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Weyerhaeuser Co. v. Novae Syndicate 2007

United States District Court, W.D. Washington, Seattle

August 16, 2019

WEYERHAEUSER COMPANY, Plaintiff,
v.
NOVAE SYNDICATE 2007, et al., Defendants.

          ORDER DISMISSING ACTION AS NONJUSTICIABLE AND VACATING PRIOR ORDERS

          Honorable James L. Robart, U.S. District Court Judge

         I. INTRODUCTION

         Before the court are Plaintiff Weyerhaeuser Company's (“Weyerhaeuser”) and Defendants Hiscox Dedicated Corporate Member Limited as Representative Member of Syndicate 33 at Lloyds and Starr Underwriting Agents Ltd.'s (collectively, “Defendants”) responses to the court's July 22, 2019, order to show cause why the court should not dismiss this case as nonjusticiable. (See Pl. Resp. (Dkt. # 93); Defs. Resp. (Dkt. # 91); see also 7/22/19 Order (Dkt. # 90).) The court heard oral argument on August 13, 2019 (8/2/19 Order (Dkt. # 96); see also Min. Entry (Dkt. # 103); Tr. (Dkt. # 108) (sealed)), and the parties submitted supplemental briefs after oral argument (see Pl. Supp. Br. (Dkt. # 107); Defs. Supp. Br. (Dkt. # 106)). The court has reviewed the parties' responses and supplemental briefs, the relevant portions of the record, and the applicable law. Being fully advised, the court DISMISSES this case as nonjusticiable, VACATES its prior orders, and STRIKES the trial date and related pretrial dates.

         II. BACKGROUND

         A. Factual Background

         This is a declaratory judgment action involving excess liability insurance policies that Weyerhaeuser purchased from Defendants for the 2016-17 policy year. (See generally Compl. (Dkt. # 1).) During that period, Weyerhaeuser incurred substantial liability for alleged property damage and personal injuries related to a Weyerhaeuser product. (Id. ¶¶ 18-20.)

         The insurance policy that Weyerhaeuser purchased from Defendants (“the Policy”) is part of a six-layer ladder that provides up to $300 million in excess liability coverage. (Lambdin Decl. (Dkt. # 37) ¶ 2.) The Policy forms the bulk of the ladder's fifth layer of coverage. (See id., Ex. A; see also Lambdin Decl. ¶ 3, Ex. F (“Hiscox/Starr Policy”).[1])

         Non-party Lex London Casualty Corp. (“Lex-London”), Weyerhaeuser's primary carrier, issued the first-layer policy in the coverage ladder (“the Lead Underlying Policy”). (Lambdin Decl. ¶ 2, Ex. B.) The Lead Underlying Policy includes an “arbitration endorsement, ” which provides that any dispute “arising out of or relating to” to the Lead Underlying Policy must be arbitrated in London (“the London Arbitration Clause”). (Id. at 41.) Specifically, the London Arbitration Clause states:

It is acknowledged and agreed that, notwithstanding anything to the contrary in the policy, any dispute, controversy or claim arising out of or relating to this policy or to the breach, cancellation, termination or validity of this Policy shall be finally and fully determined in London, England under the provisions of the Arbitration Act of 1996 ([“]Act”) and/or statutory modifications or amendments thereto, for the time being in force, by a Board composed of three arbitrators to be selected for each controversy[.] . . .

(Id.) Additionally, the Lead Underlying Policy includes a “service of suit” clause. (See id. at 44.) That clause provides that, “[s]olely for the purpose of effectuating arbitration, in the event of the failure of [Lex-London] to pay any amount claimed to be due, ” Lex-London “will submit to the jurisdiction of any court of competent jurisdiction within the United States.” (Id.)

         Defendants' Policy incorporates by reference “the same terms, definitions, exclusions and conditions . . . contained in the Lead Underlying Policy, ” except to the extent that the two are inconsistent. (See Hiscox/Starr Policy at 9.) Unlike the Lead Underlying Policy, the Policy includes a clause titled “Service of Suit Clause (U.S.A.) N.M.A. 1998” (“the N.M.A. 1998 Clause”). (See Id. at 20.) The N.M.A. 1998 Clause states:

It is agreed that in the event of the failure of the Underwriters hereon to pay any amount claimed to be due hereunder, the Underwriters hereon, at the request of the Insured (or Reinsured), will submit to the jurisdiction of a Court of competent jurisdiction within the United States.

(Id.) The London Arbitration Clause does not expressly appear in Defendants' Policy. (See generally id.)

         B. Procedural History

         Weyerhaeuser filed this action on April 20, 2018, seeking a judgment under the Declaratory Judgment Act, 28 U.S.C. § 2201, et seq., that it is not required to arbitrate in London any coverage dispute with Defendants that may arise under the Policy.[2] (See Compl. ¶¶ 35-37.) Weyerhaeuser contends that, because the N.M.A. 1998 Clause conflicts with the London Arbitration Clause, which is purportedly incorporated by reference into the Policy, the N.M.A. 1998 Clause controls. (Id. ¶¶ 26-31.) Accordingly, in Weyerhaeuser's view, Defendants may not invoke the London Arbitration Clause and must “litigate any coverage disputes in the U.S. jurisdiction of Weyerhaeuser's choosing.” (Id. ...


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