Supreme Court of Michigan.

Marie HUNT, Personal Representative for the Estate of Eugene Wayne Hunt, Plaintiff/Counter–Defendant/Cross–Defendant–Appellant,

v.

Roger DRIELICK, doing business as Roger Drielick Trucking, and Corey Drielick, Defendants/C ounter-Plaintiffs/Cross-Plaintiffs/Third-Party-Defendants/ Counter–Defendants,

and

Great Lakes Carriers Corp., Defendant/Cross–Defendant–Appellee,

and

Great Lakes Logistics & Services, Inc., and Mermaid Transportation, Inc., Defendants/Cross–Defendants,

and

Sargent Trucking, Inc., Defendant–Appellee,

and

Noreen Luczak And Thomas Luczak, Third–Party–Defendants/Counter–Defendants–Appellees,

and

Empire Fire and Marine Insurance Company, Garnishee, Defendant–Appellee.

Brandon James Huber, Plaintiff–Appellant,

v.

Corey Drielick and Roger Drielick, doing business as Roger Drielick Trucking, Defendants/Third–Party–Plaintiffs,

and

Great Lakes Carriers Corp., Defendant–Appellee,

and

Great Lakes Logistics & Services, Inc., and Mermaid Transportation, Inc., Defendants,

and

Sargent Trucking, Inc., Defendant–Appellee,

and

Great Lakes Carriers, Inc., Third–Party–Defendant,

and

Empire Fire and Marine Insurance Company, Garnishee, Defendant–Appellee.

Thomas Luczak and Noreen Luczak, Plaintiffs–Appellants,

v.

Corey Drielick and Roger Drielick, doing business as Roger Drielick Trucking, Defendants–Third–Party–Plaintiffs,

and

Great Lakes Carriers Corp., Defendant–Appellee,

and

Great Lakes Logistics & Services, Inc., and Mermaid Transportation, Inc., Defendants,

and

Sargent Trucking, Inc., Defendant–Appellee,

and

Great Lakes Carriers, Inc., Third–Party–Defendant,

and

Empire Fire and Marine Insurance Company, Garnishee, Defendant–Appellee.

 

Docket Nos. 146433, 146434, 146435.

Calendar No. 3.

Argued March 5, 2014.

Decided June 26, 2014.

 

Opinion

CAVANAGH, J.

This appeal involves Empire Fire and Marine Insurance Company’s obligations under an “Insurance for Non– Trucking Use” policy issued to Drielick Trucking. The policy contains a business-use exclusion, which includes two clauses that Empire argues preclude coverage in this case. The Court of Appeals agreed that the first clause precludes coverage when the covered vehicle is not carrying property at the time of the accident, as in this case. Thus, the Court of Appeals expressly declined to address the second clause relating to leased covered vehicles. Hunt v. Drielick, 298 Mich.App 548, 553 n. 2; 828 NW2d 441 (2012). We hold that the Court of Appeals erred for the reasons explained in this opinion and reverse the judgment of the Court of Appeals. Additionally, we remand this case to the trial court for further fact-finding to determine whether Drielick Trucking and Great Lakes Carriers Corporation (GLC) entered into a leasing agreement for the use of Drielick Trucking’s semi-tractors as contemplated under the policy’s clause related to a leased covered vehicle.

 

I. FACTS AND PROCEDURAL HISTORY

Roger Drielick owns Drielick Trucking, a commercial trucking company. It seems that throughout most of the year in 1995, Drielick Trucking leased its semi-tractors to Sargent Trucking (Sargent). Around October 1995, Roger orally terminated the lease agreement with Sargent and began doing business with Bill Bateson, one of the operators of GLC, the other being his wife at the time, Jamie Bateson.

 

On January 12, 1996, Bill Bateson dispatched Corey Drielick, a truck driver employed by Drielick Trucking, to pick up and deliver a trailer of goods stored on GLC’s property. While driving the semi-tractor without an attached trailer, Corey picked up his girlfriend and proceeded to GLC’s truck yard.FN1 When he was less than two miles away from the yard, Corey was involved in a multivehicle accident. Eugene Hunt died, and Noreen Luczak and Brandon Huber were seriously injured.

 

FN1. This case involves a semi-tractor driven “bobtail,” which means without an attached trailer, as opposed to a semi-tractor driven with an attached trailer that is empty. See Prestige Cas. Co. v. Mich. Mut. Ins. Co., 99 F3d 1340, 1343 (CA 6, 1996) (defining “bobtail”), and Zurich Ins. Co. v. Rombough, 384 Mich. 228, 230; 180 NW2d 775 (1970), citing Ayers v. Kidney, 333 F.2d 812, 813 (CA 6, 1964) (noting that driving a semi-tractor with an attached, but empty, trailer is termed “deadheading”).

 

Marie Hunt (on behalf of her deceased husband), Thomas and Noreen Luczak, and Huber filed suits against Corey and Roger Drielick, Drielick Trucking, Sargent, and GLC. Empire, which insured Drielick Trucking’s semi-tractors under a non-trucking-use, or bobtail, policy, denied coverage and refused to defend under the policy’s business-use and named-driver exclusions. Plaintiffs settled with Sargent and GLC. Plaintiffs later entered into consent judgments with the Drielicks and Drielick Trucking. The parties also entered into an “Assignment, Trust, and Indemnification Agreement,” wherein they agreed that Roger Drielick would assign the rights under the insurance policy with Empire to plaintiffs, Sargent, and GLC. Sargent and GLC agreed to help plaintiffs’ collection efforts from Empire in exchange for a portion of any proceeds received from Empire.

