Transit Casualty Company, a Missouri Corporation headquartered in Los Angeles, California, was declared insolvent by the Circuit Court of Cole County, Missouri in 1985 and placed in liquidation pursuant to the provisions of the Missouri Insurers Supervision, Rehabilitation and Liquidation Act, §§ 375.1150-375.1246, RSMo 1984 (the “Liquidation Act”). The trial court appointed a statutory Receiver of Transit in that proceeding. Prior to its insolvency, Transit entered into a seriés of reinsurance agreements with certain underwriters at Lloyd’s of London, who were members of Lloyd’s Syndicate 553. At the time these contracts were created, C.J. Warrilow was the Syndicate member with the principal responsibility for underwriting risks for Syndicate 553. These underwriters are hereinafter referred to as the Reinsurers.
In December, 1995, Transit 1 commenced an action against the Reinsurers in the court below charging that they had failed to make payments due to Transit under these reinsurance agreements. The Reinsurers subsequently filed a motion in the trial court seeking an order of the court compelling arbitration of the Receiver’s claims. The trial court denied the motion and the Reinsurers bring this appeal.
Prior to its insolvency, Transit engaged in worldwide insurance and reinsurance business for many years. It did business in all 50 states and ceded business to some 900 reinsurers located in 30 or so foreign nations. Although the reinsurance contracts at issue in the instant appeal covered the years between 1978 and 1984, the Reinsurers’ obli *394 gation thereunder followed the liabilities occurring under Transit’s insurance policies. These liabilities include “long-tail” claims, meaning claims for injuries and damages which occurred during the policy years 1978 through 1984, but which are still ongoing. Asbestos exposure, breast implants, and environmental or toxic tort claims are among the types of long-tail claims for which liabilities still exist. Transit brought the instant action for its present “paid” claims, those on which Transit claims a present payment obligation, but because the claims continue to accrue, additional claims by Transit against Lloyd’s will continue for many years until Transit’s obligation under its policies are all finally concluded.
Transit filed the instant action in December, 1995, and styled it a petition and motion for order to show cause. The petition was amended in February, 1996, and asserted three counts. Each of the three counts was predicated on obligations allegedly owed Transit under the reinsurance agreements. The first count claimed that the Reinsurers were withholding monies due under the agreements in violation of statute and orders of court. The second count claimed damages for Reinsurers’ breach of the reinsurance agreements in the amounts allegedly due under them. The third count repeated the allegation of the first two counts as a claim for amounts due and unpaid on an open and current account. The Reinsurers moved to dismiss the amended petition on the ground that the parties’ agreements required the dispute to be arbitrated. The Reinsurers then removed the case to the United States District Court for the Western District of Missouri, where they sought an order compelling arbitration under Federal Arbitration Statutes, 9 U.S.C. §§ 1-16 and §§ 201-208, as well as Missouri’s Uniform Arbitration Act, §§ 435.350-435.470, RSMo (1994). On June 11, 1996, the Federal District Court granted a motion by the Receiver to remand the action to the Circuit Court of Cole County. The Federal Court listed two reasons for its decision. First, the court construed “the service of suit” clause in the reinsurance agreements as a waiver of the Reinsurers’ right of removal. Secondly, the court found that the Reinsurers’ rights under the Federal Arbitration Laws were superseded by a provision in the Missouri Uniform Arbitration Act that excluded arbitration agreements in “contracts of insurance” from the enforcement provisions of the Act. The Reinsurers appealed the District Court’s decision to the 8th Circuit Court of Appeals. The Federal appeal was pending at the time the instant appeal was orally argued and submitted to this court. However, we take judicial notice of the fact that the United States Court of Appeals for the 8th Circuit handed down its opinion in No. 96-2532 on July 10, 1997, and dismissed the appeal pursuant to 28 U.S.C. § 1447(d) for lack of jurisdiction. Thus, the District Court’s rémand to the Circuit Court is a final disposition.
