The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
WILLWOODS COMMUNITY, et al. CIVIL ACTION
VERSUS NO. 23-6080
CERTAIN UNDERWRITERS AT LLOYD’S SECTION: “G”(4)
LONDON, et al.
ORDER AND REASONS
Before the Court are two motions filed by Defendants Certain Underwriters at Lloyd’s,
London, 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, and Old Republic
Union Insurance Company (collectively “Defendants”): (1) a Motion to Opt-Out of the
Streamlined Settlement Program1 and (2) a Motion to Compel Arbitration and Stay Proceedings.2
This litigation arises out of an insurance contract between Plaintiffs Willwoods Community, Will
Woods V, Will Woods VII, Will Woods VIII, Pontchartrain Housing Corp. I, Pontchartrain
Housing Corp. II, Pontchartrain Housing Corp. III, and Walmsley Housing Corporation
(collectively “Plaintiffs”) and Defendants. Defendants argue that this controversy should be
submitted to arbitration.3 Further, Defendants seek to stay the litigation pending the completion of
arbitration.4 For this same reason, Defendants also seek to opt-out of this Court’s Streamlined
1 Rec. Doc. 9.
2 Rec. Doc. 10.
3 Id.
4 Id.
Settlement Program applicable to Hurricane Ida cases.5 Plaintiffs have not filed an opposition to
either motion. Considering the motions, the record, and the applicable law, the Court grants both
motions and stays this litigation pending arbitration.
I. Background
This suit arises from a commercial property insurance claim made by Plaintiffs based on
damages sustained due to Hurricane Ida on August 29, 2021.6 At the time of the loss, Plaintiffs’
properties were insured by Defendants under a surplus lines commercial property insurance policy
bearing Account No. 812888 (“the Policy”).7 The Policy includes an arbitration agreement
mandating that “[a]ll matters in difference” between the Insured and the Insurers “in relation to
this insurance” be submitted to arbitration (“the Arbitration Agreement”).8 On August 26, 2023,
Plaintiffs filed a Petition for Indemnity Pursuant to Breach of Insurance Contract in the 24th
Judicial District Court for the Parish of Jefferson.9 On October 13, 2023, Defendants removed the
case to this Court.10
On October 17, 2023, Defendants filed the instant Motion to Opt-Out of the Streamlined
Settlement Program.11 On November 1, 2023, Defendants filed the instant Motion to Compel
Arbitration and Stay Proceedings.12 Pursuant to Local Rule 7.5, any opposition to the motion to
5 Rec. Doc. 9.
6 Rec. Doc. 10-1 at 2.
7 Id.
8 Id. at 3.
9 Rec. Doc. 5-2.
10 Rec. Doc. 5.
11 Rec. Doc. 9.
12 Rec. Doc. 10.
opt-out was due on November 7, 2023, and any opposition to the motion to compel arbitration
was due on or before November 21, 2023. Plaintiffs have not filed an opposition in the allotted
time, as such, the motions will be deemed unopposed.
II. Defendants’ Arguments in Support of the Motions
Defendants argue that the arbitration agreement falls under the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”) because it arises out
of a commercial relationship, and it is not entirely between citizens of the United States.13 Thus,
Defendants argue that this Court should refer all claims asserted by Plaintiffs to the arbitration
process as provided for in the arbitration agreement.14 Alternatively, Defendants contend that the
arbitration agreement is enforceable under the Federal Arbitration Act (“FAA”) because the Policy
is a contract evidencing a transaction involving commerce to settle by arbitration a controversy
arising out of such contract, including the refusal to perform the whole or any part of the contract.15
Defendants further assert that the broad delegation clause mandates the arbitration tribunal
determine all issues, including the agreement’s validity and scope.16 Defendants submit that this
litigation must be stayed pending arbitration pursuant to the Convention and the FAA.17 For this
same reason, Defendants also seek to opt-out of this Court’s Streamlined Settlement Program
applicable to Hurricane Ida cases.18
13 Rec. Doc. 10-1 at 3.
14 Id.
15 Id.
16 Id. at 17.
17 Id. at 19.
18 Rec. Doc. 9.
III. Law and Analysis
In 1958, the United Nations Economic and Social Council adopted the Convention.19 In
1970, the United States acceded to the treaty (the “Convention Act”), which was subsequently
implemented by Chapter 2 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 201 et seq.20 Article
II(1) of the Convention requires contracting states, including the United States, to recognize certain
written arbitration agreements. It states:
Each Contracting State shall recognize an agreement in writing under which the
parties undertake to submit to arbitration all or any differences which have arisen
or which may arise between them in respect of a defined legal relationship, whether
contractual or not, concerning a subject matter capable of settlement by arbitration.
