Opinion

Accelerant Specialty Insurance Company v. Dagga Boy LLC

Court
District Court, E.D. Louisiana
Filed
Oct 4, 2023
Cited by
0 cases

The opinion

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

ACCELERANT SPECIALTY CIVIL ACTION

INSURANCE CO.

VERSUS NO: 23-2796 C/W

23-2803

DAGGA BOY, LLC SECTION: "A" (5)

ORDER AND REASONS

The following motion is before the Court: Motion to Dismiss (Rec. Doc. 7) filed

by Accelerant Specialty Insurance Co. Dagga Boy, LLC opposes the motion. The

motion, submitted for consideration on September 27, 2023, is before the Court on the

briefs without oral argument.

On December 9, 2022, the M/V DAGGA BOY, was damaged by a fire while

moored at the dock for repairs. Dagga Boy, LLC (hereinafter “Dagga Boy”) owned the

vessel. Accelerant Specialty Insurance Co. (hereinafter “Accelerant”) insured the vessel.

Dagga Boy contends that the fire damage resulted in a total loss of the vessel.

On May 25th of this year, Dagga Boy filed suit against Accelerant because,

according to Dagga Boy, notwithstanding well-supported and proper proof of loss,

Accelerant persisted in denying payment on the claim. Dagga Boy filed its lawsuit in

Orleans Parish and invoked the panoply of relief available under Louisiana law for “bad

faith” insurance practices. Dagga Boy demanded a trial by jury.

Page 1 of 5

The Policy contains the following forum selection clause:

It is also hereby agreed that any dispute arising hereunder shall be subject

to the exclusive jurisdiction of the Federal courts of the United States of

America, in particular, the Federal District court within which You the

Assured resides or the Federal District court within which your insurance

agent resides.

(Rec. Doc. 1-1, Policy at 18 ¶ 11).

On July 26, 2023, following service of the state court action, Accelerant did two

things. First, Accelerant filed Civil Action 23-2796 in this district against Dagga Boy

seeking a declaratory judgment that the marine policy covering the DAGGA BOY was

void from its inception. The cited basis for federal subject matter jurisdiction was

admiralty and Accelerant invoked Rule 9(h) presumably to foreclose a jury. Diversity

jurisdiction is not mentioned in the complaint.

Second, Accelerant removed the Orleans Parish lawsuit to this district as Civil

Action 23-2803. The cited bases for federal subject matter jurisdiction are admiralty and

diversity jurisdiction, the latter of which is characterized as “an independent basis for

removal.” (Civil Action 2803, Rec. Doc. 1, Notice of Removal at 2 ¶ 5).

The cases were consolidated after Civil Action 23-2803 was transferred to

Section A of this district.

Accelerant moves to dismiss Civil Action 23-2803 arguing that because the

lawsuit was filed in violation of the Policy’s forum selection clause as quoted above, the

Court should dismiss Civil Action 23-2803 without prejudice as a sanction. After

dismissal, Dagga Boy would be required to litigate the coverage dispute as part of the

declaratory judgment action that Accelerant initiated in this Court.

Page 2 of 5

Although Accelerant’s reasons for its pressing desire to have Civil Action 23-2803

dismissed are not apparent from its briefing, Dagga Boy posits that concerns over

choice of law issues are the undercurrent driving the motion to dismiss. Because, while

admiralty jurisdiction may be a valid basis for federal jurisdiction over the declaratory

judgment action filed in this district (Civil Action 23-2796), Civil Action 23-2803, with its

heavy reliance on Louisiana law, was only removable to federal court because of the

presence of diversity jurisdiction.1 Dagga Boy posits that Accelerant wants to ensure

that the coverage dispute presented in Civil Action 23-2803, which was removable to

federal court only on the basis of diversity jurisdiction, is governed by maritime law

without the potential for incorporation of Louisiana’s insured-friendly insurance laws or

the possibility of a trial by jury.

In its Reply, Accelerant disavows any concerns over choice of law issues

because the Policy itself contains a choice of law clause.2 Accelerant continues to urge

1 Maritime cases filed in state court are not removable to federal court absent an

independent basis for federal subject matter jurisdiction, such as diversity jurisdiction. See

Finney v. Bd. of Comm’rs of Port of New Orleans, 575 F. Supp. 3d 649, 661 n.96 (E.D. La.

2021) (Brown, C.J.) (gathering cases from the various judges of the Eastern District of

Louisiana).

2 The choice of law clause contained in the Policy states:

It is hereby agreed that any dispute or claim arising hereunder (including non–

contractual disputes or claims), or in connection with this Insuring Agreement,

shall be adjudicated according to well established, entrenched principles and

precedents of substantive United States Federal Admiralty law and practice but

where no such well established, entrenched precedent exists, any dispute or

claim arising hereunder (including non–contractual disputes or claims), or in

connection with this Insuring Agreement, is subject to the substantive laws of

the State of New York.

Page 3 of 5

dismissal of Civil Action 23-2803 based solely as a sanction against Dagga Boy for

violating the Policy’s forum selection clause.

The Court agrees with Accelerant insofar as it asserts (in its Reply) that choice of

law is not at issue in the motion to dismiss. The Court will not and need not decide in

conjunction with this motion to dismiss whether the reliance on diversity jurisdiction for

removal of Civil Action 23-2803 in any manner affects the law to be applied to the

coverage dispute or whether the Policy’s forum/choice of law clauses are valid and

enforceable. All that the Court decides today is that dismissal is not necessary. The

Court notes that Accelerant filed its motion to dismiss before Civil Action 23-2803 was

transferred to this section for consolidation with the lower-numbered declaratory

judgment action. While consolidation is an administrative case management tool only,

and can have no impact on issues related to choice of law, jurisdiction, or the right to a

jury trial, the parties will benefit from the convenience of having the cases before one

district judge and one magistrate judge. Dismissal is simply not necessary.3

(Rec. Doc. 1-1, Policy at 18 ¶ 11).

3 Assuming that the Policy’s forum selection and choice of law clauses are valid and

enforceable, it would be extremely unlikely that an insured could circumvent the Policy’s

mandate as to choice of law by filing a lawsuit in violation of the Policy’s forum selection

clause. But again, the Court expresses no view at this time as to any of these matters. It

suffices for the nonce that the Court has subject matter jurisdiction over both cases in the

consolidation.

Soon the parties will receive a notice from the Case Manager regarding a scheduling

conference. The Case Manager has no authority to disregard a jury demand in a pleading.

Therefore, at the scheduling conference, unless both sides agree that the case will be non-

jury for both cases in the consolidation, the consolidated cases will be set for a jury trial but

without prejudice to Accelerant’s right to move to strike the jury demand and have the entire

matter tried to the bench. If the matter is set for a jury trial, then Accelerant must move

within 30 days of the entry of the scheduling order to strike the jury.

Page 4 of 5

Accordingly, and for the foregoing reasons;

IT IS ORDERED that the Motion to Dismiss (Rec. Doc. 7) filed by Accelerant

Specialty Insurance Co. is DENIED.

October 3, 2023 C | C

oh ayy

U (iewer □□ SANE ude

Page 5of 5

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

A word about cookies

We need a few to keep you signed in and the library working. The rest help us see which pages people use and where they get stuck. They stay off unless you say yes.