Lexington Insurance Company v. Zurich Insurance (Taiwan) Ltd. et al

Brief in Reply

W.D. Wis.February 13, 2017

16829782v1 0991645 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN ________________________________________________________________________ Lexington Insurance Company, Plaintiff, v. Zurich Insurance (Taiwan) Ltd. and Taian Insurance Co., Ltd., Defendants. Case No.: 16 CV 740 REPLY OF ZURICH INSURANCE (TAIWAN) LTD. IN SUPPORT OF ITS MOTION TO DISMISS FOR IMPROPER SERVICE, LACK OF PERSONAL JURISDICTION AND IMPROPER VENUE Defendant Zurich Insurance (Taiwan) Ltd. (“Zurich Taiwan”), an insurer organized under the laws of the Republic of China with its principal place of business in Taiwan, through its attorney Thomas R. Schrimpf, replies as follows in support of its motion to dismiss plaintiff’s Complaint for lack of jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2), for improper venue pursuant to Fed. R. Civ. P. 12(b)(3), and for improper service pursuant to Fed. R. Civ. P. 12(b)(5). Plaintiff Lexington Insurance Company (“Lexington”) seeks reimbursement- pursuant to an insurance policy1 (the “Zurich Taiwan Policy”) issued by Zurich Taiwan to Giant Manufacturing Co., Ltd. (“Giant”)- of payments Lexington made on behalf of its insured, Trek Bicycle Corporation (“Trek”). In seeking to secure this Court’s jurisdiction 1 Lexington claims that it is the Zurich Taiwan claims-made policy in effect in 2013, not 2012, that applies to the Giessler matter, though it admits that the policies are identical. See Dkt. #27 at p. 3. Interestingly, Lexington itself attaches the 2012 Zurich Taiwan Policy as the applicable policy to its Complaint. See Dkt. #1-2 at 2. The 2012 policy was the policy in effect when the Giessler lawsuit was served on Trek and, thus, is the policy that applies. Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 1 of 19 2 16829782v1 0991645 over Zurich Taiwan - indisputably an insurance company organized under the laws of the Republic of China with its principal place of business in Taipei, Taiwan, and with no connection to Wisconsin (Dkt. #13, Exh. 1, ¶6-11), Lexington finds itself in a bind. On the one hand, Lexington looks to invoke Trek’s rights as an additional insured under the Zurich Taiwan Policy as a means of establishing Zurich Taiwan’s contact with the State of Wisconsin. On the other hand, to avoid being bound by the choice of law and arbitration provisions in the Zurich Taiwan Policy, Lexington seeks to divorce its claims from the terms of the Zurich Taiwan Policy. Lexington cannot have it both ways, and the law does not support Lexington’s “heads I win, tails you lose” arguments. Lexington’s claims against Zurich Taiwan must be dismissed. I. ZURICH TAIWAN’S MOTION TO DISMISS SHOULD BE GRANTED BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE AND INSUFFICIENT SERVICE OF PROCESS A. Lexington’s Complaint Must Be Dismissed As To Zurich Taiwan Because Zurich Taiwan Is Not Subject To Personal Jurisdiction In Wisconsin Lexington does not dispute that Zurich Taiwan is not subject to general jurisdiction in Wisconsin. Accordingly, the claims against Zurich Taiwan must be dismissed unless Lexington can show that the exercise of specific jurisdiction would comport with due process. For specific jurisdiction to satisfy due process, three requirements must be met: (1) the defendant must have purposefully availed himself of the privilege of conducting business in the forum state or purposefully directed his activities at the state, [citation omitted]; (2) the alleged injury must have arisen from the defendant’s forum-related activities, [citation omitted]; and (3) the exercise of jurisdiction must comport with traditional notions of fair play and substantial justice, [citation omitted]. Felland v. Clifton, 682 F.3d 665, 673 (7th Cir. 2012). Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 2 of 19 3 16829782v1 0991645 1. Zurich Taiwan Did Not Purposefully Avail Itself Of The Privilege Of Conducting Business In The Wisconsin Forum In an attempt to establish Zurich Taiwan’s purposeful availment of the Wisconsin forum, Lexington relies on: (1) the worldwide coverage territory under the Zurich Taiwan Policy; and (2) the inclusion of a Wisconsin corporation (Trek) as a third party beneficiary/additional insured under the Zurich Taiwan Policy. Lexington’s claims against Zurich Taiwan do not arise out of either the agreement to provide coverage of claims within Wisconsin or Trek’s status as a Wisconsin corporation. Just as importantly, neither the scope of coverage nor Trek’s inclusion as an additional insured is sufficient to establish Zurich Taiwan’s purposeful availment of a Wisconsin forum. The United States Supreme Court most recently addressed the standards for establishing specific jurisdiction in Walden v. Fiore, 134 S. Ct. 1115 (2014). In Walden, the Court identified two principles that are crucial in determining whether a defendant has purposefully established contacts with the forum state. First, “the relationship must arise out of contacts that the ‘defendant himself ’ creates with the forum State.” Id. at 1122 (emphasis in original). “Second, [the] ‘minimum contacts’ analysis looks to the defendant's contacts with the forum State itself, not the defendant’s contacts with persons who reside there.” Id. Although there is no evidence to suggest that Zurich Taiwan played any role in selecting Trek as a vendor for Giant, Lexington argues that Zurich Taiwan’s consent to including Trek as an additional insured was sufficient to render the additional insured relationship one that was created by Zurich Taiwan itself. (Dkt. #27, p. 18.) But the fact Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 3 of 19 4 16829782v1 0991645 remains that the purposeful relationship with Trek was Giant’s, not Zurich Taiwan’s. By consenting to include Trek as an additional insured, Zurich Taiwan was not deliberately creating a relationship with Trek, rather, was facilitating the relationship of its Taiwanese insured with Trek. Moreover, Zurich Taiwan did not collect any additional premium in exchange for including Trek as a vendor under the Zurich Taiwan Policy, so there was no purposeful availment by Zurich Taiwan in agreeing to Giant’s request to include Trek as an additional insured. (Dkt. #13, Exh. 1, ¶18.) Perhaps more importantly, the minimum contacts analysis looks not to Zurich Taiwan’s relationship with Trek but, rather, to Zurich Taiwan’s relationship with Wisconsin. Walden, 134 S.Ct. at 1122. Zurich Taiwan has no contacts with Wisconsin: it not licensed as an insurer in this state, does not issue any insurance policies in Wisconsin, does not maintain any offices, establishments, telephone numbers, bank accounts or post office boxes here, does not own or lease any real or personal property in Wisconsin, and does not regularly engage in any business activities or have any employees in the state. (Dkt. #13, Exh. 1, ¶7-11.) Simply entering into a contract with a forum resident - which is not even the case here - is just not enough, on its own, to support personal jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985). Because Zurich Taiwan’s obligations to Trek as an additional insured “did not require performance or contemplate future consequences specifically in” Wisconsin, agreeing to include Trek as an additional insured was not enough to establish a purposeful contact with Wisconsin. Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 822 (8th Cir. 2014). Accord TH Agric. & Nutrition, LLC v. Ace Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 4 of 19 5 16829782v1 0991645 European Group Ltd., 488 F.3d 1282, 1288 (10th Cir. 2007)(“the mere presence of the insured within the forum state will not establish a substantial connection”). In support of a contrary conclusion, Lexington relies on the unpublished decision of the district court in Ridemind, LLC v. S. China Ins. Co., Ltd., C14-489RSL, 2014 WL 2573310 (W.D. Wash. June 9, 2014). In Ridemind, the District Court for the Eastern District of Washington held that specific jurisdiction could properly be exercised over South China Insurance Co. because it “created an ongoing obligation to a forum resident” by identifying a Washington entity as an additional insured. Id. at *3. Ridemind does not discuss, let alone cite, Walden. And, respectfully, the holding in Ridemind cannot be reconciled with the Walden court’s admonition that the minimum contacts inquiry looks to the defendant’s contacts with the forum state, not merely with a forum resident. Chace v. Dorcy Int’l, Inc., 68 Ohio App. 3d 99, 107 (1991), upon which Lexington additionally relies, suffers from the same flaw and pre-dates Walden. Though Lexington makes no attempt to argue that its claims arose out of the inclusion