Case: 17-20678 Document: 00514920694 Page: 1 Date Filed: 04/17/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 17-20678
FILED
April 17, 2019
Lyle W. Cayce
Clerk
HALLIBURTON ENERGY SERVICES, INCORPORATED,
Plaintiff - Appellee
v.
IRONSHORE SPECIALTY INSURANCE COMPANY,
Defendant – Appellant
------------------------------------------------------------------------------
Consolidated with 18-20239
HALLIBURTON ENERGY SERVICES, INCORPORATED,
Plaintiff - Appellant
v.
IRONSHORE SPECIALTY INSURANCE COMPANY,
Defendant - Appellee
Appeals from the United States District Court
for the Southern District of Texas
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No. 17-20678
c/w No. 18-20239
Before STEWART, Chief Judge, and SOUTHWICK and ENGELHARDT,
Circuit Judges.
CARL E. STEWART, Chief Judge:
An oil rig caught fire and exploded in Ohio. Statoil USA Onshore
Properties operated the rig, Halliburton Energy Services fracked at the rig site,
and Ironshore Specialty Insurance Company insured Statoil. Now, all the
parties disagree about who is on the financial hook for the damage.
Ironshore paid roughly $12 million to Statoil to cover a portion of the
damages, while Halliburton paid nothing. But Ironshore didn’t go away
quietly—it sent a letter to Halliburton, demanding payment and asserting
subrogation rights under the Master Services Agreement (“MSA”), a contract
between Statoil and Halliburton. Halliburton responded with this preemptive
declaratory judgment action, arguing that it owes nothing under the MSA.
Halliburton also tacked on a breach of contract claim, arguing that Ironshore
should have indemnified Halliburton. Rather than litigate these issues in
federal court, Ironshore sought a private resolution through arbitration.
This case turns on two issues. First, whether the MSA dispute should
go to arbitration. And second, whether the court has personal jurisdiction over
Ironshore for the remaining breach of contract claim. The district court held
that arbitration was not required—Ironshore could not invoke the arbitration
clause in the MSA because it waived any subrogation rights. Then, the district
court held that it lacked personal jurisdiction over Ironshore and dismissed the
case.
We hold that the district court erred when it held that Ironshore waived
its subrogation rights under the MSA. We therefore REVERSE its arbitration
ruling in appeal No. 17-20678. The district court was correct, however, when
it held that it lacked personal jurisdiction over Ironshore. We therefore
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AFFIRM the district court’s personal jurisdiction ruling in appeal No. 18-
20239.
I. Factual Background & Procedural History
This case centers on an insurance dispute following an explosion and fire
on an oil-and-gas rig in Ohio. 1 The rig at issue was operated by Statoil, which
is not a party to this lawsuit; Halliburton fracked at the well; and Ironshore
insured Statoil.
Prior to the explosion, Statoil entered into two contracts that form the
basis of this dispute. First, Statoil contracted with the plaintiff, Halliburton.
While operating the rig, Statoil hired Halliburton to perform fracking
operations. They memorialized their relationship in an Onshore Master
Services Agreement (“MSA”).
The MSA is relevant here because it allocated risk among the parties. It
contained various indemnification provisions, which shifted liability for some
accidents to Statoil and others to Halliburton. In the event of a dispute about
these provisions, the MSA required the parties to submit to binding arbitration
in Texas.
The MSA contained multiple references to Texas. The MSA required
Halliburton to send invoices to Statoil’s Houston address; it contained a Texas-
specific indemnity provision; and it required the parties to resolve any disputes
in Texas under Texas law. Halliburton and Statoil also both listed their
principal places of business as Houston, Texas.
The second relevant contract is an insurance policy—a Site Pollution
Incident Legal Liability Select (or “SPILLS”) policy—that Statoil entered into
1On June 28, 2014, a hydraulic line broke at a well pad, and fluid in the line sprayed
onto some nearby hot equipment, causing the explosion.
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with Ironshore. Under this policy, Ironshore agreed to waive subrogation
rights as required by written contract. It also agreed to insure Statoil in
accordance with Texas surplus lines laws.
On June 28, 2014, the explosion occurred, spurring a flurry of
declaratory judgment actions by Statoil’s insurers. The primary lawsuit was
filed by one of Statoil’s other insurers in Texas. Ironshore was named as a
defendant in that action. Ironshore responded by filing its own declaratory
judgment action in New York.
Eventually, the insurers settled and agreed to reimburse Statoil for $24
million, with Ironshore paying roughly $12 million. The insurers, however,
reserved their rights against each other and agreed to litigate the proper
allocation of the settlement amount among themselves in the Texas action.
Each insurer reserved the right to argue for the application of any state law.
Following the settlement, Ironshore sent a letter to Halliburton
requesting indemnification under the MSA. More specifically, Ironshore asked
Halliburton to waive arbitration and negotiate Halliburton’s potential liability.
The request failed—Halliburton rejected the offer and filed this breach of
contract and declaratory judgment action, requesting the district court to hold
that (1) Halliburton is an “additional insured” under the SPILLS policy and,
therefore, not liable for indemnification; (2) Ironshore breached the SPILLS
policy by not defending and indemnifying Halliburton as an additional insured;
and (3) Ironshore waived its subrogation rights. Ironshore responded by filing
(1) a motion to stay pending arbitration under Section 3 of the Federal
Arbitration Act (“FAA”), 9 U.S.C. § 3, and (2) a motion to dismiss for lack of
personal jurisdiction. The district court ruled on both motions.
The district court first addressed Ironshore’s motion to stay pending
arbitration. The court denied the motion, holding that Ironshore could not
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compel arbitration because there was no binding arbitration agreement
between Ironshore and Halliburton. Ironshore filed an interlocutory appeal of
that ruling, which was docketed as case number 17-20678.
After ruling on Ironshore’s motion to stay pending arbitration, the
district court ruled on Ironshore’s motion to dismiss for lack of personal
jurisdiction. The court first held that it did not have general jurisdiction over
Ironshore because Ironshore did not have any substantial contacts with Texas.
It also held that it lacked specific jurisdiction over Ironshore because Ironshore
did not have minimum contacts with the forum state. Haliburton appealed,
and the appeal was docketed as case number 18-20239. Both cases were then
consolidated.
II. The District Court’s Arbitration Ruling
The district court first addressed whether there was a binding
arbitration clause between Ironshore and Halliburton. The court determined
that there was not and denied Ironshore’s motion to stay pending arbitration.
We disagree.
A. Background Arbitration Law
This court reviews a district court’s ruling on a motion to compel
arbitration and stay litigation de novo. 2 Hadnot v. Bay, Ltd., 344 F.3d 474,
476 (5th Cir. 2003) (citing Webb v. Investacorp, Inc., 89 F.3d 252, 257 (5th Cir.
2 We address the arbitration question before turning to personal jurisdiction because
Ironshore submitted to the court’s personal jurisdiction for the limited purpose of compelling
arbitration. This court has definitively held that a defendant can subject itself to the court’s
jurisdiction for “the limited purpose of compelling arbitration” without waiving challenges to
personal jurisdiction for other purposes. Int’l Energy Ventures Mgmt., L.L.C. v. United
Energy Grp., Ltd., 818 F.3d 193, 212 (5th Cir. 2016) (internal citation and quotation marks
omitted); see also Encompass Power Servs., Inc. v. Eng’g & Constr. Co., 224 F. App’x 329, 331
(5th Cir. 2007) (unpublished) (per curiam); PaineWebber, Inc. v. Chase Manhattan Private
Bank (Switz.), 260 F.3d 453, 461 (5th Cir. 2001).
