Police Jury of Calcasieu Parish v. Indian Harbor Insurance Co.Police Jury of Calcasieu Parish v. Indian Harbor Insurance Co.
FOR IMMEDIATE NEWS RELEASE
FROM: CLERK OF SUPREME COURT OF LOUISIANA
The Opinions handed down on the 25th day of October, 2024 are as follows:
BY Knoll, J.:
2024-CQ-00449 POLICE JURY OF CALCASIEU PARISH VS. INDIAN HARBOR INSURANCE CO., ET AL.
CERTIFIED QUESTIONS
Weimer, C.J., additionally concurs and assigns reasons.
The underlying lawsuit pertains to damage caused by Hurricanes Laura and Delta in 2020 to approximately 300 properties owned by Plaintiff, Police Jury of Calcasieu Parish (“Calcasieu“), a political subdivision of the State of Louisiana. Defendants, eight domestic insurers, seek to compel arbitration. The arbitration would take place in the state of New York before an arbitration tribunal comprised of insurance executives applying New York law to Calcasieu‘s approximately 300 property damage claims. The United States District Court for the Western District of Louisiana, Lake Charles Division, granted Calcasieu‘s motion to certify three critically important questions of Louisiana law that should be answered by the Louisiana Supreme Court.
We accepted certification to address the three certified questions pursuant to
The first question is whether the 2020 amendment2 to
The second question is whether
The third question is two-pronged. It asks, first, whether a domestic insurer may invoke the doctrine of equitable estoppel to enforce an arbitration clause contained in another insurer‘s policy, thereby circumventing the prohibition of arbitration clauses under
FACTS AND PROCEDURAL HISTORY
We decide certified questions on the facts presented by the Federal Court. See Pickard v. Amazon.com, Inc., 23-01596 (La. 6/28/24), 387 So. 3d 515, 518. In its order, the Western District Court set forth the facts recited below:
On August 27, 2020, Hurricane Laura made landfall near Lake Charles, Louisiana and on October 9, 2020, Hurricane
Delta made landfall near Lake Charles, Louisiana. The Hurricanes allegedly caused damage to Calcasieu‘s numerous properties. Calcasieu is a public body. During the relevant time period, a syndicate of insurers, through separate contracts, insured approximately 300 locations in Calcasieu Parish, with a named windstorm limit of $100,000,000 per occurrence (hereinafter referred to as the “policy“). The policy provides that each insurer in the syndicate has its own separate contract with Calcasieu and each insurer is separately responsible, and never jointly responsible with any other insurer in the syndicate. Calcasieu alleges that the insurers have underpaid its claims and made untimely payments, thus, they are liable for the unpaid claims and penalties pursuant to
La. R.S. §§ 22:1892 and22:1973 .On August 22, 2022, Calcasieu filed suit in state court, entitled Police Jury of Calcasieu Parish v. Certain Underwriters at Lloyds London, et al., Civ. Action 2:23-20, and on August 26, 2022, Calcasieu dismissed with prejudice the only two foreign insurers, Certain Underwriters at Lloyd‘s, London and HDI Global Specialty SE. These Defendants were never served, and the remaining Defendants were served on November 17, 2022.
Police Jury of Calcasieu Par. v. Indian Harbor Ins. Co., 2:24-CV-00342, 2024 WL 1545135 at *1 (W.D. La. Apr. 9, 2024), certified question accepted, 24-00449 (La. 6/19/24), 386 So. 3d 306.
In January 2023, the lawsuit was removed to the Western District Court.3 Thereafter, Calcasieu filed a Motion to Remand, which was granted, and the matter was remanded to the Fourteenth Judicial District Court.
Defendants, all domestic insurers—Indian Harbor Insurance Company, Lexington Insurance Company, QBE Specialty Insurance Company, Steadfast Insurance Company, United Specialty Insurance Company, General Security Indemnity Company of Arizona, Old Republic Union Insurance Company, and Safety Specialty Insurance Company (collectively, “Defendants“)—filed a second Notice of Removal to remove the lawsuit to the Western District on March 6, 2024.4 Additionally, Defendants filed a Motion to Compel Arbitration and Stay Proceedings. Defendants sought to compel arbitration by enforcing arbitration clauses found in two foreign insurers’ policies with Calcasieu, which requires all claims associated with the policies to be submitted to arbitration proceedings in New York, where the arbitration tribunal shall apply New York law.
