Insurance Law
Forum Non Conveniens
Statute of Limitations (In the Foreign Forum)
Return-Jurisdiction Clause
Lloyd’s
Appeal from the United States District Court for the Southern District of Texas USDC No. 4:21-CV-3585
Plaintiff-appellant Noble House, L.L.C. (“Noble House”) appeals a judgment of dismissal, without prejudice, based on forum non conveniens, granted in favor of defendant-appellee Certain Underwriters at Lloyd’s, London (“Underwriters”). The district court ruled that the parties’ insurance policy contained an enforceable forum-selection clause requiring litigation in the courts of England and Wales and that a return-jurisdiction clause was not required. We affirm.
On August 20, 2018, Noble House’s yacht lost its port-side rudder while entering a channel in the Bahamas. The following day, Noble House advised Underwriters, its insurer, of the casualty, which was allegedly covered by its marine-insurance policy. Noble House purchased the policy from Underwriters by way of a Texas-based insurance broker on February 1, 2018. The policy contained a forum-selection clause that selected the courts of England and Wales. Attached to the policy was a cover note with its own forum-selection clause that selected any court of competent jurisdiction within the United States. Allegedly, the cover note was not prepared by Underwriters, but by Noble House’s own insurance broker. Approximately two months after the casualty, on October 19, 2018, Underwriters issued a letter advising that coverage “may not exist.” Underwriters has not yet denied coverage. Noble House sued to recover its damages, first in the United States District Court for the Southern District of Florida on October 12, 2020. Months later, on March 2, 2021, that district court granted Underwriters’ motion to dismiss for lack of personal jurisdiction and dismissed the case without prejudice. Then, Noble House filed the instant suit in the United States District Court for the Southern District of Texas on November 1, 2021. Underwriters moved to dismiss on forum non conveniens grounds. On March 23, 2022, after hearing argument, the district court granted Underwriters’ motion and dismissed all claims without prejudice. Noble House filed a motion for reconsideration, which the court denied. This appeal followed.
As Underwriters correctly explains, the presence of a mandatory, enforceable forum-selection clause simplifies the “usual” analysis in two ways. Barnett, 831 F.3d at 300. “First, the plaintiff’s choice of forum merits no weight” because, by contracting for a specific forum, “the plaintiff has effectively exercised its ‘venue privilege’ before a dispute arises.” Atl. Marine, 571 U.S. at 63. Second, the private-interest factors “weigh entirely in favor of the preselected forum”; so, the “district court may consider arguments about public-interest factors only.” Id. at 64. “Hence, a valid forum-selection clause controls the forum non conveniens inquiry ‘in all but the most unusual cases.’” Barnett, 831 F.3d at 300 (quoting Atl. Marine, 571 U.S. at 66). “This harmonizes with the Supreme Court’s guidance that contractually selected forums often ‘figure centrally in the parties’ negotiations’ and become part of those parties’ ‘settled expectations’ –so if a plaintiff disregards such a contractual commitment, ‘dismissal works no injustice.’” Id. (quoting Atl. Marine, 571 U.S. at 66 & n.8).
We apply a “strong presumption” in favor of enforcing mandatory forum-selection clauses. Weber, 811 F.3d at 773 (citing Haynsworth,121 F.3d at 962-63). “The presumption of enforceability may be overcome, however, by a clear showing that the clause is ‘unreasonable’ under the circumstances.” Weber, 811 F.3d at 773 (quoting Haynsworth, 121 F.3d at 963). We’ve stated: Unreasonableness potentially exists where (1) the incorporation of the forum selection clause into the agreement was the product of fraud or overreaching; (2) the party seeking to escape enforcement will for all practical purposes be deprived of his day in court because of the grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff of a remedy; or (4) enforcement of the forum selection clause would contravene a strong public policy of the forum state. Haynsworth, 121 F.3d at 963 (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991), and M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12-13, 15, 18 (1972)).
If the forum-selection clause is both mandatory and enforceable, the court must decide whether, under Atlantic Marine’s balancing test, the case “is one of the rare cases in which the public-interest forum non conveniens factors favor keeping a case despite the existence of a valid and enforceable forum-selection clause.” Weber, 811 F.3d at 775-76.
Noble House’s insurance policy details that: “This Insurance shall be governed by and construed in accordance with the law of England and Wales and each party agrees to submit to the exclusive jurisdiction of the courts of England and Wales.” The attached cover note provides: “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 Assured (or Reinsured), will submit to the jurisdiction of a Court of competent jurisdiction within the United States.” Importantly, the cover note states that it “is intended for use as evidence that insurance described herein has been effected against which a policy(ies) will be issued and that in the event of any inconsistency therewith the terms and conditions and provisions of the policy(ies) prevail.” (Fn. 2).
