Great N. Ins. Co. v. BMW of N. Am., LLC

GREAT NORTHERN INSURANCE COMPANY a/s/o HARLAN KENT and PATRICIA KENT, Plaintiff, v. BMW OF NORTH AMERICA, LLC, Defendant/Third-Party Plaintiff, v. PIERBURG GMBH and PIERBURG PUMP TECHNOLOGY GMBH, Third-Party Defendants.

No. 15-cv-00416 (VAB)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

March 25, 2018

RULING AND ORDER ON MOTION TO DISMISS

Great Northern Insurance Company ("Plaintiff" or "Great Northern"), the insurer of real or personal property owned by the insureds, Harlan Kent and Patricia Kent ("the Kents"), has sued BMW of North America, LLC ("Defendant," "Third-Party Plaintiff," or "BMW LLC") and BMW LLC's suppliers of auxiliary coolant pumps, Pierburg GMBH and Pierburg Pump Technology GMBH ("Third-Party Defendants" or "Pierburg Entities"). Great Northern's Amended Complaint alleges negligence, strict liability, and breach of warranty.

The Pierburg Entities now move to dismiss Great Northern's Amended Complaint, as well as BMW LLC's Cross-Claim and Third-Party Complaint against the Pierburg Entities, arguing that this Court lacks personal jurisdiction over them.

For the reasons that follow, the motions are DENIED.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. FACTUAL ALLEGATIONS

The Kents own a 2012 BMW 750i ("BMW"), a house, and other real and personal property. Pl.'s Am. Compl. ¶¶ 9-10. Great Northern maintains that the Kent's BMW model was the subject of a product recall related to an increased risk of fire because of a defective auxiliary coolant pump. Id. ¶ 11.

On February 5, 2014, the Kents allegedly returned home in their BMW from a trip to Massachusetts, and parked their car in their garage. Id. ¶ 12. Sometime later, the car allegedly caught fire, and eventually the entire BMW became engulfed in flames. Id. ¶ 14. The fire and resulting smoke allegedly spread throughout the garage, to an Audi A6 car also parked there as well as to a snow blower also in the garage. Id. ¶¶ 14, 16-18. The smoke from the burning vehicles also affected the rest of the house. Id. ¶ 19.

Expert investigator(s) allegedly concluded that the fire was consistent with similar fires involving defective auxiliary pumps. Id. ¶ 24. Great Northern alleges that the Kents and any prior users of the BMW used the car for reasonable, foreseeable, and intended purposes, and their acts or omissions were neither the proximate, direct, nor contributory causes of the fire. Id. ¶ 25.

Under the terms of the insurance agreement with the Kents, Great Northern made payments in the amount of $339,428.21, as compensation for the damages to the house, garage, and personal property, and in the amount of $108,363.30 as compensation for the damage to the cars, for a total of $447,791.52, allegedly the full amount to which Great Northern is subrogated at law and entitled to recover. Id. ¶¶ 9, 26. The Kents also allegedly suffered a loss of $1,000.00 due to the policy deductible. Id. ¶ 27.

BMW LLC maintains that the Pierburg Entities are the upstream supplier of the car's allegedly defective auxiliary coolant pump and that the Pierburg Entities are parties to a supplier contract with Bayerische Motoren Werke Aktiengesellschaft ("BMW AG"), the parent company of BMW LLC ("Supplier Contract"). Def.'s Cross-cl. ¶¶ 5-6; see also Def.'s Third-Party Compl. ¶ 14.

The Supplier Contract includes a November 21, 1995, Warranty Agreement between BMW AG, its associated companies, and Kolbenschmidt AG¹ and BMW AG. BMW's Opp'n Br. at 4. The Warranty Agreement states:

In amending Section 14.3 of the BMW Purchasing Conditions, the Parties agree to the following:

If one of the Contractual Partners or an indemnifiable member of its distribution network abroad is alleged to be liable for personal injury and/or property damage due to a production defect (product-liability claim), then this Contractual Partner may, at its own discretion, also assert claims for indemnity and full or partial recourse against the other Contractual Partner at the court of jurisdiction of the main claim. This right also applies to the substantive law of the respective court of jurisdiction.

Id. (quoting 1995 Warranty Agreement § 7, BMW's Opp'n Br., Ex. A, ECF No. 68-2).

The July 15, 1996, Warranty Agreement between BMW AG and Pierburg AG similarly states:

In amending Section 14.3 of the BMW Purchasing Conditions, the parties agree to the following:

If a contractual partner or an indemnifiable member of its distribution network abroad is alleged to be liable for personal injury and/or property damage due to a production defect (product-liability claim), this contractual partner may, at his own discretion, assert claims against the other contractual partner for indemnity and full or partial recourse also at the jurisdiction of the main claim. This right also applies to the substantive law of the respective court of jurisdiction.

