Civil Practice – Personal Jurisdiction – North Carolina Declaratory Judgment Act – Foreign Corporations

Exercise of general personal jurisdiction over defendant insurers is proper.

We deny motion to dismiss, in part, for lack of personal jurisdiction.

This matter was primarily an insurance coverage dispute concerning whether defendants, insurance companies that issued insurance policies to plaintiffs, owe coverage obligations to plaintiffs. Specifically, plaintiffs sought a declaration that defendant insurers have certain duties under the policies with respect to nearly 800 underlying lawsuits brought by governmental entities, third-party payors, and individuals seeking damages related to injuries allegedly caused by plaintiffs’ distribution and dispensing of opioid drugs.

At this stage, we were presented with preliminary questions. First, we had to determine whether it is proper to exercise personal jurisdiction over the 35 foreign insurance company defendants. In doing so, we were in the rare position of needing to address and apply recent U.S. Supreme Court precedent to the facts of this case. Next, we had to address whether, under the North Carolina Declaratory Judgment Act, we should exercise our discretion to refuse to render a declaratory judgment as to the liabilities and obligations of defendants, if any. Finally, we addressed whether it is more appropriate to stay this action pending a final resolution of a similar, earlier-filed action initiated in the State of Ohio that involves some, but not all, of the parties to this action.

Defendants moved to dismiss for lack of personal jurisdiction and under the North Carolina Declaratory Judgment Act.

All moving defendants except defendant AXIS, a surplus lines insurance company, are licensed to conduct insurance business in North Carolina and all of those moving defendants accepted service of process through the Commissioner pursuant to N.C.G.S. § 58-16-30. Therefore, all of those moving defendants except defendant AXIS consented to suit in this State by completing the statutorily required registration procedures for foreign corporations. Doing so rendered those defendants essentially at home in this State and defendants submitted to suit in this State. As a result, our exercise of general personal jurisdiction over these defendants is proper and we deny the motion to dismiss, in part, to the extent it requested dismissal of the moving defendants, except AXIS, for lack of personal jurisdiction.

AXIS is subject to different licensing requirements than foreign insurance companies, as set forth in the North Carolina Surplus Lines Act. Under the limited circumstance where the surplus lines insurer is sued in this State under a policy issued by it, and service of process is made upon the Commissioner, the surplus lines insurer has consented to general jurisdiction in this State. We conclude that AXIS, by doing business in this State, agreed to be subject to the laws and regulations set forth herein. Doing so constituted a consent to the exercise of general personal jurisdiction over it by North Carolina courts because the statutory framework requires service of process upon the Commissioner as AXIS’s agent for causes of action arising in this State under insurance contracts made by it. Therefore, we deny the motion to dismiss, in part, to the extent it requested dismissal of AXIS for lack of personal jurisdiction.

Defendants next argued that we should refuse to hear this case because the Kroger plaintiffs’ filing of this action constituted forum shopping, and courts of this State have rejected declaratory judgment suits in like circumstances. In response, plaintiffs contended this Court is the only forum that may provide complete relief and terminate the uncertainty regarding the insurance coverage dispute. We agree with defendants that this action will not settle the entire controversy giving rise to the proceeding as this action relates to the Kroger plaintiffs because the issue of the Kroger plaintiffs’ rights under their insurance policies issued by defendants is already being litigated in an Ohio insurance action. We determine that it is appropriate for us to decline to enter a declaratory judgment regarding the Kroger plaintiffs’ rights, if any, under the insurance policies they purchased from defendants. Our decree would not end the uncertainty giving rise to the proceeding, and it appears that the Kroger plaintiffs may be attempting to circumvent their home state to obtain a more preferable venue. Therefore, we grant, in part, the motion to dismiss and decline to grant declaratory relief as it relates to the Kroger plaintiffs.

Granted in part and denied in part.

