SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

715 

CA 11-02521 

PRESENT: SCUDDER, P.J., CENTRA, PERADOTTO, CARNI, AND LINDLEY, JJ. 

 

JEFFREY CONSTANTINE, M.D., PLAINTIFF-RESPONDENT, 

V MEMORANDUM AND ORDER

STELLA MARIS INSURANCE COMPANY, LTD., 

DEFENDANT-APPELLANT, 

MARY SERIO, NICHOLAS SERIO, AS PARENTS AND 

NATURAL GUARDIANS OF NICOLE SERIO, A MINOR, 

DEFENDANTS-RESPONDENTS, 

ET AL., DEFENDANTS. 

 

PHILLIPS LYTLE, LLP, BUFFALO (KENNETH A. MANNING OF COUNSEL), FOR

DEFENDANT-APPELLANT. 

BROWN & TARANTINO, LLC, BUFFALO (TAMSIN J. HAGER OF COUNSEL), FOR

PLAINTIFF-RESPONDENT. 

PAUL WILLIAM BELTZ, P.C., BUFFALO (WILLIAM A. QUINLAN OF COUNSEL), FOR

DEFENDANTS-RESPONDENTS. 

 

Appeal from an order of the Supreme Court, Erie County (Joseph R.

Glownia, J.), entered February 10, 2011 in a declaratory judgment

action. The order, among other things, denied the motion of defendant

Stella Maris Insurance Company, Ltd. to dismiss the complaint for lack

of personal jurisdiction. 

It is hereby ORDERED that the order so appealed from is affirmed

without costs.

Memorandum: As limited by its brief, defendant-appellant, Stella

Maris Insurance Company, Ltd. (SMI), appeals from an order denying its

motion pursuant to CPLR 3211 (a) (8) seeking to dismiss the complaint

in this declaratory judgment action on the ground that New York lacks

personal jurisdiction over it. SMI is a single-parent captive

insurance company doing business in the Cayman Islands. Its sole

shareholder, Catholic Health East (CHE), a not-for-profit Pennsylvania

corporation that is authorized to do business in New York, has a joint

operating agreement with Catholic Health System, which is the sole

member of Sisters of Charity Hospital (Sisters Hospital) in Buffalo. 

CHE and its affiliates, including Catholic Health System and, in turn,

Sisters Hospital, are named as “covered persons” in the professional

liability policy issued by SMI to CHE. In the underlying medical

malpractice action, defendant Nicholas Serio alleges medical

malpractice by, inter alia, plaintiff in connection with the birth of
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CA 11-02521 

his daughter at Sisters Hospital. Plaintiff commenced this action

seeking a declaration that SMI is obligated to indemnify him in

connection with the underlying medical malpractice action, but the

sole issue before us is whether Supreme Court properly denied SMI’s

motion to dismiss the complaint for lack of personal jurisdiction. 

CPLR 302 (a) provides in relevant part that “a court may exercise

personal jurisdiction over any non-domiciliary . . . who in person or

through an agent: (1) transacts any business within the state or

contracts anywhere to supply goods or services in the state” (emphasis

added). “While the ultimate burden of proof rests with the party

asserting jurisdiction, . . . in opposition to a motion to dismiss

pursuant to CPLR 3211 (a) (8), [plaintiff] need only make a prima

facie showing that the defendant [,here, SMI,] was subject to the

personal jurisdiction of the Supreme Court” (Cornely v Dynamic HVAC

Supply, LLC, 44 AD3d 986, 986). We conclude that plaintiff sustained

that burden here, and we therefore affirm.