Meanwhile, the Circuit Court of Cole County allowed Transit to file a second amended petition and motion for order to show cause against Reinsurers based on the same reinsurance agreements. It is that petition which is the subject of this appeal. The second amended petition alleges, in separate counts, that the Reinsurers owe Transit nearly a million dollars under the reinsurance agreements and the liquidation order; that the Reinsurers breached the reinsurance agreements to Transit’s damage; that the Receiver has made demand on the claims against the Reinsurers on an open account over periods covered by the reinsurance agreements and the Reinsurers have refused to pay; that the Reinsurers have breached a contractual duty of good faith and fair dealings; that the Reinsurers are guilty of “vexatious delay” in making payment under the agreements; that Transit is entitled to statutory punitive damages for wrongful refusal to pay amounts due under the agreements; that Transit is entitled to specific performance of a contract provision allegedly requiring the posting of a letter of credit for over 5.9 million dollars; and that Transit is entitled to specific performance of a contract provision to compel a final settlement of all future liabilities under the agreements. The petition also characterized the Reinsurers’ alleged failure to discharge their obligations under the reinsurance agreements as a refusal to surrender assets belonging to Transit in violation of an order entered by the trial *395 court at the outset of the Transit liquidation proceeding and sought to have the Reinsur-ers held in contempt of court for doing so.
Each of the reinsurance agreements contained an arbitration clause. The 1978 agreement is typical, and Art. XXII of that agreement provides, in pertinent part:
All disputes or differences arising out of this disagreement shall be submitted to the decision of two arbitrators, one to be chosen by each party, and in the event of the arbitrators failing to agree, to the decision of an umpire to be chosen by the arbitrators.
The agreements also contain a “service of suit” clause, pursuant to which the Reinsur-ers agree to submit to the jurisdiction of the courts of any state in which Transit is admitted to do business. Art. XVII of the 1978 agreement, in relevant part, provides:
In the event of the failure of the reinsurer to pay any amount claimed to be due hereunder, the reinsurer will, at the request of the reinsured, submit to the jurisdiction of any competent jurisdiction within the United States and will comply with all requirements necessary to give such court jurisdiction and all matters arising hereunder shall be determined in a court vrith the law and practice of such court.
In its order denying the motion to compel arbitration, the court found that the clear and specific language of the “service of suit” clauses of the reinsurance agreements control over the arbitration provisions of those agreements and permitted Transit to litigate the claim of a failure to pay in court. The court likewise found that § 375.1188 controls over any other state or Federal law and prohibits the motion to compel arbitration.
We first take up our jurisdiction to decide the appeal. Transit filed a motion to dismiss the appeal, asserting the trial court’s order did not dispose of all parties before the court because C.J. Warrilow did not join in the motion to compel arbitration. This court denied Transit’s motion by order entered October 7, 1996. However, Transit renews its motion to dismiss the appeal in its brief and at oral argument. Transit relies on
Abrams v. Four Seasons Lakesites/Chase Resorts, Inc.,
The answer to Transit’s claim is first, and quite simply, that C.J. Warrilow was in fact a party to the motion to compel arbitration, and such was made clear in the motion, notwithstanding the fact that he was not expressly named in the caption thereof. Consequently, the order appealed from did dispose of all parties. Moreover, this court held in
Madden v. Ellspermann,
The Reinsurers bring four points on appeal. In Point I, they assert the trial court erred in denying their motion to compel arbitration on the ground that the “service of suit” clauses expressed an intent on the part of the Reinsurers to waive their rights under the arbitration clauses of the agreements. In Point II, the Reinsurers contend that the trial court erred in finding that § 375.1188 takes precedence over other state or federal laws such as to preclude arbitration. In Point III, the Reinsurers argue that the trial court erred in finding that federal arbitration policy is inconsistent with the insurance regulatory laws of Missouri, and in Point IV, they contend the trial court erred in denying their motion to compel arbitration on the ground that the claims of the Receiver they, seek to arbitrate involved matters su i gener-is to the court. Transit responds to the Reinsurers’ points on appeal by generally asserting: (1) the plain language of the contract does not require arbitration of the dispute involving the Reinsurers’ “failure to pay;” (2) Missouri’s insurance insolvency law controls and it specifically.bars any person from compelling arbitration against an insolvent insurer; and (3) the injunction order is sui generis and cannot be avoided by a contractual arbitration clause.
In the Reinsurers’ Point I, they contend the trial court found that they waived their arbitration rights by placing a strained reading on the reinsurance agreements that flies in the face of established rules of contract interpretation. They observe that waiver of arbitration rights is not to be lightly inferred by the courts and resort to principals of contract construction in an effort to demonstrate the error of the trial court’s decision.
