Patton Boggs Reinsurance Newsletter - December 2012: California Appeals Court Affirms Quashing of Complaint Against Bermuda Company

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Hollander v. XL Ins. (Bermuda) Ltd., No. B230807, 2012 WL 4748956 (Cal. Ct. App. Oct. 5, 2012).

A California appeals court has affirmed a trial court’s order quashing service of a summons and complaint for lack of personal jurisdiction against a Bermuda insurer.  The Bermuda insurer made a special appearance and moved to quash because it did not issue the policies in issue, did not do business in California, and its small number of insureds in California did not subject it to jurisdiction.  The policyholder argued that the Bermuda insurer did substantial business in California and was party to a quota share reinsurance agreement that results in the Bermuda company’s sharing in California risks written by XL group members.

In affirming the trial court, the appellate court held that the Bermuda insurer is not subject to general jurisdiction in California.  The minimal California policyholders it has and its participation in the reinsurance agreement, the court found, was too de minimis to confer jurisdiction.  The court also rejected any alter ego theory.  The court noted again how the policy in issue was not one issued by the Bermuda company.  The case offers a good analysis of what makes for contacts with a state and how off-shore companies can maintain their protection from personal jurisdiction in states where they do not do substantial business.

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