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Hawthorne v. Mid-Continent Casualty Co.

United States District Court, W.D. Washington, Seattle

April 4, 2017

PATRICIA S. HAWTHORNE, individually, and as assignee of Oklahoma Court Services, Inc., Plaintiff,
v.
MID-CONTINENT CASUALTY COMPANY, OKLAHOMA SURETY COMPANY, an Oklahoma Insurance Company, Defendant.

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

          ROBERT S. LASNIK, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This matter comes before the Court on defendant Oklahoma Surety Company's motion to dismiss under Rule 12(b)(2) for lack of personal jurisdiction (Dkt. # 9).[1] For the reasons set forth below, the Court denies the motion.

         II. BACKGROUND

         Oklahoma Court Services (“OCS”) provides probation and supervision services to Oklahoma state courts. Dkt. # 9 at 3. Beginning in September 2013, OCS had an insurance agreement with Oklahoma Surety Company (“Oklahoma Surety”). Dkt. # 14 at 4-7.[2] That general commercial liability policy provides that Oklahoma Surety has “a right and duty to defend” OCS against suits that seek damages resulting from events covered by the policy. Dkt. # 10-2 at 10, ¶ I.1.a. The policy covers “bodily injuries” resulting from an “occurrence” within the coverage territory. Dkt. # 10-2 at 7-8. The policy's coverage territory includes the entire United States. Dkt. # 10-2 at 21, ¶ V.4.a.

         In January 2014, Christopher A. Brown was convicted of burglary in Oklahoma and received a sentence of seven years' confinement, suspended, with two years' probation under OCS's supervision. Dkt. # 14 at 3. Per the conditions of Brown's probation, OCS allowed Brown to spend time in Washington while on probation on the condition that he check in with OCS weekly. Dkt. # 10-3 at 5, ¶ 9. While in Washington in March 2014, Brown assaulted and raped plaintiff Patricia Hawthorne. Dkt. # 14 at 4. Brown pleaded guilty to multiple serious charges in King County in September 2014. Dkt. # 15-3 at 10.

         In February 2016, plaintiff filed suit against OCS and Brown in King County Superior Court, alleging that OCS's negligence in monitoring Brown had caused her injuries. Dkt. # 15-1. In June 2016, citing the duty-to-defend clause in its insurance policy, OCS tendered its defense to Oklahoma Surety. Dkt. # 15-9 at 2. On August 3, 2016, a Senior Claim Manager for Mid-Continent Casualty Company (“Mid-Continent”) accepted the defense under a reservation of rights. Dkt. # 15-11 at 2. On August 16, 2016, however, the same claim manager informed OCS that the insurance policy did not cover plaintiff's damages claims against OCS. Dkt. # 15-12 at 2.

         Meanwhile, plaintiff and OCS agreed to mediate plaintiff's damages claims in Tacoma on November 22, 2016. Dkt. # 15-20 at 6; Dkt. # 14 at 11. Both Mid-Continent and OCS's professional liability insurer agreed to participate in the mediation. Dkt. # 15-20. During that mediation, Mid-Continent continued to deny coverage, and plaintiff and OCS agreed to enter into a covenant judgment[3] in which OCS would assign to plaintiff all claims against Mid-Continent arising from the insurance policy coverage dispute. See Dkt. # 15-21.

         On November 22, 2016, Oklahoma Surety filed a declaratory judgment action in Oklahoma state court, seeking a declaration that plaintiff's claims against OCS were not covered by OCS's insurance policy, and thus that Oklahoma Surety had no duty to indemnify or defend OCS. Dkt. # 10-5 at 5.

         On November 23, 2016, acting in her individual capacity and as assignee of OCS's insurance claims per the covenant judgment, plaintiff filed this action in King County Superior Court against Oklahoma Surety for bad faith, violation of Washington's Unfair Trade Practices Act, and breach of the contractual duties to defend, settle, and indemnify. Dkt. # 1-1.

         On December 5, 2016, in plaintiff's case against OCS in King County Superior Court, plaintiff and OCS stipulated to a judgment against OCS of $7.2 million, plus costs and attorney's fees. Dkt. # 15-22 at 3.

         On December 21, 2016, Oklahoma Surety removed this case to federal court. Dkt. # 1. After Oklahoma Surety filed this motion to dismiss for lack of personal jurisdiction, plaintiff amended her complaint to include additional facts regarding the corporate relationship between Oklahoma Surety and Mid-Continent. Dkt. # 13.

         III. ANALYSIS

         A. Personal Jurisdiction

         Given that defendant moves to dismiss under Rule 12(b)(2), plaintiff has the burden of demonstrating that the Court may exercise personal jurisdiction over defendant. Harris Rutsky & Co. Ins. Services, Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128-29 (9th Cir. 2003). The Court has not held an evidentiary hearing, so “the plaintiff need only make a prima facie showing of jurisdiction to avoid the defendant's motion to dismiss.” Id. at 1129. Plaintiff's version of the facts are taken as true, and “conflicts between the facts contained in the parties' affidavits must be resolved in [plaintiff's] favor for purposes of deciding” whether plaintiff has met her burden. Id. (Internal quotation marks and citations omitted).

         Due process requires a district court to have personal jurisdiction over a defendant in order to adjudicate a claim against it. Daimler AG v. Bauman, 134 S.Ct. 746, 753 (2014). Provided the long-arm statute of the state in which the Court sits permits the Court's exercise of personal jurisdiction, [4] there are two ways to establish that a defendant's due process rights ...


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