All of the reinsurance agreements in effect from 1978 to 1984 contain the two provisions that are at issue in this appeal:
Article XVII-Service of Suit Clause
In the event of the failure of the reinsurer to pay an amount claimed to be due hereunder, the reinsurer will, at the request of the reinsured, submit to the jurisdiction of any court of competent jurisdiction within the United States and will comply with all requirements necessary to give such court jurisdiction and all matters arising hereunder shall be determined in accord with the law and practice of such court.
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[I]n any suit instituted against the reinsurer under this agreement the Reinsurer will abide by the final decision of such court or any reviewing court.
Article XXII-Arbitration Clause
All disputes or differences arising out of this agreement shall be submitted to the decision of two Arbitrators ... and in the event of the Arbitrators failure to agree, to the decision of the Umpire to be chosen by the Arbitrators.
It is settled law in Missouri that insurance and reinsurance is a matter of contract, and is governed by the rules applicable to contracts.
Hartford Accident & In-
*397
dem. Co. v. Farmington Auction, Inc.,
Turning now to the reinsurance contracts at issue in this appeal, we first observe that all parties concede that the Reinsurers drafted the language of the service of suit clause, Art. XVII. There is also no question that the service of suit clause is very specific to the single issue of “failure to pay” any amount “claimed” to be due under the contract. On the other hand, the arbitration clause of Art. XXII is broad and general and refers to all disputes or differences arising out of the entire contract. It is likewise conceded that the reinsurance agreements cover “long-tail” claims, and the periods of coverage already span nearly twenty years and are anticipated to cover perhaps another ten years. Thus, the parties, when the treaties were entered into, could anticipate a great number of differences arising under the numerous clauses of the very lengthy treaty documents, most of which would not pertain to a “failure to pay.”
In evaluating Art. XVII, the service of suit clause, the language is plain and clear. The clause spells out that, in the event of a failure of the reinsurer to pay an amount claimed by Transit to be due under the reinsurance agreement, the reinsurer will, at Transit’s request, submit to the jurisdiction of any court of competent jurisdiction within the United States; that all matters shall be determined in accord with the law and practice of such court; and that the reinsurer will abide by the final decision of such court. The clause even contemplates an appeal when it provides that the reinsurer will abide by the final decision “of any reviewing court.”
The language of the service of suit clause cannot, as the Reinsurers here assert, pertain only to the enforcement of an arbitration award. The plain language of the clause does not mention or otherwise refer to the *398 word “arbitration,” nor does it refer to Art. XXII governing arbitration. Moreover, the Reinsurers’ interpretation would render the words “amounts claimed to be due” meaningless; it would change the contract to read “amounts awarded by an arbitration panel.” Such is not what the service of suit clause specifies. Rather, the clause clearly refers to a unilateral claim by Transit, not an arbitration award resolving disputed claims of both parties.
Having concluded that the plain language of the service of suit clause permits Transit to litigate a failure to pay any amount “claimed” to be due under the agreements in any court of competent jurisdiction, we turn to Art. XXII, the arbitration clause, to determine whether an inconsistency exists between the two clauses. As noted earlier, the arbitration clause is broad and general, referring to “all disputes or differences arising out of this agreement.” The general language of the arbitration clause, “all disputes or differences,” clearly encompasses a dispute or difference over a claimed failure to pay. Therefore, there is a classic conflict and inconsistency between the service of suit clause and the arbitration clause in the reinsurance agreement. “These two requirements are inconsistent. Being reasonably susceptible of two interpretations, the contract is ambiguous.”
Sadler,
We first look to the nature of the two inconsistent clauses and find, as we have previously observed, that Art. XVII, the service of suit clause, is the more specific clause, dealing with the single issue of a failure to pay amounts claimed to be due under the reinsurance contracts. The arbitration clause, Art. XXII, is broad and general, and refers to all disputes or differences arising out of the reinsurance agreements. As noted earlier, when one contract clause is general and inclusive and another is more limited and specific, the more specific clause acts to modify and
“pro tanto
” nullify the more general clause.
Surface v. Ranger Ins. Co.,
The next rule of construction requires that the ambiguity must be read against the draftsman of the provisions in question. As noted previously, it is conceded that the Reinsurers drafted the service of suit clause. Thus, we construe the provisions contrary to the Reinsurers’ asserted interpretation on this appeal and consistent with the outcome contended for by Transit. The Reinsurers could have written the clause in these reinsurance agreements to expressly state that Art. XVII, the service of suit clause, only apples to suits to enforce arbitration awards, or otherwise, as it here argues. As observed in the Memorandum Order and Decision in
Thiokol Corp. v. Certain Underwriters at Lloyd’s of London,
No. 1:96-CV-028B (D.C.Utah 1997),
appeal dismissed per stipulation, (1
0th Cir., October 14, 1997), “[i]f Lloyd’s — one of the largest and most experienced insurance underwriters in history— wanted to make its own boilerplate service of suit clause only an ‘aid to arbitration,’ it could have employed simple English words to say so.”
