Al Copeland Invs., LLC v. First Specialty Ins. Corp.
Decision Date | 29 June 2017 |
Docket Number | CIVIL ACTION NO. 16-16346 SECTION: "G"(5) |
Parties | AL COPELAND INVESTMENTS, LLC, et al. v. FIRST SPECIALTY INSURANCE CORPORATION |
Court | U.S. District Court — Eastern District of Louisiana |
Pending before the Court is Defendant First Specialty Insurance Corporation's ("Defendant") "Motion to Dismiss" in which Defendant argues that the instant action should be dismissed without prejudice due to the existence of a valid forum selection clause contained in the insurance policy at issue.1 Having considered the motion, the memoranda in support and in opposition, the record, and the applicable law, the Court will grant the motion and dismiss the instant action without prejudice.
This matter concerns an insurance dispute. Plaintiffs Al Copeland Investments, LLC and Diversified Foods & Seasonings, LLC (collectively "Plaintiffs") allege that they suffered damages to two properties and that those damages are covered under an insurance policy ("the Policy") issued by Defendant.2 Plaintiffs allege that Defendant failed to honor their claim for the property damage, and they bring a claim for breach of contract based on Defendant's denial of coverage.3 Plaintiffs also seek penalties and attorneys' fees arising out of Defendant's alleged breach of thePolicy.4
Plaintiffs filed the original complaint in this action on November 14, 2016.5 With leave of Court, Plaintiffs filed an amended complaint on November 18, 2016, to properly allege the citizenship of Plaintiffs.6 On January 9, 2017, Defendant filed the instant motion to dismiss.7 On January 24, 2017, Plaintiffs filed an opposition to the motion.8 On February 1, 2017, with leave of Court, Defendant filed a reply in further support of the motion.9 On March 29, 2017, with leave of Court, Plaintiffs filed a supplemental memorandum in opposition to the motion.10 With leave of Court, Defendant filed a supplemental memorandum in further support of the motion on April 7, 2017.11
In support of its motion to dismiss, Defendant argues that the Policy contains an unambiguous forum selection clause designating the state of New York as the exclusive jurisdiction to hear any disputes between the parties.12 Defendant asserts that the forum selection clause was included in the original policy issued by Defendant to Plaintiffs, as well as the mostrecent Policy.13 Thus, Defendant asserts that Plaintiffs filed the instant suit with full knowledge of the forum selection clause.14
Defendant asserts that when a party seeks to enforce a forum selection clause that requires that an action be brought in a particular state court, the appropriate way to enforce such a clause is through the doctrine of forum non conveniens.15 Defendant further asserts that under such an analysis, the Court should first consider whether the claims asserted in the complaint fall within the scope of a valid forum selection clause.16 Once the validity of the forum selection clause is established, Defendant avers, dismissal is appropriate unless the plaintiff shows extraordinary circumstances demonstrating that public interest factors overwhelmingly disfavor dismissal.17
Defendant contends that in this case, dismissal is appropriate because it argues that the forum selection clause is valid and that Plaintiffs cannot show that the clause is unreasonable.18 According to Defendant, such unreasonableness exists where: (1) the forum selection clause was the product of fraud or overreaching; (2) the party seeking to escape enforcement will be deprived of his day in court because of the inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement of the forum selection clause would contravene a strong public policy of the forum state.19
Defendant asserts that the forum selection clause was the product of an arm's length negotiation between sophisticated parties and not the product of fraud or overreaching.20 Defendant next argues that the fact that Plaintiffs might be burdened with travel inconvenience or expense in litigating the instant dispute in New York does not preclude enforcement of the forum selection clause.21 Defendant contends that Plaintiffs would be neither deprived of their day in court nor a remedy by enforcing the forum selection clause and requiring the dispute to be litigated in New York.22
Next, Defendant argues that enforcement of the forum selection clause would not contravene a strong public policy of Louisiana.23 According to Defendant, Louisiana law approves of and encourages forum selection clauses.24 Defendant next notes that Plaintiffs cite to Louisiana Revised Statute § 22:868 for the apparent argument that the statute precludes enforcement of the Policy's forum selection clause.25 According to Defendant, the Louisiana Supreme Court has recognized that the state legislature has enacted three statutes to declare forum selection clauses unenforceable and against public policy in very limited circumstances, none of which are present here.26 Defendant further asserts that none of the cases interpreting Section 22:868 have found itto limit the application of forum selection clauses.27 Rather, Defendant avers, the statue has been viewed as a limitation on arbitration clauses.28
