# Olsen Securities Corporation, Inc v. Certain Underwriters at Lloyd's London

> District Court, E.D. Louisiana · January 25, 2023

URL: https://www.frixlaw.com/law-library/cases/10188839

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** January 25, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

OLSEN SECURITIES CORP., et al. CIVIL ACTION
VERSUS NO. 22-3120
CERTAIN UNDERWRITERS AT LLOYD’S SECTION: “G”(1)
LONDON, et al.

ORDER AND REASONS
Before the Court is Defendants’ Certain Underwriters at Lloyd’s London (“Underwriters”)
and other Insurers Subscribing to Certificate No. AMR-71981 (collectively, “Defendants”)
“Motion to Compel Arbitration and Stay Litigation.”1 In the motion, Defendants seek an order to
compel Plaintiffs Olsen Securities Corporation, Inc., OSC Management, Inc., Jasmine Lane
Associates, Ltd., Lancelot Square TC-17 Associates Limited Partnership, Old Man River, LP, St.
Rose Associates, Ltd., Willow Ridge Associates, Ltd., Pine Cliff TC-17 Associates Limited
Partnership, Airport Road Associates, Ltd., College Towne Partnership, Green Oaks Associates,
Ltd., and Cedar Court Associates, Ltd. (collectively, “Plaintiffs”) to arbitrate the claims against
Defendants and stay the litigation pending arbitration pursuant to 9 U.S.C. §§ 3, 208.2 Plaintiffs
oppose the motion on the grounds that contradicting language in the contract invalidates the
arbitration clause.3 Having considered the motion, the memoranda in support and in opposition,

1 Rec. Doc. 4.
2 Id. at 2.
3 Rec. Doc. 9 at 5–9.
the record, and the applicable law, the Court grants the motion to compel arbitration and stays this
litigation.
I. Background
This litigation arises out of alleged damage to Plaintiffs’ properties during Hurricane Ida.4

Plaintiffs filed a petition for damages against Defendants in the Thirty-Second Judicial District
Court for the Parish of Terrebonne on August 29, 2022.5 According to the Petition, Plaintiffs
purchased a commercial insurance policy from Defendants covering eleven properties across
several parishes against all risks of loss (the “Policy”).6 Plaintiffs aver that the properties covered
by the Policy were severely damaged by hurricane force winds sustained during Hurricane Ida on
August 29, 2021.7
On September 2, 2022, Defendants removed the action to this Court, asserting subject
matter jurisdiction based on a federal question under 28 U.S.C. §§ 1441 and 1446.8 In the Notice
of Removal, Defendants asserted that removal was proper because Policy contains an arbitration
provision governed by the Convention Act, 9 U.S.C. § 201, et seq. (the “Convention Act”).9

“Congress promulgated the Convention Act in 1970 to establish procedures for our courts to
implement” the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the
“Convention”).10 The Convention is an international treaty, ratified by Congress in 1970, which

4 Rec. Doc. 1-2 at 2–3.
5 Id. at 1.
6 Id. at 2.
7 Id. at 3.
8 Rec. Doc. 1 at 2.
9 Id. at 8.
10 McDermott Int’l, Inc. v. Lloyd’s Underwriters of London, 944 F.2d 1199, 1208 (5th Cir. 1991).
seeks to “encourage the recognition and enforcement of commercial contracts and to unify the
standard by which the agreements to arbitrate are observed, and arbitral awards are enforced in
signatory countries.”11 Therefore, Defendants contend that this Court has original jurisdiction
under the Convention Act because Defendant Underwriters at Lloyd’s, London and Defendant

HDI Global Specialty SE are foreign corporations with principle places of business in the United
Kingdom and Germany, respectively.12
On September 6, 2022, Defendants filed the instant Motion to Compel Arbitration.13 On
September 20, 2022, Plaintiffs filed a motion to continue the submission date of the instant
motion.14 On September 23, 2022, the Court granted the motion to continue.15 On September 27,
2022, Plaintiffs opposed the Motion to Compel Arbitration.16 The Court granted Defendants leave
to file their reply on October 5, 2022.17
II. Parties’ Arguments
A. Defendants’ Arguments in Support of the Motion to Compel Arbitration
In support of the Motion to Compel Arbitration, Defendants raise five arguments. First,
Defendants argue that all four requirements necessary for a court to compel arbitration under a