Id.
at Slip Op. 10, n. 3. The Rein-surers did not do so. This is the reason for the rule that courts construe ambiguities in contracts against those who draft them.
Schroeder v. Horack,
Our rules of construction also require that we construe reinsurance agreements to avoid an interpretation which would render a clause or a term meaningless. The Reinsur-ers’ argument, referred to earlier, that Art. XVII only relates to enforcement of arbitration awards would render the word “claimed” in that clause meaningless. Such being the case, the Reinsurers’ argument that a dis *399 pute involving a “failure to pay” must be arbitrated makes the entire first paragraph of the service of suit clause void and meaningless because the provision would then only apply to amounts actually due, which would, of necessity under the Reinsurers’ argument, have been determined to be due by an arbitration panel.
We have previously observed that the language of the service of suit clause is plain and clear. The plain language, and clear meaning, of the service of suit clause gives meaning to the word “claimed.”
In the event of the failure of the reinsurer to pay an amount claimed to be due hereunder, the reinsurer will, at the request of [Transit], submit to the jurisdiction of any court of competent jurisdiction within the United States....
The intention of the parties to permit Transit, when it claims the Reinsurers have failed to pay an amount due under the reinsurance treaties, to litigate that issue is clearly enunciated in the clause and all words are given their plain and ordinary meaning. The Rein-surers’ strained construction would render meaningless much of the language in the service of suit clause and distort the otherwise clear intent of the parties. We reject such a construction.
Finally, interpreting the service of suit clause to permit Transit to litigate its claims that the Reinsurers have failed to pay amounts due harmonizes seemingly conflicting provisions. Arbitration is not barred. To the contrary, all disputes or differences arising out of the reinsurance treaties, other than those involving claims by Transit of failure to pay on the Reinsurers’ part, are subject to arbitration. Indeed, claims by Transit of the Reinsurers’ failure to pay may be submitted to arbitration if Transit so elects. Thus, our construction harmonizes the service of suit clause and the arbitration clause because arbitration remains a viable option in all circumstances, but is only optional when the dispute involves a claimed failure of payment by Transit.
In summary, we find a patent ambiguity in the conflict between the service of suit clause, Art. XVII, and the arbitration clause, Art. XXII, in the reinsurance agreements. Applying our rules of contract construction, we conclude that the intention of the parties was to give Transit two options: (1) proceed to arbitration on “all disputes or differences arising out of the [reinsurance] agreement;” or (2) require the Reinsurers to submit to litigation in the United States in a court of competent jurisdiction selected by Transit “in the event of the failure of the reinsurer[s] to pay an amount claimed to be due” under the reinsurance agreement.
While this is a case of first impression in Missouri, and there is sparse authority elsewhere, there is, nonetheless, a body of case law construing Lloyd’s service of suit clauses in a related context which is consistent with our interpretation. In those cases, the courts have considered whether a service of suit clause, similar or identical to those at issue here, precludes a reinsurer’s right to remove an action initiated in state court to Federal court. A large majority of those cases hold that once the reinsured has chosen a state court forum, the reinsurer cannot force a forum change by removing the case to Federal court. These cases are persuasive because they reject the same arguments made by the Reinsurers in the ease at bar.
In
General Phoenix Corp. v. Malyon,
*400 The defendant agreed to “ ... submit to the jurisdiction of any Court of competent jurisdiction -within the United States....” The Supreme Court of the State of New York is such a Court ....
The defendant agreed that “... all matters arising ... shall be determined in accordance with the law and practice of such Court”; and “such court” could mean only the Supreme Court, to which defendant submitted. One may not determine matters in accordance with the law and practice of the Supreme Court in this Court. Finally, the defendant agreed to “ ... abide by the final decision of such Court ...” Removing the suit from the Supreme Court to here is not such abidance.
[T]he clause is legal and ... the defendant is bound by it.
