Delta America Re Ins. Co., In re
| Citation | 900 F.2d 890 |
| Decision Date | 26 April 1990 |
| Docket Number | Nos. 89-5871,s. 89-5871 |
| Parties | In re DELTA AMERICA RE INSURANCE CO., in Liquidation, Leroy MORGAN, Commissioner of Insurance, Commonwealth of Kentucky, as Liquidator of Delta America Re Insurance Company, Plaintiff-Appellee, v. NATIONAL DISTILLERS & CHEMICAL CORPORATION, et al., Defendants-Appellants. to 89-5873. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
David Klingsberg, Alan Goot, Michael Braff, Kaye, Scholer, Fierman, Hays & Handler, New York City, W. Henry Jernigan, Jr., Kevin M. McGuire (argued), James L. Gay, Jackson & Kelly, Lexington, Ky., for plaintiff-appellee.
John P. Brice, II, Fleming, Horstmeyer & Fleming, Lexington, Ky., Larry W. Thomas, Cameron, Hornbostel & Butterman, Washington, D.C., William P. Swain, Boehl, Stopher, Graves & Deindoerfer, Louisville, Ky., James L. Fischer (argued), Perry Kreidman, Wilson, Elser, Moskowitz, Edelman & Dicker, New York City, Stephen M. O'Brien, III (argued), Landrum, Shouse & Patterson, Lexington, Ky., Mark S. Fragner, Kroll & Tract, New York City, for defendants-appellants.
Before WELLFORD and GUY, Circuit Judges, and ENGEL, Senior Circuit Judge.
The issue presented by this appeal is the right of an agency or instrumentality of a foreign state to remove a state court contract action to federal court despite a forum selection clause in the contract, which states that jurisdiction to resolve contract disputes will lie in "any court of competent jurisdiction within the United States." The district court concluded that such language results in a waiver of the right of removal and remanded the removed case to the state court where it originated. Upon review, we find that the district court erred, requiring us to reverse the remand order.
The original action underlying this appeal was commenced in the Franklin, Kentucky, Circuit Court by the insurance commissioner of the Commonwealth of Kentucky. The commissioner was acting in his capacity as liquidator of Delta America Re Insurance Company (Delta) after Delta had been declared insolvent. The original defendants were National Distillers and Chemical Corporation (National), the parent corporation of Delta, and DR Insurance Company, a subsidiary of National formed for the purpose of accepting insurance risks ceded from Delta. The liquidator claimed that National had mismanaged Delta and had failed to establish proper loss reserves. National allegedly received improper dividends in excess of twelve million dollars from Delta.
Delta was a wholly owned subsidiary of National Distillers, and was comprised of both Elkhorn Insurance Company and Elkhorn Re Insurance Company. Delta was in the business of providing reinsurance, and accepted risks ceded from primary insurance companies in consideration for the payment of premiums pursuant to reinsurance contracts or treaties. In turn, Delta retroceded approximately forty percent of the risks assumed by it to the reinsurers, who provided reinsurance for Delta. In this capacity, the defendant reinsurers are commonly referred to as "retrocessionaires."
After Delta was declared insolvent, the liquidator began receiving demands from some of the retrocessionaires to rescind their treaties predicated upon allegations that they had been misled at the time those treaties were entered into and that the treaties had been improperly administered by the former managers of Delta. The retrocessionaires indicated they would not remit any balances owed by Delta. Given that the retracessionaires' claims of mismanagement and fraud were directly intertwined with and related to the liquidator's existing action against National, the liquidator amended the complaint against National adding as defendants Delta's reinsurers, including the retrocessionaires.
After being joined as defendants, the retrocessionaires, with the exception of Banco de Seguros del Estado (Seguros), removed this action to federal court on the basis of diversity of citizenship pursuant to 28 U.S.C. Sec. 1441(c). 1 Subsequently, Seguros filed a petition joining in the removal of this action predicated upon its status as a foreign sovereign, as defined by the Foreign Sovereign Immunity Act (FSIA), 28 U.S.C. Sec. 1603. Removal was predicated upon 28 U.S.C. Sec. 1441(d), which states:
Sec. 1441. Actions removable generally
....