of Wisconsin within the Zurich Taiwan Policy’s territory of coverage, Lexington does contend that a broad territory of coverage provision may be sufficient to establish purposeful availment. But “the nature of the purposeful-direction/purposeful-availment inquiry depends in large part on the type of claim at issue.” Felland v. Clifton, 682 F.3d 665, 674 (7th Cir. 2012). In each of the cases Lexington cites (and in sharp contrast to the present case), suit was brought by the insured with respect to coverage of a claim that occurred within the forum state. Ferrell v. West Bend Mut. Ins. Co., 393 F.3d 786 (8th Cir. 2005); Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911 (9th Cir. Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 5 of 19 6 16829782v1 0991645 1990); Eli Lilly & Co. v. Home Ins. Co., 794 F.2d 710 (D.C. Cir. 1986). Indeed, the court in CSR Ltd. v. Fed. Ins. Co., 146 F. Supp. 2d 556 (D.N.J. 2001) expressly specified that inclusion of the forum state within a policy’s territory of coverage is sufficient to “subject [the insurer] to suit by its insured there in coverage litigation concerning forum-related incidents or claims.” Id. at 560 (emphasis added). Significantly, the present litigation was not brought by Zurich Taiwan’s insured and does not concern coverage of forum-related incidents or claims. An insurer can reasonably expect to be haled into court in a state within its territory of coverage-by its named insured-with respect to a covered event within the forum state. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1095 (10th Cir. 1998). The same cannot be said for claims brought by an unrelated party related to covered events that occurred outside of the forum. Id. Unsurprisingly, Lexington has identified no case in which any court has found a broad territory of coverage provision sufficient to sustain personal jurisdiction under this latter set of circumstances. Neither the inclusion of a Wisconsin resident as an additional insured vendor nor the worldwide territory of coverage are sufficient to establish that Zurich Taiwan purposefully availed itself to the privilege of doing business in Wisconsin. 2. This Action Does Not Directly Arise Out of Any Forum Contacts Even if minimum contacts were established by the inclusion of a Wisconsin resident as an additional insured vendor or the inclusion of Wisconsin within the policy’s territory of coverage, Lexington’s claims do not “directly arise out of [these] specific contacts” as required to establish specific jurisdiction under the rigorous standard followed by the Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 6 of 19 7 16829782v1 0991645 Seventh Circuit. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1278 (7th Cir. 1997) (emphasis in original). Cf. Bristol-Myers Squibb Co. v. Superior Court, 1 Cal. 5th 783, 800 (2016) (“claim need not arise directly from the defendant's forum contacts” to support specific jurisdiction), cert. granted sub nom. Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 16-466, 2017 WL 215687 (U.S. Jan. 19, 2017). Lexington offers little analysis on this point, instead merely asserting in cursory fashion that “[t]he ‘arising out of’ requirement is plainly satisfied” and “[t]he relationship between Lexington’s claims and Zurich’s contacts with the forum could not be more ‘intimate’” because “Lexington’s claims in this action arise directly from Zurich’s failure to pay defense and indemnity to Trek in Wisconsin under the very insurance policy that establishes Zurich’s connection to Wisconsin.” (Dkt. #27, p. 20.) Lexington’s assertion is wrong on numerous levels. First, “[s]pecific jurisdiction is not appropriate ‘merely because a plaintiff's cause of action arose out of the general relationship between the parties; rather, the action must directly arise out of the specific contacts between the defendant and the forum state.’” uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 430 (7th Cir. 2010), quoting Sawtelle v. Farrell, 70 F.3d 1381, 1389 (1st Cir. 1995). Lexington suggests that this court should consider Zurich Taiwan Policy as a whole as a “specific contact[ ]” between Zurich Taiwan and Wisconsin for purposes of the “arising from” analysis. But, as the United States Supreme Court has recognized, “a ‘contract’ is ‘ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction.’” Burger King Corp. v. Rudzewicz, 471 U.S. Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 7 of 19 8 16829782v1 0991645 462, 479 (1985), quoting Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 317 (1943). Here, no prior business negotiations occurred in Wisconsin. The “future consequences” contemplated by the policy in Wisconsin are: (1) coverage for covered events occurring in Wisconsin; and (2) providing coverage to a Wisconsin resident named as an additional insured. These, then, are the relevant contacts and Lexington’s claims in this case do not “directly arise” from either. Lexington makes no attempt to argue that its claims arise directly from the territory of coverage provision. Any such argument would fail as Lexington’s alleged injury and theories of recovery as to Zurich Taiwan would remain unchanged in this case even if the territory of coverage provision expressly excluded coverage for events occurring in Wisconsin. Lexington argues instead, at least for purposes of its “arising from” argument, that its claims in this case “arise directly from Zurich’s failure to pay defense and indemnity to Trek in Wisconsin.” (Dkt. #27, p. 20.) But Trek has not asserted any claims at all against Zurich Taiwan. Lexington does not purport to be asserting claims on Trek’s behalf but instead seeking recovery of monies it - not Trek -- paid. In fact, elsewhere in its response, Lexington adamantly insists that its claims are not derivative of Trek’s contractual rights against Zurich Taiwan. (Dkt. #27, p. 28.) The fact that Trek happens to be a Wisconsin resident had no effect on Lexington’s injury or its theories of recovery. Because Lexington’s claims would remain unchanged even in the absence of any Wisconsin connection, Lexington cannot establish even a “but for” relationship between its claims and Zurich Taiwan’s forum contacts. And, in the Seventh Circuit, demonstrating Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 8 of 19 9 16829782v1 0991645 that a plaintiff’s claims “directly arise” from the defendant’s forum contacts requires more than just a “but for” relationship. GCIU-Employer Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1025 (7th Cir. 2009), citing O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 323 (3d Cir. 2007). Relevant forum contacts must “either bear on the substantive legal dispute between the parties or inform the court regarding the economic substance of the contract.” RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1278 (7th Cir. 1997). Lexington’s alleged injury in this case would have been no different and Lexington would have no greater (and no less) right to reimbursement under any theory if Wisconsin were excluded from the territory of coverage or if Trek had been located in Minnesota. Because Lexington’s claims would remain unchanged even if all possible connection between Zurich Taiwan and Wisconsin were removed, Lexington’s claims do not “arise from” Zurich Taiwan’s purported Wisconsin contacts. 3. Exercise Of Personal Jurisdiction Offends Traditional Notions Of Fair Play And Substantial Justice Finally, the exercise of personal jurisdiction over Zurich Taiwan would offend traditional notions of fair play and substantial justice in this case. The law is clear that the burden on a defendant of litigating in the forum is significant in determining whether the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. “The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness” of personal jurisdiction. Asahi Metal Indus. Co., Ltd. v. Superior Court of California, Solano County, 480 U.S. 102, 114 (1987). Lexington denigrates as “feigned” Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 9 of 19 10 16829782v1 0991645 Zurich Taiwan’s “concern regarding this Court’s unfamiliarity with [Republic of China (“ROC”)2] law,” claiming that this Court will not need to look to ROC law to interpret the Zurich Taiwan Policy because Lexington’s contribution and reimbursement claims “do not rely on the terms of the Zurich Policy”-that is, the policy out of which Lexington earlier argued its claims “arise directly.” Lexington’s belief that ROC law will not apply is incorrect. Lexington conveniently overlooks the first cause of action alleged in its complaint, which specifically seeks a declaratory judgment as to Zurich Taiwan’s obligations under the Zurich Taiwan Policy. Any contention that the request for declaratory relief “do[es] not