Wednesday, March 10, 2010

St. Paul Mercury Insurance Company v. American Bank Holdings, Inc., et al. (Maryland U.S.D.C.)

Filed: March 5, 2010.
Opinion by Judge Roger Titus.

Held: The U.S. District Court of Maryland may exercise personal jurisdiction over a non-resident defendant who enrolled foreign default judgments in Maryland.

Facts: The plaintiff initially sued American Bank Holdings, Inc., a Delaware corporation with its principal place of business in Maryland, in Illinois. On July 23, 2008, the Illinois court entered three default judgments against American. The plaintiff then enrolled the foreign default judgments in Maryland.

American notified its insurance carrier of the default judgments and moved to set aside the default judgments in Illinois. The motion was denied. The insurance carrier denied American's request for coverage and commenced a declaratory judgment action against American and the plaintiff. The plaintiff filed a motion to dismiss for lack of personal jurisdiction, contending he had insufficient contacts with the state.

Analysis: A federal court may exercise personal jurisdiction over a non-resident defendant if (1) the requirements of the forum state's long-arm statute are satisfied and (2) the exercise of jurisdiction comports with the Due Process Clause of the 14th Amendment.

Under Maryland's long-arm statute a court may exercise personal jurisdiction over a person that "transacts any business or performs any character of work in the State." There must be some act by which the defendant purposefully avails itself of the privilege of conducting activities in the State. Based on the similarities between the purposeful availment when a judgment creditor enrolls a foreign default judgment and when a litigant files a lawsuit, the Court found that the plaintiff transacted business and engaged in purposeful activity in Maryland. The plaintiff expressly invoked the "benefits and protections of Maryland's laws" by enrolling the foreign judgments. Therefore, the Court found it could exercise personal jurisdiction under Maryland's long-arm statute.

Due process allows personal jurisdiction over a non-resident defendant when the defendant has minimum contacts with Maryland, "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." According to the Court, jurisdiction was permitted because (1) the plaintiff could not reasonably argue that litigating in Maryland is burdensome when he enrolled the foreign judgments, (2) Maryland has an interest in adjudicating a matter involving a Maryland policy holder, (3) no other identifiable forum exists for the insurance company, (4) states have an interest in adjudicating claims in a single action, and (5) the only social policies involved in the action concerned a Maryland policyholder and its insurance company.

The opinion is available in pdf.

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