Tuesday, January 27, 2015

Greenwell v. Auto-Owners Ins. Co. (Cal. Ct. App. - Jan. 27, 2015)

In my two decades of being a law professor, I've graded more than a couple of civil procedure exams in which the essay was about personal jurisdiction.  Like, literally, thousands.

Justice Robie begins this opinion by noting that the stuff we do in law school isn't necessarily all that far off from what happens in the real world. He says:

"This case goes to show that sometimes life can be like an essay question on a law school exam. Here, a California resident owned an apartment building in Arkansas that was insured by a Michigan insurance company under a policy the owner obtained through an insurance agent in Arkansas. That policy included commercial property coverage for the Arkansas apartment building and commercial general liability coverage for the owner’s property ownership business, which he operated from California. Other than writing this policy, the insurer did no business in California.

Both the commercial property coverage and the commercial general liability coverage in the policy covered some risks, losses, or damages that could have arisen in California, but the dispute at issue here arose out of two fires that damaged the building in Arkansas. Initially, the insurer agreed to treat the two fires as separate losses but later reversed its position and took the position that both incidents were subject to only a single policy limit payment. As a result, the owner sued the insurer in a California state court for breach of contract and bad faith.

Here is the question: Under the foregoing circumstances, did the insurer have sufficient minimum contacts with California to allow the state court to exercise personal jurisdiction over the company in this action?"

That's a darn good hypothetical.  And the Court of Appeal answers:  "No."

Justice Robie's opinion is very cogent.  I'd be exceptionally psyched if I saw something like this submitted by a student in a law school exam.

Admittedly, Justice Robie (and his chambers) got to read briefs on the issue, and then had much longer to pen an answer than in your normal law school in-class (or even take-home) exam.

But, still, it's very good.

Of course, even very good things aren't perfect.  If a student submitted this as their essay answer, I might give 'em a couple of tiny suggestions.  For example, the opinion plods along in places, and could probably be five pages shorter without any loss of substantive content.  Another minor point:  on pages five and six, the author forgets that the Due Process Clause should be capitalized.

But substantively, the opinion reads well, and correctly focuses on the "nexus" requirement for specific personal jurisdiction:  The cause of action has to arise out of the defendant's contacts with the forum state.  That's the weak part of plaintiff's claim, and why the Court of Appeal holds that it ultimately fails.  Yeah, the defendant did business in California.  But the cause of action "really" arose out from acts in Arkansas, not California.

The only substantive part of the answer that I thought was relatively weak was the claim that the fact that the witnesses were mostly in Arkansas reaffirmed the lack of nexus.  The location of the witnesses is indeed a fact that's relevant to personal jurisdiction.  But only to the "fairness" prong, not the existence (or lack thereof) of minimum contacts in the first place.  Even if all of the witnesses to the Arkansas fire were in California -- e.g., viewing the thing on closed-circuit television -- and all of the debris transported here, the answer would be the same.  Witnesses are relevant to prong three, not prong two.

Apart from these minor changes, though, I'd have told my student that it was an outstanding answer.  They'd definitely get an A.

Probably even make law review.

POSTSCRIPT - Extraordinarily reliable sources tell me (and I've confirmed) that the California Style Manual says to capitalize things like "Constitution," "Bill of Rights," "Social Security," basically every statute known to man (e.g., the Civil Mediation Act and Usury Law), but, apparently, not the Due Process Clause.  I'll leave my normative comments about this scheme to myself.  But now I might have to bump Justice Robie's grade up a bit.  'Cause when you know something your professor doesn't; well, seems to me that's the definition of an A+.