UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

NATIONAL UNION FIRE INSURANCE

COMPANY OF PITTSBURGH, PA.,

Plaintiff,

VS.

IF P&C INSURANCE, LTD.,

Defendant.

)

)

)

) CIVIL ACTION NO.

)

) 3:04-CV-2185-G

)

)

)

)

MEMORANDUM OPINION AND ORDER

Before the court is the motion of the defendant If P&C Insurance, Ltd. (“If

P&C”) to dismiss the complaint of the plaintiff National Union Fire Insurance

Company of Pittsburgh, PA. (“National Union”) for lack of personal jurisdiction

and/or on the basis of a prior pending action or, alternatively to stay this action

pending a resolution of the prior pending action. For the reasons discussed below, If

P&C’s motion is granted. 

I. BACKGROUND

This is a coverage dispute between two international insurance companies over

several civil lawsuits arising out of the September 11, 2001, terrorist attacks on the

 

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1 National Union’s policy provides a $50,000,000.00 aggregate limit of

liability for the products/completed operations hazard. Brief of Plaintiff in

Opposition to Defendant’s Motion to Dismiss or Alternatively Motion to Stay

(“National Union’s Response”) at 2. National Union avers that the World Trade

Center attack arose out of the Globe’s “completed operations” because Globe’s

(continued...)

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World Trade Center in New York City. Defendant’s Brief in Support of Its Motion

to Dismiss or Alternatively Motion to Stay (“If P&C’s Motion to Dismiss”) ¶ 1. 

National Union, a Pennsylvania corporation based in New York, is part of the

American International Group, Inc. (“AIG”), the nation’s largest commercial insurer

based in the United States. Id. If P&C is a Swedish insurance company with its

principal place of business in Stockholm, Sweden. Id. ¶ 13. If P&C is the leading

property and casualty insurance company in Sweden, Norway, Finland, and

Denmark, with approximately $5.6 billion in annual gross income. Id. If P&C

maintains no offices, assets, or personnel in the United States; however, it insures

world-wide operations of international companies, often through local insurance

entities. Id. ¶¶ 1, 13. 

Underlying the instant dispute are claims brought against Burns International

Security Services Corporation and Burns International Services Corporation

(collectively, “Burns”) and Globe Aviation Services Corporation (“Globe”), to whom

National Union issued a primary general commercial liability aviation policy. Id. ¶ 1. 

This policy specifically covered airport security operations at issue in the claims

against both Burns and Globe (collectively, the “Insureds”).1

 Id.; see Exhibit A,

 

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1

(...continued)

passenger screening operations for American Airlines were “completed” under the

terms of Globe’s contract with American Airlines when the hijackers passed through

Globe’s security screening checkpoints prior to boarding the aircraft. Id. n.3. 

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Commercial General Liability Aviation Policy, attached to Complaint for Declaratory

Judgment, Equitable Contribution and Money Damages (“Complaint”). These

lawsuits allege, inter alia, that the Insureds were negligent in their provision of airport

security services at the Portland, Maine and Boston, Massachusetts airports, where

some of the terrorists boarded the airplanes that eventually crashed into the World

Trade Center. If P&C’s Motion to Dismiss ¶ 8; National Union’s Response at 1-2, 6. 

If P&C issued an excess/umbrella liability policy to Securitas AB (“Securitas”), a

Swedish company which is the ultimate parent company of the Insureds. If P&C’s

Motion to Dismiss ¶ 9; see Affidavit of Anders Beijer (“Beijer Affidavit”) ¶ 4, attached

to Appendix to Defendant’s Brief in Support of Its Motion to Dismiss or Alternatively

Motion to Stay (“Appendix to If P&C’s Motion to Dismiss”) at 2. The If P&C policy

provides excess liability coverage for the world-wide operations of Securitas and its

subsidiaries. If P&C’s Motion to Dismiss ¶ 15; see also Exhibit B, Insurance Policy

Between If P&C and Securitas AB (“If P&C policy”), attached to Complaint. The If

P&C policy was issued in Sweden, is written in Swedish, and has a Swedish choice of

law and forum selection clause. If P&C’s Motion to Dismiss ¶ 15. As part of the

global liability insurance program with Securitas, If P&C and Securitas arranged local

United States coverage through Employers Insurance Company of Wausau

 

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(“Wausau”) for Securitas’ subsidiary, Pinkertons, Inc. (“Pinkertons”), and certain

affiliated entities. Id. ¶¶ 1, 16; Beijer Affidavit ¶ 5, attached to Appendix to If P&C’s

Motion to Dismiss at 2. Globe, one of the Insureds and a subsidiary of Pinkertons,

has its principal place of business in Irving, Texas. If P&C’s Motion to Dismiss ¶ 1;

National Union’s Response at 6; Affidavit of Marshall Potashner ¶ 3, attached to

Appendix to If P&C’s Motion to Dismiss at 3-4.

