Soon after the collision, Mr. Wright's counsel informed Key of the collision, and Key denied coverage. After Mr. Wright sued Mr. Nash in Jackson County, Missouri, they agreed to submit their dispute to arbitration in Jackson County. The arbitrator awarded Mr. Wright $4.5 million in damages, and the trial court confirmed Mr. Wright's arbitration award as a final judgment.

After arbitration, Mr. Wright sued Key and Mr. Nash in Jackson County, seeking to collect insurance proceeds from Ms. Nash's Key insurance policy.

Mr. Nash filed a cross-claim against Key, alleging that Key had committed the tort of bad faith refusal to settle, bringing Key within the purview of Missouri's long-arm statute and establishing the requisite minimum contacts necessary to satisfy due process.

Key moved to dismiss Mr. Wright and Mr. Nash's claims for lack of personal jurisdiction.

The trial court overruled its motion, and the dispute reached the Supreme Court of Missouri.

The Missouri Supreme Court's Decision

The Supreme Court of Missouri ruled that the trial court could assert personal jurisdiction over Key.

In its decision, the court explained that, to establish specific personal jurisdiction over a foreign corporation, a two-prong test had to be met:

(1) The defendant's conduct had to fall within the Missouri long-arm statute, RS Mo § 506.500; and

(2) The court then had to determine if the foreign corporation had the requisite minimum contacts so as not to offend due process.

With respect to the first prong, the court observed that Mr. Nash's cross-claim alleged the tort of bad faith refusal to settle against Key. The court reasoned that, taking Mr. Nash's allegations in his cross-claim as true, there were facts established that invoked Missouri's long-arm statute and made a prima facie showing as to the validity of his bad faith refusal to settle claim. The court noted that Mr. Wright's petition, and subsequently Mr. Nash's cross-claim, alleged that jurisdiction was proper in Missouri under Section 506.500 because:

• The action arose out of a contract to insure a person, property, or risk in Missouri;
• Nash alleged that he was a resident of Jackson County, Missouri, and that the Jackson County court had entered judgment confirming an arbitration award of $4.5 million in favor of Mr. Wright against him; and
• Nash also alleged that the policy Key issued to Ms. Nash granted Key the exclusive right to contest or settle any claim, that the policy prohibited any insured from voluntarily assuming any liability or settling any claims without Key's consent, and that Key had engaged in fraud or bad faith.

According to the court, for jurisdictional purposes, Mr. Nash had "satisfactorily pleaded that Key committed the tort of bad faith refusal to settle in Missouri." The court then found that because Key was alleged to have committed a tort in Missouri, its conduct fell within the purview of Missouri's long-arm statute, satisfying the first prong of the two-prong test.

The court then addressed the minimum contacts prong of the two-prong test.

The court pointed out that, in Missouri, a "single tortious act" was sufficient to support personal jurisdiction consistent with due process standards. Moreover, the court continued, Missouri courts could assert personal jurisdiction over a non-domiciliary defendant corporation without violating due process if that entity had at least one contact with the state and the cause of action being pursued arose out of that contact.

Here, the court decided, Key had the requisite minimum contacts with Missouri because its alleged tortious behavior of bad faith refusal to settle was a contact contemplated by Missouri's long-arm statute. According to the court, this alleged tortious contact was, by itself, "sufficient to satisfy due process" because Mr. Nash's cross-claim arose out of this contact with Missouri.

In conclusion, the court said that although Key's alleged tort might be its only contact with Missouri, it was "within the bounds of due process to allow Missouri courts to exercise personal jurisdiction over it."

The case is State ex rel. Key Ins. Co. v. Roldan, No. SC97623 (Mo. Oct. 29, 2019). Attorneys involved include: Key was represented by James P. Maloney and Angela Probasco of Foland, Wickens, Roper, Hofer & Crawford PC in Kansas City. Wright was represented by Michael W. Manners of Langdon & Emison LLC in Lexington, and Garrett Tuck of Dipaquale Moore LLC in Kansas City.