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1996)). A district court’s interpretation of the scope of an arbitration
agreement is also subject to this court’s plenary review. See Freudensprung v.
Offshore Tech. Servs., Inc., 379 F.3d 327, 337 (5th Cir. 2004); Pennzoil Expl. &
Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1065 (5th Cir. 1998).
Under the FAA, ordinary principles of state contract law determine
whether there is a valid agreement to arbitrate. 3 See Arthur Andersen LLP v.
Carlisle, 556 U.S. 624, 630 (2009) (“Neither [section 2 nor 3 of the FAA]
purports to alter background principles of state contract law regarding the
scope of agreements (including the question of who is bound by them).”); see
also Jody James Farms, JV v. Altman Grp., Inc., 547 S.W.3d 624, 631 (Tex.
2018); In re Rubiola, 334 S.W.3d 220, 224 (Tex. 2011). Here, Texas state law
governing “the validity, revocability, and enforceability of contracts generally”
controls the dispute. Arthur Andersen, 556 U.S. at 631.
Under Texas law, a party can compel arbitration only by establishing:
(1) the existence of a valid agreement to arbitrate; and (2) that the claims
asserted by the party attempting to compel arbitration are within the scope of
the arbitration agreement. Certain Underwriters at Lloyd’s of London v.
Celebrity, Inc., 950 S.W.2d 375, 377 (Tex. App.—Tyler 1996, writ dism’d w.o.j).
Both the existence issue and scope issue are decided by the court. See Tex. Civ.
Prac. & Rem. Code Ann. § 171.021; Howell Crude Oil Co. v. Tana Oil & Gas
Corp., 860 S.W.2d 634, 639 (Tex. App.—Corpus Christi 1993, no writ).
A party seeking to compel arbitration must first show that a valid
arbitration agreement exists between the parties, a determination governed by
3 Section 3 of the FAA permits litigants already in federal court to invoke arbitration
agreements. 9 U.S.C. § 3. That provision requires courts, “on application of one of the
parties,” to stay the actions if it involves an issue “referable to arbitration under [the]
agreement.” Id.
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traditional state contract principles. Jody James Farms, 547 S.W.3d at 631.
Under these principles, the court must determine whether an arbitration
agreement exists based on the parties’ intent as expressed in the terms of the
contract. Chrysler Ins. Co. v. Greenspoint Dodge of Hous., Inc., 297 S.W.3d 248,
252 (Tex. 2009).
The parties’ intent controls even when a non-signatory to the arbitration
agreement seeks to enforce it. Non-signatories sometimes try to enforce an
arbitration agreement against a signatory, who will often respond by arguing
that the arbitration agreement exists only between the signatories. When
parties dispute whether a “non-signatory can compel arbitration pursuant to
an arbitration clause,” their dispute “questions the existence of a valid
arbitration clause between specific parties and is therefore a gateway matter
for the court to decide.” In re Rubiola, 334 S.W.3d at 224; see also In re Weekley
Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005); Sherer v. Green Tree Servicing
LLC, 548 F.3d 379, 381 (5th Cir. 2008).
Although arbitration agreements apply to non-signatories “only in rare
circumstances,” the question of “[w]ho is actually bound by an arbitration
agreement is [ultimately] a function of the intent of the parties, as expressed
in the terms of the agreement.” Bridas S.A.P.I.C. v. Gov’t of Turkm., 345 F.3d
347, 355, 358 (5th Cir. 2003); see also In re Rubiola, 334 S.W.3d at 224 (closely
examining an arbitration agreement to determine if a non-signatory could
compel arbitration). Courts addressing whether a non-signatory can enforce
an arbitration agreement are guided by “‘traditional principles’ of state law,”
which “allow a contract to be enforced by or against nonparties to the contract
through assumption, piercing the corporate veil, alter ego, incorporation by
reference, third-party beneficiary theories, waiver and estoppel.” Arthur
Andersen, 556 U.S. at 631 (holding that “the Sixth Circuit’s holding that
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nonparties to a contract are categorically barred from § 3 relief was error”); see
also In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 738 (Tex. 2005)
(“[U]nder certain circumstances, principles of contract law and agency may
bind a non-signatory to an arbitration agreement.”). A non-signatory can also
enforce an arbitration agreement through subrogation. See Trefny v. Bear
Stearns Secs. Corp., 243 B.R. 300, 316 (S.D. Tex. 1999) (“[T]he law is clear that
a nonsignatory to an agreement containing an arbitration clause may be
treated as bound by the arbitration agreement . . . [through] subrogation.”).
While parties can select an arbitrator to determine whether their arbitration
agreement is valid, courts strongly presume that a judge should resolve the
issue, especially when a non-signatory seeks to enforce the arbitration
agreement. Jody James Farms, 547 S.W.3d at 632 (holding that courts should
use a strong “presumption favoring a judicial determination” of whether an
arbitration agreement exists).
After proving that a valid arbitration agreement exists, the party
seeking to compel arbitration must show that the dispute falls within the scope
of the agreement. Celebrity, 950 S.W.2d at 378. This question—which can
include a question about who decides arbitrability—is one of contract
interpretation. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 626 (1985) (“[T]he first task of a court asked to compel arbitration
of a dispute is to determine whether the parties agreed to arbitrate that
dispute. . . . [A]s with any other contract, the parties’ intentions control . . . .”);
First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995) (“Just as the
arbitrability of the merits of a dispute depends upon whether the parties
agreed to arbitrate that dispute, so the question ‘who has the primary power
to decide arbitrability’ turns upon what the parties agreed about that matter.”
(emphasis in original)). As a contract interpretation issue, a court can only
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determine arbitrability by looking to the arbitration clause itself. See Louis
Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 225 (2d
Cir. 2001) (“[A] court must determine whether . . . the language of the clause,
taken as a whole, evidences the parties’ intent to have arbitration serve as the
primary recourse for disputes connected to the agreement containing the
clause . . . .”).
If the trial court finds that a valid agreement to arbitrate exists and that
the claims asserted fall within that agreement, it is required to compel
arbitration. See Phillips v. ACS Mun. Brokers, Inc., 888 S.W.2d 872, 875 (Tex.
App.—Dallas 1994, no writ); Prudential Secs. Inc. v. Banales, 860 S.W.2d 594,
597 (Tex. App.—Corpus Christi 1993, no writ). If, on the other hand, the trial
court determines that there is no arbitration agreement between the parties,
or that no dispute between them falls within the scope of the binding
arbitration agreement, the court must deny the motion to compel arbitration
with prejudice. ASW Allstate Painting & Constr. Co. v. Lexington Inc. Co, 188
F.3d 307, 311 (5th Cir. 1999).
B. The MSA & Ironshore’s Subrogation Rights
The MSA is the only contract here that contains an arbitration
agreement. From a high level, the primary issue controlling this dispute is
whether the MSA’s arbitration agreement is binding between Ironshore and
Halliburton. Ironshore was not a signatory to the MSA, so to prove that an
arbitration agreement exists between it and Halliburton, Ironshore must rely
on another theory to assert rights under the MSA. See Arthur Andersen, 556
U.S. at 631 (holding that “nonparties to a contract” can enforce an arbitration
clause under Section 3 of the FAA if traditional state law principles allow it);
see also In re Rubiola, 334 S.W.3d at 224 (holding that a dispute over non-
signatory enforcement of an arbitration agreement “questions the existence of
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a valid arbitration clause between specific parties and is therefore a gateway
matter for the court to decide.”). Ironshore chose subrogation. 4 See Trefny,
243 B.R. at 316.
“Subrogation is the substitution of one party for another such that the
new party may assert the rights of the substituted party.” Cont’l Cas. Co. v. N.
