Liberty Mutual Fire Insurance Co. v. Southeastern Mechanical Services Inc. and San Miguel Electric Cooperative Inc. (M.D. Fla. June 18, 2010)
Liberty Mutual Fire Insurance Co. ("Liberty Mutual") insured Southeastern Mechanical Services Inc. ("Southeastern"). San Miguel Electric Cooperative Inc. ("San Miguel") contracted with Southeastern to perform maintenance work in 2007 during a scheduled service outage at its facility. As part of the agreement, San Miguel required that Southeastern name it as an additional insured party on its Liberty Mutual policy. San Miguel claimed that Southeastern’s poor welding work resulted in a nine-day power outage, leading San Miguel to lose revenue from the lack of electricity generation.
Liberty Mutual sued San Miguel and Southeastern seeking a declaration of no coverage, alleging that the cost to repair the shoddy work did not constitute property damage under the policy. San Miguel moved to dismiss the complaint for lack of personal jurisdiction.
Liberty Mutual argued that the San Miguel met the long-arm statute's requirement for conducting substantial activity within Florida because the cooperative held 135 contracts with Florida companies worth about $10 million over the past five years. Liberty Mutual also argued that San Miguel fell under Florida's long-arm statute ecause of the cooperative's request to be added as an insured party under Southeastern's insurance policy.
The court rejected these arguments, noting that San Miguel's contracts were all made for purchases, not sales. Additionally, they constituted less than 3% of the company's total expenditures in any given year. Accordingly, the contracts could not satisfy the statute's "substantial and not isolated activity" requirement. The court noted that San Miguel had no insured property in Florida and that simply being a potential third-party beneficiary of an insurance policy was not enough to bring San Miguel under Florida’s long-arm statute.
The court held that asserting jurisdiction over San Miguel would violate due process, as the company had not "established minimum contacts" with the state of Florida.
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Toni Frain and Anthony Golowski