Southland Square Apartments, LLC v. Certain Underwriters at Lloyd's, London
2:23-cv-02329
| E.D. La. | Dec 12, 2024Background
- The case involves an insurance dispute arising from Hurricane Ida damage to Southland Square Apartments, insured under a surplus lines commercial property insurance policy.
- Plaintiff, Southland Square Apartments, received partial payment from insurers and sued for additional damages, breach of contract, and bad faith in Louisiana state court.
- Defendants, a combination of domestic and foreign insurers, removed the case to federal court and invoked an arbitration clause in the policy; the plaintiff pursued claims against foreign insurers in arbitration and initially sought to litigate against domestic insurers.
- The federal court previously granted defendants’ motion to compel arbitration as to all insurers and stayed litigation, applying equitable estoppel to avoid inconsistent outcomes and wasted resources.
- Plaintiff moved to lift the stay and reconsider, relying on a recent Louisiana Supreme Court decision interpreting the state law prohibiting arbitration clauses in insurance contracts.
- The court ultimately denied the motion and maintained the stay because key appellate and state supreme court decisions remained non-final and under review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether domestic insurers can compel arbitration via equitable estoppel under the Convention despite Louisiana’s prohibition on arbitration in insurance policies | Louisiana law prohibits arbitration clauses in insurance policies, so equitable estoppel should not apply | The Convention and federal law supersede Louisiana’s prohibition; equitable estoppel allows arbitration | Denied plaintiff’s motion; stay remains until key appeals are finalized |
| Should the stay be lifted pending non-final conflicting state and federal rulings? | Recent Louisiana Supreme Court precedent invalidates basis for stay and compulsion of arbitration | State court decision is not final; federal appeals pending; status quo should be maintained | Stay should remain until final resolution of relevant appeals |
Key Cases Cited
- Bass v. U.S. Dep't of Agric., 211 F.3d 959 (5th Cir. 2000) (rule for challenging judgments and orders)
- Austin v. Kroger Texas, L.P., 864 F.3d 326 (5th Cir. 2017) (standard for reconsideration under Rule 54(b))
- Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167 (5th Cir. 1990) (district court’s discretion to revise non-final orders)
- Bordelon Marine, L.L.C. v. Bibby Subsea Rov, L.L.C., [citation="685 F. App'x 330"] (5th Cir. 2017) (appeals from interlocutory orders compelling arbitration)