Mr. Cardozo was found legally responsible after a default judgment was rendered against him. Mr. Samelko was awarded $126,839.93 and Ms. Samelko was awarded $10,852.

Kingstone failed to indemnify Mr. Cardozo for the judgment rendered against him.

The Samelkos then sued Kingstone in a Connecticut state court, relying on Connecticut's insurance subrogation statute, Connecticut General Statutes Section 38a-321, 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. The Samelkos claimed breach of contract, breach of the covenant of good faith and fair dealing, negligence, conversion, unfair claims settlement practices, unfair trade practices, and unjust enrichment.

Kingstone, a company domiciled in New York, moved to dismiss the Samelkos' action for lack of personal jurisdiction. It asserted that it did not do business in Connecticut and, therefore, it was not subject to the state's long arm statute, Connecticut General Statutes Section 33-929(f)(1), and that requiring it to defend the Samelkos' action in Connecticut did not comport with due process.

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. Specifically, the trial court found that the Samelkos had failed to meet their burden of providing evidence that their action arose out of a contract to be performed in Connecticut. Instead, the trial court was persuaded by the fact that Mr. 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 Connecticut Supreme Court transferred the appeal to itself.

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.

The Kingstone Policy

Under its policy, Kingstone agreed to provide Mr. Cardozo with $100,000 of liability insurance for any one accident or loss occurring within the designated coverage territory of:

[t]he United States of America. 

Connecticut's subrogation law, General Statutes Section 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.

Connecticut's long arm statute, Section 33-929(f)(1), provides for jurisdiction over a foreign corporation on any cause of action arising out of any contract:

to be performed in this state

The Connecticut Supreme Court's Decision

The court reversed, holding that exercising personal jurisdiction over Kingstone was permitted by Connecticut's 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 Section 33-929(f)(1) 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 Mr. Cardozo (the insured), Kingstone, or another party to the insurance contract was required to perform in Connecticut.

The court then held that the performance contemplated by Kingstone in Connecticut under the insurance policy – that is, to provide a defense and to indemnify Mr. 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). Attorneys involved include: John L. Cordani, Jr., for the appellants (plaintiffs). Regina P. Armon, with whom was Michele C. Wojcik, for the appellee (defendant).

FC&S Legal Comment

It is worth noting that the Supreme Court of Connecticut suggested that it might reach a different result if the issue involved uninsured and underinsured motorist coverage rather than liability coverage. It said that it agreed with Kingstone that, “most likely,” an insurer's promise under an uninsured motorist policy was not “to be performed” under Section 33-929(f)(1) in Connecticut where an accident occurred because that type of policy promised only to make the insured whole. Of course, how the court will decide the personal jurisdiction question if directly faced with it remains to be seen.

It also is worth noting that other courts have reached the same conclusion when examining whether to exert personal jurisdiction over nationwide insurers that did not otherwise do any business in the forum.

For example, in Rossman v. State Farm Mutual Automobile Ins. Co., 832 F.2d 282 (4th Cir. 1987), the U.S. Court of Appeals for the Fourth Circuit considered whether there was personal jurisdiction over an insurer that contracted to defend and indemnify its insured nationwide when the collision at issue occurred in a state where the insurer otherwise did no business. The Fourth Circuit concluded that, in such circumstances, the district court's exercise of personal jurisdiction over the insurer comported with the due process clause. The Fourth Circuit reasoned that when an insurer “specifically promise[s] to defend its policyholders from any claim or [action] arising from a loss or accident within [the] United States,” its “expectation of being haled into court in a foreign state is an express feature of its policy.”

The Fourth Circuit also explained that, because “an automobile liability policy is typically sued upon where an accident takes place,” insurers should anticipate that insureds will travel to other states within the coverage territory “and become involved in accidents and litigation there.” (Internal quotation marks omitted.) This was because “[i]nsurance by its nature involves the assertion of claims, and resort to litigation is often necessary.” (Internal quotation marks omitted.) After all, nationwide coverage was “basic to the product that [the defendant insurer] markets.”

The U.S. Court of Appeals for the Ninth Circuit has ruled similarly. That court reasoned that “an insurer has the contractual ability to control the territory into which its product – the indemnification and defense of claims – will travel,” and, therefore, “litigation requiring the presence of the insurer is . . . foreseeable . . . .” (Internal quotation marks omitted.) Farmers Ins. Exchange v. Portage La Prairie Mutual Ins. Co., 907 F.2d 911, 914 (9th Cir. 1990).

Other jurisdictions agree with these decisions, including the U.S. Courts of Appeals for the Sixth, Eighth, Tenth, and Eleventh Circuits. See, e.g., TH Agriculture & Nutrition, LLC v. Ace European Group, Ltd., 488 F.3d 1282, 1290-91 (10th Cir. 2007); McGow v. McCurry, 412 F.3d 1207, 1214-15 (11th Cir. 2005) (claim involved uninsured motorist coverage, but long arm statute conferred personal jurisdiction to the maximum extent permitted by the due process clause of the U.S. Constitution); Ferrell v. West Bend Mutual Ins. Co., 393 F.3d 786, 790-91 (8th Cir. 2005); Payne v. Motorists' Mutual Ins. Cos., 4 F.3d 452, 455-56 (6th Cir. 1993).

Compare, Batton v. Tennessee Farmers Mutual Ins. Co., 736 P.2d 2 (Ariz. 1987) (insurer's “agreement to defend and indemnify [its insured] in any state does not imply an agreement to allow its own insured to bring [an action] in any state.”).