Full faith and credit

Repwest Ins. Co. v Country-Wide Ins. Co., 2018 NY Slip Op 06505 [1st Dept. 2018]

There is a split in authority as to whether the existence of a territory of coverage clause constitutes sufficient contact with the forum state to support specific jurisdiction. For example, while the Ninth Circuit in Farmers InsExch. held that an insurer had shown purposeful availment, the court in King v American Family Mut. Ins. (632 F3d 570 [9th Cir 2011] and Hunt v Erie Ins. Group (728 F2d 1244 [9th Cir 1984]) held otherwise.

We disagree with Rossman and Farmers to the extent that they hold that the territory clause of a foreign insurer’s policy and the situs of the accident provides sufficient contact with the forum state.

We find that minimum contacts has not been established on this record. Countrywide did not purposefully avail itself of conducting activities within North Carolina. It is undisputed that Countrywide has never been licensed or authorized to do business in any capacity in North Carolina. At all times relevant to this suit, Countrywide has only been licensed to issue insurance policies within New York State. Countrywide has never maintained an office or employees in North Carolina. It is a company incorporated under the laws of Delaware, with its principal place of business in New York. Countrywide has never conducted or solicited business in or from North Carolina. There is a qualitative distinction between contracting to cover an insured under a territory of coverage clause and the insurer of the policy being amenable to being haled into court anywhere in the United States in a dispute with another insurer. Countrywide cannot reasonably foresee being haled into court in a state where it did not purposefully direct its activities (see D & R Global Selections, S.L., 29 NY3d at 300).

Moreover, conferring jurisdiction also violates fair play and substantial justice. Since Countrywide has no connection with North Carolina, it would be a burden for the insurer to litigate the subrogation claim with Repwest in that state. Repwest, while authorized to do business in North Carolina, is an Arizona corporation with its principal place of business in Phoenix.

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