RICHARD'S CLEARVIEW, LLC NO. 24-C-114
VERSUS FIFTH CIRCUIT
STARR SURPLUS LINES INSURANCE COURT OF APPEAL COMPANY STATE OF LOUISIANA
ON APPLICATION FOR SUPERVISORY REVIEW FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 830-008, DIVISION "F" HONORABLE MICHAEL P. MENTZ, JUDGE PRESIDING
June 05, 2024
TIMOTHY S. MARCEL JUDGE
Panel composed of Judges Susan M. Chehardy, Scott U. Schlegel, and Timothy S. Marcel
WRIT DENIED TSM SMC
CONCURS WITH REASONS SUS COUNSEL FOR DEFENDANT/RELATOR, STARR SURPLUS LINES INSURANCE COMPANY H. Alton Johnson, III Kevin W. Welsh Lee Ann C. Thigpen
COUNSEL FOR PLAINTIFF/RESPONDENT, RICHARDS CLEARVIEW CENTER, LLC AND RICHARD'S CANAL STREET PROPERTY, LLC Richard P. Voorhies, III William A. Barousse MARCEL, J.
In this case arising from insurance claims on properties damaged during
Hurricane Ida, defendant-relator Starr Surplus Lines Insurance Company (“Starr”)
seeks supervisory review of the February 6, 2024 trial court judgment denying its
declinatory exception of improper venue and granting plaintiff’s partial motion for
summary judgment and motion to compel. For the following reasons, we affirm
the judgment of the trial court.
BACKGROUND AND PROCEDURAL HISTORY1
On August 29, 2021, wind and water from Hurricane Ida caused significant
damage to properties located at 4403-4500 and 4436 Veterans Boulevard (a
shopping center and a parking garage) in Metairie, Louisiana, owned by plaintiff
Richard's Clearview, LLC (“Clearview”). At that time, the properties were subject
to a surplus lines policy of insurance (no. SLSTPTY11446721) issued by Starr,
that specifically provided approximately $20,000,000.00 in coverage for damages
caused by hurricanes, wind, and named storms for a twelve month term from
August 1, 2021 to August 1, 2022.2
Clearview reported their losses to Starr on September 13, 2021. Starr
inspected the damaged properties on September 23 and October 4, 2021.
Clearview submitted on November 30, 2021 a 735-page proof of loss detailing
$27,648,807.54 in damages to the shopping center as well as other invoices and
repair estimates. On December 3, 2021, Starr tendered $500,000.00 on the claim.
Around that time, disputes arose between the parties concerning the policy
1 This case and its companion, 24-C-104, involve multiple properties located in Metairie, Louisiana, owned by affiliate companies that were all damaged by Hurricane Ida. While the facts and background of these cases contain slight differences, they both present the same legal issue to be resolved: the enforceability of a forum selection clause in a surplus line insurance policy. Though the policies at issue in each case are separate, they are both issued by Starr and contain identical language on the forum selection clause. Our analysis in both cases is substantively the same. 2 Identified in the policy as its producer is CRC Insurance Services, whose address is listed at 3300 West Esplanade Ave. S., Suite 600, Metairie, Louisiana. The document recites that it was issued at Starr Specialty Lines Insurance Agency, LLC, in New York, New York.
24-C-114 1 deductible and the scope of the damage. No other loss payments were issued for
the alleged damage to the properties.
Clearview instituted legal action against Starr in the 24th Judicial District
Court for the Parish of Jefferson on July 1, 2022 with the filing of a Petition for
Damages and Jury Demand to recover policy proceeds for property damage under
the insurance contract as well as damages, penalties, and attorney’s fees for breach
of contract and bad faith investigation and claims handling under La. R.S. 22:1892
and 22:1973.
Starr filed and was granted a Notice of Removal to the United States District
Court for the Eastern District of Louisiana on July 26, 2022, invoking that court’s
jurisdiction on the grounds of diversity of citizenship.3 Following the removal, on
August 25, 2022, Starr filed its Answer and Affirmative Defenses in the federal
court. In its thirtieth affirmative defense therein, Starr asserts the action must be
transferred to a court within the state of New York pursuant to the mandatory
forum selection clause contained in the surplus line policy. Starr additionally
asserts that Clearview’s claims are subject to New York law based upon the choice
of law clause also contained in the policy.
