Ferguson v. Aon Risk Servs. Cos.

ROBERT D. FERGUSON, et al., Plaintiffs, v. AON RISK SERVICES COMPANIES, INC., et al., Defendants.

Civil Action No. 19-9303 (FLW)(TJB)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

February 26, 2020

OPINION

WOLFSON, United States Chief District Judge:

This matter comes before the Court on a motion filed by defendants Aon Risk Services Companies, Inc. ("Aon Inc."); Aon Risk Services Central, Inc. ("Aon Central"); and Aon Risk Services Southwest, Inc ("Aon Southwest") (collectively, "Defendants" or "Aon¹"), to dismiss the Complaint filed by plaintiffs Robert D. Ferguson ("Ferguson"); Kansas International Corporation, Ltd., Bankruptcy Estate, a Finnish Corporation ("Kansas Intl"); and Impolex LLC's ("Impolex") (collectively, "Plaintiffs"), pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6). For the following reasons, Defendants' motion is GRANTED, and Plaintiffs' Complaint is dismissed for lack of personal jurisdiction.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

In addressing a motion to dismiss, this Court must accept the allegations from the plaintiff's complaint as true. See Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 457 (3d Cir. 2003);Dayhoff, Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996). Thus, the facts recited below are taken from Plaintiffs' Amended Complaint and do not represent this Court's factual findings.

a. The Relationship between Clarendon and Raydon

Plaintiffs are the former shareholders of Lion Holdings, Inc. ("Lion"), a holding company for two New Jersey-based insurance companies, Clarendon America Insurance Company and Clarendon National Insurance Company (collectively, "Clarendon"). See ECF No. 17, Am. Compl. ¶2. Plaintiffs allege that in the 1990s, Raydon Underwriting Management Company ("Raydon"), a Bermudan entity, and Clarendon collaborated to identify insurance and reinsurance business opportunities. Id. at ¶23. Raydon acted as managing general agent for Clarendon, and "[a]s part of its responsibilities, Raydon identified, evaluated, and recommended insurance and reinsurance business opportunities to Clarendon." Id. at ¶23. Clarendon was allegedly "the single largest source of Raydon's business." Id. at ¶27.

b. Aon Obtains a Professional Liability Policy for Raydon

As a condition of doing business, Clarendon, allegedly, required that Raydon comply with New Jersey's financial responsibility laws for insurance managing agents and obtain professional errors and omissions ("E&O") coverage liability insurance. Id. at ¶24. Plaintiffs assert that Raydon and its parent company, Stirling Cook Browne Holdings, Ltd ("SCBH"), hired Aon to put in place and manage an E&O liability insurance program. Id.

Aon PLC, a United Kingdom Company, is "one of the world's largest insurance brokerage firms, with offices throughout the United States and worldwide, including New Jersey," and is the parent company of various entities with the world "Aon" in their names, including Defendants in the instant action. Id. at ¶¶22,10. Plaintiff alleges that the all of Aon entities "operate as one" and "hold themselves out to the world as one entity." Id. at ¶¶10, 13. The defendants named in thisaction are the Aon entities which handled the policy placement, claims notification and related services for Raydon's E&O insurance during the relevant time period. Defendant Aon Risk Services is a Maryland corporation with its principal place of business in Chicago, Illinois. Id. ¶16. Aon Central is an Illinois corporation with its principal place of business in Chicago, Illinois. Id. at ¶17. It is also registered to transact business in New Jersey and maintains a designated agent for service of process in the state. Aon Southwest is a Texas corporation with its principal place of business in Dallas, Texas. Id. at ¶18.

At Raydon's request, Aon eventually put in place "a $50 million 'combined' liability insurance program," which included the E&O insurance. Id. at ¶24. During that process, Aon allegedly learned that the single largest source of Raydon's business was the Clarendon account. Id. at ¶25. Aon's files² also allegedly included a copy of SCBH's prospects for the company's initial public offering, which disclosed that "[t]he [c]ompany's managing general agencies market insurance products and programs developed by the Company on behalf of independent insurance carries, primarily Clarendon National Insurance Company and its affiliates." Id. at ¶27. SCBH's application for the E&O policy allegedly indicated that 81% of Raydon's business with admitted insurance carriers was placed through Clarendon. Id. at ¶28. Accordingly, Plaintiffs assert that Aon understood that Raydon's E&O policy was intended to benefit Clarendon. Id. ¶¶26-32.

c. Plaintiff's claims against Raydon

In 1993, Raydon recommended that Clarendon participate in a reinsurance program called "PA/LMX." Id. at ¶¶23,35. The PA/LMX program was "disastrous" for Clarendon and caused it to suffer significant losses. Id. at ¶¶37-38. In 1999, Lion and its subsidiaries including Clarendon,were sold to another entity. Id. at ¶39. As a result of the PA/LMX losses, the purchase price for Clarendon was allegedly reduced by $25 million and Clarendon agreed to indemnify the purchaser an additional $50 million of the PA/LMX losses. Id.