Am. Capacity Ins. Co., 683 F.3d 79, 85 (5th Cir. 2012). Subrogation rights
belong to the subrogated party and are waivable only by the insurer, not the
insured. Austin Indep. School Dist. v. H.C. Beck Partners, Ltd., 2009 WL
638189, at *2 n. 3 (Tex. App.—Austin Mar. 13, 2009, pet. dism’d). Texas courts
recognize subrogation rights to their “fullest extent.” Frymire Eng’g Co. ex rel.
Liberty Mut. Ins. Co. v. Jomar Int’l, Ltd., 259 S.W.3d 140, 141 (Tex. 2008)
(quoting Faires v. Cockrill, 31 S.W. 190, 194 (1895) (noting that “the courts of
no state have gone further” than Texas “in applying the doctrine of
subrogation”)); see also Associated Int’l Ins. Co. v. Scottsdale Ins. Co., 862 F.3d
508, 509-10 (5th Cir. 2017).
From a lower level, the nub of this dispute is whether Ironshore waived
its subrogation rights under the MSA. The MSA states that Statoil will “cause
its insurer to waive subrogation against [Halliburton] for liabilities [Statoil]
assumes.” 5 The contract clearly requires Statoil to force its insurer to waive
subrogation. And a full subrogation waiver would preclude Ironshore from
4 In part of its briefing, Ironshore argues that determining whether Ironshore has
subrogation rights is a merits question and, therefore, the district court erred in deciding it.
That argument is wrong. This court must determine whether Ironshore has subrogation
rights in order to determine whether an arbitration agreement exists.
5Ironshore waived subrogation rights in the SPILLS policy it sold to Statoil. But the
subrogation waiver only applied “[t]o the extent required by written contract.” The only
relevant written contract is the MSA, so Ironshore only waived subrogation rights to the
extent required by the MSA.
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enforcing the arbitration clause. But Ironshore only waived subrogation if (1)
it is an insurer under the MSA and (2) the asserted claim involves a liability
that Statoil assumed under the MSA. If Ironshore shows that either of these
elements does not apply, then it retained subrogation rights.
1. Is Ironshore an Insurer?
The first element turns on two main provisions. Under Section 9.1,
Statoil agreed that it “[(1)] will cause its insurer to waive subrogation against
[Halliburton] for liabilities [Statoil] assumes and [(2)] shall maintain, at [its
own] expense, insurance coverage as set forth in Enclosure 2 of the same kind
and in the same amount as is required of [Halliburton].” The primary difficulty
with this provision is whether the second clause, beginning with “and shall
maintain,” modifies the term “insurer.” If it does, then Ironshore does not
qualify as an insurer under Section 9.1 simply because it sold Statoil
insurance—it must have sold Statoil a particular type of insurance. Those
types of insurance are set forth in the second relevant contract provision,
Enclosure 2.
Enclosure 2 sets forth the minimum insurance coverages Statoil must
carry. Those include “Workers’ Compensation and Occupational Disease
Insurance,” “Commercial General Liability Insurance,” “Automobile Liability
Insurance,” “Excess Liability (Umbrella) Insurance,” and “All Risk Property
Insurance.” (We will call these Enclosure 2 policies.)
The face of the contract and limited record do not shed much light on
whether Ironshore qualifies as an “insurer” under the MSA. But Ironshore
points to three main ambiguities to prove that it is not. First, by using the
singular “insurer,” rather than the plural “insurers,” the contract suggests that
Statoil only needed to cause one insurer to waive subrogation rights.
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Second, if Statoil was required to cause more than one insurer to waive
subrogation rights, then another ambiguity arises—whether an “insurer” is
one that sells Enclosure 2 policies. The parties may have intended that only
insurers selling an Enclosure 2 insurance policy waive subrogation rights. For
example, the record shows that two other insurers sold Statoil general
commercial liability insurance and commercial umbrella insurance, both of
which are Enclosure 2 policies. But there is no record of Ironshore selling a
type of Enclosure 2 insurance to Statoil. The term “insurer” might only include
the other two insurers, but not Ironshore. The record is largely silent on
whether Statoil’s “insurer” had to be an insurer that offered an Enclosure 2
type of insurance.
Third, the policy between Ironshore and Statoil did not exist until over a
year and a half after the MSA became effective. This timing could suggest that
Ironshore was not one of the insurers contemplated when the parties drafted
the MSA.
Ultimately, these arguments are not persuasive. First, Ironshore is
clearly an insurer within the normal meaning of the word. Second, the second
phrase, which mentions Enclosure 2, does not appear to modify the term
“insurer”—the word “insurer” comes after the verb phrase “will cause,” and
Enclosure 2 is referenced after a new verb phrase beginning with “shall
maintain.” It would be odd for a drafter to intend that a direct object of one
verb phrase modify the direct object of an entirely different verb phrase
without a clear connection.
Third, the parties seemed to contemplate Statoil maintaining insurance
policies from multiple insurers since the contract required multiple types of
insurance and Statoil did in fact acquire insurance from multiple insurers.
Fourth, the very same sentence using the singular “insurer” goes on to use the
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plural “insurers.” Finally, Ironshore’s timing argument is undercut by the
MSA, which did not require Statoil to acquire its insurance policies before
entering the contract. Ironshore has not provided any additional proof that it
is not an “insurer” under the MSA. Without a convincing argument or
supporting caselaw that it is not an insurer under the MSA, Ironshore has not
carried its burden of proving a valid arbitration agreement on this ground.
2. Did Statoil Assume Liability for the Explosion?
Next is the second element—whether damage from the explosion was a
liability that Statoil assumed. Statoil and Halliburton divided up liabilities in
four primary places in the MSA. First, in Section 12.8 of the MSA, Statoil
agreed to “release, defend, hold harmless and indemnify [Halliburton] against
any Claims resulting from any blowout, fire, explosion, cratering or any
uncontrolled well condition,” “notwithstanding anything contained elsewhere”
in the MSA. Statoil, therefore, agreed to assume liability for damages
resulting from any fire or explosion.
Section 12.8, however, is “subject to” the second section bearing on
Statoil’s liabilities, Section 12.1. In Section 12.1, Halliburton agreed to
“release [Statoil] of any liability for . . . all Claims of every kind and character
. . . arising out of any illness, bodily injury, death or loss or damage to property
of any member of [Halliburton].”
The third place where Statoil assumed liability is Section 12.2, which is
the mirror image of Section 12.1. In Section 12.2, Statoil agrees to “release
[Halliburton] of any liability for . . . all Claims of every kind and character . . .
arising out of any illness, bodily injury, death or loss or damage to property of
any member of [Statoil].”
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A fourth provision further complicates matters. 6 In Section 12.10,
Halliburton agreed to “assume all responsibility for . . . Claims of every kind
and character arising from pollution and contamination, which originates
above the surface of the land or water from items in the possession or control
of anyone within [Halliburton].” Later in the same section, Statoil agreed to
“assume all responsibility for . . . all other pollution or contamination which
may occur during or arising from the conduct of Work.”
