Texas Court of Appeals Holds that Texas Courts Have Specific Jurisdiction over Forty-Seven Out-of-State and International Surplus Lines Insurers.

Does Your Surplus Lines Policy Contain a Service of Suit Clause?

In a long, scholarly opinion, the Houston based 14th District Court of appeals in the state of Texas affirmed a trial court's ruling that it had specific jurisdiction over 47 surplus lines insurance companies who provided coverage to a defunct manufacturer. In this case, Certain Underwriters of Lloyds, London v. Henry Vogt[1], a bankruptcy trustee representing the unsecured liabilities of relating to thousands of asbestos lawsuits against the manufacturer failed a declaratory judgment action seeking a declaration of coverage as to 74 policies issued by the insurers.

Registering to Do Business by Insurer is Not Enough.

The court rejected an argument by the trustee that the mere fact that some of the insurers had registered to do business in Texas gave the court jurisdiction. The trustee relied on Texas Business Organization Code § 9.202 which provides that  “A foreign nonfiling entity or a foreign filing entity registered under this chapter enjoys the same but no greater rights and privileges as the domestic entity to which it most closely corresponds.” Rejecting this argument, the court pointed out that this language applies to both foreign entities who registered to do business in Texas and those that don't. As a result, this language was not enough to find a consent to jurisdiction. The court distinguished this language from other statutes from other states that provided a specific consent to jurisdiction through the fact of registration to do business in the state.

This portion of the ruling might surprise many practitioners who might assume that by registering to do business in a state and appointing an agent for service of process, that a company was consenting to jurisdiction. However, according to the 14th District, this fact by itself is not enough.

Service of Suit Clause Provides Jurisdiction

However, the court went on to hold that the service of suit clauses contained in the policies issued by the international insurers were sufficient to consent to jurisdiction. The court found that the allegations that the insurers had failed to make payments were sufficient to Shift the burden to the insurers to rebut these allegations and that they had not done so.

Gather Your Facts to Show Personal Jurisdiction

The court then went on to perform a traditional personal jurisdiction analysis providing the following bedrock principles:

Personal jurisdiction over a nonresident defendant is constitutional when two conditions are met: (1) the defendant has established minimum contacts with the forum state and (2) the exercise of personal jurisdiction comports with traditional notions of fair play and substantial justice. See BMC Software, 83 S.W.3d at 795. For a defendant to have sufficient contacts with the forum, it is essential that there be some act by which the defendant “purposefully avails” itself of the privilege of conducting activities in the forum state, thus invoking the benefits and protections of its laws. Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). In analyzing personal jurisdiction, only the defendant's purposeful contacts with the forum count; personal jurisdiction over a defendant cannot be based on the unilateral activity of another party. Id. at 785. A defendant should not be subject to a Texas court's exercise of personal jurisdiction based on random, fortuitous, or attenuated contacts. Id. For there to be purposeful availment, a defendant must seek some benefit, advantage, or profit by “availing” itself of the jurisdiction. Id.

[38] [39]Specific jurisdiction exists when the claims in question arise from or relate to the defendant's purposeful contacts with Texas. Am. Type Culture Collection Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002). For a nonresident defendant's contacts with Texas to support an exercise of specific jurisdiction, there must be a substantial connection between the defendant's purposeful contacts with Texas and the operative facts of the litigation. See Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007)[2]

The Court then examined the Guardian Royal Exchange Assurance, Ltd. v. English China Clays, P.L.C., case[3], 815 S.W.2d 223, 227–28, 230–32 (Tex. 1991) and stated:

The Supreme Court concluded that when the nonresident defendant is an insurance company, the minimum-contacts analysis may be based on either “the insurer's awareness that it was responsible to cover losses arising from a substantial subject of insurance regularly present in the forum state” or “the nature of the particular insurance contract and its coverage.”[4]

Based on this language, the Court of Appeals held that the insurers could anticipate that they would be called into Texas courts on issues of coverage relating to Texas claims and that a significant portion of the asbestos claims rose in Texas. The court found specific jurisdiction relating to Texas claims.

General Jurisdiction Will Be the Exception and Not the Rule

However, the Court of Appeals reversed the trial court’s finding of jurisdiction relating to out-of-state claims. While the trial court did not state its faces for jurisdiction, the Court of Appeals assumed that it must have been based on general jurisdiction. The court summarized the principals relating to general jurisdiction:

 A court may exercise general jurisdiction over a nonresident corporation whose contacts with the forum state are so continuous and systematic as to render the corporation “essentially at home” in the forum state. See Daimler AG v. Bauman, 571 U.S. 117, 127, 139, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014); Old Republic Nat'l Title Ins. Co. v. Bell, 549 S.W.3d 550, 565 (Tex. 2018). For a defendant corporation, the paradigm forum for the exercise of general jurisdiction is the place of incorporation and the principal place of business. Bauman, 571 U.S. at 137, 134 S.Ct. 746. In an exceptional case, a corporation's operations in a forum other than its place of incorporation or principal place of business may be so substantial and of such a nature as to render the corporation at home in that State. See Bauman, 571 U.S. at 139 n. 19, 134 S.Ct. 746. General jurisdiction may be established whether or not the nonresident defendant's alleged liability arises from those contacts.[5]

The court found that the trustee had not established sufficient contacts for the court to assert general jurisdiction over the out-of-state insurers. While these insurers had many contacts with Texas, they were not enough to show that Texas was essentially the home state of these insurers.

This case provides a comprehensive overview of personal jurisdiction in the insurance context. It also brings up a couple of pointers for lawyers to follow when dealing with out-of-state and international surplus lines insurers. First, don’t assume that the court has jurisdiction simply because the company has registered to do business in the state. Second, make sure to research and then plead your jurisdictional facts in detail. Third, look to see if the policy contains a Service of Suit clause that might provide a jurisdictional basis.  If you have any questions or need anything, please contact us.

[1] 2025 WL 1033951 (Tx. Ct. of Appeals, 14th Dist. April 8, 2025).

[2] 2025 WL 1033951 at *15.

[3] 815 S.W.2d 223, 227–28, 230–32 (Tex. 1991)

[4] Henry Vogt, 2025 WL 1033951at *17.

[5] Id. at 21.