11 Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974).
12 Rec. Doc. 1 at 6–9. 9 U.S.C. § 205 states that “where a subject matter of an action or proceeding pending
in State court relates to an arbitration agreement or award falling under the Convention, … the defendants may, at any
time before the trial thereof, remove such action or proceeding to the district court of the United States and division
embracing the place where the action or proceeding is pending.”
13 Rec. Doc. 4.
14 Rec. Doc. 5.
15 Rec. Doc. 8.
16 Rec. Doc. 9.
17 Rec. Doc. 13.
provision governed by the Convention Act are satisfied.18 Defendants argue that the first criteria—
whether there is a written agreement to arbitrate the matter—is met because the Policy and its
arbitration clause “is a written agreement to arbitrate all matters . . . in relation to the coverages
under the Policy.”19 Defendants assert that the second criteria—whether the agreement provides

for arbitration in a Convention signatory nation—is satisfied because the Policy provides for
arbitration in New York and the United States ratified the Convention in 1970.20 Defendants
contend that the third criteria—whether the arbitration agreement arises from a commercial legal
relationship—is fulfilled because “[t]his Court has held that an arbitration clause in an insurance
agreement satisfies the requirement that the arbitration agreement arises from a commercial legal
relationship.”21 Lastly, Defendants aver that the fourth criteria—whether any party to the
agreement is not an American citizen—is satisfied because Underwriters is a citizen of the United
Kingdom comprised partially of syndicates that are also citizens of the United Kingdom and HDI
Global Specialty SE “is a citizen of Germany.”22 Thus, Defendants assert that the Convention Act
requires that the Court compel arbitration absent a finding that the agreement is “null and void,
inoperative or incapable of being performed.”23

18 See Rec. Doc. 4-1 at 6.
19 Id.
20 Id.
21 Id. (citing Gulledge v. Certain Underwriters at Lloyd’s, London, No. 18-6657, 2018 WL 4627387, at *4
(E.D. La. Sept. 26, 2018); Viator v. Dauterive Contractors, Inc., 638 F. Supp. 2d 641, 646 (E.D. La. 2009)).
22 See id. at 7.
23 Id. (quoting Freudensprung v. Offshore Tech. Servs., Inc., 379, F.3d 327, 339 (5th Cir. 2004)).
Second, Defendants argue that the “null and void exception is very narrow and only
includes internationally recognized defenses such as fraud, duress, and mistake.”24 Third,
Defendants contend that the Policy’s arbitration provision “contains a broad delegation clause that
requires that the Arbitration Panel, and not the Court, resolve all questions regarding whether
specific issues fall within [its] scope.”25 Defendants assert that the Fifth Circuit has held that a

“motion to compel should be granted in almost all cases” where an arbitration agreement contains
a delegation clause.26 Thus, Defendants conclude that the Policy’s arbitration clause “refers all
disputes, including Plaintiff’s bad faith claims, to arbitration”27 because the clause encompasses
“all matters in difference.”28
Fourth, Defendants argue that “Plaintiff is equitably estopped from objecting to []
arbitration [because] all insurers have acted in concert in evaluating and adjusting Plaintiff's
insurance claims.”29 Defendants assert that another court in the Eastern District of Louisiana found
that a plaintiff was equitably estopped from avoiding arbitration where it alleged “interdependent
and concerted misconduct” against several insurer-defendants under “a substantially identical
arbitration provision.”30 Defendants argue that here, “Plaintiffs have failed to differentiate between

