United States District Court, S.D. New York
July 21, 2004.
HILDA GRADINGER, Plaintiff,
PIONEER LIFE INSURANCE COMPANY and CONSECO, INC., Defendants.
The opinion of the court was delivered by: GEORGE DANIELS, District Judge
MEMORANDUM OPINION & ORDER
Plaintiff brings this action against her health insurance
provider, Pioneer Life Insurance Company ("Pioneer"), alleging
breach of contract and fraud. Pioneer moves to dismiss the
complaint for, inter alia, lack of jurisdiction pursuant to
Fed.R.Civ.P. 12(b)(2). For the reasons stated below,
defendant's motion is granted.
In December, 1990, Pioneer issued a Limited Benefit Home Health
Care insurance policy to plaintiff Hilda Gradinger. The policy
was dated December 26, 1990, and issued in the State of Florida.
Plaintiff paid an initial premium of $581.70, and annual premiums
of $3,394.70. This policy insured plaintiff for: 1) home health
care daily benefits of $180.00 per day; 2) lifetime maximum
benefits of $250,000.00; 3) per occurrence maximum benefits of
$150,000.00; and 4) automatic benefit increase of 8% per year on
her home health care daily benefits.
According to plaintiff, Pioneer "terminated the insurance
payments under the policy on April 26, 2003 without payment of
the amount stated in the insurance policy in the sum of
$250,000.00." Complaint at 2, ¶ 9. Plaintiff states that although
she furnished Pioneer with proof of her illness and disability
pursuant to the terms of the policy, she "really only got a small
portion" of the benefits she should have received. Transcript of
Oral Argument dated May 5, 2004 ("Tr."), p. 14. Instead, she
claims, Pioneer made "most of" the benefit payments to "certain
nursing services" not named in the complaint, without plaintiff's
authorization. Tr. p. 14. Additionally, plaintiff asserts that Pioneer failed to increase
her benefits 8% yearly as it was obligated under the policy.
Plaintiff further argues that Pioneer's representations as to
the insurance policy were false, misleading, and constituted
fraud. According to plaintiff, defendants "falsely and
fraudulently stated and represented to the plaintiff that she
would be paid in full for any illness. . . ." Complaint at 3, ¶
15. Plaintiff states that she relied on the representations, and
was thereby induced to purchase the insurance policy, but that
"these payments were not obtainable and were misleading to the
plaintiff." Id. According to plaintiff, "in truth the facts
were that the payments were never intended to be made pursuant to
the terms of the policy." Id. at 3, ¶ 16.
Plaintiff filed a complaint against Pioneer and Conseco
Company, the alleged corporate parent of Pioneer, on January 8,
2004 in the Supreme Court of the State of New York, County of New
York.*fn1 In her complaint, plaintiff alleged breach of
contract and fraud. On February 13, 2004, Pioneer removed the
case from the state court to this Court. On February 21, 2004,
Pioneer moved to dismiss the complaint pursuant to Fed.R. Civ.
P. 12(b)(2), lack of personal jurisdiction; Fed.R.Civ.P. 9(b),
failure to state fraud with particularity; and Fed.R.Civ.P.
12(b)(6), failure to state a claim on which relief can be
a. Personal Jurisdiction
In its Fed.R.Civ.P. 12(b)(2) motion to dismiss, Pioneer
argues that the Court does not have jurisdiction because this
case bears no relationship to New York. Plaintiff is a citizen of
the state of Florida. Pioneer is an Illinois corporation with its
principal place of business in Indiana. Conseco, Inc., the parent
corporation of Pioneer, is an Indiana corporation with its principal place of business in Indiana. It is alleged that
Conseco, Inc. is licensed to do business in New York, but Pioneer
is not. Plaintiff made no allegation that her claims arose out of
any business conducted by Pioneer in New York, or that Pioneer
had a substantial and continuous presence in New York justifying
the exercise of personal jurisdiction.
The determination of the amenability of a foreign corporation
to suit in a federal diversity action is a two-part analysis. The
court must first determine whether the defendant is amenable to
service of process under the forum state's laws. If so, the court
then asks whether personal jurisdiction under the state laws
would comport with federal requirements of due process.
Metropolitan Life Ins. Co. v. Robertson-Ceco. Corp.,
84 F.3d 560, 567 (2d Cir. 1996); Arrowsmith v. United Press Int'l,
320 F.2d 219, 223 (2d Cir. 1963). When the defendant is not within
the jurisdiction of the court according to the forum state's
laws, the question of federal due process does not arise, and
jurisdiction is not proper. "There is nothing to compel a state
to exercise jurisdiction over a foreign corporation unless it
chooses to do so, and the extent to which it so chooses is a
matter for the law of the state as made by its legislature"
Arrowsmith, 320 F.2d at 222.
Personal jurisdiction in New York State is codified under N.Y.
CPLR § 301, New York's general jurisdiction statute. Furthermore,
New York's long-arm statute, CPLR § 302 allows for personal
jurisdiction under the "minimum contact" theory formulated by the
Supreme Court in International Shoe Co. v. Washington,
326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).
