{"id":905023,"date":"2025-11-18T16:33:19","date_gmt":"2025-11-18T23:33:19","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=905023"},"modified":"2025-11-18T16:33:22","modified_gmt":"2025-11-18T23:33:22","slug":"arbitration-court-holds-required-under-federal-law","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/arbitration-court-holds-required-under-federal-law\/","title":{"rendered":"Louisiana Federal Court Rejects Attempt to Avoid Arbitration, Holds That Arbitration Is Required Under Federal Law"},"content":{"rendered":"\n<p>Brendan Gooley | <a href=\"https:\/\/www.carltonfields.com\/insights\/blogs\/reinsurance-focus\/migrated\/louisiana-federal-court-rejects-attempt-to-avoid-arbitration-holds-that-arbitration-is-required\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Carlton Fields<\/a><\/p>\n\n\n\n<p>The U.S. District Court for the Eastern District of Louisiana rejected an effort to avoid arbitration based on Louisiana law. The court held that federal law applied and <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/category\/arbitration\/\">required arbitration<\/a> of claims against both domestic and foreign insurers because the issues related to each group of insurers were intertwined.<\/p>\n\n\n\n<p>The plaintiffs alleged that their properties were damaged by Hurricane Ida. They sued the defendants, a group of domestic and foreign insurers, seeking coverage under policies the defendants issued to the plaintiffs. The defendants removed the action and then filed a motion to compel arbitration and stay judicial proceedings pursuant to arbitration clauses in the policies.<\/p>\n\n\n\n<p>The district court granted the defendants\u2019 motion to compel arbitration and stay judicial proceedings. The plaintiffs subsequently moved to lift the stay as to the domestic insurers based on a recent Louisiana Supreme Court decision,\u00a0<a href=\"https:\/\/cases.justia.com\/louisiana\/supreme-court\/2024-2024-cq-00449.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\"><em>Police Jury of Calcasieu Parish v. Indian Harbor Insurance Co.<\/em><\/a>, holding that the arbitration clauses in the policies were invalid as to domestic insurers. The defendants responded that federal law superseded state law in cases governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and required arbitration of claims against both foreign and domestic insurers because concerted and interdependent conduct was alleged.<\/p>\n\n\n\n<p>The district court agreed with the defendants, though it noted that courts are divided on this issue. The court noted that the Louisiana Supreme Court\u2019s decision in\u00a0<em>Police Jury<\/em>\u00a0conflicted with the Fifth Circuit\u2019s decision in\u00a0<a href=\"https:\/\/cases.justia.com\/federal\/appellate-courts\/ca5\/23-30171\/23-30171-2024-03-04.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\"><em>Bufkin Enterprises LLC. v. Indian Harbor Insurance Co.<\/em><\/a>\u00a0that if \u201c\u2018the signatory to the arbitration agreement &#8230; raises allegations of substantially interdependent and concerted misconduct by both a non-signatory (the domestic insurers) and one or more signatories to the contract (the foreign ones),\u2019 equitable estoppel should apply to the domestic insurers, allowing them to compel arbitration.\u201d The district court therefore determined that it had to decide \u201cwhether the Louisiana Supreme Court or Fifth Circuit\u2019s rule controls.\u201d The court concluded that the Fifth Circuit\u2019s law governed. It applied the U.S. Supreme Court\u2019s test in\u00a0<em>Boyle v. United Technologies Corp.<\/em>, 487 U.S. 500 (1988), which requires the court to first \u201cdetermine if a case presents a uniquely federal interest necessitating application of federal common law, and second, &#8230; whether the application of state law conflicts with or frustrates specific objectives of federal legislation.\u201d The court concluded that test was satisfied. It explained that \u201c[l]itigation between domestic insurers and plaintiffs could influence the arbitration between foreign insurers and plaintiffs, and vice versa\u201d and that applying Louisiana law to ban arbitration would \u201cfrustrate the purposes of the Convention.\u201d<\/p>\n\n\n\n<p>The district court therefore denied the plaintiffs\u2019 motion.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.govinfo.gov\/content\/pkg\/USCOURTS-laed-2_22-cv-03120\/pdf\/USCOURTS-laed-2_22-cv-03120-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\"><em>Olsen Securities Corp. v. Certain Underwriters at Lloyd\u2019s London<\/em><\/a>, No. 2:22-cv-03120 (E.D. La. May 12, 2025).<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Brendan Gooley | Carlton Fields The U.S. District Court for the Eastern District of Louisiana rejected an effort to avoid arbitration based on Louisiana law. The court held that federal law applied and required arbitration of claims against both domestic and foreign insurers because the issues related to each group of insurers were intertwined. The&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/arbitration-court-holds-required-under-federal-law\/\">Continue reading <span class=\"screen-reader-text\">Louisiana Federal Court Rejects Attempt to Avoid Arbitration, Holds That Arbitration Is Required Under Federal Law<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[41],"tags":[9895,42,6602],"class_list":["post-905023","post","type-post","status-publish","format-standard","hentry","category-arbitration","tag-advise-consult","tag-arbitration-2","tag-louisiana","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Louisiana Federal Court Rejects Attempt to Avoid Arbitration, Holds That Arbitration Is Required Under Federal Law - Advise &amp; 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