Lynn McCullough, et al v. AIG Insurance Hong Kong Limited

At a glance

Parties

Lynn McCullough and William McCullough (plaintiffs-appellees) v. AIG Insurance Hong Kong Limited (defendant-appellant)

Case no.

U.S. Court of Appeals, Eleventh Circuit, No. 19-12100 (D.C. No. 1:16-cv-20194-DPG)

Court

U.S. Court of Appeals for the Eleventh Circuit, on appeal from the U.S. District Court for the Southern District of Florida

Treaty

New York Convention

Panel

Wilson, Newsom and Anderson, Circuit Judges (per curiam)

Sector

Insurance

Outcome

The district court's denial of AIG's motion to compel arbitration was vacated and the case remanded (28 October 2020).

The dispute

Lynn and William McCullough were injured third parties. They sought tort damages from the "Rain Forest defendants" and settled with them. They then sued AIG Insurance Hong Kong Limited, which they say insured one or more of those defendants. As Florida law allows, they claimed that AIG breached its duty to its insureds to act in good faith to settle within the policy limits. AIG moved to compel the McCulloughs to arbitrate under the arbitration provisions of the insurance policy, which bound AIG and the Rain Forest defendants. The McCulloughs had not signed the policy. Relying only on the Eleventh Circuit's decision in Outokumpu Stainless USA, LLC v. Converteam SAS, the district court refused to compel arbitration. It did not address AIG's argument that equitable doctrines allowed the agreement to be enforced against non-signatories.

Key holdings

1. In Outokumpu (902 F.3d 1316), the Eleventh Circuit had held that the New York Convention requires the parties to actually sign the arbitration agreement. It had also held that domestic equitable estoppel doctrines conflict with that signatory requirement. The district court relied on that decision alone. p. 2
2. After the district court ruled, the Supreme Court reversed Outokumpu in GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637 (1 June 2020). It held that nothing in the New York Convention conflicts with applying relevant equitable doctrines. pp. 3–4
3. Following the Supreme Court's ruling, the Court of Appeals vacated the district court's judgment. It remanded for further proceedings consistent with its opinion and with the Supreme Court's opinion in Outokumpu, including on whether equitable doctrines allow arbitration to be enforced against the non-signatory McCulloughs. p. 4
4. The court noted that insurance coverage, and possibly other issues, must also be decided on remand. p. 4, n. 1

Procedural history

1. The McCulloughs sued AIG in the U.S. District Court for the Southern District of Florida (No. 1:16-cv-20194-DPG). Relying on Outokumpu, the district court denied AIG's motion to compel arbitration.
2. 1 June 2020The Supreme Court reversed the Eleventh Circuit's Outokumpu decision in GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC.
3. 28 October 2020The Eleventh Circuit (per curiam, unpublished) vacated the district court's judgment and remanded.

Keywords

• New York Convention
• non-signatory
• equitable estoppel
• motion to compel arbitration
• Outokumpu
• GE Energy Power Conversion
• insurance policy arbitration clause
• bad faith failure to settle
• third-party claimant
• Florida law
• signatory requirement
• Eleventh Circuit
• vacated and remanded
• AIG

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