96 F.4th 726
5th Cir.2024Background
- In May 2020, Bufkin Enterprises, L.L.C. purchased a surplus lines insurance policy from eight U.S.-based (domestic) insurers and two foreign insurers to cover property in Louisiana.
- The policy included an identical arbitration clause across all agreements, providing for arbitration in New York under New York law.
- Hurricane Laura struck in August 2020, damaging Bufkin's property. Bufkin submitted a single proof of loss to all insurers, accusing them collectively of failing to pay timely.
- Bufkin sued only the domestic insurers in state court for breach of contract and related claims, later amending to add and then dismiss the foreign insurers with prejudice.
- The domestic insurers removed the case to federal court and moved to compel arbitration and stay proceedings; the district court denied the motion, holding arbitration was not available for the domestic insurers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Application of the Convention to Compel Arbitration | Convention doesn't apply to domestic insurers (no foreign party to contract) | Even if contracts are separate, equitable estoppel permits arbitration under Convention | Court agrees with defendants—equitable estoppel warrants compelling arbitration. |
| Equitable Estoppel under Grigson | No intertwined misconduct between signatories/non-signatories | Bufkin alleges interdependent and concerted misconduct by all insurers | Bufkin's collective allegations trigger equitable estoppel and compel arbitration. |
| Applicability of Louisiana Statute § 22:868 (Venue/Jurisd.) | Statute bars arbitration clauses, reverse-preempts FAA via McCarran-Ferguson | Convention excepted from state bar; statute doesn't block arbitration for surplus lines | Statute does not bar arbitration where the Convention applies via estoppel. |
| Mootness of Certifying Question to Louisiana Supreme Court | Certification needed to clarify state law | Unnecessary due to resolution on federal law/estoppel grounds | Motion to certify denied as moot. |
Key Cases Cited
- Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524 (5th Cir. 2000) (establishes equitable estoppel in compelling arbitration where there is concerted misconduct)
- Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) (explains the Convention’s purpose to encourage enforcement of international arbitration agreements)
- Safety Nat’l Cas. Corp. v. Certain Underwriters at Lloyd’s London, 587 F.3d 714 (5th Cir. 2009) (holds that Louisiana statute does not reverse-preempt the Convention for arbitration)