The Cornfeld Group, LLC v. Certain Underwriters at Lloyd's, London Subscribing to Policy No. AMR-55418-01 et al, No. 0:2021cv62510 - Document 27 (S.D. Fla. 2022)

Court Description: ORDER denying 8 Motion to Remand to State Court and granting 4 Motion to Compel Arbitration. Closing Case. Signed by Judge Federico A. Moreno on 6/23/2022. See attached document for full details. (mmd)

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The Cornfeld Group, LLC v. Certain Underwriters at Lloyd's, London...icy No. AMR-55418-01 et al Doc. 27 Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 1 of 9 UNITED STATESPISTRICT COURT FOR THE SOUTHERX DISTRICT OP FLORIDA A iamiDivisioù' . . ' . , CaseNuiziber:11<62510rCIV-M ORENO TRE COM FELD GROUP,LLC, Plaintiff, VS. CERTA IN U N DERW RITERS AT LLO YD 'S, LONDON SUBSCRIBFNG TO POLICY NO. AM R-55418-01,IKDIAN HARBOR INSURANCE cO.,QBE SPECIALTY IN SUR AN CB C O.,STEA D FA ST INSURANCECO.,(FNEM L SECURITY FNDEMNITY CO.Oy ARIZONA,UNITED SPECIA LTY IN SU R AN CE CO ., LEX m GTON IN SU RAN CE CO . PRINCETON EXCESS AND SURP . LUS LIN ES IN SRU AN CE CO ., INTEM ATIONAE FNSURAN CE CO.OF HAN NO V ER,S.E ., Defendanss. / ORUER DENYING M OTION FOR REM AND ANb GM NTING M OTION TO COM PEL ARBITM TION Plaintiff, l'he Cornfeld Group,LLC,bringsthi!statutôry bad faith casefo' llowing an arbitralaward in itsfavôron itsproperty insurance claim s.Defendanty,the insurers,removed . .' this case underthe rem ovalprovision ofthe Convention on the Recognitiop and Enforcem entof Foteign ArbitralAwards.Plaintiffm ovesforrem and arguing itsstatutory bad faith insurance claim fallsoutsidethescopeofthearbitrationclauseandtherefbre,theCourtlacksjurisdiction underthe Convention.The Coul' tfndsthe Plaintiff'scase,which stem sfrom the D efendants' handling ofPlaintiff's insurance claim ,isGsconceivably related''to the arbitrétion provision such ' thatthereisjurisdictionundertheConvention. Dockets.Justia.com Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 2 of 9 HavingfoundthereisjmisdictiontmdertheConvention',thenextissueiswhetherto granttheDefendants'm otion to çom pelarbitration ofthebadfaith claim .Becausethe arbitration clause contains a delegation clause,the courttu dsthe arbitration panelshould decide the threshold issue regarding the scopeofarbitration.Accordingly,the Courtdeniesthem otion for rem and and grantsthem otion to compelarbitration.TheCourtstaysthecasepending arbitration pursuanttô9U.S.C.j3. THIS CAUSE came beforetheCourtuponPlaintiffsM otion forRemand (D.E.8)and Defendants'M otiontoCompelArbitration(D.E.4). THE COURT has considered the m otions,the responses,the pertinçntportions ofthe record,and being otherwisefully advised in theprem ises,itis ADJUbGE: that the motion for relpand is DENIED and the motion to compel arbitration isG R AN TED . Backerotlnd Thisisastétutorybadfaith actionundefFlöridaStatutej624.155arisingfrom the Defendants'failum totim ely pay fordnm agescaused by HurricaneIrmato Plaintiff'sproperties. Plaintiffplzrchased ariiùsurancepolicy from Defendants,which provided coverageforoverfifty propertieswithtotallimitsof$170,219,763.OnSeptember10,2017,fiveofPlaintiffs propertiessustained dam agesdlzring HunicaneIrm a.Plaintifffiled aclaim with theDefendantj on September20,2017.TheDefendantsinvestigated thelossand initially asserted