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Law360 (August 25, 2020, 7:33 PM EDT) -- Gartner Inc. asked a Texas federal judge to allow it to appeal his refusal to transfer U.S. Specialty Insurance Co.'s suit seeking not to pay more coverage over its $150 million policy limit for canceled events, saying that the Fifth Circuit should review jurisdiction because the suit does not involve any contacts between Gartner and Texas.
Gartner said Monday there are "controlling questions" regarding the court's order to let it stay in Texas, and if the Fifth Circuit were to reverse the decision, it would end the litigation in Texas. The research firm said that the district court did not explain its ruling or reveal the "basis" for holding that USSIC had established personal jurisdiction.
U.S. District Judge Lynn Hughes ruled to keep the case in Texas on Aug. 13, three days after USSIC urged Judge Hughes to do so in a response where it characterized Gartner's request to move the suit as "procedural gamesmanship."
USSIC sued Gartner in late May seeking a declaration that it is not obligated to pay beyond Gartner's $150 million yearly coverage limit. Gartner, which organizes over 300 conferences globally, had to cancel or postpone its events because of COVID-19.
Gartner has said the policy was obtained by its New York broker from HCC Specialty Underwriters Inc. in Massachusetts, and its premiums were paid to HCC, not to USSIC in Texas. The company said it did not authorize anyone to either obtain or negotiate its policy in Texas.
"The court's conclusion that specific and general jurisdiction exists over Gartner in Texas runs contrary to well-established Supreme Court principles and Fifth Circuit decisions," the research firm said on Monday.
Gartner claimed it has sufficiently shown it never did anything in Texas regarding the event cancellation policies, and USSIC failed to allege anything Gartner or its broker did in Texas. The research firm claimed the carrier brought it to Texas court to shirk its obligation to provide coverage so "there is no conceivable basis for exercising specific personal jurisdiction."
"USSIC seeks to drag a nonresident policyholder into court in an effort to avoid paying benefits due under a policy— even if the insured has been a policyholder for many years. There is substantial ground for a difference of opinion on specific jurisdiction," Gartner said, stressing that it should be allowed to appeal.
In the motion, Gartner said there are two "controlling questions" that need to be decided at the Fifth Circuit: whether the court can exercise specific personal jurisdiction over an out-of-state policyholder when the insurer wants to avoid paying coverage, and if the court can use general jurisdiction over a company from another state that generates only 4% of revenues in Texas.
"There is no authority for the assertion of specific jurisdiction over a nonresident policyholder who did nothing in the forum state to procure its policy when the insurer only seeks judicial ratification of its decision to deny coverage," it said.
The research firm also requested that if the Texas federal court grants this motion, the court should stay further proceedings in this case until the Fifth Circuit has issued its mandate.
Gartner separately sued USSIC and HCC claiming coverage in New York federal court in late June, saying the issuer agreed that Gartner can increase its policies' coverage limit by $170 million for a potential total of $340 million, including $20 million for a subsidiary's policy, in 2020.
Representatives from both parties could not be immediately reached for comment.
USSIC is represented by Gerard G. Pecht, Sumera Khan, Todd D. Batson and Daniel McNeel Lane Jr. of Norton Rose Fulbright.
Gartner is represented by Julie A. Hardin and Nicole Soussan Caplan of Reed Smith LLP and Steven L. Schreckinger, Scott P. Lewis and Tamara S. Wolfson of Anderson & Kreiger LLP.
The case is U.S. Specialty Insurance Co. v. Gartner Group Inc., case number 4:20-cv-01850, in the U.S. District Court for the Southern District of Texas.
--Additional reporting by Michelle Casady. Editing by Amy Rowe.
Correction: An earlier version of this story used the wrong pronoun for Judge Hughes. The error has been corrected.
For a reprint of this article, please contact reprints@law360.com.