 

Sargent and GLC filed writs of garnishment against Empire. In response, Empire filed a motion to quash, arguing again that the policy exclusions apply, among other things. The trial court denied Empire’s motion and entered an order to execute the consent judgments, reasoning that the business-use exclusion does not apply and the named-driver exclusion is invalid under MCL 500.3009(2). FN2 The Court of Appeals affirmed the trial court’s ruling regarding the named-driver exclusion but reversed the trial court’s ruling regarding the business-use exclusion, holding that further factual determinations were necessary because the fact that the semi-tractor “was traveling bobtail at the time of the accident, creat[ed] a question of fact whether the truck was being used for a business purpose at that time.” Hunt v. Drielick, unpublished opinion per curiam of the Court of Appeals, issued October 5, 2004 (Docket Nos. 246366, 246367, and 246368), p. 5. The Court mentioned that the policy exclusions are clear but “whether this accident was a covered event is not,” explaining that Roger Drielick orally revoked his lease with Sargent, and, contrary to federal regulations, there was no written lease with GLC.FN3 Id.

 

FN2. MCL 500.3009(2) states:

 

If authorized by the insured, automobile liability or motor vehicle liability coverage may be excluded when a vehicle is operated by a named person. Such exclusion shall not be valid unless the following notice is on the face of the policy or the declaration page or certificate of the policy and on the certificate of insurance: Warning—when a named excluded person operates a vehicle all liability coverage is void—no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain fully personally liable.

 

FN3. See 49 CFR 376.11; 49 CFR 376.12.

 

On remand, the trial court concluded that, “even if there was a lease between Drielick and [GLC],” the business-use exclusion does not preclude coverage. On appeal, the Court of Appeals reversed, holding that the first clause of the business-use exclusion—precluding coverage if injury or damage occurred “while a covered ‘auto’ is used to carry property in any business” FN4—applies, despite the fact that the truck was not actually carrying property at the moment of the accident. Hunt, 298 Mich.App at 555–557, citing Carriers Ins. Co. v. Griffie, 357 F.Supp 441, 442 (WD Pa, 1973).

 

FN4. As used in the policy, “auto” is defined as “a land motor vehicle, trailer, or semitrailer designed for travel on public roads but does not include ‘mobile equipment.’ “ References throughout this opinion to coverage will be to either “auto” or “vehicle.”

 

Plaintiffs sought leave to appeal, which this Court granted.FN5

 

FN5. We asked the parties to address the following:

 

(1) whether a lease agreement is legally implied between Roger Drielick Trucking and Great Lakes Carriers Corporation under the facts of the case and under applicable federal regulation of the motor carrier industry; and

 

(2) if so, whether the Court of Appeals erred in resolving this case on the

 

II. STANDARD OF REVIEW

This case involves the interpretation and application of an insurance policy, which is a question of law reviewed de novo. Cohen v. Auto Club Ins Ass’n, 463 Mich. 525, 528; 620 NW2d 840 (2001).

 

III. ANALYSIS

An insurance policy is similar to any other contractual agreement, and, thus, the court’s role is to “determine what the agreement was and effectuate the intent of the parties.” Auto–Owners Ins. Co. v. Churchman, 440 Mich. 560, 566; 489 NW2d 431 (1992). “[W]e employ a two-part analysis” to determine the parties’ intent. Heniser v. Frankenmuth Mut. Ins. Co., 449 Mich. 155, 172; 534 NW2d 502 (1995). First, it must be determined whether “the policy provides coverage to the insured,” and, second, the court must “ascertain whether that coverage is negated by an exclusion.” Id. (citation and quotation marks omitted). While “[i]t is the insured’s burden to establish that his claim falls within the terms of the policy,” id., “[t]he insurer should bear the burden of proving an absence of coverage,” Fresard v. Mich. Millers Mut. Ins. Co., 414 Mich. 686, 694; 327 NW2d 286 (1982) (opinion by FITZGERALD, C.J.). See, also, Ramon v. Farm Bureau Ins. Co., 184 Mich.App 54, 61; 457 NW2d 90 (1990). Additionally, “[e]xclusionary clauses in insurance policies are strictly construed in favor of the insured.” Churchman, 440 basis of the first clause of the business use exclusion in the non-trucking (bobtail) policy issued by Empire Fire and Marine Insurance Company, instead of on the basis of the second clause, which excludes coverage for “ ‘[b]odily injury’ or ‘property damage’ … while a covered ‘auto’ is used in the business of anyone to whom the ‘auto’ is leased or rented.” [ Hunt v. Drielick, 495 Mich. 857 (2013).] Mich at 567. See, also, Group Ins. Co. of Mich. v. Czopek, 440 Mich. 590, 597; 489 NW2d 444 (1992) (stating that “the exclusions to the general liability in a policy of insurance are to be strictly construed against the insurer”). However, “[i]t is impossible to hold an insurance company liable for a risk it did not assume,” Churchman, 440 Mich. at 567, and, thus, “[c]lear and specific exclusions must be enforced,” Czopek, 440 Mich. at 597.

 

A. THE POLICY

At issue is the proper interpretation of the bobtail insurance policy. “ ‘Bob-tail’ in trucking parlance is the operation of a tractor without an attached trailer,” and “[f]or insurance purposes, … it typically means coverage ‘only when the tractor is being used without a trailer or with an empty trailer, and is not being operated in the business of an authorized carrier.’ “ Prestige Cas. Co. v. Mich. Mut. Ins. Co., 99 F3d 1340, 1343 (CA 6, 1996) (citations omitted). The relevant portions of the bobtail insurance policy in this case state:

 

A. COVERAGE:

 

We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from ownership, maintenance or use of a covered auto….