In its Notice of Removal, Defendants relied on the recent case Bufkin Enter. v. Indian Harbor Ins. Co., 96 F.4th 726 (5th Cir. 2024), in which the United States Court of Appeal for the Fifth Circuit held an arbitration clause contained in a Louisiana insurance contract was enforceable under the rules of the Convention on the Recognition and Enforcement of Arbitral Awards of 1958 (the “Convention“) via equitable estoppel. In its order to certify questions to this Court, the Western District noted that another recent case supported the re-removal of this matter, Indian Harbor Ins. Co. v. Belmont Commons, L.L.C., 23-30246, 2024 WL 962376 (5th Cir. Mar. 6, 2024). In Belmont Commons, the court found an arbitration agreement within an insurance policy issued in Louisiana was enforceable, notwithstanding the Convention, equitable estoppel, or
After the second removal of this matter, Calcasieu filed a Motion to Certify Question to this Court on March 28, 2024, urging Bufkin and Belmont Commons are inconsistent with this Court‘s 2019 ruling in Creekstone Juban, L.L.C. v. XL Ins. Am., Inc., 18-0748 (La. 5/8/19), 282 So. 3d 1042.5 Thereafter, on April 9, 2024, the Western District Court granted Calcasieu‘s motion and certified the following three questions to this Court:
(1) Whether the 2020 amendment adding Subsection D (Act No. 307 § 1 of 2020) to
La. R.S. 22:868 to allow forum and venue selection clauses in limited circumstances implicitly repealed Subsection A‘s long-standing prohibition of arbitration clauses in all insurance policies in Louisiana?(2) Whether
La. R.S. 9:2778 applies to all contracts with political subdivisions of the State, including insurance contracts, and thereby prohibits venue or arbitration outside of Louisiana or the application of foreign law in claims involving the State and its political subdivisions?(3) If arbitration continues to be prohibited in all insurance policies delivered or issued for delivery in Louisiana, whether a domestic insurer may resort to equitable estoppel under state law to enforce an arbitration clause in another insurer‘s policy in contravention of the positive law prohibiting arbitration in
La. R.S. 22:868(A)(2) ; and related, whether estoppel can be applied to political subdivisions without satisfying the distinct and heightened standard otherwise required by the Louisiana Supreme Court for application of estoppel to public bodies?
Police Jury of Calcasieu Par., 2024 WL 1545135 at *2. We accepted certification.6
DISCUSSION
Question 1: Did Subsection D of
At the outset, we note this case involves the interpretation of
Legislation is the solemn expression of legislative will; as such, statutory interpretations are primarily the search for legislative intent. Creekstone Juban, 18-0748, p. 4, 282 So. 3d at 1046. The interpretation of any statute begins with the statute itself. Id. When the law in question is clear and unambiguous, and its application does not lead to absurd consequences, it shall be applied as written; no further interpretation in search of legislative intent is required. Id.; See
With these well-established principles in mind, and as discussed herein, we find the addition of
19. SERVICE OF SUIT AND CHOICE OF LAW
In the event that any disagreement arises between the “insured” and the “Company” requiring judicial resolution the “insured” and the “Company” each agree that any suit shall be brought and heard in a court of competent jurisdiction within the State of New York. The “Insured” and the “Company” further agree to comply voluntarily with all the requirements necessary to give such court jurisdiction [...]
The “Insured” and the “Company” further agree that New York law shall control the interpretation, application and meaning of this contract, whether in suit or otherwise.
At the time of the Creekstone Juban decision,
A. No insurance contract delivered or issued for delivery in this state and covering subjects located, resident,
or to be performed in this state, or any group health and accident policy insuring a resident of this state regardless of where made or delivered, shall contain any condition, stipulation, or agreement either: (1) [...]