thatmuch of thèdnm agewaspre-existing ornon-existent. OnN ovember6,2017,theDefendantsre-inspectedthepropertiesand issued a Reservation ofRightsLetter.Thelettergenerally cited to exclusionsunderthepolicy,butdid not statewhich exclusionsappliedto each ofthe fiveproperties.TheDefendantssentacheck for $1.25m illion butdid riötspecifywhatdam agesthe check covered.iplaintiffcontinued to a Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 3 of 9 supplem enttheclaim', anLinJuly 2018,submittedaproofof' loss.TheDefendantsdidnotaccept theproofoflosg,butstated onAugust13,2018,thatçstheyhagdlnotcompletedtheir ipvestigat1onintotheclaim inordertofullydeterminethenmountofcoveredloss.''Defendants . . ' did notmake any paym ehtto Plaintiffinresponseto theproofofloss. Thepartiesdecided to arbitratetheextentofdnm agesundefthearbitration cléuse.The clause provides as follow s: C .A RBITR ATION CLA U SE:A 11m attersin diffqrence between the Insured and theCompanies(hereinafterreferredtoasthe(lparties'')intelationtothis insurnce including itsform ation and validity,and whetherarising during orafter theperiod ofinsurance,shallbe referredto altArbitrqtion Tribunalin them anner hereinafter:etout. The arbitrators coflferred on the case butw ere unable to agr' ee on the nm ountofloss.A sa result,thePlaintifffiled acomplaintin Broward County seeking e 'nfotcementofthepolicy's arbitration clause,ipcludingthe appoinfm entgfa neutralarbitrator.TheDeferldantsm movedthe caseand thefederaldistrictcoul' tappointed aneutralum pire.On December4,2020,the appointedumpireèntered an arbitr' ation award in favorofthePlainsiffforapproxim ately $36 pillion.Defendantypaid thelossin Decem ber2020,39 ftiohthsafterHurricaheIr' m a. 011October19,2021,PlaintifffiledthisbadiaithactioninBrôwardCounty,alldthe Defendantsagainremovédthecage.YhecomplaihtàllegestheDefendahtsbreachedtheirgood féith dutiesby failing to settlel11göi)d faith,failingto prnm ptly'com m tm icatu w ith the insm ed, . failing to affirm ordeny coverageforthe claim s,failing to provide a w titten statem entthatthe çlaim isbeing investigated,failing to prom ptly provideareasonabl:' explanation in m iting for thedenialofPlaintiff'sclaims,anéfailingtopromptlynotifyPlaintiffofény'additional . infotm ation necessary forthe processing ofitsclaim s. 3 Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 4 of 9 TheDefendahtsrem ovedthisactioh.Plaintifffiled am otitm torem and the caseto state ' ; . , courtclaiming thatitsstamtoiy badfaith claim doesnotfallundertheambitbfthéaibitratiori clauseandtlteCotu'tlacksjurisdiction.Def4ndantsfiledamotiontocompelarbitrationofthe' '' . . ' bad faith claim . lwezaIStandard and Analvsis 1I. W..hfotionforRemand The issue in the m otion forrem and is whetherthe Plaihtiff sstattttoly bad faith claim ' fallsundertheinsurancepolicy'sarbitrationprovision,trigg:ringthisCourt'sju 'risdiciion tmder. < . . theConvention ontheRecognitionandEnforcementofForeignArbitralAwards,9U.SCC.j 102' 2û3> and205.TheConyentionisallinternationaltreatythatguaranteescitizensofsignatory . , countriebtherightto enforceagreemçntsto arbitratedisputes.ItisincorporatedinjoUhapteriof the FederalArbitrationAct,9U.S.C.jj201-208. . Section 203oftheConventionprovidesthatdistrictcouttshaveoriginaljtzrisdictionover an aetion Gçfalling underthe Conventiong ''9U.S.C.j203.Section202.definesçifallingunderthe . Convention''as:<&An arbittation agm em en 'toratbi tralaward érising outofa legalrelationship, l . '*''' . ' . ' t , . ' whethercontraduàlornot,which isconsidem' d ascom mercial,including atransaction,colttract, oragredmént.''Section205allowsforremovalltwhetethesubjectmatterota' n actton or proceedingspçnding in Stàte courttelatdsto an arbitration agreem entor'awérd fallingtm derthe Conyenticm.''TheEleventhCircuithasjoined othercircuitcou'l'tàtoagreethatthettrelatesto'' languageofGssection205providesforbmadremovabiiity(jfcasesto'feberalcourt.''Outokumpu stqinles's ca -d,LLC v,converi vum,5:. ,s,9o2lt.3d1316,1324,(11thcir.2018)reversedon .othergrounds,sub nom,GE fndpgpèowerConversionFr.5' -4S v.Outukumpus' fcfn/cp' ,gUSA, . LLC,I4O.S.Ct.1637(2020).ItgtatesthatGtgwlhilethelinkbetweentheArbitrationagreement . 4 Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 5 of 9 and thedispute isnotboundless,thearbitration pgreem entneed only bç hufficiently related tothe ' disputesuch thatitconceivably affectstheoutcomeofthecàse.i'Thisinitialjurisdictional ' . . . inquia isdistinctfrom adeterminatibnofwhetherthe' partiesareboundto arbitrate.Id:(citing Bautistav;StarCruisevt,396F.3d 1189,1301(11th Cir.2005). Thequestiop in thiscaseiswhetherthebad faith claim (srelatesto''the arbitration ' . agreem ent,which thepartiesdo notdisputefallqundertheConvention.Here,thePlaintiffargues . thatthebad faith claim doesnotsufficiently çirelateto''theinsurancepolicy to createfederal jurisdictiontmdertheConvention.TodetermineifPlaintiffiscorrrct,theCourtmustengagein a two-step inquirytodeterminejurisdidion,llmitingtheexnminationtothepleadingsandthe removalnotice.9U.S.C.j205.First,thedistrictcourtshoulddeterminewhetherthenoticeof removgldescribesan arbitfationagreementthatmaylsfallu un'dertheConvention.''Outokumpu, ' . 902F 3dat1324.Thisisnotindispute.Thearbitratitm agrèementfallsuncterjheCqnvention. second,thedistrictctnurtmustdeterminewhetherther'eis'Eanon-frivölousbasistoconcludethat agreem entsufsciently Slrelatesto''thecasebeforethecourtsuch thatthe agreem entto arbitrate could conceivably affecttheoutcom eofthecase.''16l Thepartiesdisagreeon thispoint. Thearbitration clausehere statesthatthepartiesfnustarbitratealldisputedm attersGfin relationto thisinsurance.''Plaintiffarguesthattheagreem enttô arbitrate disputesunderthe insurance pölicy doesnotencom passPlaintiffsstatm ory bad faith claim ,and therefore,rem and isproper.The question is w hethçr itisttconteivable''thatthe arbitration provision affects the outcom e ofthe case.Itdoes.Plaintifrsstatutory bad faith claim arises from the D efendants' ' a' llegedfailuretotimelyadjustPlaintiY sHunicaneIM a-related commercialproperty'insutance claim and to tim ely péy am otmtsow ed unde'rthe insurance policy.There isà,conceivable connection between the Arbitration Clause and thePlaintiff'sclaim .TheCourtfindsthateven Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 6 of 9 though itiànota claifn fotcoverage,thebad falth claim m eetsthislow threshold and theCourt hasjtlrisdictionundertheConventioh. #. M otion to CompelArbitratiolt HavingfoundtheCourthasjurisdiction,theCourtmustnextexaminewhetheritis propertocom pelatbitration ofPlaintiY sstatutory bad faith claim .ttln deciding am otionto compelarbitration underthe Convelltion