Motion for Forum Non Conveniens in CV-2019-10-4044| Trellis.Law

On October 21, 2019 a Motion-Secondary was filed in the District Court of Summit County.

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IN THE COURT OF COMMON PLEAS
SUMMIT COUNTY, OHIO

PHILADELPHIA INDEMNITY INSURANCE CASE NO. CV 2019 10 4044
COMPANY,
JUDGE AMY CORRIGALL JONES
Plaintiff,
REPLY BRIEF IN SUPPORT OF MOTION TO
vs. DISMISS BASED UPON FORUM NON
CONVENIENS OR LACK OF PERSONAL
GATEWAY HOSPITALITY GROUP, INC., et al., JURISDICTION, OR ALTERNATIVELY TO
STAY
Defendants.

In Philadelphia Indemnity Insurance Company’s Response to the Defendants’ Motion to Dismiss or

for a Change of Venue or Stay (“Philadelphia’s Response”), Philadelphia makes misstatements of fact,

misrepresentations and inaccurate representations of Montana and Ohio law. In addition, Philadelphia offers

no argument why this matter should not be dismissed based upon the doctrine of forum non conveniens.

MISSTATEMENTS OF FACT/MISREPRESENTATIONS

Philadelphia asserts that Defendants made four “Factual Errors in Gateway’s and the HGI Entities’

Motion.” Philadelphia’s Response, pp. 5-9 of 251. As set forth below, Philadelphia’s representations to the

Court are incorrect and, in some instances, demonstrably false. In addition, throughout Philadelphia’s

Response, Philadelphia also made misstatements of fact and misrepresentations. All of which are refuted

by Philadelphia’s own documents or documents submitted with Defendant’s motion. As discussed below, in

many instances Philadelphia’s statements and representations are directly opposite to and in conflict with

what Philadelphia argued or represented to the Montana Supreme Court and Montana trialcourt in the

Montana matter.

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First, Philadelphia captions its response to what it terms Defendants’ motion for a change of venue.

Philadelphia’s Response, p. 1 of 251. Contrary to Philadelphia’s representation, Defendants’ motion was a

request for dismissal based upon forum non conveniens. See Motion to Dismiss Based Upon Forum Non

Conveniens or Lack of Personal Jurisdiction, or Alternatively to Stay and Memorandum in Support

(“Defendants’ Motion.”).

Second, Philadelphia deliberately misrepresents statements by Mr. Cockrell “concerning

Philadelphia’s arbitration demand.” As noted inDefendants’ initial
brief and undisputed by Philadelphia,

Philadelphia never requested arbitration until about three hours before it filed the Petition. In referencing Mr.

Cockrell’s statement, Philadelphia states:

In their Motion, Defendants contend, “Although not disclosed in the Petition,
Philadelphia has already asked the Montana state court … to rule on
whether arbitration could now be compelled under the Policy.” (Defendant’s
Motion at 3.) That is wrong. Mr. Cockrell, whose name appears in the
signature block to Defendants’ Motion here, argued the exact opposite
position about arbitration at oral argument on Philadelphia’s Personal
Jurisdiction Motion in Montana. At oral argument in Montana Circuit Court,
Mr. Cockrell stated: “finally, as [Philadelphia] acknowledge[s], there was no
request for arbitration ever in this case.”

Philadelphia’s Response, p. 5 of 251. Conveniently, Philadelphia left out Mr. Cockrell’s statements leading

up and subsequent to the portion of the sentence Philadelphia quotes:

MR. COCKRELL: Oh, let me -- just one thing. I apologize, Your Honor. They
brought up the Ohio Amendatory Endorsement; and while they did mention
it in their brief, we acknowledge they mentioned it in their brief, they never
argued about it. They never
argued it in their brief [on the amended complaint].

