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CARONIA v. AMERICAN RELIABLE INS. CO.

March 23, 1998

CHARLES A. CARONIA, Plaintiff,
v.
AMERICAN RELIABLE INSURANCE COMPANY, CANADIAN HERITAGE LIVESTOCK INSURANCE BROKERS, LTD, and CANADIAN LIVESTOCK INSURANCE, Defendants.



The opinion of the court was delivered by: SPATT

 SPATT, District Judge :

 This diversity-breach of contract action arises from the claims of the plaintiff, Charles A. Caronia ("the plaintiff" or "Caronia") that the defendant, American Reliable Insurance Company ("American Reliable"), and Canadian Heritage Livestock Insurance Brokers, Ltd. and Canadian Livestock Insurance (referred to collectively as "Canadian") owe him money under a livestock insurance policy. Presently before the Court is Canadian's motion to dismiss the complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), which is opposed by the plaintiff and by American Reliable.

 I. BACKGROUND

 The plaintiff, Caronia, is an individual who owns thoroughbred race horses. He maintains residences in both Nassau County, New York and in Florida. At all relevant times, Caronia's horses were racing and quartered in New York for approximately nine months of the year.

 The defendant Canadian is a Canadian corporation engaged in the business of insurance brokerage, particularly livestock mortality insurance. Canadian's principal office and place of business is located in the Province of Ontario, Canada. John D. Carlton, Sr. ("Carlton"), Canadian's owner and president, has a license issued by the State of New York to engage in insurance brokerage within the State.

 During their telephone negotiations, the parties agreed that Canadian would forward the insurance policy and all future billing to Caronia's New York residence. Pursuant to this arrangement, Canadian mailed the policy to Caronia in New York, along with a cover letter, dated March 11, 1994, which stated that two invoices were enclosed for the policies on Dominant Prospect and another horse. Several months later, on or about July 13, 1994, Caronia increased the policy coverage of Dominant Prospect from $ 75,000 to $ 200,000, once again through Lloyds of London.

 Approximately half a year later, in early 1995, Canadian solicited the renewal of the insurance coverage on Dominant Prospect, and offered Caronia a new policy with a different company, the defendant American Reliable. At this stage of the litigation, it is unclear how Canadian communicated the solicitation. In any event, Caronia apparently agreed to the renewal and increased his coverage of Dominant Prospect from $ 200,000.00 to $ 300,000.00. By a "cover note" mailed to Caronia's New York home, dated March 3, 1995, Canadian documented the increase in coverage and sought payment of the premium. The cover note set forth Caronia as the insured, and listed Caronia's New York home as the insured's address.

 Later that year, in December 1995, Canadian sent to Caronia at his New York home a letter soliciting renewal of the coverage for Dominant Prospect. The letter also provided a toll-free number for Caronia to use when contacting Canadian. Caronia responded on February 14, 1996, by placing a phone call to Canadian, and speaking to one of Canadian's employees, a broker named Holly Hewitt. While the facts are in dispute, it is clear that during the conversation, they discussed whether the policy could be modified for several months while Caronia's horses were not racing. According to Canadian's version of the conversation, which Caronia disputes, Caronia told Hewitt that he wanted the insurance coverage of Dominant Prospect to be reduced to $ 50,000. Regardless of the actual content of the conversation, Hewitt immediately relayed instructions to renew and modify the policy to a London intermediary which, on February 15, 1996, issued a cover note reflecting that American Reliable was bound for the reduced amount of $ 50,000 insurance coverage for Dominant Prospect.

 Later that month, Dominant Prospect failed to live up to his name and was euthanized due to illness. On March 11, 1996, Caronia signed a livestock proof of loss, and asked for $ 50,000 in insurance coverage plus $ 4,950 for surgical costs. Several weeks later, on April 23, 1996, Caronia signed an amended livestock proof of loss seeking $ 300,000 in coverage, plus $ 11,800 for surgical costs. Subsequently, American Reliable paid Caronia the amount he initially requested -- $ 54,950 -- and refused to pay the greater amount he demanded in his amended livestock proof of loss -- $ 311,800.00.

 Thereafter, Caronia commenced a lawsuit against American Reliable in the Supreme Court of the State of New York, Nassau County. The gravamen of Caronia's complaint is that he never requested a reduction from $ 300,000 to $ 50,000 in insurance coverage of Dominant Prospect, and therefore, American Reliable is liable for the higher amount of coverage, less the $ 54,950 the company already paid him. The defendant American Reliable initiated a cross-claim against Canadian for indemnity and contribution. In February 1997, American Reliable filed a Notice of Removal to this Court.

 Presently before the Court is the motion of the defendant Canadian to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. According to Canadian, there is no basis for in personam jurisdiction because the plaintiff has failed to establish the requirements set forth in New York's long-arm statute, New York Civil Practice Law and Rules ("CPLR") §§ 301 and 302. The plaintiff and the defendant American Reliable oppose the motion, arguing that Canadian fulfilled ...


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