Cedar Ridge, LLC et al v. Certain Underwriters at Lloyds London et al

Filing 13

ORDER AND REASONS: granting #9 Motion to Compel Arbitration. It is ORDERED that the matter is STAYED and ADMINISTRATIVELY CLOSED pending arbitration. Signed by Judge Sarah S Vance on 2/7/2024. (cs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CEDAR RIDGE, LLC, ET AL.
VERSUS

CIVIL ACTION
NO. 23-7350

CERTAIN UNDERWRITERS AT
LLOYD’S LONDON, ET AL.

SECTION “R” (1)

ORDER AND REASONS
Before the Court is defendants’ unopposed motion to compel
arbitration and stay the proceedings.1 For the following reasons, the Court
grants the motion.

I.

BACKGROUND
Plaintiffs are the owner and manager of commercial property in New

Orleans, Louisiana, that was allegedly damaged during Hurricane Ida on
August 29, 2021. 2 At the time of the hurricane, the property was covered by
an insurance policy issued by defendants.3 Plaintiffs allege that defendants
failed to make required payments under their policy, and they assert causes
of action for breach of the insurance contract and breach of the duty of good

1
2
3

R. Doc. 9.
R. Doc. 1-2 ¶¶ 2-3.
Id. ¶ 1.

faith and fair dealing.4

Defendants removed the action to this Court,

invoking federal-question jurisdiction because the subject matter of the
action relates to an arbitration agreement enforceable under the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards (“New York
Convention” or “Convention”), and the Federal Arbitration Act (“FAA”). 5 On
January 8, 2024, Magistrate Judge Janis van Meerveld granted defendants’
motion to opt-out of the Court’s Streamlined Settlement Program.6
Defendants now move to compel arbitration and to stay proceedings
pending arbitration. 7 Defendants contend that arbitration is mandated
under the following provision within the insurance policy: 8
All matters in difference between the Insured and the Companies
(hereinafter referred to as “the parties”) in relation to this
insurance, including its formation and validity, and whether
arising during or after the period of this insurance, shall be
referred to an Arbitration Tribunal in the manner hereinafter set
out.

4
5

6
7
8

R. Doc. 1-2 ¶¶ 4-5.
R. Doc. 1. See also 9 U.S.C. § 205 (providing for removal of actions
when the subject matter “relates to an arbitration agreement or award
falling under the Convention”).
R. Doc. 10.
R. Doc. 9.
R. Doc. 9-1 at 6-7.
2

The arbitration provision further states that “[t]he seat of the Arbitration
shall be in New York,” and that the “Arbitration Tribunal shall apply the law
of New York.” 9 Plaintiff does not oppose the motion.
The Court considers the motion below.

II.

LEGAL STANDARD
The New York Convention is an international treaty that provides

citizens of the signatory countries the right to enforce arbitration
agreements. The purpose of the Convention is “to encourage the recognition
and enforcement of commercial 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.”
Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n. 15 (1974). In 1970, the
United States acceded to the Convention, and Congress enacted
implementing legislation in Chapter 2 of the FAA, 9 U.S.C. §§ 201-208. See
GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless
USA, LLC, 140 S. Ct. 1637, 1644 (2020). Chapter 2, often referred to as the
“Convention Act,” provides for the New York Convention’s enforcement,
grants federal courts jurisdiction over actions governed by the Convention,

9

Id. at 7.
3

and empowers the courts to compel arbitration. 9 U.S.C. §§ 201, 203, 206;
see also Francisco v. STOLT ACHIEVEMENT MT, 293 F.3d 270, 273 (5th
Cir. 2002 (“Chapter 2 is the Convention Action.”). Chapter 1 of the FAA, 9
U.S.C. §§ 1-16, serves as the primary domestic source of federal arbitration
law. Todd v. Steamship Mut. Underwriting Ass’n (Bermuda) Ltd., 601 F.3d
329, 332 (5th Cir. 2010). Chapter 1 applies to actions brought under the
Convention to the extent that it does not conflict with the Convention or its
implementing legislation.

