Milestones: Haung Tang v. Aetna Life Ins. Co., 523 F.2d 811 (9th Cir. 1975)

Summary:

Plaintiff is a mother of a decedent who was killed by her husband. The husband killed the decedent in San Diego, California, and thereafter fled to Taiwan. There, the husband was tried, convicted and incarcerated for homicide. The decedent had a life insurance policy, for which the husband was the primary beneficiary and the plaintiff mother was the alternate beneficiary. The mother sued to collect the life insurance proceeds; the husband cross-claimed, averring that because he killed his wife while being temporarily insane, he was not precluded from collecting the insurance proceeds. The district court found that the husband was precluded from litigating the insanity argument, because the husband raised the argument in the Taiwanese court and lost.

The Ninth Circuit reversed. The court found that while there may be some occasions in which issue preclusion is permissible with a foreign judgment, plaintiff failed to meet the burden of pleading and proving the identity of issues, because plaintiff provided no foundation for a conclusion that the insanity defense in Taiwan is the same as legal insanity under California law.

Takeaway:

It's an old case, but always a good lesson to remember: because estoppel is such a powerful weapon, it always requires active pleading and establishment.

Case of the Day: Korea Trade Ins. Corp. v. ActiveON, Inc., 2018 U.S. Dist. LEXIS 39283 (S.D. Cal. Mar. 9, 2018)

Summary:

Plaintiff is trade insurance company backed by the Korean government, with a branch office in Los Angeles. Defendants are a set of affiliated Delaware corporations and their officers and directs. Plaintiff alleged that the defendants fraudulently induced the plaintiff to provide insurance to certain Korean banks, which in turn provided financing to the defendants. When the defendants did not repay the loans to the banks, the plaintiff was forced to pay out the insurance. The plaintiff alleged RICO violation, fraud and misrepresentation.

The court dismissed the RICO claim, citing RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016) and noting that the damage occurred in Korea where the plaintiff paid the banks pursuant to the insurance policies. Then the court dismissed the fraud and misrepresentation claim because the federal law claims were dismissed and there was no longer any basis to exercise pendant jurisdiction.

Takeaway:

This appears to be the correct reading of RJR Nabisco, which is another important case that further pulled back the U.S. court's extraterritorial reach. But it is a bit strange why the plaintiff's attorneys did not allege the obvious alternative basis of jurisdiction for the fraud claim: diversity jurisdiction.

Case of the Day: Dick's Sporting Goods v. PICC Prop. & Cas. Co., 2017 U.S. Dist. LEXIS 119983 (W.D. Penn. July 28, 2017)

Summary:

A customer bought a fitness ball manufactured by a Chinese company from Dick's Sporting Goods, was injured from it, and sued the company in the Pennsylvania state court. The Chinese company had an insurance policy from PICC Property and Casualty Company Ltd., a Chinese insurance company. The insurance policy also covered DSG as a third party beneficiary. The insurance company, however, refused to cover the underlying state court litigation. DSG then sued the defendant insurance company. The defendant claimed the forum selection clause in the contract required the dispute come before a Chinese court.

The court found that the forum selection clause is binding even on the third party beneficiary, and the plaintiff did not make an adequate showing for forum non conveniens.

Takeaway:

The first line of the magistrate judge's opinion reads: "International commerce creates international consequences. One such consequence is litigating a garden-variety-insurance dispute on the other side of the world." Isn't that the truth! It's not quite Robert Jackson's quote in Board of Education v. Barnette ("If there is any fixed star in our constitutional constellation, it is that no official . . . can prescribe what shall be orthodox in politics . . ."), but for international litigators, it is such an important point. Something as mundane as an insurance dispute can suddenly go up several factors in difficulty when it crosses borders.

Another interesting point is how the corporations' preference for a forum selection clause is starting to backfire. Until around 15 to 20 years ago, U.S. corporations loved the U.S. court's strict enforcement of the forum selection clause, because it was usually the corporations that were choosing the forum. But as U.S. companies come to rely ever more on trades with China, increasingly it is the Chinese companies dictating the forum selection clause upon a U.S. company, as is the case here.

Case of the Day: Yang v. Farmers New World Life Ins. Co., 2017 U.S. Dist. LEXIS 42501 (D. Minn. Mar. 23, 2017)

Summary:

Plaintiff's grandmother had a life insurance policy with the defendant insurer. Defendant refused to pay out the policy upon the grandmother's passing, claiming that the policy holder was 69 years old when she took out the policy. The insurance policy has a maximum issue age limit of 60 years old.

The policy holder had "two birthdays"--one indicated by birth records from Laos, and another assigned by the U.S. immigration authorities. The policy holder was 59 years old according to the former, and 69 years old according to the latter. Both parties moved for summary judgment.

The court granted summary judgment in favor of the plaintiff . The court found that there was a genuine issue of material fact as to the age of the insured. But the court also found that, even if the insured was indeed 69 years old, the incontestability provision in the insurance policy prohibited the insurance company from challenging the validity of the policy once the policy had been in effect for two years. Because the policy had been in effect for two years, the defendant was barred from challenging it.

Takeaway:

It is a common problem for Asian Americans that their birthday is botched in the process of immigration. (For another rendition of this issue, see Teng v. District Director, USCIS, 2016 U.S. App. LEXIS 8161 (9th Cir. May 4, 2016)). It is exceedingly difficult to establish the "true" birthday; the plaintiff here could not do so either. Only the incontestability provision in the life insurance policy saved them from losing the case.

Case of the Day: Law Offices of Zachary R. Greenhill P.C. v. Liberty Ins. Underwriters, Inc., 2017 N.Y. App. Div. LEXIS 718 (N.Y. App. Div. 1st Dep't Feb. 2, 2017)

Summary:

Plaintiff attorney was involved in a business venture in China, for which he served as both an attorney and the venture's senior manager. A dispute arose, causing the attorney to sue the Chinese venture. The Chinese venture, in turn, counterclaimed against the attorney. The plaintiff attorney then sued the defendant insurer, claiming that the defendant must indemnify the plaintiff based on a lawyer's professional liability insurance policy.

The court affirmed the trial court's order for summary judgment against the plaintiff. Because the professional liability insurance does not cover claims arising from a relationship that was not attorney-client, it did not cover the counterclaim which was solely based on the plaintiff's status as a manager of the project.

Takeaway:

The connection between this case and Asia is a wee bit thin, but I thought it would be nice to put it up as a warning sign for my fellow attorneys. Beware, attorneys, beware! Your malpractice insurance will not protect you from lawsuits arising from your side projects, even if you serve as the attorney for the side project.

Case of the Day: Mitsui Sumitomo Ins. USA, Inc. v. Kyocera Mita Corp., 2016 U.S. Dist. LEXIS 96747 (C.D. Cal. July 25, 2016)

Summary:

Plaintiff insurer sued a Japanese copier manufacturer and its American distributor, for selling defective copiers that caught on fire. The copier caused a fire in Chatsworth, California; the insurer paid the claims, and sued the manufacturer for indemnification. 

The court dismissed the case for lack of personal jurisdiction, finding that the manufacturer was not subject to either general or specific jurisdiction in California.

Takeaway:

This is another progeny of Nicastro, the Supreme Court decision that found the plaintiff's contact with the defendant alone cannot serve as the basis for specific jurisdiction. Seeing more of these cases make me doubt the wisdom of Nicastro. 

Another curious part is that the opinion did not mention at all where the insurance agreement was made. If the agreement was made in the U.S., why wouldn't the court have jurisdiction over it? Which leads to another question: why did the plaintiff think it would be more advantageous to sue in the U.S., rather than in Japan?