Lexington Ins. Co. v. Zurich Ins. (Taiwan) Ltd.

• Decision Date: 21 December 2017
• Docket Number: 16–cv–740–jdp
• Citation: 286 F.Supp.3d 982
• Parties: LEXINGTON INSURANCE COMPANY, Plaintiff, v. ZURICH INSURANCE (TAIWAN) LTD. and Taian Insurance Co., Ltd., Defendants.
• Court: U.S. District Court — Western District of Wisconsin

286 F.Supp.3d 982

LEXINGTON INSURANCE COMPANY, Plaintiff,

v.ZURICH INSURANCE (TAIWAN) LTD. and Taian Insurance Co., Ltd., Defendants.

16–cv–740–jdp

United States District Court, W.D. Wisconsin.

Signed December 21, 2017

Amy Julia Collins Cassidy, Amy P. Klie, Nicolaides Fink Thorpe Michaelides Sullivan LLP, Chicago, IL, for Plaintiff.

Brenden Leib, Samuel J. Leib, Leib Knott Gaynor LLC, Thomas R. Schrimpf, Hinshaw & Culbertson LLP, for Defendants.

OPINION & ORDER

JAMES D. PETERSON, District Judge

This insurance dispute arises from an accident in Texas in which a Louisiana resident was seriously injured while riding a Trek bicycle. Plaintiff, Massachusetts-based Lexington Insurance Company, insured Wisconsin-based Trek Bicycle Corp. Lexington settled a lawsuit on Trek's behalf, and now it seeks contributions from defendants Zurich Insurance (Taiwan) Ltd. and Taian Insurance Co., Ltd. Zurich and Taian insured the manufacturers of some of the components of the bicycle, and thus they are indirect insurers of Trek.

Zurich and Taian move to dismiss for lack of personal jurisdiction and for improper venue. Dkt. 13 and Dkt. 22. The evidence shows that Zurich and Taian had only attenuated contacts with Wisconsin, and the assertion of jurisdiction would not comport with constitutional due process. The court will grant Zurich's and Taian's motions to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. All other pending motions will be denied as moot.

FACTS

In deciding a motion to dismiss for lack of personal jurisdiction, the court may consider the well-pleaded allegations in the complaint, affidavits, and written materials. Kipp v. Ski Enter. Corp. of Wis., Inc. , 783 F.3d 695, 697 (7th Cir. 2015) ; Purdue Research Found. v. Sanofi–Synthelabo, S.A. , 338 F.3d 773, 782 (7th Cir. 2003) ). Here, the court draws the following facts from Lexington's complaint, affidavits from the parties, and relevant contracts. The court can decide the issue on written evidence without an evidentiary hearing because the material facts are not disputed. See Abbott Labs., Inc. v. BioValve Techs, Inc. , 543 F.Supp.2d 913, 918 (N.D. Ill. 2008) (citing Hyatt Int'l Corp. v. Coco , 302 F.3d 707, 713 (7th Cir.2002) ).

Lexington is a Delaware company with its principal place of business in Massachusetts. Defendants Zurich and Taian are both insurance companies organized in the Republic of China (Taiwan).¹

A. The Texas lawsuit

In 2012, Louisiana resident James Giessler rented a Trek mountain bike in Texas. The front wheel of the bike detached from the bike's frame, and Giessler sustained permanent serious injuries. Giessler, his wife, and his son filed a lawsuit in Texas against Trek, Mellow Johnny's LLC (the business that rented the bike to Giessler), and SRAM, LLC, and Rock Shox (both manufacturers of the bike's component parts). On the eve of the trial, the case settled. Lexington, an insurer for Trek, indemnified Trek and paid the settlement.

Zurich and Taian were not parties to the Texas lawsuit. Zurich had insured the manufacturer of the bike, Giant Manufacturing Co., Ltd., a Taiwanese company. Taian had insured the manufacturer of the bike wheel, Hubtec International Ltd. a/k/a Formula Hubs, also a Taiwanese company. Neither Zurich nor Taian had insured Trek directly, but they both had extended insurance coverage to Trek by allowing Trek to be named as an additional insured under the policies issued to Giant and Formula Hubs. Lexington demanded that Zurich and Taian contribute to the cost of defending Trek and the settlement amount, but Zurich and Taian refused.

B. Defendants' contacts with Wisconsin

Neither Zurich nor Taian does business in Wisconsin. The parties agree that for the purposes of this dispute, Zurich and Taian have no contact with Wisconsin other than the insurance policies that name Trek as an additional insured. The two insurance policies at issue were negotiated and signed in Taiwan. Lexington is a party to neither policy.

1. Zurich Policy

The first insurance policy (the Zurich Policy) is an agreement between Zurich and Giant. Dkt. 1–2. The policy includes Giant's vendors as "[A]dditional Insured" and lists Trek as one of Giant's vendors. Id. at 4, 6.

Under the Zurich Policy, Zurich agreed to indemnify Giant and its vendors for "[c]ompensation resulting from judgments delivered by or obtained from a court of competent jurisdiction in the Geographical Limits" and "charges, expenses, and legal costs incurred or recoverable in the Geographical Limits." Id. at 12. The term "Geographical Limits" is defined as "the Geographical Limits stated in the Schedule," id. at 16, and the Schedule provides that the Geographical Limits is "worldwide," id. at 2.