9 U.S.C. § 208; Todd v. Steamship Mut.

Underwriting Ass’n (Bermuda) Ltd., 601 F.3d 329, 332 (5th Cir. 2010); see
also McDermott Intern., Inc. v. Lloyds Underwriters of London, 120 F.3d
583, 588 (5th Cir. 1997) (“[T]he FAA is the approximate domestic equivalent
of the Convention such that the Convention Act incorporates the FAA except
where the FAA conflicts with the Convention Act’s few specific provisions.”
(citation and internal quotation marks omitted) (alterations omitted)).
“In determining whether the Convention requires compelling
arbitration in a given case, courts conduct only a very limited inquiry.”
Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 339 (5th Cir.
2004).

The Court “should compel arbitration if (1) there is a written

agreement to arbitrate the matter; (2) the agreement provides for arbitration
in a Convention signatory nation; ‘(3) the agreement arises out of a
4

commercial legal relationship; and (4) a party to the agreement is not an
American citizen.’” Id. (quoting Francisco v. STOLT ACHIEVEMENT MT,
293 F.3d 270, 274 (5th Cir. 2002)). Once these factors have been found to
exist, a court must order arbitration “unless it finds that the [arbitration]
agreement is null and void, inoperative or incapable of being performed.” Id.
(citation and internal quotation marks omitted).

III. DISCUSSION
The Court finds that the Convention applies to the dispute here
because (1) there is a written agreement to arbitrate “all matters in
difference” between the parties;10 (2) the agreement provides for arbitration
in the United States, and specifically in New York; 11 (3) the agreement arises
out of a commercial legal relationship, specifically, a contract to provide
insurance coverage; 12 and (4) a party to the agreement is not an American
citizen, as at least one subscribing syndicate of Certain Underwriters at
Lloyd’s London is a citizen of Germany.13 See Certain Underwriters at
Lloyd’s, London v. Prop. Risk Servs. Mgmt. II, No. 3:19-CV-1696, 2019 WL

10
11
12
13

R. Doc. 9-2 at 42.
Id.
Id. at 1; R. Doc. 1-2 ¶ 2.
R. Doc. 9-1 at 9.
5

5318566, at *3 (N.D. Tex. Oct. 21, 2019) (finding that a dispute would fall
under the Convention as long as one of the subscribers to the insurance
policy was not an American citizen).

Plaintiffs do not dispute the

applicability of the Convention. Plaintiffs’ allegation that defendants failed
to make required payments under the insurance policy constitutes a matter
in dispute between the parties. Plaintiffs do not contend, and no applicable
law or evidence shows, that the agreement is “null and void, inoperative, or
incapable of being performed.” See Freudensprung, 379 F.3d at 341-42.
Accordingly, the Court must order arbitration.
The Convention does not explicitly authorize a court to stay litigation
pending arbitration. Todd, 601 F.3d at 332. The FAA applies in Convention
cases to the extent that it does not conflict with the Convention. 9 U.S.C. §
208; Todd, 601 F.3d at 332. Thus, when the parties’ arbitration agreement
falls under the Convention, a party may apply for a stay under the FAA, 9
U.S.C. § 3. Todd, 601 F.3d at 332. Having found that plaintiffs’ claims fall
under the Convention and must be submitted to arbitration, the Court must
stay the action pending arbitration upon application of one of the parties
under the FAA. 9 U.S.C. § 3 (“[T]he court . . . upon being satisfied that the
issue involved in such suit . . . is referable to arbitration . . . shall . . . stay the
trial of the action until such arbitration has been had.”). Here, defendants
6

have applied for a stay. 14 Accordingly, the Court must stay the litigation
pending arbitration.

IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS defendants’ motion to

compel arbitration.

It is ORDERED that the matter is STAYED and

ADMINISTRATIVELY CLOSED pending arbitration.

New Orleans, Louisiana, this _____
7th day of February, 2024.
_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

14

R. Doc. 9.
7