United States District Court, W.D. Washington, Tacoma
CLMS MANAGEMENT SERVICES LIMITED PARTNERSHIP; ROUNDHILL I, L.P., Plaintiffs,
AMWINS BROKERAGE OF GEORGIA, LLC; AMRISC, LLC; C.J.W. & ASSOCIATES, INC.; CERTAIN UNDERWRITERS AT LLOYD'S, Defendants.
ORDER ON DEFENDANTS CERTAIN UNDERWRITERS AT
LLOYD'S AND CJW & ASSOCIATES, INC.'S MOTION TO
COMPEL ARIBTRATION AND STAY PROCEEDINGS DKT. # 22
B. Leighton United States District Judge.
MATTER is before the Court on Defendants Certain Underwriters
at Lloyd's and CJW & Associates, Inc.'s Motion to
Compel Arbitration and Stay Proceedings. Dkt. # 22. This case
is an insurance dispute concerning coverage for flood damage
to a residential development in Houston, TX, that is owned by
Roundhill I, L.P., and managed by CLMS Management Services,
L.P. Complaint, Dkt. # 1, at 3. Defendants move to enforce
the Policy's mandatory arbitration clause, which requires
all disputes be resolved in New York. Policy, Dkt. # 23, Ex.
1, at 37 (26 of 48). However, enforcement of the arbitration
clause turns on a clash between two sources of law: RCW
48.18.200, which bars mandatory arbitration clauses in
insurance contracts, and the Convention on the Recognition of
Foreign Arbitral Award, Art. II, Sec. 3, which requires U.S.
courts to enforce arbitration clauses upon request. At the
fulcrum of these two is the McCarran-Ferguson Act, which
provides that state insurance law preempts conflicting
federal law. The question is whether the Convention-an
international treaty implemented by a congressional
statute-is preempted by RCW 48.18.200.
following reasons, the Court holds that the Convention is not
preempted and GRANTS Defendants' Motion to Compel
Arbitration and Stay Proceedings.
Houston residential development, Roundhill Townhomes,
allegedly sustained $5, 660, 000 worth of damage as a result
of Hurricane Harvey in August of 2017. Dkt. # 1, at 3. The
property was insured through August 30, 2017 under Commercial
Insurance Policy No. AMR-39768-02 with the Lloyd's
Underwriters. Id.; Policy, Dkt. # 23, Ex. 1, at 5.
This Policy constitutes one coverage part of a larger
insurance agreement between CLMS and Defendant Amrisc, LLC,
which acts as the “program manager for the
companies” providing coverage. Policy, Dkt. # 23, Ex.
1, at 5. The agreement with Amrisc effectively creates
“a separate contract between the [CLMS] and each of the
Underwriters.” Id. at 8 (1 of 4). CJW, a
Florida company, is the third-party claims administrator for
the Lloyd's Underwriters. Id. at 39 (28 of 48);
Dkt. # 1 at 3.
citizenship of the Lloyd's Underwriters, meanwhile, is a
bit more complicated. Plaintiffs allege simply that the
Lloyd's Underwriters are “a British business entity
with its principle place of business in London,
England.” Dkt. # 1, at 2. However, as the Eleventh
Circuit explained in Underwriters at Lloyd's, London
The Society of Lloyd's, London, is not an insurance
company, but rather a British organization that provides
infrastructure for the international insurance market.
Originating in Edward Lloyd's coffee house in the late
seventeenth century, where individuals gathered to discuss
insurance, the modern market structure was formalized
pursuant to the Lloyd's Acts of 1871 and 1982. . . .
Lloyd's itself does not insure any risk. Individual
underwriters, known as “Names” or “members,
” assume the risk of the insurance loss. Names can be
people or corporations; they sign up for certain percentages
of various risks across several policies. . . .
Names underwrite insurance through administrative entities
called syndicates, which cumulatively assume the risk of a
particular policy. . . . The syndicates are not incorporated,
but are generally organized by Managing Agents, which may or
may not be corporations. The Managing Agents determine the
underwriting policy for the syndicate and accept risks on its
behalf, retaining a fiduciary duty toward the underwriting
Names. . . .
613 F.3d 1079, 1083 (11th Cir. 2010).
their property was damaged, Plaintiffs submitted a claim
under the Policy. Dkt. # 1 at 3. Plaintiffs allege that they
made inquiries about their claim that went unanswered until
CJW sent them a letter in May 2018 stating that the
Policy's deductible was $3, 600, 000. Id.
Plaintiffs contend that the deductible should instead be
$600, 000. Id. at 4. This disagreement is at the
center of Plaintiffs' Complaint. Id.
Motion to Compel is based on the arbitration provision in the
Policy's “Conditions” section. It reads as
ARBITRATION CLAUSE: All matters in difference between the
Insured and the Companies (hereinafter referred to as
“the parties”) in relation to this insurance,
including its formation and validity, and whether arising
during or after the period of this insurance, shall be
referred to an Arbitration Tribunal in the manner hereinafter
The seat of the Arbitration shall be in New York and the
Arbitration Tribunal shall apply the law of New York as the