As a preliminary matter, we agree with SMI that plaintiff failed

to make a prima facie showing that SMI transacts business within New

York State. Insurance Law § 1101 (b) (1) governs acts in this state

that constitute “doing an insurance business” for purposes of long-arm

jurisdiction. The record establishes that SMI and CHE negotiated the

insurance contract in the Cayman Islands; that the policy was issued

in the Cayman Islands, where it was delivered to CHE; and that CHE

retains the policy in Pennsylvania (see § 1101 [b] [1] [A]). Further,

CHE pays premiums to SMI; SMI does not collect premiums from CHE’s New

York affiliates (see § 1101 [b] [1] [C]). Thus, plaintiff failed to

present prima facie evidence that any of the enumerated activities

were conducted in this state, as required by Insurance Law § 1101 (b)

(1) (A) and (C) (cf. Caronia v American Reliable Ins. Co., 999 F Supp

299, 303 [ED NY]). We note that, in any event, under the facts

presented here, Insurance Law § 1101 (b) (2), which enumerates

activities that “shall not constitute doing an insurance business in

this state,” would apply inasmuch as the policy was “negotiated,

issued and delivered without this state in a jurisdiction in which

[SMI] is authorized to do an insurance business,” i.e., the Cayman

Islands (§ 1101 [b] [2] [E]). We therefore conclude that plaintiff

failed to make a prima facie showing that SMI transacts business in

New York State (see CPLR 302 [a] [1]). 

We nevertheless conclude that plaintiff made a prima facie

showing that SMI contracted in the Cayman Islands to provide services

in New York (see CPLR 302 [a] [1]), and thus that the exercise of

long-arm jurisdiction is appropriate (see Insurance Co. of N. Am. v

Pyramid Ins. Co. of Bermuda Ltd., 1994 WL 88754, *2 [SD NY]; see

generally Armada Supply Inc. v Wright, 858 F2d 842, 849 [2d Cir 1988];

Twin City Fire Ins. Co. v Harel Ins. Co. Ltd., 2011 WL 3480948, *2 [SD

NY]; Caronia, 999 F Supp at 300-301). Although, by its nature, a

single-parent captive insurance company insures only its parent and,

indeed, CHE is named as the insured in the policy, here, the policy

itself states that the “persons insured” are the covered persons,

i.e., CHE and its named affiliates, which include Catholic Health
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CA 11-02521 

System, the sole member of Sisters Hospital, as well as the employees

and contract physicians of the covered persons (see generally Hudson

Ins. Co. v Oppenheim, 35 AD3d 168). Further, plaintiff provided the

deposition testimony of CHE’s vice-president who also serves as SMI’s

president and CEO, who testified that the list of physicians who

contract with Sisters Hospital is provided to SMI’s broker and

actuary, and that SMI issues a certificate of insurance to him for CHE

and Catholic Health System. We therefore conclude that plaintiff made

a prima facie showing that SMI contracted with CHE to insure

professional liability risks in New York, and thus that it is subject

to the exercise of long-arm jurisdiction (see Armada Supply Inc., 858

F2d at 849; see generally Hudson Ins. Co., 35 AD3d at 168). 

 We further conclude that “the exercise of jurisdiction comports

with due process” (LaMarca v Pak-Mor Mfg. Co., 95 NY2d 210, 214; see

Andrew Greenburg, Inc. v Sirtech Can., Ltd., 79 AD3d 1419, 1420),

i.e., that SMI has the requisite minimum contacts with New York (see

LaMarca, 95 NY2d at 216), and that the “prospect of defending [this

action] . . . comport[s] with traditional notions of fair play and

substantial justice” (id. at 217 [internal quotation marks omitted]). 

Although SMI itself has no direct contacts with New York, we conclude

that, based on its policy language that the contract physicians of

Sisters Hospital, a “covered person,” are “insured,” the minimum

contacts requirement has been met (see generally Hudson Ins. Co., 35

AD3d at 168-169). We further conclude that permitting the action to

proceed in New York comports with notions of fair play and substantial

justice inasmuch as the remaining defendants, as well as plaintiff,

either are residents of New York or are authorized to do business in

New York, and the alleged basis for liability occurred in New York

(see generally Armada Supply Inc., 858 F2d at 849). Furthermore, we

note that, in connection with a declaratory judgment action that SMI

commenced against plaintiff in Federal District Court in Pennsylvania,

SMI requested as alternative relief that the matter be transferred to

Federal District Court in New York. 

