On May 3, 1987, Steven C. Crockett ("Crockett") began an ill-fated voyage as a passenger aboard a twenty-one foot boat manufactured by Mako. While boating that day on Casco Bay near Portland, Maine, Crockett was thrown from the boat and landed in the engine's propellers. Crockett suffered severe physical injuries, including wounds to his lower body that required the amputation of both legs.
Shortly thereafter, Crockett commenced a civil action against Mako in Maine Superior Court, alleging negligent boat design, breach of warranty and liability based upon a theory of strict liability (the "Crockett action"). In his complaint, Crockett sought $ 8 million for medical costs, pain and suffering, mental anguish and lost earnings. See Complaint in Crockett action, annexed to the Affirmation of Harvey Gladstein, sworn to on July 9, 1993 (the "Gladstein Aff."), as Exh. "A."
Pursuant to its obligations under the primary policy, Scottsdale retained a law firm to defend Mako in connection with the Crockett action. Although the parties made several attempts to settle the case, settlement was never achieved and the case went to trial before a jury in November 1991. After an approximately two-week trial, the jury returned a verdict in Crockett's favor, holding Mako liable for damages in the amount of $ 2,356,568.85, exclusive of prejudgment interest and costs. See Judgment in Crockett action, annexed to the Gladstein Aff. as Exh. "B." In January 1993, Mako satisfied the judgment by paying Crockett $ 2,400,000. Pursuant to the primary and excess policies, Scottsdale paid $ 1,000,000 and Arkwright contributed $ 1,400,000.
II. The Present Action
On April 6, 1993, Arkwright and Mutual Marine filed the present Complaint seeking recovery of the $ 1,400,000 it was obligated to pay Mako in the Crockett action. Plaintiffs allege that Scottsdale breached its duty to plaintiffs "by failing to fully investigate and evaluate the facts in the [Crockett action] and to negotiate settlement . . . in good faith for an amount within the limits of its primary policy." See Complaint at P 22. More specifically, plaintiffs allege that Scottsdale failed to (1) appraise them of the status of the Crockett action; (2) evaluate the potential liability; and (3) settle the Crockett action within the bounds of the primary policy in good faith. Id.
On April 26, 1993, Scottsdale answered the Complaint, denying plaintiffs' allegations and setting forth the following affirmative defenses: (1) lack of subject matter jurisdiction; (2) lack of personal jurisdiction; (3) improper venue; (4) forum non conveniens; (5) waiver; (6) estoppel; (7) contributory negligence; (8) improper service of process; (9) failure to state a claim upon which relief may be granted; and (10) improper inclusion of Mutual Marine as "attorney-in-fact" for Arkwright. See Answer at PP 15-26.
Subsequently, Scottsdale moved, pursuant to 28 U.S.C. § § 1391, 1404 and 1406, to dismiss or transfer the action to Maine on the grounds of improper venue or forum non conveniens. On June 19, 1994, the Court directed the parties to submit papers on the jurisdiction issue, as this defense was raised in the answer but not addressed in Scottsdale's motion. Thereafter, Scottsdale submitted its motion to dismiss for lack of personal jurisdiction and improper service of process. The Court will address Scottsdale's jurisdiction and transfer motions below.
Scottsdale argues that the Court lacks jurisdiction in the present case on the grounds that: (1) plaintiffs have failed to effectuate adequate service of process; and (2) Scottsdale is not subject to personal jurisdiction in New York.
In opposition, plaintiffs contend that Scottsdale waived any objections to service of process and personal jurisdiction by failing to include these grounds in its original motion to dismiss. The Court agrees.
Federal Rule of Civil Procedure 12(h)(1) provides:
A defense of lack of jurisdiction over the person, improper venue, insufficiency of process, or insufficiency of service of process is waived (A) if omitted from a motion in the circumstances described in subdivision (g), or (B) if it is neither made by motion under this rule nor included in a responsive pleading or an amendment thereof permitted by Rule 15(a) to be made as a matter of course.
Fed. R. Civ. P. 12(h)(1). Federal Rule of Civil Procedure 12(g) states, in relevant part:
If a party makes a motion under this rule but omits therefrom any defense or objection then available to the party which this rule permits to be raised by motion, the party shall not thereafter make a motion based on the defense or objection so omitted.