Lexington Insurance Company v. Hotai Insurance Company, Ltd.
938 F.3d 874
7th Cir.2019Background
- Zurich (Hotai) and Taian are Taiwanese insurers that issued worldwide products-liability indemnity policies to Giant and Formula (Taiwanese suppliers) and named Trek (Wisconsin) as an additional insured.
- Policies were negotiated and issued in Taiwan, contained Taiwanese-law and Taiwan-arbitration clauses, and gave the insurers the right (but not the obligation) to control litigation; no duty-to-defend clause was assumed.
- In 2012 a Texas accident injured Giessler; Trek (insured in Wisconsin) was defended by its primary insurer, Lexington, which settled and paid on Trek’s behalf.
- Lexington sued Zurich and Taian in the Western District of Wisconsin seeking indemnification/contribution/subrogation after the Taiwanese insurers refused reimbursement.
- Defendants moved to dismiss for lack of personal jurisdiction; the district court granted dismissal for lack of jurisdiction.
- The Seventh Circuit affirmed: Zurich and Taian lacked the minimum contacts with Wisconsin needed for specific jurisdiction; additional-insured status and a “worldwide coverage” clause were insufficient to establish purposeful availment.
Issues
| Issue | Plaintiff's Argument (Lexington) | Defendant's Argument (Zurich/Taian) | Held |
|---|---|---|---|
| Whether Wisconsin has specific personal jurisdiction over Zurich and Taian | Insurers purposefully availed themselves of Wisconsin by naming Trek as an additional insured and offering "worldwide" coverage, making suit in Wisconsin foreseeable | Insurers negotiated and issued policies in Taiwan for Taiwanese companies, never solicited business or otherwise purposefully directed activities to Wisconsin | Held: No specific jurisdiction; insurers lacked sufficient minimum contacts with Wisconsin |
| Whether being named an additional insured creates a contact with the forum state | Additional-insured status connects insurer to Trek (a Wisconsin resident), supporting jurisdiction | A contract with a forum resident, standing alone, is insufficient without purposeful contacts with the forum | Held: Naming Trek does not establish jurisdiction; contacts must be with the forum state, not merely with a plaintiff |
| Whether a "worldwide coverage" clause establishes purposeful availment | Worldwide territory shows insurers expected to be sued anywhere and derived financial benefit from broad coverage, supporting jurisdiction | Financial benefit from broad territorial coverage and foreseeability of suit are collateral and do not equal "doing business" in the forum | Held: Clause insufficient; foreseeability and collateral financial benefit alone do not establish minimum contacts |
| Relevance of duty-to-defend vs. right-to-defend | Expectation of defending suits anywhere supports jurisdiction even if duty is optional | The policies only preserved the right to defend; insurers did not assume an obligation to litigate in foreign forums, so no contractual commitment to be haled into forum courts | Held: Absence of duty-to-defend is decisive; right (but not obligation) to control litigation does not establish purposeful availment |
Key Cases Cited
- Walden v. Fiore, 571 U.S. 277 (2014) (jurisdictional inquiry looks to defendant’s contacts with the forum state, not contacts with the plaintiff)
- Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts standard for due process)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) (foreseeability and collateral financial benefit do not alone establish jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (contracts alone do not automatically establish jurisdiction; assess prior negotiations, contemplated consequences, and course of dealing)
- Goodyear Dunlop Tires Operations v. Brown, 564 U.S. 915 (2011) (general jurisdiction requires contacts so continuous and systematic as to render defendant at home)
- Hanson v. Denckla, 357 U.S. 235 (1958) (defendant must purposefully avail to invoke forum benefits)
- J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873 (2011) (defendant's actions, not expectations, empower forum to exercise jurisdiction)
- McGee v. Int’l Life Ins. Co., 355 U.S. 220 (1957) (single or limited acts directed at forum may support jurisdiction when they demonstrate purposeful availment under facts)
- TH Agriculture & Nutrition, LLC v. Ace European Group Ltd., 488 F.3d 1282 (10th Cir. 2007) (territory-of-coverage + option to defend found to create minimum contacts, but case ultimately held jurisdiction unreasonable)
- OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086 (10th Cir. 1998) (contracting to defend is a low-level contact; foreseeability alone insufficient)
- Felland v. Clifton, 682 F.3d 665 (7th Cir. 2012) (summarizes specific-jurisdiction three-part test)
- Purdue Research Found. v. Sanofi-Synthelabo, 338 F.3d 773 (7th Cir. 2003) (plaintiff must make prima facie showing of jurisdictional facts)