Finally, we agree with SMI that plaintiff failed to make a prima

facie showing that jurisdiction exists on the alternative theories

that it is a “mere department” of CHE, or that CHE is SMI’s agent, and

thus that CHE’s actions may be attributed to SMI. Although CHE is the

sole shareholder of SMI, and the two corporations share certain

executive personnel and one board member, those are “factors [that]

are intrinsic to the parent-subsidiary relationship and, by

themselves, [are] not determinative” (Porter v LSB Indus., 192 AD2d

205, 214). Here, the record establishes that SMI and CHE maintain

corporate formalities inasmuch as the policy was negotiated between

CHE and the management company with which SMI contracts to run its day

to day operations; that CHE does not have access to SMI’s bank

accounts; that there is no commingling of funds or investments; and

that SMI’s board, although appointed by CHE, owes a fiduciary duty to

SMI. We therefore conclude that plaintiff has failed to make a prima

facie showing that CHE’s “control over [SMI’s] activities ‘[are] so

complete that [SMI] is, in fact, merely a department of [CHE]’ ” (id.

at 213). Further, we reject plaintiff’s contention that CHE, the

parent corporation, acted as an agent of its wholly owned subsidiary
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CA 11-02521 

SMI with respect to doing business in New York in connection with

Catholic Health System and Sisters Hospital (see generally Frummer v

Hilton Hotels Intl., 19 NY2d 533, 537-538, rearg denied 20 NY2d 758,

remittitur amended 20 NY2d 737, 759, cert denied 389 US 923; Jazini v

Nissan Motor Co., Ltd., 148 F3d 181, 184-185). 

All concur except PERADOTTO, J., who concurs in the result in the

following Memorandum: I respectfully concur in the result reached by

the majority, namely, the affirmance of the order denying the motion

of defendant-appellant, Stella Maris Insurance Company, Ltd. (SMI), to

dismiss the complaint on the ground that New York lacks personal

jurisdiction over it. I agree with the majority that plaintiff made a

prima facie showing that SMI contracted in the Cayman Islands to

provide services in New York State within the meaning of CPLR 302 (a)

(1), and thus that the exercise of long-arm jurisdiction is

appropriate. I write separately, however, because I further conclude

that plaintiff also made a prima facie showing that SMI transacts

business within New York pursuant to CPLR 302 (a) (1) and Insurance

Law § 1101 (b) (1).

As set forth by the majority, SMI is a single-parent captive

insurance company domiciled in the Cayman Islands. SMI issued a

professional liability insurance policy to its sole shareholder,

Catholic Health East (CHE), a not-for-profit Pennsylvania corporation

authorized to do business in New York. CHE has a joint operating

agreement with Catholic Health System, which is the sole member of

Sisters of Charity Hospital (Sisters Hospital) in Buffalo. Both

Catholic Health System and Sisters Hospital are “covered persons”

under the SMI policy issued to CHE. Plaintiff commenced this action

seeking a declaration that SMI is obligated to indemnify him in

connection with the underlying medical malpractice action. The

underlying action arises from plaintiff’s provision of obstetrical

services at Sisters Hospital. As noted by the majority, the sole

issue before us is whether Supreme Court properly denied SMI’s motion

to dismiss the complaint for lack of personal jurisdiction.

Although it is well established that “the burden of proving

jurisdiction is on the party asserting it” (Roldan v Dexter Folder

Co., 178 AD2d 589, 590), a plaintiff opposing a pre-answer motion to

dismiss pursuant to CPLR 3211 (a) (8) for lack of jurisdiction “need

only make a prima facie showing that personal jurisdiction exists”

(Opticare Acquisition Corp. v Castillo, 25 AD3d 238, 243). As

relevant here, CPLR 302 (a) (1) provides that a New York court may

exercise personal jurisdiction over a non-domiciliary who, in person

or through an agent, “transacts any business within the state.” With

respect to foreign insurance companies, Insurance Law § 1101 (b) (1)

expressly provides in pertinent part that “any of the following acts

in this state, effected by mail from outside this state or otherwise,

. . . shall constitute doing business in the state within the meaning

of [CPLR 302]: (A) making, or proposing to make, as insurer, any

insurance contract, including either issuance or delivery of a policy

or contract of insurance to a resident of this state or to any firm,

association, or corporation authorized to do business herein . . . ;

[or] (C) collecting any premium . . . for any policy or contract of
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CA 11-02521 

insurance.”

