In two companion decisions, a Texas court of appeals held that Texas lacks specific personal jurisdiction over a Mexican insurance company that provided a fronting policy to a Mexican insured with insured locations in Mexico and Texas, as well as over a Mexican reinsurance broker who helped procure the policy. Seguros Afirme, S.A. de C.V. v. Elamex, S.A. de C.V., et al., 2017 WL 3599693 (Tex.App.—Dallas Aug. 22, 2017) and Cooper Gay Martinez Del Rio y Asociados Intermediarios de Reaseguro S.A. de C.V. v. Elamex, S.A. de C.V., et al., 2017 WL 3599690 (Tex.App.—Dallas, Aug. 22, 2017).
A Mexican company with its principal place of business in El Paso, Texas, used a Mexican insurance broker for the excess insurance for its facilities in Mexico and the United States. The broker procured a fronting policy with a Mexican insurance company almost completely reinsured by foreign insurers. The company’s facility in Juarez, Mexico, was destroyed by fire, and the company submitted a claim for the loss to both its primary and excess insurers. The Mexican excess insurer investigated the loss and attended two meetings in El Paso to discuss the loss with the insured, but later denied the claim. The insured sued the excess insurer and the broker who placed the policy. The insured also contended that Texas had jurisdiction over the excess insurer because it issued a policy covering two Texas properties, with premiums to be paid in Texas and policy benefits to be paid to Texas entities, and sent an independent adjuster to visit with the insured in Texas. The insured asserted that Texas had jurisdiction over the broker because the broker had contracted with parties in Texas. The excess insurer and Mexican broker filed special appearances, asserting lack of personal jurisdiction. The court found specific jurisdiction. The broker and excess insurer appealed.
The Court of Appeals reversed. It held that specific jurisdiction was lacking as to the excess insurer because: (1) it had not sought out a Texas insured or attempted to develop Texas business; (2) the insurer knowing of properties in Texas was insufficient to confer specific jurisdiction, particularly because the policy insured a Mexican company with a Mexican address on the policy; and (3) its independent adjuster’s attendance at two meetings in Texas was too “random and fortuitous” to constitute personal availment of Texas’s jurisdiction. The appellate court held that specific jurisdiction was lacking as to the broker because: (1) the broker did not contract with the insured, and its involvement was confined to suggesting three potential fronting insurers; (2) the broker selected only the reinsurers; (3) the broker did not seek out business in Texas, but only responded to inquiries through a series of brokers; (4) the broker did not receive commissions from the insured’s premiums, but rather received commissions from placing the excess insurer’s reinsurance; and (5) the directing e-mails to Texas was not a basis for specific jurisdiction.