J.B. Hunt Transp., Inc. v. Steadfast Ins. Co., CASE NO. 5:20-CV-5049
| Decision Date | 01 July 2020 |
| Docket Number | CASE NO. 5:20-CV-5049 |
| Citation | 470 F.Supp.3d 936 |
| Parties | J.B. HUNT TRANSPORT, INC., Plaintiff v. STEADFAST INSURANCE COMPANY ; and Certain Underwriters at Lloyd's, London Subscribing to Auto Terror and Malicious Attack Protect Contingent Insurance Policy No. TE1800238, Defendants |
| Court | U.S. District Court — Western District of Arkansas |
Bruce E. Munson, Zachary Richmond Hill, Elizabeth A. Fletcher, Munson, Rowlett, Moore & Boone, P.A., Little Rock, AR, for Plaintiff.
David D. Wilson, Friday, Eldredge & Clark, Little Rock, AR, Kamber Stefany Burke, Pro Hac Vice, Paul L. Fields, Jr., Fields Howell LLP, Atlanta, GA, for Defendant Certain Underwriters at Lloyd's London.
Douglas McIntosh, Ilana Olman, Pro Hac Vice, Segal McCambridge Singer & Mahoney, Ltd., Fort Lauderdale, FL, Gary D. Marts, Jr., Quinten Johnson Whiteside, Wright Lindsey Jennings LLP, Little Rock, AR, for Defendant Steadfast Insurance Company.
Defendant Certain Underwriters at Lloyd's London subscribing to Auto Terror and Malicious Attack Protect Contingent Insurance Policy No. TE1800238 ("Underwriters") have filed a Motion to Compel Arbitration and Dismiss or, Alternatively, Stay Litigation Pending Arbitration. (Doc. 15). Plaintiff J.B. Hunt Transport, Inc. ("J.B. Hunt") and Defendant Steadfast Insurance Company ("Steadfast") have filed responses in opposition. (Docs. 23 & 25). Underwriters replied. (Doc. 37). For the reasons discussed below, the Court finds that J.B. Hunt's claims against Underwriters should be referred to arbitration and therefore GRANTS the Motion to Compel Arbitration (Doc. 15). The Court STAYS the remaining claims against Steadfast until the conclusion of arbitration.
Furthermore, J.B. Hunt has filed a Motion to Strike Underwriters' Answer to the Amended Complaint (Doc. 44), to which Underwriters have responded. (Doc. 47). For the reasons discussed below, the Court DENIES the Motion to Strike (Doc. 44).
Finally, J.B. Hunt filed a Motion for Leave to File a Second Amended Complaint (Doc. 41), Underwriters responded (Doc. 50), and J.B. Hunt replied (Doc. 58). For the reasons discussed below, this Motion is DENIED.
This dispute arises from two insurance policies issued to J.B. Hunt by separate defendants Underwriters and Steadfast. In its Amended Complaint, J.B. Hunt alleges that Underwriters and Steadfast are liable for breach of duty to defend and indemnify J.B. Hunt for claims presented in a separate suit involving the wrongful death of Evelyn S. Udell ("Udell Suit"). (Doc. 8, p. 1–2). The Udell Suit arose from the alleged intentional killing of Evelyn S. Udell by an employee for XM Carriers, a contracted carrier for J.B. Hunt. The Udell Suit has resulted in a confidential settlement agreement. (Doc. 15-1, p. 2). J.B. Hunt alleges that the claims in the Udell Suit are covered under the insurance policies issued by Underwriters and Steadfast but that Underwriters and Steadfast refused to defend those claims and have refused to "remit the sums owed under the aforementioned policies." (Doc. 8, p. 2). For Underwriters' part, they argue that they remain willing to participate in a good faith settlement of the Udell Suit but allege that they are not liable for a voluntarily overvalued settlement offer made without the consent of Underwriters and Steadfast. (Doc. 15-1, p. 3).
The policy issued by Underwriters, Underwriters policy No. TE11800238 (the "Policy"), provided certain auto terror and malicious attack excess insurance coverage to J.B. Hunt from December 31, 2018 through December 31, 2019. (Doc. 59-1, p. 57). Subsection 7.6 of the Policy, entitled "Arbitration," states:
Any dispute, controversy, or claim arising out of or relating to this contract, including the formation, interpretation, breach or termination thereof, including whether the claims asserted are arbitrable, will be referred to and finally determined by arbitration in accordance with the JAMS International Arbitration Rules. The tribunal will consist of three arbitrators. The place of arbitration will be New York .... Judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The law of this contract shall be the law of New York.
Id. at 71 (emphasis added). Subsection 7.6 of the Policy will be referred to as the "Arbitration Provision." Somewhat confusingly, the Policy also includes language indicating that Arkansas law governs. Id. at 57.
In their Motion to Compel Arbitration, Underwriters allege that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"), as implemented through Chapter II of the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 201 - 208, is controlling law under the Supremacy Clause. (Doc. 15, p. 2 ¶ 3). According to Underwriters, pursuant to the Convention and Chapter II of the FAA, the Arbitration Provision is valid and enforceable. Id. J.B. Hunt responds that Arkansas state law—which bars the use of arbitration provisions in insurance contracts—renders the Arbitration Provision unenforceable. J.B. Hunt also argues that it is not a party to the Arbitration Provision and that Underwriters have waived their right to enforce the Arbitration Provision. (Doc. 24, pp. 1–10). For Steadfast's part, it argues that it is not subject to the Arbitration Provision and, in the event the Court does compel arbitration between J.B. Hunt and Underwriters, it asks that the claims against it be stayed until the arbitration is concluded. (Doc. 25, p. 2).
On May 22, 2020, after the Motion to Compel Arbitration became ripe, J.B. Hunt filed a Motion for Leave to File a Second Amended Complaint. (Doc. 41). In its proposed second amended complaint, J.B. Hunt seeks to add separate counts for breach of contract and bad faith. Id. at 2. J.B. Hunt also alleges that it has not yet received "a true and correct copy" of the Policy. Id. at 1. Furthermore, on May 29, 2020, J.B. Hunt filed a Motion to Strike Underwriters' Answer to the Amended Complaint. (Doc. 44).
On June 8, 2020, the Court held a case management hearing with the parties and took the pending motions under consideration. At the hearing, the Court ordered J.B. Hunt and Underwriters to meet and confer in the hope that they could agree on the true and correct form of the Policy in effect at the time of Ms. Udell's death. On June 19, 2020, J.B. Hunt and Underwriters filed a stipulation and agreed that the copy of the Policy attached to that stipulation is a true and correct copy of the Policy in effect at the time of the incident (Docs. 59 & 59-1).
The Court will first address J.B. Hunt's Motion to Strike Underwriters' Answer to the Amended Complaint (Doc. 44). J.B. Hunt contends that the answer (Doc. 42) should be struck because the copy of the Policy attached thereto is "not a true and correct copy of the insurance policy which was in effect on the date of the loss." (Doc. 45, p. 1). As proof of this assertion, J.B. Hunt states that the copies of the Policy attached to its original complaint and amended complaint (Docs. 4-4 & 8-3) are not the same as the copy of the Policy attached to Underwriters' answer. (Doc. 42-1). Underwriters respond that the documents are identical except for "identifying Exhibit ‘divider’ pages." (Doc. 47, p. 1). The parties appear to have resolved this dispute via their agreed stipulation (Doc. 59).
This Motion—which is likely mooted by the parties' agreed stipulation—is DENIED. The copy of the Policy attached to Underwriters' answer is substantively identical to the one attached to the parties' stipulation. The only difference is that the endorsed version of the Policy attached to the agreed stipulation specifically identifies other underlying insurance policies, while the other copies of the Policy did not identify other such insurance policies. Compare Doc. 42-1, p. 31 (), with Doc. 59-1, p. 57 (). There is no dispute regarding the actual language of the Arbitration Provision; that provision is identical in all of the copies of the Policy before the Court. Motions to strike are disfavored, Stanbury Law Firm v. I.R.S. , 221 F.3d 1059, 1063 (8th Cir. 2000), and J.B. Hunt has presented no basis for the Court to do so here. Accordingly, J.B. Hunt's Motion to Strike is DENIED.
This case involves an arbitration agreement between foreign nationals and United States citizens, and such arbitration agreements are governed by the Convention and its implementing legislation, Chapter II of the FAA. Article II, Section 3 of the Convention provides that "[t]he court of a Contracting State ... shall, at the request of one of the parties, refer the parties to arbitration ...." 1970 WL 104417, at *1 (Dec. 29, 1970). At the same time as the United States' accession to the Convention, Congress amended Chapter II of the FAA so that it now implements the Convention in disputes involving foreign parties or related to a foreign state. 9 U.S.C. §§ 201 – 208 ().
Arkansas law bars the enforcement of binding arbitration clauses in insurance contracts. Ark. Code Ann. § 16-108-233(b)(3) (); Ark. Code Ann. § 23-79-203(a) ().1 Typically, the FAA would preempt conflicting state law under the Supremacy Clause, but the...
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