Havard v. Offshore Specialty Fabricators, LLC
Filing
147
ORDER AND REASONS - IT IS ORDERED that 135 MOTION to Compel Arbitration and Stay Litigation filed by Steamship Mutual Underwriting Association Limited is GRANTED, as set forth herein. The Clerk of Court shall stay this case and close it administratively. Signed by Judge Martin L.C. Feldman on 11/21/2019.(sa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
RONALD HAVARD
CIVIL ACTION
v.
NO. 14-824
OFFSHORE SPECIALTY FABRICATORS, LLC
SECTION F
ORDER AND REASONS
Before the Court is Steamship Mutual Underwriting Association
Limited’s motion to compel arbitration and stay litigation.
For
the reasons that follow, the motion is GRANTED.
Background
This is a Jones Act personal injury case.
On January 24,
2014 Ronald Havard was working as a seaman for Offshore Specialty
Fabricators, LLC aboard the Betty “R” Gamberlina when a tow cable
broke, causing him to fall and injure his back and other parts of
his body.
Havard sued Offshore Specialty Fabricators, LLC (“OSF”), his
employer and the owner and operator of Betty “R” Gamberlina,
alleging Jones Act negligence, negligence under general maritime
law, unseaworthiness, and entitlement to maintenance and cure. OSF
later
filed
for
bankruptcy
and
the
matter
was
stayed.
The
bankruptcy stay was lifted in December 2018. On May 30, 2019, on
the eve of trial, Havard filed a first amended complaint, adding
1
Steamship Mutual Underwriting Association Limited (“Steamship”) as
a direct defendant pursuant to the Louisiana Direct Action Statute,
La. Rev. Stat. Ann. § 22:1269. 1
Trial was continued. Steamship
now seeks an order compelling arbitration and requests that this
litigation be stayed.
I.
A.
Determining the arbitrability of disputes governed by the
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards is well settled. 2
The Convention on the Recognition and Enforcement
of Foreign Arbitral Awards (“the Convention”) governs
cases in which a party seeks to compel arbitration
outside of the United States. The United States joined
the Convention in 1970. Congress implemented the
Convention by enacting Chapter 2 of Title 9 of the United
States Code (“the Convention Act”). The Supreme Court
has explained that “[t]he goal of the Convention was to
encourage the recognition and enforcement of commercial
At the time of Havard’s alleged accident, Steamship, a P&I Club,
provided P&I (Protection & Indemnity) insurance coverage to OSF
and the Betty “R” Gamberlina.
Regarding similar insurance
arrangements:
[T]he insurer is an association of shipowners who engage
in providing insurance. The association is referred to
as the club, and the insured is the member. To obtain
coverage, the member enrolls a vessel with the club. The
rules of the club and the quotation are the contract of
insurance.
Triton Lines, Inc. v. Steamship Mut. Underwriting Assoc. (Bermuda)
Ltd., 707 F. Supp. 277, 278 (S.D. Tex. 1989).
2 The
governing law was aptly summarized by another Section of
Court considering overlapping issues; because the parties here do
not dispute these settled principles, the Court merely reproduces
this summary for context.
2
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arbitration agreements in international contracts and to
unify the standards by which agreements to arbitrate are
observed and arbitral awards are enforced in the
signatory
countries.”
The
Convention
applies
to
arbitration agreements between citizens of nations that
are signatories to the Convention. The United States,
Luxembourg, and England are all signatories.
“The Convention Act incorporates the entire Federal
Arbitration Act (“FAA”) to the extent that the two do
not conflict.
The FAA governs the validity and
enforceability of an agreement to arbitrate in the
United States and explicitly applies to any maritime
transaction.
A district court’s power to order
arbitration under the FAA, however, is limited to
arbitrations that will take place “[w]ithin the district
in which the petition for an order directing such
arbitration is filed.” As a result, the Convention
governs when a party seeks to compel arbitration outside
the United States.”
Authenment v. Ingram Barge Co., 878 F. Supp. 2d 672, 676-77 (E.D.
La. 2012)(internal citations, quotations omitted)(Milazzo, J.).
The Convention and the Convention Act do not explicitly
authorize
a
stay
of
litigation
pending
arbitration.
Todd
v.
Steamship Mut. Underwriting Ass’n (Bermuda) Ltd., 601 F.3d 329,
332 (5th Cir. 2010).
Nevertheless, “parties whose arbitration
agreements fall under the Convention have had to seek authority
for stays” under the FAA, 9 U.S.C. § 3.