rely on the terms of the Zurich Policy” would be disingenuous. Lexington also fails to mention that its third and fourth causes of action designate its claim as based on contribution/reimbursement/equitable subrogation. As “[t]he right of subrogation is purely derivative” (Crowley Mar. Corp. v. Boston Old Colony Ins. Co., 158 Cal. App. 4th 1061, 1067 (2008)), Lexington likewise cannot claim that this theory does not rely on the terms of the Zurich Taiwan policy. Even under a theory of equitable contribution, the terms and interpretation of the Zurich Taiwan Policy remain crucial. An equitable contribution claim by one insurer against another “require[s] that the several insurers share a common obligation or burden.” Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 771 (Tex. 2007). Accord Kafka v. Pope, 194 Wis. 2d 234, 243 (1995) (contribution claim under Wisconsin 2 Lexington’s reference here to “Chinese law” confuses the “Republic of China”-i.e., Taiwan-and the “People’s Republic of China”-i.e., China. See http://www.cfr.org/china/china-taiwan-relations/p9223. Though not directly crucial to the jurisdictional analysis, this distinction is worth noting. Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 10 of 19 11 16829782v1 0991645 law requires that “the parties must be liable for the same obligation”). While Lexington is correct that a claim for equitable contribution does not depend on the existence of a contract between Lexington and Zurich Taiwan, such a claim does require Lexington to show that it and Zurich Taiwan were both liable to Trek for the same obligation. The only possible source of Zurich Taiwan’s liability to Trek in this case is the Zurich Taiwan Policy and, under the terms of that policy, ROC law applies. Lexington further argues that the burden on Zurich Taiwan should be disregarded because “modern methods of communication and transportation” minimize the burdens of litigating in a foreign forum. But even if “modern advances may minimize the burden on the [Zurich Taiwan], they are not significant enough to tip the scales in favor of exercising jurisdiction.” TH Agric. & Nutrition, LLC, 488 F.3d at 1293 (emphasis in original). While modern advances in air travel may reduce the time it once took to travel from Taipei to Madison, the time required for such travel remains considerable with potential additional complications arising from the necessity to obtain appropriate visas.3 Modern advances in communications also may allow representatives of Zurich Taiwan to communicate with counsel in Wisconsin via telephone or email, but the significant difference in time zones remains a complicating factor. Lexington further ignores the clear burden to Zurich Taiwan being forced to litigate in a foreign language under a foreign legal system in a court unfamiliar with ROC law in a state that has absolutely no interest in this dispute. All of 3 Currently, citizens or nationals of the ROC are eligible for admission to the United States under the Visa Waiver Program unless also a national of Iraq, Iran, Syria or Sudan. See https://travel.state.gov/content/visas/en/visit/visa-waiver-program.html Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 11 of 19 12 16829782v1 0991645 these factors weigh heavily against the exercise of personal jurisdiction. OMI Holdings, 149 F.3d at 1096. On balance, the burden on Zurich Taiwan of defending litigation in Wisconsin continues to weigh against the exercise of jurisdiction. Shifting back away from the assertion that its claims are independent of Trek’s rights under the Zurich Taiwan Policy, Lexington argues that Wisconsin has an interest in this litigation to “polic[e]” Zurich Taiwan’s obligations under that policy to a Wisconsin insured. Lexington relies on Mut. Serv. Ins. Co. v. Frit Indus., Inc., 358 F.3d 1312 (11th Cir. 2004), a case in which Alabama insureds filed cross-claims against their offshore insurers to enforce the offshore insurers’ duties to defend. Alabama’s interest in resolving the claims of its own residents under an insurance policy stands in marked contrast to the present case in which Lexington, a Delaware corporation domiciled in Massachusetts, asks this Court to resolve its own claims against Zurich Taiwan, an entity incorporated and doing business in the ROC. The interests of Trek, a Wisconsin corporation not party to the present litigation, are not at