Source: http://tx.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180326_0000588.STX.htm/qx
Timestamp: 2019-04-24 06:10:52+00:00

Document:
FindACase | Halliburton Energy Services, Inc. v. Ironshore Specialty Insurance Co.
IRONSHORE SPECIALTY INSURANCE COMPANY, Defendant.
HON. KEITH P. ELLISON UNITED STATES DISTRICT JUDGE.
This is an action for breach of an insurance contract. The Court previously denied Defendant's Motion to Stay Pending Arbitration. There are two remaining grounds for dismissal of this case: personal jurisdiction and venue. The Court holds that there is no personal jurisdiction over the defendant and therefore, the Motion to Dismiss must be granted.
In November 2012, Plaintiff Halliburton Energy Services, Inc. (“HESI”) and non-party Statoil ASA (“Statoil”) entered into the Onshore Master Services Agreement (the “MSA”). Pursuant to the MSA, HESI conducted fracking operations at the Eisenbarth Well Pad, a crude petroleum and natural gas facility operated by Statoil in Ohio. An explosion occurred there in June 2014, which caused significant environmental damage. The environmental liability costs to Statoil exceeded $25 million. Statoil sued Defendant Ironshore Specialty Insurance Company (“Ironshore”) and other insurers in Texas state court to recover under various insurance policies (the “Texas Action”).
In the Texas Action, Statoil claimed that Ironshore owed reimbursement to Statoil pursuant to the Site Pollution Legal Liability Select Policy (the “Insurance Policy”) that Ironshore had issued to Statoil in May 2014. The Insurance Policy was procured by a surplus lines broker in Tulsa, Oklahoma. Ironshore underwrote the Insurance Policy in Louisiana. Ironshore negotiated the terms primarily in Tulsa, Oklahoma. The Insurance Policy provides for the application of New York law and for dispute resolution in New York.
Using Texas counsel, Ironshore defended itself in the Texas Action and filed counterclaims against other insurers. In so doing, Ironshore served two Texas subpoenas on HESI (one for documents and the other for corporate designee testimony) with which HESI complied.
The litigation between Statoil and its insurers was resolved in a confidential settlement agreement. As part of that agreement, Ironshore paid Statoil almost $12 million. While the settlement agreement resolved Statoil's claims against its insurers, the agreement reserved the insurers' claims against each other and required that disputes concerning the reallocation of contributions be resolved in Texas under Texas law.
The Texas Action (consisting of insurer-versus-insurer disputes) was ongoing in November 2016, when Ironshore wrote to HESI and claimed that Ironshore was legally subrogated to Statoil's interests. In that letter, Ironshore requested that HESI join the Texas Action in order to streamline resolution and minimize counsel fees. HESI declined in a response letter. HESI's response letter also informed Ironshore that Ironshore's demand for subrogation constituted a breach of the Insurance Policy, which waived subrogation against HESI. HESI's letter further asserted that HESI was named as an additional insured in the Insurance Policy, which meant that Ironshore was obligated to defend and indemnify HESI from and against Ironshore's own purported subrogation claim. Ironshore wrote a reply letter, which reasserted that Ironshore was Statoil's subrogee and as such, Ironshore was owed indemnification from HESI. Ironshore's reply letter also declared that HESI had failed to comply with the MSA dispute resolution procedure such that Ironshore, pursuant to the MSA, was free to commence arbitration proceedings against HESI (which, under the MSA, would have occurred in Texas).
To summarize the parties' arguments, HESI contends that Ironshore breached the Insurance Policy when it asserted an indemnity claim against HESI, because the Insurance Policy waived subrogation against HESI and in fact required Ironshore to defend HESI from such claims because HESI was named as an “additional insured.” Ironshore argues that its actions were proper because, through the Insurance Policy, Ironshore became subrogated to Statoil's rights under the MSA, and HESI agreed to indemnify Statoil for losses and damages from the accident; according to Ironshore, the Texas Action settlement with Statoil triggered those rights. HESI disagrees with Ironshore's interpretation of the MSA, and seeks a declaratory judgment as to whether Ironshore waived subrogation rights against HESI and whether HESI is an additional insured under the Insurance Policy.
