Justia Arbitration & Mediation Opinion Summaries

The case involves the Police Jury of Calcasieu Parish, a political subdivision of Louisiana, which suffered property damage from Hurricanes Laura and Delta in 2020. The Police Jury had insurance policies with a syndicate of eight domestic insurers. The insurers sought to compel arbitration in New York under New York law for the approximately 300 property damage claims. The Police Jury alleged underpayment and untimely payments by the insurers and filed suit in state court, which was later removed to the United States District Court for the Western District of Louisiana.The Western District Court granted the Police Jury's motion to certify three questions of Louisiana law to the Louisiana Supreme Court. The questions concerned the validity of arbitration clauses in insurance policies issued to Louisiana political subdivisions, particularly in light of a 2020 amendment to La. R.S. 22:868 and the applicability of La. R.S. 9:2778, which bars arbitration clauses in contracts with the state or its political subdivisions.The Louisiana Supreme Court addressed the certified questions. First, it held that the 2020 amendment to La. R.S. 22:868, which allowed forum or venue selection clauses in certain insurance contracts, did not implicitly repeal the prohibition of arbitration clauses in all insurance contracts under La. R.S. 22:868(A). Second, the court determined that La. R.S. 9:2778 applies to all contracts with political subdivisions, including insurance contracts, thereby prohibiting arbitration outside Louisiana or the application of foreign law. Third, the court held that a domestic insurer cannot use equitable estoppel to enforce an arbitration clause in another insurer’s policy against a political subdivision, as it would contravene the positive law prohibiting arbitration clauses in La. R.S. 22:868(A)(2).The Louisiana Supreme Court answered all three certified questions, maintaining the prohibition of arbitration clauses in insurance policies issued to Louisiana political subdivisions and affirming the applicability of La. R.S. 9:2778 to such contracts. View "POLICE JURY OF CALCASIEU PARISH VS. INDIAN HARBOR INSURANCE CO." on Justia Law

The Louisiana Supreme Court granted review in this case to determine whether the Louisiana Commissioner of Insurance was bound by an arbitration clause in an agreement between a health insurance cooperative and a third-party contractor. The Louisiana Health Cooperative, Inc. (“LAHC”), a health insurance cooperative created in 2011 pursuant to the Patient Protection and Affordable Care Act, entered an agreement with Milliman, Inc. for actuarial and other services. By July 2015, the LAHC was out of business and allegedly insolvent. The Insurance Commissioner sought a permanent order of rehabilitation relative to LAHC. The district court entered an order confirming the Commissioner as rehabilitator and vesting him with authority to enforce contract performance by any party who had contracted with the LAHC. The Commissioner then sued multiple defendants in district court, asserting claims against Milliman for professional negligence, breach of contract, and negligent misrepresentation. According to that suit, the acts or omissions of Milliman caused or contributed to the LAHC’s insolvency. Milliman responded by filing a declinatory exception of lack of subject matter jurisdiction, arguing the Commissioner must arbitrate his claims pursuant to an arbitration clause in the agreement between the LAHC and Milliman. The Supreme Court concluded, however, the Commissioner was not bound by the arbitration agreement and accordingly could not be compelled to arbitrate its claims against Millman. The Court reversed the appellate court's judgment holding to the contrary, and remanded the case for further proceedings. View "Donelon v. Shilling" on Justia Law

