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Courville v. Allied Professionals Ins. Co.

Court of Appeals of Louisiana, First Circuit

June 5, 2015


Page 660


Thomas A. Gennusa, II, Joseph S. Piacun, Reid S. Uzee, Metairie, Louisiana, Attorney for Plaintiffs, Appellants, Ronald Courville and Angela Courville.

Guice A. Giambrone, III, Metairie, Louisiana, Attorney for Defendant, Appellee, Allied Professionals Insurance, Company, A Risk Retention Group, Inc.

Stephen Babcock, Kevin Kleinpeter, Chase Tettleton, Baton Rouge, Louisiana, Attorneys for Defendants, Appellees, Rathmann-Keogh Chiropractic, Clinics, L.L.C. and Thomas J., Rathmann, Jr.



Page 661

[2013 0976 La.App. 1 Cir. 2] McDONALD, J.


Ronald and Angela Courville (the Courvilles) filed a petition for medical malpractice on November 28, 2011, against Dr. Rathmann and his clinic, Rathmann-Keogh Chiropractic Clinics, L.L.C. Pursuant to the Louisiana Direct Action Statute, La. Rev. Stat. 22: 1269 (" LDAS" ), et seq., the Courvilles also named Dr. Rathmann's foreign liability insurer, Allied Professionals Insurance Company, A Risk Retention Group, Inc. (" APIC" ), as a defendant. APIC is an Arizona risk retention group

Page 662

created pursuant to the Liability Risk Retention Act of 1986 (" LRRA" ). 15 U.S.C. § 3901, et seq. APIC, however, refused to participate in the proceedings and filed an exception raising the objection of no cause of action and a Motion to Compel Arbitration and Stay Proceedings. APIC's Motion to Compel Arbitration and Stay Proceedings was premised on an arbitration provision contained in an insurance agreement entered into between Dr. Rathmann and APIC (no other party or entity is mentioned in the agreement, nor is anyone a signatory to the agreement except APIC and Dr. Rathmann). The arbitration clause in question provides, in pertinent part:

" C. Arbitration. All disputes or claims involving the Company shall be resolved by binding arbitration, whether such disputes or claim arises between the parties to this Policy, or between the Company and any person or entity who is not a party to the Policy but is claiming right either under the policy or against the Company ....All procedures, methods, and rights with respect to the right to compel arbitration pursuant to this Article shall be governed by the Federal Arbitration Act. The arbitration shall occur in Orange County, California. The laws of the State of California shall apply to any substantive, evidentiary, or discovery issues ....If any party seeks a court order compelling arbitration under this provision, the prevailing party in such motion, petition or other proceeding to compel arbitration shall recover all reasonable legal fees and costs incurred thereby and in any subsequent appeal, and in any action to collect the fees and costs..."

In an order signed February 4, 2013, APIC's Motion to Compel Arbitration and Stay Proceedings was granted by the trial court, ordering all parties to submit [2013 0976 La.App. 1 Cir. 3] to binding arbitration in California pursuant to the terms and conditions of the insurance policy. The trial court pretermitted ruling on the no cause of action exception filed by APIC. In support of its exception of no cause of action, APIC argues that the LRRA preempts the LDAS. The Courvilles' contend that the trial court's narrow holding allows this Court to decide not to rule on the issue. However, to properly discuss and review the Courvilles' first assignment of error, it is necessary to clarify the relationship between the LRRA, The Federal Arbitration Act, and the McCarran-Ferguson Act.

On March 15, 2013, the Courvilles filed a motion for suspensive appeal, which was granted by the trial court, on March 21, 2013. The trial court granted a Motion and Order for Suspensive Appeal. On appeal, the Courvilles assign the following errors:

1. APIC was well aware of La. Rev. Stat. Ann. § 22:1269 (Louisiana Direct Action Statute) and the risk that it would be hailed into a Louisiana court when it issued liability insurance coverage to a Louisiana physician. APIC was also well aware of La. Rev. Stat. Ann § 22:868 that expressly prohibits arbitration provisions in insurance contracts. APIC, furthermore, was well aware that its arbitration provision was governed by the Federal Arbitration Act, an Act which the McCarran Ferguson Act allows for La. Rev. Stat. § § 22:1269 and 22:868 to " reverse preempt," thereby voiding APIC's arbitration provision. The district court erred in ordering that the Courvilles must attend binding arbitration in California.
2. Out of an abundance of caution and to the extent that this Court affirms the district court's granting of APIC's Motion to Compel Arbitration and Stay All Proceedings, the Courvilles raise an additional

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assignment of error. The Courvilles' claims against Dr. Rathmann, individually, and Rathmann-Keogh Chiropractic Clinics, L.L.C., individually, are not subject to an arbitration agreement. The district court should not have stayed those claims. The district court erred in staying the entire proceedings as opposed to only the Courvilles' claims against APIC.