Condensing these four sections, Statoil agreed to assume all liability
resulting from a fire or explosion (§ 12.8); Halliburton assumed liability for any
claims arising out of damage to its property (§ 12.1); Statoil assumed liability
for any claims arising out of damage to its property (§ 12.2); and Halliburton
assumed liability for pollution or contamination claims that arise from work or
items in Halliburton’s possession or control (§ 12.10). So, putting these
sections together, Statoil did not assume liability for damage to Halliburton’s
property, even if a fire or explosion caused the damage; Statoil assumed
liability for all damage to its own property and property of third parties, unless
that damage qualifies as pollution or contamination caused by property in
Halliburton’s possession or control. 7
6 The district court did not discuss this provision.
7 The district court held that Section 12.1 controlled over Section 12.8 because Section
12.1 seems to cover nearly all possible harm. But Section 12.1 only covers “damage to
property of any member of [Halliburton].” It does not say anything about damage to property
owned by Statoil or a third party, damage that is covered by Section 12.8. This limiting
language is important because, without it, Section 12.8 is meaningless. And Texas law
requires courts to “read all provisions of an agreement together, interpreting the agreement
so as to give each provision its intended effect.” Mustang Tractor & Equip. Co. v. Liberty
Mut. Ins. Co., 76 F.3d 89, 91 (5th Cir. 1996) (applying Texas law) (internal citation omitted).
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The district court determined that Ironshore made a roughly $12 million
payment to Statoil for damage caused by the fire. But the court did not
determine whose property was damaged in the fire. 8 Nor did it determine what
damage the $12 million payment covered. If Halliburton’s property was
damaged, then Ironshore did not waive subrogation rights, since Statoil did
not assume liability for damage to Halliburton’s property. If, however, Statoil’s
or a third party’s property was damaged, then Ironshore did waive its
subrogation rights and the claim fell outside of the MSA’s arbitration
agreement. Without determining what damage Ironshore reimbursed with its
roughly $12 million payment, the district court could not determine whether
Statoil or Halliburton should be liable for the damage.
The district court also did not determine what kind of damage
Ironshore’s payment was meant to remediate—pollution, contamination, or
otherwise. While the district court stated that the explosion caused
“significant environmental damage,” it did not relate this statement to Section
12.10. Meanwhile, Ironshore argues, with some support, that the explosion
occurred above ground and started with Halliburton’s equipment. Ironshore
further argues that some of the damage resulted from chemical runoff at the
drilling site, which caused environmental harm unrelated to the fire and
explosion. 9 If those contentions are true, then Ironshore likely has a strong
8 In one of Ironshore’s letters to Halliburton, Ironshore pointed out that Halliburton
“was responsible for providing, possessing, and controlling most of the equipment and
materials” at the oil rig. The equipment included “over 40 tanks, trucks, totes, and drums,”
most of which were “compromised in the fire.”
9 In one of Ironshore’s letters to Halliburton, it made clear that the EPA observed
“uncontrolled runoff of liquids from” the oil rig platform, and this runoff “entered an unnamed
tributary . . . which discharges to the Ohio River.” The letter also noted other sources of
chemical runoff. It is unclear whether all the runoff began before the fire, because of the fire,
or during the cleanup operations.
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claim that it did not waive subrogation rights to an indemnification claim. In
short, Ironshore waived some subrogation rights, but not all. The district
court’s opinion, however, incorrectly held that Ironshore waived them all.
Ken Petroleum Corporation v. Questor Drilling Corporation supports this
position. 24 S.W.3d 344 (Tex. 2000). In Ken Petroleum, the Supreme Court of
Texas addressed a similar subrogation dispute, and the court approached the
subrogation waiver clauses with a similarly fine-grained reading,
distinguishing between waived and unwaived subrogation rights:
Sections 13 and 14.9 of the drilling contract require [plaintiff] to
cause its insurers to waive their subrogation rights only with
regard to [plaintiff’s] agreement to indemnify [defendant] for the
death of or injury to [plaintiff’s] employees and certain others. The
drilling contract does not require [plaintiff] to cause its insurers to
waive subrogation rights when they pay amounts that [defendant]
should have paid under its agreement to indemnify [plaintiff]. If
[plaintiff] is not contractually obligated to [defendant] to enforce a
waiver of subrogation, [defendant] cannot insist that [plaintiff]
assert a waiver of subrogation when [plaintiff] and the
Underwriters both agree that the Underwriters stepped into
[plaintiff’s] shoes by paying $450,000 to settle the [other] litigation.
Id. at 355-56 (emphasis added).
Similarly, in Exxon Mobil Corp. v. Insurance Company of State, the
insured caused its insurer to waive subrogation rights against the defendant
for any bodily injuries sustained by the insured’s employees arising out of
operations at Texas plants. No. 17-0200, 2019 WL 638992, at *2 (Tex. Feb. 15,
2019). The injuries in the case happened to the insured’s employees at the
defendant’s Baytown, Texas plant. Id. The court went on to hold that the
claims at issue fell within the subrogation waiver. Id. at *10. But the court
explicitly noted that the case would have been different if the subrogation
waiver were more specific. Id. If, “for example, [the insured] agreed in a
written contract to provide [the defendant] a subrogation waiver for work
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performed at a refinery in Dallas,” rather than all Texas facilities, the waiver
would not cover the claims at issue. Id. Like in Ken Petroleum, the court
distinguished between waived and unwaived subrogation rights. Other cases
take a similar view, closely reading subrogation waivers and distinguishing
between waived and unwaived rights. 10
Here, like in Ken Petroleum and the hypothetical contract in Exxon
Mobil, it is unclear that Statoil assumed liability—and therefore was required
to cause Ironshore to waive subrogation rights—for all damage at the drilling
site. Some of the damage might have been to Halliburton’s equipment, and
some of it might have been environmental. It is therefore possible that
Ironshore paid “amounts that [Halliburton] should have paid under its
agreement to indemnify [Statoil].” Ken Petroleum, 24 S.W.3d at 356. If that is
true, then Ironshore should be able to assert subrogation rights under the
MSA.
The point is that Ironshore did not waive all of its subrogation rights.
Ironshore only waived its subrogation rights to the extent required by the
10 See, e.g., Liberty Mut. Fire Ins. Co. v. Axis Surplus Ins. Co., No. A-16-CA-00870-SS,
2017 WL 6420920, at *6 (W.D. Tex. Dec. 14, 2017) (“[The defendant] seeks to expand [the
insurer’s] subrogation waiver to all indemnity parties recited in the [contract] regardless of
whether [the insured] agreed in writing directly with those parties or whether the indemnity
agreement encompasses the underlying insurance claims at issue. The waiver language,
however, does not support such an expansive reading, and the Court concludes [the plaintiff]
did not waive its subrogation rights against [the defendant] or [the third party] in this case.”);
Catlin Specialty Ins., Co. v. L.A. Contractors, Ltd., No. CIV.A. H-14-261, 2015 WL 6692221,
at *5 (S.D. Tex. Oct. 9, 2015) (“[T]he unambiguous contract language provided that [the
insured’s] waiver of subrogation is not ‘unlimited,’ but was instead limited to insuring [the
insured’s] indemnity obligations. Here, [the insurer] was attempting to enforce [the
defendant’s] indemnity obligation; [the insured’s] indemnity obligation has not been
triggered and thus neither has its waiver of subrogation. . . . Because [the insured] did not
waive its subrogation rights to enforce [the defendant’s] indemnity obligations, [the insurer]
has not waived its right to subrogate [the insured’s] claims.”).
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MSA. Under the MSA, Ironshore maintained subrogation rights for damages
under MSA sections 12.1 for damage to Halliburton’s property and 12.10 for
environmental damage. Because the damages here might involve damage to
Halliburton’s property or environmental damage, and therefore implicate
sections 12.1 and 12.10, Ironshore did not waive its subrogation rights.
Critically, this lack of waiver points to the existence of an arbitration
agreement. If Ironshore decides to assert claims not covered by sections 12.1
or 12.10, or it asserts claims for a liability that Statoil did not assume under
the MSA, those claims will implicate the scope of the arbitration agreement,
not its existence.
We hold that the district court erred. We therefore REVERSE and hold
that there is a binding arbitration agreement between Ironshore, as subrogee,
and Halliburton.