(2) Depriving the courts of this state of the jurisdiction of action against the insurer
(emphasis added). In Creekstone Juban, we emphasized the distinction between the concepts of forum or venue and jurisdiction, declining to extend the definition of “jurisdiction” to include “venue” or “forum.” Id., 18-0748, p. 9, 282 So. 3d at 1049. Citing Al Copeland Investments, LLC v. First Specialty Ins. Corp., 884 F.3d 540 (5th Cir. 2018), we concluded
In the wake of Creekstone Juban, in May 2020, the Legislature amended
On its face,
Forum selection clauses primarily concern the location where parties may pursue litigation. Indeed, the U.S. Supreme Court has held a forum selection clause does not impact jurisdiction.10 In contrast, arbitration clauses primarily concern the method of dispute resolution, depriving any court of jurisdiction over an action.
In Creekstone Juban, we declined to extend the definition of “jurisdiction” to include “venue” or “forum.” In the
We find no irreconcilable conflict between Subsections A and D, thus there is no repeal by implication. Rather, the plain language of Subsection D creates a limited exception in which a forum or venue selection clause is permitted in certain types of insurance contracts; the language of the statute does not plainly indicate arbitration clauses are also permitted. The Legislature‘s 2020 amendment to
Simultaneously, we find the Legislature‘s enactment of Subsection D provided merely a carve-out, allowing a forum or venue selection clause in limited circumstances, i.e., policies not subject to approval by the Department of Insurance. The language of the statute as amended is clear and unambiguous. We cannot conclude the Legislature conflated the terms “jurisdiction” and “forum” or “venue” in
Thus, we find
Question 2: Does
In the second certified question, we are asked:
Whether
La. R.S. 9:2778 applies to all contracts with political subdivisions of the State, including insurance contracts, and thereby prohibits venue or arbitration outside of Louisiana or the application of foreign law in claims involving the State and its political subdivisions?
The answer to this certified question rests on whether an insurance policy with a political subdivision is a “public contract” within the meaning of
A. The [L]egislature finds that with respect to public contracts involving the
state or a political subdivision of the state, provisions in such agreements requiring disputes arising thereunder to be resolved in a forum outside of this state or requiring their interpretation to be governed by the laws of another jurisdiction are inequitable and against the public policy of this state. B. The [L]egislature hereby declares null, void, unenforceable, and against public policy, any provision in a contract, subcontract, or purchase order, as described in Subsection A, which either:
(1) Requires a suit or arbitration proceeding to be brought in a forum or jurisdiction outside of this state.
(2) Requires interpretation of the agreement according to the laws of another jurisdiction.
C. The provisions of this Section shall apply to public contracts, as described in this Section, entered into on or after June 30, 1992.
(emphasis added).
Although
It is undisputed that Calcasieu is a political subdivision of this state. Importantly, it is the governing body of Calcasieu Parish. Also, it is undisputed the Defendants contracted with Calcasieu for Defendants to provide insurance coverage for approximately 300 properties owned by Calcasieu for the benefit of the public. There are no private actors present in the transactions between Calcasieu and the Defendants. The Defendants’ insurance policies clearly covered public properties owned by Calcasieu, purchased with public funds – taxpayer dollars. As such, we easily find insurance contracts with political subdivisions, like the policies at issue, are public contracts within the meaning of
We note with significance the Western District applied this statute in similar circumstances in two recent cases, both of which arose after the 2020 amendment to
The policy at issue was purchased with public money and covers public property; there is thus every basis for considering it a “public contract.” Additionally, the statute falls under the title regulating contracts as a whole.
***
The statute under its plain terms or even through the interpretation of any ambiguity indicates the state‘s strong public policy against both forum selection clauses and choice of law clauses in the policy at issue, requiring a political subdivision of the state to litigate its insurance claim in New York and under New York law. This is clearly a valid
area of state concern; it does not relate to private actors and their right to contract but to clauses in public contracts that would potentially subject a state actor to litigation under the laws of another state in an out-of-state forum. Accordingly, it is unenforceable. . . .
