Carroll et al v. American Empire Surplus Lines Insurance Company et al

Filing 100

ORDER AND REASONS: For the forgoing reasons, Airbnb's Motion to Compel Arbitration of Claims Asserted Against It in the Third-Party Complaint 71 is GRANTED, and Airbnb's Motion to Compel Arbitration of Claims Asserted by Plaintiffs 72 ; United Specialty's Motion to Compel Arbitration with Respect to Third-Party Claim 81 ; and United Specialty's Motion to Compel Arbitration and Stay Proceedings with Respect to Plaintiff's Claims 83 are DENIED. Arbitration is COMPELL ED with respect to the claims asserted against Airbnb by Schwarzhoff, Hamilton, and American Empire. All other claims survive. IT IS FURTHER ORDERED that a status conference is SET in this matter on February 15, 2017 at 11:00 a.m.Signed by Judge Jane Triche Milazzo on 2/10/2017.(Reference: All Cases)(my)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JUSTIN CARROLL, ET AL

CIVIL ACTION

VERSUS

NO: 16-2589
c/w 16-3760

AMERICAN EMPIRE SURPLUS
LINES INSURANCE CO., ET AL

SECTION: “H”(5)

ORDER AND REASONS
Before the Court are four motions to compel arbitration: Airbnb’s Motion
to Compel Arbitration of Claims Asserted Against It in the Third Party
Complaint (Doc. 71); Airbnb’s Motion to Compel Arbitration of Claims Asserted
by Plaintiffs (Doc. 72); United Specialty’s Motion to Compel Arbitration with
Respect to Third-Party Claim (Doc. 81); and United Specialty’s Motion to
Compel Arbitration and Stay Proceedings with Respect to Plaintiff’s Claims
(Doc. 83). These motions are disposed of as outlined herein.
BACKGROUND
Plaintiffs in this consolidated action rented an apartment at 1423 Royal
Street in New Orleans from Defendants Mark Hamilton and Lynn Schwarzhoff
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through the website Airbnb. On April 10, 2015, the stairs to the apartment
collapsed as Plaintiffs were using them, causing them to fall approximately 10
feet. Plaintiffs seek damages for injuries sustained in this accident. Defendant
American Empire is the general liability insurer of Schwarzhoff and Hamilton.
Plaintiff Justin Carroll and his wife Keren Rosenblum (the “Carroll
Plaintiffs”) filed the lead action in this matter on March 30, 2016 (the “Carroll
Action”). Separately, on April 8, 2016, Plaintiff Andrew Callard filed suit
arising out of the same incident in Louisiana state court (the “Callard Action”).
That action was removed to this Court on April 27, 2016 and consolidated with
the Carroll Action on May 31, 2016.
All Plaintiffs have filed suit against Schwarzhoff, Hamilton, and
American Empire. The Carroll Plaintiffs have additionally filed suit against
Airbnb and its insurer, United Specialty Insurance Company (“United
Speciality”).
Additionally, Schwarzhoff, Hamilton, and their insurer American
Empire have filed a third party complaint against United Specialty and
Airbnb. They allege that Airbnb agreed to provide “primary, non-contributory
insurance coverage for accidents that occur at an insured location.” They aver
that this coverage was underwritten by United Specialty. Accordingly, they
allege that United owes them defense and indemnity for this suit as covered
“hosts” under this policy. In the alternative, if such coverage is not provided,
they bring a claim against Airbnb for breach of contract or negligence as a
result of its failure to provide insurance coverage.
Defendants United Specialty and Airbnb have filed various motions
seeking to compel arbitration of the claims asserted against them in this
matter. Plaintiffs and Third-Party Plaintiffs respond in opposition.
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LEGAL STANDARD
The issue before the Court is whether Plaintiffs’ claims are subject to
arbitration. The inquiry is governed by the Federal Arbitration Act (“FAA”), 9
U.S.C. § 1 et seq., which broadly applies to any written provision in “a contract
evidencing a transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or transaction.”1
A two-step analysis governs whether parties should be compelled to
arbitrate a dispute.2

The Court must first determine whether the parties

agreed to arbitrate the dispute.3 This determination involves two separate
inquiries: (1) whether there is a valid agreement to arbitrate between the
parties, and, if so, (2) whether the dispute in question falls within the scope of
that agreement.4

