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Penn Mutual Life Insurance Co. v. BNC National Bank

September 2, 2010


The opinion of the court was delivered by: O'neill, J.


In this lawsuit, plaintiff Penn Mutual Life Insurance Company seeks: (1) declaratory judgment that the life insurance policy it issued to defendant Gerald Carnago is either void or voidable; and (2) damages for material misrepresentations allegedly made by defendants Carnago, Stephen D. Schutte and BNC National Bank. Defendants move to dismiss for lack of personal jurisdiction or, in the alternative, to transfer venue to the Eastern District of Michigan. Presently before me are defendants' motions and plaintiff's response thereto. For the following reasons, I will deny both motions.


Plaintiff is a life insurance company incorporated in Pennsylvania. Its principal place of business is Horsham, Pennsylvania. On October 15, 2007, defendant Carnago applied to plaintiff for a five million dollar life insurance policy. His application was handled by defendant Stephan D. Schutte, a licensed life insurance agent. Both Schutte and Carnago were residents of Michigan. Defendants assert that neither Schutte nor Carnago traveled to Pennsylvania "for any purpose related to [the] life insurance policy [in question]." See Def.'s Br. at 1.

On October 24, 2007, plaintiff issued the requested insurance policy in the name of the Carnago Trust, which had been established that day. The trustee of the Carnago Trust was defendant BNC National Bank, a citizen of the state of Minnesota.

After further investigation, plaintiff concluded that Carnago had purchased the life insurance policy for the sole purpose of selling it on a secondary market "in which speculative investors seek to obtain pecuniary interests in life insurance policies on individuals with whom they have no prior relationship." Compl. ¶ 6. Plaintiff alleges that such an arrangement is unlawful. Plaintiff filed this lawsuit in the Montgomery County Court of Common Pleas seeking a declaration that the insurance policy is void. On February 16, 2010, pursuant to 28 U.S.C. § 1441(a), defendants removed the case to this Court. I have subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Whether I have personal jurisdiction and whether venue is appropriate are the subjects of the present motions.


I. Motion to Dismiss for Lack of Personal Jurisdiction

Federal Rule of Civil Procedure 12(b)(2) provides a means by which a defendant may move to dismiss a claim for lack of personal jurisdiction. Once the defendant files a Rule 12(b)(2) motion, the plaintiff bears the burden of establishing by a preponderance of the evidence that the Court has personal jurisdiction over the defendant. See Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992). Where the District Court does not hold an evidentiary hearing, the plaintiff need only establish a prima facie case of personal jurisdiction. See O'Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d Cir. 2007) (citing Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004)). The plaintiff is entitled to have its allegations taken as true and all factual disputes resolved in its favor. See id.

II. Motion to Transfer Venue

28 U.S.C. § 1404(a) authorizes the District Court to transfer an action to "any other district or division where it might have been brought" if such transfer is "[f]or the convenience of parties and witnesses [and] in the interest of justice." Before granting a motion to transfer venue, the Court must undertake a balancing test in deciding whether "the interests of justice would be better served by a transfer to a different forum." See Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).


Defendants argue that this case should be dismissed for lack of personal jurisdiction or, in the alternative, that it should be transferred to the Eastern District of Michigan. Both of their arguments turn on the extent to which the parties and operative facts of the case are connected to this District. I will discuss each argument in turn.

I. Personal Jurisdiction

Defendants first argue that I do not have personal jurisdiction over them because they have had no contact with the Commonwealth of Pennsylvania. "A District Court sitting in diversity may assert personal jurisdiction over a nonresident defendant to the extent allowed under the law of the forum state." Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009) (citing Time Share Vacation Club v. Atl. Resorts, Ltd., 735 F.2d 61, 63 (3d Cir. 1984)). The Pennsylvania long-arm statute provides that Courts may exercise personal jurisdiction "based on the most minimum contact with th[e] Commonwealth allowed under the Constitution of the United States." 42 Pa. Cons. Stat. Ann. § 5322(b) (cited in D'Jamoos ex rel. Estate of Weingeroff v. Pilatus Aircraft Ltd., 566 F.3d 94, 102 (3d Cir. 2009)). The Due Process Clause, in turn, requires that a defendant have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." See D'Jamoos, 566 F.3d at 102 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). The Court of Appeals has held that minimum contacts may be satisfied under either of two tests: (1) the "traditional test" or (2) the "effects test." See Marten v. Godwin, 499 F.3d 290, 296-97 (3d Cir. 2007) (distinguishing between the traditional test and the effects test).

A. Application of the Traditional Test Reveals that this Court Has Personal Jurisdiction Over Defendants

The traditional test involves a three-step analysis.*fn1 See D'Jamoos, 566 F.3d at 102. First, I must determine whether defendants have purposefully directed their activities at this forum such that they should reasonably anticipate being haled into Court here. See id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)); North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 690 (3d Cir. 1990) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). Next, I must decide whether the litigation arises out of the activities purposefully directed by defendants at this forum. See id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15 (1984)). Finally, "if the first two requirements have been met, [I will] consider whether the exercise of jurisdiction otherwise comports with fair play and substantial justice." See id. (quoting Burger King, 471 U.S. at 476) (internal quotation marks omitted)).

1. Both Defendants Had Contacts with Pennsylvania Sufficient to Justify this Court's Exercise of Personal Jurisdiction Over Them

I turn now to the question of whether defendants' contacts with Pennsylvania are sufficient to justify an exercise of personal jurisdiction over them. Because personal jurisdiction is defendant-specific, see Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 101 (3d Cir. 2004), I must decide whether an exercise of ...

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