United States District Court, M.D. Alabama, Eastern Division
REPORT AND RECOMMENDATION
A. BAKER UNITED STATES MAGISTRATE JUDGE.
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.
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).
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. (Doc. 24). Thereafter, NAC
filed a renewed motion to dismiss for lack of personal
jurisdiction. (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.
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).
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.
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).
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.
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.
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.
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,
Defendant's Renewed Motion to Dismiss
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 ...