After the lawsuits were initiated against the Insureds, the Insureds tendered the

claims to National Union, and National Union assumed defense obligations for those

claims in accordance with its obligations under the policy. If P&C’s Motion to

Dismiss ¶ 10. The Insureds also tendered the claims to Wausau. Id. However,

because questions remained as to whether Burns and Globe were “insureds” under the

Wausau and If P&C insurance policies, and because Wausau and If P&C believe that

National Union is the primary carrier, Wausau brought suit in a Delaware state court

seeking a declaratory judgment as to coverage with respect to the Insureds and

priority and allocation of coverage as between National Union and Wausau. Id.; see

also First Amended Complaint for a Declaratory Judgment Action in Employers

Insurance Company of Wausau v. National Union, et al, No. 03C-01-214 (Del. Super.

Ct.) (the “Delaware Action”), attached to Appendix to If P&C’s Motion to Dismiss at

5-20. 

 

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2 Additionally, following the initiation of this suit, a Swedish arbitration

panel determined that the Burns and Globe were “insureds” under the If P&C policy. 

See generally Complaint ¶ 17; Exhibit C, Arbitral Award, attached to Complaint. 

Wausau, Burns, and Globe commenced negotiations to settle the coverage dispute

and to dismiss Burns, Globe, and Pinkertons from the Delaware Action. If P&C’s

Motion to Dismiss ¶ 11. The settlement is currently in process. Id. As a result, the

claims between Wausau and National Union with respect to priority and allocation of

coverage as to defense and indemnity obligations will be the only issues remaining in

the Delaware Action. Id. 

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On October 7, 2004, National Union filed this suit seeking a declaration of the

rights and obligations of both liability insurance carriers to pay or contribute to the

cost of defense and indemnity of their common insureds in the lawsuits arising from

the September 11, 2001, terrorist attacks. See generally Complaint. The issues in this

case concern how defense costs will be allocated and which of the parties’ policies is

primary and which is excess, or whether they are co-primary.2

 If P&C’s Motion to

Dismiss ¶ 2. In the instant motion, If P&C now challenges its amenability to the

jurisdiction of this court, maintaining that its contacts with Texas do not constitute

the kind of contacts that would permit this court to exercise personal jurisdiction over

it. See generally If P&C’s Motion to Dismiss ¶¶ 1-38.

II. ANALYSIS

A. The Factual Standard: A Prima Facie Case

When a nonresident defendant moves to dismiss for lack of personal

jurisdiction, the plaintiff bears the burden of establishing the district court’s

jurisdiction over the nonresident. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert.

 

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denied, 513 U.S. 930 (1994); Gardemal v. Westin Hotel Company, 186 F.3d 588, 592

(5th Cir. 1999). If the district court chooses to decide the matter without an

evidentiary hearing, the plaintiff may meet its burden by presenting a prima facie case

for personal jurisdiction. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592.

The court will take the allegations of the complaint as true, except where they

are controverted by opposing affidavits, and all conflicts in the facts are resolved in

favor of the plaintiff. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592. In making

its determination, the court may consider affidavits, interrogatories, depositions, oral

testimony, or any combination of recognized discovery methods. Allred v. Moore &

Peterson, 117 F.3d 278, 281(5th Cir. 1997), cert. denied, 522 U.S. 1048 (1998);

Thompson v. Chrysler Motors Corporation, 755 F.2d 1162, 1165 (5th Cir. 1985).

B. The Legal Standard

A federal district court may exercise personal jurisdiction over a nonresident

defendant if (1) the long-arm statute of the forum state permits the exercise of

personal jurisdiction over the defendant; and (2) the exercise of such jurisdiction by

the forum state is consistent with due process under the United States Constitution. 

Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002). A defendant is amenable to the

personal jurisdiction of a federal court sitting in diversity to the same extent that it

would be amenable to the jurisdiction of a state court in the same forum. Pedelahore v.

Astropark, Inc., 745 F.2d 346, 347 (5th Cir. 1984). Applying state law, this court

 

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must first determine whether Texas, the forum state, could assert long-arm

jurisdiction. Id. Because the Texas long-arm statute confers jurisdiction to the limits

of the federal constitution, Access Telecom, Inc. v. MCI Telecommunications Corporation,

197 F.3d 694, 716 (5th Cir. 1999), cert. denied, 531 U.S. 917 (2000); Hall v.

Helicopteros Nacionales de Colombia, S.A., 638 S.W.2d 870, 872 (Tex. 1982), rev’d on

other grounds, 466 U.S. 408 (1984), the court need only concern itself with the federal

due process inquiry. Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999); Wilson,

20 F.3d at 647 n.1; see also TEX. CIV. PRAC. & REM. CODE ANN. § 17.041 et seq.

(Vernon 1997) (Texas long-arm statute).

C. Due Process Requirements

Due process requires the satisfaction of two elements to exercise personal

jurisdiction over a non-resident defendant: (1) the nonresident must have some

minimum contact with the forum that results from an affirmative act on its part such

that the nonresident defendant could anticipate being haled into the courts of the

forum state; and (2) it must be fair or reasonable to require the nonresident to defend

the suit in the forum state. Burger King Corporation v. Rudzewicz, 471 U.S. 462,

474-78 (1985); Gulf Consolidated Services, Inc. v. Corinth Pipeworks, S.A., 898 F.2d

1071, 1073 (5th Cir.), cert. denied, 498 U.S. 900 (1990). The Due Process Clause

ensures that persons have a “fair warning that a particular activity may subject [them]

 

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to the jurisdiction of a foreign sovereign.” Burger King, 471 U.S. at 472 (quoting

Shaffer v. Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring)).

1. Minimum Contacts

To establish minimum contacts with the forum, a nonresident defendant must

do some act by which it “purposefully avails itself of the privilege of conducting

activities within the forum State, thus invoking the benefits and protections of its

laws.” Burger King, 471 U.S. at 474-75 (quoting Hanson v. Denckla, 357 U.S. 235,

253 (1958)). However, the unilateral activity of one asserting a relationship with the

nonresident defendant does not satisfy this requirement. Burger King, 471 U.S. at

474 (quoting Hanson, 357 U.S. at 253); Helicopteros Nacionales de Colombia, S.A. v.

Hall, 466 U.S. 408, 417 (1984) (citing Kulko v. California Superior Court, 436 U.S. 84

(1978); Hanson, 357 U.S. at 253). In determining whether the exercise of

jurisdiction is appropriate, the Supreme Court has focused less on presence in the

forum state as a means to establish jurisdiction and looked increasingly to whether a

defendant’s contacts with the forum state make it reasonable to require the defendant

to defend the particular suit in that forum. Quill Corporation v. North Dakota, 504

U.S. 298, 307 (1992).

Two types of in personam jurisdiction may be exercised over a nonresident

defendant: specific jurisdiction and general jurisdiction. Specific jurisdiction exists if

the cause of action is related to, or arises out of, the defendant’s contacts with the

 

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forum state and those contacts meet the due process standard. J.R. Stripling v. Jordan

Production Company, LLC, 234 F.3d 863, 871 (5th Cir. 2000) (quotations and

citations omitted). “When a court exercises personal jurisdiction over a defendant

based on contacts with the forum related to the particular controversy, the court is

exercising ‘specific jurisdiction.’” Holt Oil & Gas Corporation v. Harvey, 801 F.2d 773,

777 (5th Cir. 1986) (citations omitted), cert. denied, 481 U.S. 1015 (1987). General

jurisdiction, on the other hand, may be found when the nonresident’s contacts with

the forum are “continuous and systematic,” even though the claim is unrelated to

those contacts. Helicopteros Nacionales, 466 U.S. at 415-16.

Under either a specific or general jurisdiction analysis, however, “the

constitutional touchstone remains whether the defendant purposefully established

‘minimum contacts’ in the forum [s]tate.” Burger King, 471 U.S. at 474 (quoting

International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). The “purposeful

availment” requirement of the minimum contacts inquiry “ensures that a defendant

will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or

‘attenuated’ contacts . . . or of the ‘unilateral activity of another party or a third

person.’” Id. at 475 (citations omitted). A plaintiff must establish a substantial

connection between the nonresident defendant and the forum state. Jones v. Petty-Ray

Geophysical, Geosource, Inc., 954 F.2d 1061, 1068 n.9 (5th Cir.), cert. denied, 506 U.S.

