Ten G, LLC v. Certain Underwriters at Lloyd's London

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

TEN G, LLC CIVIL ACTION

VERSUS NO. 22-4426

CERTAIN UNDERWRITERS AT SECTION: D(5)

LLOYD’S LONDON, ET AL.

ORDER AND REASONS

Before the Court is Defendant’s Motion to Compel Arbitration and Dismiss

Claims or Alternatively Stay Litigation Pending Arbitration, filed by Certain

Underwriters at Lloyd’s, London severally subscribing to Certificate No. AMR-63312-

03, Indian Harbor Insurance Company, QBE Specialty Insurance Company,

Steadfast Insurance Company, General Security Indemnity Company of Arizona,

United Specialty Insurance Company, Lexington Insurance Company, HDI Global

Specialty SE, Old Republic Union Insurance Company, GeoVera Specialty Insurance

Company, and Transverse Specialty Insurance Company (collectively,

“Defendants”).1 Ten G, LLC (“Ten G”), opposes the Motion,2 and Defendants have

filed a Reply.3 The Court also allowed Ten G to filed a Sur-Reply brief.4

After careful consideration of the parties’ memoranda, the record, and the

applicable law, the Motion is GRANTED in part and DENIED in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises from alleged damage to property owned by Ten G that occurred

1 R. Doc. 10.

2 R. Doc. 12.

3 R. Doc. 19.

4 R. Doc. 21.

when Hurricane Ida made landfall in Louisiana on or about August 29, 2021.

Defendants, which include both foreign and domestic insurers, had issued a policy of

insurance bearing policy number 840883, to Ten G for its commercial property located

in Reserve, Louisiana.5 That policy was in effect on August 29, 2021.6 Ten G alleges

that it reported the damage by filing a claim and that Defendants sent an adjuster to

inspect the property on September 6, 2021.7 Ten G asserts that Defendants also had

an engineer inspect the property on September 21, 2021.8 According to Ten G,

Defendants provided an initial statement of loss on December 4, 2021, indicating that

it would cost $2,666,164.37 to repair the property.9 Ten G alleges that it submitted

a demand for payment on February 2, 2022 and submitted an estimate from Strategic

Claim Consultants, valuing the damage sustained in the amount of $3,749,864.53.10

Ten G claims that Defendants issued a check on February 11, 2022 in the amount of

$1,775,864.53 for the property damage, which was the first payment issued by

Defendants. Ten G points out that this was done “158 days following the initial

inspection of the Property by Defendants’ chosen adjuster.”11

On or about September 21, 2022, Ten G filed a Petition for Damages against

Defendants in the 40th Judicial District Court for the Parish of St. John the Baptist,

Louisiana, asserting that Defendants failed to adequately adjust, investigate, and

timely pay its insurance claim by severely undervaluing the damages sustained by a

5 R. Doc. 10-1 at p. 2; R. Doc. 12 at p. 2.

6 R. Doc. 10-1 at p. 2; R. Doc. 12 at p. 2.

7 R. Doc. 1-1 at ¶ 9.

8 Id.

9 Id. at ¶ 10.

10 Id. at ¶ 11.

11 Id. at ¶ 12.

covered event.12 Ten G alleges that Defendants’ actions in adjusting its claim and

failing to timely compensate Ten G for the covered losses sustained to the property

were arbitrary, capricious, and/or without probable cause under La. R.S. 22:1892 and

La. R.S. 22:1973.13 As such, Ten G seeks damages, including bad faith penalties

under §§ 1892 and 1973, attorney’s fees and costs, and “[a]ny and all other relief that

the Court deems just and proper.”14

Defendants removed the matter to this Court on November 7, 2022 pursuant

to 28 U.S.C. §§ 1441 and 1446 on the grounds that there is a valid arbitration

agreement in the insurance policy in dispute that falls under the Convention on the

Recognition and Enforcement of Foreign Arbitral Awards (hereafter, “the

Convention”).15 Defendants contend that the Court has original jurisdiction over this

case based upon 9 U.S.C. §§ 202, 203, and 205.16 Defendants assert that the

insurance policy contains an arbitration clause that states, “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 insurance, shall be referred to an Arbitration Tribunal

in the manner hereinafter set out.”17 The arbitration clause also specifies that, “The