24 Id. at 8 (quoting Johnson v. NCL (Bah.) Ltd., 163 F. Supp. 3d 338, 361 (E.D. La. 2016)).
25 Id. at 8.
26 Id. at 9 (quoting Kubala v. Supreme Prod. Sers., 830 F.3d 199, 202 (5th Cir. 2016)).
27 Id. (quoting Georgetown Home Owners Ass’n v. Certain Underwriters at Lloyd’s, No. 20-102, 2021 2021
WL 359735, at *15 (M.D. La. Feb. 2, 2021)).
28 Id. (citing 5556 Gasmer Mgmt. LLC v. Underwriters at Lloyd’s, London, 463 F. Supp. 3d 785, 790 (S.D.
Tex. 2020).
29 Id. at 9–10 (quoting Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524, 537 (5th Cir. 2000)).
30 Id. at 10 (citing Clean Pro Carpet & Upholstery Care Inc. v. Upper Pontalba of Metairie Condo Ass'n,
No. 20-1550, 2021 WL 638117, at *6 (E.D. La. Feb. 18, 2021)).
the alleged wrongdoing of any one insurer.”31 Thus, Defendants contend that the doctrine of
equitable estoppel applies to Plaintiffs’ claims because Plaintiffs’ allegations involve the
“interdependent and concerted conduct of all insurers in the adjustment of the claim.”32
Fifth, Defendants argue that Louisiana law does not prevent the enforcement of the
arbitration clause.33 Defendants assert that the Fifth Circuit has made clear that the Convention

Act supersedes state law.34 Thus, Defendants conclude that the Court should grant the instant
Motion to Compel Arbitration.35
B. Plaintiffs’ Arguments in Opposition to the Motion to Compel Arbitration
In opposition to Defendants’ Motion to Compel Arbitration, Plaintiffs contend that the
arbitration provision was “superseded by later amendatory endorsements that [] change the
preceding terms of the policy.”36 Plaintiffs specifically argue that the Policy’s endorsements
contain language directing Plaintiffs how to serve Defendants (the “service of suit clauses”)
“specifically stat[ing] that they change the Policy terms that precede them.”37 Plaintiffs contend
that the service of suit clauses either supersede the arbitration clause or create ambiguity in the
Policy’s terms that must be resolved in favor of the Plaintiffs.38 Thus, Plaintiffs assert that the

arbitration clause “must be rendered null and void as the result of a clear mistake in drafting the

31 Id. at 14.
32 Id. at 13.
33 See id. at 14–15.
34 Id. at 14 (citing McDonnel Grp., L.L.C. v. Great Lakes Ins. Se, 923 F.3d 427, 431–32 (5th Cir. 2019)).
35 Id. at 15.
36 Rec. Doc. 9 at 5–6.
37 Id. at 7.
38 Id.
subject Policy” because the “amendatory endorsements [] are so inapposite to the language” of the
arbitration clause.39
Alternatively, Plaintiffs argue that this Court should deny Defendants’ motion as to the
Plaintiffs’ bad faith and breach of the duty of good faith and fair dealing under Louisiana law if it
finds that the arbitration clause applies to Plaintiffs’ claims.40 Plaintiffs assert that a court must

“determine whether the parties agreed to arbitrate” a particular dispute when deciding a motion to
compel arbitration.41 Plaintiffs contend that the alleged arbitration agreement is limited only to the
breach of contract action because the clause states that “[t]he Arbitration Tribunal may not award
exemplary, punitive, multiple, consequential, or other damages of a similar nature.”42 Thus,
Plaintiffs argue that the Court should allow “Plaintiffs’ claims against Defendants for violations
of the [Louisiana Revised Statute §§ 22:1892, 22:1973] and for breach of duty of good faith and
fair dealing” to proceed in this Court upon a finding that the arbitration clause applies to Plaintiffs’
claims.43
C. Defendants’ Reply Arguments in Further Support of Motion

In their reply, Defendants raise three arguments. First, Defendants re-assert their argument
that this action is governed by the Convention.44 Second, Defendants argue that the service of suit
clauses in the Policy do not supersede the arbitration clause.45 Defendants aver that the Fifth

39 Id.
40 Id. at 10.
41 Id. at 9.
42 Id. at 10.
43 Id. at 11.
44 Rec. Doc. 14 at 2.
45 Id. at 3.
Circuit has found that service of suit clauses do not negate arbitration clauses.46 Thus, Defendants
contend that the service of suit provision in the endorsement does not prevent enforcement of the
arbitration clause.47 Third, Defendants assert that the delegation clause in the arbitration provision
at issue is clear evidence of intent to arbitrate all claims, disputes, and other matters pertaining to
the Policy.48 Thus, Defendants argue that this Court should grant the instant motion, stay this

litigation, and order the parties to arbitration.49
III. Legal Standard
Agreements arising under the Convention are subject to the provisions of the Federal
Arbitration Act (“FAA”) unless the FAA is in “conflict” with the Convention.50 The FAA was
enacted in order to “allow[] a party to . . . an arbitration agreement to petition any United States
district court for an order directing that such arbitration proceed in the manner provided for in such
agreement.”51 In Iberia Credit Bureau, Inc. v. Cingular Wireless LLC, the United States Court of
Appeals for the Fifth Circuit explained that the FAA was “in large part motivated by the goal of
eliminating the courts’ historic hostility to arbitration agreements.”52 The Fifth Circuit further

explained that “Section 2 of the FAA puts arbitration agreements on the same footing as other

46 Id. (citing McDermott Int’l, 944 F.2d at 1199).
47 Id. at 5–6.
48 See id. at 6–7.
49 Id. at 7.
50 GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S.Ct. 1637, 1644
(2020).
51 Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989) (internal
quotation marks omitted).
52 379 F.3d 159, 166 (5th Cir. 2004).
contracts.”53 This means that, “as a matter of federal law, arbitration agreements and clauses are
to be enforced unless they are invalid under principles of state law that govern all contracts.”54
Under the FAA, there is a “strong federal policy in favor of enforcing arbitration
agreements.”55 Section 3 of the FAA provides:

If any suit or proceeding be brought in any of the courts of the United States upon
any issue referable to arbitration . . . the court . . . shall on application of one of the
parties stay the trial of the action until such arbitration has been had in accordance
with the terms of the agreement. . . .56

“[I]f the issues in a case are within the reach of that [arbitration] agreement, the district court has
no discretion under section 3 to deny the stay.”57
IV. Analysis
A. Whether There is a Valid Agreement to Arbitrate Plaintiff’s Claims
The Convention Act incorporates the FAA except for the few provisions where the two
laws conflict.58 The Supreme Court has noted the “emphatic federal policy in favor of arbitral
dispute resolution,” which “applies with special force in the field of international commerce.”59
The Fifth Circuit has stated that “courts conduct only a very limited inquiry” when “determining

53 Id.
54 Id.
55 Texaco Expl. & Prod. Co. v. AmClyde Engineered Prod. Co., 243 F.3d 906, 909 (5th Cir. 2001) (citing
Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 217 (1985)).
56 9 U.S.C. § 3.
57 Texaco Expl. & Prod. Co., 243 F.3d at 909 (citing Hornbeck Offshore Corp. v. Coastal Carriers Corp.,
981 F.2d 752, 754 (5th Cir. 1993)).
58McDermott Int’l., 944 F.2d at (“The Convention Act incorporates the FAA except where the FAA conflicts
with the Convention Act’s few specific provisions.”) (citing 9 U.S.C. § 208).
59 Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985).
whether the Convention requires compelling arbitration in a given case.”60 Therefore, a court must
grant a motion to compel arbitration absent a finding that the subject “agreement is null and void,
inoperative, or incapable of being performed.”61 A court must grant a motion to compel arbitration
if the following requirements are met: “(1) there is a written agreement to arbitrate the matter; (2)

the agreement provides for arbitration in a Convention signatory nation; (3) the agreement arises
out of a commercial legal relationship; and (4) a party to the agreement is not an American
citizen.’”62
Plaintiffs only contest whether there is a valid, written arbitration agreement in the instant
Policy.63 Plaintiffs do not contest any of the other requirements under the Convention Act.
Plaintiffs argue that the Policy’s service of suit clauses invalidate the arbitration clause because
select provisions state that it “changes the policy.”64 Alternatively, Plaintiffs assert that the
subsequent language creates ambiguity which should be resolved in favor of the Plaintiffs.65 The
service of suit clauses state that Defendants “will submit to the jurisdiction of a Court of competent
jurisdiction within the United States” to resolve any disputes over amounts claimed to be due by
Plaintiffs.66

