Court of Appeals
For the First
DANIEL L. UFFNER, JR.,
LA REUNION FRANCAISE, S.A.;
T.L. DALLAS & CO. LTD.;
SCHAEFFER & ASSOCIATES,
APPEAL FROM THE UNITED STATES
FOR THE DISTRICT OF PUERTO
[Hon. Carmen Consuelo Cerezo,
U.S. District Judge]
Torruella, Chief Judge,
Lipez, Circuit Judge,
and García-Gregory,(1)District Judge.
Paul E. Calvesbert-Borgos, with whom Calvesbert Law Offices PSC
and José G. Baquero-Tirado, were on brief, for
Peter Díaz-Santiago, was on brief, for appellee La Reunion
Francaise, S.A. and Jeannette M. López-de Victoria,
with whom Pinto-Lugo & Rivera PSC and Darío
Rivera-Carrasquillo, were on brief, for appellee Schaeffer
& Associates, Inc.
March 26, 2001
TORRUELLA, Chief Judge. Plaintiff-appellant Daniel L. Uffner, Jr.
filed this diversity suit in federal district court in the District
of Puerto Rico against his insurance issuer and underwriters
for wrongful denial of an insurance claim. Defendants-appellees
La Reunion Francaise, S.A. ("La Reunion"), T.L. Dallas
& Co. Ltd. ("T.L. Dallas"), and Schaeffer &
Associates, Inc. ("Schaeffer") filed motions to dismiss
for lack of subject matter jurisdiction, failure to state a claim,
and improper venue. The district court granted the motions based
upon lack of personal jurisdiction and improper venue. For the
reasons stated below, we vacate the district court's dismissal
and remand the case for further proceedings.
La Reunion is a French insurance
company which provides vessels with marine insurance coverage
and has its principal place of business in Paris, France. T.L.
Dallas, a marine underwriting manager based in Bradford, England,
specializes in insuring yachts and represents La Reunion in the
placement of marine insurance policies. Finally, Schaeffer is
an underwriting agent located in the State of Georgia that places
yacht policies in the United States (including Puerto Rico) for
T.L. Dallas. Together, these three entities issued and underwrote
a marine policy for Uffner's sailing yacht, La Mer, in
a cover note dated March 18, 1997.
On June 14, 1997, Uffner departed
from Fajardo, Puerto Rico on a voyage to St. Thomas, U.S. Virgin
islands. When he was positioned near Isla Palominos, a small
island approximately one mile off the coast of Puerto Rico, a
fire broke out in the engine room, forcing Uffner to abandon
the vessel. The yacht subsequently sank in the same location.
Shortly thereafter, Uffner contacted his insurance broker, International
Marine Insurance Services ("IMIS") to file a claim
for the loss of the boat. After a series of written communications
and telephone calls between IMIS and appellees, the claim was
denied due to the alleged absence of a "current out-of-water
Uffner filed this suit on June 12,
1998, claiming damages for a bad-faith denial of an insurance
claim. La Reunion and T.L. Dallas filed separate motions to dismiss
based on lack of subject matter jurisdiction, failure to state
a claim upon which relief can be granted, and improper venue.
Schaeffer filed a motion joining these motions to dismiss on
the same grounds. Uffner timely opposed all motions.
On September 20, 1999, the district
court dismissed Uffner's complaint without prejudice, concluding
that the court lacked personal jurisdiction over appellees and
that venue did not lie in Puerto Rico. Uffner moved the court
to reconsider its ruling and requested leave to amend the complaint
in order to assert admiralty jurisdiction as an alternative basis
for subject matter jurisdiction. The court denied both motions
on December 10, 1999, and this appeal followed.
The district court dismissed appellant's
complaint on two grounds. First, the court concluded that pursuant
to the provisions of the Puerto Rico Long-Arm statute, appellees
lacked sufficient minimum contacts with the forum to be subject
to personal jurisdiction therein. Uffner v. La Reunion
Francaise, No. 00-1231 (D.P.R. Sept. 21 1999) (judgment granting
motion to dismiss). In addition, the court determined that the
suit involved a contract claim unrelated to the District of Puerto
Rico, making it an improper forum for litigation. Id.