Arbitration Tribunal may not award exemplary, punitive, multiple, consequential, or

other damages of a similar nature.”18 Defendants assert in the Notice of Removal

12 Id. at ¶ 13.

13 Id. at ¶¶ 14-15.

14 Id. at ¶¶ 15-17.

15 R. Doc. 1 at ¶ I (citing 9 U.S.C. § 201, et seq.).

16 R. Doc. 1 at ¶ I.

17 Id. at ¶ III (quoting R. Doc. 1-2 at p. 24).

18 R. Doc. 1 at ¶ III (quoting R. Doc. 1-2 at p. 24).

that they invoked their right to arbitrate all matters in dispute with Ten G by letter

dated March 4, 2022.19

Defendants filed the instant Motion on February 1, 2023, seeking to compel

arbitration and dismiss Ten G’s claims or, alternatively, to stay litigation pending

arbitration pursuant to the Convention.20 Defendants assert that the arbitration

clause in Ten G’s policy is triggered because the parties dispute Ten G’s Hurricane

Ida-related claim under the policy.21 Although arbitration agreements in domestic

insurance policies usually are not enforceable in Louisiana, Defendants argue that

Louisiana law does not negate the arbitration clause in this case because it involves

an international commercial relationship subject to the Convention.22 Defendants

contend that arbitration should be compelled under the Convention if the following

four requirements are met: (1) there is an agreement in writing to arbitrate the

dispute; (2) the agreement provides for arbitration in the territory of a Convention

signatory; (3) the agreement arises out of a commercial legal relationship; and (4) a

party to the agreement is not an American citizen.23 Defendants claim that there can

be no dispute that all four requirements are met in this case because there is a written

agreement to arbitrate, it requires arbitration in New York, which is within the

territory of the United States, a Convention signatory, the arbitration agreement

arises out of a commercial relationship, and at least two of the parties are not United

19 R. Doc. 1 at ¶ III.

20 R. Doc. 10.

21 R. Doc. 10-1 at p. 4.

22 Id. (citing La. R.S. 22:868).

23 R. Doc. 10-1 at pp. 4-5 (quoting Francisco v. STOLT ACHIEVEMENT MT, 293 F.3d 270, 273 (5th

Cir. 2002)) (internal quotation marks omitted).

States citizens.24

Defendants further assert that the insurance policy contains a broad

delegation clause that includes Ten G’s extra-contractual claims, and that such a

broad delegation clause creates a “presumption of arbitrability” and constitutes “clear

and unmistakable evidence” that it covers all matters in the agreement.25

Defendants claim that both this Court and the Fifth Circuit have held that identical

or substantially similar policy language requires arbitration of all disputes between

the parties.26 Defendants then assert that while they are entitled to a stay pending

arbitration,27 if the claims involved are arbitrable, a court may dismiss the action

instead of staying it.28 Defendants argue that because all of Ten G’s claims are

subject to arbitration, “the weight of authority supports dismissal.”29 As such,

Defendants assert that the Convention requires arbitration of all of Ten G’s claims

and that this Court should dismiss the case in favor of arbitration.30

Ten G does not dispute that the Convention compels arbitration for its property

coverage dispute and contractual claims, but argues that the Motion should be denied

24 R. Doc. 10-1 at p. 5. Elsewhere in the Motion, Defendants assert that, “Certain Underwriters at

Lloyd’s, London severally subscribing to Certificate No. AMR-63312-03 are foreign insurers domiciled

in the United Kingdom with their principal place of business in London, England. HDI Global

Specialty SE (“HDI”) is a foreign insurer domiciled in Germany with its principal place of business in

Hanover, Germany.” Id. at p. 2.

25 Id. at p. 5 (citing Sedco, Inc. v. Petroleos Mexicanos Mexican Nat’l Oil Co., 767 F.2d 1140, 1144-45

(5th Cir. 1985) and quoting Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d

522, 538 (5th Cir. 2019)).

26 R. Doc. 10-1 at pp. 5-6 (citing authority).

27 Id. (citing 9 U.S.C. §§ 3, 4).

28 R. Doc. 10-1 at p. 6 (citing Green Tree Fin. Corp.-Ala. V. Randolph, 531 U.S. 79, 86-87, 121 S.Ct. 513,

148 L.Ed.2d 373 (2000); Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992)).

29 R. Doc. 10-1 at p. 6 (citing McDonnel Grp., LLC v. Great Lakes Ins. SE, UK Branch, 923 F.3d, 427,

431 (5th Cir. 2019)).

