Opinion

Chubb Capital I Limited v. New Orleans City

Court
District Court, E.D. Louisiana
Filed
Jul 18, 2024
Cited by
0 cases
Authority
More cited than 31.4%

The opinion

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

CHUBB CAPITAL I

LIMITED ET AL. CIVIL ACTION

VERSUS NO: 23-5806

NEW ORLEANS CITY SECTION: “H”

ORDER AND REASONS

Before the Court is Defendant’s Motion to Stay Litigation Pending

Arbitration Between NOAB and Plaintiffs’ Insureds (Doc. 82). For the

following reasons, the Motion is GRANTED.

BACKGROUND

This case arises out of a contract dispute between the Crescent City

Aviation Team (“CCAT”) and Defendant the City of New Orleans by and

through the New Orleans Aviation Board (“NOAB”).1 NOAB and CCAT

contracted for CCAT’s provision of “professional engineering and architectural

design and related services” for construction of the new terminal facility at the

Louis Armstrong New Orleans International Airport (“the Design Services

Contract”).2 The Design Services Contract contains an arbitration clause.

1 CCAT is a joint venture composed of Leo A. Daly Company (“Daly”) and Atkins North

America, Inc. (“Atkins”).

2 Doc. 26 at 4.

Plaintiffs are a group of insurers (“the Insurers”) who provide

professional liability insurance coverage to Daly and Atkins, with CCAT listed

as an additional insured.3 On June 30, 2023, NOAB filed an arbitration

demand with the American Arbitration Association against CCAT, Daly,

Atkins, and the Insurers, demanding over $51 million in damages for errors

and omissions in CCAT’s project work.

On October 5, 2023, the Insurers filed suit in this Court, seeking (1) a

declaratory judgment that NOAB has no right to demand arbitration from

them and the Insurers should not be parties in the arbitration, and (2) a

preliminary and permanent injunction enjoining NOAB’s prosecution of the

arbitration against them.4 On May 6, 2024, this Court granted the Insurers’

request for a preliminary injunction, thereby enjoining NOAB’s arbitration

demand against the Insurers.5

Now before the Court is NOAB’s Motion to Stay Litigation Pending

Arbitration Between NOAB and Plaintiffs’ Insureds. The Insurers oppose.6

LEGAL STANDARD

The Federal Arbitration Act (“FAA”) requires a stay of proceedings

where the court finds that “the issue involved in such suit or proceeding is

3 Plaintiffs Chubb Capital I Limited, RenaissanceRe Corporate Capital (UK) Limited, Brit

UW Limited, and Swiss Re International SE had a contract of professional liability

insurance with Daly for the period of July 1, 2018 to July 1, 2019. Plaintiffs Catlin

Underwriting Agencies Limited, Scor Global P&C SE, AIG Europe Limited, Starr

Underwriting Agents Limited, Arch Insurance Canada Ltd., XL Reinsurance America Inc.,

Everest Insurance Company of Canada, Temple Insurance Company, and Aviva Insurance

Company of Canada had a contract of professional liability insurance with Atkins for the

period of April 30, 2020 to April 30, 2021.

4 Doc. 1 at 10.

5 Doc. 69. The Court also denied NOAB’s motion to compel the Insurers to arbitrate. Id.

6 Doc. 86 at 3.

referable to arbitration” pursuant to a written arbitration agreement.7 “In

some cases, of course, it may be advisable to stay litigation among the non-

arbitrating parties pending the outcome of the arbitration.”8 “That decision is

one left to the district court . . . as a matter of its discretion to control its

docket.”9 And if the district court issues a stay order, it must place “reasonable

limits on its duration.”10

LAW AND ANALYSIS

On May 6, 2024, this Court issued a preliminary injunction, enjoining

NAOB’s arbitration demand against the Insurers.11 The arbitration

proceedings—pending since June 30, 2023—among CCAT, Daly, and Atkins

(“the Insureds”) and NOAB will proceed. Various motions remain pending

before this Court, including a Rule 12(b)(6) motion to dismiss NOAB’s

counterclaim asserted against the Insurers. NOAB therefore asks this Court

to “not make substantive rulings” on the issues raised in these motions

“because such substantive issues as to the Insurers’ insureds’ liability under

Louisiana law are for the arbitrators to decide in the first instance.”12

Defendants, however, respond that the motion to stay is “premature

considering the pending Rule 12 motion” and that the issuance of a stay

“should not affect the ability of the Court to rule on the Rule 12 motion.”13

Under Louisiana law, insurers generally may owe their insureds a duty

to defend and/or a duty to indemnify. The duty to indemnify is the insurer’s

7 9 U.S.C. § 3.

8 Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 n.23 (1983).

9 Id. (citing Landis v. N. Am. Co., 299 U.S. 248, 254–55 (1936).

10 GATX Aircraft Corp. v. M/V Courtney Leigh, 768 F.2d 711, 716 (5th Cir. 1985) (citing

Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th Cir. 1983)).

11 Doc. 69.

12 Doc. 92-1 at 2.

13 Doc. 86 at 5.

“obligation to provide coverage for damage claims.”14 “‘[T]he insurer’s duty to

indemnify’ pertains to ‘a covered claim after judgment against the insured in

the underlying liability case.’”15 Therefore, resolution of the issue of the

insurer’s duty to indemnify the insured will necessarily depend on the

disposition of the merits of the injured party’s claim.16

Here, the merits of NOAB’s claims against the Insureds will be

determined in arbitration. NOAB has already initiated arbitration, and no

party disputes the validity and scope of the arbitration agreement between

NOAB and the Insureds.17 The Insurers’ duty to indemnify the Insureds,

among other issues, therefore depends upon the outcome of the pending

arbitration proceedings. Thus, the Court finds that issuance of a discretionary

stay pending resolution of arbitration between NOAB and the Insureds is

warranted to maintain control of this Court’s docket and to efficiently resolve

this case.

CONCLUSION

For the foregoing reasons, Defendant NOAB’s Motion to Stay Litigation

Pending Arbitration Between NOAB and Plaintiffs’ Insureds (Doc. 82) is

GRANTED.

IT IS ORDERED that the above-captioned matter is STAYED and

ADMINISTRATIVELY CLOSED pending resolution of the arbitration

14 Arceneaux v. Amstar Corp., 200 So. 3d 277, 281 (La. 2016) (citing Elliott v. Cont’l Cas. Co.,

949 So. 2d 1247, 1250 (La. 2007)).

15 Lewis v. State Nat’l Ins. Co., Inc., 368 So. 3d 653, 667 (La. App. 4th Cir. 2023) (citing

Brilliant Nat’l Servs., Inc. v. Travelers Indem. Co., 349 So. 3d 581, 585 (La. App. 1st Cir.

2022)).

16 Motorola, Inc. v. Assoc. Indem. Corp., 878 So. 2d 824, 837 (La. App. 1st Cir. 2004)).

17 In fact, the Insureds previously moved this Court to compel arbitration pursuant to the

Design Services Contract. See Doc. 34. The Court did not reach this alternative issue,

however, because it struck NOAB’s Third-Party Demand from the record. See Doc. 93.

proceedings between Defendant NOAB and CCAT, Daly, and Atkins. The case

may be re-opened upon motion of any party to this case upon resolution of the

arbitration proceedings.

IT IS FURTHER ORDERED that the oral argument on

Plaintiffs/Counterclaim Defendants’ Rule 12(b)(6) Motion to Dismiss presently

set for July 25, 2024 is CANCELLED.

New Orleans, Louisiana this 18th day of July, 2024.

gy TRICHE MILAZZO

UNITED STATES DISTRICT JUDGE

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.

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