And Mr. Marra brought itup today, and he showed you a portion of the
policy saying that we are subject to this Ohio Amendatory Endorsement. As
we pointed out in our initial brief on the motion to dismiss the complaint --
not the motion to dismiss the amended complaint -- we addressed that
argument. And we pointed out, when you look at the declaration’s page,
which Mr. Marra had tabbed as Tab 3 on his demonstrative exhibit, the Ohio
Amendatory Endorsement isn't listedthere. When you look at Tab 4, a
forum schedule entitled “Miscellaneous Professional Liability, forums and
endorsement applying to this coverage part and made a part of this policy,”

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it doesn't tell you which coverage part these forums apply to. And, as you
know from looking at the insurance policy, there are a number of parts of
this policy, we don't know which one that Ohio Amendatory Endorsement is
supposed to apply to, it's ambiguous.

And, finally, as they acknowledge, there was no request for arbitration ever
in this case. Apparently, Mr. Marra intends, I'm gathering from his argument
here, that if they lose, they immediately intend on asking for arbitration. That
horse is out of the barn. They should have done that before we got injured
and had to pay $4 million.

Philadelphia’s Response, Exhibit 2, pp. 151:25-153:5 of 251 (underline emphasis added).

Mr. Cockrell did not argue that Philadelphia had not asked the trial court to rule on whether arbitration

could be compelled under the Policy. Rather, the argument was that: (1) while Philadelphia raised that

argument in its brief on itsmotion to dismiss the complaint and Defendants responded to that argument,

Philadelphia did not re-raise that argument in its motion to dismiss the amended complaint; and (2) no party

had requested arbitration as of the date of the oral argument and that any attempt by Philadelphia to do so

was too late; any such attempt should have been made before the underlying matter settled.

Further, nowhere does Philadelphia cite a single document that it did not argue that arbitration be

compelled in Ohio. See Philadelphia’s Response, p. 5 of 251. The reason being Philadelphia repeatedly

argued to the Montana trial court that arbitration was required in Ohio. See Exhibit 1 (Appellees’ Brief, In the

Supreme Court for the State of Montana, Supreme Court No. DA 19-0502); Exhibit 2 (Appendix to Appellees’

Brief, In the Supreme Court for the State of Montana, Supreme Court No. DA 19-0502) (App. 4, 11:15-16 (“in

Philadelphia’s initialbrief and support of motion to dismiss the amended complaint . . . Philadelphia

specifically raised the Ohio arbitration obligation”), 11:18-25 (arbitration raised in reply brief),12:12-16

(arbitration provision provides location in Ohio), 15:13-16:6 (arbitration required in Ohio); App. 5, p. 13 (court

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cannot exercise specific personal jurisdiction because of arbitration provision); App. 6, p. 11 (same)). The

trial court rejected those arguments. See Exhibit 2 (App. 3, p. 29).1

Third, Philadelphia states that the Montana action is “an insurance coverage dispute” and that

Defendants’ are wrong that “their Montana case concerns ‘Philadelphia’s [alleged] breach of itsduty to

defend.’” Philadelphia’s Response, pp. 1, 6 of 251. Those statements are incorrect. In the Montana action,

Defendants requested a declaratory ruling that Philadelphia breached its duty to defend in Walter and seek

damages from that breach. See Exhibit 2 (App. 1, ¶¶ 42-47, prayer (declaration Philadelphia breached duty

to defend and must pay damages from that breach); App. 2, ¶¶ 60, 64-66, prayer (same)). There is no

request in the Montana action for a coverage determination and Defendants do not seek a coverage

determination in the underlying matter. See Exhibit 2 (Appxs. 1, 2).

In fact, contrary to Philadelphia’s representations to this court, under Montana law, coverage is not at issue

in a breach of duty to defend action. The Montana Supreme Court explained that insurers cannot deny

defense and then, after an insured settles, require the trial court to rule on coverage:

If we were to hold the District Court in error for failing to analyze coverage,
as the Dissent urges, we would be providing insurers with an avenue to
circumvent the clear requirement imposed by our precedent that where the
insurer believes a policy exclusion applies, itshould defend under a
reservation of rights and seek a determination of coverage through a
declaratory judgment action. . . . NUFI cannot avoid liability. . . by
attempting to convince this Court it was necessary to analyze coverage
under the Policy before determining it had breached the duty to defend . . .
Many of the arguments NUFI and the Dissent urge we address call for
analysis that would have been proper had NUFI adhered to the correct
process and filed a declaratory judgment action to discern coverage—but
they are not proper at this stage of the proceedings.

1
Philadelphia has now filed Appellant’s Opening Brief and the Appendix to Appellant’s Opening Brief in the Montana
Supreme Court appeal and for the first time argued the Montana trial court erred in its subject matter jurisdiction ruling.
See Exhibits 3 and 4. Defendants filed a Motion for Leave to File Appellees’ Surreply Brief, to which Philadelphia
objected, which prompted Defendants to file an Amended Motion for Leave to File Appellees’ Surrpely Brief. See
Exhibits 5, 6 and 7.The parties await the Montana Supreme Court ruling.

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Tidyman’s Management Services, Inc. v. Davis, 2014 MT 205, ¶ 28, 376 Mont. 80, 330 P.3d 1139 (emphasis

added); see also Draggin’ Y Cattle Company, Inc. v. Junkermier, Clark, Campanella, Stevens, P.C., 2019

MT 97, ¶ 22, 395 Mont. 316, 439 P.3d 935; J & C Moodie Properties, LLC v. Deck, 2016 MT 301, ¶ 38, 385

Mont. 382, 384 P.3d 466. As pointed out in Defendants’ Motion, pp. 13-14, Ohio is in accord with Montana

on this point. See Sanderson v. Ohio Edison Co. (1994), 69 Ohio St.3d 582, 586-87, 635 N.E.2d 19, 23-24;

Patterson v. Cincinnati Insurance Companies (2017), 91 N.E.33 191, 199-200; Bank One, N.A. v. Echo

Acceptance Corp. (2007), 522 F.Supp.2d 959, 970 (S.D. Ohio 2007). While all these cases were cited in

Defendants’ initial brief, Philadelphia did not state that any holding in the cases cited was in error nor did

Philadelphia even respond to these cases.

The fact of the matter is that whether it is under Montana or Ohio law, coverage is not at issue in a

breach of duty to defend action. Simply put, whether it is under Montana or Ohio law, in a breach of duty to

defend action, the question is whether an insurer can demonstrate beyond doubt that nothing under the

Policy triggers defense.

In further support of Philadelphia’s Response, Philadelphia cites to Landa v. Assurance Co. of Am.,

2013 MT 217, ¶ 19, 371 Mont. 202, 307 P.3d 284 and Steadele v. Colony Ins. Co., 2011 MT 208, 361 Mont.

459, 260 P.3d 145. Philadelphia somehow leaves out the full discussion surrounding Philadelphia’s selected

quotes.

In Steadele, the Court stated:

The scope of an insurer’s duty to defend its insured, and of the coverage of
the policy in general, is determined by the language of the insurance policy.
Grimsrud v. Hagel, 2005 MT 194, ¶ 34, 328 Mont. 142, 119 P.3d 47. If there
is no coverage under the terms of the policy based on the facts contained
in the complaint, there is no duty to defend.

Steadele, ¶ 25 (emphasis added). Philadelphia left out the first sentence in Steadele.

In Landa, the Court stated:

It is well-settled that an insurer's duty to defend the insured arises when an

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insured sets forth facts which represent a risk covered by the terms of the
insurance policy. Farmers Union Mut. Ins. Co. v. Staples, 2004 MT 108, ¶
27, 321 Mont. 99, 90 P.3d 381. We have held that “[t]he insurance company
must look to the allegations of a complaint to determine if coverage exists
under an insurance policy, thus giving rise to the insurer's duty to defend.”
Staples, ¶ 20 Thus, to determine whether Assurance had a duty to defend
Landa, we willlook firstto the terms of the policy, and next to the facts
alleged by Alsup's complaint. Lloyd A. Twite Family P'ship, [v. Unitrin Multi
Line Ins., 2008 MT 310, ¶ 7, 346 Mont. 42, 192 P.3d 1156]. When doing so,
we will give the terms in the policy their usual meaning and construe them
using common sense. Hardy v. Progressive Specialty Ins. Co., 2003 MT
85, ¶ 14, 315 Mont. 107, 67 P.3d 892.

Landa, ¶ 19 (emphasis added). Again, Philadelphia left out the Court’s full explanation of when a duty to

defend arises. The fact that Philadelphia failed to provide the full context of the Montana Supreme Court’s

holdings is significant. Because while not yet arguing Philadelphia’s breach, as the Montana trialcourt

pointed out, the Policy provides that as to allegations against the Defendants, e.g., those which Philadelphia

misrepresents were proven – and they were not –:

This policy does not apply to any claim or claim expenses:

A. arising out of, resulting from, based upon or in consequence
of, any dishonest, fraudulent, criminal or malicious act, error or
omission, or any intentional or knowing violation of the law, or
gaining of any profit or advantage to which you are not legally
entitled; however, we will defend suits alleging the foregoing
until there is a judgment, final adjudication, adverse admission,
plea nolo contendere or no contest or finding of fact against you
as to such conduct.

See Exhibit 2 (App. 4, p. 9) (emphasis added); see also Petition, p. 36 of 52 (same). As set forth above,

there was no judgment or finding against Defendants. As Landa and Steadele make clear, an insurer cannot

pick and choose what part of a policy it wishes to try to apply in a breach of duty to defend action, but rather

all terms of the policy must be considered in conjunction with the allegations in a complaint. Similarly, under

Montana law, if an insurer has a duty to defend one claim, it must defend against all claims even if there is

no possibility that those remaining claims would be covered. See State Farm Fire and Cas. Co. v. Schwan,

2013 MT 216, ¶ 16, 371 Mont. 192, 308 P.3d 48.

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Fourth, Philadelphia states it never requested the Montana court to send the Montana case to Ohio

for arbitration. Philadelphia’s Response, p. 7 of 251. This statement is not true. Philadelphia left out that in

its motion to the Montana trial court, Philadelphia “move[d] this Court for an Order . . . to transfer based upon

forum non conveniens.” See Exhibit 8 (Philadelphia Indemnity Insurance Company’s Motion to Dismiss

Plaintiffs’ First Amended Complaint Or, In The Alternative To Transfer Based Upon Forum Non Conveniens)

(emphasis added). Philadelphia argued to the Montana trial court that “[e]ither Ohio or Pennsylvania, not

Montana would be the appropriate forum for this lawsuit.” See Exhibit 2, (App. 5, p. 18; App. 6, p. 18 (same)).2

Contrary to Philadelphia’s representations to this Court, Philadelphia did in fact ask the Montana trial court

to transfer the Montana matter to Ohio or Pennsylvania.

Fifth, Philadelphia argues that Defendants are wrong that Philadelphia should have demanded

arbitration when it denied coverage. Philadelphia’s Response, p. 8 of 251. As Philadelphia knows, that is not

Defendants’ argument at all. Defendants’ argument is that Philadelphia having denied defense and Walter

being litigated, settled and a judgment entered against and paid by Defendants in Montana, it is now too late

for Philadelphia to demand arbitration. See Tidyman’s, supra; Draggin’ Y, supra; J & C Moodie Properties,

supra; Sanderson, supra; Patterson, supra; Bank One, supra. Furthermore, even aside from Sanderson,

supra; Patterson, supra; Bank One, supra, Ohio courts recognize that the conduct of a party that is

inconsistent with an arbitration provision may act as a waiver of that provision. American General Finance

v. Griffin, 2013 WL 3422900 * 2 (8th Dist. 2013); see also Tinker v. Oldaker, 2004 WL 1405563 * (10th Dist.,

2004) (party waived right to arbitrate by not seeking arbitration during pendency of underlying lawsuit).

