Court: District Court, D. Minnesota; July 26, 2016; Federal District Court
Plaintiff Everest Indemnity Insurance Co. seeks a judicial declaration of no coverage under an insurance policy issued to Ameriprise Financial Services, Inc. Defendant Daeil Ro, an investment advisor employed by Ameriprise, is seeking coverage under this policy due to a lawsuit filed against him by a client, Fumitaka Kawasaki, in Washington state court. This lawsuit alleges that Ro misled Kawasaki into investing in fraudulent companies before he joined Ameriprise, and that he mishandled Kawasaki's retirement accounts while employed there.
Ro has filed a separate lawsuit in the Western District of Washington against Everest, claiming entitlement to coverage and alleging violations of Washington's Insurance Fair Conduct Act. He is moving to dismiss or transfer the current case from Minnesota, citing lack of personal jurisdiction, improper venue, and the existence of the related Washington litigation.
The Court has granted Ro's motion to transfer the case to the Western District of Washington, determining that Minnesota is an improper venue for the declaratory judgment regarding insurance claims linked to Washington state court litigation. The factual background includes Ro's residency in Washington, where he is licensed to practice, and his employment at Ameriprise, which involved significant communications with the corporate headquarters in Minnesota. Ro became aware of Kawasaki's claim in 2014 and subsequently sought coverage from Everest, which was denied by its claims administrator in May 2014.
In April 2015, after the complaint in the Underlying Lawsuit was filed, Ro sought insurance coverage, which Lancer, on behalf of Everest, denied in June 2015. Ro's attorney responded in July 2015, asserting Ro's entitlement to a defense and indemnity under the Policy and claiming Lancer's denial was unlawful under Washington law. Ro indicated consideration of legal options due to Everest's refusal to defend and requested damage mitigation through defense provision. A settlement in the Underlying Lawsuit was reached in March 2016, with Ro's attorney notifying Everest and Lancer of the settlement and an upcoming hearing to assess its reasonableness, while also stating Ro's intent to assert a claim under Washington's Insurance Fair Conduct Act. Ro's letter required a twenty-day response window for Everest/Lancer, as per statutory requirements. Everest responded on April 15, 2016, denying allegations and reaffirming its position on the lack of coverage. On April 21, 2016, Everest moved to intervene in the reasonableness hearing, and on April 24, it filed a Complaint asserting that Ro sought coverage under the Policy, which was issued in Minnesota and applicable to Ameriprise representatives like Ro, subject to exclusions. Everest's Complaint sought a judicial declaration of no coverage for the Underlying Lawsuit claims. Subsequently, on May 9, 2016, Ro filed his complaint against Everest and Lancer in Washington, alleging violations of the Insurance Fair Conduct Act and additional claims related to his coverage under the Policy, including bad faith and negligence in the coverage investigation.
A party can move to dismiss claims based on lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). To counter such a motion, the plaintiff must establish a prima facie case for jurisdiction, as supported by relevant affidavits and exhibits, viewed favorably to the plaintiff. The determination of personal jurisdiction begins with Minnesota's long-arm statute, which allows jurisdiction over nonresidents conducting business or causing injury in Minnesota. Ro acknowledges that this statute aligns with federal constitutional limits. Constitutional due process requires that a defendant has "minimum contacts" with the forum state to ensure fairness and justice. The defendant must purposefully avail themselves of the state's laws, demonstrating sufficient engagement in the state's activities.
In the Eighth Circuit, five factors are assessed to evaluate minimum contacts: (1) the nature and quality of contacts with the forum; (2) the quantity of contacts; (3) the relationship of the cause of action to the contacts; (4) the forum state's interest in providing a venue; and (5) the convenience to the parties. The first three factors are prioritized. Evidence indicates that Ro had substantial contacts with Minnesota, particularly through his employment as a financial advisor with Ameriprise, which has strong ties to Minnesota, as indicated by the Financial Advisor Agreement signed in Minnesota and governed by Minnesota law.
A contract alone does not establish personal jurisdiction; jurisdiction is determined by the nature of the business relationship. Ro, as a financial advisor for Ameriprise, engaged in significant interactions with the company's Minnesota headquarters, which supports a finding of minimum contacts with Minnesota. Ro submitted numerous transactions for approval to Ameriprise in Minnesota, benefiting from the associated supervision and support. Approximately 2,000 transactions were approved there, and Ro maintained regular communication with the corporate office. His employment was also potentially insured under the Ameriprise-Everest Policy, further linking his activities to Minnesota.
The core issue in the case involves whether the events in the Underlying Lawsuit occurred before the policy's retroactive date, which aligns with the start of Ro's employment. Allegations in the Underlying Lawsuit reference actions taken by Ro as late as 2013, after he began working with Ameriprise. Ro's activities, relying on Minnesota's oversight, are central to the coverage dispute in this litigation. By highlighting his employment's connection to the policy for coverage arguments, Ro cannot disregard that same connection when addressing his minimum contacts with Minnesota in the context of the declaratory judgment action. Thus, Ro has purposefully established sufficient contacts with Minnesota that warrant specific personal jurisdiction in this case.