issue. As expected, Lexington argues that the burden of requiring it to travel to the ROC to pursue its claims weighs in favor of exercising jurisdiction over Zurich Taiwan here. Notably, the “same modern methods of communication and transportation” available to Zurich Taiwan will be available to minimize any inconvenience Lexington might face in the arbitration in Taiwan. In any event, because the personal jurisdiction analysis is “primarily concerned with the defendant’s burden,” and the inconvenience to Lexington of litigating in Taiwan is no greater than the inconvenience to Zurich Taiwan of litigating in Wisconsin, Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 12 of 19 13 16829782v1 0991645 this factor favors dismissal. Terracom v. Valley Nat. Bank, 49 F.3d 555, 561 (9th Cir. 1995). Lexington next argues that the interest in affording an efficient forum for litigation favors litigation in Wisconsin because “witness testimony is unlikely to play a significant role.” For purposes of this factor, Lexington insists that “this action turns on policy language”-apparently having forgotten its contention just one page earlier that its claims “do not rely on the terms of the Zurich Policy.” (Dkt. #27, pp. 23, 24.) As noted above, all of Lexington’s claims require an analysis of the Zurich Taiwan policy terms. Even if the litigation ultimately turns on policy language, witnesses and evidence relevant to Zurich Taiwan’s coverage position for the underlying action and settlement are located in Taiwan, where the claim was handled and where the policy was negotiated, drafted, and executed. Lexington points to no evidence or witnesses in Wisconsin. Finally, Lexington accuses Zurich Taiwan of “misleadingly cit[ing] Asahi, 480 U.S. at 115” based on Zurich Taiwan’s verbatim quotation from that decision. Lexington complains that the Asahi court did not “encourage courts to adopt a general ‘unwillingness’ toward finding jurisdiction over alien defendants,” but only cautioned that courts should be unwilling to find the burdens on an alien defendant outweighed where the plaintiff’s and forum state’s interests are minimal. (Dkt. #27, p. 25.) But the point Lexington makes is precisely the point expressed in the language from Asahi that Zurich Taiwan accurately quoted: the interests of other nations affected by an assertion of jurisdiction are “best served by… an unwillingness to find the serious burdens on an alien defendant outweighed by minimal interests on the part of the plaintiff or the forum State.” Asahi, 480 U.S. at 115. Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 13 of 19 14 16829782v1 0991645 Zurich Taiwan is at a complete loss to understand what Lexington finds “misleading” and equally at a loss to comprehend why Lexington believes this factor favors jurisdiction. All five of the factors bearing on “fair play and substantial justice” weigh heavily against the exercise of personal jurisdiction over Zurich Taiwan in Wisconsin. Accordingly, Lexington’s Complaint must be dismissed as to Zurich Taiwan. B. Lexington’s Complaint Against Zurich Taiwan Must Be Dismissed Because Venue Is Not Proper In Wisconsin 1. Lexington Cannot Establish Proper Venue Under 28 U.S.C. § 1391 In an effort to establish that “a substantial part of the acts or omissions giving rise to this claim occurred in this District,” Lexington argues that its claims “arose as a result of Zurich’s refusal to defend and indemnify Trek, which has its principal corporate offices in Waterloo, Wisconsin.” Unfortunately for Lexington, notwithstanding Trek’s Wisconsin domicile, none of the acts or omissions giving rise to this lawsuit occurred within this state. That Zurich Taiwan’s refusal to defend Trek in the Giessler lawsuit did not occur in Wisconsin should be obvious. The Giessler lawsuit was litigated in Texas. Any defense of that lawsuit would have necessarily been provided in Texas, not Wisconsin. Lexington’s claim that Zurich Taiwan’s failure to indemnify Trek occurred in Wisconsin also fails. First, contrary to Lexington’s contention, this case does not arise from any failure to indemnify Trek-there is no suggestion that Trek itself seeks indemnification for any amounts it personally incurred for defense or settlement of the Giessler litigation. Rather, Lexington’s claims arise from Zurich Taiwan’s failure to contribute to the settlement of the Giessler litigation