1. The Insurance Coverage Law Information Center
The following article is from National Underwriter’s latest online resource,
FC&S Legal: The Insurance Coverage Law Information Center.
TRIAL STRATEGY: WHEN WILL A U.S. COURT ASSERT JURISDICTION
OVER A FOREIGN INSURER?
June 17, 2014 Steven A. Meyerowitz, Esq., Director, FC&S Legal
The globalization of commerce is leading to more and more situations where a U.S. company is insured by an overseas
insurance carrier. What does it take for a policyholder to be able to sue a foreign insurer in a U.S. court? A recent decision
by a federal district court in Washington illustrates the analysis that courts undertake to determine whether a foreign
carrier is subject to their jurisdiction.
The Case
Ridemind, LLC, doing business as “Transition Bikes,” was a Washington corporation that sold bicycles. Bennett Winslow
Mauzé sued Transition in a state court in Washington, alleging products liability claims relating to the injuries he allegedly
suffered while riding a bike he purchased from Transition. Transition denied liability, but contended that the frame of the
bicycle was manufactured and sold by Astro Engineering Co., Ltd., a Taiwanese company with factories in Taiwan and
Vietnam. To the extent there was any liability, Transition claimed the cause of the injuries was Astro’s negligent
manufacture and design of the frame.
In a state court in Washington, Transition sued South China Insurance, Co., Ltd., a Taiwanese insurance company located
in Taiwan, that issued a products liability insurance policy to Astro and that identified Transition as an additional insured
vendor under the policy. In its complaint against South China, Transition asserted a breach of contract claim and alleged
violations of Washington’s Insurance Fair Conduct Act (“IFCA”) and Washington’s Consumer Protection Act (“CPA”)
arising out of South China’s alleged refusal to defend and/or indemnify Transition in the lawsuit filed by Mr. Mauzé.
In addition to seeking monetary relief, Transition sought a declaration that South China was obligated to defend and
indemnify Transition for costs incurred in defending against Mr. Mauzé’s claims.
South China removed the case to federal court in Washington and then moved to dismiss for lack of personal jurisdiction.
The Court’s Decision
The court denied the insurer’s motion to dismiss.
The court first acknowledged that general jurisdiction was lacking. It found, however, that it could exercise “limited” or
“specific” personal jurisdiction over South China.
The court used the following three-part test to analyze specific jurisdiction:
(1) the non-resident defendant must purposefully direct its activities or consummate some transaction with the forum
or resident thereof, or perform some act by which it purposefully avails itself of the privilege of conducting activities
in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one that arises out of or relates to the defendant’s forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.
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2. The court ruled that South China purposefully had availed itself of the benefits of Washington by issuing a Certificate
of Liability Insurance to Transition, a Washington resident. Based on that, the court said, South China was created a
continuing obligation to a forum resident. The court said that even though South China was not physically located in
Washington and did not have any physical contacts with the state, “South China willingly included a vendor’s
endorsement in its policy with Astro and the vendor’s endorsement specifically identified Transition and Transition’s
location in Washington.”
Once South China, through its agent V & C Risk Services Taiwan Ltd., issued the Certificate of Liability Insurance to a
Washington corporation, South China “could foresee that its actions would have an effect in Washington.” The court
ruled that, because the cause of action arose “out of that single intentional act,” Transition had established a prima
facie case of personal jurisdiction.
Then, the court said, to determine whether the exercise of jurisdiction comported with “fair play and substantial justice,”
it had to consider the following seven factors:
(1) the extent of the defendant’s purposeful injection into the forum state’s affairs;
(2) the burden on the defendant of defending in the forum;
(3) the extent of the conflict with the sovereignty of the defendant’s state;
(4) the forum state’s interest in adjudicating the dispute;
(5) the most efficient judicial resolution of the controversy;
(6) the importance of the forum to the plaintiffs’ interest in convenient and effective relief; and
(7) the existence of an alternative forum.
Balancing these factors, the court concluded that South China had failed to establish a “compelling case” that the
exercise of jurisdiction would be unreasonable. Accordingly, the court concluded that exercising specific personal
jurisdiction over South China was “appropriate.”
The case is Ridemind, LLC v. South China Ins. Co., Ltd., No. C14–489RSL (W.D. Wash. June 9, 2014). Attorneys involved
include: James Paul Murphy, Murphy Armstrong & Felton, Seattle, WA, Scott Haworth, Haworth Coleman & Gerstman,
LLC, New York, NY, for Plaintiff; Charles E. Haddick, Jr., Dickie, McCamey & Chilcote, PC, Camp Hill, PA, Charles C. Huber,
Gretchen J. Hoog, Lane Powell PC, Seattle, WA, for Defendant.
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