The Court has determined that it possesses personal jurisdiction over Ro, based on the pleadings and existing records, aligning with the standards for a motion to dismiss. The analysis of specific jurisdiction factors concludes that the absence of forum residency among the parties does not hinder jurisdiction. Although Minnesota has a vested interest in insurance disputes involving its residents, the named insured, Ameriprise, is not a party to this case. The convenience of Ro litigating in Washington does not outweigh the compelling reasons for maintaining jurisdiction in this Court.
In addressing Ro's second argument regarding dismissal, the Court evaluates the "first-filed rule." While there are overlaps with the later-filed Ro Lawsuit in Washington, the Court finds that the first-filed rule is not applicable in this instance and favors transferring the action. The principle of federal comity allows a court to decline jurisdiction when a related case is already filed elsewhere, prioritizing the party that first establishes jurisdiction. However, this rule is applied flexibly, allowing for exceptions if compelling circumstances arise. Two such red flags are present: Ro informed Everest of his intent to file a lawsuit imminently under Washington's Insurance Fair Conduct Act, providing a specific notice timeline, which contrasts with a previous vague indication of legal consideration. These factors lead the Court to conclude that the first-filed rule should not apply here.
Everest filed a declaratory judgment action shortly after the expiration of a notice period, raising concerns of haste akin to a "race to the courthouse," as noted in Anheuser-Busch, Inc. v. Supreme Int'l Corp. Everest argues that Ro had been aware of its coverage position for two years and did not act, but it is also acknowledged that Everest was aware of Ro's position during that time and only initiated action after receiving a letter indicating Ro’s intent to file a statutory claim.
The first-filed rule typically applies to parallel litigation; however, in this case, the actions are not truly parallel due to the involvement of an additional defendant, Lancer, in the Ro Lawsuit and broader allegations against Everest, which include improper investigation and violations of Washington’s Insurance Fair Conduct Act. Everest’s complaint focuses solely on the denial of coverage, neglecting to address potential violations of the Washington statute, despite prior notice from Ro.
The Court finds it unjust to adjudicate only the coverage issue in this case while leaving related statutory claims unresolved, which could result in inconsistent outcomes. The Ro Lawsuit has progressed further, with a set trial date, and Everest has engaged in that case rather than seeking a stay in this action. Since Ro’s participation in this Court is solely due to this case, while Everest is already involved in Washington, the Court concludes that judicial efficiency and the interests of justice favor transferring this action to the Western District of Washington rather than dismissing it.
Improper venue under 28 U.S.C. § 1406(a) necessitates a transfer if 28 U.S.C. § 1391(b)(2) is not satisfied, which states that venue is proper where a substantial part of the events or omissions giving rise to the claim occurred. This analysis is distinct from personal jurisdiction, as a defendant may be subject to personal jurisdiction in a district that lacks proper venue due to insufficient connection to the events underlying the claim. Courts in the Eighth Circuit focus on the defendant's activities rather than the plaintiff's to avoid subjecting defendants to distant jurisdictions with minimal connections to the dispute. A district must not only be a possible venue but must contain substantial events related to the claim. While the venue does not have to be the "best" option, there must be significant occurrences related to the claim in the district. In the case of insurance disputes, there is a lack of consensus on determining where a substantial part of the events occurred, with courts varying in their focus on the underlying events, contract execution, or breach location. The Second Circuit has recognized that events related to the insurance policy, such as its approval and issuance in one district while the underlying injury occurred in another, could support venue in either district.
The court explicitly refrains from deciding if negotiating and issuing a contract in a judicial district alone establishes venue there. Both the First and Tenth Circuit Courts of Appeal support proper venue where the loss occurred but have not ruled on the relevance of other factors for venue in different districts. The Eighth Circuit, however, applies a more restrictive analysis of venue. In this case, no significant events transpired in the District of Minnesota that would warrant venue there. Although the insurance policy was issued to a Minnesota-based insured, this event is deemed merely a necessary, non-wrongful occurrence in the chain leading to the dispute. Furthermore, interactions involving Ro, who worked for Ameriprise in Minnesota, do not constitute wrongful actions connected to Everest's lawsuit, which arises from claims made from Ro's residence in Washington where the underlying lawsuit is active. The substantial events relevant to the lawsuit occurred in Washington, not Minnesota, leading to the conclusion that venue in Minnesota is improper. Consequently, the court determines that transferring the action to the Western District of Washington serves the interest of justice, under 28 U.S.C. § 1406(a). Ro's alternative motion for transfer under 28 U.S.C. § 1404(a) is not addressed, as the initial transfer motion is granted.
Defendant's Motion to Dismiss or Transfer is granted regarding the transfer of the case to the United States District Court for the Western District of Washington (Seattle). The Court notes that Ro's employment with Ameriprise has recently ended, and his counsel confirmed he resides in Washington. The nature of Ro's interactions with Ameriprise distinguishes this case from Protective Ins. Co. v. Cody, where insufficient personal jurisdiction was established due to minimal corporate engagement. In contrast, Ro maintained significant communication with the Minnesota headquarters, relying on its support and reputation. Additionally, unlike U.S. Fire, where the parties had weak connections regarding the dispute, Ro and Everest were actively engaged in discussions prior to the lawsuit's filing. The court acknowledges that while venue is proper under 28 U.S.C. § 1391(b)(2), the other subsections do not apply as Ro is not domiciled in Minnesota, and the case could be litigated in the Western District of Washington.