made by Lexington, not Trek. The omission giving rise Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 14 of 19 15 16829782v1 0991645 to this litigation, then, occurred in the state where a payment contributing to the settlement would have been made. Had Zurich Taiwan paid some share of the settlement directly to the Giessler plaintiffs, that payment would have been made from Taiwan to the Giesslers in Louisiana (where the Giessler plaintiffs were domiciled) or perhaps to their counsel in Texas (where the Giessler litigation occurred). Had Zurich Taiwan reimbursed Lexington for some share of the settlement, then payment would have been made from Taiwan to Lexington in Massachusetts (where Lexington has its principal place of business). Lexington admitted that it funded the settlement, and so there is no basis for any claim that Zurich Taiwan should have sent any indemnity payments to Trek in Wisconsin. That Trek happens to reside in Waterloo, Wisconsin simply played no role in giving rise to Lexington’s claim. Venue is improper and the complaint should be dismissed. 2. Venue Is Improper Because The Dispute In This Case Is Subject To Arbitration In Taiwan Finally, in an effort to avoid mandatory arbitration, Lexington returns to its attempts to distance its claims from the Zurich Taiwan Policy. Citing Crowley Maritime Corp. v. Boston Old Colony Ins. Co., 158 Cal.App.4th 1061, 1067 (1st Dist. 2008), Lexington argues that it cannot be bound by the arbitration provision of the Zurich Taiwan Policy under the doctrine of direct benefits estoppel because an insurer’s claims for contribution from another insurer are not derivative of the insured’s contractual rights under the policy. Once again, Lexington appears to forget that it has specifically alleged a right to reimbursement based on equitable subrogation as well as on equitable contribution. As the Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 15 of 19 16 16829782v1 0991645 court in Crowley Maritime explained, unlike a claim for equitable contribution, a claim for equitable subrogation “is purely derivative. An insurer entitled to subrogation is in the same position as an assignee of the insured's claim, and succeeds only to the rights of the insured.” Crowley Mar. Corp., 158 Cal. App. 4th at 1067. By pleading a claim for equitable subrogation, Lexington stepped into Trek’s shoes and seeks to benefit directly under the Zurich Taiwan Policy. It is now estopped from avoiding the arbitration provision of that policy. Lexington makes no effort to affirmatively distinguish the cases cited in Zurich Taiwan’s Motion holding that, although a party - like Lexington -- is not itself a signatory to an insurance policy containing an arbitration provision, “the obligation to arbitrate a dispute is not always limited to those who have personally signed an agreement containing such a provision.” Scheurer v. Fromm Family Foods LLC, __ F.Supp.3d __, No. 15-cv- 770, slip op. at 3 (W.D. Wis. 2016), quoting Everett v. Paul Davis Restoration, Inc., 771 F.3d 380, 383 (7th Cir. 2014). “In the arbitration context, the doctrine [of estoppel] recognizes that a party may be estopped from asserting that the lack of his signature on a written contract precludes enforcement of the contract’s arbitration clause when he has consistently maintained that other provisions of the same contract should be enforced to benefit him.” Washington Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260, 268 (5th Cir. 2004), quoting International Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 418 (4th Cir. 2000). Simply put, a party “cannot have it both ways”: a party whose claims depend on the enforcement of obligations under a contract is estopped from repudiating the arbitration provisions of that contract. Hughes Masonry Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 16 of 19 17 16829782v1 0991645 Co., Inc., 659 F.2d at 841; see also Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682, 688 (7th Cir. 2005) (“A nonsignatory party is estopped from avoiding arbitration if it knowingly seeks the benefits of the contract containing the arbitration clause.”) Lexington’s claims against Zurich Taiwan in this case depend entirely on the premise that Zurich Taiwan has not fulfilled its obligations under the insurance contract with Giant to which Trek is an additional insured. Lexington, therefore, cannot avoid