The Louisiana Supreme Court accepted a certified question of Louisiana law presented by the U.S. District Court of Appeals for the Fifth Circuit. This case involves a dispute between two creditors, each of which attached the same pig iron owned by the common debtor, America Metals Trading L.L.P. (“AMT”). Daewoo International Corp. (“Daewoo”), a South Korean trading company, entered into a series of contracts with AMT in May 2012 for the purchase of pig iron, to be delivered in New Orleans. The sale contracts contained arbitration clauses. Although Daewoo made payments under the contracts, AMT never shipped the pig iron. Daewoo sued AMT in the United States District Court for the Eastern District of Louisiana seeking an order compelling AMT to arbitrate the dispute pursuant to the terms of the contract and also seeking a writ of attachment of AMT’s pig iron on board the M/V Clipper Kasashio under the Louisiana non-resident attachment statute, Louisiana Code of Civil Procedure article 3542. The writ was granted and served by the U.S. Marshals Service on December 22, 2012. Noting that La. C.C.P. art. 3542, Louisiana’s non-resident attachment statute, allows a party to obtain a writ of attachment in "any action for a money judgment, whether against a resident or a nonresident, regardless of the nature, character, or origin of the claim, whether it is for a certain or uncertain amount, and whether it is liquidated or unliquidated," the federal court stated the issue as "whether Daewoo’s suit to compel arbitration and obtain provisional relief is an 'action for a money judgment' to which Louisiana’s non-resident attachment statute applies." The Louisiana Supreme Court responded: "Louisiana Code of Civil Procedure article 3542 allows for attachment in aid of arbitration if the origin of the underlying arbitration claim is one pursuing money damages and the arbitral party has satisfied the statutory requirements necessary to obtain a writ of attachment." View "Stemcor USA Inc. v. CIA Siderurgica Do Para Cosipar" on Justia Law

The issue before the Supreme Court in this case centered on a binding arbitration clause in an attorney-client retainer agreement and whether that clause was enforceable where the client filed suit for legal malpractice. This case presented two important countervailing public policies: Louisiana and federal law explicitly favor the enforcement of arbitration clauses in written contracts; by the same token, Louisiana law also imposes a fiduciary duty "of the highest order" requiring attorneys to act with "the utmost fidelity and forthrightness" in their dealings with clients, and any contractual clause which may limit the client's rights against the attorney is subject to close scrutiny. After its careful study, the Supreme Court held there is no per se rule against arbitration clauses in attorney-client retainer agreements, provided the clause is fair and reasonable to the client. However, the attorneys' fiduciary obligation to the client encompasses ethical duties of loyalty and candor, which in turn require attorneys to fully disclose the scope and the terms of the arbitration clause. An attorney must clearly explain the precise types of disputes the arbitration clause is meant to cover and must set forth, in plain language, those legal rights the parties will give up by agreeing to arbitration. In this case, the Defendants did not make the necessary disclosures, thus, the arbitration clause was unenforceable. Accordingly, the judgment of the lower courts was affirmed. View "Hodges v. Reasonover" on Justia Law

The issue on appeal to the Supreme Court was whether the appellate court erred in reversing a trial court's denial of Harold Wright's exception of res judicata. Mr. Wright was paralyzed and incapacitated by a medical accident in 1973. He received $1.7 million in damages. The court declared Mr. Wright an interdict and appointed his wife as his curatrix. In conjunction with the proceeding, the court issued an order allowing the curatrix to invest the damages in long-term bonds. No portion of the Mr. Wright's capital estate could be withdrawn from any long range investments without specific orders from the court. Through his investment bank Defendant A.G. Edwards & Sons, Inc. (and with the court's permission), Mr. Wright received disbursements from the invested damages award. In 2002, Mrs. Wright sued Defendant alleging breach of fiduciary duty. Specifically, she argued that A.G. Edwards and its agents misappropriated the entire $1.7 million and disbursed principal in violation of the court's order. Furthermore, Mrs. Wright alleged that when one of her account managers left A.G. Edwards to work for Morgan Stanley, he took Mr. Wright's remaining principal with him. The dispute went to arbitration. While pending, Mr. Wright died, thereby terminating the interdiction proceeding. An arbitration panel issued an award in favor of Defendants. Mr. Wright's estate then filed a motion with the district court, and Defendants filed several exceptions including an exception of res judicata where they contended the arbitration proceeding precluded further court action. The trial court denied the exception, and the appellate court reversed, dismissing the estate's claims. Upon review, the Supreme Court found that the arbitration award was unconfirmed, and therefore did not have a preclusive effect. Accordingly, the Court reversed the appellate court's ruling and remanded the case for further proceedings. View "Interdiction of Harold Wright" on Justia Law