Rather than invalidating forum selection clauses, Defendant asserts that Section 22:868 bars insurance contracts attempting to deprive Louisiana courts of jurisdiction.29 According to Defendant, the Supreme Court has rejected the idea that a forum selection clause deprives a court of jurisdiction.30 Defendant argues that a forum selection clause does not deprive a court of jurisdiction and instead asks a court to exercise its jurisdiction to enforce the parties' contract.31 Moreover, even if the law was unclear regarding whether a forum selection clause denies a court of jurisdiction, Defendant notes that Plaintiffs filed this action in federal court, rather than state court, and that enforcement of the forum selection clause would have no effect on the courts of Louisiana.32
Next, Defendant asserts that the forum selection clause is mandatory.33 According to Defendant, the language of the forum selection clause is almost identical to language that the Fifth Circuit has interpreted to be mandatory.34 Defendant argues that where, as here, the parties agreed to a mandatory forum selection clause, a court determining whether to dismiss a case under a forumnon conveniens analysis is to give the plaintiff's choice of forum no weight and is not to consider the parties' private interests.35 According to Defendant, the relevant public interest factors are: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws or the application of foreign law.36
Defendant contends that the public interest factors weigh in favor of dismissal because: (1) adjudication in New York will alleviate Louisiana federal court congestion; (2) although the property at issue is located in Louisiana, the dispute is not localized, as the Policy covers properties in multiple states throughout the United States, was issued in Georgia by Defendant, a Missouri Corporation with its principal place of business in Kansas, and specifies that New York law will apply; and (3) the Policy contains a specific choice of law clause stating that New York law governs any disputes, and New York courts have better familiarity with New York law.37 Thus, Defendant argues, the Court should dismiss the instant action without prejudice under a forum non conveniens analysis.38
In opposition to the motion to dismiss, Plaintiffs argue that Louisiana Revised Statute § 22:868(A)(2) prohibits the Policy's forum selection clause and choice of law.39 Plaintiffspoint to three Louisiana courts of appeal decisions in which the courts evaluated a former version of the statute and found that insurance policies could not deprive Louisiana courts of jurisdiction over disputes.40 Plaintiffs also assert that Louisiana courts have held that a Louisiana insurance policy cannot mandate the application of another state's law.41 Plaintiffs argue that the Louisiana Legislature and Louisiana courts are concerned about the relationship between an insured and an insurer and that the parameters of the bargaining arena in such relationships are thus "carefully patrolled."42
Plaintiffs acknowledge that the Louisiana Supreme Court has found that forum selection clauses are not per se violative of public policy in Louisiana.43 However, Plaintiffs argue that the case relied upon by Defendant, Shelter Mutual Insurance Company v. Rimkus Consulting Group, Inc. of Louisiana, is not dispositive, because the Louisiana Supreme Court did not present an exhaustive list of statutory prohibitions on forum selection clauses, but rather simply discussed three such statutes by way of example.44 Here, Plaintiffs argue, there is a specific statute that declares that the forum selection clause in the Policy is void, and the clause should therefore not be enforced.45
Next, Plaintiffs assert that when a court addresses a valid forum selection clause, the courtcan refuse to enforce such a clause based on public interest factors.46 Here, Plaintiffs assert that these factors weigh against enforcement of the clause, because: (1) this case has no connection to the State of New York except that the insurer's parent company "has an address there," and the incident occurred in Louisiana, where the witnesses and majority of relevant documents are located; (2) a companion case is pending before this Court in which Plaintiffs sue another insurer, Continental Casualty Company...
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