867 (1992); Bearry v. Beech Aircraft Corporation, 818 F.2d 370, 374 (5th Cir. 1987)

 

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(citing Burger King, 471 U.S. at 475 n.18; McGee v. International Life Insurance

Company, 355 U.S. 220, 223 (1957)).

A court must consider all factors when making the purposeful availment

inquiry -- “no single factor, particularly the number of contacts, is determinative.” 

Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). “[W]hether the minimum

contacts are sufficient to justify subjection of the non-resident to suit in the forum is

determined not on a mechanical and quantitative test, but rather under the particular

facts upon the quality and nature of the activity with relation to the forum state.” 

Mississippi Interstate Express, Inc. v. Transpo, Inc., 681 F.2d 1003, 1006 (5th Cir. 1982);

see also Coats v. Penrod Drilling Corporation, 5 F.3d 877, 884 (5th Cir. 1993), cert.

denied, 510 U.S. 1195 (1994).

a. Specific Jurisdiction

In the case at bar, National Union argues that If P&C had sufficient minimum

contacts with Texas for this court to exercise personal jurisdiction over If P&C. 

National Union’s Response at 15. Specifically, National Union contends that If P&C

is subject to personal jurisdiction in this court because National Union’s complaint

for declaratory judgment “arises out of” If P&C’s contract of insurance with Globe, a

Texas resident. Id. 

If P&C, on the other hand, argues that it lacks sufficient minimum contacts

with Texas to be subject to personal jurisdiction in this court. If P&C’s Motion to

 

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Dismiss ¶¶ 24, 25. If P&C maintains that the underlying injuries which gave rise to

the claims against the Insureds occurred in New York City, and the airport security

services at issue were provided in Maine and Massachusetts. Id. ¶ 25. Additionally,

If P&C states that the present case does not arise out of activities it directed at Texas:

the If P&C policy was not issued in Texas, no premiums were collected in or paid

from Texas, and none of the parties to the policy are Texas residents. Id. 

Even when all of National Union’s factual allegations are taken as true,

National Union has failed to establish a prima facie case that If P&C purposefully

availed itself of the privilege of conducting business within Texas. See Burger King,

471 U.S. at 475. The fact that a nonresident has entered into a contract with a

resident of the forum does not automatically establish sufficient minimum contacts

with that forum. Id. at 478; Electrosource, Inc. v. Horizon Battery Technologies, Ltd., 176

F.3d 867, 872 (5th Cir. 1999) (citations omitted); Stuart, 772 F.2d at 1193. In

determining whether a contractual relationship does establish sufficient minimum

contacts, the Fifth Circuit has repeatedly looked to the following language from the

Supreme Court’s decision in Burger King:

It is these factors -- prior negotiations and contemplated

future consequences, along with the terms of the contract

and the parties’ actual course of dealing -- that must be

evaluated in determining whether the defendant

purposefully established minimum contacts with the

forum.

 

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Burger King, 471 U.S. at 479. When these factors are taken into account, National

Union has failed to show that If P&C purposefully established minimum contacts

with Texas. 

The facts present in the instant case are analogous to the situation in Delta

Brands Inc. v. Danieli Corporation, 99 Fed. Appx. 1 (5th Cir. 2004). In Delta Brands,

the court determined that the Danieli Corporation was not subject to specific

jurisdiction in Texas. Id. at 7. Delta, a Texas corporation, contacted Danieli & C, an

Italian company, through its North American affiliate, Danieli Corp. about the

possibility of subcontracting on a project. Id. at 3. As a result, Delta sent a

delegation to Italy where Danieli & C executed a confidentiality agreement with

Delta. Id. The subcontracting agreement, however, between Danieli & C and Delta

never materialized. Id. In reaching its conclusion that Danieli Corporation was not

subject to personal jurisdiction in this court, the Fifth Circuit explained: “It is farfetched indeed to assert that Danieli Corp. should have anticipated being haled into

Texas court in connection with a contract it did not know about, that was executed in

Italy by its affiliate, and that was allegedly breached by its affiliate in Italy.” Id. at 7. 

