Opinion
NO. 2017 CW 1223
04-09-2018
CREEKSTONE JUBAN I, LLC v. XL INSURANCE AMERICA, INC.
In Re: XL Insurance America, Inc., applying for supervisory writs, 21st Judicial District Court, Parish of Livingston, No. 154463. BEFORE: GUIDRY, PETTIGREW, McCLENDON, CRAIN AND HOLDRIDGE, JJ.
WRIT DENIED.
JTP
PMc
WJC
Crain, J., agrees with denying the writ and assigns reasons. Louisiana Revised Statute 22:868 prohibits any clause in an insurance contract that "[d]eprives the courts of this state of the jurisdiction of action against the insurer." Our court has recognized that compulsory arbitration agreements contained in insurance contracts violate this provision and are unenforceable because they effectively deprive our courts of the ability to act. See Courville v. Allied Professionals Insurance Company, 16-1354 (La. App. 1st Cir. 4/12/17), 218 So.3d 144, 147, writ denied, 17-0783 (La. 10/27/17), 228 So.3d 1223; see also Doucet v. Dental Health Plan Management Corp., 412 So.2d 1383, 1384 (La. 1982); Macaluso v. Watson, 171 So.2d 755, 757 (La. App. 4th Cir. 1965). If this statute proscribed only a clause depriving a court of all jurisdiction, even a binding arbitration clause would survive scrutiny under Section 22:868. See La. R.S. 9:4203, 4209-12, and 4215 (vesting courts with jurisdiction over certain matters in binding arbitration proceeding). Interpreting the phrase "jurisdiction of action" in Lawrence v. Continental Insurance Company, 199 So.2d 398, 399-400 (La. App. 3rd Cir. 1967), Judge Tate explained the rationale behind the statute:
The statute incorporates a public policy determination that no contract issued in Louisiana covering a Louisiana subject shall deny the Louisiana insured the benefit of a practical remedy in Louisiana courts, thus prohibiting a requirement that he litigate his claim in an inconvenient foreign forum or submit to its adjudication by some private tribunal. The statute's command must be enforced, by reason of which the policy condition is void as violating the statutory prohibition.See also Bonura v. United Bankers Life Ins. Co., 509 So.2d 8, 11 (La. App. 1st Cir.), writ denied, 512 So.2d 462 (La. 1987), disapproved of on other grounds by All Star Advert. Agency, Inc. v. Reliance Ins. Co., 04-1544 (La. 4/12/05), 898 So.2d 369 ("[Section 22:868] and [Louisiana] cases announce the unequivocal policy of this state that no foreign insurer may enjoy the benefits of a source of business in this state without being prepared to answer any claims based on that business by a Louisiana resident in the Louisiana courts.") The forum-selection clause effectively deprives Louisiana courts of the ability to exercise jurisdiction over this case. Consequently, it is expressly prohibited by Section 22:868A(2) and is unenforceable.
Guidry, J., dissents and would grant the writ. The forum-selection clause contained in defendant/relator XL Insurance America, Inc.'s policy, which was issued in favor of plaintiff/respondent Creekstone Juban I, LLC is enforceable. Jurisdiction is a separate and distinct legal concept from venue and a forum-selection clause does not divest a district court of this authority. See Luffey ex rel. Fredericksburg Properties of Texas, LP v. Fredericksburg Properties of Texas, LP, 37,591 (La. App. 2d Cir. 12/10/13), 862 So.2d 403, 406. A forum-selection clause does not oust or deprive a court of jurisdiction. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15-16, 92 S. Ct. 1907, 1914, 32 L.Ed.2d 513 (1972). As the U.S. Supreme Court in M/S Bremen explained, "No one seriously contends in this case that the forum-selection clause 'ousted' the District Court of jurisdiction over Zapata's action. The threshold question is whether that court should have exercised its jurisdiction to do more that give effect to the legitimate expectations of the of the parties, manifested in their freely negotiated agreement, by specifically enforcing the forum clause." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12. Likewise, in the instant matter, XL Insurance concedes and indeed asks the Louisiana court to exercise its jurisdiction to hear and determine the threshold issue of venue by enforcing the parties' agreed-upon forum-selection clause.
Forum-selection clauses are prima facie valid, legal, and binding, and a party seeking to set aside such a provision bears a heavy burden of proof. Rising Resources Control, Inc. v. KIE Commodities and Finance, L.L.C., 2011-1026 (La. App. 1st Cir. 12/21/11), 80 So.3d 1217, 1219, writ denied, 2012-0658 (La. 4/27/12), 86 So.3d 632. Mere inconvenience or additional expense should not suffice as proof of hardship since these are burdens that were allocated by the parties' private bargain. Vallejo Enterprise, L.L.C. v. Bouder Image, Inc., 2005-2649 (La. App. 1st Cir. 11/3/06), 950 So.2d 832, 837. Moreover, La. R.S. 22:868 does not prohibit forum-selection clauses. The decisions discussing La. R.S. 22:868 do so only in the context of arbitration clauses. See, e.g. Dore v. Shelter Mut. Ins. Co., 2013-0545 (La. App. 1st Cir. 11/1/13), 2013 WL 5915141 (unpublished); and Courville v. Allied Professionals Insurance Company, 2016-1354 (La. App. 1st Cir. 4/12/17), 218 So.3d 144, 148, writ denied, 2017-0783 (La. 10/27/17), ___ So.3d ___, 2017 WL 5036169. Unlike compulsory arbitration provisions in insurance contracts, forum-selection clauses do not deprive Louisiana courts of jurisdiction over actions of the insurer, but only determine the venue in which the parties must litigate their disputes.
Accordingly, I find Creekstone has not satisfied its heavy burden of demonstrating the forum-selection clause is inapplicable.
Holdridge, J., dissents. I respectfully dissent for the reasons assigned by Judge Guidry. I further add that two Delaware corporations entered into a contract which provided for a forum selection clause which bound the parties to litigate all issues involving the contract in the courts of the State of New York. While it is unquestioned that a Louisiana court has jurisdiction in this case, there has been no showing as to why this court should not enforce the legal, binding, contractual forum selection provision entered into by the two Delaware corporations. COURT OF APPEAL, FIRST CIRCUIT /s/_________
DEPUTY CLERK OF COURT
FOR THE COURT