Id., 664 F.Supp. 3d at 673-74, see also, Chennault, 2023 WL 2637450, at *4. We find the Westlake court‘s rationale persuasive and we concur with its decision.13
As previously stated, when a law is clear and unambiguous, and its application does not lead to absurd consequences, the law shall be applied as written, and no further interpretation may be made in search of the Legislature‘s intent. Creekstone Juban, 18-0748, p. 4, 282 So. 3d at 1046. Statutes enacted for public policy purposes are to be liberally construed in favor of their objective; any exception to their application must be interpreted strictly. Westlake, 664 F.Supp. 3d at 672, citing Roger v. Estate of Moulton, 513 So.2d 1126, 1130 (La. 05/18/87).
It is well-settled that an insurance policy is a type of contract. See Broadmoor Anderson v. Nat‘l Union Fire Ins. Co. of Louisiana, 40,096 (La. App. 2 Cir. 9/28/05), 912 So. 2d 400, 404 (“[A]n insurance contract is an aleatory, nominate contract subject to the general rules of contract interpretation set forth in our civil code.“). An insurance policy issued to a public entity or political subdivision, too, is classified as a contract. This raises the questions of whether an insurance policy issued in Louisiana to a political subdivision is a “public contract” under
Forum selection clauses are generally enforceable and do not per se violate Louisiana public policy. Shelter Mut. Ins. Co. v. Rimkus Consulting Grp., Inc., of La., 13-1977, p. 11 (La. 7/1/14), 148 So. 3d 871, 878. However, when the legislature enacts a specific statute expressly prohibiting forum selection clauses, we recognize such prohibition as an expression of strong public policy. Id. at p. 17.
We agree with Chennault and Westlake that the plain language of
Further, as the Western District noted in Westlake, the Legislature failed not only
Based on the foregoing, and in the absence of compelling evidence to the contrary, we hold
Question 3: Equitable Estoppel
In the third certified question, we are asked:
If arbitration continues to be prohibited in all insurance policies delivered or issued for delivery in Louisiana, whether a domestic insurer may resort to equitable estoppel under state law to enforce an arbitration clause in another insurer‘s policy in contravention of the positive law prohibiting arbitration in
La. R.S. 22:868(A)(2) ; and related, whether estoppel can be applied to political subdivisions without satisfying the distinct and heightened standard otherwise required by the Louisiana Supreme Court for application of estoppel to public bodies?
Our answer to the first certified question informs the answer to the third certified question. Specifically, the plain language demonstrating
Moreover, we find the U.S. Fifth Circuit Court of Appeals correctly applied Louisiana law to reach the same finding in S. K. A. V., L.L.C. v. Indep. Specialty Ins. Co., 103 F.4th 1121, 1124 (5th Cir. 2024). There, the court observed that Creekstone Juban left no “doubt upon the general understanding that (A)(2) continued to operate as an anti-arbitration provision” post-amendment. Thus, in its current form,
With this principle established, we proceed to answer both prongs of this certified question which concern the availability and application of the doctrine of equitable estoppel under Louisiana law.
Equitable estoppel is a “jurisprudential [common law] doctrine involving the voluntary conduct of a party whereby he is precluded from asserting rights against another who has justifiably relied on such conduct and changed his position so that he will suffer injury if the former is allowed to repudiate the conduct.” MB Industries, LLC v. CAN Ins. Co., 11-0303, p. 9 (La. 10/25/11), 74 So. 3d 1173, 1180 (citations omitted). Further, we recognize that equitable estoppel “applies only where a party has made false or misleading representations of fact and the other party justifiably relied on the representation.” Id., p.10, 74 So. 3d at 1180.
Estoppel is not favored in our state‘s Civil Law System; rather, it is a
The first prong questions whether a domestic insurer may use equitable estoppel under Louisiana law to enforce arbitration via a foreign insurer‘s policy. For the following reasons, we answer this part of the question in the negative.
