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American Guarantee And Liability Insurance Co. v. Arch Insurance Co.

United States District Court, W.D. Pennsylvania

October 26, 2017

AMERICN GURANTEE AND LIABILITY INSURANCE CO., Plaintiff,
v.
ARCH INSURANCE CO., TARGET DRILLING, INC., PINNACLE MINING CO., LLC and GREAT MIDWEST INSURANCE CO., Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. MITCHELL UNITED STATES MAGISTRATE JUDGE.

         Plaintiff, American Guarantee and Liability Insurance Co. (AGLIC), brings this action under Pennsylvania law seeking monetary and declaratory relief under a series of primary and excess insurance policies issued to Target Drilling, Inc. (TDI), which also purchased policies from Arch Insurance Co. (Arch) and Great Midwest Insurance Co. (Great Midwest). TDI was engaged by Pinnacle Mining Co., LLC (Pinnacle) to perform certain services at one of Pinnacle's mines in West Virginia and the contract required TDI to include Pinnacle as an “additional insured” under TDI's primary insurance policies, but only for liability “to the extent caused by the negligent acts or omissions of [TDI].” Pinnacle, TDI and others were sued by the owners of an adjacent mine for property damage to certain equipment within that mine, as well as damage to the mine itself and minerals (coal) within that mine (the Underlying Tort Action).

         In this action, AGLIC seeks to recover certain defense costs and expenses it has advanced on behalf of TDI in connection with the Underlying Tort Action, and certain declaratory relief under the insurance policies AGLIC issued to TDI, including a declaration that AGLIC has no duty to defend or indemnify Pinnacle as an “additional insured” under those primary and excess policies. Presently submitted for disposition is a motion to dismiss the Amended Complaint, filed by Pinnacle, on the basis that Plaintiff has failed to point to sufficient contacts of Pinnacle with Pennsylvania to establish personal jurisdiction over it. For the reasons that follow, the motion will be granted.

         Facts

         Pinnacle owns and operates a certain coal mine, referred to as the “Pinnacle Mine, ” in Wyoming County, West Virginia. On February 12, 2015, Bluestone Coal Corporation purchased a certain coal mine, referred to as Double-Bonus Mine No. 65 (“Mine No. 65”), which was situated above the Pinnacle Mine. Pinnacle applied for and received a permit to construct a dewatering system for its Pinnacle Mine which entailed, inter alia, drilling a vertical borehole through a void (or inactive) sealed-off portion of Mine No. 65. Pinnacle elected to contract with TDI to perform certain work in connection with the dewatering system project. (Am. Compl. ¶¶ 12-15.)[1] The contract required TDI to include Pinnacle as an “additional insured” under TDI's primary insurance policies (which were issued in Pennsylvania by AGLIC, Arch and Great Midwest), but only for liability “to the extent caused by the negligent acts or omissions of [TDI], ” i.e., vicarious liability claims. (Am. Compl. ¶¶ 8, 23-64, 74-76.)

         Pinnacle, along with TDI and others, was subsequently sued by Bluestone Coal and Double-Bonus Mining Company for alleged property damage to certain equipment within Mine No. 65, as well as damage to the mine itself and minerals (coal) within that mine. The Underlying Tort Action was filed in the United States District Court for the Southern District of West Virginia on July 7, 2016, and on March 23, 2017, an Amended Complaint was filed alleging claims of negligence, trespass and willful, wanton or reckless conduct. (Am. Compl. ¶¶ 16-22 & Ex. A.) TDI tendered its defense in the Underlying Tort Action to Arch, Great Midwest and AGLIC. (Am. Compl. ¶ 65.)

         Procedural History

         On May 4, 2017, Plaintiff filed this action against Arch, Pinnacle and TDI (ECF No. 1). On June 13, 2017, Pinnacle filed a motion to dismiss for lack of personal jurisdiction, as well as for insufficient service of process (ECF No. 16). In response, Plaintiff filed an Amended Complaint on June 27, 2017 (ECF No. 24) and the motion to dismiss was dismissed (ECF No. 30). The Amended Complaint added Great Midwest as an additional defendant. Jurisdiction is based on diversity of citizenship in that: AGLIC is a New York corporation with its principal place of business in Schaumburg, Illinois; Arch is a Missouri corporation with its principal place of business in New Jersey; TDI is a Pennsylvania corporation with its principal place of business in Smithton, Pennsylvania; Great Midwest is a Texas corporation with a principal place of business in Houston, Texas; Pinnacle is a Delaware LLC whose citizenship is alleged to be other than in Illinois and New York; and the amount in controversy, excluding interest and costs, exceeds the sum of $75, 000.00. (Am. Compl. ¶¶ 1-5, 9-10.) Count I seeks declaratory relief under the 2013 AGLIC commercial general liability (“CGL”) policy against TDI and Pinnacle. Count II seeks declaratory relief under the AGLIC umbrella policies against TDI and Pinnacle. Count III seeks recovery of defense costs against Arch. Count IV seeks, in the alternative, recovery of defense costs against Great Midwest and Arch. Count V seeks, in the alternative, recovery of defense costs against TDI.

         On July 14, 2017, Pinnacle filed another motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) (ECF No. 33). Plaintiff filed a response on August 7, 2017 (ECF No. 51) and on August 21, 2017, Pinnacle filed a reply brief (ECF No. 61).

