Americas Insurance Company v. Moreno et al

Filing 58

ORDER & REASONS granting 3 Motion to Compel Arbitration. Signed by Judge Martin L.C. Feldman on 11/24/2015. (Reference: ALL CASES)(caa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
AMERICAS INSURANCE COMPANY

CIVIL ACTION

v.

NO.

ROBERT MORENO, SR.,
AN INDIVIDUAL DOING BUSINESS AS
ROBERT MORENO INSURANCE SERVICES

SECTION "F"

15-3696

ORDER AND REASONS
Before

the

Court

is

the

plaintiff,

Americas

Insurance

Company's, motion to compel arbitration and request for stay. For
the reasons that follow, the motion is GRANTED.
Background
This contract interpretation dispute hinges on the connection
between an arbitration provision and a forum selection clause in
the parties' Agency Agreement. Americas Insurance Company and
Robert Moreno Insurance Services entered into a Managing General
Agency Agreement whereby AIC appointed Moreno as its Managing
General Agent to oversee its automobile insurance business in
California. Generally, Moreno was in charge of handling AIC’s
insurance

claims

and

supervising

agents

and

brokers.

The

substantive dispute underlying the interpretive issue presented
here is a disagreement as to whether the parties have upheld their
obligations under the Agency Agreement. At present, the Court
addresses only the threshold question of whether the parties are

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bound to resolve the underlying dispute in arbitration.1
The Agreement between the parties contains a comprehensive
arbitration clause. The thrust of the provision provides:
Unless both parties mutually agree to waive arbitration
with respect to a particular dispute, the parties to this
Agreement hereby agree that binding arbitration shall be
the sole remedy for any and all dispute(s) arising
between them with reference to any transactions, terms,
or conditions under this Agreement including its
formation and validity.
The clause goes on to provide the details of the arbitration
procedure. It also states that "arbitration proceedings shall take
place in Louisiana."
The Agreement also contains a forum selection clause under the
heading "MISCELLANEOUS". It provides in full:
This Agreement has been made and entered into in the
State of Louisiana. This Agreement shall be governed by
Louisiana law, without regard to conflicts of law
principles. All disputes that may arise under this
Agreement, shall be submitted to the courts of such state
or federal courts sitting in such state, which courts
shall have jurisdiction and venue over matters arising
under this Agreement.
Moreno contends that the forum selection clause contradicts
the arbitration clause and creates an ambiguity as to the proper
forum for dispute resolution. Moreno urges the Court to apply
Louisiana contract principles to interpret the ambiguity against

1

Moreno initially brought suit against AIC in the Central
District of California. Without addressing the merits of the
underlying dispute or the issues of arbitrability, that Court
transferred the case here based on the forum selection clause.
2

the drafter, AIC. Moreno seeks to litigate the underlying contract
dispute before the Court and avoid arbitration. AIC responds that
the two provisions are complimentary. When read together, AIC
explains that the two provisions require resolution of disputes by
arbitration and entry of judgment on the arbitration award by a
court in Louisiana.
I.
Federal courts have a favorable policy toward arbitration. The
Federal Arbitration Act "reflects the fundamental principle that
arbitration is a matter of contract." Rent-A-Center, West, Inc. v.
Jackson, 561 U.S. 63, 67 (2010). The FAA "places arbitration
agreements on an equal footing with other contracts, and requires
courts to enforce them according to their terms." Id. (citations
omitted). "Like other contracts, however, they may be invalidated
by 'generally applicable contract defenses, such as fraud, duress,
or unconsionability.'" Id. at 68 (quoting Doctor's Associates, Inc.
v. Casarotto, 517 U.S. 681, 687 (1996).
To resolve a motion to compel arbitration, this Circuit
implements a two-step inquiry. First, the Court must apply state
law contract principles to determine whether the parties agreed to
arbitrate. Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429
(5th Cir. 2004); Fleetwood Enterprises, Inc. v. Gaskamp, 280 F.3d
1069, 1073 (5th Cir. 2002). Second, "the Court must determine
'whether legal constraints external to the parties' agreement

3

foreclosed

the

arbitration

of

those

claims.'"

Id.

(quoting

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614 (1985); see Banc One, 367 F.3d at 429. "In conducting this twostep inquiry, courts must not consider the merits of the underlying
action." Banc One, 367 F.3d at 429. Here, there is no contention
that a federal statute or policy precludes arbitration. Thus, the
Court narrows its focus to the first inquiry.
In determining whether the parties have agreed to arbitrate,
the Court asks two questions: 1) whether a valid agreement to
arbitrate between the parties exists; and 2) whether the dispute
falls within the scope of the arbitration agreement. See Sherer v.
Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008). In
answering the first question, the Court does not apply the federal
policy favoring arbitration. See id. In determining whether the
dispute falls within the scope of the agreement, however, the Court
resolves ambiguities in favor of arbitration. See id. Here, there
is no serious assertion that the dispute falls outside the scope of
the arbitration provision. Accordingly, the single issue presented
before the Court is whether, under Louisiana law, the parties
entered into a valid arbitration agreement.
II.
The parties do not dispute that they entered into a valid
Managing General Agency Agreement. Rather, Moreno attacks the
validity of the specific arbitration provision contained in the

4

Agreement.

He

submits

that

the

arbitration

provision,

which

provides the "sole remedy" for "any and all dispute(s)," is
invalid because it contradicts the forum selection clause, which
instructs "[a]ll disputes...shall be submitted to the courts...."
The parties invoke two competing principles of Louisiana
contract interpretation. Moreno points out that, “[i]n case of
doubt that cannot be otherwise resolved, a provision in a contract
must be interpreted against the party who furnished its text” - in
this case, AIC. La. Civ. Code art. 2056. In response, AIC correctly
asserts that "[e]ach provision in a contract must be interpreted in
light of the other provisions so that each is given the meaning
suggested by the contract as whole." See La. Civ. Code art. 2045.
The Court finds that any ambiguity between the provisions can be
resolved by viewing each in the context of the contract as a
whole.2
Although the forum selection clause is inartful, it is clear
from the detailed and all-encompassing arbitration provision that
the parties agreed to arbitrate their disputes. When considered in

2

Notably, Judge Carter in the Central District of California
also found that the two clauses did not conflict. He wrote:
In its arguments about why the disputes between the
parties are not subject to arbitration, Plaintiff
[Moreno] states that the arbitration provision conflicts
with the forum selection clause. The Court does not reach
the question of whether RMIS is bound by the arbitration
provision, but finds that the provisions do not conflict.
(citations omitted).
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context, the otherwise overbroad language of the forum selection
clause is limited by the arbitration agreement. When the forum
selection

clause

references

"[a]ll

disputes,”

its

meaning

is

logically constrained to “all disputes that are not subject to
binding arbitration.” In other words, any dispute within the scope
of the arbitration agreement must be submitted to arbitration;
anything outside the scope of the arbitration provision must be
submitted

to

a

court

in

the

proper

jurisdiction.

The

forum

selection clause is necessary to establish a forum for disputes
that fall into the latter category, such as this one. "Although a
contract is worded in general terms, it must be interpreted to
cover

only

those

things

it

appears

the

parties

intended

to

include." La. Civ. Code art 2051. AIC adds that the forum selection
clause is necessary to establish which court will have authority to
enter judgment on the arbitration award and which court will have
personal jurisdiction over the parties. This interpretation gives
meaning to all of the provisions of the Agreement.
Because

the

parties

entered

into

a

valid

arbitration

agreement, AIC's motion to compel arbitration is hereby GRANTED.
New Orleans, Louisiana, November 24, 2015
______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

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