1. Doing Business in New York
Personal jurisdiction will exist over a foreign corporation
pursuant to N.Y. CPLR § 301, if that corporation is "doing
business" in New York.*fn2 Foreign corporations are held
amenable to jurisdiction with respect to all causes of action if
engaged in "such a continuous and systematic course of `doing business' here as to warrant a finding of its
`presence'" in New York State. Simonson v. International Bank,
14 N.Y.2d 281, 285 (N.Y. 1964). See also Landoil Resources Corp.
v. Alexander & Alexander Services, Inc., 77 N.Y.2d 28, 33 (N.Y.
1990); Laufer v. Ostrow, 55 N.Y.2d 305, 309-310 (N.Y. 1982);
Frummer v. Hilton Hotels Intl., 19 N.Y.2d 533, 536 (N.Y. 1967).
The test for "doing business" in New York is a "simple and
pragmatic one." Landoil Resources Corp., 77 N.Y.2d at 33
(alteration in original) (quoting Bryant v. Finnish Nat'l
Airline, 15 N.Y.2d 426, 432 (N.Y. 1965)). There must be a
showing that allows the court to find that the corporation is
"present" in New York "not occasionally or casually, but with a
fair measure of permanence and continuity." Domond v. Great
American Recreation, Inc., 116 F. Supp.2d 368, 372 (S.D.N.Y.
2000). See also Ugalde v. Dyncorp, Inc., 2000 U.S. Dist.
LEXIS 1745 (S.D.N.Y., 2000).
In the instant case, there is no personal jurisdiction over
defendant Pioneer under CPLR § 301. Plaintiff has not alleged
that Pioneer has any business relationships, or made any
transactions whatsoever, in New York, nor has she put forward any
argument that Pioneer "does business" in New York State. Thus,
Pioneer cannot be considered "present" in New York such that
Pioneer could be amenable to jurisdiction in cases arising from
all causes of action.
2. Personal Jurisdiction under New York's Long-Arm Statute
Furthermore, New York's long-arm statute allows for personal
jurisdiction over a non-domiciliary who in person or through an
(1) transacts any business within the state or
contracts anywhere to supply goods or services in the
state; or (2) commits a tortious act within the state
. . .; or (3) commits a tortious act without the
state causing injury to person or property within the
state . . ., if he (i) regularly does or solicits
business, or engages in any other persistent course
of conduct, or derives substantial revenue from goods
used or consumed or services rendered, in the state,
or (ii) expects or should reasonably expect the act
to have consequences in the state and derives
substantial revenue from interstate or international
commerce; or (4) owns, uses or possesses any real
property situated within the state.
CPLR § 302. New York's long-arm statute "is designed to take
advantage of the constitutional power of the state of New York to
subject nonresidents to personal jurisdiction when they commit
acts within the state." Advisory Committee Notes, N.Y. CPLR § 302
(McKinney 2001). The statute allows New York courts to exercise
jurisdiction when the cause of action arises from certain listed
in-state acts of non-domiciliary defendants.
In insurance cases, the basis for specific jurisdiction are
further defined by N.Y. CLS Ins. § 1101.*fn3 Advisory
Committee Notes, N.Y. CPLR § 302 (McKinney 2001). This statute
lists the particular acts that, when taken by non-domiciliary
insurance companies, constitute a basis for specific jurisdiction
under CPLR 302.
However, it is unnecessary to discuss each basis for
jurisdiction in CPLR 302 and N.Y. Ins. § 1101(b)(1), because
plaintiff has failed to allege any specific act taken by Pioneer
in or related to New York State, much less an act from which her
cause of action arises. It is uncontested that Plaintiff's
insurance policy was issued in Florida. Plaintiff does not allege
that she was solicited to purchase the insurance in New York.
There is, therefore, no specific jurisdiction over Pioneer in
this case. 3. Jurisdiction by Corporate Parents
Plaintiff claims, however, that Pioneer is amenable to
jurisdiction in New York because Conseco, Inc. is licensed to do
business in this state. Plaintiff argued that "what Pioneer did
reflects on Conseco because that is the parent corporation," and
hence, "service on Conseco should be good . . . Pioneer is part
and parcel of Conseco and they should all be brought together."
Tr. p. 8.
Plaintiff's argument simply has no merit. It is well-settled
law in New York that the fact that a subsidiary's corporate
parent does business in the state cannot, without anything
further, render the subsidiary subject to jurisdiction here.
Giar v. Centea, 2003 U.S. Dist. LEXIS 6383 (S.D.N.Y. 2003).
Furthermore, "[i]t is hornbook law that service of process on a
subsidiary does not constitute service on a parent corporation,
nor does service on a parent constitute service on a subsidiary.
Except in exceptional circumstances not present here, the law
respects separate corporate identities even where one corporation
may wholly own another, or where they may share the same
principals." Giar 2003 U.S. Dist. LEXIS at *6 (citing In re
Matter of Crespo, 123 Misc.2d 862, 865, 475 N.Y.S.2d 319
(N.Y.Sup.Ct. 1984)).*fn4 Therefore, Conseco, Inc.'s New York
business license does not render its subsidiary Pioneer amenable
to jurisdiction here.
Plaintiff has shown no jurisdictional facts sufficient to allow
this Court to exercise jurisdiction over defendant Pioneer.
Accordingly, the Court grants defendant Pioneer's motion to dismiss under Fed.R.Civ.P. 12(b)(2). Plaintiff's claims
against defendant Pioneer are therefore dismissed.*fn5