Court Opinion

ID: 9769853
Source: CourtListenerOpinion
Date Created: 2023-08-29 15:04:14.51824+00
Date Added: 2024-06-11T07:31:08.672903
License: Public Domain

DON BURGESS, Justice,
dissenting.
I respectfully dissent. The majority rejects the “stand in the shoes” argument and refuses to delve into the issue of “covered claims.” I believe they are wrong on both accounts. The practical effect of the majority’s analysis is to say these guaranty funds can be sued only in their home states. Clearly the funds do not act as ordinary insurers, therefore they would not have any minimum contacts outside their own state until an insurer becomes insolvent. Arguably, the guaranty funds *932might establish some minimum contacts through the claims process, but that is highly unlikely.
Unlike the majority, I believe the analysis in Olivier v. Merritt Dredging Co., 979 F.2d 827, 829 (11th Cir.1992) is not flawed in any respect. In Olivier, the Eleventh Circuit held that the Louisiana Insurance Guaranty Association and the South Carolina Property and Casualty Insurance Guaranty Association were subject to personal jurisdiction in the State of Alabama. Id. at 835. Like the IGAs in this case, LIGA and SCIGA had no offices, no agents and no activities in Alabama and asserted they lacked minimum contacts with Alabama sufficient to support personal jurisdiction. Id. at 832. The Olivier court explicitly rejected this argument. Id. Instead, the court found that these associations stand in the shoes of their insolvent insurer members with respect to “covered claims” and, because the insolvent insurer at issue had “minimum contacts” with Alabama, LIGA and SCIGA also had sufficient contact such that they should have reasonably foreseen that they would be subject to suit in Alabama. Id. at 833.7
Contrary to the majority’s assertion that the Olivier court did not explain itself, the explanation is in the statutes themselves. The IGAs’ enabling statutes explicitly require these associations to stand in the shoes of their insolvent members for purposes of personal jurisdiction. Delaware’s enabling statute, for example, provides that DIGA shall be “deemed the insurer ... [and] have all rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent.” Del. Code Ann. § 4208(a)(2).8 California, Illinois and Tennessee have enacted virtually identical statutes. Cal. Ins.Code § 1063.2(b);9 215 ILCS § 5/537.4;10 Tenn.Code Ann. § 56-12-107(2).11 Re*933quiring the IGAs to stand in the shoes of their insolvent members, even when those shoes take them to foreign jurisdictions, is consistent with the stated purpose of these IGAS, which is:
to provide a mechanism for the payment of covered claims ... to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer,
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Tenn.Code ANN. § 56-12-102; see Del. Code ÁNN. § 4202; 215 ILCS § 5/532. Compare the Texas statute which negates the “stand in the shoes” doctrine and specifically mentions long arm jurisdiction.12
Other Courts from around the country concur that guaranty associations stand in the shoes of their insolvent members for purposes of jurisdiction. Specifically, the South Carolina Supreme Court held that, with respect to “covered claims,” Georgia’s guaranty fund stood in the shoes of its member insurers with regard to jurisdiction and, thus, could be haled into court in South Carolina based on an insolvent member’s contacts with the state. Bell v. Senn Trucking Co., 308 S.C. 364, 418 S.E.2d 310, 312 (1992). The Alaska Supreme Court likewise found that the insurance guaranty association for the State of Washington stood in the shoes of one of its insolvent members for purposes of establishing jurisdiction in Alaska. Washington Ins. Guar. Ass’n v. Ramsey, 922 P.2d 237, 242 (Alaska 1996)13 In affirming jurisdiction, the Court noted that “[njumerous courts have held that the act of guaranteeing an obligation in the forum state alone is a sufficient contact to establish jurisdiction.” Id. The New Jersey Appellate Division similarly held that the Pennsylvania Insurance Guaranty Association (“PIGA”) stood in the shoes of its insolvent carrier members and because these companies could be joined, the Guaranty Association could similarly be joined in a New Jersey law suit. Ruetgers-Nease Chem. Co. v. Firemen’s Ins. of Newark, 236 N.J.Super. 473, 566 A.2d 227, 229 (Ct.App.Div.1989). Pertinent to the instant case, the Ruet-gers-Nease court found that PIGA “stands in the shoes of the insolvent carriers and is hable to the plaintiff under their policies to the same extent the insolvent carriers were” and such “coverage extends to claims, wherever located, if the claimant is a Pennsylvania resident.” Id.
The majority believes Texas Property and Cas. Ins. Guar. Ass’n v. Boy Scouts of America, 947 S.W.2d 682 (Tex.App.—Austin 1997, no writ) is a more reasoned approach. The Boy Scouts case is factually distinguishable and its legal conclusions are not binding on this Court. The Boy Scouts case involved a coverage action brought by a resident of Pennsylvania seeking coverage for third-party claims brought solely by residents of Pennsylvania and arising out of events which took place entirely in Pennsylvania. Id. at 688. *934As the court noted, “[t]he only relationship between this lawsuit and Texas arises out of the Boy Scouts’ role as risk manager for the Pennsylvania councils” and “[ajccord-ingly, Texas’s interest in the lawsuit against Pennsylvania Guaranty is mini- • mal.” Id. In contrast, this case has substantial connections to Texas. While this action encompasses asbestos-related claims asserted throughout the United States, the largest number of claims have been brought in Texas. Moreover, GE has substantial operations in Texas and does a large volume of business in Texas. Hence, unlike Boy Scouts, this suit involves a plaintiff with a meaningful Texas presence seeking coverage for claims that have been brought, largely, in Texas.
Further, the Boy Scouts case involved an action by two insureds seeking coverage from their respective IGAs — specifically, one Texas insured sought coverage from the Texas IGA and one Pennsylvania insured sought coverage from the Pennsylvania IGA. The court’s ruling, therefore, simply required the Pennsylvania insured to bring its case in Pennsylvania. Here, the operative facts and the resulting harm mandate a different result. In this case, GE has sought coverage from seven geographically dispersed guaranty associations (and anticipates the need to pursue claims against guaranty associations in other states where “covered claims” exist). Upholding the special appearances here requires GE to file multiple lawsuits in numerous courts, literally, across the country. This results in an enormous waste of judicial resources, subjects GE to inconsistent judgments, and effectively precludes GE from seeking recovery from these various state insurance guaranty associations due to the prohibitive financial burden associated with such a ruling.
For the reasons stated, I would reverse the orders granting the special appearances and remand for a trial on the merits.

