Aker Kvaerner I H I v. National Union Fire Insurance Co of Louisiana
2:10-cv-00278
W.D. La.Dec 2, 2013Background
- AK/KVAERNER/IHI sues Insurers and MYI over losses from Hurricane Ike under a Construction All Risk policy.
- General Condition 3 of the CAR policy is the arbitration clause; the district court previously found it subject to 9 U.S.C. § 205 and intended to arbitrate disputes.
- AK/IHI argues the arbitration language is narrow (only about the amount of loss) and does not cover coverage disputes.
- Defendants contend the original draft language contemplated arbitration for disputes over the amount to be paid, which encompasses coverage disputes.
- The court previously determined the parties intended arbitration for coverage disputes and that New York law governs the contract.
- This report recommends granting the motion to compel arbitration and denying AK/IHI’s remand/fees request.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of arbitration clause | AK/IHI contends clause limited to amount of loss, not coverage. | Insurers argue clause broad enough to cover coverage disputes. | Arbitration scope includes coverage disputes. |
| Governing law and bad-faith claims | Bad-faith claims governed by New York law under contract. | NY law governs contract; bad-faith intertwined with contract thus arbitrable. | Bad-faith claims within arbitration under New York law. |
| Non-signatory arbitration (MYI) under Grigson | AK/IHI claims against MYI are tort claims unrelated to the CAR policy. | MYI may compel arbitration under equitable estoppel because claims rely on and interdepend with the policy. | MYI may compel arbitration under Grigson; claims fall within the original arbitration clause. |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitration policy favors broad enforcement)
- Webb v. Investacorp, Inc., 89 F.3d 252 (5th Cir. 1996) (scope of arbitration governed by contract interpretation)
- Wick v. Atl. Marine, Inc., 605 F.2d 166 (5th Cir. 1979) (strong presumption in favor of arbitrability)
- Pennzoil Exploration and Prod. Co. v. Ramco Energy, Ltd., 139 F.3d 1061 (5th Cir. 1998) (broad vs narrow arbitration clause framework)
- Grigson v. Creative Artists Agency, 210 F.3d 524 (5th Cir. 2000) (equitable estoppel supports non-signatory arbitration under certain circumstances)
- Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985) (intertwined contract and breach notions for choice-of-law in arbitration)
- Will–Drill Resources, Inc. v. Samson Resources Co., 352 F.3d 211 (5th Cir. 2003) (step-two review after arbitrability determination)
- Mar-Len of Louisiana, Inc. v. Parsons-Gilbane, 773 F.2d 633 (5th Cir. 1985) (presumption of arbitrability when scope is debatable)