30 R. Doc. 10-1 at p. 7.

because its claims for bad faith penalties under Louisiana law clearly fall outside the

scope of the arbitration clause, which states that, “The Arbitration Tribunal may not

award exemplary, punitive, multiple, or other damages of a similar nature.”31 Ten G

asserts that the language of the arbitration clause “evidences a clear intent to exclude

the instant claims from arbitration.”32 Ten G claims that bad faith, punitive claims

and damages do not arise from the insurance contract, but from the insurer’s violation

of statutory duties.33 Ten G also asserts that Defendants waived their rights to

remove bad faith claims based upon the foregoing exclusionary language in the

arbitration clause.34 Relying upon the Fifth Circuit’s decision in Ensco Int’l, Inc. v.

Certain Underwriters at Lloyd’s, Ten G argues that while the arbitration clause does

not specifically include the word “waiver,” the foregoing language “clearly operates

as a waiver of the insurers’ right to remove bad faith claims by the expressed

limitation on the Tribunal’s jurisdiction over bad faith type damages.”35 Ten G

asserts that Defendants ignore this provision of the arbitration clause in their Motion.

Ten G argues that the Motion should be denied because Defendants have clearly and

unambiguously waived their right to remove Ten G’s bad faith claims to arbitration.36

In response, Defendants first assert that Ten G’s argument that it has not

asserted any breach of contract claims contradicts the allegations in its state court

Petition, wherein Ten G alleges that Defendants failed to adequately adjust,

31 R. Doc. 12 at pp. 1-2.

32 Id. at p. 4.

33 Id. at p. 5 (citing Johno v. Doe, 2015-0737 (La. App. 4 Cir. 3/9/16), 187 So.3d 581, 585).

34 R. Doc. 12 at pp. 6-8.

35 Id. at pp. 7-8 (citing Ensco, 579 F.3d 442, 444-48 (5th Cir. 2009)).

36 R. Doc. 12 at pp. 8-9.

investigate, and timely pay its insurance claim and requests money damages, in

addition to and separately from, statutory penalties.37 Defendants further assert that

the Fifth Circuit and district courts within it, including this one, have already

rejected Ten G’s argument that the exclusionary language in the arbitration clause

shows an intent to exclude bad faith claims from arbitration, and that courts

routinely order all claims to arbitration.38 Defendants claim that courts have likewise

rejected Ten G’s argument that a right to removal can be waived based upon the

exclusionary language contained in the arbitration clause.39 Defendants maintain

that the Convention requires arbitration of all of Ten G’s claims against them that

arise from its dispute over its Hurricane Ida insurance claim.40

In its Sur-Reply brief, Ten G asserts, for the first time, that Defendants’ Motion

should be denied as premature because this action is subject to the Court’s Hurricane

Ida Case Management Order (“CMO”) and Streamlined Settlement Program

(“SSP”).41 Ten G claims that pursuant to the CMO, both parties had the opportunity

to opt out of the SSP within 15 days of entry of the CMO on November 8, 2022.42 Ten

G points out that the CMO specifically states that if the parties do not seek to opt out,

37 R. Doc. 19 at pp. 1-2 (citing R. Doc. 1-1 at ¶¶ 13, 17, & 18).

38 R. Doc. 19 at p. 2 (citing Woodmen of the World Life Ins. Co. v. Lewis, 118 Fed.Appx. 826, 831 (5th

Cir. 2004); 419 Carondelet, LLC v. Certain Underwriters at Lloyd’s, London, Civ. A. No. 22-4311, 2023

WL 143318 (E.D. La. Jan. 10, 2023) (Vitter, J.); Academy of Sacred Heart of New Orleans v. Certain

Underwriters at Lloyd’s London, Civ. A. No. 22-4401, 2023 WL 246832 (E.D. La. Jan. 18, 2023) (Africk,

J.); STMB Properties, LLC v. Certain Underwriters at Lloyd’s London, Civ. A. No. 22-2229, 2022 WL

3924313 (E.D. La. Aug. 31, 2022) (Africk, J.); Figear, LLC v. Velocity Risk Underwriters Claims, Civ.

A. No. 22-01094, 2022 WL 2812980 (E.D. La. July 18, 2022) (Fallon, J.); Georgetown Home Owners

Ass’n v. Certain Underwriters at Lloyd’s, Civ. A. No. 20-102-JWD-SDJ, 2021 WL 359735 (M.D. La. Feb.

