Insurance Company of Greater New York v. Kinsale Insurance Company
MEMORANDUM OPINION AND ORDER re: 12 MOTION to Remand to State Court . filed by Insurance Company of Greater New York, 8 MOTION to Compel Arbitration and Stay or Dismiss this Action. filed by Kinsale Insurance Company. In sum, GNY's motion to remand is DENIED, and Kinsale's motion to compel arbitration is GRANTED. Additionally, because Kinsale requests a stay, see ECF No. 10, at 13, the action must be and is stayed pending resolution of the arbitratio n, see 9 U.S.C. § 3 ("[T]he court..., upon being satisfied that the issue involved in such suit or proceeding is referrable to arbitration..., shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." (emphasis added)); Katz v. Cellco P'ship, 794 F.3d 341, 345 (2d Cir. 2015) ("We join those Circuits that consider a stay of proceedings necessary after all claims have been referred to arbitration and a stay requested."). That said, the Court sees no reason to keep the case open pending arbitration. Accordingly, the Clerk of Court is directed to terminate ECF Nos. 8 and 12 and to administratively close the case, without prejudice to either side moving by letter-motion to reopen the case within thirty days of the conclusion of the arbitration proceedings. SO ORDERED. (Signed by Judge Jesse M. Furman on 11/15/2023) (tg) Transmission to Orders and Judgments Clerk for processing.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
INSURANCE COMPANY OF GREATER NEW YORK, :
KINSALE INSURANCE COMPANY,
JESSE M. FURMAN, United States District Judge:
Plaintiff Insurance Company of Greater New York (“GNY”) filed this lawsuit on or
about March 31, 2023, in New York State court, against Defendant Kinsale Insurance Company
(“Kinsale”). GNY seeks a declaration that Kinsale, which issued a commercial general liability
policy to Nicko’s Construction, Inc., ECF No. 28-1 (the “Kinsale Policy”), is obligated to defend
GNY’s insured, Gracie Corporation (“Gracie”), in a pending personal injury lawsuit (the
“Underlying Action”). On April 28, 2023, Kinsale removed the case to this Court, invoking the
Court’s diversity jurisdiction, see ECF No. 1, and, a few days later, moved to compel arbitration
of the parties’ dispute, see ECF No. 8. Thereafter, GNY moved to remand the case on the
ground that the case does not satisfy the $75,000 amount-in-controversy requirement of 28
U.S.C. § 1332. See ECF No. 12. For the reasons that follow, GNY’s motion to remand is
DENIED, and Kinsale’s motion to compel arbitration is GRANTED.
MOTION TO REMAND
The Court begins with GNY’s motion to remand. Pursuant to Title 28, United States
Code, Section 1446, which sets forth procedures governing removal, removal based on diversity
of citizenship is proper “if the district court finds, by the preponderance of the evidence, that the
amount in controversy exceeds the amount specified in section 1332(a).” Id. § 1446(c)(2)(B).
Kinsale, as the removing party, “has the burden of proving that it appears to a reasonable
probability that the claim is in excess of the statutory jurisdictional amount.” Mehlenbacher v.
Akzo Nobel Salt, Inc., 216 F.3d 291, 296 (2d Cir. 2000). To determine whether that burden has
been met, courts first look to the plaintiff’s complaint and then to the defendant’s petition for
removal. Id. On a motion to remand, “[i]f the pleadings are inconclusive as to the amount in
controversy, the removing party may rely on, and the Court may consider, documents outside of
the pleadings to determine the amount in controversy.” Scottsdale Ins. Co. v. Acceptance Indem.
Ins. Co., No. 19-CV-7294 (RA), 2019 WL 6498316, at *2 (S.D.N.Y. Dec. 3, 2019) (citing Yong
Qin Luo v. Mikel, 625 F.3d 772, 775 (2d Cir. 2010)); see also Mehlenbacher, 216 F.3d at 298
(remanding to the district court to allow for further briefing because the complaint and notice of
removal were inconclusive as to the amount in controversy).
Measured against these standards, GNY’s motion to remand fails because Kinsale has
established that there is a “reasonable probability” that defense costs in the Underlying Action
will exceed the $75,000 threshold. To be sure, the Complaint itself does not reference such a
figure. See ECF No. 1-1. But it does allege that “GNY has paid, and likely will continue to pay,
substantial amounts of money in connection with the defense of Gracie in connection with the
Underlying Action.” Id. ¶ 50 (emphasis added). And, more significantly, Kinsale submits the
Verified Bill of Particulars served by the plaintiff in the Underlying Action, which reveals that he
is seeking at least $4.5 million in damages based in part on injuries to his spine, shoulder, and
knee, as well as lost future earnings; and alleges that he has had at least two surgeries, one on his
spine and one on his shoulder. See ECF No. 28-4. Given that, it is likely, if not probable, that
the defense of that action will require the retention of two, if not three, experts (one or two
medical experts and an expert in lost earnings) and that it will, almost certainly, cost more than
$75,000. That is enough to support jurisdiction. See, e.g., Travelers Indem. Co. of Conn. v.