 

* * *

B. EXCLUSIONS:

 

This insurance does not apply to any of the following:

 

* * *

13. BUSINESS USE:

 

“Bodily injury” or “property damage” while a covered “auto” is used to carry property in any business or while a covered “auto” is used in the business of anyone to whom the “auto” is leased or rented.

 

B. THE BUSINESS–USE EXCLUSION

Because the parties agree that the policy provided coverage at the time of the accident,FN6 we must decide whether the business-use exclusion applies to preclude coverage. Churchman, 440 Mich. at 567 (stating that “coverage under a policy is lost if any exclusion within the policy applies to an insured’s particular claims”). The business-use exclusion includes two separate clauses that could apply to a covered vehicle that may prevent Empire’s liability under the policy. Specifically, the policy does not apply “[1] while a covered ‘auto’ is used to carry property in any business or [2] while a covered ‘auto’ is used in the business of anyone to whom the ‘auto’ is leased or rented.” Mich Pub. Serv. Co. v. City of Cheboygan, 324 Mich. 309, 341; 37 NW2d 116 (1949) (stating that the word “or” is used as “used to indicate a disunion, a separation, an alternative”). See, also, GC Timmis & Co. v. Guardian Alarm Co., 468 Mich. 416, 421; 662 NW2d 710 (2003) (stating that words and clauses must be read in context of the preceding and following words and phrases).

 

FN6. The parties do not dispute that Drielick Trucking’s semi-tractor involved in the accident falls under the policy’s coverage provision. That is, they do not dispute whether the semi-tractor at issue was a covered “auto,” which, as we have noted, is defined by the policy as “a land motor vehicle, trailer, or semitrailer designed for travel on public roads but does not include ‘mobile equipment.’ “

 

1. THE FIRST CLAUSE

The business-use exclusion’s first clause states that there is no coverage under the policy “while a covered ‘auto’ is used to carry property in any business.” Considering the commonly used meaning of the undefined terms of the clause to ascertain the contracting parties’ intent, Czopek, 440 Mich. at 596, the word “while” means “[a]s long as; during the time that,” The American Heritage Dictionary of the English Language (1981). Further, “use” is defined as “ ‘to employ for some purpose; put into service[.]’ “ Hunt, 298 Mich.App at 556, quoting Random House Webster’s College Dictionary (2001). See, also, The American Heritage Dictionary of the English Language (1981) (defining “employ” as “[t]o engage in the services of; to put to work”). Finally, “carry” is defined as “1. To bear or convey from one place to another; transport…. 3. To serve as a means for the conveyance or transmission of…. 4. To hold or bear while moving….” Id. Applying these definitions, the clause makes clear that there is no coverage when the accident occurs during the time that the semi-tractor is engaged in conveying property from one place to another in any business.

 

More specifically, we conclude that coverage under the first clause is precluded only during the time that a semi-tractor is physically attached to property and the property is carried in a business. “[W]e must enforce the language of this contract as it is written.” Czopek, 440 Mich. 596–597. It follows that the parties intended the phrase “carry property” to mean just that—coverage can only be precluded during the time that the semi-tractor is used to actually transport property in a business. (Emphasis added.) See generally Prestige, 99 F3d at 1343 (explaining that bobtail policies typically provide coverage “when the tractor is being used without a trailer ”) (emphasis added). Similarly, we must give meaning to all terms of the contract in order to effectuate the parties’ intent. Churchman, 440 Mich. at 566. If the parties had intended to preclude coverage irrespective of whether property was actually attached to the semi-tractor at the time of the accident, there would have been no need to include the phrase “carry property” in the clause. The Court of Appeals’ analysis, which reached the opposite conclusion, highlights this point.

 

The Court of Appeals held that the property does not have to be attached to the semi-tractor at the time of the accident for the clause to apply; rather, the Court held that the clause applies “during an interval of time when the truck was employed for the purpose of carrying property in the trucking business.” Hunt, 298 Mich.App at 556 (emphasis added). The Court of Appeals reasoned that its conclusion is compelled by the definition of the phrase “is used” in the clause. Hunt, 298 Mich.App at 557 (explaining that to interpret the clause to require that the property must be attached in order for the clause to apply would “disregard the word ‘while’ or the phrase ‘is used’ ”).

 

However, the Court of Appeals erred by placing too great an emphasis on the definition of the phrase “is used,” while overlooking the import of the phrase “carry property.” In the commercial-trucking industry, semi-tractors are intended and designed precisely to carry property and, therefore, would always be used “for the purpose of carrying property,” id. at 556, when used in any business. Thus, under the Court of Appeals’ broad interpretation, the clause is essentially defined by whether a semi-tractor is driven in the business of carrying property. If the parties had intended that the clause’s scope be defined solely by whether the semi-tractor was driven in a business, the policy could have simply stated that there is no coverage “while the covered auto is used in any business.”

 

As previously mentioned, in order to give the phrase “carry property” meaning, Churchman, 440 Mich. at 567, we conclude that the clause was intended to more narrowly preclude coverage during the time that the semi-tractor is physically carrying attached property in a business. See, also, id. (stating that exclusionary clauses in insurance contracts are strictly construed). Notably, like the first clause, the scope of the business-use exclusion’s second clause is in part defined by whether the semi-tractor is used in a business, but the parties chose not to further qualify the second clause with the phrase “carry property.” Accordingly, our interpretation of the first clause does not disregard the phrase “is used” but, rather, appreciates the intended meaning of that phrase and the phrase “carry property.”