2, 2021) (deGravelles, J.)).

39 R. Doc. 19 at p. 3 (citing Figear, Civ. A. No. 22-01094, 2022 WL 2812980 at *5).

40 R. Doc. 19 at pp. 3-4.

41 R. Doc. 21 at p. 1.

42 Id. (citing R. Doc. 6).

they are electing to participate in the SSP.43 Ten G then seems to suggest that

because neither party opted out, they have elected to participate in the SSP, thereby

rendering Defendants’ Motion premature.44

II. LEGAL STANDARD

The Convention on the Recognition and Enforcement of Foreign Arbitration

Awards (the “Convention”) applies when a party seeks to compel arbitration outside

the United States or attempts to enforce an arbitration agreement “arising out of a

legal relationship, whether contractual or not, which is considered as commercial”

and is not “entirely between citizens of the United States.”45 The purpose of the

Convention is 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.”46 In determining whether the

Convention requires compelling arbitration, courts must “conduct only a very limited

inquiry.”47 According to the Fifth Circuit, a court should compel arbitration only if

the following four prerequisites 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.48 “Federal policy and precedent

43 R. Doc. 21 at pp. 1-2 (quoting R. Doc. 6) (internal quotation marks omitted).

44 R. Doc. 21 at pp. 1-2.

45 9 U.S.C. § 202.

46 419 Carondelet, LLC v. Certain Underwriters at Lloyd’s, London, Civ. A. No. 22-4311, 2023 WL

143318, at *2 (E.D. La. Jan. 10, 2023) (quoting Scherk v. Alberto-Culver, Co., 417 U.S. 506 n.15, 94

S.Ct. 2449, 41 L.Ed.2d 270 (1974)) (internal quotation marks omitted).

47 Freudensprung v. Offshore Technical Services, Inc., 379 F.3d 327, 339 (5th Cir. 2004) (citation

omitted).

48 Freudensprung, 379 F.3d at 339.

emphasize a strong presumption in favor of the enforcement of arbitration clauses.”49

The Fifth Circuit has held that, “A presumption of arbitrability exists requiring that

whenever the scope of an arbitration clause is fairly debatable or reasonably in doubt,

the court should decide the question of construction in favor of arbitration.”50

III. ANALYSIS

A. Waiver

1. Defendants did not waive their rights to removal.

While not a model of clarity, Ten G seems to argue in its Opposition brief that

Defendants waived their rights to arbitrate Ten G’s bad faith claims and that

Defendants waived their rights to remove Ten G’s bad faith claims to federal court

based upon the exclusionary language contained in the arbitration clause.51

Regarding removal, Ten G asserts that, “Defendants waived its [sic] removal rights

based on the language of the policy,” and that, “Defendants waived their rights to

remove bad faith claims.”52 Ten G then cites a Fifth Circuit case, Ensco Intern., Inc.

v. Certain Underwriters at Lloyd’s, which set forth three ways by which a party may

waive its removal rights under the Convention.”53 Ten G then seems to conflate

49 Figear, LLC v. Velocity Risk Underwriters Claims, Civ. A. No. 22-01094, 2022 WL 2812980, at *1

(E.D. La. July 18, 2022) (citing Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 297 (5th Cir.

2004)). See, City of Kenner v. Certain Underwriters at Lloyd’s London, Civ. A. No. 22-2167, 2022 WL

16961130, at *1 (E.D. La. Nov. 16, 2022) (Vance, J.) (citing Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 4, 103 S.Ct. 927, 74 L.Ed. 2d 765 (1983); 9 U.S.C. § 2) (“Federal courts apply

a heavy presumption in favor of arbitration.”).

50 Mar-Len of Louisiana, Inc. v. Parsons-Gilbane, 773 F.2d 633, 635-36 (5th Cir. 1985) (citing United

Steelworkers of America v. Warrior & Gulf Navigational Co., 363 U.S. 574, 583, 80 S.Ct. 1347, 1353, 4

L.Ed.2d 1409 (1960)). See, Sedco, Inc. v. Petroleos Mexicanos Mexican Nat. Oil Co. (Pemex), 767 F.2d

1140, 1145 (5th Cir. 1985) (citing authority) (“Thus, as a general rule, whenever the scope of an

arbitration clause is in question, the court should construe the clause in favor of arbitration.”).