If the Court finds the parties agreed to arbitrate, it must

then proceed to the second step of the analysis and consider whether any
federal statute or policy renders the claims non-arbitratable.5 Where all the
claims presented in a case are subject to arbitration, the district court may
dismiss the case.6

Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007).
3 Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004).
4 Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008).
5 Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002).
6 Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992) (“The weight
of authority clearly supports dismissal of the case when all of the issues raised in the district
court must be submitted to arbitration.”); see Apache Bohai Corp., LDC v. Texaco China, B.V.,
330 F.3d 307, 311 (5th Cir. 2003) (stating that failure to dismiss under those circumstances
is not an abuse of discretion).
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LAW AND ANALYSIS
I. Doc. 71- Airbnb’s Motion to Compel Arbitration of Claims
Asserted Against It in the Third Party Complaint.
In the first Motion, Airbnb asks the Court to compel arbitration of the
claims asserted by Schwarzhoff, Hamilton, and American Empire in the ThirdParty Complaint. Airbnb alleges that Schwarzhoff, in creating an account on
Airbnb’s website, agreed to its Terms of Service. These terms include an
arbitration provision. Though it appears that Hamilton and American Empire
are not parties to an arbitration agreement, Airbnb argues that they should be
compelled to arbitrate their claims under a direct-estoppel theory. Third-Party
Plaintiffs have not opposed this Motion. Accordingly this Motion is granted.
Third-Party Plaintiffs’ claims against Airbnb are dismissed, and arbitration is
compelled.
II. Doc. 72- Airbnb’s Motion to Compel Arbitration of Claims
Asserted by Plaintiffs
Airbnb next seeks to compel arbitration of the claims asserted against it
by Plaintiff Andrew Callard. It also seeks a stay of the claims asserted by the
Carroll Plaintiffs pending arbitration of Callard’s claims. In response, Callard
points out that he has not, in fact, asserted claims against Airbnb. 7 This
representation was made again at oral argument. As a result, Airbnb concedes
that its Motion is moot. Accordingly, this Motion is denied.

Though he attempted to file an amended complaint adding claims against Airbnb
and United Specialty, this filing was marked deficient and the deficiency was never corrected.
Accordingly, it has been stricken from the record.
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III. Doc. 81- United Specialty’s Motion to Compel Arbitration
with Respect to Third-Party Claim
In this Motion, United Specialty argues that if the third-party claims
asserted against Airbnb are sent to arbitration, the third-party claims against
it should likewise be sent to arbitration. United Specialty cannot, however,
point to any arbitration agreement between it and the Third-Party Plaintiffs.
Indeed, the Third-Party Plaintiffs’ claims against United Specialty are based
on the fact that “hosts” are named insureds in its policy. Third-Party Plaintiffs
allege that they are therefore owed coverage, defense, and indemnity relative
to the claims asserted against them by Plaintiffs. Importantly, this liability is
not premised on any liability of Airbnb, but rather the Third-Party Plaintiffs’
alleged status as insureds under United Specialty’s policy. Accordingly, this
Motion is denied.
IV. Doc. 83- United Specialty’s Motion to Compel Arbitration
and Stay Proceedings with Respect to Plaintiff’s Claims
This Motion is an adoption of Airbnb’s Motion (Doc. 72). As noted above,
that Motion has been rendered moot. Accordingly, this Motion is denied.
CONCLUSION
For the forgoing reasons, Airbnb’s Motion to Compel Arbitration of
Claims Asserted Against It in the Third-Party Complaint (Doc. 71) is
GRANTED, and Airbnb’s Motion to Compel Arbitration of Claims Asserted by
Plaintiffs (Doc. 72); United Specialty’s Motion to Compel Arbitration with
Respect to Third-Party Claim (Doc. 81); and United Specialty’s Motion to
Compel Arbitration and Stay Proceedings with Respect to Plaintiff’s Claims
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(Doc. 83) are DENIED. Arbitration is COMPELLED with respect to the
claims asserted against Airbnb by Schwarzhoff, Hamilton, and American
Empire. All other claims survive.
IT IS FURTHER ORDERED that a status conference is SET in this
matter on February 15, 2017 at 11:00 a.m.
New Orleans, Louisiana this 10th day of February, 2017.

____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

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