United States District Court, D. South Dakota, Southern Division
Terry BURKE as personal representative of the estate of Berniece Hermsen, and in his capacity as previous attorney in fact for Berniece Hermsen, Plaintiff,
ABILITY INSURANCE COMPANY, f/k/a Medico Life Insurance Company; Ability Resources, Inc.; Ability Resources Holdings, Inc.; Ability Reinsurance Holdings Limited, Bermuda; and Ability Reinsurance Limited, Bermuda, Defendants.
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[Copyrighted Material Omitted]
Michael Charles Abourezk, Abourezk Law Firm, Rapid City, SD, Seamus Culhane, Turbak Law Office, P.C., Watertown, SD, for Plaintiff.
Daniel F. Duffy, Gregory James Erlandson, Terry G. Westergaard, Bangs, McCullen, Butler, Foye & Simmons, Rapid City, SD, Angela C. Zambrano, Weil, Gotshal & Manges, LLP, Dallas, TX, Kevin F. Meade, Weil, Gotshal & Manges LLP, New York, NY, for Defendants.
MEMORANDUM OPINION AND ORDER
KAREN E. SCHREIER, District Judge.
Plaintiff, Terry Burke, personal representative of the estate of Berniece Hermsen, brought this claim against defendants alleging breach of contract, bad faith, fraud and misrepresentation, and RICO violations stemming from the scope of coverage
of Hermsen's long-term care insurance policy. Docket 31. Defendants, Ability Resources Holdings, Inc., Ability Reinsurance (Bermuda) Limited, and Ability Reinsurance Holdings Limited (collectively referred to as noncontracting defendants) move to be dismissed as parties to the action because they claim that personal jurisdiction cannot be asserted over them when they have no contacts with the state of South Dakota and the legal theories of piercing the corporate veil, alter ego, and agency do not apply. Docket 40. Burke resists that motion and claims that he can meet the personal jurisdictional threshold and establish minimum contacts. Docket 52. Ability Resources, Inc. (ARI), and Ability Insurance Company (AIC) move to dismiss any allegations in Burke's amended complaint relating to a civil RICO claim, and ARI moves to dismiss the breach of contract claim against it. Docket 44. Burke resists that motion. Docket 55.
Mutual Protective Insurance sold a policy of long-term care insurance to Hermsen, a South Dakota resident, in January of 2000. Docket 31 ¶ 5. Generally, Hermsen's policy required that nursing or long-term care benefits be given to an insured that meets the qualifications contained in the policy. Hermsen entered an assisted living facility on January 5, 2009. Docket 31 ¶ 19. She and her family  submitted a claim for benefits under her policy on January 13, 2009. Docket 31 ¶ 20. On February 27, 2009, Hermsen received a denial letter stating that she did not meet the eligibility requirements of her policy. Id. Specifically, Burke alleges that Hermsen's denial letter did not discuss the medical necessity provision/trigger in her policy and Ability did not consult Hermsen's treating physician on her need for care. Docket 52 at 22.
Hermsen's and many other insured's long-term care insurance policies were eventually acquired by Medico Life Insurance Company. Docket 31 ¶ 6. In September of 2007, Medico Life Insurance Company was acquired by ARI, and Medico became AIC. Docket 31 ¶¶ 6-7. While AIC is the entity that contracts with insureds to purchase insurance, AIC and its owner, ARI, have a number of related entities. Ability Resources Holdings, Inc. is the holding company for ARI. AIC contracts with Ability Reinsurance (Bermuda) Limited to act as a reinsurer of its risk, and AIC pays approximately 75 percent of its premium revenues to Ability Reinsurance (Bermuda) Limited as the payment for providing reinsurance. Docket 31 ¶ 9. Finally, Ability Reinsurance Holdings Limited is the holding company of Ability Reinsurance (Bermuda) Limited. Donald Charsky is the president and CEO of Ability Resources Holdings, the holding company above AIC and ARI. Michael Crow is the president and CEO of the Bermuda companies, Ability Reinsurance Holdings Limited and Ability Reinsurance (Bermuda) Limited.
