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Frost v. North American Capacity Insurance Co.

United States District Court, M.D. Alabama, Eastern Division

April 20, 2018




         Plaintiff, Kristopher Frost (“Frost”), sues Defendant, North American Capacity Insurance Co. (“NAC”), for breach of contract, fraud, misrepresentation, breach of the duty of good faith and fair dealing, and bad faith. (Doc. 1). Frost alleges he was a star football player for Auburn University who chose to forego the 2015 National Football League (NFL) draft to return to Auburn University for the 2015 football season. To protect himself from potential economic consequences in the event of an injury, Frost obtained a loss of value and disability policy of insurance from NAC. After suffering multiple injuries during the 2015 college football season, Frost made a claim on the subject policy. Frost alleges NAC failed to provide benefits under the policy. Before the court is Defendant North American Capacity Insurance Co.'s Renewed Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 29), Plaintiff's response in opposition (Doc. 32), and Defendant's reply (Doc. 33). For the reasons set forth below, it is recommended that NAC's motion (Doc. 29) be denied.

         I. Jurisdiction

         Frost's complaint seeks to invoke the court's diversity jurisdiction pursuant to 28 U.S.C. § 1332. NAC contends the court lacks personal jurisdiction over it. On September 20, 2017, the above-styled matter was referred to the undersigned for recommendation on all pretrial matters by United States District Judge W. Keith Watkins. (Doc. 22); see also 28 U.S.C. § 636(b); Rule 72, Fed. R. Civ. P.; United States v. Raddatz, 447 U.S. 667 (1980); Jeffrey S. v. State Bd. of Educ. of State of Ga., 896 F.2d 507 (11th Cir. 1990).

         II. Procedural History

         On May 26, 2017, Frost filed suit against NAC in a five-count complaint seeking compensatory and punitive damages for NAC's alleged failure to perform under the subject policy of insurance. (Doc. 1). NAC filed a motion to dismiss for lack of personal jurisdiction and improper venue. (Doc. 18). The motion sought dismissal, or alternatively transfer, of the case to the District Court in New Jersey. In response, Frost filed a memorandum in opposition, an affidavit, and a copy of the subject policy. See (Docs. 20, 20-1, 20-2). After a hearing on the matter, this court entered an order denying without prejudice NAC's motion and directed the parties to conduct discovery targeted to the issue of NAC's personal jurisdiction.[1] (Doc. 24). Thereafter, NAC filed a renewed motion to dismiss for lack of personal jurisdiction.[2] (Doc. 29). In support, NAC submitted the declaration of Jonathan Cole, “Head Contingency and Sports Personal Accident for Swiss Re Corporate Solutions, ” (Doc. 29-1) and the affidavit of Deryck Malone, “Chief Financial Officer for North American Capacity Insurance Company” (Doc. 29-3). Frost filed a memorandum in opposition (Doc. 32), and NAC replied (Doc. 33).

         III. Background Facts

         Frost, currently a resident of Georgia, alleges that on January 18, 2011, he committed to play football at Auburn University, which is located in Lee County, Alabama. (Doc. 1, ¶¶7, 8). Auburn University is a member of the Southeastern Conference, Division I, of the National Collegiate Athletic Association (“NCAA”). Id. at ¶7. After the 2014 college football season, Frost was named an exceptional student-athlete by the NCAA, and this designation encouraged him to forego entry in the 2015 NFL draft. Id. at ¶8. Frost alleges he was predicted to be an early-round NFL draft pick, but chose to stay at Auburn University for the 2015 college football season. Id.; see also (Doc. 20-1, ¶3).

         The designation as an exceptional student-athlete qualified Frost to purchase loss of value and disability insurance to protect him from disabling injury during the upcoming 2015 college football season. (Doc. 20-1, ¶3). Prior to the 2015 college football season, Frost was contacted by Ronnie Kaymore (“Kaymore”), an independent insurance agent, seeking to sell him a loss of value and permanent disability policy of insurance. Id., ¶5. Frost understood that the policy of insurance would be issued by Defendant, NAC, and that Kaymore represented the interests of NAC. Id., ¶4.

         Frost alleges that NAC is a New Hampshire corporation and a subsidiary of Westport Insurance Company, which operates as a subsidiary of Swiss Re Corporate Solutions Global Markets, Inc. (Doc. 1, ¶2). Frost entered into a contract and obtained a policy of loss of value and disability insurance from NAC. Id., ¶10; see also (Doc. 1-1). The subject policy, which had an effective date of September 1, 2015 through August 1, 2016, provided benefits for loss of value and permanent total disability in the amounts of $2, 000, 000 and $2, 000, 000, respectively. (Doc. 1, ¶10). The last page of the policy is signed by both the president and secretary of NAC. (Doc. 1-1 at 21).

         On the Sports Insurance Proposal Form, Frost specifically identified himself as an Auburn University football player. (Doc. 1, ¶14). Frost alleges that NAC knew at all times that he was a student-athlete at Auburn University. Id. Frost's only relationship with Kaymore was as a prospect being sold an insurance policy; he had no prior relationship with him. (Doc. 20-1, ¶¶4, 5). Frost did not know Kaymore lived in New Jersey. Id., ¶4. All communications with Kaymore occurred while Frost was in Auburn, Alabama, and Frost signed all documents related to the contract in Auburn. Id, ¶¶5, 7. All paperwork went through the Auburn compliance office, and Frost's point of contact for communication regarding the disability policy was the Auburn compliance office. Id., ¶7.

         Before and after the 2015 football season, Frost sought treatment from healthcare providers in Alabama. Id., ¶11. During the 2015 college football season, Frost suffered a number of injuries in Auburn, Alabama, and was treated by the medical and training staff of Auburn University. Id., ¶10. All of the medical records related to his injuries are located in Alabama. Id. Frost has no connection with the State of New Jersey. Id., ¶12. He has never lived or owned property in New Jersey, and has never even been there. Id.

         NAC is a surplus lines insurer incorporated in New Hampshire that operates on a non-admitted basis in all 50 states. (Doc. 29-3, ¶¶2, 3). Its home office is located in New Hampshire, and it does not maintain any corporate office in Alabama. Id., ¶4. From 2014 through 2016, NAC wrote the following direct premium risks in Alabama: $981, 911 in 2014; $484, 298 in 2015; and $1, 890, 844 in 2016. Id., ¶5. In the same years, NAC wrote the following total premiums nationwide: $155, 424, 283 in 2014; $148, 603, 522 in 2015; and $159, 414, 506 in 2016. Id., ¶6.

         NAC states it never entered into an agency agreement with Kaymore or International Specialty Insurance, Inc.; Kaymore was not authorized to act as its agent; nor was International Specialty authorized to bind NAC. (Doc. 29-1, ¶¶3-8).

         IV. Defendant's Renewed Motion to Dismiss

         NAC filed a renewed motion to dismiss for lack of personal jurisdiction. NAC argues it has never directed activities in Alabama, nor sought to invoke the privileges of Alabama's laws. Because it was not incorporated in Alabama, does not have its “nerve” center there, and does not conduct virtually all of its business in Alabama, NAC contends that it cannot be subject to general jurisdiction in Alabama. Additionally, NAC ...

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