60 Freudensprung, 379 F.3d at 339 (citing Francisco v. STOLT ACHIEVEMENT MT, 293 F.3d 270, 273 (5th
Cir. 2002)).
61 See 9 U.S.C. § 206; Convention on the Recognition and Enforcement of Foreign Arbitral Awards art. II(3),
June 10, 1958, 330 U.N.T.S. 3.
62 Id. (quoting Sedco, Inc. v. Petroleos Mexicanos Mexican Nat’l Oil Co., 767 F.2d 1140, 1146 (5th Cir.
1985); Francisco, 293 F.3d at 273).
63 Rec. Doc. 9 at 5.
64 Id. at 7.
65 Id. at 6.
66 Rec. Doc. 9-1 at 62.
Under Louisiana law, insurance policies must be construed as a whole, with each provision
in the policy interpreted in the light of other provisions so that each is given meaning.67 The Fifth
Circuit has stated that “[e]ndorsements affixed to a policy of insurance are to be construed in
connection with the printed provisions of the policy and the entire agreement harmonized, if
possible.”68 The Fifth Circuit considered similar language in a prior rendition of Defendant

Underwriters’ arbitration and service of suit clauses in McDermott International, Inc. v. Lloyd’s
Underwriters of London.69 In McDermott, Underwriters provided an all-risks policy to the
plaintiff, and demanded that the plaintiff submit to arbitration of the issues arising out of the denial
of coverage.70 The Fifth Circuit held that the arbitration and service of suit clauses were “co-equal”
and that, when interpreted together, the service of suit clause “could be interpreted [as] consistent
with the arbitration clause to apply to suits concerning the enforcement of an arbitration award.”71
The Court found that it was unlikely that Underwriters’ “would secure an almost infinitely broad
arbitration clause and also permit [the plaintiff] to attack it in the court of its choice.”72
This Court finds that Defendant’s service of suit clauses do not supersede the language of
the arbitration clause.73 The contractual language in Defendants’ arbitration clause and service of

67 See Peterson v. Schimek, 98-1712 (La. 03/02/99), 729 So. 2d 1024, 1029.
68 St. Paul Surplus Lines Ins. Co. v. Settoon Towing, LLC, 720 F.3d 268, 279 (5th Cir. 2013).
69 The Fifth Circuit considered the Service of Suit provision and arbitration clause on appeal and writ of
mandamus from the district court’s order remanding the matter to state court. McDermott Int’l, 944 F.2d at 1201.
70 Id.
71 Id. (citing NECA Ins. Ltd. v. Nat’l Union Fire Ins. Co. of Pitt., 595 F. Supp. 955, 958 (S.D.N.Y. 1984))
(finding that arbitration is not waived by a service of suit clause because the clause was only designed to guarantee
the enforcement of arbitration awards).
72 Id. at 1205.
73 Several other courts in the Eastern District of Louisiana have found that language of the arbitration clause
and Service of Suit provisions in the endorsements do not prevent enforcement of the arbitration clause. 1010
Common, LLC v. Certain Underwriters at Lloyd’s, London, No. 20-2326, 2020 WL 7342752 at *8–10 (Dec. 14, 2020)
suit provisions mirrors that of the language in McDermott. The Court further finds that clauses do
not create ambiguity that necessitates denial of the instant motion because the Policy, as one
harmonious document, can be read such that the service of suit provisions apply to suits for
enforcement of a final arbitration award.74 Furthermore, Plaintiffs cite no authority accepting this