That clause states:
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 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 statute 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.
3 According to its application to act as a surplus lines insurer in the State of Louisiana, Starr is domiciled in the State of Illinois.
24-C-114 2 In response to a motion to transfer the matter to the Southern District of New
York filed by Starr, on November 4, 2022, the federal court issued an order
dismissing the case pursuant to this forum selection clause. On February 6, 2023,
the federal court vacated its order of dismissal upon a finding that it did not have
subject matter jurisdiction because there was no diversity of citizenship.4 At that
time, the case was remanded to the 24th Judicial District Court for further
proceedings.
In the 24th Judicial District Court, on March 22, 2023, Starr again filed an
Answer and Affirmative Defenses to Clearview’s petition for damages at which
time it urged a declinatory exception of improper venue together with a
memorandum in support, citing the policy’s forum selection clause. Clearview
opposed the exception by arguing the forum selection clause is prohibited by
statutes contained in the Louisiana Insurance Code, and, alternatively, that the
forum selection clause violates public policy. In addition, Clearview filed a
motion for partial summary judgment on the choice of law provision of the policy
seeking to have it declared unenforceable. Clearview also filed a motion for
sanctions, or, alternatively, a motion to compel, for Starr’s alleged violation of the
Court’s discovery order.
At the January 24, 2024 hearing on the exception, the trial court rendered
judgment in open court denying the exception of improper venue upon a finding
that the forum selection clause is a mechanism used by Starr to escape enforcement
of Louisiana law which it had agreed to follow. The trial court also granted
Clearview’s partial motion for summary judgment and declared that Louisiana law
would be applied to the claim. The court denied Clearview’s request for sanctions,
4 This decision was affirmed by the United States Court of Appeals for the Fifth Circuit on October 17, 2023.
24-C-114 3 but did order Starr to produce all information required under the discovery orders.
Starr’s timely filed application for supervisory review of that judgment followed.
In its writ application, Starr raises the following assignments of error:
1. The District Court erred when it failed to enforce the Policy’s New York
forum selection clause notwithstanding the plain language of La. R.S.
22:868(D), which authorizes surplus lines insurers to include “forum or
venue selection clause[s]” in surplus lines policies.
2. The District Court erred in granting other affirmative relief to Clearview
because it was not a proper venue given the applicable forum selection
clause.
This writ and its companion present a res nova issue for this Court: whether
forum selection clauses like the one contained in the Starr surplus line insurance
policy are forbidden or permissible under Louisiana law. This we consider in our
discussion below, beginning with a general overview of the law on forum selection
clauses and the Louisiana Insurance Code before proceeding to interpretation of
the relevant statutes and final determination on the question.
STANDARD OF REVIEW
Venue is a question of law. Seghers v. LaPlace Equip. Co., Inc., 13-350
(La. App. 5 Cir. 2/12/14), 136 So.3d 64. Appellate review regarding questions of
law is simply a review of whether the trial court was legally correct or legally
incorrect. Yount v. Handshoe, 14-919, (La. App. 5 Cir. 5/28/15), 171 So.3d 381,
384. On legal issues, the appellate court gives no special weight to the findings of
the trial court, but exercises its constitutional duty to review questions of law de
novo and renders judgment on the record. Id.
24-C-114 4 DISCUSSION
Forum Selection Clauses in General
A forum selection clause is a contract provision that mandates a particular
state, county, parish, or court as the proper venue in which the parties to an action
must litigate any future disputes regarding their contractual relationship. Fidelak v.
Holmes European Motors, L.L.C., 13-0691 (La. 12/10/13), 130 So.3d 851, 853. In
its review of a service contract, the Louisiana Supreme Court held that forum
selection clauses are generally enforceable and are not per se violative of public
policy in Louisiana. Shelter Mut. Ins. Co. v. Rimkus Consulting Grp., Inc. of
Louisiana, 13-1977 (La. 7/1/14), 148 So.3d 871, 878. More recently, the
Louisiana Supreme Court upheld the forum selection clause in a commercial
property and casualty insurance contract, stating forum selection clauses are
favored because the elimination of uncertainties relative to the location of litigation
by agreement in advance on an acceptable forum to both parties is an indispensable
element of trade, commerce, and contracting. Creekstone Juban I, L.L.C. v. XL Ins.