Harris Teeter Supermarkets Inc. v. ACE American Insurance Company (Lawyers Weekly No. 020-068-23, 53 pp.) (Michael L. Robinson, J.) 2023 NCBC 68. Offit Kurman, P.A. by J. Alexander S. Barrett and Kurt A. Seeber, and Morgan, Lewis & Bockius, LLP by Gerald P. Konkel and Christopher M. Popecki, for plaintiffs Harris Teeter Supermarkets, Inc., Harris Teeter, LLC, The Kroger Co., Kroger Limited Partnership I, and Kroger Limited Partnership II; Brooks, Pierce, McLendon, Humphrey & Leonard, LLP by Agustin M. Martinez, Jim W. Phillips, Jr., and Jennifer K. Van Zant, Clyde & Co US LLP by Robert M. Mangino and Susan K. Sullivan, and Holwell Shuster & Goldberg, LLP by Andrew C. Indorf, Blair E. Kaminsky, Neil R. Lieberman, Michael S. Shuster, and Daniel M. Sullivan, for defendants ACE American Insurance Co., ACE Property and Casualty Insurance Co., and Federal Insurance Co.; James, McElroy & Diehl, P.A. by Adam L. Ross, and Kennedys CMK LLP by Christopher R. Carroll, Tara E. McCormack, Christina R. Salem, and Joshua S. Wirtshafter, for defendants Allied World National Assurance Co., Starr Surplus Lines Insurance Co., and United States Fire Insurance Co.; Maynard Nexsen PC by James W. Bryan and Olivia F. Fajen, and Skarzynski Marick & Black, LLP by Karen M. Dixon, for defendants American Guarantee and Liability Insurance Co., Steadfast Insurance Co., and Zurich American Insurance Co.; Bennett Guthrie, PLLC by Joshua H. Bennett, and BatesCarey LLP by Joshua A. Boggioni, Adam H. Fleischer, and Paige M. Houin, for defendants Aspen American Insurance Co., Great American Alliance Insurance Co., Great American Assurance Co., Great America Insurance Co., Great American Insurance Co. of New York, Great American Spirit Insurance Co., and Westport Insurance Corp.; Teague Campbell Dennis & Gorham, LLP by William A. Bulfer and John M. Little, and Skarzynski Marick & Black LLP by Cheryl P. Vollweiler, for defendant Axis Surplus Insurance Co.; James, McElroy & Diehl, P.A. by Edward T. Hinson, Jr. and Jennifer M. Houti, and Dentons US LLP by Deborah J. Campbell, Kathryn M. Guinn, M. Keith Moskowitz, and Samantha Wenger, for defendants Columbia Casualty Co., Continental Casualty Co., and Continental Insurance Co.; Poyner Spruill, LLP by J. Nicholas Ellis, Andrew H. Erteschik, and Colin R. McGrath, and Nicolaides Fink Thorpe Michaelides Sullivan, LLP by Amy J. Collins Cassidy, Stephanie M. Flowers, and Monica T. Sullivan, for defendants Endurance American Insurance Co. and Endurance American Specialty Insurance Co.; Phelps Dunbar, LLP by Thomas M. Contois, Machaella M. Reisman, and Robert D. Whitney, and Dentons US LLP by Deborah J. Campbell, Kathryn M. Guinn, M. Keith Moskowitz, and Samantha Wenger, for Defendants Indian Harbor Insurance Co. and XL Insurance America, Inc.; Cranfill Sumner LLP by Jennifer A. Welch, and Choate, Hall & Stewart, LLP by John C. Calhoun and Robert A. Kole, for defendants Liberty Insurance Underwriters, Inc., Liberty Surplus Insurance Corp., and Ohio Casualty Insurance Co.; Goldberg Segalla, LLP by David L. Brown, and Willkie Farr & Gallagher, LLP by Joseph G. Davis, John B. Goerlich, Christopher J. St. Jeanos, and Diana C. Vall-llobera, for defendant National Union Fire Insurance Co. of Pittsburg, PA; Manning, Fulton & Skinner, P.A. by Brianne M. Glass and Michael T. Medford, and Clausen Miller, P.C. by Amy R. Paulus, for defendant Old Republic Insurance Co.; Womble Bond Dickinson (US) LLP by M. Elizabeth O’Neill, and Simpson Thacher & Bartlett, LLP by Bryce L. Friedman and Joshua C. Polster, for defendants St. Paul Fire and Marine Insurance Co., The Travelers Indemnity Co., Travelers Property Casualty Co. of America, and United States Fidelity and Guaranty Co.; Young Moore and Henderson, P.A. by Brian O. Beverly, and Ruggeri Parks Weinberg LLP by Annette P. Rolain and James P. Ruggeri, for defendant Twin City Fire Insurance Co.; HWG LLP by Amy E. Richardson and Lauren E. Snyder, and Nicolaides Fink Thorpe Michaelides Sullivan, LLP by So Young Lee, Richard H. Nicolaides, Jr., and Madison G. Satterly, for defendant Mitsui Sumitomo Insurance Co. of America. North Carolina Business Court