Contrary to the conclusion of the majority, I conclude that SMI

is subject to long-arm jurisdiction pursuant to Insurance Law § 1101

(b) (1) (A) because it “ma[d]e . . . an[] insurance contract” covering

a New York risk. Insurance Law § 1101 (a) (1) broadly defines

“insurance contract” as “any agreement or other transaction whereby

one party, the ‘insurer,’ is obligated to confer benefit of pecuniary

value upon another party, the ‘insured’ or ‘beneficiary,’ dependent

upon the happening of a fortuitous event in which the insured or

beneficiary has, or is expected to have at the time of such happening,

a material interest which will be adversely affected by the happening

of such event.” Here, it is undisputed that Catholic Health System

and Sisters Hospital, as well as their New York employees, are

“covered persons” under the SMI insurance policy and, thus, they are

insureds or beneficiaries within the meaning of Insurance Law § 1101

(a) (1). 

The majority concludes that Insurance Law § 1101 (b) (1) (A) is

inapplicable under the circumstances of this case because the record

establishes that the SMI policy was negotiated and delivered to CHE in

the Cayman Islands and was thereafter retained in Pennsylvania. I

disagree. There is no question that, had SMI mailed the insurance

policy to Catholic Health System or Sisters Hospital in New York or to

CHE, which is authorized to do business in New York, section 1101 (b)

(1) (A) would apply. The statutory language does not, however, limit

its application to policies physically delivered into New York. The

statute provides that “any of the following acts in this state,

effected by mail from outside this state or otherwise . . . shall

constitute doing business in the state” for purposes of long-arm

jurisdiction, including “making . . . any insurance contract” (§ 1101

[b] [1] [A] [emphases added]). In my view, the “or otherwise”

language broadens the statute’s applicability to any manner of making

a contract in this state, not simply to “mail order” insurance

arrangements. Inasmuch as one of the primary purposes of Insurance

Law § 1101 is to protect New York insureds from foreign insurance

companies not licensed in New York, I conclude that the statute can

reasonably be interpreted as “any of the following acts in this state,

effected by mail from outside this state or [in any other manner from

outside this state]” (§ 1101 [b] [1] [emphasis added]). Thus, where

an insurance company makes an insurance contract covering a New York

risk, the applicability of Insurance Law § 1101 should not turn on

whether the insurance company mails the contract to the insured in New

York or delivers the contract to the New York insured in some other

manner. Here, SMI issued a policy covering a New York risk, i.e.,

malpractice claims stemming from medical incidents at Sisters Hospital

and other New York health care facilities. It is therefore, in my

view, subject to jurisdiction pursuant to Insurance Law § 1101 (b) (1)

(A). 

The fact that CHE retained the policy in Pennsylvania and did not

send a copy of the policy to the covered persons in New York should

not alter the jurisdictional analysis. “It has long been recognized

that, ‘[I]t is the intention of the parties and not the manual
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CA 11-02521 

possession of a policy which determines whether there has been a

delivery thereof. There must be an intention to part with the control

of the instrument and to place it in the power of the insured or some

person acting for [it]. Manual delivery to the insured in person is

not necessary’ ” (Ecstasy Limousine Inc. v Lancer Ins., 8 Misc 3d

1025[A], 2005 NY Slip Op 51285[U], *4-5). “Delivery . . . primarily

concerns an insurer’s intent; if an insurer has put the policy outside

of its legal control, even if not outside its actual possession,

delivery has occurred” (6 Thomas, New Appleman on Insurance Law

Library Edition § 61.04 [7] [a], at 61-59 [2011]). Here, it is

undisputed that the SMI policy covers Sisters Hospital and its

employees in New York and, in my view, once SMI turned the policy over

to CHE, the policy was no longer within SMI’s legal control (see

generally Wanshura v State Farm Life Ins. Co., 275 NW2d 559, 564

[Minn]).