We review the court's legal conclusions supporting the dismissal
de novo. Ticketmaster-New York, Inc. v. Alioto,
26 F.3d 201, 204 (1st Cir. 1994).
A. Personal Jurisdiction
In their motions to dismiss, appellees
argued that the court lacked subject matter jurisdiction, Fed.
R. Civ. P. 12(b)(1), that Uffner failed to state a claim for
which relief could be granted, Fed. R. Civ. P. 12(b)(6), and
that venue was improper, Fed. R. Civ. P. 12(b)(3). None of the
parties raised any objection to personal jurisdiction. See
Fed. R. Civ. P. 12(b)(2). Nevertheless, the court itself raised
and disposed of the motion on this ground. In doing so, it overlooked
the provisions of Fed. R. Civ. P. 12(g), which states that "[i]f
a party makes a motion under this rule but omits therefrom any
defense or objection then available to the party which this rule
permits to be raised by motion, the party shall not thereafter
make a motion based on the defense or objection so omitted .
. . ." Rule 12(h)(1)(A) provides, in turn, that "[a]
defense of lack of personal jurisdiction over the person is waived
. . . if omitted from a motion in the circumstances described
in subdivision (g) . . . ." Fed. R. Civ. P. 12(h)(1)(A).
By failing to include a 12(b)(2) argument in their motion to
dismiss, appellees waived this defense in the district court.
Glater v. Eli Lilly & Co., 712 F.2d 735, 738
(1st Cir. 1983) ("It is clear . . . that defendants wishing
to raise [a defense of lack of personal jurisdiction] must do
so in their first defensive move, be it a Rule 12 motion or a
Once a party has waived its defense
of lack of personal jurisdiction, the court may not, sua
sponte, raise the issue in its ruling on a motion to dismiss.
Pilgrim Badge & Label Corp. v. Barrios, 857
F.2d 1, 3 (1st Cir. 1988) (per curiam). This is so because, since
personal jurisdiction may be acquired through voluntary appearance
and the filing of responsive pleadings without objection, the
court has no independent reason to visit the issue.(2)See
id. Furthermore, such a prohibition avoids prejudicing
the plaintiff, who has not had an opportunity to respond to the
issue before the court, and promotes the purpose of Rules 12(g)
and (h). Seeid. (noting that the rules serve "to
eliminate the presentation of these defenses in a piecemeal fashion").
There is no evidence here that the Rule 12(b)(2) defense was
unavailable to appellees at the time they filed their answer.
See Glater, 712 F.2d at 738 (finding an exception
to the strict waiver rule when the defense was not available
when the motion was filed). Nor is this merely a case of a litigant
improperly characterizing a substantive argument for lack of
personal jurisdiction under a different subsection. See
LCF Lessors, Inc. v. Pac. Sewer Maint. Corp., 739
F.2d 4, 7 (1st Cir. 1984) (stating that this Court is not "bound
by the label below") (internal citation omitted). Rather,
appellees simply failed to raise the issue in their motion to
dismiss and thereby consented to the court's jurisdiction. Since
the court was not at liberty to nullify appellees' consent, we
conclude that the district court erred in dismissing the complaint
for lack of personal jurisdiction.(3)
Due to its focus on personal jurisdiction,
the district court dealt only perfunctorily with the issue of
whether venue was proper in the district of Puerto Rico. Specifically,
the court found that the appellant's claim sounded in contract
rather than tort. As such, the court observed, the claim was
wholly unrelated to Puerto Rico: the "triggering event"
was the denial of the claim and "[t]he issue at bar is the
interpretation of the contract." The court also noted that
the contract was neither negotiated nor formed in Puerto Rico.
Finally, according to the court, the occurrence of the fire in
Puerto Rican waters was "a tenuous connection at best."