Am., Inc., 18-0748 (La. 5/8/19), 282 So.3d 1042, 1048. In Creekstone Juban I, the
Supreme Court reemphasized that forum selection clauses are unenforceable and
against public policy in very limited circumstances. Id.
Insurance Contracts and the Louisiana Insurance Code
An insurance policy is a contract, and as such, is the law between the parties.
See, e.g., Muse v. Metro. Life Ins. Co., 193 La. 605, 192 So. 72 (1939); Landry v.
Progressive Sec. Ins. Co., 21-621 (La. 1/28/22), 347 So.3d 712. An insurer is
entitled to impose contractual limitations on its liability and reasonable conditions
on its obligations. Id. However, provisions of an insurance contract which violate
statute or public policy are unenforceable. Id. “The insurance policy is a special
contract in the sense that it is usually in a printed form furnished by the insurer and
certain policy terms may be required by statute or governed by judicially
24-C-114 5 recognized considerations of public policy.” 15 La. Civ. L. Treatise, Insurance
Law & Practice § 1:4 (4th ed.), Interpretation of insurance policies.
The underwriting of insurance policies is a commercial activity uniquely
affected with the public interest, and for this reason the Louisiana Legislature
enacted the Louisiana Insurance Code for the purpose of regulating the insurance
industry in all its phases. La. R.S. 22:2; see Hammett v. Fire Ass'n of Philadelphia,
157 So. 323, 328 (La. App. 2 Cir. 11/2/34), aff'd, 181 La. 694, 160 So. 302 (1935).
The laws of this state relative to the insurance industry, and the relationship of
insurers to their insureds and other interested parties, are contained in the twenty-
two chapters of the Insurance Code. See Theriot v. Midland Risk Ins. Co., 95-2895
(La. 5/20/97), 694 So.2d 184, 189.
Engagement in the business of insurance in Louisiana must be in conformity
with the Insurance Code. La. R.S. 22:12. The power to execute and enforce
provisions of the Insurance Code is vested in the Louisiana Commissioner of
Insurance. La. R.S. 22:2. The Insurance Code’s regulatory scheme requires an
“insurer” to be authorized to transact insurance business and defines the types of
insurance which may be sold. La. R.S. 22:12. An “insurer” is defined as “every
person engaged in the business of making contracts of insurance, other than a
fraternal benefit society.” La. R.S. 22:46(14). Insurers must be qualified by the
Louisiana Insurance Commissioner for the type of insurance it offers for sale. La.
R.S. 22:12.
Surplus lines insurers are one of more than a dozen types of insurers
specifically regulated by the Insurance Code. La. R.S. 22:48(14). Surplus lines
property and casualty insurance, the type of policy at issue in this case, is
distinguishable from other types of insurance under the Insurance Code. Under
Louisiana’s statutory scheme, the vast majority of insurance policies offered in this
state must be through insurers that are “admitted” in Louisiana as insurers
24-C-114 6 “authorized” by the Insurance Commissioner. However, recognizing that some
consumers have insurable interests for which authorized insurers do not offer
coverage, the Insurance Code provides for issuance of surplus lines insurance
policies. See Enterprise Leasing Co. of New Orleans v. Simmons, 644 So.2d 1297,
1299-1300 (La. App. 4 Cir. 1995) (citing Gray & Co. v. Stiles, 221 So.2d 832, 833-
834 (La. App. 1st Cir. 1969). Surplus lines insurers must receive “approved
unauthorized” status by the Commissioner of Insurance and are permitted to offer
and issue policies only through a licensed surplus lines broker.5 To achieve
“approved unauthorized” status, surplus lines carriers must demonstrate financial
soundness and meet other consumer protection requirements mandated by the
Insurance Code and/or the Commissioner of Insurance.6 Unlike property and
casualty insurance provided by approved authorized insurers, surplus lines
property and casualty insurance policies are generally not subject to the same
regulation of their policy terms and conditions and are not required to obtain
approval from the Commissioner of the policy forms and rates.