 

In concluding that the first clause does not require the semi-tractor to actually be carrying property at the time of the accident, the Court of Appeals relied on Griffie, 357 F.Supp at 442, which interpreted a similar exclusionary clause under a bobtail insurance policy and stated, in dicta, that the clause applied to preclude coverage because “[t]he mere fact that no cargo was being handled at the particular moment when the accident occurred does not mean that the equipment was not ‘used to carry property in any business.’ “ Griffie reasoned that the equipment “was regularly so used to carry property in the carrier’s business”; thus, “[i]f the intent had been to extend coverage except when the equipment was actually hauling a load, it would not have been difficult to express such an intention clearly.” Id. at 442.

 

Grifie, like the Court of Appeals in this case, conflated whether the policy’s clause requires that a semi-tractor be physically carrying attached property at the time of the accident with the additional requirement that the property also be carried “in any business.” The question is not whether the semi-tractor itself was used in a business for the purpose of carrying property at the time of the accident; rather, the question is whether the accident occurred while the semi-tractor is actually carrying property in any business. Notably, decades after Griffie was decided, Conn. Indemnity Co. v. Stringfellow, 956 F.Supp 553, 557 (MD Pa, 1997), considered an exclusionary clause that was practically identical to the clause at issue and expressly disagreed with Griffie. Stringfellow explained that “if the covered vehicle or vehicles are not being used to carry property, the exclusion does not apply and cannot be relied upon to deny coverage.” Id. at 558 (emphasis added). Stringfellow also concluded that Griffie “significant[ly] alter[ed] … the actual language” of the exclusion. Id.FN7

 

FN7. The Court of Appeals attempted to factually distinguish Stringfellow; however, its reasoning stemmed from conflating whether the semi-tractor was, in fact, carrying property with whether the carrying of property was in furtherance of a business purpose. See Hunt, 298 Mich.App at 556 n. 5 (explaining that “in Stringfellow, the driver was not under any order to pick up or drop off property, nor was he engaged in any sort of inspection as was the driver in Griffie ”).

 

In this case, it is undisputed that at the time of the accident, the semi-tractor was driven without attached property. Accordingly, in light of our conclusion that the business-use exclusion’s first clause precludes coverage as long as the covered vehicle is carrying attached property in any business, we hold that the first clause does not preclude coverage in this case.

 

2. THE SECOND CLAUSE

Because we hold that the first clause of the business-use exclusion does not preclude coverage, it is necessary to determine whether the second clause does. After considering the record in light of the trial court’s prior factual findings, we conclude that this case requires that the trial court make further findings of fact.

 

It is clear that Drielick Trucking and the Batesons did not enter a written lease regarding the use of Drielick Trucking’s semi-tractors, contrary to federal regulations.FN8 Because Drielick Trucking’s and the Batesons’ business relationship was in direct contravention of applicable federal regulations, our order granting leave to appeal focused primarily on the potential lease agreement and whether the Court of Appeals should have, instead, resolved this case under the policy’s leasing clause.

 

FN8. Specifically, 49 CFR 376.11 and 49 CFR 376.12 require that if a semi-tractor owner leases its equipment to a carrier, a written lease agreement must be executed. See Transamerican Freight Lines, Inc. v. Brada Miller Freight Sys., Inc., 423 U.S. 28, 36–37; 96 S.Ct 229; 46 L.Ed 2d 169 (1975) (explaining that the federal regulations mandate that the “lessee must assume the responsibility for the shipment and have full authority to control it,” and, to that end, the regulations require a written lease agreement, which helps in “fixing of the lessee’s responsibility”) (citation omitted). However, the fact that no written lease was entered into in this case does not preclude the trial court on remand from concluding that a lease was in fact entered into. See Wilson v. Riley Whittle, Inc., 145 Ariz 317, 321; 701 P.2d 575 (Ariz App, 1984) (explaining that “the absence of a written trip lease is legally irrelevant”).

 

Apparently considering that clause, the trial court previously explained that the parties had agreed that there are no material issues of fact in dispute; however, that does not appear to be the case. Bill and Jamie Bateson operated Great Lakes Logistics & Services (GLLS), in addition to the carrier company, GLC. GLLS was a brokerage company that connected semi-tractor owners, such as Roger Drielick, with carriers that are federally authorized to transport goods interstate, such as GLC. The parties dispute whether Bill Bateson dispatched Corey under GLC’s authority or merely brokered the deal under GLLS’s authority. Furthermore, the trial court considered the parties’ “verbal agreement and course of conduct,” concluding that the payment terms and the fact that Corey was not bound by a strict pick-up deadline meant that the business relationship was not triggered until Corey actually picked up for delivery the trailer of goods. Yet it remains uncertain whether the parties entered into a leasing agreement as contemplated by the terms of the insurance policy. Barring GLLS’s alleged involvement, an oral arrangement or course of conduct might have existed between GLC and Drielick Trucking, but whether that agreement constituted a lease for the purposes of the policy is a threshold factual determination that has not yet been fully considered.

 

Accordingly, we direct the trial court on remand to consider the parties’ agreement to decide whether there was, in fact, a leasing agreement between Drielick Trucking and GLC as contemplated by the business-use exclusion’s leasing clause. If so, the precise terms of that agreement must be determined, and the trial court should reconsider whether Corey was acting in furtherance of a particular term of the leasing agreement at the time of the accident.

 

IV. CONCLUSION

We hold that the first clause of the business-use exclusion precluding coverage “while a covered ‘auto’ is used to carry property in any business” is properly construed as excluding coverage with respect to a semi-tractor only when the accident occurs during the time that property is attached to the semi-tractor that is used in any business. Accordingly, we reverse the judgment of the Court of Appeals. Given that coverage is not precluded under the business-use exclusion’s first clause, it is necessary to determine whether coverage is nonetheless precluded under the second clause of the exclusion relating to a leased covered vehicle. In that regard, we remand this case for the trial court to make further factual determinations consistent with our analysis and consider whether the second clause precludes coverage in light of the trial court’s additional findings of fact.

