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ARKWRIGHT MUT. INS. CO. v. SCOTTSDALE INS. CO.

January 24, 1995

ARKWRIGHT MUTUAL INSURANCE CO. & MUTUAL MARINE OFFICE INC. as Attorney-In-Fact for ARKWRIGHT MUTUAL INSURANCE CO., Plaintiffs, against SCOTTSDALE INSURANCE COMPANY, Defendant.


The opinion of the court was delivered by: SHIRLEY WOHL KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 In this insurance dispute, defendant Scottsdale Insurance Company ("Scottsdale") moves, pursuant to Rules 12(b)(2) and 12(b)(5) of the Federal Rules of Civil Procedure, to dismiss the complaint for lack of jurisdiction. In the alternative, Scottsdale moves, pursuant to 28 U.S.C. §§ 1391, 1404 and 1406, to dismiss or transfer the action on the grounds of improper venue or forum non conveniens. Plaintiffs Arkwright Mutual Insurance Co. ("Arkwright") and Mutual Marine Office Inc. ("Mutual Marine") oppose Scottsdale's motions. For the reasons set forth below, Scottsdale's motion to dismiss the complaint for lack of jurisdiction is denied and Scottsdale's motion to dismiss on the ground of improper venue is granted.

 BACKGROUND

 I. The Crockett Action

 In the mid-1980s, Scottsdale, an insurance company headquartered in Arizona, issued a comprehensive general liability policy (the "primary policy") to a Florida boat manufacturer known as Mako Marine, Inc. ("Mako"). The primary policy insured and indemnified Mako for all claims arising out of personal injuries suffered in accidents involving products manufactured, distributed or designed by Mako. The primary policy limited Mako's coverage to $ 1,000,000 per occurrence.

 At the same time, Mako sought excess insurance coverage in the event of liability exceeding the coverage provided by the primary policy. Consequently, Mutual Marine, a New York corporation that acts as managing agent for a pool of insurance companies, issued an excess policy to Mako on behalf of Arkwright, a Massachusetts insurance company that participates in the pool (the "excess policy"). The excess policy extended to Mako the same type of coverage afforded by the primary policy, but only to the extent liability should exceed $ 1,000,000 per occurrence.

 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 ...


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