2 Philadelphia’s motion to the Montana trial court was even titled as:
“Philadelphia Indemnity Insurance Company’s Motion to
Dismiss Plaintiffs’ First Amended Complaint Or, In The Alternative To Transfer Based Upon Forum Non Conveniens.” See Exhibit
8.

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Sixth, in Philadelphia’s Response, citing to its own Petition, Philadelphia states that Defendants

“illegallywithheld wages,” engaged in “illegal acts,” and “purposefully withheld wages.” Philadelphia’s

Response, pp. 1, 4 of 251. However, the Petition provides no such thing; the Petition repeats what the

Walter lawsuit was “alleging” about Defendants. See Petition, ¶ 16. And, Philadelphia’s denial letter simply

repeats some of the Walter plaintiffs’
allegations. See Exhibit 2 (App. 8, pp. 7-14). Further, the Walter

plaintiffs’ allegations were never proven. Neither in the settlement agreement nor judgment did the parties

agree or did the court find any of those allegations were proven. See Exhibit 2 (App. 11, p. 8 (“this Agreement

is not an admission of liability or wrongdoing in any way whatsoever on the part of the Parties for any of the

claims dismissed and released through this Agreement and shall not be construed as such by any Party or

the Court), p. 9 (“Nothing in this Agreement is, or is to be deemed, an admission of liability by any Party, and

nothing in this Agreement may be interpreted as an admission of liability”), pp. 20-26 (Order Granting Final

Approval of Mediated Settlement Agreement)).

Seventh, again citing to the Petition, ¶¶ 17, 27-28, Philadelphia states that “Gateway and the HGI

Entities sought insurance coverage from Philadelphia in Ohio for that lawsuit under Gateway’s Ohio insurance

policy.” Philadelphia’s Response, p. 4 of 251. The statement is false. Not only is there no such allegation

in the Petition, the Policy required Defendants to submit the request for defense to Pennsylvania. Specifically,

the Policy required that: “[n]otice hereunder shall be given by you or on your behalf in writing to us at One

Bala Plaza, Suite 100, Bala Cynwyd, PA 19004 Attn: Claims Department.” See Petition, p. 38 of 52 (emphasis

added). And, Philadelphia’s Executive Vice President of Claims responded on March 13, 2015, the day after

Defendants’ made the defense request, from “One Bala Plaza, Suite 100, Bala Cynwyd, PA 19004.” See

Exhibit 9 (March 13, 2015 letter) (emphasis added).

Eighth, Philadelphia represents that “[t]here is no dispute that the HGI Entities are not parties to the

Gateway insurance policy, nor are they insureds under the policy.” Philadelphia’s Response, p. 12 of 251.

This too is simply untrue. Even Philadelphia admits in its Montana Supreme Court brief, that there is a dispute

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on those questions. See Philadelphia’s Response, pp. 49-50 of 251 (Philadelphia disputes Defendants’

position they are insureds under the Policy). Furthermore, as Philadelphia concedes in the Montana action

and on appeal, there isa dispute whether the HGIs are subsidiaries under the Policy. Id. Contrary to

Philadelphia’s representation, there is absolutely no dispute that the HGIs were identified as entities for which

Gateway requested insurance in the application portion of the Policy. See Defendants’ Motion (Exhibit 2

(Exhibit B, pp. 120, 127, 128 of 384)).

Finally, Philadelphia cites to August and September 2015 correspondence, in which it denied

defense should Gateway be sued by the HGIs, as some sort of evidence that Defendants agreed with

Philadelphia or conceded that Philadelphia owed no duty to defend them in Walter. Philadelphia’s Response,

pp. 7-9 of 251. The argument is simply another case of a misrepresentation. As Philadelphia’s California

lawyers acknowledged, the August 11, 2015, notice was not about defending Walter, but rather was a notice

“in the event that a claim” “later arises” and about “any future Claim.” See Philadelphia’s Response, Exhibit

4, pp. 240, 241 of 251. Furthermore, once an insurer says itwillnot defend, the insured is relieved of

complying with any policy provision and can decide how best to protect itself. See Tidyman’s, supra; Draggin’

Y, supra; J & C Moodie Properties, supra.

