Greenwell v. Auto-Owners Insurance
182 Cal. Rptr. 3d 873
Cal. Ct. App.2015Background
- California resident Jacob Greenwell, Jr. (doing business as Greenwell Properties in Tracy, CA) purchased an Arkansas apartment building and obtained a tailored commercial insurance policy from Auto-Owners (a Michigan insurer) through an Arkansas agent.
- Policy included commercial property coverage (primarily for the Arkansas building) and commercial general liability coverage (territory: U.S./Puerto Rico/Canada); premiums and most correspondence were sent from Greenwell’s California address.
- Two fires damaged the Arkansas building on consecutive days in June 2010; insurer initially treated them as separate losses, then later asserted a single policy limit applied.
- Greenwell sued Auto-Owners in San Joaquin County, CA for breach of contract and bad faith. Auto-Owners moved to quash for lack of personal jurisdiction, arguing it did no business in California other than this one policy.
- Trial court granted the motion to quash; Greenwell appealed. The Court of Appeal affirmed, finding specific jurisdiction lacking despite purposeful availment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether California has specific personal jurisdiction over Auto-Owners | Greenwell: insurer purposefully availed itself of California by contracting with him, accepting premiums from CA, and providing coverage that could apply to California risks | Auto-Owners: it does no business in CA (only this one policy obtained in AR); the loss occurred in AR, so ties to CA are insufficient | Held: Purposeful availment satisfied (contract with CA resident and coverage could apply in CA), but no substantial nexus between CA contacts and the Arkansas loss; specific jurisdiction denied |
| Whether McGee controls (i.e., policy delivery/premiums in forum suffice) | Greenwell: McGee is analogous—policy delivered to CA, premiums mailed from CA, CA resident disadvantaged if forced to litigate elsewhere | Auto-Owners: McGee is distinguishable—McGee involved a life policy on a CA risk and solicitation into CA; here policy primarily insured AR property and was obtained via AR agent | Held: McGee distinguished; differences (solicitation, location of insured risk/events) make McGee inapplicable |
| Whether the relatedness/substantial-nexus requirement is met | Greenwell: the operative facts arise from the contract (issued to him in CA), so the claim is related to insurer’s CA contacts | Auto-Owners: the suit concerns AR fires and AR-based investigation/witnesses; CA contacts are incidental | Held: The claim lacks a substantial connection to Auto-Owners’ California contacts under Vons; mere contractual contact plus incidental coverage potential is insufficient |
| Whether exercising jurisdiction would be fair and reasonable | Greenwell: litigating in CA protects CA resident and is foreseeable from contract | Auto-Owners: burden/unfair because key witnesses and events are in AR and insurer does no other CA business | Held: Because nexus fails, court did not reach the full reasonableness balancing; jurisdiction would violate due process under specific-jurisdiction analysis |
Key Cases Cited
- McGee v. International Life Ins. Co., 355 U.S. 220 (U.S. 1957) (policy delivered and premiums paid in forum supported jurisdiction where insured risk and events were tied to forum)
- Vons Companies, Inc. v. Seabest Foods, Inc., 14 Cal.4th 434 (Cal. 1996) (specific jurisdiction requires purposeful availment and a substantial nexus between forum contacts and the claim)
- Hanson v. Denckla, 357 U.S. 235 (U.S. 1958) (defendant must purposefully avail itself of forum by invoking benefits/protections of its laws)
- Gilmore Bank v. AsiaTrust New Zealand Ltd., 223 Cal.App.4th 1558 (Cal. Ct. App. 2014) (articulation of three-prong specific-jurisdiction test and burden allocation)
- Snowney v. Harrah’s Entertainment, Inc., 35 Cal.4th 1054 (Cal. 2005) (discussion of relatedness/substantial nexus in specific-jurisdiction analysis)
- Southern Machine Co. v. Mohasco Indus., 401 F.2d 374 (6th Cir. 1968) (articulated the proposition that a cause of action arises from forum contacts unless operative facts are unrelated)