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R.J. Wilson & Associates, Ltd. v. Underwriters at Lloyd's London

September 21, 2009

R.J. WILSON & ASSOCIATES, LTD., PETITIONER,
v.
UNDERWRITERS AT LLOYD'S LONDON A/K/A NEW LONDON HOUSE, RESPONDENT.



The opinion of the court was delivered by: Hurley, Senior District Judge

MEMORANDUM & ORDER

Petitioner R.J.. Wilson & Associates, Ltd. ("Wilson") originally commenced this action in New York State Supreme Court, County of Nassau on or about December 12, 2007 seeking to stay arbitration in connection with an arbitration demand letter dated April 3, 2007 it received from Respondent Certain Interested Underwriters at Lloyd's, London Subscribing to Binding Authority Agreement B10120 ("ULL") i/s/a Underwriters at Lloyd's London a/k/a/ New London House. The action was thereafter removed to this Court. Presently before the Court is ULL's motion to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and Wilson's cross-motion to remand. For the reasons set forth below, ULL's motion is granted and Wilson's cross-motion is denied.

Factual and Procedural Background

In March 2001, Wilson, a Maryland corporation, entered into Binding Authority Agreement B101620 (the "BAA") with ULL, an entity organized and operating in the United Kingdom of Great Britain and Northern Ireland. Section 1 of the BAA allows Wilson to bind insurances "in accordance with the terms and conditions contained herein or agreed in writing by the Underwriters and endorsed hereon." Wilson's authority to issue policies under the BAA was limited to businesses located in Maryland, Virginia, West Virginia, and Pennsylvania..

The BAA, inter alia, contains an arbitration provision, which is the subject of this dispute. It provides in relevant part:

All matters in difference between the parties arising under, out of or in connection with the Agreement, including formation and validity, and whether arising during or after the period of the agreement, shall be referred to an arbitration tribunal in the manner hereinafter set out.

BAA (Ex. A to Dkt. No. 14) at ¶ 36.1. The BAA also specifies that arbitrations are to "be conducted in accordance with and governed by the laws of England, including the Arbitration Act of 1950 - 1979 or as from time to time re-enacted or amended." Id. ¶ 36.5. Significantly, Appendix A to the BAA provides that with respect to all commercial general liability policies, "[a]ll risks to be written strictly in accordance with the Underwriting Manual."*fn1 Other pertinent provisions of the BAA shall be discussed as relevant.

Wilson issued a policy insuring a restaurant in Brooklyn, New York, which was to be in effect from June 29, 2001, to August 1, 2002.*fn2 (Dkt. No. 13 at 3.) In March, 2002, an incident occurred at the restaurant which triggered insurance coverage.*fn3 (Id.) The victim of the incident then filed suit in the Supreme Court of the State of New York, Kings County, for damages sustained during the incident. (Id. at 3-4.) ULL then was required, under the insurance policy issued by Wilson, to defend and indemnify the restaurant. (Id. at 4.) ULL settled the case, paying the victim $500,000.00 and incurring approximately $52,571.00 in legal fees and other costs in connection with the litigation and defense of the restaurant. (Id.)

On April 3, 2007, ULL issued an arbitration demand letter to Wilson, stating that the insurance policy issued to the restaurant was improper. (Id.) ULL alleges that Wilson failed to abide by the requirements set forth in the Underwriting Guidelines ("Guidelines").*fn4 The Guidelines set out the requirements and limitations on Wilson in regards to the issuance of insurance policies. ULL contends that the Guidelines are incorporated into the BAA. Specifically, ULL alleges Wilson failed to follow the Guidelines when it: (1) failed to obtain and keep a complete underwriting file, (2) failed to include an assault and battery exclusion in the insurance policy at issue, (3) issued the insurance policy when the restaurant employed bouncers, and (4) provided assault and battery coverage where liquor liability coverage was provided. ULL seeks to recover the monies they expended in defending and settling the lawsuit.

On or about December, 12, 2007, Wilson filed its petition to stay arbitration in the Supreme Court for Nassau County. (Dkt. No. 13, at 4.) On January, 22, 2008, pursuant to 28 U.S.C. § 1441, ULL removed the action from Supreme Court to this Court, relying on the Federal Arbitration Act ("FAA") as federal subject matter jurisdiction.

The Parties' Contentions

ULL contends that the Guidelines, which restrict the manner in which Wilson can issue an insurance policy, are encompassed within the BAA, and as a result, any dispute regarding an underwriting issue is subject to the broad arbitration clause contained in the BAA. Wilson contends that the current dispute is non-arbitrable. According to Wilson, the Underwriting Guidelines do not contain any arbitration provision and do not incorporate any agreement to arbitrate. Furthermore, Wilson contends that ULL's claims are barred by the statute of limitations, warranting a stay of arbitration. It also argues that ULL's removal from state court was improper and that this Court lacks subject matter jurisdiction.

Discussion

I. This Action Is Subject To The FAA

ULL relies upon ยง 203 of the FAA as conferring subject matter jurisdiction in this matter. Section ...


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