C. Is This Dispute Arbitrable?
Having determined that there is a valid arbitration agreement between
Ironshore, as subrogee, and Halliburton, the next question is whether this
dispute—whether Ironshore can enforce its subrogation rights through
arbitration—is arbitrable. See Jody James Farms, 547 S.W.3d at 633 (holding
that a court must address “whether a valid agreement to arbitrate exists
between [a signatory and non-signatory] before any issue may be referred to
arbitration”).
When a court determines whether a particular dispute falls within the
scope of an arbitration provision, it answers a question of “substantive
arbitrability, which concern[s] the existence, enforceability and scope of an
agreement to arbitrate.” Swearingen v. Swearingen, No. 05-15-01199-CV,
2016 WL 3902747, at *4 (Tex. App.—Dallas July 14, 2016) (citing G.T. Leach
Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 520-21 (Tex. 2015)).
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While questions of substantive arbitrability are usually decided by the trial
court, G.T. Leach Builders, 458 S.W.3d at 520-21, parties can delegate these
questions to the arbitrator, McGehee v. Bowman, 339 S.W.3d 820, 825-26 (Tex.
App.—Dallas 2011, no pet.).
When determining the scope of an arbitration clause, courts typically
“indulge every reasonable presumption in favor of arbitration, and [resolve] all
doubts as to the arbitrability of an issue . . . in favor of arbitration.” Fridl v.
Cook, 908 S.W.2d 507, 511 (Tex. App.—El Paso 1995, writ dism’d w.o.j.); see
also In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001); D. Wilson
Constr. Co., Inc. v. McAllen ISD, 848 S.W.2d 226, 231 (Tex. App.—Corpus
Christi 1992, writ dism’d w.o.j.). But that presumption does not govern when
the parties dispute who determines arbitrability. In that situation, courts
reverse the presumption in favor of arbitration—the “presumption favors
adjudication of arbitrability by the courts absent clear and unmistakable
evidence of the parties’ intent to submit that matter to arbitration.” Jody
James Farms, 547 S.W.3d at 631. Differently put, courts require the party
seeking to force arbitration to prove with clear and unmistakable evidence that
the parties delegated the arbitrability question to an arbitrator. See Jody
James Farms, 547 S.W.3d at 631; see also Henry Schein, Inc. v. Archer & White
Sales, Inc., 139 S. Ct. 524, 531 (2019) (“Under our cases, courts ‘should not
assume that the parties agreed to arbitrate arbitrability unless there is clear
and unmistakable evidence that they did so.’” (quoting First Options, 514 U.S.
at 944 (alterations omitted))).
One way parties can provide such clear and unmistakable evidence of
their intent to delegate these issues is by “expressly incorporat[ing] rules
empowering the arbitrator to decide substantive arbitrability.” Swearingen,
2016 WL 3902747, at *4; see also Saxa Inc. v. DFD Architecture Inc., 312
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S.W.3d 224, 230 (Tex. App.—Dallas 2010, pet. denied). One such rule is Rule
7(a) of the American Arbitration Association’s (“AAA”) Commercial Arbitration
Rules. Rule 7(a) provides that “[t]he arbitrator shall have the power to rule on
his or her own jurisdiction, including any objections with respect to the
existence, scope, or validity of the arbitration agreement or to the arbitrability
of any claim or counterclaim.” AAA, Commercial Arbitration Rules and
Mediation Procedures, R-7, p.13 (Oct. 2013),
https://www.adr.org/sites/default/files/Commercial%20Rules.pdf. Numerous
Texas courts have held that, by incorporating Rule 7(a) into an agreement,
parties reached a “clear and unmistakable agreement that the arbitrator would
decide its jurisdiction and the arbitrability of any claim or counterclaim
concerning disputes between parties who had agreed to arbitrate claims
between them.” Swearingen, 2016 WL 3902747, at *4; see also Schlumberger
Tech. Corp. v. Baker Hughes Inc., 355 S.W.3d 791, 802-03 (Tex. App.—Houston
[1st Dist.] 2011, no pet.). 11
Another way that parties can provide clear and unmistakable evidence
that they intended an arbitrator to decide substantive arbitrability issues is by
crafting a broad arbitration clause. For example, the parties can draft “[a]
broad arbitration clause, purporting to cover all claims, disputes, and other
matters relating to the contract or its breach, creat[ing] a presumption of
11 See also Super Starr Int’l, LLC v. Fresh Tex Produce, LLC, No. 13-17-00184-CV,
2017 WL 4054395, at *4 (Tex. App.—Corpus Christi Sept. 14, 2017) (“[M]any courts—
including this Court—have recognized that incorporation of the AAA rules may constitute
clear and unmistakable evidence that the parties agreed to commit the question of
arbitrability to the arbitrator.”); Jody James Farms, JV v. Altman Grp., Inc., 506 S.W.3d 595,
599 (Tex. App.–Amarillo 2016, pet. filed) (collecting federal cases); In re Rio Grande Xarin II,
Ltd., No. 13-10-00115-CV, 2010 WL 2697145, at *8 (Tex. App.—Corpus Christi July 6, 2010)
(collecting cases).
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arbitrability.” Am. Realty Tr., Inc. v. JDN Real Estate–McKinney, L.P., 74
S.W.3d 527, 531 (Tex. App.—Dallas 2002, pet. denied); see also Saxa, 312
S.W.3d at 229-30.
Here, two MSA provisions show that the parties’ intended to submit
questions of substantive arbitrability to an arbitrator. 12 First, the parties
incorporated the AAA’s rules, including Rule 7(a), into its arbitration
provision. The Rule 7(a) inclusion and arbitration provision here are
indistinguishable from those in other cases where courts gave substantive
arbitrability questions to the arbitrator. 13 See, e.g., Super Starr Int’l, LLC,
2017 WL 4054395, at *4; Saxa, 312 S.W.3d at 230. Second, the parties drafted
a broad arbitration provision covering “[a]ny controversy between the Parties
. . . related to this [MSA] involving the construction or application of any of the
12 Here, the MSA’s arbitration provision—Section 13.2—provides that “[a]ny
controversy between the Parties . . . related to this [MSA] involving the construction or
application of any of the terms, covenants, or conditions of this [MSA] . . . shall . . . be
submitted to binding arbitration in Houston, Texas.” Section 13.2 further specifies that the
American Arbitration Association’s (“AAA”) “commercial arbitration rules” will govern any
disputes.
13 One wrinkle is that the Texas Supreme Court recently held that Rule 7 only
provides clear and unmistakable evidence of the parties’ intent to delegate an issue when the
signatories to the contract are in a dispute. When a non-signatory is involved, however,
incorporating the AAA rules does not provide clear “intent to arbitrate arbitrability.” Jody
James Farms, 547 S.W.3d at 632 (“A contract that is silent on a matter cannot speak to that
matter with unmistakable clarity, so an agreement silent about arbitrating claims against
non-signatories does not unmistakably mandate arbitration of arbitrability in such cases.”).
This holding is inapposite here because the non-signatory, Ironshore, assumed the
position of a signatory, Statoil. As noted above, Texas has a robust view of subrogation rights,
“allowing the insurer to assert any claims or rights held by the insured against a third party.”
Associated Int’l Ins., 862 F.3d 508, 510 (5th Cir. 2017) (citing Mid-Continent Ins. v. Liberty
Mut. Ins., 236 S.W.3d 765, 774 (Tex. 2007)). Courts have even allowed non-signatories with
subrogation rights to reform contracts. Id. Because Ironshore did not waive its subrogation
rights, it now stands in the position of a signatory to the contract.