In short, equitable estoppel is not available under these circumstances because it conflicts with the positive law of
With all due respect, we disagree with the Federal Court‘s recent per curiam in Bufkin Enterprises, L.L.C. v. Indian Harbor Ins. Co. 96 F.4th 726 (5th Cir. 2024). There, the Fifth Circuit, citing Grigson,15 determined that non-signatory domestic insurers may use the doctrine of equitable estoppel to compel arbitration under the Convention through the policies of foreign insurers. Id. at 732. We find this conclusion flawed and not supported by Louisiana law. Notably, domestic insurers do not fall under the rules of the Convention. The Bufkin court did correctly recognize that the Convention is an international treaty enacted to encourage “the recognition and enforcement of commercial arbitration agreements in international contracts.” Id. at 729 (emphasis added). The Bufkin court failed to acknowledge that Louisiana has positive law on this issue. Indeed,
Thus, we find a domestic insurer may not resort to equitable estoppel under Louisiana law to enforce an arbitration clause in another insurer‘s policy in contravention of the positive law prohibiting arbitration in
Finally, the second prong of the third certified question is whether estoppel can be applied to political subdivisions “without satisfying the distinct and heightened standard otherwise required by the Louisiana Supreme Court for application of estoppel to public bodies.”16 This issue is rendered
For the foregoing reasons, we answer the third certified question in the negative: Since “arbitration continues to be prohibited in all insurance policies delivered or issued for delivery in Louisiana,” a domestic insurer may not resort to equitable estoppel under state law to enforce an arbitration clause in another insurer‘s policy in contravention of the positive law prohibiting arbitration in
CONCLUSION
This Court‘s opinion is not a discussion or comment on the merits of this case. Our discussions in this opinion are interpretations of Louisiana law in strict compliance limited to the certified questions from the United States District Court for the Western District of Louisiana, Lake Charles Division.
We have answered the certified questions as set forth in this opinion. Pursuant to
CERTIFIED QUESTIONS ANSWERED
WEIMER, C.J., additionally concurring.
I am in full agreement with the thorough analysis employed in the majority opinion to correctly answer the certified questions. I write separately to emphasize that an arbitration clause is separate and distinct from a forum or venue selection clause.
There is no question that compulsory arbitration clauses deprive the courts of jurisdiction, while forum or venue selection clauses do not. See Creekstone Juban I, L.L.C. v. XL Insurance America, Inc., 18-0748 (La. 5/8/19), 282 So. 3d 1042, 1052-53 (Weimer, J., concurring). The statutory prohibition of agreements in insurance contracts which deprive Louisiana courts of the “jurisdiction of action” “is directed at agreements that have the effect of excluding judicial remedies,” such as arbitration provisions. Id. at 1053. A forum selection clause is simply a provision which mandates a particular state, county, parish, or court as the proper venue. Shelter Mut. Ins. Co. v. Rimkus Consulting Group, Inc. of Louisiana, 13-1977 (La. 7/1/14), 148 So. 3d 871, 873. By its plain language,
I recognize there has been some past jurisprudential suggestion that an arbitration clause is a type of venue or forum-selection clause. See, e.g., Donelon v. Shilling, 19-00514, p. 4 (La. 4/27/20), 340 So. 3d 786, 790 n.6 (“An arbitration clause has been characterized by this court as a type of venue selection clause.“) (citing Hodges v. Reasonover, 12-0043, p. 10 (La. 7/2/12), 103 So. 3d 1069, 1076 (“An arbitration clause does not inherently limit or alter either party‘s substantive rights; it simply
Notes
When it appears to [...] any district court of the United States, that there are involved in any proceedings before it questions or propositions of law of this state which are determinative of said cause independently of any other questions involved in said case and that there are no clear controlling precedents in the decisions of the supreme court of this state, such federal court before rendering a decision may certify such questions or propositions of law of this state to the Supreme Court of Louisiana for rendition of a judgment or opinion concerning such questions or propositions of Louisiana law. This court may, in its discretion, decline to answer the questions certified to it.
A forum-selection clause is a provision in a contract that mandates a particular state, county, parish, or court as the proper venue in which the parties to an action must litigate any future disputes regarding their contractual relationship. Section 22:868
says nothing about venue. As the district court recognized, venue and jurisdiction are “separate and distinct.” We, too, will not stretch the definition of jurisdiction to include venue—a feat with no legal footing.