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Sevigny v. British Aviation Insurance Company Limited

United States District Court, D. New Hampshire

June 16, 2015

Roger A. Sevigny, Insurance Commissioner of the State of New Hampshire, solely in his capacity as Liquidator of The Home Insurance Company
v.
British Aviation Insurance Company Limited and The Marine Insurance Company Limited

ORDER Opinion No. 2015 DNH 122.

JOSEPH DiCLERICO, Jr., District Judge.

Roger A. Sevigny, Insurance Commissioner of the State of New Hampshire, brought suit in state court, in his capacity as liquidator of the Home Insurance Company ("Liquidator"), to collect reinsurance from British Aviation Insurance Company Limited and The Marine Insurance Company Limited. The defendants removed the case to this court, and the Liquidator moves to remand. The defendants object to the motion to remand.

Discussion

The Liquidator contends that the case must be remanded to state court because the defendants' reinsurance contracts waive the defendants' right to remove through a provision titled, "Service of Suit Clause (USA)." The Liquidator also asks the court to order the defendants to pay costs and expenses incurred in seeking remand. The defendants object to the motion to remand, arguing that the Service of Suit Clause does not waive their right to remove.

The Liquidator appended a copy of a reinsurance policy to its complaint as Exhibit A. The Service of Suit Clause ("Clause") in the policy provides as follows:

In the event of the failure of Underwriters hereon to pay any amount claimed to be due hereunder, Underwriters hereon, at the request of the Company [sic] will submit to the jurisdiction of any court of competent jurisdiction within the United States and will comply with all requirements necessary to give such court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such court.
Service of Process in such suit may be made upon
And in any suit instituted against any one of them upon this contract, Underwriters will abide by the final decision of such Court or of any Appellate Court in the event of an appeal.

For purposes of the motion to remand, the defendants do not dispute that the Clause has been triggered and applies in this case to the Liquidator's claims on behalf of The Home Insurance Company.

A. Removal

"When plaintiffs file a civil action in state court over which the federal courts would have had original jurisdiction based on diversity of citizenship, the defendants may remove the action to federal court." Univ. Truck & Equip. Co., Inc. v. Southworth-Milton, Inc., 765 F.3d 103, 107-08 (1st Cir. 2014) (citing 28 U.S.C. § 1441(a)). The plaintiff may then move to remand the case to state court because of a defect, other than subject matter jurisdiction, within thirty days of removal. 28 U.S.C. § 1447(c). To oppose a motion to remand, the defendants bear the burden of showing that removal was proper. Inhabitants of the Town of Fairfield v. Time Warner Cable Northeast LLC, 2015 WL 1565237, at *1 (D. Me. Apr. 8, 2015); Hanover Ins. Gr., Inc. v. Chartis Speciality Ins. Co., 2013 WL 4495659, at *1 (D. Mass. Aug. 19, 2013); Pacheco v. St. Luke's Emergency Assocs., P.C., 879 F.Supp.2d 136, 139 (D. Mass. 2012).

There is no dispute that this court has subject matter jurisdiction based on the parties' diversity of citizenship and there is no dispute that the removal was timely. The issue is whether under the Clause the defendants waived their right to remove the case. The defendants argue that the Clause is a permissive forum selection clause, which does not mandate exclusive jurisdiction in New Hampshire state courts. The Liquidator contends that the Clause, as a service of suit provision, constitutes a waiver by the defendants of their right to remove. B. Service of Suit Clause

The parties agree that federal common law governs enforcement of forum selection clauses, including the service of suit clause at issue here.[1] Despite that choice, the defendants state that there may be a conflict among the federal circuit courts, while the Liquidator supports the choice of federal common law by showing that both Michigan and New Hampshire enforce forum selection clauses under ordinary contract principles. The appropriate inquiry, however, is whether the applicable state law conflicts with federal common law, because a conflict would require a determination of whether the enforceability of the clause was procedural or substantive under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). See Huffington v. T.C. Group, LLC, 637 F.3d 18, 23 (1st Cir. 2011); Rafael Rodriguez Barril, Inc. v. Conbraco Indus., Inc., 619 F.3d 90, 92 (1st Cir. 2010). New Hampshire follows the federal standard provided in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12 (1972). Hansa Consult of N. Am., LLC v. Hansaconsult Ingenieurgesellschaft mbH, 163 N.H. 46, 52 (2011). Therefore, an Erie analysis is unnecessary, and the Bremen standard will govern the enforceability of the service of suit clause in this case.

Under the federal standard, the court addresses a forum selection clause by first determining whether the clause is mandatory or permissive. Claudio-De Leon v. Sistema Univ. Ana G. Mendez, 775 F.3d 41, 46 (1st Cir. 2014). A mandatory clause includes language that "jurisdiction and venue are appropriate exclusively in the designated forum" while a permissive clause authorizes jurisdiction and venue in the stated form but does not preclude litigation elsewhere. Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 17 (1st Cir. 2009) (internal quotation marks omitted). If the clause is mandatory and if the scope of the clause covers the claims at issue, the ...


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