664 F.Supp.3d 665
W.D. La.2023Background
- Plaintiffs (City of Westlake, National Golf Club of Louisiana, Westlake Volunteer Fire Department, and Westlake Fire Department) purchased insurance from Starr Surplus covering immovable Westlake properties; Hurricanes Laura and Delta caused damage and plaintiffs allege Starr failed to pay timely/adequately.
- Starr Surplus policy contained a mandatory New York choice-of-law and exclusive New York-venue clause; the policy also included Endorsement 27 (a Service-of-Suit endorsement) that permits the insurer to submit to U.S. jurisdiction and allows the insured to sue in U.S. courts.
- Plaintiffs filed suit in the Western District of Louisiana; Starr moved to sever Republic Fire & Casualty (a separate insurer) and to transfer the Starr claim to the Southern District of New York under the forum-selection clause.
- Plaintiffs moved for partial summary judgment holding the policy’s New York choice-of-law/venue provisions invalid as contrary to Louisiana public policy and La. law, so Louisiana law should apply.
- The court analyzed federal forum-selection doctrine (Atlantic Marine) and Fifth Circuit precedent alongside Louisiana statutes: La. Rev. Stat. § 9:2778 (voiding forum/choice-of-law clauses in public contracts with state/political subdivisions) and La. Rev. Stat. § 22:868 (insurance-code limits on forum clauses with a surplus-lines exemption added by amendment).
- Ruling: the court found Endorsement 27 permissive, concluded § 9:2778 applies to this public-entity insurance contract, held Starr’s choice-of-law provision unenforceable, denied Starr’s motion to sever/transfer, and granted plaintiffs’ partial summary judgment that Louisiana law governs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of policy's New York forum-selection and choice-of-law clauses | Clauses are void as against Louisiana public policy for contracts with political subdivisions (La. Rev. Stat. § 9:2778); Louisiana law applies | Forum/choice clauses are contractually valid and enforceable; federal law favors enforcement; surplus-lines policies are exempt from La. Rev. Stat. § 22:868 restrictions | Held: Clauses invalid under § 9:2778 as applied to this public-entity insurance contract; Louisiana law governs |
| Effect of Endorsement 27 (Service-of-Suit) on forum choice | Endorsement 27 is permissive and gives insured the right to choose forum in U.S. courts; it controls over the mandatory clause | Insurer argues the main clause requires New York and Endorsement reservation language does not override it | Held: Endorsement 27 is permissive and Westlake could sue in Louisiana; insured did not violate policy by filing here |
| Whether federal law (Atlantic Marine) mandates transfer to New York under § 1404(a) | Louisiana public-policy exception and Endorsement 27 justify denying transfer | Insurer urges Atlantic Marine and Fifth Circuit precedent enforcing forum clauses, so transfer is required | Held: Transfer denied; because clause is unenforceable under Louisiana public-policy statute, Atlantic Marine's transfer framework does not compel transfer here |
| Whether surplus-lines exemption in La. Rev. Stat. § 22:868(D) precludes application of § 9:2778 | Plaintiffs: § 9:2778 applies to public contracts including insurance bought with public funds; no implied exemption | Starr: § 22:868(D) exempts non-approved surplus-lines forms from § 22:868(A), so § 9:2778 should not apply to insurance policies | Held: Court rejects insurer's narrow reading; § 9:2778 is applicable to this public contract and expresses a strong Louisiana public policy invalidating the clauses at issue |
Key Cases Cited
- Atlantic Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49 (2013) (valid forum-selection clauses generally enforced via § 1404(a); public-interest factors limited)
- Haynsworth v. The Corp., 121 F.3d 956 (5th Cir. 1997) (public-policy exception may bar enforcement of forum-selection clauses)
- International Ins. Co. v. McDermott, Inc., 956 F.2d 93 (5th Cir. 1992) (service-of-suit clauses can give insured right to choose forum)
- In re Rolls Royce Corp., 775 F.3d 671 (5th Cir. 2014) (Atlantic Marine alters § 1404 analysis when a valid forum clause exists)
- Barnett v. DynCorp, Internat’l, LLC, 831 F.3d 296 (5th Cir. 2016) (forum-state rejection of clause is relevant in transfer analysis)
- Shelter Mut. Ins. Co. v. Rimkus Consulting Grp., Inc., 148 So.3d 871 (La. 2014) (forum-selection clauses generally enforceable but statutory exceptions reflect strong state public policy)