Opinion ID: 435807
Heading Depth: 1
Heading Rank: 3

Heading: compliance with due process

Text: 27 The fundamental principle is that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'  International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). In addition 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 protection of its laws.... Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). Apparently the requirement of purposefulness is met where a defendant delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). 28 HBA's contacts with Virginia are as follows: The owner of its policy, issued to him in Arizona when an Arizona resident, came to reside in Virginia. The members of his family covered by the policy came with him. The events insured against are likely, as a result of the move, to occur in Virginia. Premiums are remitted by mail from Virginia to HBA in Arizona. A loss has allegedly occurred in Virginia, and a claim has been asserted by mail from Virginia. In a letter of denial mailed from Arizona to Virginia, HBA solicited an agreement which would have reduced the coverage afforded by the policy. 29 In McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), the Supreme Court held that California courts could constitutionally exercise jurisdiction over a Texas insurance company that agreed to assume the obligation of an Arizona insurer and then mailed a reinsurance certificate to a California resident offering to insure him in accordance with the terms of a policy he held with the Arizona insurer. The insured was a California resident when he purchased the policy from the Arizona insurer as well as when he accepted the Texas insurer's offer and mailed premiums from California to Texas. 30 Absent, however, from the list of HBA's contacts is the negotiation or formation of the insurance contract sued upon while August was a resident of Virginia (or even with knowledge that August was about to move to Virginia). We consider this a significant difference from McGee. 31 It is true that HBA's acceptance of the premiums effected a renewal for succeeding monthly terms, but the original Arizona contract gave August the right to renewal. HBA had no choice but to accept. It could, under the contract, have changed the premium, but plaintiff has not argued that the existence of this option made each renewal a new contract. Except for some such theory, HBA's acceptance of premiums could not fulfill the requirement of purposefulness. 32 HBA was in the business of selling insurance against events which might well occur outside Arizona as its insured moved about. Insurance by its nature involves the assertion of claims, and resort to litigation is often necessary. As pointed out in McGee, the burden of bringing an action in a foreign forum may make insurance valueless, particularly as to small or moderate claims. 355 U.S. at 223, 78 S.Ct. at 201. Here the insurance contract contains language, previously quoted, which indicates that HBA foresaw the possibility that its policyowners might come to reside in states other than the state where they resided when the policy was written. There are decisions indicating that an automobile liability insurer subjects itself to an injured person's suit on the policy in any state where the automobile caused injury. Pugh v. Oklahoma Farm Bureau Mutual Insurance Co., 159 F.Supp. 155 (E.D.La.1958). See Bevins v. Comet Casualty Co., 71 Ill.App.3d 758, 28 Ill.Dec. 333, 390 N.E.2d 500 (1979); Labruzzo v. State-Wide Insurance Co., 77 Misc.2d 455, 353 N.Y.S.2d 98 (Sup.Ct. Queens Co. 1974); Jarstad v. National Farmers Union Property & Casualty Co., 92 Nev. 380, 552 P.2d 49, 53-54 (1976). 33 The Supreme Court requires more, however, than foreseeability. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 295-97, 100 S.Ct. 566-67 (1980). 34 [T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum state. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there. 35 444 U.S. at 297, 100 S.Ct. at 567. Although it is foreseeable that readily movable products sold by a defendant in one state will be taken into a second one, that is not a sufficient contact with the second state unless defendant delivered the product into the stream of commerce with the expectation that they will be purchased by consumers in the forum state. 444 U.S. at 298, 100 S.Ct. at 567. We conclude that the fact that defendant has insured against the expense of health care for individuals who reside in Arizona but may well move into a different state does not create a sufficient contact between defendant and any state into which they may move. 36 In dealing with Mr. August concerning his claim for hospital expenses for Mrs. August, HBA mailed a request that Mr. August sign a rider which would reduce the coverage of the policy. We have no doubt that if August had signed and returned the rider, and sued in Virginia on a later claim, McGee would have supported in personam jurisdiction over HBA. Although the rider was not signed, and the cause of action did not arise out of the solicitation, the solicitation of the rider and the cause of action sued upon were very closely related. 37 The District Court concluded that the solicitation could not provide the basis for personal jurisdiction. Its view was that the rider would not change the policy but would only confirm the provision of the previously executed policy that claims relating to a pre-existing disorder of the female organs are not covered. 38 We think the District Court erred in its analysis. The original policy covered loss resulting from 39 disorders of organs peculiar to females [but] only if such expense is incurred after this policy has been in force as to the person whose illness is the basis of claim for ten (10) months preceding the date such expense is incurred, and such ... disorders to organs peculiar to females originates thirty (30) days after the date coverage hereunder is effective.... 40 The rider, however, previously quoted, would entirely exclude coverage for this type of disease if suffered by Mrs. August. 41 The proposed rider would thus significantly broaden the exclusion in the original policy. 42 Under the circumstances, including August and his family having become residents of Virginia and August's continuation of the policy in force by payment of premiums, we think that HBA's solicitation of the execution of the rider, mailed to Mr. August in Virginia, was a sufficient predicate for exercise of long arm jurisdiction over HBA, resulting in the state court judgment. 43 Accordingly, the judgment appealed from is reversed and the cause remanded for proceedings consistent with this opinion.