MA Bay Insurance v. Portland Water CV-99-487-M 05/10/00 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Massachusetts Bay Insurance C o . , Plaintiff

v. Civil No. 99-487-M Opinion No.

Portland Water District, Defendant

O R D E R

Massachusetts Bay Insurance Company ("Mass Bay") originally

filed this declaratory judgment action in the New Hampshire

Superior Court (Rockingham C o u n t y ), seeking a judicial

declaration that it is not obligated to indemnify defendant,

Portland Water District ("PWD"), with regard to any damages that

might be awarded against PWD in an underlying state court tort

action. PWD removed the case to this court and now moves to

dismiss it, asserting that the court lacks personal jurisdiction

over it. See Fed. R. Civ. P. 1 2 (b)(2). Mass Bay objects. Standard of Review

When personal jurisdiction is contested, the plaintiff bears

the burden of establishing that the court has such jurisdiction.

See Sawtelle v. Far r e l l ,

(1st Cir. 1995);

Kowalski v. Doherty, Wallace, Pillsburv & M u r p h y ,

(1st Cir. 1986). Allegations of jurisdictional facts are

construed in the plaintiff's favor, see Buckley v. B o u r d o n ,

(D.N.H. 1988), and, if the court proceeds based

upon the written submissions of the parties without an

evidentiary hearing, the plaintiff need only make a prima facie

showing that jurisdiction exists. See K o w a l s k i ,

;

Boit v. Gar-Tec Products, Inc.,

(1st Cir.

1992). Nevertheless, the plaintiff's demonstration of personal

jurisdiction must be based on specific facts set forth in the

record in order to defeat a defendant's motion to dismiss. See

Ticketmaster-New York, Inc. v. A l i o t o ,

(1st Cir.

1994). And, "in reviewing the record before it, a court 'may

consider pleadings, affidavits, and other evidentiary materials

without converting the motion to dismiss to a motion for summary

2 judgment.'" VDI Technologies v. Pr i c e ,

(D.N.H. 1991) (quoting Lex Computer & Management Corp. v.

Eslinqer & Felton, P . C . ,

(D.N.H. 1987)).

Background

Mass Bay, a New Hampshire insurance company, entered into a

contract with PWD to provide insurance coverage for certain

specifically identified claims and losses. PWD is a quasi­

municipal corporation chartered by the Maine legislature to

provide wastewater and sewage treatment services to citizens in

the greater Portland, Maine area. It is not registered to do

business in New Hampshire, nor does it own any real or personal

property in this state. It does not maintain any offices or

employees in New Hampshire and says that it neither conducts nor

solicits business here.

In 1995, PWD entered into a contract with Wheelabrator Clean

Water Systems (not a party to this p r o c e e d i n g ) . Under the terms

of that agreement, PWD agreed to pay Wheelabrator to "provide for

3 the transportation and processing of wastewater treatment plant

residuals, called Biosolids." Biosolids Agreement between PWD

and Wheelabrator (June 9, 1995), at 5 (Exhibit 1 to document no.

3). That agreement specifically contemplated that Wheelabrator

would dispose of PWD's Biosolids in both Maine and New Hampshire.

See Biosolids Agreement, at paras. 2.2(d) and 2.8.

Later that year, Wheelabrator is alleged to have transported

and deposited toxic sludge (generated by PWD) on farm land

located in New Hampshire. When a young man who lived near the

farm died from respiratory problems, his estate and parents sued

PWD and Wheelabrator in state court, alleging that their

negligent and/or intentional conduct proximately caused the young

man's death. See Marshall v. Portland Water District, et al. ,

Docket No. 99-C-0045 (N.H. Sup. Ct.).

After being served in the underlying state action, PWD

notified Mass Bay and, invoking the provisions of its insurance

policy, demanded that Mass Bay provide it with a defense and, if

4 necessary, indemnification for any damages that might be awarded

against it. Acting under a reservation of rights letter. Mass

Bay hired counsel to defend PWD in that suit. Subsequently,

through its counsel, PWD appeared before the state court. It

does not appear that PWD challenged the state court's exercise of

personal jurisdiction over it in that proceeding. That state

litigation is still pending.

Discussion

In support of its motion to dismiss, PWD alleges that it

lacks sufficient contacts with this forum to permit the court to

exercise personal jurisdiction over it. The court disagrees.

I. Legal F ramework.

Before a court may exercise personal jurisdiction over a

non-resident defendant in a diversity case, the plaintiff must

show two things: first, that the forum state's long-arm statute

confers jurisdiction over the defendant; and, second, that the

exercise of jurisdiction comports with constitutional due process

5 standards (by establishing that the defendant has sufficient

"minimum contacts" with the forum s t a t e ) . See K o w a l s k i ,

. The New Hampshire individual long-arm statute, N.H. RSA

510:4, "provide[s] jurisdiction over foreign defendants to the

full extent that the statutory language and due process will

allow." Phelps v. K i n g s t o n ,

(1987). See also

S awtelle ,

. Likewise, New Hampshire's corporate

long-arm statute, N.H. RSA 293-A:15.10, authorizes jurisdiction

over foreign corporations to the full extent permitted by federal

law. See McClarv v. Erie Engine & Mfg. C o . ,

(D.N.H. 1994) .