Section 201 of the FAA provides that the Convention shall be enforced in United States
courts.21 The Supreme Court has stated that “[t]he goal of the Convention, and the principal
purpose underlying American adoption and implementation of it, was to encourage the recognition
and enforcement of commercial arbitration agreements in international contracts and to unify the
standards by which agreements to arbitrate are observed and arbitral awards are enforced in the
signatory countries.”22
The Convention Act provides that “[a] court having jurisdiction under this chapter may
direct that arbitration be held in accordance with the agreement at any place therein provided for,
whether that place is within or without the United States.”23 In applying the Convention, the Fifth
19 Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257, 1262 (11th Cir. 2011).
20 Id.
21 9 U.S.C. § 201 (“The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June
10, 1958, shall be enforced in United States courts in accordance with this chapter.”).
22 Scherk v. Alberto–Culver Co., 417 U.S. 506, 520 n.15 (1974).
23 9 U.S.C. § 206.
Circuit has held that “courts conduct only a very limited inquiry.”24 Under this inquiry, a court
should compel arbitration if (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.25 Once these requirements are met, the Convention requires the district court to order
arbitration, “unless it finds that the said agreement is null and void, inoperative or incapable of
being performed.”26
As a general matter, arbitration provisions in insurance contracts are void under Louisiana
law.27 “The McCarran-Ferguson Act permits states to reverse-preempt an otherwise applicable
‘Act of Congress’ by enacting their own regulations of the insurance industry.”28 However, the
McCarran-Ferguson Act does not apply to “a treaty, such as the Convention, which ‘remains an
international agreement or contract negotiated by the Executive Branch and ratified by the Senate,
not by Congress.’”29 Therefore, the Convention Act is not reverse-preempted by state law, and
arbitration provisions that fall under the Convention Act are enforceable in Louisiana.30
Plaintiffs have not opposed the pending motions, and therefore, they do not contest that the
requirements for compelling arbitration under the Convention are satisfied. The validity of the
arbitration agreement is undisputed. The Policy includes an arbitration agreement mandating that
24 Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 339 (5th Cir. 2004).
25 Id.
26 Id.
27 McDonnel Grp., L.L.C. v. Great Lakes Ins. SE, UK Branch, 923 F.3d 427, 431 (5th Cir. 2019).
28 Id.
29 Id. at 432 (quoting Safety Nat. Cas, Corp. v. Certain Underwriters at Lloyd’s London, 587 F.3d 714, 723
(5th Cir. 2009)).
30 Id.
“[a]ll matters in difference” between the Insured and the Insurers “in relation to this insurance
including its formation and validity, and whether arising during or after the period of this
insurance, shall be referred to an Arbitration Tribunal…”31 Valid arbitration agreements must be
rigorously enforced.32 As such, the Court finds that the arbitration agreement falls under the scope
of the Convention, and this Court is required to order arbitration.
Defendants also seek to stay litigation pending the completion of arbitration. “[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.”33 As such, this Court is required to stay these proceedings
pending the completion of arbitration. For these same reasons, the Court also grants the Motion to
Opt-Out of the Streamlined Settlement Program. Accordingly,
IT IS HEREBY ORDERED that Defendants’ Motion to Opt-Out of the Streamlined
Settlement Program34 is GRANTED.
IT IS FURTHER ORDERED that Defendants’ Motion to Compel Arbitration and Stay
the Proceedings35 is GRANTED.
31 Rec. Doc. 10-2 at 38.
32 Perry v. Thomas, 482 U.S. 483, 490, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987) (citation omitted).
33 Texaco Expl. & Prod. Co. v. AmClyde Engineered Prod. Co., 243 F.3d 906, 909 (5th Cir. 2001) (citing
Hornbeck Offshore Corp. v. Coastal Carriers Corp., 981 F.2d 752, 754 (5th Cir. 1993)).
34 Rec. Doc. 9.
35 Rec. Doc. 10.
IT IS FURTHER ORDERED that the above-captioned matter is STAYED AND
ADMINISTRATIVELY CLOSED pending arbitration.
NEW ORLEANS, LOUISIANA, this _1st_ day of December, 2023.
NANNETTE J jobs BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT