Ytech 180 Units v. CERTAIN UNDERWRITERS AT LLOYD'S

• Decision Date: 12 February 2019
• Docket Number: Case No. 18-24770-CV-GRAHAM
• Citation: 359 F.Supp.3d 1253
• Parties: YTECH 180 UNITS MIAMI BEACH INVESTMENTS LLC, Plaintiff, v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

359 F.Supp.3d 1253

YTECH 180 UNITS MIAMI BEACH INVESTMENTS LLC, Plaintiff,

v.CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, et al., Defendants.

Case No. 18-24770-CV-GRAHAM

United States District Court, S.D. Florida, Miami Division.

Signed February 12, 2019

Entered February 13, 2019

Michael Jerome Higer, Berger Singerman, LLP, Miami, FL, Christopher Bernard Choquette, Gina Clausen Lozier, Berger Singerman LLP, Boca Raton, FL, Gavin Cunningham Gaukroger, Berger Singerman LLP, Fort Lauderdale, FL, for Plaintiff.

Evan M. Brooks, Patrick Edward Betar, William S. Berk, Berk Merchant & Sims PLC, Coral Gables, FL, for Defendants.

OMNIBUS ORDER

DONALD L. GRAHAM, UNITED STATES DISTRICT JUDGE

THIS CAUSE comes before the Court upon Defendants Certain Underwriters At Lloyd's, London et al. 's Motion to Compel Arbitration [D.E. 3], and Plaintiff Ytech 180 Units Miami Beach Investments LLC's Motion for Remand and Incorporated Memorandum of Law [D.E. 4].

THE COURT has considered the motions, responses thereto, pertinent portions of the record, and is otherwise fully advised in the premises. Based thereon, Defendants' Motion to Compel Arbitration [D.E. 3] is GRANTED and Plaintiff's Motion for Remand and Incorporated Memorandum of Law [D.E. 4] is DENIED.

THIS MATTER arises from a series of all-risk insurance contracts collectively referred to as the "Policy." [See D.E. 1-2; 1]. Defendants issued the Policy to Plaintiff. [See D.E. 1-2]. Plaintiff is a U.S. limited liability company. [D.E. 1-3]. At least two Defendants are not U.S. citizens. [D.E. 1].

The Policy insures 22 buildings owned by Plaintiff and known as the Grand Beach Apartments located in Miami Beach, Florida (the "Property"). [D.E. 1-3]. The Property suffered significant damages on September 10, 2017 because of Hurricane Irma. [D.E. 1-3]. Plaintiff sought coverage under the Policy for the damages sustained and requested that the claim be submitted to appraisal. [D.E. 1]. Defendants denied Plaintiff's request, arguing that the Policy does not provide for an appraisal. [D.E. 1]. According to Defendants, Plaintiff's claim must be resolved through arbitration. [D.E. 1].

The Policy contains an arbitration clause, which states in pertinent 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.

***

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.

[D.E. 1-2 at 39 (hereinafter, the "Arbitration Clause") ].

I. PROCEDURAL BACKGROUND AND CONTENTIONS OF THE PARTIES

Plaintiff filed a single-count complaint in the Eleventh Judicial Circuit of Miami-Dade County alleging that the Policy's Arbitration Clause is ambiguous and seeking various declarations from the Court. [D.E. 1-3]. The gravamen of Plaintiff's claim is that the Service of Suit Provision, Applicable Law Provision, and the Suits Against Us Provision (collectively, the "Provisions") conflict with the Arbitration Clause rendering the Arbitration Clause unenforceable.

Defendants removed this action to this Court pursuant to 28 U.S.C. § 1441 citing federal question jurisdiction, 28 U.S.C. § 1331, pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"), 9 U.S.C. §§ 201 - 208. In its Motion for Remand, Plaintiff avers that removal is premature, and the Convention's jurisdictional prerequisites are not met.

Shortly after removal, Defendants moved under the Convention to stay or dismiss this action and compel arbitration pursuant to the terms of the Arbitration Clause. According to the Defendants, the clear and unmistakable terms of the Arbitration Clause commits issues of validity and enforceability to an arbitrator. Plaintiff disagrees. Furthermore, Plaintiff submits that the Motion to Compel is also premature.

