Georgetown Home Owners Ass'n v. Certain Underwriters

• Decision Date: 02 February 2021
• Docket Number: CIVIL ACTION NO. 20-102-JWD-SDJ
• Parties: GEORGETOWN HOME OWNERS ASSOCIATION, INC. v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, SEVERALLY SUBSCRIBING TO POLICY NUMBER AMR-60507, ET AL.
• Court: U.S. District Court — Middle District of Louisiana

GEORGETOWN HOME OWNERS ASSOCIATION, INC. v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, SEVERALLYSUBSCRIBING TO POLICY NUMBER AMR-60507, ET AL.

CIVIL ACTION NO. 20-102-JWD-SDJ

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

February 2, 2021

RULING AND ORDER

This matter comes before the Court on the Motion to Compel Arbitration, to Sever and Dismiss Claims Against Underwriters or Alternatively, Stay Litigation Pending Arbitration (Doc. 5) filed by Defendants Certain Underwriters at Lloyd's, London, Severally Subscribing to Policy Number AMR-60507 ("Defendants" or the "Underwriters"). Plaintiff Georgetown Homeowners Association, Inc. ("Plaintiff") opposes the motion. (Doc. 13.) Defendants filed a reply. (Doc. 14-1.) Oral argument is not necessary. The Court has carefully considered the law, facts in the record, and arguments and submissions of the parties and is prepared to rule. For the following reasons, Defendants' motion is granted in part and denied in part.

I. Relevant Background and Procedural History

A. Background

This matter arises out of an alleged breach of an insurance contract. Plaintiff owns residential and commercial property located in Baton Rouge, Louisiana. The property was insured at all relevant times under a policy ("the Policy") issued by Defendants. (Petition for Damages ("Pet."), Doc. 1-2 at ¶ 3.) The Policy provided full insurance coverage for the property. The Policy specifically covered direct physical loss or damage caused by weather related perils, such as hailstorms, windstorms, tornadoes, and other similar weather events. (Id.)

Plaintiff alleges that on May 18, 2018, the property was considerably damaged by a "violent wind, hail, and rain event." (Id. ¶ 4.) Plaintiff subsequently submitted a claim for the damages to Defendants, and a claims adjustment process ensued, the facts of which are in dispute and are not pertinent for purposes of this motion.

Importantly, Plaintiff's insurance policy contains an Arbitration Agreement, which provides in relevant part:

SECTION VII - CONDITIONS

C. ARBITRATION CLAUSE: All matters in difference between the Insured and the Companies (hereinafter referred to as "the parties") in relation to this insurance, including its formation and validity, and whether arising during or after the period of this insurance, shall be referred to an Arbitration Tribunal in the manner hereinafter set out.

Unless the parties agree upon a single Arbitrator within thirty days of one receiving a written request from the other for Arbitration, the Claimant (the party requesting Arbitration) shall appoint his Arbitrator and give written notice thereof to the Respondent. Within thirty days of receiving such notice, the Respondent shall appoint his Arbitrator and give written notice thereof to the Claimant, failing which the Claimant may nominate an Arbitrator on behalf of the Respondent.

Should the Arbitrators fail to agree, they shall appoint, by mutual agreement only, an Umpire to whom the matter in difference shall be referred.

Unless the parties otherwise agree, the Arbitration Tribunal shall consist of persons employed or engaged in a senior position in Insurance underwriting or claims.

[. . .]

The seat of the Arbitration shall be in New York and the Arbitration Tribunal shall apply the law of New York as the proper law of this insurance.

[. . .]

The award of the Arbitration Tribunal shall be in writing and binding upon the parties who covenant to carry out the same. If either of the parties should fail to carry out any award the other may apply for its enforcement to a court of competentjurisdiction in any territory in which the party in default is domiciled or has assets or carries on business.

(Arbitration Agreement, Doc. 5-2 at 35-36.)

Pursuant to this Agreement, the Underwriters invoked their right to arbitrate the matters in dispute via letter dated February 20, 2020. (See Def. Ex. B, Doc. 5-4.) On April 1, 2020, the Underwriters filed the instant motion seeking to compel arbitration of Plaintiff's claims against them. (Doc. 5.)

