McDermott International, Inc. v. Lloyds Underwriters of London

944 F.2d 1199, 1991 WL 194767
CourtCourt of Appeals for the Fifth Circuit
DecidedOctober 3, 1991
DocketNo. 91-3568
StatusPublished
Cited by20 cases

This text of 944 F.2d 1199 (McDermott International, Inc. v. Lloyds Underwriters of London) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McDermott International, Inc. v. Lloyds Underwriters of London, 944 F.2d 1199, 1991 WL 194767 (5th Cir. 1991).

Opinion

REAVLEY, Circuit Judge:

The district court remanded this case to state court on the ground that an insurance policy issued by underwriters at Lloyds, London (Underwriters) to McDermott International, Inc. (McDermott) gave McDer-mott the right to choose the forum where the policy’s arbitration provision would be enforced. We consider the court’s remand order appealable and vacate it.

I. BACKGROUND

McDermott bought an all risks installation floater policy from Underwriters every year from 1952 to 1989. This case concerns construction of the following two clauses in the 1989 policy:

8. Service of Suit Clause
It is agreed that in the event of the failure of Underwriters hereon to pay any amount claimed to be due hereunder, Underwriters hereon, at the request of the Assured will 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.
It is further agreed that service of process in such suit may be made upon Messrs. Mendes & Mount, Three Park Avenue, New York, N.Y. 10016 and that in any suit instituted against any one of them upon this contract, Underwriters will abide by the final decision of such Court or of any Appellate Court in the event of an appeal.
The above-named are authorized and directed to accept service of process on behalf of Underwriters in any such suit and/or upon the request of the Assured to give a written undertaking to the Assured that they will enter a general appearance upon Underwriters’ behalf in the event such a suit shall be instituted.
9. Arbitration
All differences arising out of this contract shall be referred to the decision of any arbitrator to be appointed by the parties in difference, or if they cannot agree upon a single arbitrator to the decision of two arbitrators, one to be [1201]*1201appointed in writing by each of the parties and in case of disagreement between the two arbitrators to the decision of any umpire to be appointed in writing by the arbitrators or by a court of competent jurisdiction within the limits of the United States of America. It is agreed that the place of arbitration shall be designated by the Assured and the expenses in connection with the arbitration shall be borne equally between the parties in difference.

McDermott’s subsidiary, the Babcock and Wilcox Company (B & W), supplies utilities with electric power generation equipment and structures. In 1989, a chemical reaction irreparably damaged two air heat exchangers that B & W was installing for Baltimore Gas & Electric Company.

McDermott submitted a policy claim for its losses from the Baltimore incident, Underwriters denied coverage, and McDer-mott sued on the policy for $39,247,000 in Louisiana state court. Underwriters demanded that McDermott submit to arbitration of the issues in the state suit. The demand prompted McDermott to file a separate petition asking the Louisiana court to declare that McDermott had no obligation to arbitrate.

Underwriters removed both suits to federal district court under 9 U.S.C. § 205. McDermott filed a motion to remand the cases. The district court held that City of Rose City v. Nutmeg Ins. Co., 931 F.2d 13 (5th Cir.1991) establishes that, pursuant to the policy’s service-of-suit clause, McDer-mott is entitled to choose the forum where the parties’ dispute regarding arbitration will be resolved. The court remanded the cases to Louisiana state court.

McDermott asks us to review the district court’s remand order either by appeal or writ of mandamus.

II. APPELLATE JURISDICTION

We hold that the district court’s remand order is appealable, but this requires explanation. We begin with the proposition that the availability and means of appellate review for a district court’s remand order depend entirely on the court’s reason for issuing the order.1

A. UnReviewable Remand Orders

Congress denies us authority to review remand orders that district courts issue under 28 U.S.C. § 1447(c) for lack of subject-matter jurisdiction. 28 U.S.C. § 1447(d). And although the question is presently undecided, section 1447(d) may also preclude our review of a district court’s granting of a timely motion to remand due to defects in removal procedure. In re Shell Oil Co., 932 F.2d 1518, 1520 n. 5 (5th Cir.1991). The district court remanded this case pursuant to the policy’s service-of-suit clause, a reason outside the scope of section 1447(c). Section 1447(d) does not bar our review. Id. at 1520-21.

B. Appellate Review by Appeal versus Mandamus

The parties dispute whether review is appropriate by appeal or mandamus. These methods of review are mutually exclusive, Moses H. Cone Memorial Hosp. v. Mercury Construction Corp., 460 U.S. 1, 8 n. 6, 103 S.Ct. 927, 933 n. 6, 74 L.Ed.2d 765 [1202]*1202(1983), and we look to precedent to decide which to exercise in this case.

In Thermtron, the Supreme Court held that remand is only allowed in accordance with section 1447(c) and a writ of mandamus under 28 U.S.C. § 1651 is the proper tool for securing a district judge’s compliance with this rule. Id. 423 U.S. at 352-53, 96 S.Ct. at 593-94 (ordering district judge to hear case remanded due to crowded federal docket). The Court chose to review by mandamus because it understood its precedent to establish that a remand order is not a “final decision” within the meaning of the direct appeal statute, 28 U.S.C. § 1291.2 Id. at 352-53, 96 S.Ct. at 594 (“because an order remanding a removed action does not represent a final judgment reviewable by appeal, ‘[t]he remedy in such a case is by mandamus to compel action_’”) (quoting Railroad Co. v. Wiswall, 90 U.S. (23 Wall.) 507, 508, 23 L.Ed. 103 (1875)).3

The Court next chose between direct appeal and mandamus in Moses H. Cone. Like this case, Moses H. Cone concerned the question of whether the arbitrability of a dispute between a hospital and a contractor would be decided in federal or state court. The hospital sued the contractor in state court for a declaration that their dispute was not subject to arbitration. The contractor then filed a separate action in federal court to resolve the same arbitrability question. The district court exercised its discretion under Colorado River Water Conservation District v. United States,

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Cite This Page — Counsel Stack

Bluebook (online)
944 F.2d 1199, 1991 WL 194767, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcdermott-international-inc-v-lloyds-underwriters-of-london-ca5-1991.