For the following reasons, we affirm a portion of the decision of the trial court, reverse a portion and lift the stay.

[2013 0976 La.App. 1 Cir. 4] STANDARD OF REVIEW

The determination of whether to compel arbitration is a question of law, and thus, this court conducts a de nova review.[1] Courts use a bifurcated analysis to determine whether it is proper to compel a party to arbitrate.[2] In ruling on a motion to compel arbitration, the court must first determine whether the parties agreed to arbitrate the type of claim that is at issue.[3] Then, upon finding that the parties have agreed to arbitrate, the court must look to see if any federal statute or policy deems the dispute nonarbitrable.[4] The Federal Arbitration Act of 1924 (FAA) expresses a strong national policy favoring arbitration of disputes, and all doubts concerning the arbitrability of claims should be resolved in favor of arbitration.[5]

Clearly, the trigger of the court's power to compel arbitration is the existence of a presumptively valid arbitration agreement, contained within a contract signed by the parties. Chastain v. Robinson-Humphrey Company, 957 F.2d 851, 855 (11th Cir. 1992). Thus, the first task of a court, asked to compel arbitration of a dispute, is to determine whether the parties agreed to arbitrate that dispute. Chastain, 957 F.2d at 854 (wherein the signature of one party to a securities trading account was alleged to have been forged, and it was held that it is for courts to decide whether the alleged obligor ever signed the contract). Under normal circumstances, the Chastain court explained, an arbitration provision within a contract, which the contractual parties have admitted to signing, is sufficient to require the district court to send any controversies to arbitration. Under such circumstances, the parties have at least presumptively agreed to arbitrate any disputes, including those disputes about the validity of the contract in general. Because the making of the arbitration [2013 0976 La.App. 1 Cir. 5] agreement itself is rarely in issue when the parties have signed a contract containing an arbitration provision,

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the district court usually must compel arbitration immediately after one of the contractual parties so requests.

Jasper Contractors, Inc. v., LLC 94 So.3d 123

In ruling on a motion to stay, a court must " first determine whether there is a written agreement to arbitrate" ; then, " whether any of the issues raised are within the reach of that agreement." [6] Courts have illustrated that if there is a broad arbitration clause, the action should be stayed, and that the FAA makes the stay mandatory in this sense.[7]

Louisiana Revised Statutes R.S. 9:4203 (the state counterpart to 9 U.S.C. § 4) allows a district court to ascertain only two basic facts before ordering arbitration: (1) whether there is a dispute as to the making of the agreement for arbitration, and (2) whether a party has failed to comply with the arbitration agreement; if the trial court determines that those two facts are not at issue, the court shall issue an order directing the parties to proceed to arbitration. Jasper Contractors, Inc. v., LLC, 11-0978 at p. 12, 94 So.3d at 133.


This appeal involves two federal acts, the FAA and the LRRA, (as amended in 1986), purporting to preempt two Louisiana statutes (La. Rev. Stat. 22: 1269 and 22:868). Both federal authorities have preemptive power over state laws in some respect. To determine whether the Courvilles should be forced to arbitrate their claim in California, we analyze the preemptive effect of both federal statutes in isolation, discussing specifically how they each effect § § 22:868 and 22:1269. The analysis is further complicated by the McCarran-Ferguson Act (" MFA" ), another federal statute that acts to save state insurance laws from preemption. If the requirements of the MFA are met, it has the effect of " reverse preempting" federal [2013 0976 La.App. 1 Cir. 6] laws, but only when the federal law does not regulate the business of insurance specifically, and the conflicting state statute does purport to do so. Even if the Courvilles are correct that the MFA allows for reverse preemption of the FAA, there is still the preemptive potential of the LRRA. APIC argues that the LRRA, and not the FAA, is the federal law that supersedes § § 22:868 and 22:1269. If APIC is correct, then it should not matter that the MFA may provide for reverse preemption as to the FAA. As long as either the FAA or the LRRA supersede Louisiana state law, the effects are the same: the conflicting state statute is displaced by the federal law.

1. The FAA and Federal Preemption

The arbitration provision relied upon by APIC states that " the right to compel arbitration pursuant to this Article shall be governed by the Federal Arbitration Act." Enacted in 1924, Congress, through the FAA, abolished the common law rule against judicial enforcement of arbitration agreements.[8] Henceforth, arbitration agreements were to be treated with the same respect due any other contract.[9]

The FAA specifically allows arbitration clauses in contracts, and makes no exception for insurance contracts. The FAA provides ...

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