Forum Selection Clauses and Louisiana Revised Statute 22:868
Following the Louisiana Supreme Court’s 2019 decision in Creekstone
Juban I, supra, the Louisiana Legislature amended7 the part of the Louisiana
Insurance Code concerning limitations on actions, La. R.S. 22:868, to state, in part:
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 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. …
5 See La. R.S. 22:432. 6 See La. R.S. 22:431-46. 7 See 2020 Act No. 307 (S.B. 156), effective August 1, 2020. The language stated herein reflects the current law and the law in effect at the time the parties contracted.
24-C-114 7 C. Any such condition, stipulation, or agreement in violation of this Section shall be void, but such voiding shall not affect the validity of the other provisions of the contract.
D. The provisions of Subsection A of this Section shall not prohibit a forum or venue selection clause in a policy form that is not subject to approval by the Department of Insurance.
(Emphasis supplied.)
By this language, La. R.S. 22:868(A) specifically prohibits choice of law
provisions and forum selection clauses in Louisiana insurance policies as null and
void. Defendant Starr claims that Subsection D of 868 “authorizes” surplus lines
insurers to include forum or venue selection clauses. We disagree with Starr’s
proposed interpretation of this statute.
Interpretation of legislation is primarily the search for the legislative intent;
the starting point is the language itself. Cat's Meow, Inc. v. City of New Orleans,
98-0601 (La. 10/20/98), 720 So.2d 1186, 1198. See also La. R.S. 24:177(B)(1).
When a law is clear and unambiguous, and its application does not lead to absurd
consequences, it shall be applied as written, with no further interpretation made in
search of the legislative intent. La. C.C. art. 9. When the words of a law are
ambiguous, their meaning must be sought by examining the context in which they
occur and the text of the law as a whole. La. C.C. art. 12. When analyzing
legislative history, it is presumed the Legislature's actions in crafting a law were
knowing and intentional, and the Legislature is presumed to have enacted each
statute with deliberation and with full knowledge of all existing laws on the same
subject. Louisiana Safety Ass'n of Timbermen Self-Insurers Fund v. Louisiana Ins.
Guar. Ass'n, 09-0023, (La. 6/26/09), 17 So.3d 350, 356; Theriot v. Midland Risk
Ins. Co., 95-2895, (La. 5/20/97), 694 So.2d 184, 186.
The assertion that Subsection D of La. R.S. 22:868 “authorizes” surplus line
insurers to include forum selection clauses, as Starr claims, is an incorrect and
incomplete reading of the statute. We observe first that the statute itself makes no
24-C-114 8 express reference to surplus lines insurers. Only by referencing other provisions in
the Insurance Code can one understand which policy forms are or are not subject to
approval from the Department.8 In addition, Starr’s claim ignores the first half of
Subsection D that states “the provisions of Subsection A of this Section shall not
prohibit a forum or venue selection clause.” The plain, unambiguous meaning of
this language is that Subsection D of La. R.S. 22:868 creates an exception to the
general and broad prohibition on forum selection clauses in Louisiana insurance
policies stated in Subsection A. The language of Subsection D does not expressly
authorize the use of forum selection clauses in all surplus lines policies, rather, it
creates an exception to the limits on such clauses stated in Subsection A of La.
R.S. 22:868.
Regulations Particular to Surplus Lines Insurance
The analysis of whether the forum selection clause in the Starr surplus lines
insurance policy is permissible under Louisiana law does not stop at La. R.S.
22:868, but requires us to review the rest of the Louisiana Insurance Code for
relevant and applicable provisions. Statutes particular to surplus lines insurers are
found in Chapter 2, entitled “Requirements for Insurers and Other Risk Bearing
Entities,” Part I entitled “Kinds of Insurers”, Subpart O, entitled “Surplus Lines.”
La. R.S. 22:431, et seq. Louisiana Revised Statute 22:431 directs that liberal
construction and application must be given to statutes concerning surplus lines
insurance to promote six illustrative underlying purposes. Identified as underlying
purposes of these statutes include:
(1) Protecting persons seeking insurance in this state. (2) Facilitating the placement of surplus lines insurance with reputable and financially sound unauthorized insurers under the provisions of this Subpart.
8 Specifically, La. R.S. 22:446(A) provides that the Commissioner of Insurance shall not require surplus lines insurers to file or seek approval of their forms for property insurance.