 

We do not retain jurisdiction.

United States District Court,

S.D. Texas,

Galveston Division.

David Paul GONZALES, et al, Plaintiffs,

v.

SEADRILL AMERICAS, INC., et al, Defendants.

 

Civil Action No. 3:12–CV–00308.

Signed June 27, 2014.

 

Francis I. Spagnoletti, Spagnoletti Co, Houston, TX, for Plaintiffs.

 

Robert L. Klawetter, Eastham Watson Dale & Forney, Houston, TX, Christina K. Schovajsa, Eastham Watson et al, Houston, TX, John Michael Helms, Jr, Marc C. Tecce, Fitzpatrick Hagood Smith UHL LLP, Dallas, TX, for Defendants.

 

MEMORANDUM AND ORDER

GREGG COSTA, District Judge FN*.

 

FN* Sitting by designation.

 

*1 This is a case involving injuries allegedly sustained by two offshore-oil-rig workers during a helicopter ride off the coast of Mexico. Plaintiffs and the defendant oil platform operator want the helicopter operator to also be part of this lawsuit. The helicopter operator contends that as a Mexican corporation it is not subject to personal jurisdiction in Texas for an alleged tort that occurred outside this country.

 

I. BACKGROUNDFN1

 

FN1. The parties disagree about whether certain entities are actually subsidiaries of Pegaso Mexico and whether “long term debt” reflected on a Pegaso financial statement is for helicopter lease payments or some other financing. The Court resolves all credibility determinations in favor of Seadrill and Plaintiffs at this stage.

 

Plaintiff David Paul Gonzales is a resident of Louisiana. Plaintiff Luis Ledesma is a resident of Arizona. Gonzales and Ledesma were employed by Defendant/Third–Party Plaintiff Seadrill Americas, Inc. as crewmembers of the WEST PEGASUS at the time of the incident. WEST PEGASUS is a semi-submersible drilling unit that was located in Mexican territorial waters of the Gulf of Mexico, east of Matamoros, when Gonzales and Ledesma were allegedly injured.

 

Defendant/Third–Party Defendant Transportes Aereos Pegaso (Pegaso Mexico) is a Mexican company that provides air charter services within Mexico, mostly by helicopter. Pegaso Mexico does not have any offices in Texas and only conducts occasional flights in and out of Texas. Pegaso Mexico uses two wholly-owned subsidiaries—Pegaso USA, LLC and Pegaso, Inc.—to procure helicopter leases for its air taxi service.FN2 Pegaso USA, LLC is a Delaware corporation whose only American officer—the brother-in-law of Pegaso’s president, Enrique Zepeda Navarro—resides in Texas. Pegaso, Inc. is incorporated and based in Texas. According to Pegaso Mexico, the sole reason for the existence of Pegaso USA and Pegaso, Inc. is to procure leases for six aircraft Pegaso Mexico operates. Seadrill and Plaintiffs do not dispute the functions of these subsidiaries, instead arguing that “Pegaso, Inc. held all of Pegaso Mexico’s long term debt,” Docket Entry No. 33 ¶ 15, and that “Pegaso Mexico would be unable to conduct its business operations” without them. Docket Entry No. 42 ¶ 11 (emphasis omitted). The helicopter that Plaintiffs were riding on when they were allegedly injured was not procured by either of these subsidiaries.

 

FN2. Seadrill also discusses Westlake Aviation in its Response to Pegaso’s Motion to Dismiss. See Docket Entry No. 33 at 5, 7–8, 13–14. But Seadrill has not demonstrated how Westlake’s activities are of a sufficient quantum and quality to give rise to general jurisdiction. Nor has Seadrill presented any evidence of Westlake’s connection to this incident so as to render specific jurisdiction proper over Westlake, much less Pegaso Mexico. So—even assuming Westlake is a subsidiary of Pegaso Mexico as argued by Seadrill and Plaintiffs—this does not change the Court’s ultimate conclusion.

 

The WEST PEGASUS was operated by Seadrill and the Mexican state-owned petroleum company Pétroleos Mexicanos, known as Pemex, at the time of the incident at issue. Pemex hired Pegaso Mexico to transport workers from the WEST PEGASUS to the Mexican mainland via helicopter. The helicopter that carried Plaintiffs has a Mexican civil aviation registration and, like all of Pegaso Mexico’s aircraft, is based in Mexico.

 

Ledesma and Gonzales were working as medic and mechanic, respectively, on the WEST PEGASUS in July 2012. On or about July 13, 2012, a Pegaso Mexico helicopter that had departed Matamoros was taking Gonzales and Ledesma from the WEST PEGASUS back to shore in Mexico. During this flight, the helicopter allegedly went into freefall, injuring Plaintiffs.

 

Plaintiffs filed suit against Seadrill and Pegaso Mexico, but failed to serve the latter. Seadrill then filed and served a cross claim asserted against Pegaso Mexico. Pegaso Mexico filed a motion to dismiss for lack of personal jurisdiction, leading the Court to allow time for jurisdictional discovery. The issue has now been fully briefed and is ripe for decision.