In the instant case, like the defendant in Delta Brands, If P&C could not have

anticipated being haled into Texas court as a result of issuing the If P&C policy. If

P&C negotiated and entered into the policy with Securitas in Sweden; no

 

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3 The significance of any alleged minimum contacts in this case is severely

diminished by the fact that the If P&C policy specified that it was to be governed by

Swedish law and that the material portions of the policy were not purposefully

directed at Texas. See Freudensprung v. Offshore Technical Services, Inc., 379 F.3d 327,

345 (5th Cir. 2004); Holt, 801 F.2d at 778 (discussing relevance of contract’s choiceof-law provision and place of performance to minimum contacts analysis) (citing

Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d 1026, 1029 (5th Cir. 1983), cert.

denied, 466 U.S. 962 (1984)). 

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negotiations, or any dealings, between the parties took place wholly in Texas.3

Further, Globe did not participate in the negotiations, sign the contractual

agreements, or pay insurance premiums to If P&C. Moreover, If P&C’s position is

strengthened by the fact that If P&C and Securitas arranged for Wausau, a local U.S.

carrier, to provide initial coverage for the U.S. operations and the activities of

Securitas and its affiliates. See If P&C’s Motion to Dismiss ¶¶ 16, 29. 

Additionally, although a Swedish arbitration panel has found that the If P&C

policy with Securitas, a Swedish company, extends to the subsidiary Globe, see

generally Exhibit C, Arbitral Award, attached to Complaint, this fact alone is not

enough to justify a finding that If P&C has purposefully availed itself of the privilege

of conducting activities in Texas. Globe is a subsidiary of Burns, which in turn is a

subsidiary of Pinkertons, which in turn is a subsidiary of Securitas: in effect, Globe is

the corporate “great-grandchild” of Securitas. The Fifth Circuit has consistently held

that personal jurisdiction over a nonresident corporation may not be based solely

upon the contacts with the forum state of another corporate entity with which the

defendant may be affiliated. See Freudensprung v. Offshore Technical Services, Inc., 379

 

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F.3d 327, 346 (5th Cir. 2004); see also Hargrave v. Fireboard Corporation, 710 F.2d

1154, 1159 (5th Cir. 1983) (“Generally, a foreign parent corporation is not subject

to the jurisdiction of a forum state merely because its subsidiary is present or doing

business [in the forum state] . . .”). Given this precedent, this court is clearly unable

to assert jurisdiction over Securitas based solely on the presence in Texas of the

subsidiary (Globe) of a subsidiary (Burns) of a subsidiary (Pinkertons). 

Consequently, it would be even more tenuous for this court to assume personal

jurisdiction over Securitas’ insurer based solely on the presence of the insured’s nonparty corporate great-grandchild which -- coincidentally -- happens to be a resident of

Texas. See, e.g., Malaysia British Assurance v. El Paso Reyco, Inc., 830 S.W.2d 919, 921

(Tex. 1992) (concluding that the defendant had not purposely established minimum

contacts with Texas and reasoning that a “twice-removed contact with Texas” was

insufficient to establish jurisdiction). 

Based on these facts concerning the quality and nature of If P&C’s activity (or

lack thereof) in Texas, National Union has not demonstrated that If P&C has

purposefully directed its activities toward Texas, that it has purposefully availed itself

of the benefits and protections of Texas law, or that it could reasonably foresee being

haled into court in Texas.

 

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b. General Jurisdiction

For the court to exercise general jurisdiction, a foreign corporation must have

continuous and systematic contacts with the forum state. Helicopteros, 466 U.S. at

414-17. Cases involving general jurisdiction suggest that these contacts must be very

substantial. Id. at 416-19 (no general jurisdiction where defendant traveled to Texas

to negotiate sale of helicopters, regularly purchased helicopters in Texas, and sent

pilots for training to Texas); Perkins v. Benguet Consolidated Mining Company, 342 U.S.

437, 447-49 (1952) (jurisdiction appropriate in Ohio court where cause of action did

not arise out of Ohio contacts but the defendant carried on a substantial part of its

business in Ohio); Dalton v. R&W Marine, Inc., 897 F.2d 1359, 1362-63 (5th Cir.

