Creech v. Onebeacon America Insurance Company

Filing 11

ORDER denying Defendant's 5 Motion to Stay Proceedings Pending Arbitration. Signed by Judge J. Randal Hall on 2/16/2016. (jah)

IN THE UNITED
FOR THE

STATES DISTRICT COURT

SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION

DEBORAH CREECH, as surviving
spouse of Guy Doyle Creech,

*
*
*

Plaintiff,

*
*

v.

*

CV 416-011

*

ONEBEACON AMERICA

*

INSURANCE COMPANY,

*
Ik-

Defendant.

*

ORDER

Presently before the Court is Defendant's motion to stay

proceedings
below,

pending

arbitration

(Doc.

5).

For

the

reasons

Defendant's motion is DENIED.
I.

In

early

insurance policy

2012,

BACKGROUND

Defendant

("policy")

issued

an

accidental

to Plaintiff's husband,

death

Guy Doyle

Creech, for the benefit of his spouse, Plaintiff Deborah Creech.
However,
2012,

since the death of Plaintiff's husband in September

Defendant has denied liability for the policy benefits.

Consequently, Plaintiff filed this suit in the State Court of
Effingham County, Georgia, on January 11, 2016.

After removing the case to this Court, Defendant filed the
instant motion to stay proceedings pending arbitration.

In so

doing,

Defendant

mandates

that

contends

this

arbitrate.

Court

that

issue a

Conversely,

arbitration clause

is

the

policy's

arbitration

stay and order

Plaintiff

unenforceable

argues

the

parties

the

such that no

clause
to

policy's

stay should be

granted.

II.

DISCUSSION

Under the Federal Arbitration Act,

[a] written provision in . . . a contract
evidencing a transaction involving commerce
to
settle
by
arbitration
a
controversy
thereafter arising out of such contract or
transaction, or the refusal to perform the
whole or any part thereof, or an agreement

in writing to submit
to arbitration an
existing controversy arising out of such a
contract, transaction, or refusal, shall be
valid,

irrevocable,

and

enforceable,

save

upon grounds as exist at law or equity for
the revocation of any contract.
9 U.S.C.

§ 2.

Thus,

[i]f any suit or proceeding be brought in
any of the courts of the United States upon
any issue referable to arbitration under an

agreement
the

court

in writing
in

which

for such arbitration,
such

suit

is

pending,

upon being satisfied that the issue involved
in such suit or proceeding is referable to
arbitration under such an agreement, shall

on application

of one of the parties

stay

the trial until such arbitration has been
had in accordance with the terms
of the
agreement.

9

U.S.C.

§

3.

However,

under

provisions

within "any contract

paragraph

(1)

of

Code

Section

Georgia

of

law,

insurance,

33-1-2"

are

as

arbitration

defined in

unenforceable.

O.C.G.A.

§

Residential

9-9-2(c)(3);

Props.

2002)(providing

Continental

Trust,

that

565

S.E.2d

O.C.G.A.

§

Ins.

603,

Co.

604

9-9-2(c)(3)

v.

(Ga.

Equity

Ct.

App.

"invalidates

arbitration agreements in insurance contracts") .

While

law,

ordinarily

federal

law

the McCarran-Ferguson Act

preempts

contradictory

state

prevents such an outcome in this

case:

No Act of Congress shall be construed to
invalidate,
impair,
or supersede any law
enacted by any State for the purpose of
regulating the business of insurance .
unless such Act specifically relates to the
business

15

U.S.C.

§

of

insurance.

1012(b).

In

Eleventh Circuit has held

interpreting

(1)

this

that "[O.C.G.A.]

provision,

the

§ 9-9-2(c)(3)

is

a law enacted to regulate the business of insurance, within the

meaning of the McCarran-Ferguson Act" and (2) that the "Federal
Arbitration

Act

does

not

itself

business of insurance." McKnight v.

F.3d 854,

857,

859 (11th Cir.

specifically

to

the

Chicago Title Ins. Co.,

358

2004).

Therefore,

relate

in this case,

O.C.G.A. § 9-9-2(c) (3) governs over the Federal Arbitration Act.
Given

this

determination,

the

policy's

arbitration

clause

will be unenforceable so long as the policy is a "contract of

insurance, as defined in paragraph (1) of [O.C.G.A. §]

As

the

Georgia

Code

defines

a contract

33-1-2."

of insurance

as

"a

contract which is an integral part of a plan for distributing
individual

losses

whereby

one

undertakes
3

...

to

pay

a

specified

both

parties

O.C.G.A.
this

amount

§

is

found

33-1-2(1),

neither
have

enforcement

at 857-58;

of

the

in

meets

Defendant

Georgia

contends

§

that

O.C.G.A.

this
§

Inc.,

O.C.G.A.

contracts

of

concludes

that

§

insurance
the

Yet,

Court

nor

because

rather

than

provides,

despite this

the

should

See

Eleventh

prevent

McKnight,

the

358

F.3d

614 S.E.2d 47, 49 n.6

(Ga.

for the definition of "contract of

applicable to § 9-9-2 (c) (3) ).

finds

that

9-9-2(c)(3)

inconsistency

9-9-2 (c)(3).

definition.

33-1-2(2)

§

Supreme

contingencies,"

this

should have no effect.

2005) (citing to § 33-1-2(2)

Court

policy

O.C.G.A.

Love v. Money Tree,

insurance"

determinable

O.C.G.A.

as

the

held

upon

However,

§ 9-9-2(c)(3)

argument,
Circuit

that

33-1-2(2).

§

O.C.G.A.

benefits

agree

definition

O.C.G.A.

or

9-9-2(c)(3)

to

be

As
fully

as defined by O.C.G.A.

arbitration

clause

within

a

result,

this

enforceable

§ 33-1-2(2)
the

policy

to

and
is

unenforceable.

III.

For the reasons above,

CONCLUSION

the Court DENIES Defendant's motion

to stay proceedings pending arbitration (Doc. 5).

ORDER ENTERED at Augusta,
February,

Georgia,

this _/^^_ day of

2016.

\NDAL

STATES

HALL

DISTRICT JUDGE

^SOUTHERN DISTRICT OF GEORGIA