 

II. LEGAL STANDARDS

 

A. Rule 12(b)(2)

 

*2 The plaintiff bears the burden of demonstrating facts sufficient to support jurisdiction when a nonresident defendant challenges personal jurisdiction under Federal Rule of Civil Procedure 12(b) (2). Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir.1985) (citations omitted). “When the district court rules on a motion to dismiss for lack of personal jurisdiction ‘without an evidentiary hearing, the plaintiff may bear his burden by presenting a prima facie case that personal jurisdiction is proper.’ “ Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338, 343 (5th Cir.2002) (quoting Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.1994)). The court “must accept as true the uncontroverted allegations in the complaint and resolve in favor of the plaintiff any factual conflicts.” Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, 869 (5th Cir.2000) (quoting Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir.1999) (alterations omitted)). The court can also consider “ ‘any combination of the recognized methods of discovery,’ including affidavits, interrogatories, and depositions to assist in its jurisdictional analysis.”   Little v. SKF Sverige AB, 2014 WL 710941, at *2 (S.D.Tex. Feb.24, 2014) (quoting Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 241 (5th Cir.2008)). “But the court is not obligated to credit conclusory allegations, even if uncontroverted.” Mobius Risk Grp., LLC v. Global Clean Energy Holdings, Inc., 2012 WL 590926, at *2 (S.D.Tex. Feb.22, 2012) (citing Panda Brandywine Corp. v. Potomac Elec. Power, 253 F.3d 865, 868 (5th Cir.2001)).

 

B. The Law of Personal Jurisdiction

A federal court presiding over a maritime matter may only exercise jurisdiction over parties subject to the long-arm statute of the state in which the court sits, and only to the extent that such exercise does not violate the Constitution. See Submersible Sys., Inc. v. Perforadora Central, S.A. de C.V., 249 F.3d 413, 418 (5th Cir.2001) (citing Fed.R.Civ.P. 4(k)(1)). Because the Texas long-arm statute confers jurisdiction to the limits of due process, “the two-step inquiry collapses into one federal due process analysis.” Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 609 (5th Cir.2008); see also Tex. Civ. Prac. & Rem.Code Ann. §§ 17.041–.045 (West 2013). Federal due process permits the exercise of personal jurisdiction over a nonresident defendant when: (1) “the nonresident purposely availed himself of the benefits and protections of the forum state by establishing ‘minimum contacts’ with the state;” and (2) “the exercise of jurisdiction does not offend ‘traditional notions of fair play and substantial justice.’ ”   Johnston, 523 F.3d at 609 (quoting Wilson, 20 F.3d at 647).

 

“There are two types of ‘minimum contacts’: those that give rise to specific personal jurisdiction and those that give rise to general personal jurisdiction.” Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir.2001). Two Supreme Court decisions issued on the same day in 2011 highlight the substantially higher degree of contacts needed to establish general jurisdiction, which is “all-purpose” and grants a court the power “to hear any and all claims against” a party regardless of where the events at issue took place, than specific jurisdiction, which is “case-linked” and grants a court only the power to hear “issues deriving from, or connected with, the very controversy that establishes jurisdiction.” Compare Goodyear Dunlop Tires Operations v. Brown, ––– U.S. ––––, ––––, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011) (citations and internal quotations marks omitted) (ruling on general jurisdiction), with J. McIntyre Mach., Ltd. v. Nicastro, –––U.S. ––––, –––– – ––––, 131 S.Ct. 2780, 2787–88, 180 L.Ed.2d 765 (2011) (ruling on specific jurisdiction).

 

*3 If a plaintiff is able to establish the contacts necessary for either general or specific jurisdiction, the burden then shifts to the defendant to show that exercising jurisdiction would be unreasonable, meaning it would offend traditional notions of fair play and substantial justice. See Luv N’care, Ltd. v. Insta–Mix, Inc., 438 F.3d 465, 473 (5th Cir.2006) (citations omitted).

 

III. ANALYSIS

Plaintiffs and Seadrill assert that Pegaso Mexico’s contacts with Texas are sufficient to invoke both general and specific jurisdiction. For the reasons discussed below, the Court finds that neither basis for jurisdiction exists.

 

A. General Jurisdiction

Twice in the last three years, the Supreme Court has reiterated that the contacts required for defendants to be subject to general jurisdiction must be “so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Goodyear, 131 S.Ct. at 2851 (citation omitted); Daimler AG v. Bauman, ––– U.S. ––––, ––––, 134 S.Ct. 746, 761, 187 L.Ed.2d 624 (2014) ( “Accordingly, the inquiry under Goodyear is not whether a foreign corporation’s in-forum contacts can be said to be in some sense ‘continuous and systematic,’ it is whether that corporation’s ‘affiliations with the State are so “continuous and systematic” as to render [it] essentially at home in the forum State.’ ” (quoting Goodyear, 131 S.Ct. at 2851)). Although the Supreme Court expressly noted that general jurisdiction is not limited to forums where a corporation is incorporated or maintains its principal places of business, Daimler, 134 S.Ct. at 761 n. 19, those are the “paradigm” situations in which a corporation is “at home.” Goodyear, 131 S.Ct. at 2853–54; see also Daimler, 134 S.Ct. at 760 (“Those affiliations have the virtue of being unique—that is, each ordinarily indicates only one place—as well as easily ascertainable.”). The “essentially at home” standard is met only when “the continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit … on causes of action arising from dealings entirely distinct from those activities.” Daimler, 134 S.Ct. at 761 (quoting Int’l Shoe v. Washington, 326 U.S. 310, 318, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (emphasis omitted)); see also Johnston, 523 F.3d at 609 (“The ‘continuous and systematic contacts test is a difficult one to meet, requiring extensive contacts between a defendant and a forum.’ ” (quoting Submersible Sys., 249 F.3d at 419)).

