Jack Gulledge and Louis Pannagl v. Certain Underwriters at Lloyd’s, London

At a glance

Parties

Jack Gulledge and Louis Pannagl v. Certain Underwriters at Lloyd's, London

Case no.

U.S. District Court, Eastern District of Louisiana, Civil Action No. 18-6657, Section A(4)

Court

U.S. District Court, Eastern District of Louisiana (Judge Jay C. Zainey)

Forum and rules

Removal under the New York Convention, 9 U.S.C. § 201 et seq. (Chapter Two of the Federal Arbitration Act)

Treaty

New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Sector

Property insurance (hurricane damage)

Outcome

The motion to remand was denied (26 September 2018). The insurers' motions to compel arbitration and to appoint an arbitrator were then denied and the case was stayed until the Fifth Circuit rules in McDonnel (17 December 2018).

The dispute

Louis Pannagl owns commercial property in Gretna, Louisiana. Certain Underwriters at Lloyd's, London had insured it against windstorm and hail damage, and Hurricane Isaac damaged it on 29 August 2012. On 15 August 2013 the plaintiff sued the insurers in the Twenty-Fourth Judicial District Court for the Parish of Jefferson for non-payment of his claims. On 12 July 2018 the insurers removed the case to federal court under the New York Convention, relying on an arbitration clause in the policy. The plaintiff sought remand on four grounds: the removal was late; the policy's "Conformity to Statute" clause removed the arbitration clause because La. Rev. Stat. § 22:868 bars compulsory arbitration in insurance contracts; the McCarran-Ferguson Act reverse-preempts the Convention; and the Convention applies only to the recognition of awards.

Key holdings

1. The arbitration agreement falls under the Convention. There is a written agreement to arbitrate, it provides for arbitration in the territory of a Convention signatory, it arises from a commercial relationship, and the insurers are citizens of the United Kingdom. Under 9 U.S.C. § 205 removal is allowed at any time before trial, so the removal was timely. Order of 26 Sept. 2018, pp. 3–4
2. The Conformity to Statute clause does not remove the arbitration clause. The Court followed McDonnel Grp. v. Certain Underwriters and the reasoning of Light v. Blue Cross: the Convention preempts Louisiana law, including La. Rev. Stat. § 22:868, so state law cannot change the policy. Order of 26 Sept. 2018, p. 5
3. The McCarran-Ferguson Act does not allow Louisiana law to reverse-preempt the Convention. The Court followed the Fifth Circuit's en banc decision in Safety National Casualty Corp. Order of 26 Sept. 2018, p. 6
4. Under 9 U.S.C. § 202 the Convention covers arbitration agreements as well as arbitral awards. The motion to remand was therefore denied. Order of 26 Sept. 2018, p. 7
5. The plaintiff raised no new arguments against the arbitration clause. But to keep decisions consistent, the case is stayed until the Fifth Circuit decides McDonnel. The motions to compel arbitration and to appoint an arbitrator were denied, and either party may move to reopen once the Fifth Circuit rules. Order of 17 Dec. 2018, p. 3

Procedural history

1. 29 August 2012Hurricane Isaac damages the insured property in Gretna, Louisiana.
2. 15 August 2013The plaintiff sues in the Twenty-Fourth Judicial District Court for the Parish of Jefferson.
3. 12 July 2018The insurers remove the case to federal court under the New York Convention.
4. 26 September 2018Order and Reasons denying the motion to remand.
5. 2018The Fifth Circuit dismisses the plaintiff's appeal because the denial of remand was interlocutory and could not be appealed.
6. 17 December 2018Order and Reasons denying the motions to compel arbitration and to appoint an arbitrator, and staying the case until the Fifth Circuit decides McDonnel.

Tribunal, counsel and experts

Decided by

• Jay C. Zainey Judge, U.S. District Court, Eastern District of Louisiana

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Keywords

• New York Convention
• removal
• motion to remand
• motion to compel arbitration
• 9 U.S.C. § 205
• conformity to statute clause
• La. Rev. Stat. § 22:868
• McCarran-Ferguson Act
• reverse preemption
• Lloyd's
• insurance arbitration
• Hurricane Isaac
• McDonnel Group
• Safety National Casualty
• stay of proceedings
• preemption of state law

Summary generated with AI from the published documents — refer to the award for the authoritative text.