51 R. Doc. 12 at pp. 6-9.

52 Id. at p. 6.

53 Id. (citing Ensco, 579 F.3d 442, 444-45 (5th Cir. 2009)).

waiver of the right to arbitrate with waiver of the right to remove when it cites the

purported waiver language contained in the arbitration clause and asserts that,

“Defendants could not be more explicit in their clear waiver of arbitration of bad faith

claims,” and that, “This waiver is clear and unambiguous – Plaintiff’s bad faith claims

and damages arising from same are excluded from arbitration.”54 Ten G again cites

Ensco for the proposition that the language in the arbitration clause “clearly operates

as a waiver of the insurers’ right to remove bad faith claims by the expressed

limitation on the Tribunal’s jurisdiction over bad faith type damages.”55

To the extent Ten G claims that Defendants have waived their right to remove

Ten G’s claims to federal court, Ten G cites a Fifth Circuit case, Freudensprung v.

Offshore Technical Services, Inc., for the notion that the Convention “requires the

district court to order arbitration . . . unless it finds that the said agreement is null

and void, inoperable or incapable of being performed.”56 Ten G then seems to discuss

removal in the context of “the so called ‘null and void’ clause,”57 but never actually

alleges that the arbitration clause at issue is null or void.58 Ten G then correctly

asserts that the Fifth Circuit has recognized that there are three ways by which a

party may waive its removal rights: (1) by explicitly stating that it is doing so; (2) by

allowing the other party the right to choose venue; or (3) by establishing an exclusive

54 R. Doc. 12 at p. 7.

55 Id. at pp. 7-8 (citing Ensco, 579 F.3d at 444-45).

56 R. Doc. 12 at p. 6 (quoting Freudensprung, 379 F.3d 327, 339 (5th Cir. 2004)) (internal quotation

marks omitted).

57 R. Doc. 12 at p. 6.

58 See, generally, R. Doc. 12.

venue within the contract.59 While Ten G recognizes these are the three avenues by

which a party may waive its removal rights “under the Convention,”60 Ten G

inexplicably fails to allege or explain which avenue is applicable here. Instead, Ten

G merely cites additional Fifth Circuit cases indicating that a waiver of removal

rights need not contain explicit words,61 that a waiver may be implicit to give effect

to all contractual provisions,62 and that, “Courts generally apply the clear statement

rule to determine waiver.”63 Ten G, however, does not allege any facts or cite any

legal authority to support its position that Defendants waived their rights to removal

based upon the exclusionary language in the arbitration clause. The Fifth Circuit

has made clear that, “For a contractual clause to prevent a party from exercising its

right to removal, the clause must give a clear and unequivocal waiver of that right.”64

The Court finds that Ten G has failed to show that Defendants clearly and

unequivocally waived their rights to removal.

2. Defendants did not waive their rights to arbitrate Ten G’s bad

faith claims.

Ten G also asserts in its Opposition brief that Defendants waived their right

to arbitrate its bad faith claims through the provision in the arbitration clause that

states, “The Arbitration Tribunal may not award exemplary, punitive, multiple, or

59 R. Doc. 12 at p. 6 (citing Ensco, 579 F.3d at 443-44 (quoting City of New Orleans v. Mun. Admin.

Servs., Inc., 376 F.3d 501, 504 (5th Cir. 2004))).

60 R. Doc. 12 at p. 6.

61 R. Doc. 12 at p. 6 (citing Southland Oil Co. v. Miss. Ins. Guar. Ass’n, 182 Fed.Appx. 358, 361 (5th

Cir. 2006)).

62 R. Doc. 12 at p. 6 (citing Ensco, 579 F.3d at 444).

63 R. Doc. 12 at p. 6 (citing Ensco, 579 F.3d at 447).

64 Ensco, 579 F.3d at 443 (quoting City of New Orleans, 376 F.3d at 504) (internal quotation marks

omitted).

other damages of a similar nature.”65 At least two other Sections of this Court have

rejected these same arguments. In Figear, LLC v. Velocity Risk Underwriters Claims,

the plaintiff argued that its bad faith claims were excluded from the arbitration

clause entered into by the parties, which is nearly identical to the arbitration clause

in this case and provided that:

All matters in dispute between you and us (referred to in this policy as

“the parties”) in relation to this insurance, including this policy’s

formation and validity, and whether arising during or after the period

of this insurance, shall be referred to an Arbitration Tribunal in the

manner described below . . . . The Arbitration Tribunal may not award

exemplary, punitive, multiple, or other damages of a similar nature.66

Addressing the plaintiff’s waiver argument, the Figear court recognized that, “[i]n

light of the federal policy favoring arbitration, there is a strong presumption against

finding a waiver of arbitration.”67 The Figear court held that, “Waiver must be

explicit, clear, and unequivocal,” and that the plaintiff had failed to cite any cases

“which would indicate that this language can operate as an explicit waiver of the right

to arbitrate any claims which might result in exemplary, punitive, multiple, or other

damages of a similar nature.”68 The Figear court further held that, “At most, this

clause limits the damages which an arbitrator might order in the event that Plaintiff

was to prevail at arbitration.”69 The Figear court concluded that, “Especially in light

of the strong presumption that arbitration is not waived, the Court declines to find

65 R. Doc. 12 at p. 7.

66 Figear, Civ. A. No. 22-01094, 2022 WL 2812980, at *2 (E.D. La. July 18, 2022) (citation omitted).

67 Id. (quoting Al Rushaid v. Nat’l Oilwell Varco, Inc., 757 F.3d 416, 421-22 (5th Cir. 2014)) (cleaned

up by Figear) (internal quotation marks omitted).

68 Figear, Civ. A. No. 22-01094, 2022 WL 2812980 at *2.

69 Id.

here a clear and unequivocal waiver of the right to arbitrate any claim which might

result in exemplary, punitive, multiple, or other damages of a similar nature.”70 As

such, the court in that case found that the defendants in that case had not waived

their right to arbitrate the plaintiff’s bad faith claim.

Another Section of this court, adopting the Figear court’s analysis, reached the

same conclusion in STMB Properties, LLC v. Certain Underwriters at Lloyd’s

London.71 The arbitration clause in STMB contained the same exclusionary language

as Ten G’s policy, namely that, “The Arbitration Tribunal may not award exemplary,

punitive, multiple, or other damages of a similar nature.”72 Citing the language

quoted above from Figear, the STMB court concluded that Figear court had

“identified the crucial distinction—operative in the instant case as well—between the

first-order question of whether the Arbitration Tribunal has the authority to decide

if penalties and fees are warranted pursuant to Louisiana state law, and the second-

order question of whether the tribunal has authority to order damages be paid.”73

Although not expressly stated in the opinion, the STMB court rejected the plaintiff’s

waiver argument and compelled arbitration.

The Court reaches the same conclusion in this case. For the reasons set forth

by the Figear court, and adopted by the STMB court, this Court finds that Defendants

have not waived their right to arbitrate Ten G’s bad faith claims.

B. Ten G’s bad faith claims fall within the scope of the arbitration clause.

70 Id.

71 Civ. A. No. 22-2229, 2022 WL 3924313, at *2-3 (E.D. La. Aug. 31, 2022).

72 Id. at *1 (internal quotation marks omitted).

73 Id. at *3.

In the Opposition brief, Ten G does not dispute that the Convention compels

arbitration for its property coverage dispute and contractual claims, but argues that

its bad faith claims remain “clearly outside the scope of the arbitration clause” at

issue in this case.74 Defendants assert in their Motion that the four criteria that must

be met for a court to compel arbitration under the Convention are all met in this

case.75 Specifically, Defendants assert that there is a written agreement to arbitrate

contained in the insurance policy at issue, that the arbitration clause provides for

arbitration in a signatory nation, namely the United States (New York), that the

arbitration clause arises out of a commercial legal relationship (an insurance contract

between the parties), and that at least one of the parties to the arbitration agreement

is not a citizen of the United States.76 Ten G does not dispute these assertions.

Instead, Ten G argues that its bad faith claims do not implicate the arbitration

clause, “Because bad faith, punitive claims and damages do not arise from the

contract of insurance, but rather from the insurers’ violation of statutory duties.”77

The Figear court rejected this same argument, explaining that, “It is true that there

are Louisiana state court cases holding as such. But these cases do not arise in the

context of arbitration.”78 The Figear court acknowledged the Fifth Circuit’s

74 R. Doc. 12 at p. 1.

75 Freudensprung v. Offshore Technical Services, Inc., 379 F.3d 327, 339 (5th Cir. 2004) (quoting

Francisco v. STOLT ACHIEVEMENT MT, 293 F.3d 270, 273 (5th Cir. 2002)) (internal quotation

marks omitted).