In addition to its misstatements of fact and misrepresentations, the arguments in Philadelphia’s

Response lack merit.

ARGUMENT

Philadelphia argues Defendants’ motion should be denied because: (1) Defendants consented to

personal jurisdiction by seeking benefits under the Policy which had an endorsement with an Ohio forum

selection clause; (2) the HGIs are subject to personal jurisdiction in Ohio; and (3) Defendants arguments

about forum non conveniens and alternatively,a stay, are examples of forum shopping. Philadelphia’s

Response, pp. 9-14 of 251. Each argument lacks merit.

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A. Defendants Did Not Consent To Arbitrate Their Breach of Duty Action In Ohio. The
Montana Action Is Not A Coverage Dispute. Defendants Do Not Seek Benefits Under
The Policy. The Arbitration Clause Is Not A Forum Selection Clause.

Philadelphia argues that because the Policy’s arbitration clause provides that if the parties “do not

agree whether coverage is provided,” “all disputes must be resolved in . . . Ohio.” Philadelphia’s Response,

p. 10 of 251. This argument fails for several reasons.

First, as discussed above, in a breach of duty to defend action, a court’s job is not to determine

coverage. Tidyman’s, supra; Draggin’ Y, supra; J & C Moodie, supra; Sanderson, supra; Patterson, supra;

Bank One, supra. Rather, the court’s job in a breach of duty to defend action is to determine whether under

the terms of the Policy and allegations in a complaint, there is an unequivocal showing that no provision of

the Policy requires defense. Id; see also, Steadele, supra; Landa, supra. Exclusions in policies must be

strictly and narrowly construed against the insurer because they “are contrary to the fundamental protective

purpose of an insurance policy.” Huckins v. United Services Automobile Association, 2017 MT 143, ¶ 16,

387 Mont. 514, 396 P.3d 121, citing Newman v. Scottsdale Ins. Co., 2013 MT 125, ¶ 35, 370 Mont. 133, 301

P.3d 348. “[A]ny ambiguity in an insurance policy must be construed against the insurer.” Huckins, ¶ 16,

citing Wendell v. State Farm Mut. Auto. Ins. Co., 1999 MT 17, ¶ 14, 293 Mont. 140, 974 P.2d 623.

Second, while Philadelphia argues that the Policy’s arbitration is “a forum selection clause and a

choice of law provision,” Philadelphia did not disclose that it had made that same argument to the Montana

trialcourt and the court found that argument to be unpersuasive. See Exhibit 2 (App. 3, pp. 28-29).

Philadelphia has raised this issue in the pending Montana Supreme Court appeal. See Philadelphia’s

Response, Exhibit 1, pp. 52-58 of 251. Thus, that argument will be addressed by the Montana Supreme

Court.

Third, in support of this argument, Philadelphia cites Rodriguez de Quijas v. Shearson/American

Express, Inc., 490 U.S. 477, 482-83 (1989); Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974); Katz v. Katz,

2018 WL 3814841; LexisNexis v. Moreau-Davila, 95 N.E.3d 674, 680 (Ohio Ct. App. 2017); 1mage Software,

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Inc. v. Reynolds & Reynolds, Co., 459 F.3d 1044 (10th Cir. 2006); inVentiv Health Communs., Inc. v. Rodden,

108 N.E.3d 605 (Ohio Ct. App. 2018); Murchison Capital Partners, L.P. v. Nuance Communs., Inc., 625 Fed.

App’x 617, 627 (5th Cir. 2015); and Haber v. Biomet, Inc., 578 F3d. 553 (7th Cir. 2009). Those cases do not

support Philadelphia’s argument.

None of those cases involved a lawsuit where the insured subsequently sued its insurer for breach

of duty to defend the insured in a third-party claim against the insured. None of those cases involved an

insurer who had the opportunity to request arbitration before it denied a request for defense by its insured.