24-C-114 9 (3) Establishing a system of regulation that permits orderly access to surplus lines insurance in this state and encourages authorized insurers to make new and innovative types of insurance available to consumers in this state. (4) Providing a system through which persons may purchase insurance from approved unauthorized insurers or eligible unauthorized insurers pursuant to this Subpart. (5) Protecting the revenues of this state. (6) Providing a system pursuant to this Subpart that subjects unauthorized insurance activities in this state to the jurisdiction of the commissioner of insurance and state and federal courts in suits by or on behalf of the state.
See La. R.S. 22:431.
One of the statutes that we are legally mandated to liberally construe and
apply concerns the venue for suits against surplus lines insurers. Louisiana
Revised Statute 22:442(A) states:
An unauthorized insurer shall be sued, upon any cause of action arising in this state under any contract issued by it as a surplus lines contract, pursuant to this Subpart, in the district court of the parish in which the cause of action arose.
Clearview argues that the Legislature’s use of the word “shall” makes the
application of La. R.S. 22:442(A) mandatory. We agree. As used in statutes, the
word “shall” is mandatory. Warren v. HDI Glob. Ins. Co., 21-570 (La. App. 5 Cir.
5/16/22), 341 So.3d 1249, 1257, writ denied, 22-938 (La. 11/1/22), 349 So.3d 10,
and 22-1002 (La. 11/1/22), 349 So.3d 5 (citing McGlothlin v. Christus St. Patrick
Hospital, 10-2775 (La. 7/1/11), 65 So.3d 1218, 1228).
While the language of La. R.S. 22:442(A) has never before been interpreted
in reported jurisprudence, the Louisiana Supreme Court has given meaning to the
phrase “shall be sued” that is contained in other statutes. In Black v. St. Tammany
Par. Hosp., 08-2670 (La. 11/6/09), 25 So. 3d 711, 718–19, the Supreme Court
examined the phrase “shall be sued” as contained in La. R.S. 13:5104(B) and
46:1063. “Shall be sued,” the Court found, is the legislative expression of venue
24-C-114 10 applicable to all actions involving hospital service districts, which supersedes the
general venue provisions of the Louisiana Code of Civil Procedure. Id. Similarly,
the language of La. R.S. 22:442(A) clearly and unambiguously sets forth the
exclusive venue for actions against surplus lines insurers for all causes of action
arising in this state under a surplus lines insurance contract. There are no
exceptions to this mandatory provision stated anywhere in the Louisiana Insurance
Code.9
The Petition filed in this case is a first party claim for insurance coverage
under a surplus lines policy for alleged damage to immovable properties located in
Jefferson Parish, Louisiana. As such, the exclusive venue for this action is in the
24th Judicial District Court. In light of La. R.S. 22:442(A), we therefore declare
the forum selection clause contained in the Starr surplus lines insurance policy
null, void, and unenforceable.10
Purported Conflict between Louisiana Revised Statutes 22:868 and 22:442
Starr argues that La. R.S. 22:868 and 22:442 may be harmonized by reading
La. R.S. 22:442(A) as establishing the default venue in Louisiana for actions
against surplus lines insurers while La. R.S. 22:868(D) authorizes a surplus lines
insurer and insured to contractually agree to a non-Louisiana venue for litigation.
Alternatively, Starr argues that if there is a conflict between 22:442(A) and
22:868(D), then the latter must prevail based on its characterization of the latter
being the more specific statute on the subject matter with the former being more
general. Both of these arguments are without merit.
9 In addition to identifying the venue for legal action arising from a cause of action in this state under a surplus lines contract, La. R.S. 22:442 also prescribes service of process against and jurisdiction over surplus lines insurers. Under paragraph B, the legislature designates the Louisiana Secretary of State as the agent for service of process for surplus lines insurers. La. R.S. 22:442(B). Further, service of process upon the Louisiana Secretary of State confers the court in which the legal action is filed with personal jurisdiction over the surplus lines insurer. La. R.S. 22:442(B). 10 See La. C.C. art. 7, (“Persons may not by their juridical acts derogate from laws enacted for the protection of the public interest. Any act in derogation of such laws is an absolute nullity.”)
24-C-114 11 First, Starr’s claim that La. R.S. 22:442(A) merely presents a default venue
is contradicted by the express use of the words “shall be sued” in that statute. As
noted above, this language is mandatory, and has been used by the Legislature to
express its intent to provide exclusive venue for particular actions. Had the
Legislature intended the provision to be a default, it could have used the more
permissive “may” to indicate that actions in other venues would be allowed.