76 R. Doc. 10-1 at pp. 2 & 5. See, supra, note 24.

77 R. Doc. 12 at p. 5 (citing Johno v. Doe, 2015-0737 (La. App. 4 Cir. 3/9/16), 187 So.3d 581, 585)

(emphasis in original).

78 Figear, LLC v. Velocity Risk Underwriters Claims, Civ. A. No. 22-01094, 2022 WL 2812980, at *2

(E.D. La. July 18, 2022) (citing Johno, 2015-0737, 187 So.3d at 585 (holding that release of all

contractual rights against insurer did not include statutory bad faith claim)).

instruction that, “whenever the scope of an arbitration clause is fairly debatable or

reasonably in doubt, the court should decide the question of construction in favor of

arbitration.”79 The court in Figear then noted the strong presumption that

arbitration agreements are valid and binding and pointed out that at least one other

court in this Circuit had “specifically rejected the argument Plaintiffs present here

[that bad faith claims fall outside the scope of the arbitration clause because they are

statutory and not based on the policy], with reference to an essentially identically

worded arbitration clause.”80

In that other case, Georgetown Home Owners Association, Inc. v. Certain

Underwriters at Lloyd’s, London, the Middle District of Louisiana held that, “The

Arbitration Agreement at issue is broad in scope because it states that ‘all matters in

difference’ that relate to the insurance policy are subject to arbitration,” and that, “By

drafting a broad delegation clause, the parties have clearly and unmistakably

evidenced their intent to arbitrate all their claims, disputes and other matters

pertaining to the contractual agreement.”81 The Georgetown court further held that,

“Contrary to Plaintiff’s argument that its bad-faith claims fall outside the scope of

the arbitration agreement because they are ‘statutory’ and ‘not based on the Policy,’

the substance of these claims relates to the insurance agreement. Without the Policy

79 Figear, Civ. A. No. 22-01094, 2022 WL 2812980 at *2 (quoting Mar-Len of Louisiana, Inc. v. Parsons-

Gilbane, 773 F.2d 633, 635 (5th Cir. 1985)) (internal quotation marks omitted).

80 Figear, Civ. A. No. 22-01094, 2022 WL 2812980 at *2 (citing Georgetown Home Owners Ass’n, Inc. v.

Certain Underwriters at Lloyd’s, London, Civ. A. No. 20-102-JWD-SDJ, 2021 WL 359735, at *15 (M.D.

La. Feb. 2, 2021) (deGravelles, J.)).

81 Georgetown, Civ. A. No. 20-102-JWD-SDJ, 2021 WL 359735 at *15 (citing Halliburton Energy

Services, Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522, 538 (5th Cir. 2019)).

of insurance between the parties, no disputes or differences would exist.”82 As such,

the Georgetown court concluded that, “the Arbitration Agreement conceivably covers

these claims.”83 The court in Figear agreed with that holding and concluded that the

parties had to arbitrate the plaintiff’s bad faith claims.84 The STMB court, relying

on both Figear and Georgetown, reached the same conclusion and left “issues relative

to the determination of whether penalties and fees are warranted pursuant to

Louisiana law to the Arbitration Tribunal.”85 Other Sections of this court have

likewise compelled arbitration of bad faith claims.86

Notably, Ten G does not address any of these cases in its Opposition brief or

its Sur-Reply brief, despite the fact that some were cited by the Defendants in their

Motion87 and/or Reply brief.88 This Court agrees with the courts in Georgetown,

Figear, and STMB and finds that Ten G’s bad faith claims fall within the scope of the

arbitration clause at issue. As stated by the court in Georgetown, the substance of

Ten G’s bad faith claims arise from alleged failures of the insurers to adequately

adjust, investigate and pay the claims. Accordingly, the Court will stay the pending

82 Georgetown, Civ. A. No. 20-102-JWD-SDJ, 2021 WL 359735 at *15 (internal citation to the record

omitted).

83 Id.

84 Figear, Civ. A. No. 22-01094, 2022 WL 2812980 at *3.

85 STMB Properties, LLC, Civ. A. No. 22-2229, 2022 WL 3924313, at *3 (E.D. La. Aug. 31, 2022).

86 See, Olsen Securities Corp. v. Certain Underwriters at Lloyd’s London, Civ. A. No. 22-3120, 2023 WL

405437, at *6 (E.D. La. Jan. 25, 2023) (Brown, C.J.) (citing authority) (finding that plaintiff’s bad faith

and breach of duty of good faith and fair dealing claims derive from the insurance policy and are subject

to the arbitration clause); City of Kenner v. Certain Underwriters at Lloyd’s London, Civ. A. No. 22-

2167, 2022 WL 16961130, at *3 (E.D. La. Nov. 16, 2022) (ordering the parties to arbitrate plaintiff’s

claim that defendants breached their duties of good faith and fair dealing).