Id. Under the Convention
and the FAA, arbitration must be compelled “if there is a) an
agreement in writing to arbitrate the dispute; b) the agreement
provides
for
arbitration
in
the
territory
of
a
Convention
signatory; c) the agreement arises out of a commercial legal
relationship; and d) a party to the agreement is not an American
3
citizen.” Francisco v. Stolt Achievement MT, 293 F.3d 270, 273
(5th Cir. 2002).
There is no dispute that these criteria are met
here.
B.
The Louisiana Direct Action Statute allows a plaintiff to
“proceed
directly
against
tortfeasors’
insurers
in
certain
circumstances.” Todd v. Steamship Mut. Underwriting Ass’n, Ltd.,
601 F.3d 329, 333 (5th Cir. 2010)(citing La. Rev. Stat. Ann. §
1269).
Nonsignatories
(such
as
direct
action
plaintiffs)
to
arbitration agreements may still be compelled to arbitrate despite
not
being
a
party
to
the
agreement.
Carlisle, 556 U.S. 624, 630 (2009).
Arthur
Andersen
LLP
v.
The “’traditional principles’
of state law allow a contract to be enforced by or against
nonparties
to
the
contract
through
‘assumption,
piercing
the
corporate veil, alter ego, incorporation by reference, third-party
beneficiary theories, waiver and estoppel.’” Id. at 631.
Thus, a plaintiff-nonsignatory can be compelled to arbitrate
under federal law. Authenment, 878 F. Supp. 2d at 680. Under a
direct-benefits estoppel theory, a plaintiff is estopped from
“avoiding arbitration clauses in contracts they seek to otherwise
enforce.”
Todd, 2011 WL 1226464 at *7. Direct-benefit estoppel is
applied when a non-signatory “knowingly exploits the agreement
4
containing the arbitration clause.” Hellenic Inv. Fund, Inc. Det
Norske Veritas, 464 F.3d 514, 518 (5th Cir. 2006).
Direct action plaintiffs do not have an independent cause of
action but instead have a procedural right of action against the
insurer “’where the plaintiff has a substantive cause of action
against the insured.’” Todd, 2011 WL 1226464 at *7 (quoting Descant
v. Admin. Of Tulane Educ. Fund, 93-3098 (La. 7/5/94); 639 So. 2d
246, 249).
As such, the direct action plaintiff stands in the
shoes of the insured (OSF) and is bound by the terms of its
agreement with the insurer (Steamship).
See id.
In Todd v. Steamship Mut. Underwriting Ass’n (Bermuda) Ltd.,
the Fifth Circuit addressed whether nonsignatories can be bound to
arbitrate based on arbitration agreements between insurers and
employers who liable in tort. 601 F.3d at 330. The Fifth Circuit
determined that nonsignatories can be bound to arbitrate depending
on
several
include:
considerations.
(1)
whether
the
Id.
at
agreement
336.
These
includes
considerations
terms
that
bind
nonsignatories; (2) what law applies in determining whether the
arbitration
agreement
plaintiff’s
claims
can
fall
be
enforced;
within
agreement between the parties. Id.
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the
and
scope
of
(3)
the
whether
the
arbitration
II.
The plaintiff does not dispute arbitrability – that Steamship
is entitled to an order compelling arbitration and a stay of this
litigation.
Because the parties agree that this issue would be
determined consistent with Todd and Authenment, the Court finds as
a threshold matter that Havard as a nonsignatory is bound by the
arbitration agreement between Steamship and OSF.
Rather than
challenging whether arbitration is appropriate, Havard takes issue
with where arbitration is reasonable. The plaintiff opposes being
haled
to
arbitrate
in
England,
in
accordance
with
the
forum
selection clause in the agreement between Steamship and OSF; he
prefers to arbitrate his claims in Louisiana. Thus, the Court
considers
whether
the
against the plaintiff.
forum
selection
clause
is
enforceable
It is.
Rule 47 of Steamship’s Rules for the relevant 2013/2014 policy
year expressly provide that third party nonsignatories are bound
by the Rules, that English law applies to disputes, and that any
dispute shall be brought either before the High Court of Justice
in London or to arbitration in London. Despite this contractual
selection of London, England as the exclusive forum for resolving
any disputes, the plaintiff insists that the forum selection clause
should not be enforced.
