Anadarko E&P Onshore LLC v. California Union Insurance Company et al

Filing 47

MEMORANDUM OPINION AND ORDER - For the reasons explained, Plaintiff's 10 MOTION to Remand is DENIED, Defendants' 5 SEALED MOTION Defendants' Motion to Dismiss and Compel Arbitration is GRANTED, and this action will be dismissed without prejudice. (Signed by Judge Sim Lake) Parties notified.(sanderson, 4)

Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 1 of 18
United States District Court
Southern District of Texas

ENTERED

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ANADARKO E&P ONSHORE LLC,
Plaintiff,
V.

CALIFORNIA UNION INSURANCE
COMPANY and CENTURY INDEMNITY
COMPANY, solely as
successor-in-interest to CIGNA
Specialty Insurance Company
f/k/a California Union
Insurance Company,
Defendants.

§
§
§
§
§
§
§
§
§
§
§
§
§
§
§

September 08, 2021
Nathan Ochsner, Clerk

CIVIL ACTION NO. H-21-1743

MEMORANDUM OPINION AND ORDER

Plaintiff Anadarko E&P Onshore LLC ("Plaintiff") filed this
action in the 281st District Court of Harris County, Texas, on
April 16,

2021,

against defendants California Union Insurance

Company ("Cal Union") and Century Indemnity Company ("Century")
(collectively, "Defendants") for breach of contract and violation
of the Texas Prompt Payment of Claims Act. 1
action to this court on May 26, 2021. 2
are

Plaintiff's

Motion

to

Remand

Defendants removed the

Pending before the court

(Docket

Entry

No.

10)

and

Anadarko E&P Onshore LLC's Original Petition ("Original
Petition"), Exhibit A to Defendants' Notice of Removal ("Notice of
Removal"), Docket Entry No. 1-1, pp. 9-10 �� 37-46.
All page
numbers for docket entries in the record refer to the pagination
inserted at the top of the page by the court's electronic filing
system, CM/ECF.
1

2

Notice of Removal, Docket Entry No. 1.

Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 2 of 18

Defendants' Motion to Dismiss and Compel Arbitration ("Defendants'
Motion to Compel") (Docket Entry No. 5).

For the reasons stated

below, Plaintiff's Motion to Remand will be denied, and Defendants'
Motion to Compel will be granted.
I.

Factual Allegations and Procedural Background

Plaintiff is a Delaware limited liability company with its
principal place of business in Texas. 3
Holdings,

LLC

Anadarko Consolidated

(Plaintiff's sole member) is indirectly owned by
Century

Anadarko Petroleum Corporation (a Delaware corporation). 4
is the successor to CIGNA Specialty Insurance Company

(formerly

known as California Union Insurance Company) and is a Pennsylvania
corporation with its principal place of business in Philadelphia. 5
Plaintiff

purchased

two

third-party

policies (the "Policies") from Defend.ants. 6

liability

insurance

One of the Policies

Original Petition, Exhibit A to Notice of Removal,
Entry No. 1-1, p. 3 � 3.
3

Docket

Defendants' Amended Notice of Removal ( "Amended Notice of
Removal"), Docket Entry No. 16, p. 3 � 10; see also Plaintiff's
Corporate Disclosure Statement and Certificate of Interested
Parties, Docket Entry No. 12, p. 1 � 1 ("Anadarko E&P Onshore LLC
is a Delaware limited liability company whose shares are not
publicly traded. [It] consists of a single member, Anadarko
Consolidated Holdings LLC, who owns 100% of the interest in
Anadarko E&P Onshore LLC.").
4

Amended Notice of Removal, Docket Entry No. 16, p. 4 � 11;
see also Original Petition, Exhibit A to Notice of Removal, Docket
Entry No. 1-1, p. 3 �� 3-5 (stating that Plaintiff is a Delaware
company and that Defendants are incorporated in Pennsylvania).
5

Original Petition, Exhibit A to Notice of Removal, Docket
Entry No. 1-1, p. 2 � i .
6

-2-

9

Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 3 of 18

covers the period from April 1, 1979 to April 1, 1980 (the "1979-80
Policy") and the other covers the period from April 1, 1980 to
April 1, 1981 (the "1980-81 Policy") . 7
"[i]f

limits

of

liability

of

the

The Policies provide that
underlying

insurance

are

exhausted[,]" Defendants have a duty to defend Plaintiff against
suits alleging personal injury, property damage or advertising
injury. 8
Each of the Policies contains a "service of suit" clause,

which provides that
in the event of the failure of [Cal Union] to pay any
amount claimed to be due hereunder, [Cal Union] hereon,
at the request of the Insured, will submit to the
jurisdiction of any court of competent jurisdiction
within the United States of America and will comply with
all
requirements
necessary
to
give
such
Court
jurisdiction

1979-80 Policy, Docket Entry No. 5-1, p. 5; 1980-81 Policy, Docket
Entry No. 5-2, p. 4.
In

2007

Plaintiff

and

Defendants

reached

a

settlement

agreement. 9

The 2007 Settlement Agreement was intended to resolve

"a dispute

between

insurance coverage .
7

Id. at 4-5

1�

CENTURY

INDEMNITY and ANADARKO concerning

. for paying or indemnifying ANADARKO for
9-14.

8

1979-80 Policy, Insuring Agreement, p. 6 � (2) (a), Exhibit 1
to Defendants' Motion to Compel, Docket Entry No. 5-1; 1980-81
Policy, Insuring Agreement, p. 3 � (2) (a), Exhibit 2 to Defendants'
Motion to Compel, Docket Entry No. 5-2.
Settlement Agreement Regarding Certain Defense Costs and
Indemnity Costs (the "2007 Settlement Agreement"), Exhibit 1 to
Defendants' Response in Opposition to Plaintiff's Motion to Remand
("Defendants' Response"), Docket Entry No. 23-1.
-3-

Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 4 of 18

DEFENSE COSTS and INDEMNITY COSTS it has incurred or will incur in
the future with respect to certain lawsuits against ANADARKO
11 10

The suits concerned coverage claims under multiple

insurance policies, including the Policies. 11
The 2007 Settlement Agreement contains a merger clause:
This AGREEMENT and the DEFENSE COSTS AGREEMENT contain
the entire agreement between the parties as respects
All discussions between the
their subject matter.
parties concerning the subject matter of this AGREEMENT
and the DEFENSE COSTS AGREEMENT are merged into this
AGREEMENT and the DEFENSE COSTS AGREEMENT.
This
AGREEMENT and the DEFENSE COSTS AGREEMENT may not be
modified or amended, nor any of their provisions waived,
except by an instrument in writing, signed by both
parties hereunder.
2007 Settlement Agreement,

Exhibit 1 to Defendants'

Response,

Docket Entry No. 23-1, p. 26 � 20.
The

2007

Settlement

Agreement

also

contains

a

dispute

resolution provision:
ARBITRATION
10. Any controversy or claim between CENTURY INDEMNITY
and ANADARKO relating to the payment, non-payment, or
reimbursement by either party of any PAST DEFENSE COSTS,
INCURRED DEFENSE COSTS, FUTURE DEFENSE COSTS, PAST A/B/S
INDEMNITY COSTS, or FUTURE A/B/S INDEMNITY COSTS, and any
controversy or claim concerning this AGREEMENT, shall be
settled by arbitration
Id. at 21 � 10.

11Id. at
3 and 2 (stating that the lawsuits concern "the
POLICIES" and defining "the POLICIES" as "refer[ring] both to the
policies listed on Exhibit A and to any other policies issued by
CENTURY INDEMNITY to Union Pacific Resources Company and/or
Champlin Petroleum Company.").

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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 5 of 18

The term "Future Defense Costs" is defined as including costs
for future "PRIVATE ACTION CLAIMS, " 12 which are defined as
those pending or future lawsuits or portions of same,
brought in the United States of America, seeking damages
from ANADARKO for property damage, bodily injury,
sickness, disease, or death resulting therefrom allegedly
caused from exposure to environmental conditions stemming
from ANADARKO'S facilities, operations, or products prior
to January 1, 1986.
Id. at 7

1

D.

In 2013 and

several lawsuits were brought against

"Louisiana

(the

Plaintiff

2014

Parish

Lawsuits")

alleging

that

Plaintiff's oil and gas operations in Louisiana caused "substantial
damage

to

land

and

Plaintiff asserts and

waterbodies [,] " 13

i.e.,

property

damage.

endants do not dispute that the alleged

damage occurred during periods covered by the Policies.14

at 11

1

K.

Parish of Plaauemines v. Total Petrochemicals & Refining USA,
Inc., et al., No. 2:18-cv-05256 (E.D. La.), Exhibit 4 to
Defendants' Response, Docket Entry No. 23-4, p. 5; Parish of
Jefferson v. Anadarko E&P Onshore LLC, et al., No. 2:18 cv-05213
(E.D. La.), Exhibit 5 to Defendants' Response, Docket Entry
No. 23-5, p. 6; Parish of Plaquemines v. Hilcorp Energy Company,
et al., No. 2:18-cv-05210 (E.D. La.), Exhibit 6 to Defendants'
Response, Docket Entry No. 23-6, pp. 4-5; Parish of Plaquemines v.
Equitable Petroleum Corporation, et al., No. 2:18-cv-05220 (E.D.
La.), Exhibit 7 to Defendants' Response, Docket Entry No. 23-7,
pp. 3-4; Charles W. Fasterling, et al. v. Hilcorp Energy Company,
sh of
et al., No. 61-798 (25th Judicial District Court for the
Plaquemines, Louisiana), Exhibit 8 to Defendants' Response, Docket
Entry No. 23-8, p. 8.
13

Original Petition, Exhibit A to Notice of Removal, Docket
Entry No. 1 1, p. 7 1 23.
14

-5-

15

16

Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 6 of 18

In 2017 the parties entered into an addendum to the 2007

Settlement Agreement. 15

Under the 2017 Addendum Plaint

f agreed

that upon receiving a settlement payment from Defendants, it would
release Defendants from any liability under the

Policies for

Plaintiff's "PAST DEFENSE COSTS" in the Louisiana Parish Lawsuits. 16
However,

Plaintiff explicitly "[did]

not release or discharge

[Defendants] from any claim, demand, cause
liability

under the Policies

action, damage, or
relating to or arising

out of any defense costs or indemnity costs relating to the
LOUISIANA PARISH LAWSUITS not expressly included in the definition
of PAST DEFENSE COSTS provided in [the] ADDENDUM
On

April

16,

2021,

Plaintiff filed

this

1117

action

against

Defendants in the 281st District Court of Harris County, Texas,
alleging that Defendants breached their contractual obligations
under the Policies by refusing to pay defense costs arising out of
the Louisiana Parish Lawsuits. 18

Plaintiff's Original Petition

alleged that Defendants had paid some of the defense costs incurred
by Plaintiff before September of 2016, but that Defendants had not
Addendum to Settlement Agreement Regarding Certain Defense
Costs and Indemnity Costs ("2017 Addendum"), Exhibit A to
Plaintiff's Response to Defendants' Motion to Dismiss and Compel
Arbitration ("Plaintiff's Response"), .Docket Entry No. 21-1.
Id. at 4

1

2.

18 Original
Petition, Exhibit A to Notice of Removal, Docket
Entry No. 1-1, p. 9 � 39.

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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 7 of 18

agreed to pay "any defense expenses · incurred by Anadarko from
September

2016

forward, including those at issue in this action. " 19

Defendants removed the action to this court on May
asserting

diversity

jurisdiction

under

28

U.S.C.

26,
§

2021,
1332. 20

Defendants filed a Motion to Dismiss and Compel Arbitration on
June

2,

2021; 21

Plaintiff filed a response on July

Defendants filed a reply on August
Plaintiff's Motion to Remand on June
response on July 9,

2021; 25

3,

2021; 22

and

Plaintiff filed

2021. 23

6, 2021; 24

9,

Defendants filed a

and Plaintiff filed a reply on July

23,

2021. 26

II.
A.

Analysis

Plaintiff Has Standing

endants argue that Plaintiff lacks standing to bring a
breach of contract claim because Plaintiff "provides no factual
allegations to show it entered into an enforceable contract with
at 8 �·
20

32.

Notice of Removal, Docket Entry No.

21
22

1,

p.

2

1

5.

befendants' Motion to Compel, Docket Entry No. 5.

Plaintiff's Response, Docket Entry No. 21.

Defendants' Reply in Further Support of Their Motion to
Dismiss and Compel Arbitration ("Defendants' Reply"), D0cket Entry
No. 42.
23

24

Plaintiff's Motion to Remand, Docket Entry No.
endants' Response, Docket Entry No.

10.

23.

Plaintiff's Reply in Support of Plaintiff's Motion to Remand
("Plaintiff's Reply"), Docket Entry No. 38.
26

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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 8 of 18

Century"

and

is

not

in

privity

of

contract

with

Century. 27

Defendants argue that Plaintiff "alleges that Century [] 'has a
duty to defend [Plaintiff] against suits alleging bodily injury
and/or property damage' but continues on to state that this duty to
defend is 'impose[d]

on California Union' by the Insurance

Contracts." 28 Plaintiff responds that "[t]his argument ignores the
allegations

in

[Plaintiff's]

petition

explaining

that

both

California Union and Century Indemnity are being sued, with Century
Indemnity being made a defendant solely based on its capacity as
successor in-interest to California Union

1129

Defendants

do not revisit the standing argument in their Reply. 30
The court is persuaded by Plaintiff's Response and concludes
that Plaintiff has pleaded an actual concrete injury that would be
redressed by a decision against Defendants. See Lujan v. Defenders
of Wildlife, 112 S. Ct. 2130, 2136 (1992).
B.

Plaintiff has standing.

Diversity Jurisdiction Exists

Defendants contend that the court may exercise subject matter
jurisdiction pursuant to 28 U.S. C.
27

§

1332. 31

Section 1332 (a)

Defendants' Motion to Compel, Docket Entry No. 5, pp. 12-13.

at 12 (quoting Original Petition, Exhibit A to Notice of
Removal, Docket Entry No. 1-1, p. 5 �1 15-16).
28

29

Plaintiff 1 s Response, Docket Entry No. 21, p. 23.
Defendants' Reply, Docket Entry No. 42.

31

Notice of Removal, Docket Entry No. 1, p. 2
-8-

1

5.

Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 9 of 18

provides that federal district courts may exercise subject matter
jurisdiction

over

"all

civil

actions

where

the

matter

in

controversy exceeds the sum or value of $75,000, exclusive of
interest and costs, and is between
States

II

citizens of different

A corporation is "deemed to be a c

izen of

every State and foreign state by which it has been incorporated and
of the State or foreign state where it has its principal place of
business."

28

U.S.C.

§

1332 (c) (1).

The citizenship of an

determined by the citizenship of all its

unincorporated entity

members. Americold Realty Trust v. Conagra Foods, Inc., 136 S. Ct.
1015

1012,

(2016).

"Because

federal

courts

have

limited

jurisdiction, parties must make clear, distinct, and precise
affirmative jurisdictional allegations in their pleadings.

11

Midcap

Media Finance, L.L.C. v. Pathway Data, Inc., 929 F.3d 310, 313 (5th
Cir. 2019) (internal quotations and citation omitted).
Plaintiff argues that Defendants
jurisdiction because they "fail[ed] to

led to establish diversity
lege either Defendant's

state of incorporation or principal place of business" and "also
fail[ed] to allege the c

izenship of Anadarko E&P Onshore LLC's

members." 32 But Defendants subsequently filed an Amended Notice of
Removal

supplementing

their original Notice

information that unambiguously

32

establishes

of

Removal

complete

with

diversity

Plaintiff's Motion to Remand, Docket Entry No. 10, p. 13.
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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 10 of 18

between the parties.33

The court therefore concludes that

subject matter jurisdict
C.

under 28 U.S.C.

§

has

1332.

The 2007 Settlement Agreement Supersedes the Policies

Plaintiff argues that Defendants waived their right to remove
by agreeing to the service-of-suit provisions in the Policies.34
Defendants argue that \\Plaintiff's reliance on the service-of-suit
is misplaced because it is superseded by the dispute

clause

resolution clause in the 2007 Settlement Agreement." 35
"For a contractual clause to prevent a party from exercising
its

right

to

removal,

the

clause

unequivocal' waiver of that right."

must

give

and

a

City of New Orleans v.

Municipal Administrative Services, Inc., 376 F.3d 501, 504 (5th
Cir.

2004)

(quoting

McDermott

International,

Inc.

v.

Lloyds

Underwriters of London, 944 F.2d 1199, 1212 (5th Cir. 1991)).
contractual clause may do this by "mak[ing] clear that

A

other

party to the contract has the \right to choose the forum' in which
any dispute will be heard."

Waters v. Browning-Ferris Industries,

Inc., 252 F.3d 796, 797 (5th Cir. 2001) (quoting City of Rose City
v. Nutmeg Insurance Co., 931 F.2d 13, 16 (5th Cir.), cert. denied,
112 S. Ct. 301 (1991)).
Amended Notice of Removal, Docket Entry No. 16.
34

Plaintiff's Motion to Remand, Docket Entry No. 10, p. 8.

35

Defendants' Response, Docket Entry No. 23, p. 8.
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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 11 of 18

The Policies 1 service-of-suit provisions state that
the event of the failure of [Cal Union] to pay any
amount claimed to be due hereunder, [Cal Union] hereon,
at the request of the Insured, wi
submit to the
jurisdiction of any court of competent jurisdiction
within the United States of America and will comply with
all requirements necessary
to give
such
Court
jurisdiction and all matters arising hereunder shall be
determined in accordance with the law and practice of
such Court.
1979-80 Policy, Docket Entry No. 5-1, p. 5; 1980-81 Policy, Docket
Entry No. 5-2, p. 4.
In Nutmeg the Fifth Circuit construed a nearly identical
service-of-suit clause, which stated
[W] e, at your request agree to submit to the jurisdiction
of any Court of Competent jurisdiction within the
United States and will comply with all requirements
necessary to give such Court jurisdiction and all matters
arising hereunder shall be determined in accordance with
the law and practice of such court.
Nutmeg, 931 F.2d at 14.
The

Fifth

Circuit

concluded

that

this

provision

was

"unambiguous" and "plainly require[d] that the insurer submit to
the jurisdiction of any court of the policyholder's choosin g.
at 15.

11

Id.

The Fifth Circuit therefore held that the service-of-suit

clause waived the insurer's right of removal.
In McDermott, 944 F.2d at 1200, the

Id.

fth Circuit construed a

service-of-suit provision that was substantially identical to the
one in Nutmeg. · But the Fifth Circuit found that the defendant in
McDermott had not waived its removal rights.

Id. at 1204-06.

The

Fifth Circuit distinguished the cases by noting that the policy at
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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 12 of 18

issue in Nutmeg contained a service-of-suit provision as its only
forum-selection clause, while the policy in McDermott had two
forum-selection

clauses -- a

arbitration clause.

service of-suit

clause

McDermott, 944 F.2d at 1207.

and

an

Here as in

McDermott, there are more than one forum-selection clause:

(1) the

service-of-suit provisions in the Policies and (2) the arbitration
clause in the 2007 Settlement Agreement, which -- as explained
below -- supersedes the Polic

The court thus concludes that

the service-of-suit provisions are not "clear and unequivocal"
waivers of Defendants' right of removal.

New Orleans, 376 F.3d

at 504.
When the terms of one contract are "so inconsistent with those
of the other that the two cannot subsist together[,]" there is a
presumption that the second superseded the first.

IP Petroleum

Co., Inc. v. Wevanco Energy, L.L.C., 116 S.W.3d 888, 899 (Tex.
App.-Houston [1st Dist.] 2003, pet. denied).

A service-of suit

clause is inconsistent with an arbitration clause because both
operate as forum-selection clauses.

See McDermott, 944 F.2d at

1205 ("If the service-of-suit clause is a forum selection clause,
the arbitration clause is a co-equal forum selection clause.").
While the Policies' service-of-suit provisions gave Plaintiff
the right to select a forum "in the event of the

lure of [Cal

Union] to pay any amount claimed" under the Policies, 36 the 2007
1979-80 Policy, Exhibit 1 to Defendants' Motion to Compel,
Docket Entry No. 5-1, p. 5; 1980-81 Policy, Exhibit 2 to
Defendants' Motion to Compel, Docket Entry No. 5-2, p. 4.
36

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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 13 of 18

Settlement Agreement provides that "[a] ny controversy or claim
between [the parties]

relating to the payment, non-payment, or

reimbursement by either party" of future defense costs must be
submitted to arbitration.37

The Louisiana Parish Lawsuits are

private action claims because they seek redress for damage to
property.

Therefore, they are Future Defense Costs within the

meaning of the 2007 Settlement Agreement, and are subject to its
arbitration clause.
arbitration

Because the service-of-suit provisions and the

clause

are

the

in

conflict,

the

second

IP Petroleum Co., 116 S.W.3d at 899.

supersedes the first.
Moreover,

inherently

2007

Settlement

Agreement

Policies because it contains a merger clause.

supersedes

the

A merger clause is

"a contractual provision mandating that the written terms of the
contract may not be varied by prior agreements because all such
agreements have been merged into the new document." Allen Drilling
Acquisition Company v. Crimson Exploration Inc.,

558

S.W.3d 761,

772 (Tex. App.-Waco 2018, pet. filed) (op. on reh'g).
Texas courts have long recognized that, under appropriate
circumstances, "instruments pertaining to the same
transaction may be read together to ascertain the
parties' intent, even if the parties executed the
instruments at different times and the instruments do not
Where appropriate, "a
expressly refer to each other .
court may determine, as a matter of law," that multiple
separate contracts, documents, and agreements "were part
of a single, unified instrument."
11

2007 Settlement Agreement, Exhibit 1 to Defendants' Response,
Docket Entry No. 23-1, p. 21·1 10.
37

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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 14 of 18

Rieder v. Woods, 603 S.W.3d 86, 94 (Tex. 2020)

(quoting Fort Worth

Independent School District v. City of Fort Worth, 22 S.W.3d 831,
84 o ( Tex. 2 o o o ) ) .
The merger clause at issue provides that
[the 2007 Settlement Agreement] and the DEFENSE COSTS
AGREEMENT contain the entire agreement between the
parties as respects their subject matter.
discussions between the parties concerning the subject
matter of this AGREEMENT and the DEFENSE COSTS AGREEMENT
are merged into this AGREEMENT and the DEFENSE COSTS
AGREEMENT.
This AGREEMENT and the DEFENSE COSTS
AGREEMENT may not be modified or amended, nor any of
their provisions waived, except by an instrument in
writing, signed by both parties hereunder.
2007 Settlement Agreement,
Docket Entry No. 23-1, p. 26

Exhibit 1 to Defendants'

1

Response,

20.

Plaintiff argues that the 2007 Settlement.Agreement's \\subject
matter" is confined to the specific dispute it settled. 38

But the

arbitration clause makes clear that the 2007 Settlement Agreement's
"subject matter" includes "[a]ny controversy or claim between [the
parties] relating to the payment, non-payment, or reimbursement" of
any past or future defense costs, as we
the Agreement itself. 39
defense

costs

arising

Plaintiff - precisely

as any controversy about

The present dispute is over non-payment of
from
the

private

kind

of

action
"future

claims

against

defense

costs"

encompassed by the 2007 Settlement Agreement's arbitration clause.
38

Plaintiff's Reply, Docket Entry No. 38, p. 17.

2007 Settlement Agreement, Exhibit i to Defendants' Response,
Docket Entry No. 23-1, p. 21 1 10.
39

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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 15 of 18

D.

The 2017 Addendum Does Not Supersede the Arbitration Clause

Plainti

argues

that

identified the Louisiana

"[t] he

Parish

2017

Lawsuits

Addendum
as

separately

a different

and

distinct class of claims not encompassed by the terms of the prior
2007 Settlement Agreement. 1140
Plaintiff's argument.