Furthermore, as noted above, the language of La. R.S. 22:868(D) does not
expressly authorize a surplus lines insurer and insured to contractually agree to a
non-Louisiana venue for litigation. The language of Subsection D is not an
authorization, but rather a specific exception to the general prohibition on forum
selection clauses in Louisiana insurance policies stated in La. R.S. 22:868(A).
Addressing Starr’s alternative argument, we disagree with Starr’s
characterization of La. R.S. 22:868(D) as the more specific statute that must
prevail. It is a well-settled rule of statutory construction that when interpreting
potentially conflicting statutes, the statute specifically directed to the matter at
issue prevails over a statute more general in character, unless there is legislative
intent or expression regarding which statute is to control, such as the phrase
“notwithstanding any other provision of law to the contrary.” Salathe v. Par. of
Jefferson through Dep't of Sewerage, 19-427 (La. App. 5 Cir. 7/15/20), 300 So.3d
460, 468, writ denied, 20-01027 (La. 11/4/20), 303 So.3d 642. In its statutory
enactment identifying the court in which legal action is to be brought arising from
a surplus lines insurance policy, the Louisiana Legislature did not include such
language. The language of La. R.S. 22:442 is plain, clear, and unambiguous.
The declinatory exception of improper venue raises the question of where a
legal action is to properly be brought. La. C.C.P. art. 925. La. R.S. 22:442
specifically addresses the venue where actions shall be brought against surplus
lines insurers. In contrast, La. R.S. 22:868 states a general prohibition on forum
24-C-114 12 selection clauses in Louisiana insurance policies. There is no indication that the
Legislature intended the additional language of La. R.S. 22:868(D) to supersede,
alter, or repeal the mandatory venue provisions for surplus lines insurers of La.
R.S. 22:442(A). On the contrary, as noted above, the express language of La. R.S.
22:868(D) makes it clear that it is an exception to the rule stated in La. R.S.
22:868(A), not to any other statute. Starr’s argument is without merit.
CONCLUSION
Upon de novo review of relator’s declinatory exception of improper venue,
we find that the forum selection clause stated in the Starr surplus lines insurance
policy no. SLSTPTY11446721 that requires any suit, action, or proceeding against
Starr to be brought solely and exclusively in a New York state court or a federal
district court sitting within the State of New York to be null, void, and
unenforceable under La. R.S. 22:442(A), which mandates all causes of action
arising under any contract issued by an unauthorized insurer as a surplus lines
contract be brought in the district court of the parish in which the cause of action
arose. Louisiana Revised Statute 22:868(D), which provides an exception to the
general prohibition on forum selection clauses in Louisiana insurance policies
stated in La. R.S. 22:868(A), does not supersede, alter, or repeal the mandatory
venue provisions for surplus lines insurers stated in La. R.S. 22:442. Accordingly,
the ruling of the trial court is affirmed and this writ is denied.
24-C-114 13 RICHARD'S CLEARVIEW, LLC NO. 24-C-114
STARR SURPLUS LINES INSURANCE COURT OF APPEAL COMPANY STATE OF LOUISIANA
SCHLEGEL, J., CONCURS WITH REASONS
I concur with the majority’s decision to deny Starr’s declinatory exception of
improper venue but for different reasons.
The seminal decision by the Louisiana Supreme Court in Shelter Mutual Ins.
Co. v. Rimkus Consulting Group, Inc. of Louisiana, 13-1977 (La. 7/1/14), 148
So.3d 871, 878, held that forum selection clauses in contracts are generally
enforceable and are not per se violative of public policy in Louisiana.
We hold that [forum selection] clauses should be enforced in Louisiana unless the resisting party can ‘clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching.... [or that] enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.’
Id. at 881 (citation omitted.)
Additionally, in Creekstone Juban I, L.L.C. v. XL Ins. Am., Inc., 18-0748
(La. 5/8/19), 282 So.3d 1042, 1048, the Louisiana Supreme Court determined that
La. R.S. 22:868 “does not indicate that Louisiana has a strong public policy against
forum-selection clauses in insurance contracts.”
After Creekstone, the Louisiana legislature amended La. R.S. 22:868 in
2020 in two important respects. The legislature added the words “or venue” to La.
