United States District Court, M.D. Louisiana
MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
RICHARD L. BOURGEOIS, Jr., Magistrate Judge.
Before the court is a Motion to Remand filed by Amy Impson and John Robinson ("Plaintiffs"). (R. Doc. 7). The motion is opposed by the removing defendant, Associated Electric and Gas Insurance Services, Ltd. ("AEGIS"). (R. Doc. 8). Having reviewed the pleadings, the parties' arguments, and the applicable law, the court concludes that AEGIS has met its burden of establishing removal jurisdiction pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the Convention"), codified at 9 U.S.C. § 201-208. Accordingly, the Motion to Remand should be denied.
On June 11, 2013, Plaintiffs filed a Petition in the 19th Judicial District Court, East Baton Rouge Parish, Louisiana alleging that defendants Dixie Electric Membership Corporation and Donnie Young are liable for injuries caused to the Plaintiffs in an automobile accident. (R. Doc. 2-1 at 1-5). On April 21, 2014, the state court entered into the record Plaintiffs' First Supplemental and Amending Petition, which named AEGIS Security Insurance Company as defendant pursuant to the Louisiana direct action statute, La. R.S. 22:655 (R. Doc. 2-1 at 6-9). On June 23, 2014, the state court entered into the record Plaintiffs' Second Supplemental and Amending Petition naming AEGIS as the correct insurer defendant. (R. Doc. 2-1 at 14-17).
On October 6, 2014, AEGIS removed the action alleging that federal question jurisdiction exists pursuant to the Convention. (R. Doc. 2). AEGIS alleges that the policy at issue contains an arbitration provision that "falls under the convention" pursuant to 9 U.S.C. § 202 and that the state court litigation "relates to" the arbitration provision for the purposes of 9 U.S.C. § 205. (R. Doc. 2 at 6). AEGIS attached the policy at issue to its Notice of Removal. (R. Doc. 2-3). The policy's arbitration provision provides, in pertinent part, the following:
Any controversy or dispute arising out of or relating to this POLICY, or the breach, termination or validity thereof, which has not been resolved by non-binding means as provided herein within ninety (90) days of the initiation of such procedure, shall be settled by binding arbitration....
(R. Doc. 2-3 at 18). The "non-binding means" of resolution referenced in the arbitration provision are governed by provisions requiring non-binding negotiation and mediation prior to the commencement of arbitration. (R. Doc. 2-3 at 17-18).
In the Notice of Removal, AEGIS alleges that the arbitration provision "falls under" the Convention because (1) it is a written agreement to arbitration; (2) the agreement provides for arbitration in the United States, which is a Convention signatory nation; (3) the relationship between AEGIS and its insureds arise out of a "commercial legal relationship"; and (4) AEGIS, a citizen of Bermuda, is not a citizen of the United States. (R. Doc. 2 at 6). AEGIS further alleges that the state court litigation "relates to" the arbitration provision because this action was brought pursuant to the Louisiana direct action statute, and, therefore, the plaintiffs "have effectively stepped into the shoes of the named insureds." (R. Doc. 2 at 7). The other defendants consent to removal. (R. Doc. 2 at 7).
On November 5, 2014, Plaintiffs filed their Motion to Remand, arguing that the arbitration provision does not consist of a "valid" arbitration agreement because there has been no attempt at resolution of this controversy or dispute through the non-binding means of resolution provided by the policy. (R. Doc. 7).
II. Arguments of the Parties
Plaintiffs argue that AEGIS has not met its burden of proving that a "valid agreement to arbitrate" exists under the terms of the AEGIS policy as required pursuant to 9 U.S.C. § 202. (R. Doc. 7-2 at 2). Plaintiffs argue that Louisiana contract law principles govern whether the arbitration provision constitutes a valid agreement to arbitration. (R. Doc. 7-2 at 3-4). Plaintiffs claim that the AEGIS policy does not contain a valid arbitration agreement because the "narrow conditions for the AEGIS policy to sustain an agreement to arbitrate this matter are clearly not met." (R. Doc. 7-2 at 4). Plaintiffs argue that because the parties have not sought resolution by non-binding means, a contractual requirement before an actual binding arbitration may commence, "there is no contractual agreement to mandatory [arbitration] in this matter." (R. Doc. 7-2 at 4).
In opposition, AEGIS argues that it correctly alleged in the Notice of Removal that the policy at issue contains an arbitration provision that "falls under the convention" pursuant to 9 U.S.C. § 202. (R. Doc. 8 at 3-4). AEGIS further argues that the contractual prerequisites for arbitration in the arbitration provision are irrelevant because "defendant is not required to prove that it can successfully compel arbitration to justify removal and federal court jurisdiction." (R. Doc. 8 at 5-6). AEGIS notes that the Plaintiffs do not dispute that the arbitration provision "relates to" the present litigation as required by 9 U.S.C. § 205. (R. Doc. 8 at 3).
III. Law and Analysis
Federal courts have jurisdiction over actions or proceedings failing under the Convention, which "shall be deemed to arise under the laws and treaties of the United States." 9 U.S.C. § 203. The Convention allows removal of cases from state court where the state court ...