 

Pegaso Mexico is not incorporated in Texas nor is its headquarters located in Texas. For general jurisdiction to exist, it thus must fit into that small, undefined category of other situations in which a foreign corporation is nonetheless “essentially at home” in a forum.FN3 As the Second Circuit recently noted when reversing a district court’s pre-Daimler holding that a Turkish company was subject to general jurisdiction in New York, “although Daimler and Goodyear ‘d[o] not hold that a corporation may be subject to general jurisdiction only in a forum where it is incorporated or has its principal place of business,’ those cases make clear that even a company’s ‘engage[ment] in a substantial, continuous, and systematic course of business’ is alone insufficient to render it at home in a forum.” Sonera Holding B.V. v. Cukurova Holding A.S., 750 F.3d 221, 226 (2d Cir.2014) (per curiam) (quoting Daimler, 134 S.Ct. at 760–61) (emphasis in original).FN4

 

FN3. The one such situation the Supreme Court has recognized, Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952), was a case in which a Philippine corporation had relocated to Ohio during WWII, essentially making Ohio its principal place of business during the war.

 

FN4. Demonstrating the difficulty of establishing general jurisdiction outside of a forum where a defendant is incorporated or maintains its headquarters, only one federal court has apparently found jurisdiction in that situation since Daimler (even though more than 75 federal cases have already cited Daimler ). See Barriere v. Juluca, 2014 WL 652831, at *7–9 (S.D.Fla. Feb.19, 2014) (finding general jurisdiction in Florida over an Anguillan corporation with its principal place of business in Anguilla because it “maintains a sales office in Florida” and conducts other business in Florida). That outlier is at odds with other courts’ application of Goodyear and Daimler in similar situations, see, e.g., Barger v. Midland Funding, LLC, 2014 WL 2812233, at *2 (D.Md. June 20, 2014) (“The fact, if it is a fact, that Defendants have a business location in Maryland with employees is by no means adequate to create a valid basis for general jurisdiction. To hold otherwise, as Plaintiff suggests, would be to render essentially every entity that has any significant operation in this State to general jurisdiction to the same degree as if Maryland were its principal place of business.”), and relies on a pre-Daimler circuit decision that another court has doubted remains good law. See Air Tropiques SPRL v. N. & W. Ins. Co., Ltd., 2014 WL 1323046, at *10 (S.D.Tex. Mar.31, 2014) (discussing Stubbs v. Wyndham Nassau Resort & Crystal Palace Casino, 447 F.3d 1357 (11th Cir.2006)).

 

*4 Numerous undisputed facts are at odds with a finding that Pegaso Mexico is “essentially at home” in Texas. Pegaso Mexico does not have any offices, property, employees, or registered agents in Texas. All of its aircraft are based and registered in Mexico. In 2012 and 2013, only three to five flights a year travelled from Mexico into Texas. Less than one percent of its flights travel anywhere in the United States, and no flights travel entirely within the United States.

 

Recognizing the scant contacts between Pegaso Mexico and Texas, Seadrill and Plaintiffs rely on the contacts of its Texas subsidiary, Pegaso, Inc. Pegaso, Inc. is a single-purpose financing entity that leases three helicopters from American companies that it then subleases to Pegaso Mexico. The helicopter involved in this case—one of 33 in Pegaso Mexico’s fleet—is not one of the three leased from Pegaso, Inc.

 

The impact of a subsidiary’s contacts on the general jurisdiction inquiry was at issue in Daimler, so that decision is worth recounting in more detail. Argentine plaintiffs sued Daimler, a German corporation, in the Northern District of California. They alleged that a Daimler subsidiary, Mercedes–Benz Argentina, collaborated with Argentine state security forces to “kidnap, detain, torture, and kill certain Mercedes workers” during the Argentine “Guerra Sucia” (“Dirty War”) of 1976 to 1983. Daimler, 134 S.Ct. at 751–52. All complained-of actions occurred in Argentina. Id. Those plaintiffs named only the German corporation as a defendant in their complaint and sought to hold Daimler vicariously liable for the actions of its Argentinian subsidiary. Id. at 752.

 

The Daimler plaintiffs argued that jurisdiction in California was proper because Mercedes—Benz USA—an indirect subsidiary of Daimler incorporated in Delaware and having its principal place of business in New Jersey—maintained multiple California-based facilities and realized substantial revenues from California sales. Id. at 752–53. The Supreme Court concluded that even assuming Mercedes—Benz USA was at home in California and its actions could be imputed to Daimler, “there would still be no basis to subject Daimler to general jurisdiction in California, for Daimler’s slim contacts with the State hardly render it at home there.” Id. at 760. In doing so, the Court rejected the plaintiffs’ request to “approve the exercise of general jurisdiction in every State in which a corporation ‘engages in a substantial, continuous, and systematic course of business’ “ as “unacceptably grasping.” Id. at 761.

 

This Court will assume arguendo, as Daimler did, that the contacts of Pegaso Mexico’s subsidiaries can be considered in making the general jurisdiction assessment.FN5 Daimler makes clear, however, that a subsidiary being “at home” in the forum state does not automatically subject the parent to general jurisdiction. See Air Tropiques SPRL v. N. & W. Ins. Co., Ltd., 2014 WL 1323046, at *10 (S.D.Tex. Mar.31, 2014) (“What is clear from Daimler is that, for a court to exercise general jurisdiction over a foreign corporation, that corporation itself—not its managing agent or subsidiary or affiliate—must be ‘at home’ in the forum state.” (citing Daimler, 134 S.Ct. at 761)). The Court must look at the forum state contacts, including those imputed from the subsidiary, in the context of the parent’s overall operation. See Sonera, 750 F.3d at 226 (“Even assuming [defendant’s three subsidiaries’] New York contacts should be imputed to [defendant], they do not shift the company’s primary place of business (or place of incorporation) away from Turkey.”).