None of those cases involved an insurer who waited until after its insured was sued, had settled, and had a

judgment entered against and paid by the insured, before requesting arbitration. None of those cases

involved an insurer who asked one state court to transfer a case to another state (or in this instance two other

states), lost that request, and then appealed the decision before requesting arbitration. Furthermore, even if

the Policy’s arbitration provision was to be considered a forum selection clause and otherwise enforceable

despite Montana and Ohio law, supra, on an insurer’s decision to deny defense, as both Lexis-Nexis and

inVentiv made clear, forum selection clauses are not enforceable if enforcement would be unreasonable or

unjust under the circumstances. LexisNexis, 95 N.E.3d at 680; inVentiv, 108 N.E.3d at 612-614.

Here, Philadelphia knew of the arbitration provision; Philadelphia drafted it. Yet, Philadelphia made

the deliberate decision to deny the Defendants’ requested defense of Walter in May 2015 and did not request

arbitration. Philadelphia did not request arbitration during 2015-2016, while Defendants were being sued in

and defending against Walter. Philadelphia did not request arbitration before Defendants settled and

judgment was entered against and paid by them in Walter in 2016. Philadelphia did not request arbitration

in 2018 when it suggested to Defendants that they dismiss the Montana federal district court action and re-

file it in Montana state district court. Philadelphia did not request arbitration, nor even file the Petition, until

after it requested the Montana state district court send the Montana matter to Ohio for arbitration, lost that

request, and appealed the Montana state district court ruling to the Montana Supreme Court. Based on these

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circumstances, enforcement of the arbitration clause as a “forum selection” or “choice of law” provision would

be unjust and unreasonable. See Tinker, 2004 WL 1405563 * 5, ¶ 22 (unjust to enforce arbitration provision

where insurer’s actions prejudiced insured); see also Rodriguez, 490 U.S. at 479 (arbitration not required, if

clause is unenforceable under federal or state law). Finally, even if this Court were to ignore Montana and

Ohio law – which it should not - that an insurer cannot deny defense and then after an insured settles attempt

to enforce policy provisions, and find that the arbitration clause was a “forum selection” or “choice of law”

provision, enforcement of the arbitration clause would be prejudicial to Defendants.

B. The HGIs Are Not Subject To Personal Jurisdiction In Ohio.

Philadelphia argues that Defendants are subject to personal jurisdiction in Ohio because they

“‘transacted business’ with Gateway in Ohio.” Philadelphia’s Response, p. 18 of 251. Philadelphia argues

telephone calls or emails from Montana by the HGIs to Gateway in Ohio and the contract for Gateway, an

Ohio entity, to manage the HGIs suffices for the “transacting business” provision of Ohio’s long-arm statute.

Philadelphia does not cite to a single Ohio case that supports that argument. Nor does Philadelphia even

attempt to address the cases cited by Defendants in Defendants’ Motion, which support that personal

jurisdiction does not exist over the HGIs. More importantly, Philadelphia ignores that the underlying

controversy arose from Defendants being sued and requesting defense in Montana, not Ohio. Even if this

Court were to find Ohio’s long-arm statue conferred personal jurisdiction over Defendants, granting

jurisdiction under the “long-arm” statute would deprive Defendants of the right to due process of law pursuant

to the Fourteenth Amendment of the United States Constitution.

While Philadelphia cites to Kauffman Racing Equip., L.L.C. v. Roberts, 126 Ohio St.3d 81, 88, 930

N.E.2d 784, 792, Philadelphia does not address the three-part test for finding whether exercising personal

jurisdiction over the HGIs is consistent with due process. Id., 126 Ohio St.3d at 88, 930 N.E.2d at 792-93, ¶

49; MJM Holdings Inc. v. Sims, 130 N.E. 3d 1093. Ohio’s three-part test requires:

First, the defendant must purposefully avail himself of the privilege of acting in the

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forum state or causing a consequence in the forum state. Second, the cause of
action must arise from the defendant’s activities there. Finally, the acts of the
defendant or consequences caused by the defendant must have a substantial
enough connection with the forum state to make the exercise of jurisdiction over
the defendant reasonable.