. In addressing the issue of "foreseeability,” the Olivier court specifically noted that, in forming the state insurance guaranty associations to avoid federal legislation creating a national guaranty fund, the insurance industry had to anticipate that the guaranty associations would be haled into the same courts where their insolvent members would have been subject to the reach of due process. Id. at 833.

. Del.Code Ann. tit. 18, § 4208(a)(2) (1996) states:
§ 4208. Powers and duties of the Association
(a) The Association shall:
(2) Be deemed the insurer to the extent of its obligation on the covered claims and, to such extent, shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent.

. Cal. Ins.Code § 1063.2(b) (West 1997) states:
§ 1063.2. Covered claims; duties; priority of claims
(b) The association shall be a party in interest in all proceedings involving a covered claim, and shall have the same rights as the insolvent insurer would have had if not in liquidation, including, but not limited to, the right to: (1) appear, defend, and appeal a claim in a court of competent jurisdiction; (2) receive notice of, investigate, adjust, compromise, settle, and pay a covered claim; and (3) investigate, handle, and deny a noncovered claim. The association shall have no cause of action against the insureds of the insolvent insurer for any sums it has paid out, except as provided by this article.

. 215 III. Comp. Stat. Ann. 5/537.4 (West 1997) states:
5/537.4. Fund assumes obligations of insolvent companies
§ 537.4. Fund assumes obligations of insolvent companies. The Fund shall be deemed the insolvent company to the extent of the Fund’s obligation for covered claims and to such extent shall have all rights, duties, and obligations of the insolvent company, subject to the limitations provided in this Article, as if the company had not become insolvent, with the exception that the liquidator shall retain the sole right to recover any reinsurance proceeds. The Fund’s rights under this Section include, but are not limited to, the right to pursue and retain salvage and subrogation recoveries on paid covered claim obligations to the extent paid by the Fund.

. Tenn.Code Ann. § 56-12-107(a)(2) states:
56-12-107. Powers and duties of association.— The association shall:
(2) Be deemed the insurer to the extent of its obligation on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent;

. Tex. Ins.Code Ann. art. 21.28-C, § 8(b) (Vernon Supp.1999) states:
Powers and duties of association
Sec. 8.
(b) The association shall undertake to discharge the policy obligations of the impaired insurer, including the duty to defend insureds under a liability policy, to the extent that the policy obligations are covered claims under this Act. In performing its statutory obligations, the association may also enforce any duty imposed on the insured party or beneficiary under the terms of any policy of insurance within the scope of this Act. In performing its statutory obligations under this Act, the association shall not be considered to be in the business of insurance, shall not be considered to have assumed or succeeded to any liabilities of the impaired insurer, and shall not be considered to otherwise stand in the shoes of the impaired insurer for any purpose, including the issue of whether the association is amenable to the personal jurisdiction of the courts of any other state, (emphasis added)

. While the guaranty association in the Ramsey case had more direct contact with the forum than the IGAs in this action, the court’s decision was not based on those contacts. Instead, the Court found jurisdiction based on (1) the presence of a “covered claim”; (2) the association's guaranteeing of its members obligations in the forum state; and (3) the fact that association funds are derivedti in part from premiums collected in exchange for insuring out-of-state risks. 922 P.2d at 242. These factors are also present in this action.