 

FN5. Because Pegaso USA is a Delaware corporation—with no connection to the incident at suit—that performs the same basic functions as Pegaso, Inc., the Court does not see a scenario in which Pegaso USA’s activities would support a finding of general or specific jurisdiction over Pegaso Mexico in Texas if Pegaso, Inc.’s activities did not.

 

*5 The contacts of Pegaso, Inc.—an entity indisputably subject to general jurisdiction in this forum as a Texas corporation primarily conducting business in the State-are not enough to render the larger Pegaso Mexico enterprise “essentially at home” in Texas. The activities of Pegaso, Inc. mean that some of Pegaso Mexico’s aircraft are leased out of Texas. But these aircraft still account for less than 10% of its fleet. Combining the subsidiaries’ Texas contacts with the Texas contacts of Pegaso Mexico—the flights into Texas already discussed as well as contracts with Texas residents, purchasing some parts from Texas, and training pilots in Texas—still does not get close to making the Mexican parent at home in Texas. These combined contacts are similar to (and if anything less substantial than) those the Supreme Court found insufficient in Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415–17, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) (rejecting general jurisdiction when the nonresident defendant’s contacts with Texas “consisted of sending its chief executive officer to Houston for a contract-negotiation session; accepting into its New York bank account checks drawn on a Houston bank; purchasing helicopters, equipment, and training services from [a Texas company] for substantial sums; and sending personnel to … facilities in Fort Worth for training.”); see also Johnston, 523 F.3d at 610–11 (explaining “just how difficult it is to establish general jurisdiction” by citing numerous Fifth Circuit cases rejecting general jurisdiction, most of which had far more extensive contacts than those present in this case), a decision reached even before it arguably tightened the general jurisdiction standard in Goodyear and Daimler. See, e.g., Air Tropiques, 2014 WL 1323046, at *10 (“Before Daimler, NWIC might have been subject to general jurisdiction in this forum.”); David D. Siegel, U.S. Supreme Court Severely Circumscribes “Presence” as Basis for Personal Jurisdiction of Foreign Corporations, 265 Siegel’s Prac. Rev. 1, 2 (2014) (“The opportunities for personal jurisdiction of foreign corporations are of course much reduced after Daimler, but not gone entirely.”).

 

For these reasons, Pegaso Mexico is not subject to general jurisdiction in Texas.

 

B. Specific Jurisdiction

That leaves the specific jurisdiction question. Though not so substantial and continuous as to render Pegaso Mexico at home in Texas, its contacts in this State are likely sufficient to meet the much lower contacts threshold for specific jurisdiction. Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir.2006) (noting that “relatively few contacts” can suffice for specific jurisdiction). The problem for Seadrill and Plaintiffs is that a contacts assessment is not the whole ball game in a specific jurisdiction analysis: the cause of action must “arise from” those contacts. See Felch v. Transportes Lar–Mex SA DE CV, 92 F.3d 320, 324 (5th Cir.1996) (“Specific jurisdiction is appropriate when the nonresident defendant’s contacts with the forum state arise from, or are directly related to, the cause of action.” (citation omitted)). The contours of this requirement are not well defined. See Breathwit Marine Contractors, Ltd. v. Deloach Marine Servs., LLC, –––F.Supp.2d ––––, 2014 WL 199026, at *4 (S.D.Tex. Jan.16, 2014) (“Although the Supreme Court has issued a number of rulings on the ‘contacts’ requirement, it has not offered direct guidance on the scope of the requirement for specific jurisdiction that the claim must ‘arise out of or relate to’ those contacts.” (citations omitted)). But the facts in this case do not even approach the boundaries of this issue where the law is hazy.

 

*6 Specific jurisdiction would undoubtedly exist in Texas if the alleged injuries took place during one of the rare instances in which a Pegaso Mexico aircraft is in Texas airspace. A tougher question would exist if the tort occurred over Mexican airspace but on a flight that departed from Texas.   Breathwit, 2014 WL 199026, at *4–*6 (finding specific jurisdiction in a similar maritime scenario). And perhaps even closer to the line would be a situation in which the tort occurred on a flight entirely within Mexico, but on one of the three aircraft that are leased out of Texas.

 

The tort that allegedly occurred off the coast of Mexico in this case has none of those connections to Texas. The Texas contacts of Pegaso Mexico or Pegaso, Inc. are not even a “but for” cause of the incident, and, as this Court recently observed, the Fifth Circuit appears to require even a bit more of a causal relationship. See Breathwit, 2014 WL 199026, at *5–6 (discussing “but-for-plus” test). Plaintiffs and Seadrill have failed to show how their tort claims arise out of any contacts with Texas. See Felch, 92 F.3d at 324–26 (finding specific jurisdiction over a trucking accident in Mexico to be lacking in Texas because, despite the trucking company having some contacts in Texas, the entire Felch route took place in Mexico (from Monterrey to Nuevo Laredo)). Specific jurisdiction is thus also lacking.

 

IV. CONCLUSION

For the reasons given above, the Court finds that Pegaso is not subject to personal jurisdiction in Texas and GRANTS Pegaso’s Motion to Dismiss (Docket Entry No. 20). The Court further DENIES Seadrill and Plaintiffs’ requests for additional jurisdictional discovery (Docket Entry Nos. 33, 34, 42, & 45). Substantial jurisdictional discovery has already occurred, and the Court is able to determine that Pegaso is not subject to general jurisdiction under the Supreme Court’s recent pronouncements on this issue. All claims against Pegaso are thus DISMISSED WITHOUT PREJUDICE.