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Pharmacists Mutual Insurance Co. v. Namic Insurance Co.

United States District Court, D. Colorado

September 20, 2019




         THIS MATTER comes before the Court on the Defendant’s Motion to Dismiss or Change Venue (# 40), the Plaintiff’s response (# 53), and the Defendant’s reply (# 56). For the reasons that follow, the Motion is denied.


         The Court has subject-matter jurisdiction to hear this case under 28 U.S.C. § 1332(a). The parties dispute whether the Court can exercise personal jurisdiction over the Defendant.

         II. BACKGROUND[1]

         The Plaintiff, Pharmacists Mutual Insurance Co. (“PHMIC”), is an Iowa corporation with its principal place of business in Algona, Iowa. PHMIC issued an automobile insurance policy to Kimberly Schock, a Colorado resident. Defendant Namic Insurance Co. (“NAMICO”) is an Indiana corporation with its principal place of business in Indianapolis. NAMICO insured PHMIC against professional liability.

         Ms. Schock claimed uninsured-motorist benefits under her policy with PHMIC. PHMIC initially told Ms. Schock that her uninsured-motorist benefits were capped at $500, 000, but later informed her that such benefits were capped at $100, 000. As a result, Ms. Schock accused PHMIC of acting in bad faith, and sued PHMIC (Case No. 17-CV-0592) claiming breach of contract, and bad-faith breach of contract for unreasonable delay and denial of benefits under Colorado law (the Underlying Action).

         NAMICO undertook PHMIC s defense, both retaining defense counsel in Colorado and in orchestrating the defense. When Ms. Schock offered to settle for an amount within the policy limits of its coverage by NAMICO, NAMICO accepted the offer, but making its contribution subject to “allocation and funding of of the settlement amount. PHMIC brings this suit because it funded the settlement with Ms. Schock and NAMICO has refused to reimburse it for any part of the sum paid.

         In its Amended Complaint (# 36), PHMIC asserts three claims against NAMICO: (1) breach of contract based on its failure to pay under the professional liability policy; (2) bad faith failure to pay in violation of Colorado law, [2] specifically, Colorado's Unfair Claims Act, C.R.S. §§ 10-3-101 et seq, ; and (3) breach of the covenant of good faith and fair dealing recognized under Colorado common law. NAMICO moves to dismiss all claims for lack of personal jurisdiction and improper venue (# 40).


         When the Court’s jurisdiction over a defendant is challenged pursuant to Rule 12(b)(2), the plaintiff bears the burden of establishing that personal jurisdiction exists. Soma Medical Int’l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir. 1999); OMI Holdings Inc. v. Royal Ins. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998). Courts may elect to resolve the jurisdictional question immediately, by conducting an evidentiary hearing on the issue, or they may defer resolution of the jurisdictional question until trial, requiring the plaintiff to make only a prima facie showing of jurisdiction at the pretrial phase. Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). The Court may receive affidavits and other evidentiary material to assist in resolving the issue, but it must resolve any disputed facts in the light most favorable to the plaintiff. Id.

         Normally, the jurisdictional inquiry comprises two components, which the plaintiff must show. First, the laws of the forum state confer jurisdiction by authorizing service upon the defendant, and second, the exercise of such jurisdiction comports with the principles of due process. Niemi v. Lasshofer, 770 F.3d 1331, 1348 (10th Cir. 2014). However, in Colorado, that inquiry is short-circuited because Colorado’s Long-Arm Statute “confers the maximum jurisdiction permissible, consistent with the Due Process clause.” Thus, the inquiry simply becomes one of whether due-process principles would be satisfied by the exercise of personal jurisdiction. The due-process inquiry itself has two components. First, a court must determine whether a defendant has “such minimum contacts with the forum state” that it should reasonably expect to be sued in courts in that state. Second, a court considers whether the exercise of personal jurisdiction in the circumstances presented offends traditional notions of fair play and substantial justice.

         The minimum-contacts analysis considers whether the defendant is susceptible to either general or specific jurisdiction in the forum state. See Am. Fidelity Assur. Co. v. Bank of New York Mellon, 810 F.3d 1234, 1237 (10th Cir. 2016). General jurisdiction arises in the location that the defendant is “at home” - generally, a corporation’s state of incorporation and its principal place of business - and in certain “exceptional” cases, in other locations where the defendant’s connections are substantial. BNSF Ry. Co. v. Tyrell, 137 S.Ct. 1549, 1558 (2017). Specific jurisdiction is a more flexible concept, depending upon the nature and extent of the defendant’s contacts with the forum and whether the legal claims in suit arise out of those contacts. Bristol-Meyers Squibb Co. v. Superior Court of Cal., 137 S.Ct. 1773, 1780 (2017). Specific jurisdiction arises when the defendant engages in “an activity or occurrence that takes place in the forum state, ” from which the claims at issue arise. That activity must be purposefully directed by the defendant towards the state, rather than being random or fortuitous or the result of the actions of another, and the harmful effects of that conduct must typically be felt in the forum state. Anzures v. Flagship Restaurant Grp., 819 F.3d 1277, 1280 (10th Cir. 2016).

         The fair-play and substantial-justice analysis requires a “fact-specific” inquiry on which the defendant bears the burden of proof. ClearOne Commc’ns Inc. v. Bowers, 643 F.3d 735, 764 (10th Cir. 2011). The defendant must present a “compelling case, ” showing considerations that would render the exercise of jurisdiction unreasonable. Such considerations include: (1) the burden on the defendant of litigating in the forum, (2) the forum state’s interest in resolving the dispute, (3) the plaintiff’s interest in receiving convenient and effective relief, (4) the judicial system’s ...

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