1990) (no general jurisdiction over defendant which chartered boats to Louisiana

subsidiary resulting in almost 13% of parent’s revenues, advertised in Louisiana,

purchased vessels at marshal’s sales; no general jurisdiction over defendant which sold

fuel to Louisiana purchasers and traveled into Louisiana territorial waters); Bearry,

818 F.2d at 375-76 (no general jurisdiction over company that advertised in Texas as

part of a national campaign and sold goods to Texas distributors of its products via

contracts entered into and executed in Kansas). 

National Union contends that If P&C has systematic and continuous contacts

with Texas because If P&C has purposefully availed itself of the benefits of

conducting business in Texas. National Union’s Response at 16. Specifically,

 

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4 An “eligible surplus lines insurer” is defined as “[a]n unlicensed insurer

allowed by the commissioner to do business in Texas as a surplus lines insurer.” 28

TEX. ADMIN. CODE § 15.2(2) (West 2005). “‘Surplus lines insurance’ means

insurance coverage . . . for a subject that is resident, located, or to be performed in

this state . . . .” TEX. INS. CODE § 981.002(4)(a) (Vernon Supp. 2004-05). 

5 According to If P&C’s counsel, If P&C’s business in Texas was limited

solely to surplus lines insurance and it collected $8,100,000.00 in premiums on

policies issued by If P&C in the State of Texas during the year 2003. See Affidavit of

Antti Salenius (“Salenius Affidavit”) ¶ 5, attached to Appendix to If P&C’s Motion to

(continued...)

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National Union argues that: (1) If P&C contracted in 2001 to insure Globe, a Texas

resident, for its airport operations at the Dallas-Fort Worth (“DFW”) airport, and

(2) If P&C issued surplus lines insurance policies to Texas residents continuously for

a period of at least three years.4

 Id.; see also National Union’s Response at 8-10. The

court concludes, however, that National Union’s arguments are without merit. The

facts show that If P&C’s business in Texas has been, at best, minimal. If P&C has no

office in Texas, nor does it own any property in the state. If P&C’s Motion to

Dismiss ¶ 34. If P&C does not have any Texas employees or agents, nor does it have

any financial accounts in Texas. Id.; see Bearry, 818 F.2d at 376 (concluding, on basis

of facts analyzed there, that defendant was not “doing business” in Texas so as to

subject it to general jurisdiction). In fact, the only business If P&C conducted in

Texas was surplus lines insurance in 2002 and 2003. IF P&C’s Motion to Dismiss

¶ 34. This business accounted for only a small percentage of If P&C’s overall worldwide revenues.5

 Id.

 

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5

(...continued)

Dismiss at 21-23. Nevertheless all of If P&C’s surplus lines policies placed in Texas

were through its marine and energy division. Id. If P&C sold this division in January

2004 and, as a result, no longer sells surplus lines insurance in Texas or anywhere else

in the United States. Id. 

6 National Union argues that If P&C has anticipated being “haled into

court” in Texas and it cannot be a surprise to If P&C that it was sued in Texas for its

refusal to meet its obligations under a policy of liability insurance it issued covering

Globe for its operations in Texas. National Union’s Response at 11-12. Specifically,

National Union points to the fact that the Texas Insurance Code required If P&C to

maintain a registered agent for service of process in Texas. TEX. INS. CODE

§ 804.103(b) (Vernon Supp. 2004-05). Additionally, as a further condition of

engaging in “the business of insurance,” If P&C was required to maintain a trust

account in a United States bank for the protection of its insureds. TEX. INS. CODE

§ 981.058 (Vernon Supp. 2004-05); see also Appendix to Brief of Plaintiff in

(continued...)

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Although If P&C’s surplus lines insurance activity may indeed suggest

purposeful conduct aimed at this forum, the facts show that If P&C’s business in

Texas has only been sporadic and minimal. Indeed, the fact that If P&C is subject to

service of process in Texas because it registered with the Department of Insurance as

a surplus lines carrier is wholly separate from the question of whether If P&C has

maintained substantial contacts with the state sufficient to subject If P&C to general

jurisdiction in Texas. National Union has presented no persuasive evidence

suggesting that “the quality and nature of the activity with relation to the forum

state,” see Mississippi Interstate Express, 681 F.2d at 1006, justifies the assumption of

jurisdiction over If P&C for activities unrelated to any surplus lines policies issued by

If P&C covering risks in Texas.6

 In support of its motion, If P&C cites this court’s

 

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6

(...continued)

Opposition to Defendant’s Motion to Dismiss or Alternatively Motion to Stay at

151, 204. If P&C does not contest the fact that it has registered with the Texas

Department of Insurance, that it has made all the filings required, and that it has

identified brokers. Defendant’s Reply Brief in Support of Its Motion to Dismiss or

Stay at 6. 