Stated another way. New Hampshire's individual and corporate

long-arm statutes reach as far as constitutional due process

limits will permit. Accordingly, the court's two-step

jurisdictional analysis collapses into a single inquiry: whether

the exercise of personal jurisdiction over defendant would

comport with federal constitutional guarantees. See S a w t e l le,

; M c C l a r v ,

.

6 Before a court may exercise personal jurisdiction over a

foreign defendant in a manner consistent with the Constitution,

the plaintiff must demonstrate that the defendant has "certain

minimum contacts with the forum such that the maintenance of the

suit does not offend traditional notions of fair play and

substantial justice." Helicopteros Nacionales de Colombia, S.A.

v. H a l l ,

(1984). And, before concluding that a

defendant has such "minimum contacts," the court must also be

satisfied that the defendant's conduct bears such a "substantial

connection with the forum state" that the defendant "should

reasonably anticipate being haled into court there." Burger King

Corp. v. R u d z e w i c z ,

(1985) (citing World-

Wide Volkswagen Corp. v. W o o d s o n ,

(1980)).

II. General vs. Specific Jurisdiction.

A court may exercise either general or specific jurisdiction

over a defendant. "General jurisdiction exists when the

litigation is not directly founded on the defendant's forum-based

contacts, but the defendant has nevertheless engaged in

7 continuous and systematic activity, unrelated to the suit, in the

forum state." United Elec. Workers v. 163 Pleasant Street C o r p . ,

, 1088 (1st Cir. 1992). See also Phillips Exeter

Academy v. Howard Phillips Fund, Inc.,

(1st

Cir. 1999). Mass Bay does not contend that PWD engaged in

"continuous and systematic activity" in New Hampshire, nor does

it ask the court to exercise general jurisdiction over PWD.

Accordingly, if the court may properly exercise personal

jurisdiction over this defendant, it must be specific

ju r i s d i c t i o n .

A court may exercise specific jurisdiction when the cause of

action arises directly out of, or relates to, the defendant's

forum-based contacts. See United Elec. W o r k e r s , 960 F.2d at

1088-89. In an effort to assist district courts in determining

whether they might properly exercise specific jurisdiction, the

Court of Appeals has formulated a three-part test:

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state contacts. Second, the defendant's in-state activities must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

I d ., at 1089. See also Phillips E x e t e r ,

.

III. Personal Jurisdiction over P W D .

In this case, each of the three factors identified by the

court of appeals counsels in favor of exercising personal

jurisdiction over PWD. This proceeding plainly "arises out of"

PWD's contacts with this forum. See generally Ticketmaster-New

York, Inc. v. A l i o t o ,

(1st Cir. 1994) ("For our

part, we think it significant that the constitutional catch-

phrase is disjunctive in nature, referring to suits 'arising out

of, .or relating to,' in-forum activities. We believe this added

language portends added flexibility and signals a relaxation of

the applicable standard.") (emphasis in original) (citation

omitted). It is equally evident that PWD has purposefully

9 availed itself of the privileges and protections afforded by New

Hampshire law.

First, PWD arranged to dispose of its waste (through

Wheelabrator) in New Hampshire. And, as a result of that

conduct, it has been sued (and appeared) in a New Hampshire state

court. Specifically, it has been charged with having disposed of

toxic waste on farm land in this forum, proximately causing the

death of a New Hampshire citizen.

Additionally, PWD has demanded that its New Hampshire

insurance carrier. Mass Bay, provide it with a defense, in New

Hampshire, and, if necessary, indemnification with regard to that

underlying state court suit. That demand, in turn, prompted Mass

Bay to seek a judicial declaration of its obligations under the

policy PWD purchased from it. To be sure, the mere act of

contracting with a New Hampshire insurance company would not,

alone, automatically establish sufficient minimum contact with

this forum to warrant the exercise of personal jurisdiction over

10 a foreign defendant. S e e , e . g . . Burger K i n g ,

.

Here, however, that contract plainly contemplates that Mass Bay

would provide coverage to PWD in New Hampshire and PWD has

invoked that coverage, and made demand that its interests in New

Hampshire be defended.

Thus, this case involves more than merely the interpretation

of an insurance contract formed in Maine and an insured with no

contacts with this forum. Instead, this declaratory judgment

action arises directly out of PWD's having allegedly disposed of

toxic waste in this forum, its having been named as a defendant

in the underlying state tort action, and Mass Bay's desire to

obtain a judicial determination of its obligations, if any, to

provide PWD with a defense in this state and indemnify it for any

damages it must pay in the pending tort action. S e e , e .g..

United Services Automobile Ass'n v. Cregor,

(N.D. 111. 1985) (concluding that court could exercise

personal jurisdiction over defendants in declaratory judgment

action concerning insurance coverage because that dispute

11 "relates to" and "lies in the wake of" defendants' in-state

activities, which were the subject of the underlying lawsuit in

which defendants invoked the protections provided by their

insurance p o l i c y ) . See also St. Paul Surplus Lines Ins. Co. v.