the arbitration obligation under that contract. Lexington argues in the alternative that the arbitration provision does not extend to the claims at issue in the present litigation. The language of that provision mandates arbitration where “any difference arises as to the amount to be paid under this Policy (liability being otherwise admitted).” Lexington argues that this provision has not been triggered because “Zurich has not admitted liability to Lexington” and “has not accepted liability for Trek’s defense and indemnification.” As Zurich Taiwan’s Request for Arbitration makes clear, Zurich Taiwan acknowledges that Trek is an additional insured under its policy for the Giessler lawsuit. However, Zurich Taiwan believes that the amount it is required to pay for the Giessler lawsuit is reduced to zero based on an excess “Other Insurance” provision in the Zurich Taiwan Policy, making that policy apply in excess of the Lexington policies issued to Trek. All other controversies about the amount under the policy that Zurich Taiwan owes Lexington are to be arbitrated. Therefore, this dispute falls squarely within the language of the arbitration provision. Accordingly, the claims against Zurich Taiwan must be dismissed. Faulkenberg v. CB Tax Franchise Systems, LP, 637 F.3d 801, 808 (7th Cir. 2011). Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 17 of 19 18 16829782v1 0991645 C. Because Lexington Failed To Comply With The Requirements Set Out In This Court’s December 8, 2016 Order, Service Of Process Must Be Quashed Lexington contends that its failure to provide a translation of the summons and complaint does not generally violate due process and require dismissal unless such translations are specifically required by the country in which the foreign defendant is served. Accordingly, Lexington argues that its failure to provide certified translations as ordered by this Court does not defeat service. Lexington misses the point. Lexington sought to effect service pursuant to Rule 4(f)(3) of the Federal Rules of Civil Procedure, which “affirmatively authorizes the federal district court to direct any form of service that is not prohibited by an international agreement.” Brockmeyer v. May, 383 F.3d 798, 805 (9th Cir. 2004); Fed. R. Civ. P. 4(f)(3). Because the district court has broad discretion under this provision to “‘tailor the manner of service to fit the necessities of a particular case’” (id., quoting Levin v. Ruby Trading Co., 248 F.Supp. 537, 540 (S.D.N.Y. 1965)), compliance with the specific manner of service ordered by the court is required (Int’l Controls Corp. v. Vesco, 593 F.2d 166, 180 (2d Cir. 1979)). That translations might not generally be required is irrelevant. Translations were required in the order entered by this Court pursuant to Rule 4(f)(3) and so translations were required to perfect service under that rule. This Court’s December 8, 2016 order carefully detailed the documents Lexington was required to include in issuing alternative service pursuant to Rule 4(f)(3). Remarkably, Lexington takes the position that this Court’s order cannot be read as actually requiring Lexington to include the documents this Court instructed it to include because Lexington’s Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 18 of 19 19 16829782v1 0991645 motion for alternative service offered to provide a translation only of the complaint, and because this Court’s December 8, 2016 order indicates that Lexington’s motion is granted “in all respects.” This Court’s order is clear and there is no dispute that Lexington failed to comply with this Court’s instructions for perfecting alternative service under Rule 4(f)(3). Accordingly, Zurich Taiwan respectfully requests that this Court quash Lexington’s attempted service and dismiss this case pursuant to Fed. R. Civ. P. 12(b)(5). WHEREFORE, defendant Zurich Insurance (Taiwan) Ltd. respectfully requests that it be dismissed from the present suit for lack of personal jurisdiction, improper venue, and/or improper service. Dated this 13th day of February, 2017. /s/ Thomas R. Schrimpf Thomas R. Schrimpf State Bar No. 1018230 Attorneys for Defendant Zurich Insurance (Taiwan) Ltd. HINSHAW & CULBERTSON LLP 100 E. Wisconsin Avenue Suite 2600 Milwaukee, WI 53202 Telephone 414-276-6464 Fax 414-276-9220 E-mail tschrimpf@hinshawlaw.com Case: 3:16-cv-00740-jdp Document #: 30 Filed: 02/13/17 Page 19 of 19