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Lexington Insurance Co. v. Hotai Insurance Company, Ltd.

United States Court of Appeals, Seventh Circuit

September 12, 2019

Lexington Insurance Company, Plaintiff-Appellant,
v.
Hotai Insurance Company, Ltd., and Taian Insurance Company, Ltd., Defendants-Appellees.

          Argued November 27, 2018.

          Appeal from the United States District Court for the Western District of Wisconsin, Madison Division. No. 3:16-cv-740 - James D. Peterson, Chief Judge.

          Before Bauer, Hamilton, and Barrett, Circuit Judges.

          Barrett, Circuit Judge.

         Zurich Insurance (Taiwan), Ltd., and Taian Insurance Company, Ltd., are insurance companies based in Taiwan.[1] Each provided worldwide products-liability insurance coverage to two Taiwanese companies that supplied parts and inventory to Trek Bicycle Corporation, which is based in Wisconsin. As part of their agreements with the Taiwanese companies, Zurich and Taian both recognized Trek as an additional insured covered by their policies.

         On the basis of that additional-insured status, Trek's primary insurer, Lexington Insurance Company, which is based in Massachusetts, sued Zurich and Taian in Wisconsin seeking indemnification for a products-liability settlement paid on Trek's behalf involving an accident that took place in Texas. The district court correctly concluded that it lacked personal jurisdiction over Zurich and Taian, so we affirm its dismissal of the case.

         I.

         Trek, a bicycle manufacturer, maintains its corporate offices in Waterloo, Wisconsin. It is party to two purchase order agreements, both with Taiwanese companies, that are relevant to this appeal. One is an agreement with Giant Manufacturing Company to purchase bicycles that Trek markets and sells under its own brand name. The other is an agreement to purchase bicycle parts from Formula Hubs, Inc.

         Giant's purchase order agreement with Trek required it to have Trek named as an additional insured in its products-liability insurance policy with Zurich, a Taiwanese insurer. Under that policy, Zurich agreed to indemnify Giant and its listed vendors, including Trek, for judgments, expenses, and legal costs incurred "worldwide." In addition, the Zurich policy (1) allowed Zurich to control the litigation or settlement of a covered claim but did not require it to do so; (2) included a Taiwanese choice of law provision; and (3) required disputes between Zurich and its insureds regarding the policy to be resolved by arbitration in Taiwan.[2]

         Trek's purchase order with Formula involved a similar insurance arrangement. In it, Formula agreed to have Trek included as an additional insured in its products-liability insurance policy with Taian, another Taiwanese insurer. Under the policy, Taian agreed to indemnify Formula and its vendors, including Trek, for liability and defense costs incurred "worldwide." Like the Zurich policy, the Taian policy gave Taian the right but not the obligation to control the litigation of a covered claim against an insured. Finally, it dictated that disputes concerning the policy would be subject to Taiwanese law and would have to submit to the jurisdiction of a Taiwanese court.

         In 2012, John Giessler, a Louisiana resident, was seriously injured while riding a rented Trek bicycle in Travis County, Texas. During his ride, the front wheel detached from the frame of the bicycle, Giessler fell, and the resulting injuries rendered him a quadriplegic. Giessler, his wife, and his son sued Trek, among others, in Texas. Although Giant had manufactured the bicycle that Giessler was riding, and Formula had manufactured the front-wheel release, neither was a party to Giessler's lawsuit.

         Lexington Insurance Company, which insures Trek through comprehensive general liability and commercial umbrella policies, defended Trek in the Giessler suit. Trek and Lexington attempted to notify Giant and Formula -and their respective insurers, Zurich and Taian-of Giessler's lawsuit. In the end, though, the case settled, and Lexington paid Giessler on Trek's behalf. Lexington sought reimbursement from Zurich and Taian; after they refused to pay, it sued them in the Western District of Wisconsin. It argued that both were obligated to indemnify Trek under their respective insurance policies with Giant and Formula. And presenting theories of contribution and equitable subrogation, Lexington contended that the Taiwanese insurers must pay it the money that they owed Trek.

         Both Zurich and Taian moved to dismiss the case for lack of personal jurisdiction and improper venue. With respect to the former, the insurers argued, among other things, that they lacked the necessary minimum contacts with Wisconsin to justify the district court's exercise of jurisdiction over them - these policies were contracts between Taiwanese companies, drafted and signed in Taiwan, and governed by Taiwanese law. In response, Lexington contended that the worldwide coverage provisions and the inclusion of Trek as an additional insured in each policy constituted sufficient contacts ...


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