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Conn. SC: Insurance commissioner can't reach out-of-state business

By John O'Brien | May 23, 2007

HARTFORD, Conn. - Though it seemed to be performing business where it wasn't licensed to, American Transit Insurance Co. recently received a bit of good news from the Connecticut Supreme Court.

American Transit will not have to comply with former state Insurance Commissioner Susan Cogswell's subpoena because it is not licensed in and has no places of business or property in the state, a Tuesday opinion authored by Justice Joette Katz says.

The company, based in New York, was saved by an exception to the state's long arm statute that applies to out-of-state insurance companies.

"(T)he defendant claims that the trial court improperly concluded that it had personal jurisdiction over the defendant and improperly rendered summary judgment in favor of the plaintiff because disputed issues of fact remain concerning the extent of the defendant's activities in Connecticut to support jurisdiction as well as the burdensomeness of the subpoena," Katz wrote.

"We conclude that the exercise of jurisdiction in the present case would violate due process. Accordingly, the trial court lacked jurisdiction over the defendant and, therefore, we reverse the judgment."

The case concerns an automobile accident involving the defendant's insured and Mickey Reavis, a Connecticut resident. Reavis received a letter and phone call from American Transit, but was unhappy with the insurer and filed a complaint with Connecticut's Department of Insurance.

During that investigation, the DOI determined American Transit was not licensed in the state, and that the appraisal company that evaluated Reavis' car had performed other work in Connecticut for the company.

Cogswell subpoenaed American Transit, asking for specific documents related to its business from Jan. 1, 1998-Oct. 9, 2003. Eventually, Cogswell began litigating against American Transit to force it to comply with the request.

A trial court granted Cogswell's motion for summary judgment. American Transit argued the trial court overlooked a statute not brought by either side, though.

"The defendant... claims that the long arm statute does not reach its conduct in the present case because its actions fell under an exception to the long arm statute... for certain transactions involving out-of-state insurance policies," Katz said. "Because it raises this statutory exception for the first time on appeal to this court, the defendant seeks to prevail under the plain error doctrine."

The court agreed with American Transit, even though Attorney General Richard Blumenthal's office represented Cogswell.

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