argument that service of suit provisions supersede or void an arbitration clause in an insurance
policy or otherwise create ambiguity which voids the arbitration clause. Thus, the Policy’s
arbitration clause satisfies the requirements of the Convention Act and Plaintiffs have failed to
overcome their burden to establish the invalidity of the Policy’s arbitration clause, especially given
the strong presumption in favor of arbitration that applies with “special force” to arbitration clauses
falling under the Convention.75
B. Whether the Arbitration Clause Applies to Plaintiffs’ Bad Faith and Breach of Duty of
Good Faith and Fair Dealing Claims
Having found above that the parties entered into an arbitration agreement; the Court now
turns to whether Plaintiffs’ Louisiana law claims are covered by the agreement.76 Plaintiffs contend
that their extracontractual claims of bad faith and breach of the duty of good faith and fair dealing
do not fall within the scope of the Policy’s arbitration provision.77 Plaintiffs point out that the

(Lemelle, J.); Woodward Design + Build, LLC v. Certain Underwriters at Lloyd’s London, No. 19-14017, 2020 WL
5793715 at *3–4 (E.D. La. Sept. 29, 2020) (Guidry, J.) (finding that the service of suit provision in Defendant’s
endorsements did not prevent enforcement of the arbitration clause).
74 See, e.g., id.; Farmers Rice Milling v. Certain Underwriters at Lloyd’s London, No. 21-503, Rec. Doc.
(M.D. La. Sept. 14, 2022); NECA Ins. Ltd., 595 F. Supp. at 958.
75 See Mitsubishi Motors Corp., 473 U.S. at 638–40; see also Carter, 362 F.3d at 297.
76 See Kubala, 830 F.3d at 201.
77 Rec. Doc. 9 at 9–10.
Policy states that the arbitration tribunal “may not award exemplary, punitive, multiple,
consequential, or other damages of a similar nature.”78
The Fifth Circuit has held that “whenever the scope of an arbitration clause is in question,
the court should construe the clause in favor of arbitration.”79 Typically, courts have rejected the

argument that bad faith claims fall outside the scope of the arbitration agreement where the clause
contains language that all claims and disputes related to the contract are subject to arbitration.80
Here, the arbitration clause provides that “all matters in difference” between Plaintiffs and
Defendants are subject to arbitration. This Court finds that these claims derive directly from the
Policy and therefore are subject to the arbitration clause. Without the existence of that contractual
relationship between the parties, these claims would not exist. Therefore, Plaintiffs’ Louisiana law
claims are governed by arbitration provision because the delegation clause governs “all matters in
difference” arising from the Policy.81
V. Conclusion
Based on the foregoing,

IT IS HEREBY ORDERED that Defendants’ Motion to Compel Arbitration82 is
GRANTED.

78 Rec. Doc. 9-1 at 38.
79 Sedco, Inc., 767 F.2d at 1145.
80 See, e.g., City of Kenner v. Certain Underwriters at Lloyd’s London, No. 2022 WL 16961130 at *3 (E.D.
La. Nov. 16, 2022) (Vance, J.) (granting Defendants’ motion to compel arbitration and ordering parties to arbitrate
their breach of duty of good faith and fair dealing claim alongside the breach of contract claim); STMB Props., LLC
v. Certain Underwriters at Lloyd’s London, No. 22-2229, 2022 WL 3924313 at *2–3 (E.D. La. Aug. 31, 2022) (Africk,
J.) (holding same); Georgetown Home Owners Ass’n, Inc. v. Certain Underwriters at Lloyd’s London, No. 20-102,
2021 WL 359735 at *15 (M.D. La. Feb. 2, 2021) (deGravelles, J.) (holding same).
81 See Georgetown Home Owners Ass’n, Inc. 2021 WL 359735 at *15.
82 Rec. Doc. 4.
IT IS FURTHER ORDERED that the above-captioned matter is STAYED AND
ADMINISTRATIVELY CLOSED pending arbitration.
NEW ORLEANS, LOUISIANA, this 25th day of January, 2023.

NANNETTE JOLIVETTE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT

14

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10188839. Public record. Not legal advice.