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A worldwide retailer’s complaint against its insurer will not continue in Indiana state court after the Court of Appeals of Indiana affirmed dismissal for lack of personal jurisdiction.
Tom James, a worldwide clothing manufacturer, has “executive offices” in Indianapolis, while its executive officers and board members are located in offices in Tennessee, Indiana and Maryland. The remaining plaintiffs are subsidiaries of Tom James, none of which are located or incorporated in Indiana.
Zurich American Insurance Company is incorporated in New York, with its principal place of business in Illinois. The company issues insurance polices to customers across the U.S., including in Indiana.
In 2019, the Tennessee office of insurance broker Arthur J. Gallagher Risk Management Services Inc. communicated with Zurich on behalf of Tom James to obtain the “Zurich EDGE Global Policy.” The policy was issued to Tom James in Tennessee.
Appendix E to the policy is a “Schedule of Locations” that identifies the reported business income of many Tom James locations and whether business interruption coverage was purchased for each location. The schedule included over 120 locations around the world, including one in Indiana.
In April 2020, Tom James filed a complaint against Zurich in Marion Superior Court, alleging that Marion County was the preferred venue because of the Indianapolis executive office.
The complaint also alleged that due to the COVID-19 pandemic, many Tom James locations around the world had to close, which caused disruptions and financial losses, although the complaint didn’t allege loss in any specific location.
The complaint sought a judgment declaring the scope of Zurich’s obligation to pay Tom James for its losses under the policy.
In May 2020, Zurich filed a notice of removal of the lawsuit from state court to federal court based on alleged diversity of citizenship. In the federal court, Zurich filed a motion to dismiss the claims of all the Tom James subsidiary plaintiffs based on alleged lack of personal jurisdiction.
In June 2020, the federal district court ordered Zurich to show cause why the action should not be remanded back to state court due to a lack of the federal court’s subject-matter jurisdiction based on diversity of citizenship. Tom James filed a motion to remand the cause back to state court, as well as its response to Zurich’s motion to dismiss.
In November 2020, the court granted Tom James’ motion to remand the matter back to state court. Zurich then filed a motion in state court to dismiss the claims for lack of personal jurisdiction.
Following a hearing at which the trial court heard arguments on the motion to dismiss, it granted Zurich’s motion and dismissed the lawsuit for lack of personal jurisdiction.
Tom James appealed, bringing four issues to the appellate court.
First, it argued that Zurich had waived its right to raise a personal jurisdiction defense. But the Court of Appeals disagreed.
“By omitting the highly relevant facts that it is headquartered in Tennessee and that its officers/board members are located not just in its ‘executive offices’ in Indiana but also in Tennessee and Maryland, Tom James’ complaint misleadingly suggests its principal place of business is Indiana — a misleading suggestion Zurich appears to have relied upon when it failed to include Tom James Company in its motion to dismiss for lack of personal jurisdiction in federal court,” Judge L. Mark Bailey wrote. “Tom James provides no cogent reason why it should benefit from its own true but critically incomplete statements relevant to jurisdiction.”
The second issue the appellate court addressed was whether the trial court lacked specific personal jurisdiction over Zurich under the “minimum contacts” analysis.
The court found there is no specific personal jurisdiction in Indiana.
“In short, no party to this lawsuit is a citizen of Indiana, the Policy was not entered into in Indiana, and the claimed injury did not arise in Indiana,” Bailey wrote. “Zurich did not ‘reach out’ to Indiana to enter into the Policy at issue in this case, and Tom James’ claims under the Policy do not arise out of or relate to Zurich’s contacts with Indiana.”
Next, Tom James argued Zurich consented to personal jurisdiction by executing documents to transact business in Indiana per Indiana Code § 27-1-17-4(7).
“Tom James essentially asserts that compliance with that statute operates as a consent to jurisdiction even as to insurance contracts that are not made within Indiana or with residents of Indiana. We disagree, as our Supreme Court has specifically held otherwise regarding a prior statute that used exactly the same statutory language as is used currently in Indiana Code Section 27-1-17-4(7),” Bailey wrote, citing Gen. Am. Life Ins. Co. v. Carter, 222 Ind. 557, 54 N.E.2d 944 (1944).
Lastly, Tom James argued Zurich consented to personal jurisdiction in the “Jurisdiction Clause” of the insurance policy between the parties.
Rejecting that argument, as well, the COA held, “… (T)hat Clause, by its plain terms, was intended to limit lawsuits to courts in the United States, as opposed to the courts of other countries where a cause of action might arise in Tom James’ world-wide business.”
“There is nothing in the Policy clearly indicating a ‘high probability’ that the parties intended the words ‘court of competent jurisdiction’ to have any meaning other than its ordinary legal significance, i.e., any court (in the United States) with both subject-matter and personal jurisdiction,” Bailey concluded.
Judges Elizabeth Tavitas and Dana Kenworthy concurred in Tom James Company, et al. v. Zurich American Insurance Company, 23A-PL-106.
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