Avaid Hotels, LLC v. Allied World Assurance Co. U.S.

AVAID HOTEL, LLC D/B/A COUNTRY INN AND SUITES, LA v. ALLIED WORLD ASSURANCE COMPANY U.S. INC., ET. AL.

CIVIL No. 21-1973

United States District Court, W.D. Louisiana, Shreveport Division

August 23, 2022

HORNSBY, MAGISTRATE JUDGE.

MEMORANDUM RULING

S MAURICE HICKS, JR., CHIEF JUDGE.

Before the Court is a Motion to Dismiss filed by Allied World Assurance Company (US) Inc., Navigators Insurance Company Navigators Specialty Insurance Company, Navigators Management CO Inc., Ategrity Specialty Insurance Company, Hudson Insurance Company, Swiss Re International SE, Amalgamated Insurance Underwriters LLC, and Aspen Specialty Insurance Company (hereinafter “the Defendants”). See Record Document 19. The Defendants seek dismissal of the Plaintiff Avaid Hotel, LLC d/b/a Country Inn and Suites, Louisiana's (“the Plaintiff”) claims without prejudice for forum non conveniens to be refiled in New York state court. The Plaintiff opposes the Motion. See Record Document 27. For the reasons that follow, the Motion is DENIED.

BACKGROUND

The Plaintiff filed the instant suit alleging counts of breach of insurance contract and bad faith against the Defendants pursuant to Louisiana Revised Statute §§ 22:1892 and 22:1973. The Defendants collectively provided insurance policies to the Plaintiff (“the policies”) which covered the hotel property against all occurrences. Since July 2020, the Plaintiff has submitted three claims to the Defendants seeking insurance proceeds to repair damage exacted by a vehicle crash into the hotel, Hurricane Laura and the February 2021 winter storm. The Plaintiff alleges that although it acted promptly in submitting evidence of the damage and reporting the claims, the Defendants have either purposefully or negligently refused to compensate the Plaintiff.

The Plaintiffs claim the Defendants breached the policies when they 1) failed to compensate the Plaintiff for the damage recorded in its claims, 2) purposefully or negligently misrepresented to the plaintiff the terms and conditions of the policy, 3) failed to conduct the handling of the claims with good faith and fair dealing, 4) manipulated its pricing software to artificially suppress the cost of repairs below market value, and 5) failed to include adequate overhead and profit in its damages estimation. The Plaintiff also alleges the Defendants are liable for statutory bad faith penalties for failing to timely and adequately compensate the Plaintiff without probable cause.

The Defendants filed the instant Motion to Dismiss, requesting this Court dismiss the Plaintiff's suit without prejudice on the basis of forum non conveniens so that it may be refiled in the proper venue of New York state court pursuant to the insurance policies' mandatory forum selection clauses. See Record Document 20. The Plaintiff opposes the Motion. See Record Document 27.

LAW AND ANALYSIS

The doctrine of forum non conveniens draws its support from a court's power “to prevent its process from becoming an instrument of abuse or injustice.” In re Air Crash Disaster Near New Orleans, 821 F.2d 1147 1153-54 (5th Cir. 1987), vacated on other grounds sub nom. PanAm World Airways, Inc. v. Lopez, 490 U.S. 1032, 109 S.Ct. 1928 (1989). When deciding whether to dismiss a case for forum non coveniens, a court must determine whether there is an adequate alternative forum available to the parties. See O'Keefe v. Noble Drilling Corp., 347 Fed.Appx. 27, 31 (5th Cir. 2009). If an alternative forum is both adequate and available, a court must then weigh a multitude of private and public interest factors to determine whether dismissal is proper. See id.

The private factors a court must weigh are “the relative ease of access to sources of proof, availability of compulsory process for attendance of unwilling witnesses, cost of obtaining attendance of willing witnesses, need to view premises at issue, the enforceability of judgment if one is obtained, and all other practical problems that make trial of a case easy, expeditious and inexpensive.” Dynamic Indus. v. Metlife-Am. Int'l Grp. -Arab Nat'l Bank Coop. Ins. Co., No. 21-748, 2021 U.S. Dist. LEXIS 242878, at *10 (E.D. La. Dec. 20, 2021), (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 91 L.Ed. 1055 (1947), superseded on other grounds by statute, 28 U.S.C. § 1404(a), as recognized in Am. Dredging Co. v. Miller, 510 U.S. 443, 114 S.Ct. 981, 127 L.Ed.2d 285 (1994)) (internal quotations omitted). The court must also assess the public interest factors of administrative difficulties, local interest, interest in trying a diversity case in a forum familiar with the law, the need to avoid unnecessary conflicts of law, and the unfairness to citizens for the purposes of jury duty. See id.