Centex Homes, No. 14-CV-217 (LJO) (GSA), 2014 WL 2002320, at *5 (E.D. Cal. May 15,
2014) (“Based on the parties’ filings and the Court’s review of parties’ other related litigation
(between each other and other parties), it is certainly possible (if not likely and probable) that the
costs for Plaintiffs to defend [in the underlying] action will exceed $75,000.”); Travelers Cas.
Ins. Co. of Am. v. Am. Home Realty Network, Inc., No. 13-0360 (SC), 2013 WL 1808984, at *5
(N.D. Cal. Apr. 29, 2013) (denying a motion to remand an insurance coverage action based on a
finding that “[l]egal bills exceeding $75,000” in the underlying action were “likely”).
In arguing otherwise, GNY contends that the Court is limited to the face of the Complaint
and the Notice of Removal. See ECF No. 15 (“Pl.’s Remand Mem.”), at 3. If that were correct,
GNY’s motion to remand would be on firm ground. After all, as noted, the Complaint does not
specify the likely defense costs. And nor does the Notice of Removal, which focuses on the
prospect that Kinsale could be required to indemnify Gracie in the Underlying Action — even
though indemnification is not relief that GNY seeks in this case. See, e.g., Greater N.Y. Ins. Co.
v. United Specialty Ins. Co., No. 20-CV-1083 (MKV), 2020 WL 3446690, at *2 (S.D.N.Y. June
24, 2020) (granting a motion to remand an insurance coverage action for failure to meet the
amount-in-controversy requirement where, as here, the plaintiff did not “not seek . . .
indemnification by Defendant for any eventual damages”). But GNY’s argument is foreclosed
by Second Circuit precedent, which provides that where “the pleadings are inconclusive,” a court
“may look to documents outside the pleadings [and] to other evidence in the record to determine
the amount in controversy.” Yong Qin Luo, 625 F.3d at 775; accord United Food & Com.
Workers Union, Local 919 v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 305 (2d
Cir. 1994). For that reason, the Court declines to rely on Greater New York Insurance Co., an
otherwise similar case on which GNY places heavy reliance, see Pl.’s Remand Mem. 3-4, as the
court there (despite citing Mehlenbacher) erroneously limited its review to the complaint and
notice of removal. See 2020 WL 3446690, at *2. In any event, Greater New York Insurance Co.
is also distinguishable because the plaintiff in the underlying state litigation there was seeking
only $180,000 and the removing defendant failed to establish more than a “mere ‘possibility’” of
defense costs exceeding $75,000. Id.
For the foregoing reasons, the Court concludes that the amount-in-controversy
requirement for diversity jurisdiction is met. Because there is no dispute that the parties are
diverse, it follows that GNY’s motion to remand must be and is DENIED.
MOTION TO COMPEL ARBITRATION
The Court turns, then, to Kinsale’s motion to compel arbitration. The Federal Arbitration
Act (“FAA”) reflects “a strong federal policy favoring arbitration as an alternative means of
dispute resolution.” Hartford Accident & Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d
219, 226 (2d Cir. 2001). In light of that policy, it is well established that “any doubts concerning
the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). Where, as in this case, a party
refuses to arbitrate, a court’s role is limited to determining “(1) whether there exists a valid
agreement to arbitrate at all under the contract in question . . . and if so, (2) whether the
particular dispute sought to be arbitrated falls within the scope of the arbitration agreement.”
Nat’l Union Fire Ins. Co. v. Belco Petroleum Corp., 88 F.3d 129, 135 (2d Cir. 1996); accord
Jacobs v. USA Track & Field, 374 F.3d 85, 88 (2d Cir. 2004).
In light of these standards, Kinsale’s motion to compel arbitration must be and is granted.
First, the Kinsale Policy contains a valid arbitration clause, which requires arbitration of “[a]ll
disputes over coverage or any rights afforded under this Policy, including whether an entity or
person is a Named Insured, an insured, [or] an additional insured.” Kinsale Policy 24. 1 Second,
the present action plainly falls within the scope of that provision, as GNY seeks a declaration
that its insured, Gracie, is an “additional insured” under the Kinsale Policy with respect to the
Underlying Action and, thus, entitled to coverage. Id. at 57, 60-61, 64-65. And while GNY
itself is not a signatory to the Kinsale Policy, it is nevertheless bound by the Policy’s arbitration
provision because it seeks to enforce other provisions of the Policy against Kinsale. See, e.g.,
Mobile Real Estate, LLC v. NewPoint Media Grp., LLC, 460 F. Supp. 3d 457, 479 (S.D.N.Y.