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opinion in British Aviation Insurance Group v. American Eurocopter Corporation, No. 3:96-

CV-0392-G, 1997 WL 118425 (N.D. Tex. Mar. 12, 1997). If P&C’s Motion to

Dismiss ¶ 35. In British Aviation, this court rejected a claim that Caledonian

Insurance Group, Inc. was subject to general jurisdiction where Caledonian had two

clients in Texas, had traveled to a convention in Texas, had sent certificates of

insurance to several Texas entities, and its president held a Texas insurance license. 

Id. at *5. This court reasoned that the determination of whether there are contacts

sufficient to assert general jurisdiction “is determined not on a mechanical and

quantitative test, but rather under the particular facts upon the quality and nature of

the activity with relation to the forum state.” Id. at *4 (quoting Mississippi Interstate

Express, 681 F.2d at 1006). Even though the Texas clients and the Texas insurance

license indicated that Caledonian had engaged in purposeful conduct aimed at Texas,

the business contacts with Texas were only sporadic and minimal. Id. at *5. The

revenue generated from Caledonian’s clients in Texas “amounted to only one-half of

one percent of its total revenue.” Id. (citation omitted). Here, If P&C’s revenue

derived from Texas, like Cadedonian’s in British Aviation, amounted to only 0.15% --

a minimal percentage -- of If P&C’s overall premiums in 2003 and even less in 2002. 

 

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If P&C’s Motion to Dismiss ¶ 36. Because the percentage of revenue derived from

Texas by If P&C is clearly less than that received by Caledonian in British Aviation,

the argument for exercising general jurisdiction in this case is even weaker than it was

there. See also International Turbine Service, Inc. v. Lovitt, 881 S.W.2d 805, 809-10

(Tex. App.--Fort Worth 1994, writ denied) (although non-resident defendants

maintained a Texas insurance license, there was no general jurisdiction over them

because only 0.2% of defendants’ business was conducted in Texas); cf. Holt Oil, 801

F.2d at 779 (that a “great deal of business” was transacted in Texas by non-resident

defendant weighed in favor of exercising of general jurisdiction over him). 

Accordingly, National Union has not established that If P&C’s registration as a

provider of surplus lines policies with the Texas Department of Insurance gives If

P&C sufficient presence in Texas to subject it to suit in Texas for claims not arising

from any policy sold under that registration. Since If P&C has only minimal and

sporadic contacts with Texas, is not licensed to sell insurance in Texas, has no

physical presence in Texas and no Texas employees or agents, the court concludes

that it cannot exercise general jurisdiction over If P&C.

2. Fair Play and Substantial Justice

Both minimum contacts and fairness are required to assert personal jurisdiction

over a nonresident defendant. See Burger King, 471 U.S. at 474-78; Gulf Consolidated

Services, 898 F.2d at 1073-75. Because this court concludes that If P&C did not have

 

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sufficient minimum contacts with Texas for this court to maintain personal

jurisdiction over If P&C, it is not necessary to determine whether exercising that

jurisdiction -- despite If P&C’s lack of minimum contacts -- would comport with

notions of fair play and substantial justice. See Helicopteros, 466 U.S. at 418-19

(reversing a finding of personal jurisdiction after determining that there were

insufficient minimum contacts and without determining whether exercising

jurisdiction would comport with traditional notions of fair play and substantial

justice); Wilson, 20 F.3d at 650 n.7 (same).

III. CONCLUSION

In determining whether a nonresident corporation should be required to

defend a suit in Texas arising out of contacts claimed between the nonresident and

Texas, “‘each case must be decided on its own facts.’” Hydrokinetics, 700 F.2d at 1028

(citation omitted). Based on the facts in this record, an exercise of jurisdiction over If

P&C would be inconsistent with the requirements of due process. Accordingly, If

P&C’s motion to dismiss for lack of personal jurisdiction is GRANTED. This case is

DISMISSED for lack of personal jurisdiction.

 

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SO ORDERED.

July 13, 2005.

 

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