R.S. 22:868(A)(2) and added a new section (D), which provides: “[t]he provisions
of Subsection A of this Section shall not prohibit a forum or venue selection clause
in a policy form that is not subject to approval by the Department of Insurance.”
24-C-114 1 Consequently, the current version of La. R.S. 22:868 provides in pertinent
part:
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. *** C. Any such condition, stipulation, or agreement in violation of this Section shall be void, but such voiding shall not affect the validity of the other provisions of the contract. D. The provisions of Subsection A of this Section shall not prohibit a forum or venue selection clause in a policy form that is not subject to approval by the Department of Insurance.
Also relevant to the analysis are the provisions of La. R.S. 22:446(A), which
provide that “[t]he commissioner [of insurance] shall not require surplus lines
insurers to file or seek approval of their forms and rates for property and casualty
insurance except as provided in R.S. 22:1456(B)(2) relative to public carrier
vehicles.” (Emphasis added).
Thus, in light of the amendment to La. R.S. 22:868, I would find that surplus
lines insurers fall under the exception created by the legislature under section D as
they are not required to have their forms approved by the Insurance Commissioner.
Accordingly, surplus lines insurers, like Starr, are generally permitted to include
forum selection clauses in their policies. However, as noted in Shelter Mutual,
forum selection clauses should be enforced, unless, as in this case, the clause
would contravene a strong public policy of the forum in which suit is brought, as
declared by statute. Shelter Mut. Ins. Co., 148 So. 3d at 881.
24-C-114 2 The insurance policy issued by Starr contains more than a forum selection
clause though. It also includes a choice of law provision. The combined “Choice
of Law and Choice of Venue” provision of the subject policy states:
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 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. (Emphasis added).
This language creates a dilemma for the Court because the record in this
case indicates that if this case is transferred to New York, Starr will argue in the
New York courts that New York law applies.1 And it appears from the decision
rendered in Louisiana Revitalization Fund LLC v. Starr Surplus Lines Insurance
Co., No. 23CV1006VSBVF, 2024 WL 1337617 (S.D.N.Y. Mar. 27,
2024)(Figueredo, Mag. J., Report and Recommendation) that the New York courts
would apply New York law to the subject contract, which would be in direct
violation of Louisiana’s strong, public policy against choice of law provisions in
insurance contracts as set forth in La. R.S. 22:868(A)(1).
In the Louisiana Revitalization Fund case, the same defendant, Starr, and
even some of the same attorneys who represent Starr, were involved. Moreover,
the case had the same choice of law provision, involved property damage in
Metairie, Louisiana resulting from Hurricane Ida and was initially filed in the 24th
Judicial District Court before being removed to the Eastern District of Louisiana.
The Eastern District then transferred the case to the United States District Court for
1 Starr’s answer to the petition and answer to the first amended complaint asserts as a 31st affirmative defense that “[t]he Policy contains a New York choice of law provision. Plaintiff’s claims fail under New York law, which the Policy requires be applied in this action.”
24-C-114 3 the Southern District of New York based upon the forum selection clause in the
contract just like Starr is requesting here. The plaintiffs filed a motion for partial
summary judgment asking for a determination that Louisiana law apply because
La. R.S. 22:868 prohibits choice of law provisions that apply the laws of other
states. After conducting an extensive choice-of-law and conflict-of-law analysis
though, the Magistrate Judge concluded that New York Court of Appeals
precedent required application of New York law given the parties’ choice-of-law
provision in the policy.
It stands to reason then that the same analysis in Louisiana Revitalization
Fund will occur in the case at bar if this Court grants Starr’s exception and
transfers this case to New York.
Whether New York or Louisiana law applies in this case makes a difference
to plaintiffs. If New York law applies, then plaintiffs will not be able to assert
their claims regarding Starr’s alleged bad faith under La. R.S. 22:1973 and
22:1892.
For all of the above reasons, while I concur in the result, I do not agree with
the majority’s opinion that La. R.S. 22:868 and 22:442(A) specifically prohibit
forum selection clauses in Louisiana insurance policies from surplus lines insurers.
24-C-114 4 SUSAN M. CHEHARDY CURTIS B. PURSELL
CHIEF JUDGE CLERK OF COURT
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