Id. Thus, as early as 1949, Lloyd’s of London, of which the Reinsurers in the instant appeal are a syndicate, was using the identical service of suit clause that appears in the reinsurance contracts here under consideration. And, as early as 1949, Lloyd’s was told by the General Phoenix court that the service of suit clause could not be read as “merely an agreement to submit to personal jurisdiction,” but rather meant that the insured could unilaterally select a state court forum and that Lloyd’s could not remove the ease to the Federal system. Id.
Numerous other cases have followed.
Perini Corp. v. Orion Ins. Co.,
The author of this policy, Lloyd’s of London, has known at least as early as the General Phoenix decision in 1949 that the clause prevents removal of state-initiated actions. Confronted with repeated decisions following General Phoenix, Lloyd’s and its associated underwriters can hardly claim that this interpretation comes as a surprise. If the courts have misconstrued the clause, Lloyd’s has had ample opportunity to invoke the ultimate remedy, the drafter’s pen. Until the clause is changed, therefore, the parties are entitled to expect that the clause now means what it has always meant — that “submission” to a state tribunal precludes removal to a federal court.
Id. at 455.
More recently, in
Archdiocese of Milwaukee v. Underwriters at Lloyd’s,
The great weight of authority supports the position taken in
General Phoenix, Perini Corp.,
and
Archdiocese of Milwaukee. See Travelers Ins. Co. v. Keeling,
The Reinsurers cite several cases in support of their assertion that the service of suit clause is nothing more than a service of process clause or a personal jurisdiction clause, primarily:
Brooke Group Ltd. v. JCH. Synidcate,
In re Delta America Re Insurance Company,
Whirlpool Corp.,
As noted earlier, we consider all of the cases cited by the Reinsurers to be readily distinguishable or unpersuasive, as have other courts.
4
We are unwilling to abandon our time honored rules of contract construction, and we decline the invitation to re-write the parties’ contracts. Moreover, the two most compelling cases on the issues involved in the pending appeal are those which sought removal of the instant action to Federal court, and its companion case. In the first,
Transit Casualty Company in Receivership v. Certain Underwriters at Lloyd’s of London Who are Members of Syndicate No. 553,
No. 96-4173-CV-C-2,
As we hold that the parties did not agree to arbitrate claims of failure to pay amounts due under the reinsurance agreements, the other arguments raised by the Reinsurers on this appeal are moot and need not be addressed. For the reasons detailed herein, the order of the trial court denying arbitration is affirmed.
All concur.
Notes
. Transit Casualty Company in Receivership, the insolvent company, is the party to this action, not the court appointed Receiver.
. Section 435.440.1 provides, in pertinent part: An appeal may be taken from:
(1) An order denying an application to compel arbitration made under § 435.355;
. "Reinsurance agreement,” "reinsurance contract,” and "reinsurance treaty” are used synonymously throughout this opinion.
. In the most recent case to address the issue, a Memorandum Decision and Order in Thiokol Corp. v. Certain Underwriters at Lloyd's of London, No. 1:96-CV-028B (D.C.Utah 1997), appeal dismissed per stipulation (10th Cir. October 14, 1997), the court was confronted with a service of suit clause and an arbitration clause virtually identical to those before us. The case arose in the typical manner. Thiokol submitted a claim for amounts due, and Lloyd’s refused to pay. Thiokol then brought suit in United States District Court. Lloyd’s responded with a motion to stay the action in favor of arbitration. Lloyd’s argued that the service of suit clause merely provided for submission to jurisdiction in a proceeding in aid of arbitration, relying on the same authorities on which the Reinsurers here rely. The court rejected the argument, and the cases on which Lloyd’s relied, and denied the motion to stay proceedings pending arbitration. In doing so, the court stated:
To accept Lloyd’s interpretation and impose arbitration on Thiokol in this case however would not only construe the clauses in the insurer’s favor, but also subvert, rather than harmonize, the service of suit clause to the arbitration clause.
A more harmonious interpretation of the policy is [that] ... [t]he service of suit clause grants Thiokol an explicit right to bypass arbitration by bringing Lloyd's to court in the United States in the event that Lloyd’s fails to pay a claim submitted by Thiokol. The arbitration clause still has meaning because arbitration appears to be ... the exclusive forum for Thiokol in instances not addressed in the service of suit clause. It also provides an alternative forum for Thiokol in the specific instance where Lloyd’s fails to pay a claim brought by Thiokol.
Id. at slip op. 9-14.