2020) (“Numerous courts have found that non-signatory parties are estopped from denying
arbitration when they rely on or seek direct benefits under an agreement by, for example,
bringing suit under that agreement.”); see also, e.g., Am. Bureau of Shipping v. Tencara Shipyard
S.P.A., 170 F.3d 349, 353 (2d Cir. 1999) (compelling non-signatory insurers to arbitrate because
“[i]t is clearly established that an insurer-subrogee stands in the shoes of its insured” (internal
quotation marks omitted)); Scottsdale Ins. Co. v. Kinsale Ins. Co., 253 F. Supp. 3d 796, 803
(E.D. Pa. 2017) (same); Best Concrete Mix Corp. v. Lloyd’s of London Underwriters, 413 F.
Supp. 2d 182, 187 (E.D.N.Y. 2006) (“By seeking to enforce its indemnification rights as an
additional insured under the policy, [the non-signatory party] must also be bound by its
arbitration clause because it wishes to avail itself of the protection and direct benefits afforded by
References to the Kinsale Policy are to the page numbers automatically generated by the
Court’s Electronic Case Filing (ECF) system.
GNY’s arguments to the contrary are without merit. First, it points to a “service of suit”
provision in the Kinsale Policy, which provides that Kinsale “will submit to the jurisdiction of
any court of competent jurisdiction” in the event it fails “to pay any amount claimed to be due.”
ECF No. 17 (“Pl.’s Arbitration Mem.”), at 6; see also Kinsale Policy at 24. But that argument
fails substantially for the reasons stated by the court in Hudson Specialty Ins. Co. v. N.J. Transit
Corp., No. 15-CV-89 (ER), 2015 WL 3542548 (S.D.N.Y. June 5, 2015), which involved a nearly
identical “service of suit” clause. As the Hudson Specialty Insurance court explained, arbitration
and service of suit clauses operate “in harmony, rather than in conflict with each other,” as the
service of suit clause applies when a party seeks to compel arbitration or enforce an arbitration
award. Id. at *6; see also, e.g., Travelers Ins. Co. v. Keeling, No. 91-CV-7753 (JFK), 1993 WL
18909, at *4 (S.D.N.Y. Jan. 19, 1993) (finding “little difficulty giving effect to the plain
language of both [an arbitration clause and service of suit clause]”). Second, GNY contends that
Kinsale waived its right to compel arbitration by delaying its request for arbitration and by
repudiating coverage under the Policy. See Pl.’s Arbitration Mem. 6. But Kinsale’s alleged presuit delay is not a basis to find waiver where, as here, it moved to compel arbitration a little more
than a month after GNY filed suit and only days after its removal. See, e.g., Gonder v. Dollar
Tree Stores, Inc., 144 F. Supp. 3d 522, 529 (S.D.N.Y. 2015) (holding that there was no waiver
where the party moved to compel arbitration one week after removal); Builders Grp. LLC v.
Qwest Commc’ns Corp., No. 07-CV-5464 (DAB), 2009 WL 3170101, at *5 (S.D.N.Y. Sept. 30,
2009) (holding that there was no waiver where the party moved to compel arbitration two-and-ahalf months after removal). And nothing precludes an insurer from denying coverage and later
invoking an arbitration clause if the insured seeks to contest that decision. See, e.g., Mulvaney
Mech., Inc. v. Sheet Metal Workers Int’l Ass’n, Loc. 38, 351 F.3d 43, 46 (2d Cir. 2003)
(determining that repudiation of a contract does not discharge the obligation to arbitrate); see
also, e.g., Carpet et Cetera, Inc. v. Forde, No. 06-CV-6993 (BSJ), 2006 WL 2959063, at *4
(S.D.N.Y. Oct. 16, 2006) (“[W]hether the [subsequent] conduct amounted to a complete
repudiation of the Agreement such that [the plaintiff] was excused from its obligations to
arbitrate, is a question properly answered by the arbitrators.”).
For the foregoing reasons, Kinsale’s motion to compel arbitration must be and is
In sum, GNY’s motion to remand is DENIED, and Kinsale’s motion to compel
arbitration is GRANTED. Additionally, because Kinsale requests a stay, see ECF No. 10, at 13,
the action must be and is stayed pending resolution of the arbitration, see 9 U.S.C. § 3 (“[T]he
court . . . , upon being satisfied that the issue involved in such suit or proceeding is referrable to
arbitration . . . , shall on application of one of the parties stay the trial of the action until such
arbitration has been had in accordance with the terms of the agreement.” (emphasis added)); Katz
v. Cellco P'ship, 794 F.3d 341, 345 (2d Cir. 2015) (“We join those Circuits that consider a stay
of proceedings necessary after all claims have been referred to arbitration and a stay requested.”).
That said, the Court sees no reason to keep the case open pending arbitration. Accordingly, the
Clerk of Court is directed to terminate ECF Nos. 8 and 12 and to administratively close the case,
without prejudice to either side moving by letter-motion to reopen the case within thirty days of
the conclusion of the arbitration proceedings.
Dated: November 15, 2023
New York, New York
JESSE M. FURMAN
United States District Judge
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