In August and September 1999, Clarendon sent Raydon three letters demanding that the company and/or its insurers indemnify Clarendon for the losses incurred as a result of Clarendon's involvement in the PA/LMX program. See ECF No. 28, Certification of Robert Leventhal, Exs. X, Letter dated 9/28/1999, W, Letter dated 9/30/1999. Raydon's risk manager allegedly forwarded two of the letters, and instructed Aon to notify all of Raydon's insurers of Clarendon's claims.³ Id. Exs, V, Letter dated 9/14/199 at 4; W, Letter dated 9/30/1999 at 2.

In connection with the sale of Clarendon, Plaintiffs agreed to indemnify Clarendon for losses stemming from the company's participation in the reinsurance program and were accordingly subrogated to Clarendon's professional malpractice claims against Raydon, in that regard. In 2011, Plaintiffs brought suit against Raydon in Bermuda, and obtained a judgement in excess of $92 million. Am. Compl. at ¶9. Because Raydon was unable to satisfy the default judgment, Plaintiffs sought to recover from Raydon's E&O professional liability policies. Id. at ¶¶41-42.

d. Plaintiffs' Attempt to Collect the Raydon Judgment

Thereafter, however, some of Raydon's insurers claimed that they did not receive timely notice of the claim and declined coverage. Id. at ¶42. Plaintiffs eventually settled with two of the excess insurers, ERSIC and Reliance, for "substantial discounts." Id. at ¶44.

Robert Jackson and Mark Hannington, the two Aon employees allegedly responsible for noticing Clarendon's claims, were deposed as part of the state court coverage action against Raydon's insurers, captioned Ferguson et al, v. Travelers Indemnity Company et al, New JerseySuperior Court, Mercer County Law Division, No. L-2911-11. See ECF No. 23-2, Certification of John-Paul Madden ("Madden Cert.") , Ex. 2, R. Deposition of R. Jackson ("Jackson Dep."); ECF No. 28-2, Certification of E,x. G., Deposition of Mark E. Hanington ("Hanington Dep."). Neither Mr. Hannington nor Mr. Jackson could explain why the excess insurers did not receive notice of Clarendon's claims.

Plaintiffs assert that their claims against Raydon were covered under the ERSIC and Reliance excess insurance polices, and would have been paid but for Aon's negligence in failing to notice the claims. Accordingly, Plaintiffs filed the instant lawsuit against Aon in New Jersey state court, which was removed to this Court in April 2019, asserting professional negligence and breach of contract claims. They also seek a declaratory judgment that Aon is liable to Plaintiffs for the reduced value of Plaintiffs' claims against the other insurers, as well as the discounted amount of the settlement with ERSIC and Reliance. In response to a prior motion to dismiss, Plaintiffs filed an Amended Complaint. Defendants now move to dismiss the Amended Complaint, based on lack of personal jurisdiction, improper venue, and for failure to state a claim. The Court addresses the jurisdictional question first.

II. DISCUSSION

Defendants move to dismiss this matter for, inter alia, lack of personal jurisdiction. Def. Br. at 9-21. Plaintiffs argue that this Court has jurisdiction over Defendants, based on two theories: jurisdiction by consent and specific jurisdiction.⁴ Pl. Br. at 15-21.

A. Standard of Review

When reviewing a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the Court must accept the plaintiff's allegations as true and resolve disputed facts in favor of the plaintiff. Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002). However, once a defendant has raised a jurisdictional defense, the plaintiff must "prove by affidavits or other competent evidence that jurisdiction is proper." Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009). If an evidentiary hearing is not held, a plaintiff "need only establish a prima facie case of personal jurisdiction." Id. A plaintiff meets this burden by "establishing with reasonable particularity sufficient contacts between the defendant and the forum state." Provident Nat. Bank v. California Fed. Sav. & Loan Assoc., 819 F.2d 434 (3d Cir. 1987). In order "[t]o meet that burden, [plaintiff] must 'establish [ ] jurisdictional facts through sworn affidavits or other competent evidence.' " Cerciello v. Canale, 563 F. App'x. 924, 925 n.1 (3d Cir. 2014) (quoting Miller Yacht Sales, Inc., v. Smith, 384 F.3d 93, 96 (3d Cir. 2004)). "Once the plaintiff has shown minimum contacts, the burden shifts to the defendant, who must show that the assertion of jurisdiction would be unreasonable." Ameripay, LLC v. Ameripay Payroll, Ltd., 334 F.Supp.2d 629, 633 (D.N.J. 200...