(d) Any civil action brought in a State court against a foreign state as defined in section 1603(a) of this title may be removed by the foreign state to the district court of the United States for the district and division embracing the place where such action is pending. Upon removal the action shall be tried by the court without jury. Where removal is based upon this subsection, the time limitations of section 1446(b) of this chapter may be enlarged at any time for cause shown.
It is undisputed that Seguros and possibly one or more of the retrocessionaires qualify as a "foreign state" as defined in 28 U.S.C. Sec. 1603(a) and (b).
The liquidator then moved to remand, claiming that the retrocessionaires had waived their right to remove by operation of a forum selection clause contained within the reinsurance contracts at issue. The district court remanded in a brief opinion, stating:
Although the statutes make special concessions to agencies of foreign governments with regard to removal, the court does not see any reason why they should not be able to waive that right, the same as any other litigant. The court agrees with the arguments of the plaintiffs in this regard.
Before addressing the forum selection clause issue, we must first address a preliminary matter. In the order of remand, the district court stated that "[t]his is not an appealable order." Subsequent to the issuance of the order of remand in this case, we decided Regis Associates v. Rank Hotels, Ltd., 894 F.2d 193 (6th Cir.1990). In Regis, we specifically addressed the appealability of a remand order predicated upon the interpretation of a forum selection clause, and we joined with those circuits which have held such orders appealable. 2 Regis is controlling here; therefore, this appeal is properly before us.
We now turn to the issue of whether the forum selection clause at issue here constituted a waiver of the right of removal. The clause in question reads in its entirety:
It is agreed that in the event of the failure of the Reinsurers hereon to pay any amount claimed to be due hereunder, the Reinsurers hereon, at the request of the Elkhorn will submit to the jurisdiction of any court of competent jurisdiction within the United States and will comply with all requirements necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such Court.
Our decision in Regis, although dealing with a differently worded forum selection clause, 3 is helpful as a starting point in the resolution of this issue. We acknowledged in Regis that the right to remove could be waived, but aligned ourselves four-square with those courts which have insisted that the waiver be clear and unequivocal:
The right of removal of a suit from state court to federal court is a statutory right. 28 U.S.C. Sec. 1441. A defendant is entitled to have the suit removed to a proper federal court as a matter of right, on complying with the conditions prescribed by statute. White v. Wellington, 627 F.2d 582, 586 (2d Cir.1980).
Although the right to remove can be waived, the case law makes it clear that such waiver must be clear and unequivocal. Kiddie Rides U.S.A., Inc. v. Elektro-Mobiltechnik GMBH, 579 F.Supp. 1476 (C.D.Ill.1984); Capital Bank & Trust Co. v. Associated Int'l Ins. Co., 576 F.Supp. 1522 (M.D.La.1984)....
Regis, 894 F.2d at 195 (footnote omitted). Although the district court found waiver here, there is no discussion of the standard used to determine waiver, nor is there any citation to any authority finding waiver under similar circumstances.
A forum selection clause, such as the one at issue here, is part of a contract, and principles of contract interpretation apply. In interpreting disputed contract provisions, we generally start by attempting to discern the intent of the parties. We also generally resolve ambiguities against the drafter. 4 Although there is not much in the way of a record in this case, it does appear that the forum selection clause was not the subject of negotiations and that the language used was standard in all contracts between Delta and its retrocessionaires. Although not determinative of the waiver issue, both of these factors cut against the conclusion that there was a waiver here.
Also militating against a finding of waiver is the language of and apparent purpose behind 28 U.S.C. Sec. 1441(d). To begin with, section 1441(d) was added in 1976 as part of the FSIA. The FSIA accomplished a number of purposes, including transferring the resolution of sovereign immunity questions involving foreign states from the executive to the judicial branch of government, and providing that the judicial forum for such resolution shall be the "courts of the United States and of the States...." 28 U.S.C. Sec. 1602. Although the FSIA allowed resolution of immunity questions by state courts, the legislation also provided an absolute right of removal to the federal courts by the foreign state. 28 U.S.C. Sec. 1441(d). Section 1441(d) also liberalized the removal time requirements of section 1446(b) by providing that the limitations may be enlarged at any time "for cause shown." Additionally, cases removed pursuant to section 1441(d) must be tried to the court without a jury.
Although, as the liquidator points out, we are not dealing with any claims of immunity from suit here, we nonetheless find that the addition of section 1441(d) to the removal statutes as part of the FSIA is not without significance. It enables...
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