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MANHATTAN LIFE v. A.J. STRATTON SYNDICATE

January 23, 1990

THE MANHATTAN LIFE INSURANCE COMPANY, PLAINTIFF,
v.
A.J. STRATTON SYNDICATE (NO. 782), AS LEAD UNDERWRITER ON CONTRACT #PT4699/82 AND LLOYD'S LONDON SYNDICATES ON CONTRACT #PT4699/82, AND BURT STRATTON, DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. ZIMMERMAN, GREEN INCORPORATED, GEORGE G. ZIMMERMAN & CO., INC. AND GEORGE G. ZIMMERMAN, THIRD-PARTY DEFENDANTS AND FOURTH-PARTY PLAINTIFFS, V. DANIEL FETTROLL AND JOSEPH HADLEY LIMITED, FOURTH-PARTY DEFENDANTS.



The opinion of the court was delivered by: Robert L. Carter, District Judge.

  Fourth-party defendants Daniel Fettroll and Hadley Cannon (International) Limited*fn1 ("Hadley") (together, the "defendants")*fn2 move to dismiss the complaint of fourth-party plaintiffs Zimmerman, Green Incorporated, George G. Zimmerman & Co., Inc. and George G. Zimmerman (together, the "plaintiffs") for lack of personal jurisdiction.*fn3 The plaintiffs have invoked the court's diversity jurisdiction pursuant to 28 U.S.C. § 1332. The defendants have submitted affidavits, and the plaintiffs have submitted affidavits and a deposition transcript in support of their respective positions.

I.

In March, 1982, Zimmerman, Green, Inc. ("Zimmerman, Green"), a New Jersey insurance brokerage firm, was retained by the Manhattan Life Insurance Company ("Manhattan Life"), a New York insurance company, for the purpose of soliciting quotes for Manhattan Life for the reinsurance of life insurance contracts for accidental death and dismemberment. Zimmerman, Green retained Hadley in London to obtain a quote from A.J. Stratton Syndicate and other underwriters at Lloyd's London Syndicates (together, the "Insurance Syndicates"), now defendants and third-party plaintiffs in this case. Fettroll negotiated the contract for Hadley and was primarily responsible for representing Zimmerman, Green.

After negotiations, done in large part by Zimmerman, Green and Hadley (through Fettroll), Manhattan Life and the Insurance Syndicates entered into a "losses occurring" policy for reinsurance,*fn4 and, subsequently, Manhattan Life sought recovery under the reinsurance contract for a $1.6 million claim. The Insurance Syndicates denied coverage on the basis that prior to the date of the reinsurance contract Manhattan Life received notice of the $1.6 million claim, and, had this been made known to them, they would not have reinsured on a losses occurring basis.

Following the Insurance Syndicates' denial of payment, Manhattan Life commenced this action. The Insurance Syndicates impleaded Zimmerman, Green and the other third-party defendants, who in turn impleaded Fettroll and Hadley.

When considering a claim of lack of personal jurisdiction, the critical factual issue to be determined is the degree and nature of contacts the defendants have or had with the state of New York. Defendants state in their affidavit that they are not domiciliaries of New York, maintain no office or other real property in New York, and have no New York accounts, telephone or business listings. Defendants further state that they are not licenced to do business in New York and, with regard to the contract for reinsurance at issue, that they did not make any contract in New York, had no communications or dealings in New York, supplied no goods or services in New York, and did not forward any correspondence, mail, telexes or any other writings to anyone in New York. Defendants maintain that all services were performed in London, and that all substantial communication was between London and New Jersey.

Plaintiffs claim that in the past defendants have solicited and obtained other insurance business in New York, and have serviced such business, at times travelling to New York to do so. Specifically regarding the insurance contract at issue, they claim that Fettroll traveled to New York at least once to meet with Manhattan Life after placing the contract. Plaintiffs submit three letters produced by another party in the case which show that employees of Hadley and Manhattan Life met in New York on November 7, 1983. These letters make oblique references to other events, permitting the inference that Hadley has conducted other business in New York. Additionally, plaintiffs submit two telexes sent from Hadley to Manhattan Life in New York, the contents of which are not entirely clear.

In response to plaintiffs' submissions, defendants admit the existence of the documents,*fn5 but deny that the facts they establish provide any basis for personal jurisdiction. Following plaintiffs' submissions, defendants provided the court with seven additional letters, telexes, or written evidence of oral communication from them to Manhattan Life which they claim constitute the entirety of dealings between the two parties.

Alternatively, if the court does not find that there is personal jurisdiction over the defendants, plaintiffs ask for permission to conduct discovery related to the jurisdictional question.

II.

Personal jurisdiction in a diversity action is determined by the laws of the jurisdiction in which the district court sits and therefore New York law is applicable to this action. United States v. First National City Bank, 379 U.S. 378, 381-82, 85 S.Ct. 528, 530-31, 13 L.Ed.2d 365 (1965). While a plaintiff has the ultimate burden of establishing that jurisdiction is proper by a preponderance of the evidence, Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762 (2d Cir. 1983), prior to an evidentiary hearing he must only make a prima facie showing to avoid dismissal, even if the defendant offers controverting evidence. Hoffrift for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985). In determining whether a plaintiff has made a prima facie showing "all pleadings and affidavits are construed in the light most favorable to plaintiff, and where doubts exist, they are resolved in the plaintiff's favor." Id.

Plaintiffs contend that the court has jurisdiction over the defendants pursuant to CPLR §§ 301 and 302(a)(1), N.Y. Civ. Prac. L. & R. §§ 301 and 302(a)(1) (Consolidated 1972 & 1990 Supp. Pamphlet). In addition to the New York statutory requirements, the court must consider the requirements of constitutional due process and therefore must examine the facts of each case using the "minimum contacts" and "traditional notions of fair play and substantial justice" standards set forth in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and its progeny.

Generally, the test as to whether personal jurisdiction is constitutionally permissible is "whether the defendant purposefully established 'minimum contacts' in the forum state."*fn6 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). This requires "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id. at 475. "The 'substantial connection' [citations omitted] between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully ...


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