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  • WisBar News
    September 16, 2019

    Taiwanese Insurers Escape Wisconsin Lawsuit Involving Trek Bicycle Corp.

    Joe Forward


    Sept. 16, 2019 – A Louisiana man became paralyzed in 2012 after falling from a defective Trek bicycle he was renting in Texas. Trek’s primary insurer settled the case, then sought indemnification from Taiwanese insurers by suing in federal district court in Wisconsin, which dismissed the case.

    But in Lexington Ins. Co. v. Hotai Ins. Co. Ltd., No. 18-1141 (Sep. 12, 2019), a three-judge panel for the U.S. Court of Appeals for the Seventh Circuit upheld dismissal of the case, concluding the court lacked personal jurisdiction over the Taiwanese insurers, Hotai Insurance Company Ltd. (formerly Zurich) and Taian Insurance Company Ltd.

    The insurers provided worldwide products-liability insurance coverage to Taiwanese companies that supply parts to Trek Bicycle Corporation, based in Waterloo, Wis. Those Taiwanese companies are Giant Manufacturing Company and Formula Hubs, Inc.

    The purchase order agreements between Trek, Giant, and Formula Hubs named Trek as an additional insured under the product-liability insurance policies.

    Giant manufactured the bicycle that John Giessler was riding in Texas when the front wheel detached from the frame. Formula Hubs made the front-wheel release. Injuries from the fall rendered Giessler a quadriplegic, and lawsuits followed.

    Giessler sued Trek, and Lexington Insurance Company defended Trek under its commercial general liability and umbrella policies. The case settled, and Lexington sought indemnification from insurers Zurich and Taian, but they refused to pay.

    Hotai and Taian moved to dismiss for lack of personal jurisdiction. The district court granted the motion, and the Seventh Circuit Court of Appeals recently affirmed.

    “Lexington has failed to demonstrate that either Zurich or Taian made any purposeful contact with Wisconsin before, during, or after the formation of the insurance contracts,” wrote Judge Amy Barrett for the three-judge panel, noting personal jurisdiction requires a party to have minimum contacts with a forum state to be haled into court there.

    Lexington argued that provisions within the product liability policies, naming Trek as additional insureds, constituted sufficient minimum contacts with Wisconsin.

    “Both contracts acknowledged Trek as an additional insured and extended coverage for liabilities’ worldwide,’” Judge Barrett noted.

    “But neither of these provisions constitutes a contact with the State of Wisconsin, so they do not singly or together provide a basis for personal jurisdiction.”

    In other cases involving foreign insurers, it was decisive that the insurance policies contained duty-to-defend clauses, triggering personal jurisdiction. But the insurers in this case had no duty to defend – they just promised to pay Trek for losses.

    The panel noted the product liability policies promised to cover worldwide claims, but disputes concerning the policy were governed by Taiwanese law in Taiwanese courts.

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