizona. Rather, Plaintiff’s entire argument that

this Court has personal jurisdiction over Defendant QBE appears to be based on the

following facts: (1) Bruce Carlino, Head of Claims of QBE Insurance, attended a September

22, 2010 meeting in San Diego, California where the Commutation agreement was discussed;

(2) QBE attended a February 17, 2011 meeting in Chicago, Illinois where the 1991

Agreements and the Commutation Agreement were discussed; (3) an August 20, 2008 letter

from a lawyer in New York on QBE the Americas letterhead was sent to Plaintiff in Phoenix,

Arizona demanding that a letter of credit be issued for Defendant Praetorian in reference to

a 2001 agreement (the “2001 agreement”) entered into between Plaintiff and Defendant

Praetorian; (4) Defendant Praetorian was listed as “a Member of QBE the Americas” in the

2001 agreement and (5) QBE never refuted a statement, made in a responsive letter to the

August 20, 2008 letter, made by Plaintiff that the August 20, 2008 letter came from “QBE

(apparently acting on behalf of Praetorian)”). 

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 At times, it appears that Plaintiff argues that QBE is liable as the alter ego or agent

of Defendant Praetorian. See Doc. 29 at 7 (arguing that personal jurisdiction is clear because

QBE never disputed that it sent a letter on behalf of Defendant Praetorian). However,

Plaintiff also appears to specifically disavow such a theory. See id. at 8 (“Repwest is not

attempting to hold both QBE and Praetorian/ICH liable for the same wrongdoing). Without

some showing that QBE’s subsidiaries are the alter egos or agents of QBE, a simple

corporate affiliation does not confer personal jurisdiction on a parent company. See Bauman

v. DaimlerChrysler Corp., 644 F.3d 909, 920 (9th Cir. 2011) (Even if the Court has personal

jurisdiction over a subsidiary, such personal jurisdiction will not be imputed to a parent

holding company unless (1) the parent holding company is merely an alter ego of the

subsidiary or (2) the subsidiary is the general agent of the parent in the forum). Plaintiff has

presented no argument that there is an alter ego or agency relationship between Defendant

QBE and Defendant Praetorian, so that Defendant Praetorian’s contacts with Arizona could

be imputed to Defendant QBE. Accordingly, the Court cannot find general personal

jurisdiction over QBE under an alter ego or agency theory.

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Notably, while Plaintiff makes several assertions that it does not attempt to hold both

QBE and Praetorian liable for the same wrongdoing,8

 Plaintiff fails to point to any allegations

in the Complaint about any direct conduct by QBE (aside from the five facts listed above)

relating to the allegations in the Complaint. Plaintiff does not dispute the Declaration of

Bruce Carlino, Senior Vice President for Defendant Praetorian Insurance Company and

Senior Vice President/Head of Claims for QBE Reinsurance Corporation, that Defendant

QBE Insurance Group, Ltd. is an Australian company with its principal place of business in

Sydney, Australia, with no offices or employees in the United States of America. (See Doc.

16-1 at ¶ 2). Further, Plaintiff does not dispute that Defendant QBE is not authorized or

licensed to do business or to write insurance in any state in the United States. (Id.). 

Plaintiff has provided the Court with no facts that suggest Defendant QBE has a

physical presence in Arizona or has done anything that approximates a physical presence in

Arizona. Even if the letter to Plaintiff on “QBE the Americas” letterhead were from

Defendant QBE (which Defendant QBE disputes), this would not be the type of

communication that would approximate physical presence. See, e.g., Gates Learjet Corp.

v. Jensen, 743 F.2d 1325, 1330 (9th Cir.1984) (Arizona court did not have general personal

jurisdiction over Defendant who solicited a distributorship agreement in Arizona, visited

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Tucson, Arizona a number of times, entered into purchase agreements with Plaintiff that

contained an Arizona choice of law and forum provision, purchased parts from Plaintiff in

Tucson, Arizona, and sent many letters and telexes and made numerous telephone calls to

Tucson).

Because QBE’s activities in Arizona are not sufficiently substantial, this Court cannot

assert general personal jurisdiction over QBE based on its contacts with Arizona.

b. Specific Jurisdiction

If a defendant does not have substantial or continuous and systematic contacts with

the forum state, then the court must determine whether the defendant has had sufficient

contacts with the forum state such that the exercise of specific jurisdiction over the defendant

would not offend the Due Process Clause. See Int’l Shoe, 326 U.S. at 316; Core–Vent, 11

F.3d at 1485. The Ninth Circuit applies a three-prong test to determine whether the

defendant’s contacts with the forum state are sufficient to subject him to the state’s specific

jurisdiction. Schwarzenegger, 374 F.3d at 802. Under this three-prong test, specific

jurisdiction exists only if: (a) the nonresident defendant purposefully directs activities or

consummates some transaction with the forum of the plaintiff, or performs some act by

which he personally avails himself of the privilege of conducting activities in that forum; (b)

the claim arises out of or relates to the defendant’s forum-related activities; and (c) the

exercise of jurisdiction comports with fair play and substantial justice, i.e., it is reasonable.