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Forum selection clauses are “prima facie valid and should be
enforced unless enforcement is shown by the resisting party to be
‘unreasonable’ under the circumstances.” M/S Bremen v. Zapata OffShore Co., 407 U.S. 1, 10 (1972) (footnotes omitted). A strong
showing is necessary to show that it would be unreasonable to
enforce the clause under the circumstances of the case. St. Tammany
Parish School Bd. v. Siemens Industry, Inc., No. 14-1881, 2014 WL
4425791 at *1 (E.D. La. 2014).
The plaintiff invokes M/S Bremen v. Zapata Off-Shore Co., 407
U.S. at 16-17, to support his contention that the forum selection
clause is unreasonable. Courts have distilled from Bremen these
factors
to
consider
when
determining
reasonableness
of
forum
selection clauses: (1) whether the forum selection clause was
incorporated
overreaching;
into
(2)
the
agreement
whether
the
as
party
a
result
of
challenging
fraud
the
of
forum
selection clause will be deprived of their day in court because
the forum selection clause is gravely inconvenient or unfair; (3)
if there is fundamental unfairness that will deprive the plaintiff
of a remedy; and (4) whether public policy of the forum state is
contravened by the enforcement of the forum selection clause.
Calix-Chacon v. Global Intern. Marine, Inc., 493 F.3d 507, 511
(5th Cir. 2007).
Havard underscores the inconvenience factor,
invoking Bremen’s example of an “agreement between two Americans
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to resolve their essentially local disputes in a remote alien
forum” as a rationale for why the forum selection clause may not
be enforceable here.
M/S Bremen, 407 U.S. at 17. He claims that
this dispute is a local one, where he was injured in waters off
the coast of Louisiana by a Louisiana tortfeasor and that the
witnesses are local to Louisiana, Texas, and Mississippi. The
plaintiff claims neither he, nor his claim, have any connection to
England
and
that
he
lacks
the
financial
resources
to
travel
oversees to arbitrate.
Steamship counters that this is not an exceptional case and,
in
fact,
none
of
designated forum.
Bremen
factors
favor
invalidation
of
the
The Court agrees. Although the incident is
local, the plaintiff has sued an England-based defendant. The
plaintiff opted to add Steamship as a defendant, knowing that
Steamship is a United Kingdom insurer.
Thus, this is not the case
of two Americans resolving their local disputes in a remote forum,
but, instead, an American plaintiff and an English defendant
resolving their dispute in England.
To be sure, the plaintiff
seeks to enforce the terms of the Steamship-OSF contract; and that
contract designates England as the proper forum for resolution of
disputes.
The plaintiff’s claim that he is unable financially to proceed
in England is not sufficient to show that the forum selection
8
clause is unreasonable. The plaintiff offers no support for his
assertion, noting simply that it will be expensive to travel.
But
the Fifth Circuit has declined to speculate that being compelled
to litigate in a designated forum necessarily requires that parties
and witnesses be physically present there. “[W]ith [the] modern
conveniences
of
electronic
filing
and
videoconferencing,
‘[a]
plaintiff may have his “day in court” without ever setting foot in
a courtroom.’” Calix-Chacon, 493 F.3d at 515 (citing Effron v. Sun
Line Cruises, Inc., 67 F.3d 7, 11 (2d Cir. 1995)). That the cost
of litigation in England may be higher than proceeding in Louisiana
is not alone enough to invalidate the forum selection clause. See
McQuillan v. Norwegian Cruise Line, No. 14-1195, 2014 WL 5305792,
at *4 (E.D. La. 2014)(“Although plaintiff’s costs may be higher in
Florida than in Louisiana, that factor alone is not enough to
invalidate the forum selection clause.”). Financial hardship is
not enough to render a prima facie valid forum selection clause
unenforceable.
And he offers no other Bremen factors that might
persuade the Court to invalidate the forum selection clause. The
plaintiff fails to make the clear showing required to overcome the
presumption of the forum selection clause’s enforceability.
The
plaintiff
added
Steamship
as
a
defendant
in
this
litigation, yet he is displeased by the forum selection clause
included in the insurance agreement between Steamship and OSF.
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“Plaintiff cannot embrace the contract when it works to his benefit
and
repudiate
the
contract
when
it
works
to
his
detriment.”
Authenment, 878 F. Supp. 2d at 681. Although arbitrating in London
may be inconvenient for the plaintiff, he has failed to carry his
heavy
burden
to
persuade
the
Court
that
enforcing
the
forum
selection clause is unreasonable.
Accordingly, IT IS ORDERED: that the defendant’s motion to
compel arbitration and stay litigation is GRANTED. The Clerk of
Court shall stay this case and close it administratively.
New Orleans, Louisiana, November 21, 2019
______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
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