A court's analysis changes, however, when there is a forum selection clause in play. See id. at 11 (quoting Atl. Marine Constr. Co., v. United States Dist. Court, 571 U.S. 49, 63, 134 S.Ct. 568 (2013)). This new analysis hinges on a forum selection clause's validity. The clause is presumed valid unless the party attacking the clause can show it is unreasonable by proving “1) the forum selection clause was a product of fraud or overreaching; 2) the plaintiff will be ‘deprived of his day in court' due to the grave inconvenience or unfairness of the agreed upon forum; 3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or 4) enforcement would contravene a strong public policy of the forum state.” Id. at *11-12 (quoting Barnett v. DynCorp Int'l, L.L.C., 831 F.3d 296, 301 (5th Cir. 2016)).

The Defendants issued two commercial insurance property policies to the Plaintiff, one covering the period of November 2019 to November 2020, the other covering November 2020 to November 2021. Each policy contains the following clause:

SECTION IX, Subsection F. Governing Law and Jurisdiction

1. The laws of the State of New York, without regard to its conflict of laws rules that would cause the application of the laws of any other jurisdiction, shall govern the construction and interpretation of this POLICY.

2. The parties hereto do irrevocably submit to the exclusive jurisdiction of the Courts of the State of New York, and to the extent permitted by law, the parties expressly waive all rights to challenge or otherwise limit such jurisdiction.

Record Documents 20-1 at 50 and 20-2 at 48. The Defendants contend that the policies' mandatory forum selection clauses dictate where the instant case must be tried. The Plaintiff argues that the clauses are unenforceable because they violate Louisiana public policy. They point to Louisiana Revised Statute § 22:868(A)(2), which explicitly prohibits application of the forum selection clause because, as the statute states,

A. No insurance contract delivered or issued for delivery in this state and covering subjects located, resident, or to be performed in this state, or any group health and accident policy insuring a resident of this state regardless of where made or delivered, shall contain any condition, stipulation, or agreement either:

(1) Requiring it to be construed according to the laws of any other state or country except as necessary to meet the requirements of the motor vehicle financial responsibility laws of such other state or country.

(2) Depriving the courts of this state of the jurisdiction or venue of action against the insurer.

La. R.S. § 22:868(A)(1)-(2). The Defendants counter by pointing to the Fifth Circuit Court of Appeals decision in Al Copeland Invs., L.L.C. v. First Specialty Ins. Corp., 884 F.3d 540 (5th Cir. 2018), which held that the statute did not evince a public policy in Louisiana against the enforcement of forum selection clauses. The Defendants underscore the circuit court's opinion explaining that § 22:868(A) merely prohibits contract provisions that deprive Louisiana state courts of jurisdiction, not venue. See Al Copeland Invs. LLC, 884 F.3d at 543. “Section 22:868 says nothing about venue. As the district court recognized, venue and jurisdiction are separate and distinct.” Id. at 544 (internal quotations omitted). The Defendants aver that this Court should follow the circuit court's reasoning.

However, this Court agrees with the Plaintiff that while the Fifth Circuit's interpretation of § 22:868(A) may have been correct in 2018, the Louisiana legislature answered the court's decision by promptly amending the statute in 2020 to include “venue” in the language. The Court believes this amendment clearly changes whether forum selection clauses, such as the one at issue here, are enforceable in Louisiana. “As always, the starting point in statutory interpretation is the ‘language of the statute itself'.” Al Copeland Invs. LLC, 884 F.3d at 543, (quoting Red Stick Studio Dev., L.L.C. v. State ex rel. Dep't of Econ. Dev., 56 So.3d 181, 187-88 (La. 2011)) (citation omitted). The language of § 22:868(A)(2) is straightforward: forum selection clauses which deprive a Louisiana court of jurisdiction or venue are in violation of Louisiana law and policy thus rendering them unenforceable.^[1] In their Reply, the Defendants raise the new argument that § 22:868(A) is inapplicable in instances where the insurance contract or policy was not “delivered or issued for delivery” in the state of Louisiana. They contend such is the case here.^[2] The Court requested additional briefing from both parties further explaining when “delivery” of an insurance policy occurs and the meaning of the phrase “delivered or issued for delivery.” Additionally, the Court required the Plaintiff to instruct the Court on the relationship between the Plaintiff and the “first insured” Amalgamated Hospitality Management II, LLC (“Amalgamated Hospitality”).

The Defendants maintain that the...