Oak Haven Management L L C v. Starr Surplus Lines Insurance Co

Filing 23

MEMORANDUM RULING re 10 MOTION to Dismiss filed by Starr Surplus Lines Insurance Co. Signed by Judge James D Cain, Jr on 9/9/2021. (crt,Benoit, T)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION

OAK HAVEN MANAGEMENT L L C

CASE NO. 2:21-CV-01273

VERSUS

JUDGE JAMES D. CAIN, JR.

STARR SURPLUS LINES INSURANCE CO MAGISTRATE JUDGE KAY

MEMORANDUM RULING
Before the court is a Motion to Dismiss [doc. 10] brought by defendant Starr Surplus
Lines Insurance Company and seeking dismissal of the action on the basis of forum non
conveniens, due to a forum selection clause in the insurance policy at issue. Plaintiff Oak
Haven Management LLC opposes the motion. Doc. 16.
I.
BACKGROUND
This suit arises from a first-party insurance dispute following property damage
incurred by plaintiff in Hurricane Laura and Hurricane Delta, in August and October 2020.
Plaintiff owns retirement homes in Southwest Louisiana, which were at all relative times
insured under a surplus lines policy issued by defendant.1 The policy contains the following
forum selection clause:
e. Choice of Law and Choice of Venue
No suit, action, or proceeding regarding this POLICY for the recovery of any
claim shall be sustainable in any court of law or equity unless the Insured
shall have fully complied with all the requirements of this POLICY. The
1

The properties at issue in this matter are The Guardian House and The Gardens, located in Lake Charles, Louisiana;
and The Golden Age of Welsh, located in Welsh, Louisiana.

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COMPANY agrees that any suit, action, or proceeding against it for recovery
of any claim under this POLICY shall not be barred if commenced within the
time prescribed in the statutes of the State of New York. Any suit, action,
or proceeding against the COMPANY must be brought solely and
exclusively in a New York state court or a federal district court sitting
within the State of New York. The laws of the State of New York shall
solely and exclusively be used and applied in any such suit, action, or
proceeding, without regard to choice of law or conflict of law principles.
Doc. 10, att. 3, p. 26 (emphasis added).
The properties sustained damage in the hurricanes that struck Southwest Louisiana
in August and October 2020. Following disagreements with defendant over the amount of
these damages, plaintiff filed suit in this court raising claims of breach of insurance contract
and bad faith under Louisiana law. Doc. 1. It invoked the court’s diversity jurisdiction
under 28 U.S.C. § 1332. Defendant now brings this motion to dismiss, seeking to enforce
the forum selection clause. Plaintiff opposes the motion, arguing that the clause is
unenforceable because it violates Louisiana public policy or, alternatively, that defendant
has waived its right to enforce the clause through its substantial participation in the
Streamlined Settlement Process mandated by this court for first-party insurance claims
arising from Hurricanes Laura and Delta. See doc. 3.
II.
LAW & APPLICATION
A. Legal Standard
Though formerly approached through a motion to dismiss for improper venue,
forum selection clauses are now enforced through a motion for transfer of venue under 28
U.S.C. § 1404(a). Weber v. PACT XPP Technologies AG, 811 F.3d 758, 767 & n. 9 (5th
Cir. 2016) (citing Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for Western Dist. of Tex.,
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571 U.S. 49 (2013)). When there is a valid forum selection clause, the plaintiff’s choice of
forum and private interest factors merit no weigh in light of the parties’ agreement as to
the proper forum. Atl. Marine, 571 U.S. at 63. Instead, the plaintiff bears the burden of
showing that transfer to the bargained-for forum is unwarranted based on public interest
considerations. Id. It may prevail by showing that enforcement of the clause violates a
“strong” or “fundamental” public policy of the forum state. Barnett v. DynCorp. Internat’l,
LLC, 831 F.3d 296, 303–04 (5th Cir. 2016).
B. Application
Plaintiff does not dispute that the forum selection clause was validly incorporated
into the policy at issue, or that its terms encompass the claims in this matter. It maintains,
however, that the clause should not be enforced because it violates a strong public policy
expressed in Louisiana Revised Statute 22:868(A), which forbids forum selection clauses
and arbitration clauses in insurance contracts. Specifically, the statute provides:
A. No insurance contract delivered or issued for delivery in this state and
covering subjects located, resident, or to be performed in this state, or any
group health and accident policy insuring a resident of this state regardless
of where made or delivered, shall contain any condition, stipulation, or
agreement either:
(1) Requiring it to be construed according to the laws of any other
state or country except as necessary to meet the requirements of the motor
vehicle financial responsibility laws of such other state or country.
(2) Depriving the courts of this state of the jurisdiction or venue of
action against the insurer.
La. Rev. Stat. 22:868(A).
Defendant argues that this public interest was insufficient to bar enforcement of a
forum selection clause in Al Copeland Investments, LLC v. First Specialty Insurance Co.,