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terms, covenants, or conditions.” Like in other cases, this language suggests
that the parties intended to submit substantive arbitrability issues to an
arbitrator. See, e.g., Am. Realty Tr., 74 S.W.3d at 531.
We hold that Ironshore has produced clear and unmistakable evidence
that Statoil and Halliburton agreed to submit issues of substantive
arbitrability, which include this dispute, to the arbitrator. 14 We therefore
REMAND to the district court to stay the case pending arbitration.
III. The District Court’s Personal Jurisdiction Ruling
After ruling on Ironshore’s arbitration motion, the court turned to
Ironshore’s motion to dismiss for lack of personal jurisdiction. The court
granted the motion, holding that it did not have specific jurisdiction over
Ironshore because Ironshore lacked minimum contacts with the forum state.
We agree.
A. Background Personal Jurisdiction Law
This court reviews de novo a district court’s decision to grant a motion to
dismiss for lack of personal jurisdiction. ICEE Distribs., Inc. v. J&J Snack
Foods Corp., 325 F.3d 586, 591 (5th Cir. 2003). Because the district court
granted Ironshore’s motion to dismiss “without holding an evidentiary hearing,
[we] must accept as true the uncontroverted allegations in the complaint and
resolve in favor of [Halliburton] any factual conflicts.” Latshaw v. Johnston,
167 F.3d 208, 211 (5th Cir. 1999). While Halliburton bears the burden of
14 The arbitrability of the underlying merits dispute is not at issue in this case. The
only issues are (1) whether an arbitration agreement exists between Ironshore and
Halliburton and (2) whether Statoil and Halliburton intended an arbitrator to determine
substantive arbitrability questions. The merits of the dispute, as articulated in Ironshore’s
motion to stay, concern several questions related to the MSA, including whether Halliburton
is “obligated to indemnify Ironshore” and “whether Statoil is obligated to indemnify
Halliburton,” as well as other MSA-related questions. The court need not address whether
these fall within the arbitration agreement’s scope.
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proving personal jurisdiction, it need only present a prima facie case of
personal jurisdiction to satisfy that burden. Stripling v. Jordan Prod. Co.,
LLC, 234 F.3d 863, 869 (5th Cir. 2000). “Proof by a preponderance of the
evidence is not required.” Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602,
609 (5th Cir. 2008) (internal citation omitted).
A “federal court sitting in diversity may assert jurisdiction if (1) the
state’s long-arm statute” allows it; and (2) exercising jurisdiction would not
violate the Due Process Clause of the Fourteenth Amendment. Cycles, Ltd. v.
W.J. Digby, Inc., 889 F.2d 612, 616 (5th Cir. 1989). Because the Texas long-
arm statute extends to the limits of federal due process, the two-step inquiry
reduces to only the federal due process analysis. Johnston, 523 F.3d at 609.
Federal due process requires a plaintiff to prove two things. First, the
plaintiff must show that the non-resident defendant “purposely availed himself
of the benefits and protections of the forum state by establishing minimum
contacts with the state.” Walk Haydel & Assocs., Inc. v. Coastal Power Prod.
Co., 517 F.3d 235, 243 (5th Cir. 2008) (internal citation omitted). Second, the
plaintiff must show that the “exercise of jurisdiction . . . does not offend
traditional notions of fair play and substantial justice.” Id. (internal citation
omitted).
“There are two types of ‘minimum contacts’: those that give rise to
specific personal jurisdiction and those that give rise to general personal
jurisdiction,” which is not at issue here. Lewis v. Fresne, 252 F.3d 352, 358
(5th Cir. 2001). Specific jurisdiction applies when a non-resident defendant
“has purposefully directed its activities at the forum state and the litigation
results from alleged injuries that arise out of or relate to those activities.”
Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 868 (5th
Cir. 2001) (internal citation omitted).
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B. Personal Jurisdiction over Ironshore
Halliburton argues that three sets of facts establish Ironshore’s
minimum contacts with the state of Texas. First, Ironshore voluntarily
pursued forum-state litigation by seeking to draw Halliburton into the initial
Texas lawsuit filed by Statoil. Second, Ironshore seeks to assert subrogated
rights against Halliburton under the MSA. Third, Ironshore sold the SPILLS
policy to Statoil, a Texas resident. We will address these three arguments in
turn.
1. Participating in State-Court Litigation
Four facts are relevant to analyzing this argument. First, Ironshore
participated, as a defendant, in a Texas state court action with Statoil’s other
insurers and attempted to involve Halliburton. Second, Ironshore attempted
to arbitrate in Texas with Halliburton. Third, Ironshore sent letters
threatening to invoke the benefits of Texas arbitration. Finally, Ironshore
settled the litigation with Statoil’s insurers, and the settlement agreement
included a forum selection clause with Texas as the forum state. Ultimately,
Halliburton’s arguments are unconvincing.
a. Ironshore’s Participation in Texas Litigation
This court has long held that a non-resident defendant may participate
in litigation without submitting to the court’s jurisdiction so long as it
maintains its objection to personal jurisdiction. PaineWebber Inc., 260 F.3d at
461. Relatedly, this court has also held that filing a counterclaim or “third-
party claim does not, without more, waive an objection to personal
jurisdiction.” 15 Id.; see also Bayou Steel Corp. v. M/V Amstelvoorn, 809 F.2d
This rule has one exception: “When a defendant seeks to bring into an action new
15
claims against new parties, such as counterclaims, cross-claims, or third-party claims, and
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1147, 1149 (5th Cir. 1987) (holding that “the filing of a counterclaim, cross-
claim, or third-party demand does not operate as a waiver of an objection to
jurisdiction”). This rule makes sense. Prior to the current rule, non-resident
defendants could accidentally waive their personal jurisdiction defense by
litigating the merits of their case too ardently—defendants had to exhaust all
potential jurisdictional defects before addressing the merits. Orange Theatre
Corp. v. Rayherstz Amusement Corp., 139 F.2d 871, 874 (3d Cir. 1944) (holding
that a defendant “is no longer required at the door of the federal courthouse to
intone that ancient abracadabra of the law, de bene esse, in order by its magic
power to enable himself to remain outside even while he steps within . . . [and]
may now enter openly in full confidence that he will not thereby be giving up
any keys to the courthouse door which he possessed before he came in”). Rule
12(b) reversed these results, allowing a non-resident defendant “to
simultaneously protest personal jurisdiction while vigorously advocating the
merits of his case.” Toshiba Int’l Corp. v. Fritz, 993 F. Supp. 571, 573-74 (S.D.
Tex. 1998).
Here, Ironshore never initiated an original action in Texas, which would
have subjected it to personal jurisdiction. Ironshore participated as a
defendant in the only two relevant actions: the action initiated by Statoil’s
insurers and this action initiated by Halliburton. In both actions, Ironshore
continuously objected to the court’s personal jurisdiction. While it did file a
counterclaim in the insurer action and sought to involve Halliburton—though
these claims do not arise out of the same transaction or occurrence as the original action, the
attempted joinder constitutes a waiver of personal jurisdiction defense.” 4 Charles Alan
Wright & Arthur R. Miller, Federal Practice & Procedure § 1067.3 (4th ed. 2018) (emphasis
added). This case does not implicate this exception because (1) Ironshore never officially filed
a third-party claim and (2) even if it had, the claim would arise out of the same transaction
or occurrence as the original action.