Id.; see, e .g., Bancroft, 223 F.3d at 1086 (citing Cybersell, Inc. v. Cybersell, Inc. 130 F.3d

414, 416 (9th Cir.1997)); see also Burger King, 471 U.S. at 472–73.

i. Purposeful Availment

In discussing the specific jurisdiction test, the United States Supreme Court

emphasized long ago that “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.” Hanson v. Denckla, 357 U.S.

235, 253 (1958) (citing Int’l Shoe, 326 U.S. at 319).

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The Ninth Circuit has held that a district court should apply different specific

jurisdiction tests to contract and tort cases. See Roth v. Garcia Marquez, 942 F.2d 617, 621

(9th Cir.1991) (stating that in determining whether court has specific jurisdiction over

defendant, “[i]t is important to distinguish contract from tort actions”); Ziegler, 64 F.3d at

473.

 In cases arising out of contractual relationships, including those involving related tort

claims, the Ninth Circuit applies the “purposeful availment” test enunciated in Hanson.

Because Plaintiff’s claims sound in contract, the Court will apply the purposeful availment

test in analyzing whether there is specific jurisdiction over QBE. See, e.g., Roth, 942 F.2d

at 621 (applying purposeful availment test in breach of contract action). 

In cases arising out of a contractual relationship, a “contract alone does not

automatically establish the requisite minimum contacts necessary for the exercise of personal

jurisdiction. ‘[P]rior negotiations and contemplated future consequences, along with the

terms of the contract and the parties’ actual course of dealing’ are the factors to be

considered. The foreseeability of causing injury in another state is not a sufficient basis on

which to exercise jurisdiction.” Gray, 913 F.2d at 760 (internal citations omitted) (quoting

Burger King, 471 U.S. at 474, 478–79). A defendant has engaged in affirmative conduct and

thereby “purposely availed himself of the benefits of a forum if he has deliberately ‘engaged

in significant activities within a State or has created “continuing obligations” between

himself and the residents of the forum.’” Id. (quoting Burger King, 471 U.S. at 475–76); see

Cybersell, Inc., 130 F.3d at 417 (stating that “the ‘purposeful availment’ requirement is

satisfied if the defendant has taken deliberate action within the forum state or if he has

created continuing obligations to forum residents” and “[i]t is not required that a defendant

be physically present within, or have physical contacts with, the forum, provided that his

efforts ‘are purposefully directed’ toward forum residents.”) (citing Ballard v. Savage, 65

F.3d 1495, 1498 (9th Cir. 1995)).

The only action directly attributed to Defendant QBE in the Complaint is that “[u]pon

information and belief, QBE purchased the assets and liabilities of Defendant Praetorian in

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December 2006 for $800 million.” (Doc. 7 at ¶ 4). However, this allegation is directly

refuted by the Declaration of Bruce Carlino. (See Doc. 16-1 at ¶ 7 (“QBE Group never

purchased the assets and liabilities of [Defendant Praetorian]”). Mr. Carlino avows that, on

May 31, 2007, QBE Reinsurance Corporation purchased Defendant Praetorian. (Id. at ¶ 4).

Prior to this transaction, QBE Reinsurance Corporation had no ownership interest, direct or

indirect, in Defendant Praetorian. (Id.). On March 31, 2010, Praetorian was merged into

QBE Holdings, Inc. and is owned by QBE Holdings, Inc., who is owned by QBE Holdings

(Americas) Pty Limited, who is owned by Defendant QBE. Accordingly, Defendant argues

that Defendant QBE is solely a distant parent of Defendant Praetorian and has had no direct

involvement in the facts giving rise to the claims in this case and thus, the Court lacks

personal jurisdiction over Defendant QBE. Plaintiff has offered no controverting testimony

to the facts as asserted by Mr. Carlino. Because Plaintiff has failed to point to any direct

action by Defendant QBE (except for QBE acquiring Defendant Praetorian’s assets and

liabilities, which is refuted by Mr. Carlino), the Court cannot find that QBE purposefully

availed itself in Arizona. Accordingly, Plaintiff has failed to carry its burden of making a

prima facie showing that the Court has specific jurisdiction over QBE.