         Pinnacle argues that: 1) it does not conduct “continuous and systematic” business in Pennsylvania and thus general personal jurisdiction cannot be asserted over it; and 2) the mere fact that Pinnacle contracted with TDI (a Pennsylvania corporation) for TDI to perform work at Pinnacle Mine in West Virginia does not suffice to establish specific personal jurisdiction over Pinnacle in Pennsylvania, and the claims against it should be dismissed or, in the alternative, this case could be transferred to the Southern District of West Virginia, where the Underlying Tort Action is currently pending.

         AGLIC responds that: 1) Pinnacle has continuous and systematic contacts with Pennsylvania in that it was previously headquartered in Canonsburg, it operated mines in Pennsylvania, a longwell system was assembled and tested in Pennsylvania, it purchased $155, 000 in hoses from Cypher Company in Pennsylvania which resulted in litigation in Allegheny County, it has brought suits in Allegheny County and some coal is directed through or transported through Pennsylvania via contracts with Pennsylvania companies; and 2) specific personal jurisdiction can be based on Pinnacle contracting with TDI, issuing a purchase order to TDI in Pennsylvania and asking to be covered as an additional insured on TDI's policies, and in addition Pinnacle contracted with other Pennsylvania companies for hammer rental and re-tipping work at the project, and various individuals communicated with them in Pennsylvania.

         In a reply brief, Pinnacle indicates that: 1) AGLIC is incorrect in that its mines are not located in Pennsylvania, the brief period of time during which Pinnacle was owned by a Pennsylvania entity was long before the events leading to the Underlying Tort Action and the 2006 filing of a case in Allegheny County to aid in a West Virginia civil action is insufficient to establish general personal jurisdiction over Pinnacle in Pennsylvania; and 2) AGLIC erroneously cites cases involving parties to contracts, but this case does not, and the courts that have addressed the specific issue of being named as an additional insured have held that such a relationship is insufficient for jurisdictional purposes.

         Standard of Review

         “Once it is challenged, the burden rests upon the plaintiff to establish personal jurisdiction. A nexus between the defendant, the forum and the litigation is the essential foundation of in personam jurisdiction.” General Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir. 2001) (citation omitted). “The plaintiff must sustain its burden of proof through ‘sworn affidavits or other competent evidence.'” North Penn Gas v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d Cir. 1990) (quoting Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 67 n.9 (3d Cir. 1984)). The court initially must “accept all of the plaintiff's allegations as true and construe disputed facts in favor of the plaintiff, ” who only needs to establish a “prima facie case, ” although the court can reconsider the issue “if it appears that the facts alleged to support jurisdiction are in dispute, ” and can conduct an evidentiary hearing to resolve any disputed facts. Carteret Savs. Bank, FA v. Shushan, 954 F.2d 141, 142, n.1 (3d Cir. 1992). See also Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004).

         Specific personal jurisdiction arises from a defendant's forum related activities and may be established even where the defendant has not physically appeared in the state but has “‘purposefully directed' his activities at residents of the forum, and the litigation results from alleged injuries that ‘arise out of or relate to' those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985) (citations omitted). It is claim specific. Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001).

         As summarized by the Court of Appeals:

The inquiry as to whether specific jurisdiction exists has three parts. First, the defendant must have “purposefully directed [its] activities” at the forum. Second, the litigation must “arise out of or relate to” at least one of those activities. Helicopteros [Nacionales de Columbia, S.A. v. Hall], 466 U.S. [408, ] 414, 104 S.Ct. 1868');">104 S.Ct. 1868 [(1984)]; Grimes v. Vitalink Commc'ns Corp., 17 F.3d 1553, 1559 (3d Cir. 1994). And third, if the prior two requirements are met, a court may consider whether the exercise of jurisdiction otherwise “comport[s] with ‘fair play and substantial justice.'”

O'Connor v. Shady Lane Hotel Co., Ltd., 496 F.3d 312, 317 (3d Cir. 2007) (quoting Burger King, 471 U.S. at 472, 476) (footnote omitted).[2]

         With respect to general personal jurisdiction, the Supreme Court has held that the proper inquiry “is not whether a foreign corporation's in-forum contacts can be said to be in some sense ‘continuous and systematic, ' it is whether that corporation's “affiliations with the State are so ‘continuous and systematic' as to render [it] essentially at home in the forum State.” Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Pennsylvania authorizes its courts to exercise general jurisdiction over partnerships and similar associations pursuant to 42 Pa. C.S. § 5301(a)(3) by showing: “[f]ormation under or qualification as a foreign entity under the laws of this Commonwealth, ” “[c]onsent, to the extent authorized by the consent, ” or “[t]he carrying on of a continuous and systematic part of its general business within this Commonwealth.”

         The Federal Rules of Civil Procedure authorize a district court to assert personal jurisdiction over a non-resident to the extent permissible under the law of the state where the district court sits. Fed.R.Civ.P. 4(k)(1)(A). O'Connor, 496 F.3d at 316. Pursuant to Pennsylvania's long arm statute, 42 Pa. C.S. § 5322(a), a plaintiff can establish specific personal jurisdiction by showing that a defendant has engaged in forum related activities.

         Pennsylvania also authorizes exercise of the jurisdiction of its courts over non-residents “where the contact is sufficient under the Constitution of the United States, ” 42 Pa. C.S. § 5308, and “to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States.” 42 Pa. C.S. § 5322(b). See Kubik v. Letteri, 614 A.2d 1110, 1114 (Pa. 1992) (following Burger King analysis).

         Facts Relating to Personal Jurisdiction

         Pinnacle is a Delaware LLC with a mailing address in Natural Bridge, Virginia. It has registered agents for service of process in Delaware and West Virginia, ...


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