International Plavtex, Inc., Ill P.2d 1259, 1264-65 (Kan. 1989)

("It was not error for the trial court to find that the

declaratory judgment action was sufficiently connected to the

sale of Playtex products in Kansas to warrant personal

jurisdiction over Playtex. . . . [I]f it were not for the sale of

Playtex products in Kansas, resulting in the death of a Kansas

resident [and the subject of underlying state court litigation],

there would be no dispute between Playtex and its i n s u r e r s . " ).

The same facts compel the conclusion that PWD has availed

itself of the privileges and protections afforded by New

Hampshire law, by disposing of its waste in New Hampshire and by

purchasing (from a New Hampshire insurance company) insurance

coverage it knew (or reasonably could have anticipated) would

likely be invoked in New Hampshire, for services to be rendered

12 in New Hampshire. And, PWD has, in fact, demanded that Mass Bay

honor that contract by providing a defense and indemnification in

the underlying state court litigation.

Notwithstanding PWD's argument to the contrary, one cannot

reasonably interpret its contacts with New Hampshire as either

random or isolated. Nor can they properly be viewed as the

result of the unilateral conduct of Wheelabrator. S e e , e.g.

Burger K i n g ,

(cautioning that the "purposeful

availment" aspect of the jurisdictional inquiry ensures that a

defendant will not be haled into a jurisdiction solely as a

result of "random," "fortuitous," or "attenuated" acts or as a

result of the unilateral activity of a third p a r t y ) . To the

contrary, PWD's contract with Wheelabrator specifically

contemplates that its waste will be deposited in New Hampshire.

That was PWD's intent, on a projected and systematic basis. That

potentially toxic waste generated by PWD was deposited on farm

land in New Hampshire can hardly be said to have been

13 "fortuitous" or "random," nor was it solely a product of

Wheelabrator's unilateral conduct. PWD agreed to it.

Finally, the so-called "Gestalt factors" also counsel in

favor of exercising personal jurisdiction over PWD. The burden

imposed on PWD by requiring it to appear in this forum,

particularly in light of the fact that it is already appearing in

the state court action, is minimal. As to New Hampshire's

interest in this litigation, it is both self-evident and

substantial. PWD is alleged to have committed a tort in this

state, proximately causing the death of a New Hampshire citizen.

In addition to appearing in the state court litigation, PWD has

also demanded that its insurance carrier, a New Hampshire

company, provide it with both a defense in this state and

indemnification. New Hampshire's interest in providing the forum

for resolving the parties' contract dispute, and its interest in

seeing a prompt resolution to the insurance coverage issues

relating to that suit, are therefore undeniable. Finally, some

modest weight must also be given to Mass Bay's choice of forum

14 and its interest in obtaining convenient and effective relief.

See Sawt e l l e ,

.

Conclusion

PWD's contacts with this forum are not only purposeful, they

are substantial:

1. It contracted with Wheelabrator knowing that part of the contract (i.e., disposal of some of its biosolids) would be performed in this state. Thus, it purposefully directed business activity (dumping of waste) at the State of New Hampshire (albeit through a third p a r t y ) .

2. As a result of having arranged for the disposal of some of its waste in New Hampshire, PWD is alleged to have committed a tort in this forum: the plaintiffs in the underlying state court litigation claim that PWD's wrongful conduct played a substantial role in causing the death of a New Hampshire citizen.

3. PWD appeared in the underlying state court proceeding, apparently without challenging the court's authority to exercise personal jurisdiction over it. Thus, it is actively defending in New Hampshire.

4. PWD contracted with a New Hampshire insurance company (Mass B a y ) , reasonably anticipating

15 that its insurance contract would likely call for at least partial performance in this forum; since New Hampshire is one of the few states with which PWD appears to have meaningful business contacts, it would be reasonable to presume that New Hampshire would be one of the states in which it might engage in conduct giving rise to the need to invoke the protections afforded by its insurance contract with Mass Bay.

5. Beyond merely entering into an insurance contract that reasonably anticipated at least partial performance in New Hampshire, PWD has actually demanded that Mass Bay perform its (alleged) obligations under that contract in this forum, by providing a defense and indemnification in the underlying state court litigation.

In light of the foregoing, the court necessarily concludes

that it can, consistent with New Hampshire's long arm statute and

fundamental constitutional notions of due process, justice, and

fair play, exercise personal jurisdiction over PWD. Its contacts

with this New Hampshire are more than adequate to warrant the

conclusion that PWD should reasonably have anticipated being

haled into this forum to answer for allegedly wrongful conduct

that proximately caused the death of a New Hampshire citizen.

Consequently, having appeared in state court and invoked the

16 protections afforded by the Mass Bay insurance policy, it

necessarily should have anticipated that it would be subject to

the personal jurisdiction of this court, at least as it relates

to Mass Bay's petition for declaratory judgment. Accordingly,

PWD's motion to dismiss for lack of personal jurisdiction

(document no. 3) is denied.

SO ORDERED.

Steven J. McAuliffe United States District Judge

May 10, 2000

cc: Jeffrey A. Meyers, Esq. Gregory S. Clayton, Esq.

17