Creekstone Juban I, LLC v. XL Ins. Am., Inc.
Decision Date | 09 April 2018 |
Docket Number | NO. 2017 CW 1223,2017 CW 1223 |
Parties | CREEKSTONE JUBAN I, LLC v. XL INSURANCE AMERICA, INC. |
Court | Court of Appeal of Louisiana — District of US |
In Re: XL Insurance America, Inc., applying for supervisory writs, 21st Judicial District Court, Parish of Livingston, No. 154463.
BEFORE: GUIDRY, PETTIGREW, McCLENDON, CRAIN AND HOLDRIDGE, JJ.
WRIT DENIED.
Crain, J., agrees with denying the writ and assigns reasons. Louisiana Revised Statute 22:868 prohibits any clause in an insurance contract that "[d]eprives the courts of this state of the jurisdiction of action against the insurer." Our court has recognized that compulsory arbitration agreements contained in insurance contracts violate this provision and are unenforceable because they effectively deprive our courts of the ability to act. See Courville v. Allied Professionals Insurance Company, 16-1354 (La. App. 1st Cir. 4/12/17), 218 So.3d 144, 147, writ denied, 17-0783 (La. 10/27/17), 228 So.3d 1223; see also Doucet v. Dental Health Plan Management Corp., 412 So.2d 1383, 1384 (La. 1982); Macaluso v. Watson, 171 So.2d 755, 757 (La. App. 4th Cir. 1965). If this statute proscribed only a clause depriving a court of all jurisdiction, even a binding arbitration clause would survive scrutiny under Section 22:868. See La. R.S. 9:4203, 4209-12, and 4215 ( ). Interpreting the phrase "jurisdiction of action" in Lawrence v. Continental Insurance Company, 199 So.2d 398, 399-400 (La. App. 3rd Cir. 1967), Judge Tate explained the rationale behind the statute:
The statute incorporates a public policy determination that no contract issued in Louisiana covering a Louisiana subject shall deny the Louisiana insured the benefit of a practical remedy in Louisiana courts, thus prohibiting a requirement that he litigate his claim in an inconvenient foreign forum or submit to its adjudication by some private tribunal. The statute's command must be enforced, by reason of which the policy condition is void as violating the statutory prohibition.
See also Bonura v. United Bankers Life Ins. Co., 509 So.2d 8, 11 (La. App. 1st Cir.), writ denied, 512 So.2d 462 (La. 1987), disapproved of on other grounds by All Star Advert. Agency, Inc. v. Reliance Ins. Co., 04-1544 (La. 4/12/05), 898 So.2d 369 () The forum-selection clause effectively deprives Louisiana courts of the ability to exercise jurisdiction over this case. Consequently, it is expressly prohibited by Section 22:868A(2) and is unenforceable.
Guidry, J., dissents and would grant the writ. The forum-selection clause contained in defendant/relator XL Insurance America, Inc.'s policy, which was issued in favor of plaintiff/respondent Creekstone Juban I, LLC is enforceable. Jurisdiction is a separate and distinct legal concept from venue and a forum-selection clause does not divest a district court of this authority. See Luffey ex rel. Fredericksburg Properties of Texas, LP v. Fredericksburg Properties of Texas, LP, 37,591 (La. App. 2d Cir. 12/10/13), 862 So.2d 403, 406. A forum-selection clause does not oust or deprive a court of jurisdiction. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15-16, 92 S. Ct. 1907, 1914, 32 L.Ed.2d 513 (1972). As the U.S. Supreme Court in M/S Bremen explained, M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12. Likewise, in the instant matter, XL Insurance concedes and indeed asks the Louisiana court to exercise its jurisdiction to hear and determine the threshold issue of venue by enforcing the parties' agreed-upon forum-selection clause.
Forum-selection clauses are prima facie valid, legal, and binding, and a party seeking to set aside such a provision bears a heavy burden of proof. Rising Resources Control, Inc. v. KIE Commodities and Finance, L.L.C., 2011-1026 (La. App. 1st Cir. 12/21/11), 80 So.3d 1217, 1219, writ denied, 2012-0658 (La. 4/27/12), 86 So.3d 632. Mere inconvenience or additional expense should not suffice as proof of hardship since these are burdens that were allocated by the parties' private bargain. Vallejo Enterprise, L.L.C. v. Bouder Image, Inc., 2005-2649 (La. App. 1st Cir. 11/3/06), 950 So.2d 832, 837. Moreover, La. R.S. 22:868 does not prohibit forum-selection clauses. The decisions discussing La. R.S. 22:868 do so only in the context of arbitration clauses. See, e.g. Dore v. Shelter Mut. Ins. Co., 2013-0545 (La. App. 1st Cir. 11/1/13), 2013 WL 5915141 (unpublished); and Courville v. Allied...
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