B. Procedural History

On December 23, 2019, Plaintiff filed suit in state court, asserting numerous claims against Defendants.¹ These claims include:

a. Failing to pay for all damages due under the policy which is now causing economic losses to the petitioner by virtue of the individual unit owners of the properties to want out of their ownership arrangements;

b. Failing to bring in qualified professionals to timely and properly assess all of the damages;

c. Improperly conveying non-policy requirement information to its insured in an attempt to deny a rightful claim, supported with all requested documents;

d. Refusing to assist its insured and offer to settle, in violation of the doctrine in Kelly v. State Farm Fire & Cas. Co., 2014-1921 (La. 5/5/15);

e. Failing to pay sufficient amounts under the policy;

f. Failure to timely and properly communicate with its insured;

g. Breach of Contract;

h. Negligence;

i. Intentional or Negligent misrepresentation of non-policy and policy facts and provisions;j. Arbitrary and capricious penalties, attorney's fees, and general and special damages pursuant to LSA R.S. Arts. 22:1973 and 22:1892.

(Pet., Doc. 1-2 ¶ 9.) Plaintiff seeks to recover damages due under the Policy, as well as extracontractual damages, mental anguish, and attorney's fees pursuant to La. Rev. Stat. § 22:868 and § 22:1973. (Id. ¶ 10.) Defendants removed the matter to this Court on February 21, 2020, under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the Convention"). (Notice of Removal, Doc. 1 at ¶ 4.) Defendants now move to compel arbitration and to stay or dismiss Plaintiff's suit.

II. Discussion

In the instant motion, Defendants contend that because the Agreement is valid and enforceable and falls within the scope of the Convention, this dispute should be compelled to arbitration. (Doc. 5-1 at 2.) In response, Plaintiff argues that: (1) the Convention does not apply because it is reverse-preempted by Louisiana state law; (2) the Arbitration Agreement is adhesionary and therefore unenforceable; and (3) no agreement covers its claims under La. Rev. Stat. § 22:868 and § 22:1973. For the reasons explained below, Defendants' motion is granted in part and denied in part.

A. The Convention

1. Applicability

a. Parties Arguments

i. Defendants' Motion

The Underwriters insist that this matter must be compelled to arbitration in accordance with the Policy's broad arbitration provision, the Federal Arbitration Act ("FAA"), and the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the Convention"). (Doc. 5-1 at 5.) In support of this argument, Defendants point out that thereis a strong presumption in favor of enforcing arbitration provisions, which "applies with special force in the field of international commerce." (Id. at 6-7 (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)).)

Pursuant to the FAA and the Convention, Defendants argue that this Court's inquiry is limited to determining whether: (1) an arbitration agreement exists which falls within the scope of the Convention's reach; and (2) the agreement is null and void, inoperative, or incapable of being performed. (Doc. 5-1 at 7-8.)

As to the first prong, the Arbitration Agreement falls within the scope of the Convention because: (1) the agreement is in writing, (2) arbitration is to take place in New York, which is in a country that is a signatory to the Convention, (3) the dispute arises from an insurance policy, which is a commercial legal relationship, and (4) at least some Defendants are not citizens of the United States. (Id. at 11.) Therefore, the first prong is met. (Id. at 12.)

As to the second prong, Defendants argue that there is nothing to suggest the agreement to arbitrate is null and void, inoperative, or incapable of being performed. Further, such agreements contained in insurance contracts have been enforced by this court and by the Fifth Circuit. (Id. (numerous citations omitted).) Accordingly, this dispute must be compelled to arbitration. (Doc. 5-1 at 2.)

ii. Plaintiff's Opposition

In opposition, Plaintiff argues that the Convention does not apply for three reasons. (Doc. 13 at 9 (citing Bautista v. Star Cruises, 396 F.3d 1289, 1294 (11th Cir. 2005)).) First, Plaintiff argues that the Policy does not "provide for arbitration in a territory of a signatory to the Convention" because New York is listed as the place of arbitration, not an international country. (Id. at 9-10.)

Second, Plaintiff argues that "the Policy listed does not fall within the meaning of the Convention" because "if even one investor or partner of one syndicate [of the Underwriters] is American, Underwriters would not be a foreign entity." (Id. at 11-12.) Additionally, the Policy does not reference the Convention at all, "much less inform Georgetown that any type of international business is going on." (Id. at 10.)

Third, Plaintiff contends that the Convention does not apply since this is a domestic arbitration agreement, not an international one. The property, the policyholder, and the insurer are all located in the United States making this case "singularly in the domestic realm." (Id. at 12.)

iii. Defendants' Reply

In response, Defendants argue that the Convention applies because the dispute involves at least one party that is not a United States citizen. (Doc. 14-1 at 1.) Specifically, Defendants contend that Plaintiff's reliance on "some sort of complete diversity concept" to determine whether foreign entities are involved is misplaced. Defendants then point out that the Convention applies if even one subscriber to the Policy is a foreign domicile. (Id. at 9 (citing 9 U.S.C. § 202).) Since the Underwriters have detailed some of the names that are domiciled and have a principal place of business in London, England and Plaintiff is a Louisiana entity, "there is unquestionably a contract between...