Unlike the majority, I further conclude that SMI collected

premiums from Catholic Health System and/or Sisters Hospital in New

York within the meaning of Insurance Law § 1101 (b) (1) (C). The

record establishes that CHE collected funds from the “covered

persons,” including Catholic Health System and Sisters Hospital, to

pay the premiums due to SMI under the policy. Catholic Health System

received a bill for premiums due under the policy and remitted payment

to CHE. CHE then paid SMI for the premiums owed under the policy. 

Although it appears that CHE collected premiums on behalf of SMI, that

arrangement does not alter the fact that premiums collected from

Catholic Health System and Sisters Hospital were paid to SMI for the

policy. Moreover, the terms of the policy specifically provide that

SMI has the right to assess additional premiums against all “covered

persons,” thereby including Catholic Health System and Sisters

Hospital, and SMI directly issued certificates of insurance to

Catholic Health System. I thus conclude that plaintiff made a prima

facie showing that SMI “collect[ed] a[] premium . . . or other

consideration [from the New York entities] for [the] policy or

contract of insurance” issued to CHE (§ 1101 [b] [1] [C]). 

I disagree with the majority’s alternative conclusion that

Insurance Law § 1101 (b) (2), the statutory exception to Insurance Law

§ 1101 (b) (1), applies to this case. Insurance Law § 1101 (b) (2)

(E) provides that, “[n]otwithstanding the foregoing, the following

acts or transactions, if effected by mail from outside this state by

an unauthorized foreign or alien insurer duly licensed to transact the

business of insurance in and by the laws of its domicile, shall not

constitute doing an insurance business in this state, but section [

1213] of this chapter shall nevertheless be applicable to such

insurers: . . . (E) transactions with respect to policies of

insurance on risks located or resident within or without this state .

. . , which policies are principally negotiated, issued and delivered

without this state in a jurisdiction in which the insurer is

authorized to do an insurance business” (emphasis added). Insurance

Law § 1213, entitled “Service of process on superintendent as attorney

for unauthorized insurers,” provides that its purpose is “to subject

certain insurers to the jurisdiction of the courts of this state in

suits by or on behalf of insureds or beneficiaries under certain
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insurance contracts. The legislature declares that it is a subject of

concern that many residents of this state hold policies of insurance

issued or delivered in this state by insurers while not authorized to

do business in this state, thus presenting to such residents the often

insuperable obstacle of resorting to distant forums for the purpose of

asserting legal rights under such policies. In furtherance of such

state interest, the legislature herein provides a method of

substituted service of process upon such insurers and declares that in

so doing it exercises its power to protect its residents and to

define, for the purpose of this section, what constitutes doing

business in this state” (§ 1213 [a]).

The statute goes on to provide that “[a]ny of the following acts

in this state, effected by mail or otherwise, by an unauthorized

foreign or alien insurer . . . is equivalent to and constitutes its

appointment of the superintendent . . . to be its true and lawful

attorney upon whom may be served all lawful process in any proceeding

instituted by or on behalf of an insured or beneficiary arising out of

any such contract of insurance, and shall signify its agreement that

such service of process is of the same legal force and validity as

personal service of process in this state upon such insurer” (§ 1213

[b] [1] [emphasis added]). The acts include, in language closely

mirroring Insurance Law § 1101 (b) (1), “the issuance or delivery of

contracts of insurance to residents of this state or to corporations

authorized to do business therein,” “the collection of premiums,

membership fees, assessments or other considerations for such

contracts,” or “any other transaction of business” (§ 1213 [b] [1]

[A], [C], [D]).

As an initial matter, I question whether the exception set forth

in Insurance Law § 1101 (b) (2) is even triggered inasmuch as it is

limited by its terms to acts or transactions “effected by mail from

outside this state,” which did not occur here. In any event, I

conclude that the exception applies only to shield foreign insurance

companies from the licensing requirements set forth in Insurance Law §

1102, and does not limit the exercise of long-arm jurisdiction

pursuant to CPLR 302. That conclusion is supported by the difference

in the meaning and usage of the phrases “doing business in the state”

and “doing an insurance business in this state” (see e.g. Insurance

Law § 1101 [b] [1]; § 1102 [a]; § 1213 [a]). As used in the Insurance

Law, the phrase “doing business in the state” relates to the predicate

for the exercise of long-arm jurisdiction pursuant to CPLR 302 (a) (1)