The court is not persuaded by

Except as otherwise provided in its own

language, the 2017 Addendum incorporated by reference all the
defined terms from the 2007 Settlement Agreement. 41

This would

include the 2007 Settlement Agreement's definition of the term
"future defense costs," which are the type of costs at issue here.
The 2017 Addendum provides that Plaintiff
does not release or discharge CENTURY INDEMNITY from any
claim, demand, cause of action, damage, • or liability
under the POLICIES
relating to or arising
out of any defense costs or indemnity costs relating to
the LOUISIANA PARISH LAWSUITS not expressly included in
the definition of PAST DEFENSE COSTS provided in this
ADDENDUM
2017 Addendum, Exhibit A to Defendants' Response, Docket Entry
No. 21-1, p. 4 , 2.
The 2017 Addendum does not affect the application of the 2007
Settlement Agreement to the defense costs that Plaintiff incurred
after September of 2016.

Those costs are still "future defense

costs" as defined in the 2007 Settlement Agreement, and thus are
subject to that agreement's arbitration clause.
40

Plaintiff's Reply, Docket Entry No. 38, p. 8.

2017 Addendum, Exhibit A to Defendants' Response, Docket
Entry No. 21-1, p. 2.
41

15 -

Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 16 of 18

The 2017 Addendum also provides that Plaintiff "expressly
reserves,

and does not waive,

the right to demand payment or

reimbursement from CENTURY INDEMNITY of all defense costs and
indemnity costs for the LOUISIANA PARISH LAWSUITS not expressly
included in the definition of PAST DEFENSE COSTS provided in this
ADDENDUM." 42

Plaintiff

[Plaintiff's]

rights to pursue

argues

that

this

language

"preserved

'causes of action' against the

Insurers under the Policies for the post-September 2016 Louisiana
Parish Lawsuits defense costs." 43

But Plaintiff waived its right

to choose the forum for future defense cost disputes when it became
bound

by the

2007 Settlement

Agreement's

arbitration clause.

Plaintiff cannot "preserve" in 2017 what it forfeited in 2007.
E.

The Court Will Compel Arbitration

Courts apply a two-step inquiry when ruling on a motion to
compel arbitration.

Edwards v. Doordash, Inc., 888 F.3d 738, 743

(5th Cir. 2018) (citing Klein v. Nabors Drilling USA L.P., 710 F.3d
234, 236 (5th Cir. 2013)).

"First, the court asks whether there is

a valid agreement to arbitrate and, second,
dispute falls

within

the scope

of a

whether the current

valid

agreement."

"Determining whether there is a valid arbitration agreement is a
question of state contract law and is for the court."

1

42

Id. at 5

3.

43

Plaintiff's Reply, Docket Entry No. 38, p. 21.
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Huckaba v.

Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 17 of 18

Ref-Chem, L.P., 892 F.3d 686, 688 (5th Cir. 2018) (citing Kubala v.
Supreme Production Services,

Inc.,

830 F.3d 199,

202

(5th Cir.

2016)).
Plaintiff does not dispute that it agreed to the terms of the
2007 Settlement Agreement.

The Agreement bears the signature of

Plaintiff's duly authorized representative.44

The court therefore

concludes that there is a valid agreement to arbitrate.

For

reasons set forth above, and with due regard to the federal policy
favoring arbitration, see Mastrobuono v. Shearson Lehman Hutton,
Inc., 115 S. Ct. 1212, 1218 (1995), the court concludes .that this
dispute

is

within

the

scope

of

the

arbitration

agreement.

Accordingly, the court will grant Defendants' Motion to Compel.
When all parties in an action are bound by an agreement to
arbitrate, the court has discretion to dismiss the action.

Alford

v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992).
Because Plaintiff's claims must be submitted

to arbitration,

"retaining jurisdiction and staying the action will serve no
purpose."

See id.

Accordingly, the court will dismiss the action

without prejudice.
III.

Conclusions and Order

For the reasons explained above, Plaintiff's Motion to Remand
(Docket Entry No. 10) is DENIED, Defendants' Motion to Dismiss and
2007 Settlement Agreement, Exhibit A to Defendants' Response,
Docket Entry No. 23-1, pp. 28-29.
44

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Case 4:21-cv-01743 Document 47 Filed on 09/08/21 in TXSD Page 18 of 18

Compel Arbitration (Docket Entry No. 5) is GRANTED, and this action
will be dismis�ed without prejudice.
SIGNED at Houston, Texas, on this 8th day of September, 2021.

SIM LAKE
SENIOR UNITED STATES DISTRICT JUDGE

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