II. DISCUSSION

A. The Motion to Remand

Plaintiff moves to remand this action arguing that this Court cannot exercise subject-matter jurisdiction unless and until the state court determines that the Arbitration Clause is valid and enforceable. Highlighting the purported inconsistencies between the Provisions and the Arbitration Clause, Plaintiff avers that the Policy is ambiguous. According to Plaintiff, the Defendants' contention that the Convention's jurisdictional prerequisites are met is based on the conclusory assumption that the Arbitration Clause is valid. Notably, Plaintiff cites no case for the proposition that a state court must find that the Arbitration Clause is valid and enforceable before a district court may exercise federal subject-matter jurisdiction under the Convention.

Contrary to Plaintiff's contentions, federal courts have original jurisdiction over any action or proceeding falling under the Convention regardless of the amount in controversy. Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1440 (11th Cir. 1998) (citing 9 U.S.C. § 203 ; H.R.Rep. No. 91-1181, at 2 (1970), reprinted in 1970 U.S.C.C.A.N. 3601, 3602). Such cases confer original subject-matter jurisdiction upon a district court because they are "deemed to arise under the laws and treaties of the United States." 9 U.S.C. § 203 ; Bautista v. Star Cruises, 396 F.3d 1289, 1294 (11th Cir. 2005). Furthermore, the Convention "does not require a district court to review the putative arbitration agreement-or investigate the validity of the signatures thereon-before assuming jurisdiction: ‘The language of § 205 strongly suggests that Congress intended that district courts continue to be able to assess their jurisdiction from the pleadings alone.’ " Bautista, 396 F.3d at 1301 (citing Beiser v. Weyler, 284 F.3d 665, 671 (5th Cir.2002) ).

Accordingly, the Court will decide the jurisdictional issue before turning to Defendant's Motion to Compel Arbitration. See Czarina, L.L.C. v. W.F. Poe Syndicate, 358 F.3d 1286, 1291 (11th Cir. 2004) (noting that federal courts must "first assure themselves of their jurisdiction by deciding whether the agreement-in-writing requirement has been met" before "enforcing an [arbitration] agreement or confirming an award under the Convention"). The Court begins its analysis with an overview of the Federal Arbitration Act ("FAA") and the Convention.

1. The FAA and the Convention

The FAA applies to all "written" agreements to arbitrate "in any maritime transaction or a contract evidencing a transaction involving commerce." 9 U.S.C. § 2. The purpose of the FAA is to give arbitration agreements the same force and effect as other contracts. Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1367-68 (11th Cir. 2005). The United States Supreme Court has expressed a liberal federal policy favoring the enforcement of arbitration provisions, especially in the field of international commerce.

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625, 631, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (noting that the presumption in favor of arbitration carries "special force" when international commerce is involved, because the United States is also a signatory to the Convention).

The Convention is incorporated into federal law by Chapter Two of the FAA. 9 U.S.C. §§ 201 - 208. Section 202 defines an arbitration agreement or award that "falls under" the Convention as:

An arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the Convention unless that relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states.

9 U.S.C.A. § 202. The Convention aims "to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries." Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n. 15, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974). The Convention also serves the purpose of "reliev[ing] congestion in the courts and [ ] provid[ing] parties with an alternative method for dispute resolution that is speedier and less costly than litigation." Indus. Risk Insurers, 141 F.3d at 1440.

As an exercise of the Congress' treaty power and as federal law, "[t]he Convention must be enforced according to its terms over all prior inconsistent rules of law." Indus. Risk Insurers, 141 F.3d 1434 at 1440 (quoting Sedco, Inc., 767 F.2d at 1145 ). Accordingly, to determine whether the district court has jurisdiction over an action to compel arbitration, courts look to the language of the Convention. Czarina, L.L.C., 358 F.3d at 1291.

2. Removal Under the Convention

The Convention provides for removal "where the subject matter of an action or proceeding pending in a state court relates to an arbitration agreement or award falling under the Convention." Outokumpu Stainless USA, LLC v. Converteam SAS, 902 F.3d 1316, 1323 (11th Cir. 2018) (citing 9 U.S.C. § 205 ) (emphasis added). The Eleventh Circuit has interpreted the "relates to" language of Section 205 to allow "broad removability of cases in federal court." Id. (noting that the arbitration agreement need only be sufficiently related to the dispute such that it conceivably affects the outcome of the case). "[A]s long as the argument that the case ‘relates to’ the arbitration agreement is not immaterial, frivolous, or made solely to obtain...