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Cornell-Dubilier Electronics, Inc. v. Allianz Versicherungs Ag

United States District Court, D. New Jersey

February 6, 2019

CORNELL-DUBILIER ELECTRONICS, INC., Plaintiff,
v.
ALLIANZ VERSICHERUNGS AG, et al., Defendants.

          OPINION

          SUSAN D. WIGENTON, U.S.D.J.

         Before this Court is Defendants SCOR Global P&C SE, as successor in interest to Societe Commerciale de Reassurance (sued herein as “SCOR, ” “SCOR CCR, ” “SCOR FACULT” and “SCOR TRAITE”); Riverstone Insurance (UK) Limited, as successor in interest to L'Independence; Mutuelle Generale Francaise Accidents; Generali IARD as successor in interest to Le Continent (sued herein as Le Continent Holding S.A.); Allianz IARD S.A., as successor in interest to Assurances Générale de France; Compagnie d'Assurances Maritime Aeriennes et Terrestres and companies (sued herein as “La Fonciere, ” “La Preservatrice, ” and “Preservatrice Fonciere”); and AXA Corporate Solutions Assurance, as successor in interest to Groupe Drouot; and L'Union des Assurances de Paris's (collectively, the “French Market Insurers” or “FMI”)[1] motion to stay Cornell-Dubilier Electronics, Inc.'s (“CDE” or “Plaintiff”) suit and compel arbitration of its claims pursuant to Federal Rule of Civil Procedure 12(b), the Convention on the Recognition of Foreign Arbitral Awards and Agreements, 9 U.S.C. § 201 et seq. (the “Convention”), and the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367. Venue is proper pursuant to 28 U.S.C. § 1441. This Court, having considered the parties' submissions, decides this matter without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons stated below, this Court GRANTS FMI's Motion.

         I. BACKGROUND AND PROCEDURAL HISTORY

         The current suit involves a dispute over insurance coverage for “environmental contamination at a Superfund site located at 333 Hamilton Boulevard, South Plainfield, New Jersey” (the “Site”). (D.E. 11-3 ¶¶ 1, 27.) CDE, a former subsidiary of Exxon Mobil Corporation (“Exxon”)[2], is liable for damage from the release of certain chemicals at the Site, [3] and now seeks indemnification from the defendant insurers under general liability insurance policies Exxon entered into from January 1, 1980 through November 1, 1983 (the “Exxon Policies”). (Id. ¶¶ 17-36; Ex. A (listing policies at issue).) Those policies[4] contain the following arbitration provision, which provides, in relevant part:

In the event of any difference arising between the Insured and the Insurers with reference to this insurance such difference may, at the request of either party (after all requirements of this insurance with respect to recovery of any claim shall have been complied with), be referred to three disinterested arbitrators, one being chosen by the Insured, one chosen by the Insurers, and the third chosen by the two aforesaid arbitrators before they enter into arbitration. . . . Any such arbitration shall take place in New York, N.Y. unless otherwise agreed by both parties, and the expense of arbitration shall be borne and paid as directed by the arbitrators.

(D.E. 11-3 ¶ 47.)

         Plaintiff initially filed suit in the Superior Court of New Jersey, Law Division, Middlesex County, and on December 31, 2018, filed an Amended Complaint alleging breach of contract (Count I) and breach of duty of good faith (Count II), and seeking declaratory judgment that Plaintiff is not required “to arbitrate any disputes arising under the Exxon Policies.” (Id. at 8-12.) Defendants removed to this Court on November 8, 2018, and moved to compel arbitration on November 14, 2018. (D.E. 1; 18.) Briefing on the motion was completed on January 16, 2019. (D.E. 21, 30, 38, 39, 41, 45.)

         II. LEGAL STANDARD[5]

         There is a “strong policy in the federal courts favoring arbitration, especially in the context of international agreements.” Becker Autoradio U.S.A., Inc. v. Becker Autoradiowerk GmBH, 585 F.2d 39, 44 (3d Cir. 1978); see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985). As such, “arbitration provisions are to be liberally construed” and “‘any doubts as to whether an arbitration clause may be interpreted to cover the asserted dispute should be resolved in favor of arbitration unless a court can state with “positive assurance” that this dispute is not meant to be arbitrated.'” Becker, 585 F.2d at 44-45 (internal citations omitted).