The Zurich Policy also includes an arbitration clause. The clause provides,

If any difference arises as to the amount to be paid under this Policy (liability being otherwise admitted) such difference will be referred to an arbitrator in accordance with the relevant statutory provisions in force at that time or, if there are no relevant statutory provisions in force, by agreement between Zurich and the Insured. Where any difference is by this Condition to be referred to arbitration the making of an award will be a condition to precedent to any right of action against Zurich.

Id. at 18. The Zurich Policy is governed by Taiwanese law. Id. at 12. The policy allows Zurich to control the litigation or settlement of any covered claim against an insured, but Zurich has no obligation to do so. Id. at 18.

2. Taian Policy

The second insurance policy at issue is an agreement between Taian and Formula Hubs (the Taian Policy). Dkt. 26–2 and Dkt. 26–4. Like the Zurich Policy, the Taian Policy's insurance coverage extends to Formula Hub's vendors. The Taian Policy as filed with the court does not include a list of Formula Hub's vendors, but such a list is contemplated. Dkt. 26–4, at 18. Taian sent Trek a certificate of insurance, and the certificate states that Trek is insured "in conjunction with" the Taian Policy. Dkt. 1–4, at 2. and Dkt. 26–2, at 1. The certificate includes a territorial limit, but the term "Territorial Limit" is defined as "Worldwide including USA/Canada." Dkt. 1–4 at 1.

Under the section titled "applicable law and jurisdiction," Taian and Formula Hub agreed to litigate their disputes applying "the law and practice" of Taiwanese courts:

Each party agrees to submit to the jurisdiction of any court of competent jurisdiction within Taiwan and to comply with all requirements necessary to give such court jurisdiction. All matters arising hereunder shall be determined in accordance with the law and practice of such court.

Dkt. 26–2, at 12. The policy gives Taian a right, but not an obligation, to control the litigation or settlement of any covered claim against an insured. Id. at 10.

ANALYSIS

A. Motions to dismiss

Zurich and Taian both contend that the court should dismiss the case for lack of personal jurisdiction under Rule 12(b)(2) and for improper venue under Rule 12(b)(3). Zurich also contends that the service of process on Zurich was improper under Rule 12(b)(5). The court will dismiss the case for lack of personal jurisdiction, and thus it need not reach the venue and service issues.

The personal jurisdiction analysis has two steps. First, the court determines whether the long-arm statute of the forum state, in this case Wisconsin, would reach the defendants. The Wisconsin statute must be construed "liberally in favor of the exercise of personal jurisdiction."

Rasmussen v. Gen. Motors Corp. , 2011 WI 52, ¶¶ 16–17, 335 Wis. 2d 1, 13, 803 N.W.2d 623, 629. Second, the court must determine "whether the exercise of jurisdiction comports with due process requirements." Id. ¶ 16 (quoting Kopke v. A. Hartrodt S.R.L. , 2001 WI 99, ¶ 8, 245 Wis. 2d 396, 409, 629 N.W.2d 662, 667 ). "The plaintiff has a ‘minimal burden’ of showing that the statutory and constitutional requirements are met," and the court must resolve any "factual doubt" in favor of the plaintiff. Id. (quoting Kopke , 2001 WI 99, ¶ 8, 245 Wis.2d 396, 629 N.W.2d 662 ).

Neither Zurich nor Taian does business in Wisconsin, and Lexington concedes that they are not subject to general jurisdiction here. For their part, Zurich and Taian concede that their activities would satisfy Wisconsin's long-arm statute applicable to insurance actions, which applies to any action that arises from "a promise made anywhere to the plaintiff or some 3rd party," when the "person insured" was a Wisconsin resident "when the event out of which the cause of action is claimed to arise occurred." Wis. Stat. § 801.05(10). So the question here is whether the assertion of specific jurisdiction over defendants would comport with the due process requirements under the Constitution.

Three requirements must be satisfied: (1) the defendant must have sufficient minimum contacts with the forum; "(2) the alleged injury must have arisen from the defendant's forum-related activities"; and "(3) the exercise of jurisdiction must comport with traditional notions of fair play and substantial justice." Felland v. Clifton , 682 F.3d 665, 673 (7th Cir. 2012). Lexington bears the burden on the first two requirements; Zurich and Taian have the burden on the third. See Carlson v. Fid. Motor Grp., LLC , 2015 WI App 16, ¶ 10, 360 Wis. 2d 369, 376, 860 N.W.2d 299, 302.

1. Minimum contacts

The minimum-contacts analysis varies depending on the nature of the claim. Felland , 682 F.3d at 674. "There is no ‘pendent’ or ‘supplemental’ theory of specific personal jurisdiction," so when a plaintiff asserts multiple claims, "personal jurisdiction over the defendant must be established as to each claim asserted." MG Design Assocs., Corp. v. Costar Realty Info., Inc. , 224 F.Supp.3d 621, 629 (N.D. Ill. 2016) (quoting In re Testosterone Replacement Therapy Prod. Liab. Litig. Coordinated Pretrial Proceedings , 164 F.Supp.3d 1040, 1048 (N.D. Ill. 2016) ).

Lexington asserts five...