Court Opinion

ID: 9769852
Source: CourtListenerOpinion
Date Created: 2023-08-29 15:04:14.511463+00
Date Added: 2024-06-11T07:31:08.670280
License: Public Domain

EARL B. STOVER, Justice,
concurring.
“The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid personal judgment against a nonresident defendant.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490, 497 (1980). To this end, principles or requirements have evolved which help to define exactly what type of conduct constitutes minimum contacts as a basis for personal jurisdiction. Based on federal constitutional requirements, the Texas Supreme Court has clarified a jurisdictional formula or “checklist” to determine if a court’s exercise of jurisdiction is consistent with due process. See Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 230-31 (Tex.1991). Chief Justice Walker, author of the majority opinion, has adequately and ably reviewed the two federal due process requirements of personal jurisdiction — (1) minimum contacts and (2) fair play and substantial justice. I choose to direct my attention to the foreseeability component of the minimum contacts analysis as well as the fair play and substantial justice requirement.
As stated by the Texas Supreme Court in Guardian Royal, “the concept of ‘foreseeability’ is implicit in the requirement that there be a ‘substantial connection’ between the nonresident defendant and Texas arising from action or conduct of the nonresident defendant purposefully directed toward Texas.” Id. at 227. Stated another way, the activities of the nonresident defendant “must justify a conclusion that the defendant should reasonably anticipate being called into court there.” Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990) (citing World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. 559). “ ‘Foreseeability’ is especially pertinent when the nonresident defendant is an insurance company.” Guardian Royal, 815 S.W.2d at 227.
[W]hen the nonresident defendant is an insurance company, the following factors, when appropriate, should be considered when determining whether the nonresident defendant has purposely established “minimum contacts” with the forum state: (a) the insurer’s awareness that it was responsible to cover losses arising from a substantial subject of insurance regularly present in the forum state; and (b) the nature of the particular insurance contract and its coverage.
Id. Because this appeal involves a personal jurisdiction analysis of guaranty associations, a distinctive form of insurance, factor (b) as listed above, is especially pertinent to our consideration.
CIGA, DIGA, IIGF and TIGA are entities created by the state legislatures of California, Delaware, Illinois, and Tennessee. The statutory purpose of these guaranty funds is to provide a limited form of protection for policyholders and claimants residing in these states in the event of the insolvency of certain insurers. The existence of guaranty funds and the extent of their statutory obligation to their resident claimants, if any, depends exclusively upon the law of the state creating the guaranty association. Pursuant to express statutory language, the guaranty fund’s obligations *931are not, in all respects, co-extensive with that of the insolvent insurer. For example, although the insolvent insurer might be bound to pay its full policy limits for a particular claim, the enabling statute of each guaranty fund contains a monetary cap on the guaranty fund’s liability to each claimant. Also, some statutes provide that a guaranty fund may not pay a claimant at all if the insured has a high net worth.
It would be fundamentally unfair to allow Appellant to hale these Appellee guaranty funds into a Texas court, only to ask the court to adjudicate the extent of the protections afforded under California, Delaware, Illinois, and Tennessee law for residents of those states — protections which are paid for by residents of those states. This conclusion is supported by the fact that the guaranty funds perform limited functions, their statutory schemes require intra state contacts (within the state enacting the particular guaranty fund) before the guaranty funds become involved, and the states have an important interest in conserving the guaranty fund’s limited funds by avoiding the increased costs of litigation in other states. In addition, while the drafters of the enabling legislation creating the Texas guaranty fund were possibly more astute in including a specific provision denying long-arm jurisdiction, I do not feel that the omission of such a provisión by legislation of other states should be construed as an implied consent to jurisdiction.
Some private commercial insurance companies offer customers broad-based coverage; these customers, in turn, pay higher premiums. Obviously, substantial financial benefits may accrue to companies which offer such policies. In such a situation, a non-resident defendant corporation could reasonably anticipate being called into a court of the forum state. However, a guaranty fund is not a commercial insurance company offering broad based coverage. These guaranty funds did not agree to provide coverage for acts occurring in Texas. Under Appellant’s theory, the guaranty funds “stepped into the shoes” of their insolvent insurers for purposes of jurisdiction.5 However, as noted by the majority opinion, the record before us contains no evidence that the Appellee guaranty funds themselves took any action purposely directed toward Texas or intended to serve the Texas market.
Finally, the exercise of jurisdiction cannot offend traditional notions of fair play and substantial justice.6 As discussed in Guardian Royal, the “State of Texas has a special interest in regulating certain areas such as insurance[.]” Id. at 229. “However, a state’s regulatory interest alone is not in and of itself sufficient to provide a basis for jurisdiction.” Id. In my view, under' these facts and circumstances, an assertion of personal jurisdiction over the guaranty funds would be unreasonable and would not comport with fair play and substantial justice.

. I acknowledge the scholarly "standing in the shoes” analysis by our veteran Judge Burgess, but it reminds me of a statement made by General Colin Powell. In response to former president Reagan’s theory that people should pull themselves up by their own bootstraps, Colin Powell remarked that you must first have boots before you can pull. In similar fashion, I fail to find any “shoes” for these insurance companies to stand in. Accordingly, I do not believe they can be bootstrapped into the jurisdiction of the Texas courts.

. Our distinguished Chief Justice, Ronald L. Walker, an east Texas sage who is rapidly . becoming a legend in his own time, has a rule called "t’aint fair.” Here, I find myself adopting that rule.