To begin, the distinction between
tort and contract is immaterial to the requirements for venue
set forth in the general venue statute, 28 U.S.C. § 1391(a).(4) Under this statute,
[a] civil action wherein jurisdiction
is founded only on diversity of citizenship may, except as otherwise
provided by law, be brought only in (1) a judicial district where
any defendant resides, if all defendants reside in the same State,
(2) a judicial district in which a substantial part of the events
or omissions giving rise to the claim occurred, or a substantial
part of the property that is the subject of the action is situated,
or (3) a judicial district in which any defendant is subject
to personal jurisdiction at the time the action is commenced,
if there is no district in which the action may be otherwise
28 U.S.C. § 1391(a). There
is no dispute that § 1391(a)(1) is inapplicable in this
case. The question, then, is whether "a substantial part
of the events . . . giving rise to the claim occurred" in
Prior to 1990, § 1391(a) provided
venue in "the judicial district . . . in which the claim
arose." 28 U.S.C. § 1391(a) (1988). Congress amended
the statute to its current form because it found that the old
language "led to wasteful litigation whenever several different
forums were involved in the transaction leading up to the dispute."
Cottman Transmission Sys. v. Martino, 36 F.3d 291,
294 (3d Cir. 1994) (citing Rep. of the Fed. Cts. Study Comm.
94 (Comm. Print 1990)). The pre-amendment statute also engendered
a plethora of tests to determine the single venue in which the
claim "arose." See, e.g., Rosenfeld
v. S.F.C. Corp., 702 F.2d 282, 284 (1st Cir. 1983) (observing
that the Court could choose one of several approaches, including
the "significant contacts" test, the "place of
injury" test, or the "convenience of the parties"
test) (internal citations omitted). By contrast, many circuits
have interpreted the legislative history of the 1990 amendment
as evincing Congress's recognition that when the events underlying
a claim have taken place in different places, venue may be proper
in any number of districts. See First Mich. Corp.
v. Bramlet, 141 F.3d 260, 263 (6th Cir. 1998) (citing
Setco Enters. Corp. v. Robbins, 19 F.3d 1278, 1281
(8th Cir. 1994) (asking "whether the district the plaintiff
chose had a substantial connection to the claim, whether or not
other forums had greater contacts")); Bates v. C
& S Adjusters, Inc., 980 F.2d 865, 867 (2d Cir. 1992)
(stating that "the new statute does not, as a general matter,
require the District Court to determine the best venue");
cf. Cottman, 36 F.3d 291 at 294 (noting the amendment's
departure from the earlier version of the law, which "had
encouraged an approach that a claim could generally arise in
only one venue"). We look, therefore, not to a single "triggering
event" prompting the action, but to the entire sequence
of events underlying the claim. See Bramlet, 141
F.3d 260 at 263-64 (concluding that the district court misapplied
the statute in basing its determination of improper venue "on
a single occurrence which directly gave rise to the plaintiff's
In so doing, we consider the following
acts: (1) appellant, a resident of the Virgin Islands, obtained
an insurance policy for his yacht, La Mer;(6)
(2) the insured vessel caught fire and sank in Puerto Rican waters;
(3) appellant filed a claim with appellees through his insurance
broker demanding payment for this loss; and (4) the claim was
ultimately denied because it was allegedly not covered by the
policy. Though this is merely a skeletal outline of events leading
to the claim, for purposes of this appeal, we need just establish
that the sinking of La Mer was one part of the historical
predicate for the instant suit.(7)
It is the only event, however, that occurred in Puerto Rico.
For venue to be proper in that district, therefore, the loss
of La Mer must be "substantial." See
Cottman, 36 F.3d at 294 (noting that "substantiality"
requirement provides the venue statute with a limiting principle).
Appellees argue that Uffner's complaint
alleges a bad faith denial of his insurance claim, not that the
loss itself was due to their fault or negligence. Consequently,
they reason, the sinking of the vessel cannot be considered "substantial."
It is true, as the district court pointed out, that the legal
question in the suit is "whether [an out-of-water survey]
was necessary under the terms of the insurance contract."