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it did not file an official third-party claim—as discussed above, counterclaims
and third-party claims do not subject non-resident defendants to jurisdiction. 16
b. Ironshore’s Attempts to Arbitrate
Ironshore’s efforts to force arbitration do not change this analysis. This
court has definitively held that a defendant’s “agreement to arbitrate in Texas
does not necessarily constitute consent to the personal jurisdiction of Texas
courts to adjudicate its claims in the first instance.” Int’l Energy Ventures, 818
F.3d at 212. When a party agrees to arbitrate, it subjects itself to the court’s
jurisdiction for “the limited purpose of compelling arbitration.” Id. (quoting
Armstrong v. Assocs. Int’l Holdings Corp., 242 F. App’x 955, 957 (5th Cir. 2007)
(unpublished) (per curiam)); see also Encompass Power Servs. v. Eng’g &
Constr. Co., 224 F. App’x 329, 331 (5th Cir. 2007) (unpublished) (per curiam).
Here, Ironshore submitted to the court’s jurisdiction for the sole purpose
of compelling arbitration. By submitting to the court’s power for this limited
purpose and maintaining its personal jurisdiction motion to dismiss, Ironshore
continued to object to “the power of the court” and did not waive its personal
jurisdiction defense. PaineWebber, 260 F.3d at 460.
Nor does an agreement to arbitrate necessarily provide minimum
contacts with the arbitration forum. In International Energy, this court
further held that an agreement to arbitrate also did not provide sufficient
minimum contacts where the defendant, much like here, (1) “did not negotiate
16 Although the above cases discuss waiver, rather than minimum contacts,
responding to a lawsuit is not the type of purposeful availment required to find minimum
contacts. Dell Mktg., L.P. v. Incompass IT, Inc., 771 F. Supp. 2d 648, 655-56 (W.D. Tex. 2011)
(“Although these cases refer to waiver rather than minimum contacts, asserting counter-
claims when one has already been sued is hardly the sort of purposeful availment that gives
rise to personal jurisdiction.”). Holding otherwise would also undercut the purposes of Rule
12(b). Practically, holding that filing a third-party claim results in purposeful availment is
no different than holding that filing a third-party claim results in waiver.
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the agreement in Texas, (2) . . . did not travel to Texas because of that
agreement, and (3) the unwritten agreement did not require performance in
Texas.” 818 F.3d at 213. Notably, the defendant in that case was a party to
the agreement at issue, unlike here, where Ironshore was not a party to the
MSA. 17
c. Ironshore’s Demand Letters to Halliburton
Ironshore’s letters to Halliburton also fail to confer personal jurisdiction.
Many other circuits have addressed similar scenarios in which a potential
plaintiff sends a cease-and-desist letter threatening litigation to a potential
defendant. None of these courts held that sending a letter amounts to
purposeful availment. 18 In-circuit district courts have reached the same
17In our own research, we found two cases in which district courts imputed the actions
of an insured party to the subrogee-insurer for personal jurisdiction purposes. In re M/V
MSC FLAMINIA, 107 F. Supp. 3d 313, 322 (S.D.N.Y. 2015) (holding that “a court may impute
an insured’s actions to the insurer when the insurer has paid the insured for a loss” in
assessing the insurer’s minimum contacts with the forum state because the insurer, as
subrogee, is the real party in interest); Compl. of Kreta Shipping, S.A., No. 96 CV. 1137 KMW,
1997 WL 115428, at *4 (S.D.N.Y. Mar. 14, 1997) (holding “that the real party in interest
behind a claimant appearing in this Court for a limitation proceeding must also be considered
to have appeared in this Court”). We find these out-of-circuit district court opinions
unpersuasive for two reasons. First, the Supreme Court has made clear that the non-resident
defendant’s actions—not those of another party—are relevant for assessing minimum
contacts. Second, when assessing principal-agent relationships, this court has held that the
actions of a principal are not necessarily attributable to an agent, even though the actions of
the agent can be attributed to the principal. See McFadin v. Gerber, 587 F.3d 753, 761 (5th
Cir. 2009) (holding that “the actions of an agent may establish minimum contacts over a
principal” but requiring the plaintiff to show an agency relationship).
18 See e.g., Genetic Implant Sys., Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458-59 (Fed.
Cir. 1997) (holding that “sending infringement letters, without more activity in a forum state,
is not sufficient to satisfy the requirements of due process”); Beacon Enters., Inc. v. Menzies,
715 F.2d 757, 766 (2d Cir. 1983) (“It is difficult to characterize [defendant’s] letter alleging
infringement in an unspecified locale and threatening litigation in an unspecified forum as
an activity invoking the ‘benefits and protection of New York law.’”); Nova Biomedical Corp.
v. Moller, 629 F.2d 190, 196-97 (1st Cir. 1980) (holding that the mere sending of an
infringement letter into the forum state is not enough to confer jurisdiction); Cascade Corp.
v. Hiab–Foco AB, 619 F.2d 36, 38 (9th Cir. 1980) (holding that letters from defendant claiming
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conclusion. 19 Ironshore’s letters, even if they threatened litigation, are not
enough to show minimum contacts with Texas. 20
d. Ironshore’s Settlement Agreement & Forum Selection Clause
The final fact Halliburton highlights in favor of personal jurisdiction is
a forum selection clause that specifies Harris County as the desired forum for
future litigation. The clause is located in the settlement agreement Ironshore
entered to end its prior litigation with Statoil’s insurers.
Choice-of-law provisions and forum-selection clauses are relevant to this
minimum-contacts analysis, but they are not dispositive. See Pervasive
Software v. Lexware GmbH & Co. KG, 688 F.3d 214, 223 (5th Cir. 2012)
(internal citation omitted); Am. Gen. Life Ins. Co. v. Rasche, 273 F.R.D. 391,
patent infringement were not enough to invoke personal jurisdiction under Oregon long-arm
statute because to do so would offend traditional notions of fair play and substantial justice).
19 See e.g., Xtera Communs., Inc. v. TPACK A/S, 2010 WL 4118803, at *3 (E.D. Tex.
Sept. 1, 2010) (dismissing claim for declaratory relief for lack of personal jurisdiction because
“demands for payment sent to Texas were the result of the unilateral action of the plaintiffs”);
Stroman Realty, Inc. v. Grillo, No. CIV.A. H-05-2066, 2006 WL 492458, at *4 (S.D. Tex. Feb.
28, 2006) (“[T]he cease and desist letter-which was sent to Stroman after the Secretary
received a complaint from an Illinois citizen who had a seller-client relationship with
Stroman-is an insufficient basis for conferring specific jurisdiction.”); DNH, LLC v. In-N-Out
Burgers, 381 F. Supp. 2d 559,564 (E.D. La. 2005) (noting that courts have repeatedly held
that cease-and-desist letters are insufficient to confer specific personal jurisdiction in patent
and copyright cases because principles of fair play and substantial justice afford a party
latitude to inform others of its rights without subjecting itself to suit in a foreign forum)
(citing cases); Thousand Trails, Inc. v. Foxwood Hill Prop. Owners Ass’n, 1999 WL 172322,
at *3 (N.D. Tex. Mar. 22, 1999) (“[T]he vast majority of the courts have held that the
nonresident defendant’s action in sending a demand letter to the plaintiff is insufficient to
create personal jurisdiction.”).
20 Halliburton’s cited cases do not help. In Interpole, the party challenging personal
jurisdiction filed its own lawsuit in the forum state. 940 F.2d at 21. Mitrano involved a
second lawsuit in which the former plaintiff later contested personal jurisdiction. Mitrano,
377 F.3d 402, 407 (4th Cir. 2004).
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395 (S.D. Tex. 2011). Halliburton must still satisfy the standard minimum-
contacts analysis.