         Arbitration provisions in international commercial agreements are governed by the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”), codified at 9 U.S.C. § 201-208. See Standard Bent Glass Corp. v. Glassrobots Oy, 333 F.3d 440, 448-49 (3d Cir. 2003). “Where a dispute arises from an international commercial agreement, a court must address four factors to determine whether the arbitration agreement falls under” the Convention. Id. (citing Ledee v. Ceramiche Ragno, 684 F.2d 184, 186-87 (1st Cir.1982)). Those factors are: 1) the existence of a written agreement; 2) that provides for arbitration in the territory of a signatory of the Convention; 3) that is also commercial in nature; and 4) which is not entirely domestic in scope. See Ledee, 684 F.2d at 186-87. If all four factors are satisfied, “the court must order arbitration unless it determines the agreement is null and void.” Standard Bent, 333 F.3d at 448-49.[6] This is a “very limited inquiry, ” Bautista v. Star Cruises, 396 F.3d 1289, 1294 (11th Cir. 2005) (citing cases), which leaves to the arbitrators procedural questions such as whether the parties satisfied any prerequisites or met conditions precedent to arbitration. See, e.g., Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (holding that, when seeking a stay of a federal action while arbitration is pending “a federal court may consider only issues relating to the making and performance of the agreement to arbitrate”); Howsman v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85 (2002) (noting that procedural issues, such as whether prerequisites to arbitration were met are questions for an arbitrator); Certain Underwriters at Lloyd's London v. Westchester Fire Ins. Co., 489 F.3d 580, 585-86 (3d Cir. 2007) (distinguishing between “questions of arbitrability (for the court) and questions of arbitral procedure (for the arbitrator)”).

         III. DISCUSSION

         Reviewing each of the four factors in turn, this Court is satisfied that arbitration is appropriate in this matter. First, neither party disputes that the Exxon Policies contain a valid, written arbitration provision, which requires arbitration of “any difference arising between the Insured and the Insurers.” (D.E. 11-3 ¶ 47.)[7] Second, the arbitration agreement provides for arbitration in New York, New York, and the United States is a signatory to the Convention. (See http://www.newyorkconvention.org/countries (identifying signatories).) Third, insurance and reinsurance contracts are commercial in nature. See, e.g. VVG Real Estate Inv. v. Underwriters at Lloyd's, London, 317 F.Supp.3d 1199, 1205 (S.D. Fla. 2018) (recognizing insurance contracts as being “commercial in nature”); Viator v. Dauterive Contractors, Inc., 638 F.Supp.2d 641, 647 (E.D. La. 2009) (same); Meadows Indem. Co. Ltd. v. Baccala & Shoop Ins. Servs. Inc., 760 F.Supp. 1036 (E.D.N.Y. 1991) (treating insurance and reinsurance contracts as commercial agreements). Fourth, this matter is not entirely domestic in scope. Matters are entirely domestic in scope only when they are 1) “between two United States Citizens, ” 2) “involve property located in the United States, ” and 3) “have no reasonable relationship with one or more foreign states.” Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys “R” Us, Inc., 126 F.3d 15, 19 (2d Cir. 1997); see also Jain v. de Méré, 51 F.3d 686, 689 (7th Cir. 1995). CDE is a Delaware Corporation with a principal place of business in the United States. (D.E. 11-3 ¶ 1.) The French Market Insurers are French and/or British entities with principal places of business in France or the United Kingdom. (Id. ¶¶ 2-12.) Therefore, this dispute is not between citizens of the United States. As a result, FMI's motion to compel will be granted.[8] This matter will be administratively terminated pending the outcome of arbitration. This case may be reinstated to the Court's active docket upon written notice from the parties following the conclusion of arbitration.

         IV. CONCLUSION

         For the reasons set forth above, Defendants' Motion to Compel Arbitration is GRANTED. This matter is administratively terminated pending the ...


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