When an auto accident insurance claim crosses state lines
After an insured writes an auto policy in one state, must the carrier defend the insurance after an accident in another state?
Geraldo A. Cardozo’s vehicle collided with a vehicle occupied by Jerzy and Sylvia Samelko in Stamford, Conn. The Samelkos were injured and sued Cardozo.
Cardozo notified his carrier, Kingstone Insurance Company, of the accident and the lawsuit, but Kingstone failed to defend him. Cardozo was found legally responsible after a default judgment was rendered against him, and Kingstone failed to indemnify Cardozo for the judgment.
The Samelkos then sued Kingstone in Connecticut state court, relying on Connecticut’s insurance subrogation law, which allows a party who has an unsatisfied judgment against an insured for bodily injury to step into the shoes of the insured and bring a claim under the insured’s policy directly against the insurer.
Kingstone, a company domiciled in New York, tried to dismiss the Samelkos’ action for lack of personal jurisdiction. It asserted that it did not do business in Connecticut and, therefore, was not subject to the state’s jurisdiction. Requiring Kingstone to defend the action in Connecticut would not comport with due process.
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In response, the Samelkos argued that the trial court had personal jurisdiction over Kingstone because their claims “[arose] out of a contract to be performed in this state.”
The trial court granted Kingstone’s motion to dismiss, reasoning that there was “no evidence” and “no authority” to support the Samelkos’ claims. The trial court found that the Samelkos had failed to prove that their action arose out of a contract to be performed in Connecticut.
Instead, the trial court was persuaded by the fact that Cardozo resided in New York, his vehicle was registered and garaged in New York, he maintained his driver’s license in New York, and the Kingstone insurance policy was sold, paid for, and written in New York at Kingstone’s principal place of business.
In short, the trial court found “no evidence [Kingstone] ever had notice, or even an inkling, that its insured was living in Connecticut” for purposes of due process analysis.
The Samelkos appealed, and the case was transferred to the Connecticut Supreme Court.
There, Kingstone contended that, even though its policy provided nationwide coverage, it was subject to personal jurisdiction in a Connecticut state court only if it actually performed under the policy in Connecticut.
For their part, the Samelkos asserted that Connecticut’s long-arm statute conferred jurisdiction over Kingstone as long as the insurance policy called for a performance in Connecticut.
Under its policy, Kingstone agreed to provide Cardozo with $100,000 of liability insurance for any one accident or loss occurring within the designated coverage territory of “the United States of America.”
Here’s what Connecticut law says
Connecticut’s subrogation law, Sec. 38a-321, provides:
Upon the recovery of a final judgment against any person … for loss or damage on account of bodily injury or death or damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment was not satisfied … such judgment creditor shall be subrogated to all rights of the defendant and shall have a right of action against the insurer to the same extent that the defendant in such action could have enforced his claim against such insurer had such defendant paid such judgment.
Final decision
The Connecticut Supreme Court reversed the trial court, holding that exercising personal jurisdiction over Kingstone was permitted by the corporate long-arm statute and comported with due process.
In its decision, the court first ruled that the phrase “to be performed” as used in the law referred to the performance that the parties contemplated in the contract, without regard to whether it actually had been performed.
As such, the court continued, whether Kingstone already had performed in Connecticut was “irrelevant.” Moreover, the court added, even though the insurance policy was contingent on a collision, which might never have occurred, that contingency did not negate the contemplation of Kingstone’s performance in Connecticut.
The court also said that, because the statute did not specify which party’s performance must be considered, it made no difference whether Cardozo (the insured), Kingstone (the insurer), or another party to the insurance contract was required to perform in Connecticut.
The court then held that the performance contemplated by Kingstone under the insurance policy — that is, to provide a defense and to indemnify Cardozo nationwide, including in Connecticut if he was involved in an accident there — was “sufficient to bring it within our long arm statute.” The court reasoned that the duty to provide a defense required “the engagement of counsel to undertake such tasks as interviewing and deposing Connecticut witnesses, meeting with opposing Connecticut counsel, and appearing in a Connecticut courtroom. Indemnifying the insured could include reimbursing a Connecticut citizen injured in this state for damages suffered in this state.” In other words, the court declared, because the contract expressly contemplated “providing a defense and indemnification in Connecticut,” it anticipated a “host of unavoidable performances in Connecticut.”
Therefore, the court ruled, the trial court — which had focused on the formation of the contract rather than where it had to be performed — had improperly determined that Kingstone was not subject to personal jurisdiction under Connecticut’s corporate long arm statute.
Finally, the court decided that exercising personal jurisdiction over Kingstone met the minimum contacts and reasonableness requirements of due process analysis. It concluded that because Kingstone “drafted an insurance policy expressly covering nationwide travel, it should have foreseen the need to defend and indemnify its insured as a result of collisions during nationwide travel.” Requiring Kingstone to defend itself in Connecticut comported with traditional notions of “fair play and substantial justice,” according to the court.
The case is Samelko v. Kingstone Ins. Co., No. SC 19964 (Conn. June 12, 2018).
Steven A. Meyerowitz, Esq., (smeyerowitz@meyerowitzcommunications.com) is director of FC&S Legal and editor-in-chief of Insurance Coverage Law Report.
See also:
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