As noted above and below, Ironshore has virtually no connections to the
state other than as a defendant in litigation. There are no allegations of suit-
related contact between Ironshore and Texas other than Ironshore’s
participation as a defendant in litigation and the forum-selection clause in the
settlement agreement; the conduct underlying that suit, as well as this one,
occurred outside the forum state; this suit does not arise under the settlement
agreement; and the settlement agreement did not shift Ironshore from
defendant to plaintiff—it simply released Statoil from the litigation. And
Ironshore still participates as a defendant. See Hazim v. Schiel & Denver Pub.
Ltd., No. CIV-A-H-12-1286, 2015 WL 4545534, at *7 (S.D. Tex. July 28, 2015)
(finding no personal jurisdiction, despite a forum selection clause, because the
defendant had few if any other contacts with the forum state).
2. Asserting Subrogated Rights
Halliburton next argues that Ironshore has minimum contacts with
Texas based on the MSA. According to Halliburton, two facts support this
argument. First, the MSA is a Texas-centric contract. Second, Ironshore
attempted to assert subrogated rights to binding arbitration under the MSA.
Halliburton’s first argument is unconvincing for two basic reasons.
First, a non-resident defendant can only develop minimum contacts with a
forum state through “actions by the defendant himself that create a
‘substantial connection’ with the forum State.” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475 (1985) (quoting McGee v. Int’l Life Ins. Co., 355
U.S. at 223). Second, as a general matter, courts must assess each defendant’s
contacts with the forum state individually—a substantial connection is not
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formed by the “unilateral activity of another party or a third person.” Id.
(internal citation omitted).
Here, Ironshore was not a party to the MSA, had no connection to the
MSA, and never agreed to be bound by the MSA. The MSA, therefore, does not
bear on Ironshore’s contacts with the state. Nor can Statoil’s contacts be
imputed to Ironshore. While this court has imputed the contacts of one party
to another, 21 it has not done so in a scenario where the non-resident defendant
is so detached from the contract in dispute. Nor has any other court. See, e.g.,
Allied Prof’ls Ins. Co. v. Harmon, No. 8:16-CV-1864-JLS-KESX, 2017 WL
5634861, at *4 (C.D. Cal. Mar. 7, 2017) (holding that “the contacts of a
contracting party are not imputed to an assignee or third-party beneficiary
under a minimum contacts analysis”).
Halliburton’s second argument is also unconvincing because, as noted
above, a party’s decision to submit to arbitration in the forum state does not
result in either (1) minimum contacts or (2) waiver of the personal jurisdiction
defense.
3. Insurance Contract with a Texas Resident
Halliburton next argues that Ironshore has minimum contacts with the
state of Texas because (1) it sold the SPILLS policy to Statoil, a Texas resident
and (2) Ironshore is subject to Texas regulation as a lines insurer.
21 This court has held that courts can impute forum contacts of a predecessor company
to the successor corporation, but only because the successor corporation is a “mere
continuation” of the predecessor. Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 654
(5th Cir. 2002). It has also held that courts can attribute the authorized actions of an agent
to the principal. McFadin, 587 F.3d at 761 (holding that “the actions of an agent may
establish minimum contacts over a principal” but requiring the plaintiff to show an agency
relationship). Halliburton has not argued, and the record does not show, that such a close
relationship, like successor-predecessor companies or principal-agent, exists here.
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The first argument is not persuasive. The Supreme Court has long held
that “an individual’s contract with an out-of-state party alone [cannot]
automatically establish sufficient minimum contacts in the other party’s home
forum.” Burger King, 471 U.S. at 478; see also Gulf Coast Bank & Tr. Co. v.
Designed Conveyor Sys., L.L.C., 717 F. App’x 394, 399 (5th Cir. 2017)
(unpublished) (per curiam). So Statoil being a Texas resident does not, on its
own, establish minimum contacts between Ironshore and Texas.
Nor does the SPILLS policy establish minimum contacts under the test
developed in Burger King. That test requires courts to evaluate “prior
negotiations and contemplated future consequences, along with the terms of
the contract and the parties’ actual course of dealing . . . in determining
whether the defendant purposefully established minimum contacts within the
forum.” Gulf Coast Bank, 717 F. App’x at 399 (internal citation omitted). None
of these factors cut in favor of Halliburton.
The parties negotiated the SPILLS policy in Oklahoma. Ironshore
underwrote the policy in Louisiana. Ironshore did not underwrite any policies
in Texas. A surplus lines broker in Oklahoma procured the policy. And the
policy is governed by New York law and provides for dispute resolution in New
York.
This case falls far below other cases in which courts found insufficient
minimum contacts. See, e.g., Int’l Energy Ventures, 818 F.3d at 213 (finding no
minimum contacts where “(1) [the defendant] did not negotiate the agreement
in Texas, (2) [it] did not travel to Texas because of that agreement, and (3) the
unwritten agreement did not require performance in Texas”); Freudensprung
v. Offshore Tech. Servs., Inc., 379 F.3d 327, 344 (5th Cir. 2004) (“[T]he
combination of mailing payments to the forum state, engaging in
communications related to the execution and performance of the contract, and
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the existence of a contract between the nonresident defendant and a resident
of the forum are insufficient to establish the minimum contacts necessary to
support the exercise of specific personal jurisdiction over the nonresident
defendant.”). 22
Halliburton’s second argument is also unconvincing. Texas’s decision to
regulate the lines insurance market has nothing to do with Ironshore’s
minimum contacts with Texas. A state’s decision to regulate an industry is
relevant to the second prong of the personal jurisdiction test: whether the
assertion of personal jurisdiction would comport with “fair play and substantial
justice.” 23 And courts only reach this prong after establishing the defendant’s
minimum contacts with the forum state. While it is true that “[t]hese
considerations sometimes serve to establish the reasonableness of jurisdiction
upon a lesser showing of minimum contacts than would otherwise be required,”
Burger King, 471 U.S. at 477, they cannot overcome the baseline rule that “an
individual’s contract with an out-of-state party alone [cannot] automatically
establish sufficient minimum contacts,” id. at 478.
22 See also Freudensprung, 379 F.3d at 345 (“The significance of these alleged
minimum contacts is severely diminished by the fact that the contract at issue specified that
it was to be governed by English law and that the material portions of the contract, which
contemplated the supply of personnel to WWAI for its projects in West Africa, were to be
performed in West Africa, not Texas.”); Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 778
(5th Cir. 1986) (discussing relevance of contract’s choice-of-law provision and place of
performance to minimum contacts analysis).
23 When making the “fair play and substantial justice” assessment, courts look to a
variety of factors, one of which is “the forum State’s interest in adjudicating the dispute.”
Burger King, 471 U.S. at 477 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 292 (1980)). This court has previously held that state regulation of the insurance
industry shows the state’s interest in adjudicating disputes related to that industry. Burstein
v. State Bar of Cal., 693 F.2d 511, 519, 522 (5th Cir. 1982) (distinguishing the Supreme
Court’s approval of personal jurisdiction over the out-of-state insurance company in McGee,
355 U.S. 220, in part by explaining that insurance transactions are highly state regulated,
and thus states have a particularly strong interest in resident victims of insurance fraud).
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We therefore AFFIRM and hold the district court was correct in
concluding that Ironshore lacks minimum contacts with Texas and dismissing
Halliburton’s breach of contract claims.
IV. Conclusion
For appeal No. 17-20678, we REVERSE the district court’s decision that
Ironshore waived all of its subrogation rights under the MSA. We REVERSE
the district court’s decision that Ironshore, as subrogee, and Halliburton do not
have a binding arbitration agreement. As a result, we REMAND for the
district court to stay the case pending arbitration.
For appeal No. 18-20239, we AFFIRM the district court’s decision that it
lacked personal jurisdiction over Ironshore for the remaining breach of
contract claims.
33