Act,acouryconductùtavery lim ited inqt tiry.'''Bautista * ' . . . v.StarCruises,396F,3d 1289,1295(11thCir.2005)(citationsomitted).Underthatinquiry,çsin the absence of an affirm ative defense,a districtcouttm ustcom pelarbitration underthe Conventioniffourjtuisdictionalrequirementsaremet.''Albertsv.RoyalCaribbean Cruises, ftd.,834F.3d 1202,1204(11th Cir.2016).TheCoul'tmustdeterminewùetherthesefourprèngs aremetpfiortocompellingarbitration:(1)thereisawrittenagreementwithinthemeaningofthe Uonvention;(2)theagrqementprokidesforarbitration intheterritoryofasignatoryofthe Convention;(3)theagreementarisesoutofalegalrelationship,whethercontractualornot, whichisconsidered commercial;arfd(4)apartytotheagreementis'notan Americancitizen. Northrop drJohnsonsYachts-ships,Inc.v.RoyalVanLentShèyar4 B.P:,855F.App'x468, 472(11th Cir.2021).Asnoted,supra,theConventionis'alsoincoporated'int?Chapter2ofthe p-ederalA' rbitration A ct, which isa''congressionaldeclaration ofaliberalfederalpolicy favoring arbitration'agreements.M osts. J' f ConeM emorialHosp.v.M ercury Constr.Corp.,103 S.Ct. ' . , 927,941(1983).IIA. I' Iydoubtsconcerningthescopço 'farbitrableigsues:hou'ldbçresolvedin . ' fàvorofarbitration.'>za at941.Thestrongpolicy favoringaràitrationGtapplieswith specialforce in the field ofintem ationalcöm m erce.''M itsubishiM otoes Cotp.'v.Soler Chlysler-plym outh, Inc.,473U.S.614,631(1985). Plaintiffonly disputeswhetherprong two ism ét- whetherthe agtèepentprovidesfor arbitrationofthisbadfaithclaim.élaintiffqrgpesthatitscauseofactionforbadfaith doesnot Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 7 of 9 involve a differenceofopinion between thelnslzred andtheInsurerswith respectto the . . $ application ofinsurance coverage,butratheris a dispute regarding the Insurers'perform ance of iheirdutiestmdertloridalaw.PlaintiffarguestheInsurers,misc' onductdoesnotLa .11underthe Rmbitofthearbitrationclause,whiùàreiuiresaràitratiönof($allmattersindifferencebetween the lnsured and the Com paniés,... in relation to this insurance,including its form ation and validityg.j'' AsiheCoul'tmustresolvealldoubtsinfavorofm bitration,theCourtfindsthatthebad faith claim Strelatesto thisinsurance.''The clause doçsnotlim itarbitration to coverage disputes butto any claim thatrelatestôtheparties' .insuràhcerelationship.Eveflifthiswerenotthecase andtheclaim isoutsidethesèope ofthearbitration provision,theclause delegatesthatdecision ' . , . totheArbitration Tribunal.The agreem entherecontainsa bruad delegation clause, encompassingallissuesoft:formationand validity.''SeeJone'sv WaffleXouse,Inc.,866F.3d . . 1257,1264(11th Cir.2017)(isAmongotherthings,thepartiesmay agreetoarbitrategateway questionsofarbitrability'ihcludingtheenforceability,scope,àpplicàbility,and intep retation of thearbitrationagreement.'').Courtsconstruingidehticalpolloywördinghaveuniformly concluded thatthis language constitutes a broad delegation cl>use,giving the arbitratioflpanel exclusiveauthorityto resblvethreshold ibsuesofarbitrability,including itqvalidity and scope. SeeYtech 180UnitsM iamiBeachInv.LLC v.Certain UnderwritersatLloyd' sLondon,359 F. . Supp.3d 1253,1265-66*(S.D.Fla.2019);CorpusChristiIslandApt.VillasMgmt.Grp.LLC v. UnderwritersatLloyd' sLondon,(S.D.Tex.2019)(holdingthatgiven delegationclause, arbitratorshoulddecidethe'drbitrabllity