Id. (quoting 1996 Warranty Agreement § 7, BMW Opp'n Br., Ex. B, ECF No. 68-2).

The July 1, 2012, Warranty Agreement—the most current warranty agreement among BMW AG, the Pierburg Entities, and others²—contains a forum-selection clause that states:

Claims in connection with product liability, irrespective of their legal basis, remain unaffected by this agreement.

Should a third party make a legal claim on BMW or a company affiliated with BMW (§ 15 AktG, German Stock Companies Act) for compensation for personal and/or material damage, BMW may also take the necessary procedural steps at the relevant place of jurisdiction in order to enforce its claims against the Contractor. In such a case, the law applicable to the place of jurisdiction shall exclusively apply with regard to the parties' rights and obligations.

Id. at 5 (quoting 2012 Warranty Agreement § 7, BMW Opp'n Br., Ex. C, ECF No. 68-2) (collectively "the Warranty Agreements").

Furthermore, the Preamble of the July 1, 2012 Warranty Agreement states that it supersedes and replaces all prior agreements. Id. at 6 (citing 2012 Warranty Agreement § 7).

B. PROCEDURAL BACKGROUND

On March 22, 2015, Great Northern filed a Complaint against BMW LLC. ECF No. 1. BMW LLC answered on April 14, 2015. ECF No. 9.

On January 27, 2017, Great Northern filed an Amended Complaint against BMW LLC and joined the Pierburg Entities. ECF No. 34.

BMW LLC then filed a Third-Party Complaint against the Pierburg Entities. ECF No. 35. The Third-Party Complaint alleges four counts against the Pierburg Entities as the alleged upstream supplier of the defective auxiliary coolant pump contained within the subject vehicle.Third-Party Compl. ¶¶ 11-12. The Third-Party Complaint alleges contract and common-law indemnity claims. Id. ¶¶ 13-16, 17-20.

BMW LLC also answered Great Northern's Amended Complaint asserting cross-claims against the Pierburg Entities. ECF No. 36. The cross-claim against the Pierburg Entities alleges four counts of common-law and contractual indemnity. See generally Def.'s Cross-cl. ¶¶ 9-14.

II. STANDARD OF REVIEW

On a motion to dismiss under Rule 12(b)(2) of the Federal Rules of Civil Procedure for lack of personal jurisdiction, a "plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Radwan v. Univ. of Connecticut Bd. of Trustees, No. 3:16-cv-2091 (VAB), 2017 WL 6459799, at *3 (D. Conn. Dec. 14, 2017) (citing In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir. 2003)). Prior to discovery, a plaintiff challenged by a jurisdiction-testing motion may defeat the motion by pleading in good faith legally sufficient allegations of jurisdiction. Id.

"At that preliminary stage, the plaintiff's prima facie showing may be established solely by allegations." Id. (citing Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)). Such allegations must be made through the plaintiff's "own affidavits and supporting materials." Id. (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). In deciding a 12(b)(2) motion to dismiss, a court must construe the pleadings and affidavits in the light most favorable to the plaintiff, resolving all doubts in the plaintiff's favor. Id. (citing See A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993)).

In a diversity action, the amenability of a foreign corporation to suit in federal court is determined in accordance with the law of the state where the court sits; Connecticut law therefore is applies to this case. See Moreno v. Aerostar Airport Holdings, LLC, No. 3:15-cv-1194 (VAB), 2016 WL 5844464, at *2 (D. Conn. Sept. 30, 2016) (citing Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963)). In Connecticut, "a trial court may exercise jurisdiction over a foreign defendant only if the defendant's intrastate activities meet the requirements both of [the state's long-arm] statute and of the due process clause of the federal constitution." Id. (citing Thomason v. Chem. Bank, 661 A.2d 595, 598 (Conn. 1995)). The court will address the question of whether it would offend due process to assert jurisdiction only after determining that jurisdiction is statutorily permissible. Id. (citing Lombard Bros., Inc. v. Gen. Asset Mgmt. Co., 460 A.2d 481, 484 (Conn. 1983)).

The trial court must accept all undisputed factual allegations for the purpose of determining personal jurisdiction. Id. (citing Pitruzello v. Muro, 798 A.2d 469, 473 (Conn. App. Ct. 2002)). If a plaintiff's factual allegations are disputed, however, the Court cannot "avoid scrutiny of the plaintiff's affidavit to determine whether it [can] provide a sufficient basis for the court to assume . . . jurisdiction." See id. (quoting Pitruzello, 798 A.2d 469, 473 (Conn. App. Ct. 2002)) (approving of a trial court's decision not to exercise jurisdiction over a defendant because even though plaintiff's allegations, "standing alone, might have provided a basis for assuming personal jurisdiction," they "were not supported by [the plaintiff's] affidavit and [had] been contradicted by [the defendant's] affidavit"); see also Chirag v. MT Marida...