• Count I (declaratory judgment): HESI seeks a declaratory judgment that Ironshore waived subrogation against HESI for amounts that Ironshore paid to Statoil under the Insurance Policy.
• Count II (breach of contract): HESI seeks damages for Ironshore's breach of the Insurance Policy, which consisted of asserting a barred subrogation claim.
• Count III (declaratory judgment): HESI seeks a declaratory judgment establishing Ironshore's obligation under the Insurance Policy to defend and indemnify HESI from and against the claims that Ironshore itself asserted against HESI.
• Count IV (breach of contract): HESI seeks damages for Ironshore's breach of the Insurance Policy, which consisted of failing to defend and indemnify HESI.
Ironshore moved to dismiss all of HESI's claims on three grounds: (1) because the issues were arbitrable pursuant to the arbitration clause of the MSA, (2) lack of personal jurisdiction, and (3) improper venue.
In its Motion to Dismiss, Ironshore requested that this Court decide the arbitrability question before the other grounds for dismissal. The Court did, and determined that there was no valid arbitration agreement between the parties. In making that determination, the Court found that Ironshore had waived subrogation. Ironshore appealed. The appeal is pending.
The Court now addresses personal jurisdiction.
Lack of personal jurisdiction constitutes grounds for dismissal. Fed.R.Civ.P. 12(b)(2). “Federal courts sitting in diversity may exercise personal jurisdiction over a non-resident where the state long-arm statute grants jurisdiction and the exercise of jurisdiction is consistent with federal due process.” Delgado v. Reef Resort Ltd., 364 F.3d 642, 644 (5th Cir. 2004). “Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry collapses into one federal due process analysis.” Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008). “Obtaining personal jurisdiction over a non-resident is constitutionally permissible if: 1) the non-resident purposely availed himself of the benefits and protections of the forum state by establishing minimum contacts with the state; and 2) the exercise of jurisdiction does not offend ‘traditional notions of fair play and substantial justice.'” Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir. 2001). “Once a plaintiff establishes minimum contacts between the defendant and the forum state, the burden of proof shifts to the defendant to show that the assertion of jurisdiction is unfair and unreasonable.” Sangha v. Navig8 ShipManagement Private Ltd., 882 F.3d 96, 101 (5th Cir. 2018).
“Minimum contacts” can give rise to either specific jurisdiction or general jurisdiction. Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir. 2001). Specific jurisdiction may exist “over a nonresident defendant whose contacts with the forum state are singular or sporadic only if the cause of action asserted arises out of or is related to those contacts.” Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 212 (5th Cir. 2016) (citing McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009)). In other words, such jurisdiction exists “when a nonresident defendant has purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities.” Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 243 (5th Cir. 2008) (internal quotation marks omitted). “A court may assert general jurisdiction over [non-resident defendants] to hear any and all claims against them when their affiliations with the State are so continuous and systematic as to render them essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (internal quotation omitted). Establishing general jurisdiction is “difficult” and requires “extensive contacts between a defendant and a forum.” Johnston, 523 F.3d at 609.
With respect to general jurisdiction, there is no dispute that Ironshore is not incorporated in Texas nor does it have its principal place of business in Texas. Ironshore emphasizes that it “is not licensed to sell insurance in Texas, has no Texas office, does not own property in Texas, has no Texas employees, and has no financial accounts in Texas.” (Doc. No. 24 at 5.) HESI has pleaded no additional facts suggesting that Ironshore has contacts “so substantial and of such a nature as to render [it] at home” in Texas. Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2014). In a footnote, HESI avers that Ironshore provides loss control services to Texas insureds and has possibly been involved in the Texas federal courts on 13 other occasions. (Doc. No. 23 at 14.) Such contacts would be insufficient for general jurisdiction under Daimler. Therefore, there is no general jurisdiction.
“Specific jurisdiction . . . depends on an affiliation between the forum and the underlying controversy, principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation.” Goodyear, 564 U.S. at 919. “[W]here the defendant deliberately has engaged in significant activities within a State, or has created continuing obligations between himself and residents of the forum, he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by the benefits and protections of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985) (internal quotations omitted).

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