On appeal from the Superior Court, Appellate Division.
Chief Justice Wilentz and Justices Handler, Pollock, Garibaldi and Stein join in Justice Clifford's opinion. Justice O'hern flied a separate Concurring opinion.
The opinion of the court was delivered by CLIFFORD, J.
On this interlocutory appeal, two rulings of the trial court raise issues of first impression. In denying defense motions to dismiss this declaratory-judgment action, the court held, first, that a "territory of coverage" clause in an insurance policy, without more, is a sufficient basis on which to rest in personam jurisdiction over a nonresident insurance carrier. With that holding the trial court became the only court in this or any other jurisdiction to declare that a "territory of coverage" clause standing alone confers jurisdiction over an alien insurer. Second, the trial court held that New Jersey's "interest nexus" in resolving massive environmental insurance-coverage cases comprehensively can, by itself, confer personal jurisdiction over foreign carriers with no ties whatsoever to this state.
Because we conclude that both holdings are erroneous, we vacate the trial court's order and remand for entry of judgment for defendants-appellants.
Plaintiffs are Waste Management, Inc., fifty-four of its present subsidiaries, and one of its former subsidiaries. They are engaged in the disposal of solid- and hazardous-waste products. Plaintiffs are subject to environmental damage claims by customers, governmental agencies, and others. Defendants, various insurers of plaintiffs, have denied coverage for those claims. Plaintiffs therefore brought this declaratory-judgment action to establish liability coverage for pollution-related damage at ninety-seven sites in twenty-two states and Canada. Seventeen of those sites lie in New Jersey.
Among the 150 defendant insurers are out-of-state carriers that have conducted no activities of any sort in New Jersey and whose policies, written elsewhere, contain no reference to New Jersey risks. Each of the policies, however, contains a "territory of coverage" clause, generally extending coverage to the United States and Canada. Examples of such clauses are: "The policy applies only to bodily injury or property damage * * * [that] occurs during the policy term as stated in the Declarations within the United States of America, its territories or possessions, Canada or Mexico * * * ," and "This policy covers only within Canada and the Continental Limits of the United States of America (excluding Alaska)."
Many of the out-of-state insurers brought motions to have the declaratory-judgment action dismissed, principally on grounds of lack of personal jurisdiction and forum non conveniens. When the trial court denied the motions to dismiss, five of the defendant insurers sought leave to appeal to the Appellate Division, which that court denied. We granted leave to appeal, 133 N.J. 414-15 (1993).
The five carriers before us on this appeal have no connection with New Jersey, but their policies all contain "territory of coverage" clauses providing liability coverage for losses occurring in the United States or Canada. Four of those carriers are referred to as the Canadian Insurers: Canadian General Insurance Company, Commercial Union Assurance Company of Canada, Royal Insurance Company of Canada, and Wellington Insurance Company. The Canadian Insurers do no business in New jersey, are not licensed to do business in New Jersey, and claim that they issued their respective policies only after ascertaining that their single insured in this litigation conducted operations in Canada alone. That insured, WMU Waste Management of Canada, Inc. (Waste Management of Canada), is neither licensed to do business in New Jersey nor involved in sites related to New Jersey. The sole site insured by the Canadian Insurers lies in Ontario and is the subject of litigation in that province's Supreme Court. Waste Management of Canada seeks, as part of this suit in New Jersey, a declaration that the Canadian Insurers are liable for any judgment entered by the Supreme Court of Ontario.
The Canadian Insurers appeal the denial of their motions to dismiss on both the jurisdiction and forum non conveniens issues. They argue that they will suffer irreparable injury, as contemplated by Rule 2:2-2(b) governing interlocutory appeals to this Court, if the decision below is sustained. They contend that if forced to defend in New Jersey on the coverage issue, they will lose the right to contest the resulting judgment in Canadian courts; that Canada is the appropriate forum because the insuring transaction and any insured event took place in Canada, where the site and the witnesses are located; and that subjecting them to the cost and complexity of this tangled litigation is unfair.