Id., 126 Ohio St.3d at 88, 930 N.E.2d at 792-93, ¶ 49.

Even if the HGIs telephone calls or emails to Gateway in Ohio meets Ohio’s long-arm statute, or the

fact that the Policy was obtained by Gateway from Philadelphia in Pennsylvania, sufficed to meet the

“transacting business” of Ohio’s long-arm statute, exercising personal jurisdiction over the HGIs does not

meet Ohio’s three part test for finding exercising personal jurisdiction comports with due process for several

reasons.

First, in both Kauffman and MJM, the alleged wrongful conduct occurred in Ohio. In Kauffman, the

alleged defamatory statements were seen in Ohio when the defendant published them on the internet such

that they were seen by Ohio residents. Kauffman, ¶ 41. In Kauffman, the alleged injuries occurred in Ohio.

Id., ¶ 44. Similarly, in MJM, the alleged fraudulent representations were sent to and received by the plaintiff

in Ohio. MJM, ¶ 45. The alleged harm from the alleged fraudulent statements occurred in Ohio. Id.

In contrast, here, the alleged wrongful conduct was Philadelphia’s decision to deny the defense

requested in Montana. Philadelphia made that decision in Pennsylvania and sent that decision from

California. Even Philadelphia does not dispute it did not make or send that decision from Ohio. Further, the

HGIs’ injuries occurred entirely in Montana; the Montana HGIs requested defense in Montana, not Ohio, and

judgment was entered against and paid by Defendants in Montana.

In Bristol-Myers Squibb v. Superior Court, 137 S.Ct. 1773 (2017), another cased cited by

Philadelphia, the Court found that personal jurisdiction did not exist in California because the alleged injury

did not occur in California. Bristol-Myers Squibb, 137 S.Ct. at 1778. Similarly, in BNSF Ry. v. Tyrell, 137

S.Ct. 1549 (2017), another cased cited by Philadelphia, one of the principal reasons the Court found that

personal jurisdiction should not be exercised was because the plaintiffs’alleged injuriesdid not occur in

Sandra Kurt, Summit County Clerk of Courts
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Montana. Tyrell, 137 S.Ct. at 1554. In Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915

(2011), another cased cited by Philadelphia, one of the reasons the Court found that personal jurisdiction

should not be exercised over non-North Carolina entities was because the injuries occurred in France, not

North Carolina, where the suit was brought. Goodyear, 564 U.S. at 921.

C. Defendants Forum Non Conveniens And Alternatively, A Stay, Arguments Are Valid And
Meritorious Under Ohio Law.

Philadelphia argues that Defendants’ forum non conveniens and “stay” arguments should not be

addressed because Defendants engage inforum shopping. Philadelphia’s Response, pp. 21-24 of 251.

Aside from that argument being incorrect, forum shopping is exactly what Philadelphia is doing, having now

litigatedand lostin Montana over whether the Montana action should be sent to Ohio (or Pennsylvania;

Philadelphia cannot quite make up itsmind) for arbitration. Nevertheless, Philadelphia’s arguments lack

merit.

First, Philadelphia argues that because arbitration clauses in insurance contracts are unenforceable

in Montana, the Court should not address Defendants’ forum non conveniens and “stay” arguments.

Philadelphia’s Response, p. 21 of 251. While Philadelphia is correct that Montana law does not enforce

arbitration clauses in insurance contracts, the problem with Philadelphia’s argument is that the Montana

matter is a breach of duty to defend lawsuit. And, under Montana or Ohio law, in a breach of duty to defend

lawsuit, an insurer cannot deny defense, allow its insured to litigate, settle and have judgment entered against

the insured in the case requested to be defended, and then, come back and try to assert policy provisions.

See Tidyman’s, supra; Draggin’ Y, supra; J & C Moodie Properties, supra; Sanderson, supra; Patterson

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Motion-Secondary: CV-2019-10-4044

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