87 See, R. Doc. 10-1 at pp. 5-6.

88 R. Doc. 19 at p. 2.

litigation while the Arbitration Tribunal determines whether penalties and fees are

warranted under Louisiana law.89

C. The Motion is not premature based upon the CMO.

In its Sur-Reply brief, Ten G argues that in addition to lacking merit,

Defendants’ Motion should be denied as premature because the parties did not timely

opt out of the Court’s Hurricane Ida Streamlined Settlement Program (“SSP”), as

described in the Case Management Order (“CMO”) pertaining to Hurricane Ida

claims and, as such, the parties are subject to the SSP.90 The CMO was filed into the

record in this case on November 8, 2022, and it provides that, “Within 15 days of the

filing of the defendant’s responsive pleading (or if later then within 15 days of either

an Order denying a motion for remand or of entry of this Order) either party may

petition the presiding Magistrate Judge to opt out of the SSP (Section 3 of this

Order).”91 The CMO further provides that, “If the parties do not seek to opt out, they

are electing to participate in the two-staged Streamlined Settlement Program . . . .”92

This Court has previously held that even when parties fail to timely opt-out of

the SSP, there are instances when “mandating the parties to abide by the SSP would

hinder rather than promote the swift and just resolution of this matter.”93 As such,

the Court concluded that, “the clear language of the arbitration clause as well as

89 In their Motion, Defendants request that the Court either compel arbitration and dismiss Ten G’s

claims against them or, alternatively, stay the litigation pending arbitration. R. Doc. 10 at p. 1; R.

Doc. 10-1 at pp. 1 & 6-7. Since the Court will grant Defendants’ request to compel arbitration and stay

the case, the Court declines to dismiss Ten G’s claims at this time.

90 R. Doc. 21 (citing R. Doc. 6).

91 R. Doc. 6 at p. 5.

92 Id.

93 419 Carondelet, LLC v. Certain Underwriters at Lloyd’s, London, Civ. A. No. 22-4311, 2023 WL

143318, at *2 (E.D. La. Jan. 10, 2023).

binding precedent require this Court to grant Defendants’ Motion to Compel

Arbitration.”94 In doing so, the Court explained that, “Although Louisiana law

ordinarily prohibits enforcement of arbitration clauses concerning insurance

disputes, the Fifth Circuit has held that [the Convention] supersedes state law.”95 At

least one other Section of this Court has reached the same conclusion.96 Accordingly,

the Court rejects Ten G’s assertion that the parties’ failure to opt-out of the SSP

renders the instant Motion, and Defendants’ request to compel arbitration,

premature.

IV. CONCLUSION

For the foregoing reasons, IT IS HEREBY ORDERED that Defendants’

Motion to Compel Arbitration and Dismiss Claims or Alternatively Stay Litigation

Pending Arbitration97 is GRANTED in part and DENIED in part. The Motion is

GRANTED to the extent that Defendants move to compel arbitration, but DENIED

to the extent that Defendants seek dismissal of Ten G’s claims.

IT IS FURTHER ORDERED that this matter is STAYED and

ADMINISTRATIVELY CLOSED pending a final decision by the Arbitration

Tribunal.

IT IS FURTHER ORDERED that if any issues remain after a final judgment

is issued by the Arbitration Tribunal, the above-captioned matter may, following a

94 Id.

95 Id. (citing McDonnel Grp., LLC v. Great Lakes Ins. SE, UK Branch, 923 F.3d 427, 431-32 (5th Cir.

2019), as revised (June 6, 2019)).

96 3501 N. Causeway Assocs., LLC v. Certain Underwriters at Lloyd’s, London, Civ. A. No. 22-3787,

2023 WL 1765920, at *3 (E.D. La. Feb. 3, 2023) (Barbier, J.).

97 R. Doc. 10.

written motion by a party filed within thirty (380) days of a final judgment of the

Arbitration Tribunal, be reopened if authorized by this Court.

New Orleans, Louisiana, July 25, 2023.

WENDY heed

United States District Judge