ofstatutofyb:dfaithclaim);5556GasmerMgmt.,LLC v.UnderwritersatLloyd'sLondön,463F.Supp.3d705,790(S.D.Tex.2020)(çç-l-hisCourt agreesthatal1meansjustthat- all.Butevenifitsomehow didn't,thedelegation clauseon its Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 8 of 9 facem akes(formatipn andvalidity'ofthearbitration agreem entpm'tapd parcelofCalldisputes' thatm'ustbe subm itled to arbitration.''). W here,ashere,(tan arbitration agreem entcontainsadelegation provision - comm itting to thembitratorthethreshold determ ination ofwhethertheagreep entto arbitrateisenforceable - thecottrtsonlyretainjurisdictiontoreview achallengetothatspecificprbvision.''Parnellv. Cashcall,Inc.,804F.3d 1142,1144(11thdir.2015).Gconly ifgtheCoul'tqdetenninqlsqthatthe ' delegatio' nclauseitselfisinvalidorun 'enforceablemay(theCoul'tlrevfew theenforceabilityof jhearbitraiion asawhole.''Parm v.Nat'lBankofcal.,N A.,835F.3à 1331,1335(11thCir. q , . 2016).Plaintiffdoesnotchallengethedelegationprovision.Itsargumentismerelythatthebad faith claim fallsputsidethe scopeqfarbitmtion.Accordihgly,theCourtfindsthedelegation provision isvalid and çompelsthepartiesto atbitration.Parnell,. 804 ê.3d at1144. i-lere,'thçPlaitltiffalsoarguusthattheEleventhCircuiihasheldthatarbitration agreementsthatprohibitstatutorytemediesareunepforceàble.TV arbitration clauseprovides that:GGgtjheArbitrationTribunalm>ynotawardexemplary,punitive,multiple,consequential,or ötherdam agesof a sim ilarnature.''Plaintiffclaim sthatitseeks extraçon 'tracm aland cohsequentialdamagesin thebad fàith clàim',which areoutsidethescopeofthe arbitratioh clause.Forthiyreason,PlaintiffatguestheCourtshould deny them ötion to compelarbitratioh. TheElevehth Circuithasheld thata challengeto the ehforceability ofan arbitration agreementonthegroundthatitjrohibitsstztutoryremediesisnut.adefense'thatmayberaisèd tmderth:Cofwention attheenforcemehtstage.Suaznv.NCL (Bahamaà),Tftf,822F.3.d543, 546(11th Cir.2016).Thelimiteddefensesallowed érethattheagreepefltis$Yu11andvoid, inoperative,orincapable öfbeing pèrform ed.'' .1d.Thrrefore,the Coprtfindsthisdefenseto arbisrationisimproper.M oreover,wtlerethereisabroadde legationclause,a'sisthecasehere, ') . 8 Case 0:21-cv-62510-FAM Document 27 Entered on FLSD Docket 06/27/2022 Page 9 of 9 any disputeregarding thevalidity oftheagreem entto arbitrateisp' roperly decided by the ArbitrationTribunal.Th(ArbitrationTribunalshoulddecideasathresholdmatterwhetherthe bad faith claim falls outside ofthe scope ofthatproceeding. , Finally,Plaintiffraisesachoice of1aw argumentstating thatifthe Cput'tcom pels arbitratioh,theçaseshopldretulmko. thesnmeArbitratiqnTribunaltodecidethemattérunder . . . ' . . . . (. . ' . Florida law .Plaintiff schoicè oflàw and fonzm selectign argum entsextçndbeyond thescopeof t .. . . . . ' the Cotlrt':inquil'y to decidethemotion to compelarbitratioh underthe Convention.M oreover, ' . the delegation claus: squarely puts choice of1aw and fortlm selection in the hands ofthe Arbitration Tribunal.Having found arbitration isproperirithiscase,the Courtstaystheqase pendingprbitrationpttrsuàlg to 9U.S.C.j3. DQNE AND ORDEM D inChambersatMiami,Flörida,this YX'ofJune2022. e ..e ' FEPE ..- A.M ORENO UN ITED STA TES D ISTRICT JU D G E èopiesfunushedto: CouqselofRecord 9

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