(see Insurance Law § 1101 [b] [1] [“(A)ny of the following acts in

this state . . . shall constitute doing an insurance business in this

state and shall constitute doing business in the state within the

meaning of (CPLR 302)” (emphasis added)]; Insurance Law § 1213 [a]

[defining “what constitutes doing business in this state” for the

purpose of “subject(ing) certain insurers to the jurisdiction of the

courts of this state” (emphasis added)]; see generally CPLR 302 [a]

[1] [court may exercise personal jurisdiction over any non-domiciliary

who “transacts any business within the state”]). By contrast, “doing

an insurance business” refers to state licensing requirements (see

Insurance Law § 1102 [a] [“No person, firm, association, corporation

or joint-stock company shall do an insurance business in this state
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CA 11-02521 

unless authorized by a license in force pursuant to the provisions of

this chapter” (emphasis added)]). I thus conclude that the exception

set forth in Insurance Law § 1101 (b) (2) (E), which provides that

certain acts “shall not constitute doing an insurance business” does

not exempt SMI from personal jurisdiction (emphasis added). Any other

interpretation of the statute would render meaningless the language in

the exception that “section [1213] of this chapter shall nevertheless

be applicable to such insurers,” i.e., unauthorized foreign insurers

licensed to transact insurance business in their place of domicile (§

1101 [b] [2]). In my view, the quoted language means that, even

though foreign insurers transacting business in New York may be exempt

from the licensing requirements of New York Law, they are nevertheless

subject to jurisdiction in New York courts. Indeed, the language in

Insurance Law § 1213 is the equivalent of consent to personal

jurisdiction.

In sum, I conclude that plaintiff made a prima facie showing not

only that SMI contracted in the Cayman Islands to provide services in

New York State within the meaning of CPLR 302 (a) (1), but also that

it transacted business in this state pursuant to CPLR 302 (a) (1) and

Insurance Law § 1101 (b) (1). 

Finally, contrary to the conclusion of the majority, I conclude

that plaintiff made a prima facie showing that jurisdiction exists on

the alternative theories that SMI is a “mere department” of CHE, or

that CHE is SMI’s agent, and thus that CHE’s actions may be attributed

to SMI (see generally Porter v LSB Indus., 192 AD2d 205, 212-213;

Turbon Intl., Inc. v Hewlett-Packard Co., 769 F Supp 2d 259, 260-261). 

As noted by the majority, CHE is the sole shareholder of SMI, and the

two corporations share certain executive personnel as well as one

board member. Furthermore, the record establishes that SMI’s sole

function is to provide insurance to CHE and its affiliates, that SMI

is financially dependent on premiums paid by CHE and its affiliates,

and that CHE controls many of the insurance-related activities of SMI

(see generally Delagi v Volkswagenwerk AG of Wolfsburg, Germany, 29

NY2d 426, 431-432, rearg denied 30 NY2d 694; Volkswagenwerk

Aktiengesellschaft v Beech Aircraft Corp., 751 F2d 117, 120-122;

National Union Fire Ins. Co. of Pittsburgh v Ideal Mut. Ins. Co., 122

AD2d 630, 631-633; Dorfman v Marriott Intl. Hotels, Inc., 2002 WL

14363, *7-8). Among other things, plaintiff submitted evidence that

CHE and/or its agents: (1) drafted the insurance policy at issue and

reviewed the policy; (2) determined the risks to be covered; (3)

collected premiums from its affiliates for the professional liability

coverage; (4) provided Catholic Health System and/or Sisters Hospital

with any information regarding the professional liability coverage;

(5) established the policy for making claims; and (6) received all

notices of claims under the policy. Thus, given the foregoing

interrelationship between SMI and CHE, I further conclude that there

is at least an issue of fact whether SMI is subject to long-arm

jurisdiction pursuant to an agency or “mere department” theory. 

Entered: July 6, 2012 Frances E. Cafarell

Clerk of the Court