Resolving this issue does not require an investigation into how,
when, or why the accident occurred. In this sense, the sinking
of Uffner's yacht is not related to the principal question for
However, an event need not be a
point of dispute between the parties in order to constitute a
substantial event giving rise to the claim. Cf. Woodke
v. Dahm, 70 F.3d 983, 986 (8th Cir. 1995) (requiring that
the event itself be "wrongful" in order to support
venue). In this case, Uffner's bad faith denial claim alleges
that the loss of his yacht was covered by the contract and the
payment due to him wrongfully denied. Thus, although the sinking
of La Mer is itself not in dispute, the event is connected
to the claim inasmuch as Uffner's requested damages include recovery
for the loss. We conclude that, in a suit against an insurance
company to recover for losses resulting from a vessel casualty,
the jurisdiction where that loss occurred is "substantial"
for venue purposes.
We add that our conclusion does
not thwart the general purpose of statutorily specified venue,
which is "to protect the defendant against the risk that
a plaintiff will select an unfair or inconvenient place of trial."
LeRoy v. Great W. United Corp., 443 U.S. 173, 183-84
(1979). First, appellees have not alleged -- either below or
on appeal -- that continuing the suit in the district of Puerto
Rico would confer a tactical advantage to appellant or prejudice
their own case in any way. We also highlight the absence of a
forum-selection clause in the insurance policy indicating appellees'
preferred forum for litigation.(8)
Finally, appellees conceded at oral argument that they would
not object to litigating in the Virgin Islands, suggesting that
traveling to the Caribbean would not be unduly burdensome. We
therefore hold that venue properly lies in the district of Puerto
Appellees have suggested that venue
is proper in the Virgin Islands or in Georgia. We do not address
these possibilities since, as we have already noted, § 1391
contemplates that venue may be proper in several districts. In
this case, Puerto Rico is at least one of them.
The judgment of the district court
is vacated and the case remanded for further proceedings.
1. Of the District
of Puerto Rico, sitting by designation.
2. Unlike subject-matter
jurisdiction, which is a statutory and constitutional restriction
on the power of the court, see U.S. Const. art. III, §
1, personal jurisdiction arises from the Due Process Clause and
protects an individual liberty interest. Ins. Corp. of Ir.,
Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S.
694, 702 (1982). The ability to waive this right thus reflects
the principle that "the individual can subject himself to
powers from which he may otherwise be protected." Id.
at 703 n.10.
3. We need not
address the district court's denial of appellant's motion to
amend the complaint, since this motion appears to have been an
effort to circumvent the court's ruling concerning personal jurisdiction.
However, because we are free to affirm the court's judgment on
alternative grounds, see Ticketmaster, 26 F.3d
at 204, we must confront the issue of venue.
4. We add, tangentially,
that the question of whether a bad faith denial of an insurance
claim is an issue of contract or tort is a matter of state law
that has not yet been addressed by the courts of Puerto Rico.
See Noble v. Corporación Insular de Seguros,
738 F.2d 51, 53 (1st Cir. 1984) (deciding that such an action
would fall under either Civil Code Article 1802, 31 L.P.R.A.
§ 5141 (tort), or Article 1504, 31 L.P.R.A. § 3018
(contract)). But see Event Producers Inc. v. Tyser
& Co., 854 F. Supp. 35, 38-39 (D.P.R. 1993) (concluding
that the Puerto Rico Supreme Court would probably follow the
trend in most states and allow a tort action for bad faith refusals
to pay insurance).
5. We turn to
the third alternative only in the event that the first two provisions
fail to provide an appropriate forum.
6. As far as
the record suggests, this contract was drafted in France, underwritten
in England, and issued to appellant through Georgia.
7. In considering
"events or omissions" for purposes of venue, we decline
to adopt the Eighth Circuit's approach, which looks only at the
acts of the defendant. See Woodke v. Dahm,
70 F.3d 983, 985 (8th Cir. 1995). Instead, we join those courts
that have chosen a more holistic view of the acts underlying
a claim. See Bramlet, 141 F.3d at 263; Cottman,
36 F.3d at 294; Bates, 980 F.2d at 868.
8. Indeed, the
contract broadly states that "in the event of the failure
of the Underwriters . . . to pay any amount claimed to be due
hereunder, the Underwriters, at the request of the Assured, will
submit to the jurisdiction of a court of competent jurisdiction
within the United States of America."