The fifth carrier on this appeal, Auto Owners Insurance Company (Auto Owners), raises only the claim that New Jersey courts lack jurisdiction over it. Auto Owners is not authorized, licensed, or qualified to do business in New Jersey, nor has it ever issued a policy to a New Jersey domiciliary or insured any risks located in this state. It is a Michigan corporation that issued policies to businesses that operate waste-disposal facilities and conduct local waste-hauling activities in Michigan. It asserts that it has no minimum contacts with New Jersey and that the "territory of coverage" clause does not by itself afford a basis of jurisdiction.
The basic question is whether the trial court's determination that New Jersey has personal jurisdiction over these defendants runs afoul of due-process considerations. Our Discussion of that issue starts with a restatement of some fundamental propositions.
If a cause of action arises directly out of a defendant's contacts with the forum state, the court's jurisdiction is "specific." Lebel v. Everglades Marina, Inc., 115 N.J. 317, 322, 558 A.2d 1252 (1989). If, however, the suit is not related directly to the defendant's contacts with the forum state, but is based instead on the defendant's continuous and systematic activities in the forum, then the State's exercise of jurisdiction is "general." Id. at 323; see also Helicopteros Nacionales de Colum., S.A. v. Hall, 466 U.S. 408, 414 n.9, 104 S. Ct. 1868, 1872 n.9, 80 L. Ed. 2d 404, 411 n.9 (1984) (discussing general jurisdiction).
In Hanson v. Denckla, 357 U.S. 235, 251, 78 S. Ct. 1228, 1238, 2 L. Ed. 2d 1283, 1296 (1958), the Supreme Court, striking down an exercise of personal jurisdiction over out-of-state defendants, pointed to a shift from the rigid rule of Pennoyer v. Neff, 95 U.S. 714, 24 S. Ct. 565, 24 L. Ed. 565 (1878), which had required actual presence in a state, to a more flexible standard of "minimum contacts" under International Shoe v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). "Minimum contacts" are the threshold requirements for specific personal jurisdiction. Hanson, supra, 357 U.S. at 253, 78 S. Ct. at 1239-40, 2 L. Ed. 2d at 1298. "It is essential that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefit and protection of its laws." Id. at 253, 78 S. Ct. at 1240, 2 L. Ed. 2d at 1298 (citing International Shoe, supra, 326 U.S. at 319, 66 S. Ct. at 159, 90 L. Ed. at 103).
In World-Wide Volkswagen v. Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980), the Supreme Court clarified the purposes of the "minimum contacts" doctrine: to protect a defendant against litigating in an inconvenient forum and to ensure that States not exceed their jurisdictional limits under our federal system. Id. at 291-92, 100 S. Ct. at 564, 62 L. Ed. 2d at 498. The first interest, that of ensuring against litigating in inconvenient forums, requires that "maintenance of the suit" * * * not offend "traditional notions of fair play and substantial Justice."'" Id. at 292, 100 S. Ct. at 564, 62 L. Ed. 2d at 498 (quoting International Shoe, supra, 326 U.S. at 316, 66 S. Ct. at 154, 90 L. Ed. at 102 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 342, 85 L. Ed. 278, 283 (1940))). That end is achieved through the requirement that "the relationship between the defendant and the forum * * * be such that it is 'reasonable * * * to require the corporation to defend the particular suit which is brought there.'" Ibid. (quoting International Shoe, supra, 326 U.S. at 317, 66 S. Ct. at 158, 90 L. Ed. at 102 (omission in original)). The second interest, the jurisdictional limitations, "has been relaxed substantially over the years" because of the "fundamental transformation in the American economy." Id. at 292-93, 100 S. Ct. at 565, 62 L. Ed. 2d at 498. Nonetheless, minimum contacts remain the threshold requirement of jurisdiction. Id. at 294, 100 S. Ct. at 565-66, 62 L. Ed. 2d at 499-500.
Critical to the due-process analysis is the question whether the defendant should reasonably anticipate being haled into court in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528, 542 (1985). The record must demonstrate that the defendant has purposefully availed itself of the privilege of engaging in activities within the forum state, thereby gaining the benefits and protections of its laws. Id. at 475, 105 S. Ct. at 2183, 85 L. Ed. 2d at 542. In that way defendants are protected against being haled into court in a ...