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884 F.3d 540 (5th Cir. 2018). Copeland, however, was decided based on an earlier version
of § 22:868(A), which only forbade a “condition, stipulation, or agreement . . . depriving
the courts of Louisiana of the jurisdiction of action against the insurer.” Id. at 543
(alterations omitted). The Fifth Circuit noted that the statute said nothing about venue, a
separate concept from jurisdiction, and found no basis for concluding that Louisiana had a
strong public policy against forum selection clauses in insurance contracts. Id. at 544–45.
The statute was amended in 2020, effective August 1 of that year, with the addition
of “or venue” at § 22:868(A)(2)—resulting in a clear limitation on forum selection clauses.
See 2020 La. Sess. Law Serv. Act 307 (S.B. 156) (WEST). State and federal courts have
found similar statutes to evince a strong public policy against forum selection clauses in
other types of contracts.2 Defendant argues, however, that the court must hew to the prior
version of the statute rather than retroactively applying the amended version. As the United
States Supreme Court has observed:
A statute does not operate “retrospectively” merely because it is applied in a
case arising from conduct antedating the statute's enactment, or upsets
expectations based in prior law. Rather the court must ask whether the new
provision attaches new legal consequences to events completed before its
enactment.
Landgraf v. USI Film Products, 511 U.S. 244, 269, 114 S.Ct. 1483, 1499, 128 L.Ed.2d
229, 254 (1994) (internal citations omitted), quoted in Walls v. Am. Optical Corp., 740

2

See, e.g., Westbrook v. Pike Elec., LLC, 799 F.Supp.2d 665, 770 (E.D. La. 2011) (concerning the prohibition on
forum selection clauses in certain employment contracts under La. Rev. Stat. 23:921A(2)); Sawicki v. K/S Stavanger
Prince, 802 So.2d 598 (La. 2001) (same); Ha Thi Le v. Lease Finance Group, LLC, 2017 WL 2915488, *4–5 (E.D.
La. May 9, 2017) (ban on forum selection clauses in leases of movables under La. Rev. Stat. 9:3303(F)); Builder’s
Iron, Inc. v. Western Sur. Co., 2012 WL 2406026, *2–3 (E.D. La. June 25, 2012) (La. Rev. Stat. 9:2779A’s prohibition
on forum selection clauses in certain construction contracts).

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So.2d 1262, 1266 (1999). The Louisiana Supreme Court holds that a statute only acts
retroactively when it “either (1) evaluates the conditions of the legality of a past act, or (2)
modifies or suppresses the effects of a right already acquired.” Walls, 740 So.2d at 1267.
On the first question, it is the present enforceability of the forum selection clause that
concerns the court. On the second, plaintiff’s cause of action—and therefore defendant’s
right to invoke the forum selection clause—did not accrue until after the statute’s
amendment. Like the statutory employer defense (Louisiana Revised Statute § 23:1032)
under consideration in Walls, § 22:868(A) is not properly characterized as a substantive
law or one governing defendant’s past conduct. Instead, it is a procedural limitation on the
right of defendant insurers to transfer suits to out-of-state courts. Even if the cause of action
had accrued before the statute’s amendment, the Louisiana Supreme Court has also
determined that laws prohibiting forum selection clauses are procedural in nature and may
be applied retroactively to causes of action accruing before their effective date unless the
legislature expresses otherwise. Sawicki v. K/S Savanger Prince, 802 So.2d 598 (La. 2001).
The application of § 22:868(A), as amended, thus poses no retroactivity problems.
The court also rejects defendant’s argument that the reference to “courts of this
state” limits the statute’s application to cases filed in state courts. Defendant provides no
support for this assertion, and such language has been held to embrace the federal courts
sitting within a state. E.g., Woods v. Interstate Realty Co., 337 U.S. 535, 538 (1949)
(holding that a statute prohibiting certain persons from bringing suit in Mississippi under
a statement prohibiting suits “in courts of this State” applied to Mississippi federal courts).

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In its reply brief, defendant notes that § 22:868(D), which was enacted at the same
time as the amendment to § 22:868(A), permits forum selection clauses in insurance
contracts not subject to regulation by the Department of Insurance. It maintains that this
provision undermines any determination that the statute contains a strong public policy
directive against forum selection clauses. The court rejects this argument. The fact that the
legislature regards some insurance contracts as beyond its reach does not show that the
limitations are any less important for the contracts that are governed by the statute. The
fact that the legislation was passed so recently, and so soon after the Fifth Circuit
determined that the prior version of § 22:868(A) had no effect against forum selection
clauses, further supports its significance in state policy concerns. As with the cases cited
supra at note 2, the Louisiana legislature’s prohibition against forum selection clauses in
insurance contracts reflects a strong public interest in having disputes over policies
covering Louisiana residents or property decided locally. Accordingly, the forum selection
clause is unenforceable in this matter.
III.
CONCLUSION
For the reasons stated above, the Motion to Dismiss [doc. 10] will be DENIED.
THUS DONE AND SIGNED in Chambers on this 9th day of September, 2021.

__________________________________
JAMES D. CAIN, JR.
UNITED STATES DISTRICT JUDGE

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