All Ability entities are named defendants in this case. Burke alleges that defendants " are an association of entities acting together for the purpose of providing long-term care insurance under the name Ability Insurance and also act as the alter egos and/or agents of each other." Docket 31 ¶ 4.
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(b)(2), the court may dismiss an action for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). " To survive a motion
to dismiss for lack of personal jurisdiction, a plaintiff ‘ must state sufficient facts in the complaint to support a reasonable inference that [the defendants] can be subjected to jurisdiction within the state.’ " Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir.2004) (quoting Block Indus. v. DHJ Indus., Inc., 495 F.2d 256, 259 (8th Cir.1974)). If jurisdiction is denied or controverted, then the plaintiff carries the burden of showing such facts exist to support jurisdiction. Id.
To defeat a motion to dismiss based on personal jurisdiction, the plaintiff need only make a prima facie showing of jurisdiction. Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir.2003) (citation omitted). Plaintiff's prima facie showing of jurisdiction is not tested by the pleadings alone, but also " affidavits and exhibits presented with the motions and in opposition thereto." Dever, 380 F.3d at 1072 (quotation omitted). A court considering whether personal jurisdiction is proper " must view the evidence in the light most favorable to the plaintiff and resolve all factual conflicts in its favor in deciding whether the plaintiff made the requisite showing." K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir.2011).
When reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court assumes that all facts in the complaint are true and construes any reasonable inferences from those facts in the light most favorable to the nonmoving party. Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir.2008). To decide the motion to dismiss under Rule 12(b)(6), the court may consider the complaint, some materials that are part of the public record, or materials embraced by the complaint. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.1999). To survive the motion to dismiss, the complaint must contain " enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The factual content in the complaint must " allo[w] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Braden v. Wal-Mart Stores, 588 F.3d 585, 594 (8th Cir.2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)).
I. Minimum Contacts
" A federal court in a diversity action may assume jurisdiction over nonresident defendants only to the extent permitted by the long-arm statute of the forum state and by the Due Process Clause." Morris v. Barkbuster, Inc., 923 F.2d 1277, 1280 (8th Cir.1991). The South Dakota long-arm statute confers jurisdiction to the fullest extent possible under the Constitution, thus, the court's inquiry is whether this claim satisfies due process. Bell Paper Box, Inc. v. Trans W. Polymers, Inc., 53 F.3d 920, 921 (8th Cir.1995) (citations omitted); see also Minn. Mining & Mfg. Co. v. Nippon Carbide Indus., Inc., 63 F.3d 694, 697 (8th Cir.1995) (noting that if the state statute extends to the maximum length allowed under the Fourteenth Amendment, then the only inquiry is whether the exercise of personal jurisdiction meets the standards of due process).
For due process to be satisfied, a defendant must have minimum contacts with the forum state such that personal jurisdiction can be asserted over them. Myers v. Casino Queen, Inc., 689 F.3d 904, 910 (8th Cir.2012) (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). " Contacts with the forum state must be sufficient that
requiring a party to defend an action would not ‘ offend traditional notions of fair play and substantial justice.’ " Id. The necessary " substantial connection" between the forum state and defendant " must come about by an action of the defendant purposefully directed toward the forum State.' " Id. (quoting Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987)).
The United States Supreme Court has noted that two types of personal jurisdiction may exist over a party: general and specific. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). General jurisdiction means that the party has contacts with the forum that are so " continuous and systematic" that they do not have to arise out of the party's contacts with the forum or the cause of action itself. Id. at 415, 104 S.Ct. 1868. The court can also have specific jurisdiction over a defendant, which " unlike general jurisdiction, requires a relationship between the forum, the cause of action, and the defendant." Myers, 689 F.3d at 912 (citing Helicopteros, 466 U.S. at 414, 104 S.Ct. 1868).
The Eighth Circuit Court of Appeals asks courts to consider the following factors for their personal jurisdiction determination: " ‘ (1) the nature and quality of [a defendant's] contacts with the forum state; (2) the quantity of such contacts; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) [the] convenience of the parties.’ " Dever, 380 F.3d at 1073-74 (quoting Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th ...