Plaintiff requests jurisdictional discovery to “either confirm QBE is the appropriate

entity in name” or to discover which QBE subsidiary is appropriately named in this lawsuit.

(Doc. 29 at 9). 

Courts should deny discovery requests where the plaintiff fails

to show “that further discovery would elucidate the facts

necessary to prove that the court has personal jurisdiction.”

Autogenomics, Inc. v. Oxford Gene Tech., Ltd., 566 F.3d 1012,

1023 (Fed.Cir. 2009) (denying discovery request because

“[plaintiff] provided the district court with no reasons for its

request or particular areas to which discovery would be

directed.”). “Such a showing is especially important where . . .

the defendant enters declarations into evidence specifically

denying certain jurisdictional allegations.” Id.

MMI, Inc. v. Baja, Inc., 743 F.Supp.2d 1101, 1113 (D. Ariz. 2010). 

In this case, it is not clear to the Court the nature of Plaintiff’s legal theory for any

possible claims against Defendant QBE. As discussed above, in the absence of a claim or

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any showing that QBE is the agent or alter ego of Defendant Praetorian, which Plaintiff

appears to deny, or any facts that QBE (or any other QBE entity other than Praetorian) acted

directly to give rise to the claims in this case, the Court cannot exercise personal jurisdiction

over Defendant QBE. 

Plaintiff has failed to propose any method or manner of discovery or the nature of

such discovery that would allow it to prove facts supporting personal jurisdiction over

Defendant QBE or any other QBE-related entity. Accordingly, Plaintiff has failed to show

that “further discovery would elucidate the facts necessary to prove that the court has

personal jurisdiction.” As such, Defendant QBE should not have to engage in further

discovery when Plaintiff has shown that its claims are against Defendant Praetorian and has

made no showing that some other activity by QBE or any other QBE subsidiary or holding

company gave rise to Plaintiff’s claims in this lawsuit. Therefore, discovery on personal

jurisdiction will not be permitted. 

Accordingly, because the Court lacks personal jurisdiction over Defendant QBE, the

Court will grant QBE’s Motion to Dismiss and the Court need not address QBE’s alternative

bases for dismissal. 

V. CONCLUSION

Based on the foregoing,

IT IS ORDERED that Defendant Praetorian’s Motion to Dismiss or Stay Proceedings

and Compel Arbitration (Doc. 11) is granted in part and denied in part as follows:

 IT IS ORDERED that Defendant Praetorian’s Motion to Dismiss and Compel

Arbitration is granted. IT IS FURTHER ORDERED denying Defendant Praetorian’s

alternative Motion to Stay as moot. Plaintiff’s claims against Defendant Praetorian are

dismissed without prejudice to the Parties’ arbitrating those claims. Plaintiff and Defendant

Praetorian are ORDERED to proceed to arbitration pursuant to the 1991 Agreements.

IT IS FURTHER ORDERED that Defendant Aon Benfield, Inc.’s Motion to

Dismiss, or in the Alternative Motion to Stay (Doc. 40) is granted in part and denied in part

as follows:

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Plaintiff’s claims against Defendant Aon Benfield, Inc. (Counts VI and V) are

dismissed. Plaintiff may file an amended Complaint within 20 days of the date of this Order.

If Plaintiff fails to file an amended Complaint within 20 days of the date of this Order, the

Clerk of the Court shall dismiss all claims against Defendant Aon Benfield, Inc. with

prejudice. Defendant Aon Benfield, Inc.’s Motion to Stay is denied without prejudice to

Defendant Aon Benfield, Inc. reasserting if Plaintiff chooses to file an amended Complaint.

IT IS FURTHER ORDERED that Plaintiff’s Motion to Stay Arbitration (Doc. 34)

is granted to the extent it seeks to prohibit Defendant Praetorian from arbitrating claims for

fraudulent inducement and negligent misrepresentation and is otherwise denied.

IT IS FINALLY ORDERED that Defendant QBE Insurance Group Ltd’s Motion

to Dismiss (Doc. 16) is granted in part and denied in part as follows:

 IT IS ORDERED that Defendant QBE’s Motion to Dismiss for lack of personal

jurisdiction is granted. IT IS FURTHER ORDERED that QBE’s alternative Motion to

Dismiss for insufficient process and failure to state a claim is denied as moot. Plaintiff’s

claims against Defendant QBE are dismissed without prejudice to Plaintiff reasserting in a

Court of proper jurisdiction. 

DATED this 28th day of August, 2012.

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