National Union Fire Insurance Co. of Pittsburgh, PA v. Seneca Family of Agencies

255 F. Supp. 3d 480, 2017 WL 2536845, 2017 U.S. Dist. LEXIS 89851
CourtDistrict Court, S.D. New York
DecidedJune 12, 2017
Docket17-cv-01061 (JGK)
StatusPublished
Cited by12 cases

This text of 255 F. Supp. 3d 480 (National Union Fire Insurance Co. of Pittsburgh, PA v. Seneca Family of Agencies) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Union Fire Insurance Co. of Pittsburgh, PA v. Seneca Family of Agencies, 255 F. Supp. 3d 480, 2017 WL 2536845, 2017 U.S. Dist. LEXIS 89851 (S.D.N.Y. 2017).

Opinion

OPINION AND ORDER

JOHN G. KOELTL, District Judge:

The petitioner, National Union Fire Insurance Company of Pittsburgh, PA. (“National, Union”), on behalf of itself and its related insurers has petitioned to compel the Seneca Family of Agencies (“Seneca”) to arbitrate a dispute pursuant to the Federal Arbitration,Act (the “FAA”), 9 U.S.C. § 4. National Union has also moved for a preliminary injunction to prevent Seneca from pursuing a state court action in California. The underlying dispute in this case involves a disagreement over the amount of .collateral that Seneca is required to deliver under a payment agreement (the “Payment Agreement”) with National Union that governs certain obligations related to a series of California Workers’ Compensation/Employers’ Liability Insurance policies (the “Policies”) also issued by National Union.

National Union alleges subject matter jurisdiction pursuant to 28 U.S.C, § 1332(a)(1).

I.

The following facts are taken from the parties’ submissions.

National Union is a Pennsylvania insurance company with its principal place of business in New York. Pet. ¶ 4. Seneca is a [483]*483California corporation with its principal place of business in California. Pet. ¶ 5.

National Union provided Seneca with workers’ compensation and employers’ liability insurance for Seneca’s operations in California pursuant to the Policies, which were entered into each year from 2004 to 2013. Pet. ¶ 2; DeHaven Decl., Ex. 4 (Schedules of Policies and Payments). Each Policy was effective for a one-year period.

On November 1, 2004, the parties entered into the Payment Agreement, which governs the parties’ financing and credit obligations with respect to the Policies. Pet. ¶¶ 8-9; see, e.g„ DeHaven Decl., Ex, 1 (The November 1, 2004 Payment Agreement) at 3, 6. Among other things, the Payment Agreement requires Seneca to deliver collateral to National Union to secure Seneca’s payment obligations. Pet. ¶¶ 8,10; see, e.g., DeHaven Deck, Ex. 1 at 6.

The November 1, 2004 Payment Agreement required arbitration to decide disputes. The Payment Agreement’s arbitration provisions (the “Arbitration Provisions”) provided that “any dispute[]” related to the amount of Seneca’s payment obligations and “[a]ny other unresolved dispute arising out of [the Payment] Agreement must be submitted to arbitration.” DeHaven Deck, Ex. 1 at 8. The Arbitration Provisions included an arbi-tral forum provision that left the determination of the arbitral forum to the arbitrators and a delegation provision (the “Delegation Provision”) that provided that the arbitrators would “have exclusive jurisdiction over the entire matter in dispute, including any question as to its arbitrability.” DeHaven Deck, Ex. 1 at 9.

The Payment Agreement also contained provisions contemplating court resolution for disputes with respect to “How arbitrators must be chosen,” with a litigation forum selection clause (the “Litigation Forum Selection Clause”) designating certain New York courts as the. forum for the resolution of disputes related to that subject. DeHaven Deck, Ex. 1 at 8. Specifically, the Payment Agreement provided that, in the event of arbitration, each party was to choose one arbitrator, who together would then choose a third. The three arbitrators would be the arbitral panel. However, if the first two arbitrators could not select the third arbitrator, then either party could make an application to a “Justice of the Supreme Court of the State of New York, New York County” to ' select the additional arbitrator,1 DeHaven Deck, Ex. 1 at 8.

The parties amended, the Payment Agreement through “mandatory addenda” in 2009, 2011, and 2013. See DeHaven Deck, Ex. 2 (The 2009 Addendum); DeHa-ven Deck, Ex. 5 (The 2011 Addendum); DeHaven Deck, Ex. 3 (The 2013 Addendum). The- provision in the Litigation Forum Selection Clause relating to the court-appointment of the third arbitrator was amended to provide that the parties could “make an application only to a court of competent jurisdiction in the City, County, and State of New York.” DeHaven Deck, Ex. 3 § 7. And, as relevant to this case, the parties added the following provision to the Clause in the 2013 Addendum: “any action or proceeding concerning arbitrability, including motions to compel or to stay arbitration, may be brought only in a court of competent jurisdiction in the City, County, and State of New York.” DeHaven Deck, Ex. 3 § 7.

[484]*484II.

Seneca argues that subject matter jurisdiction under 28 U.S.C. § 1332(a)(1) is lacking because the amount in controversy is not in excess of $75,000. The argument is frivolous. The Petition alleges that the amount in controversy is in excess of $75,000. Pet. ¶ 6. The amount-in-controversy “burden is hardly onerous” and there is “a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy.” Scherer v. Equitable Life Assurance Soc’y of U.S., 347 F.3d 394, 397 (2d Cir. 2003) (citation and internal quotation marks omitted). Seneca has offered no support to suggest that the amount-in-controversy allegation was not made in good faith. See id. (“To overcome the face-of-the-complaint presumption, the party opposing jurisdiction must show ‘to a legal certainty1 that the amount recoverable does not meet the jurisdictional threshold.” (citation omitted)). To the contrary, as reflected in the Complaint in the California Action (the “California Complaint”), at stake in this dispute is nearly $1 million in collateral, years-worth of premiums, and statutory and common law damages. See Ex. 6 ¶¶ 34, 39. The amount-in-controversy is plainly satisfied.

III.

National Union has petitioned to compel arbitration pursuant to § 4 of the FAA.

A.

Seneca argues that, with respect to its claims related to any workers’ compensation policies issued or renewed on or after July 1, 2012 (the “Post-July 2012 Policies”), recently-enacted (and little-interpreted) Cal. Ins. Code § 11658.5 overcomes the normal presumption under the FAA in favor of enforcing arbitration agreements according to their terms. Section 11658.5(a)(1) provides:

An insurer that intends to use a dispute resolution or arbitration agreement to resolve disputes arising in California out of a workers’ compensation insurance policy or endorsement issued to a California employer shall disclose to the employer, contemporaneously with any written quote that offers to provide insurance coverage, that choice of law and choice of venue or forum may be a jurisdiction other than California and that these terms are negotiable between the insurer and the employer. The disclosure shall be signed by the employer as evidence of receipt where the employer accepts the offer of coverage from that insurer.

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255 F. Supp. 3d 480, 2017 WL 2536845, 2017 U.S. Dist. LEXIS 89851, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-union-fire-insurance-co-of-pittsburgh-pa-v-seneca-family-of-nysd-2017.