Even if this Court were to rely on the “available and adequate” standard, as Noble House suggests, Noble House’s argument that the courts of England and Wales are not “available and adequate” fails. By contracting for those courts’ exclusive jurisdiction, it necessarily agreed that such courts are available and adequate. See Atl. Marine, 571 U.S. at 63 (noting that a forum-selection clause “represents the parties’ agreement as to the most proper forum”) (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 31 (1988)). (Fn. 4).
Noble House’s fear that its claims would be time-barred under the foreign fora’s statutes of limitations is not novel. Both the Supreme Court and this Court have acknowledged the risk of time-barred claims in the forum-selection-clause context. Unfortunately for Noble House, controlling caselaw affords it no sympathy. It is no secret that dismissal under forum non conveniens “makes it possible for plaintiffs to lose out completely through the running of the statute of limitations in the forum finally deemed appropriate.” Atl. Marine, 571 U.S. at 66 n.8. But dismissal of a suit “when the plaintiff has violated a contractual obligation by filing suit in a forum other than the one specified in a valid forum-selection clause ... works no injustice on the plaintiff.” Id. That is why we have said: “That an action may be time-barred in the chosen forum does not make a forum-selection clause unreasonable.” Barnett, 831 F.3d at 309 n.14.
(…) There is an express clause stating that the provisions in the policy supersede that in the cover note.
When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation.” Atl. Marine, 571 U.S. at 64. Any grave inconvenience or unfairness of the selected forum Noble House “would suffer by being forced to litigate in the contractual forum as it agreed to do was clearly foreseeable at the time of contracting.” Bremen, 407 U.S. at 17-18. Because the applicable foreign statutes of limitations were certainly foreseeable at the time the parties executed the policy, their enforcement is not unfair.
(…) Courts enforce a forum-selection clause unless the contracted forum accords the plaintiff no remedies whatsoever. Id. at 774 & n.24; see also Barnett, 831 F.3d at 308 n.14. That’s because “it is the availability of a remedy that matters, not predictions of the likelihood of a win on the merits.” Weber, 811 F.3d at 774 (emphasis in original). Noble House’s failure to point to a substantive law that bars its claim for relief is fatal.
(…) “A return jurisdiction clause remedies the concern that the identified forum will remain available or that defendants will submit to its jurisdiction by permitting parties to return to the dismissing court should the lawsuit become impossible in the foreign forum.” Vasquez, 325 F.3d at 675. “The ‘failure to include a return jurisdiction clause in an f.n.c. i.e., forum non conveniens dismissal constitutes a per se abuse of discretion.’” Vasquez, 325 F.3d at 675 (quoting Robinson v. TCI/US West Communications, Inc.,117 F.3d 900, 907-08 (5th Cir. 1997)). “This is because, as this Court has repeatedly made clear, ‘courts must take measures, as part of their dismissals in forum non conveniens cases, to ensure that defendants will not attempt to evade the jurisdiction of the foreign courts.’” Rajet Aeroservicios S.A. de C.V. v. Castillo Cervantes, 801 F. App’x 239, 244 (5th Cir. 2020) (unpublished) (per curiam) (quoting Baris v. Sulpicio Lines, Inc., 932 F.2d 1540, 1551 (5th Cir. 1991)). “Such measures often include agreements between the parties to litigate in another forum, to submit to service of process in that jurisdiction, to waive the assertion of any limitations defenses, to agree to discovery, and to agree to the enforceability of the foreign judgment.” Baris, 932 F.2d at 1551. “A return-jurisdiction clause assists in preventing defendants from circumventing these measures and ensures plaintiffs have the opportunity to proceed with the action in one of the forums.” Rajet Aeroservicios, 801 F. App’x at 244. The existence of a mandatory, enforceable forum-selection clause swallows the purpose of a return-jurisdiction clause whole. See Baris, 932 F.2d at 1551. As noted, an agreement is one of the express “measures” to ensure that defendants will not attempt to evade the jurisdiction of the foreign courts. See Baris, 932 F.2d at 1551. By agreement, Noble House and Underwriters are contractually bound to litigate their dispute in the courts of England and Wales. Accordingly, there is no concern that Underwriters will “attempt to evade jurisdiction of the foreign courts” or flout the litigation procedure and outcome. The clause ensures that Noble House will have the opportunity to proceed with the action in the foreign fora. See Rajet Aeroservicios, 801 F. App’x at 244. Moreover, should Underwriters evade the jurisdiction of the foreign courts, Noble House has a remedy in a breach-of-contract action, a protection which does not exist in the forum non conveniens context where there is no forum-selection clause. The parties’ agreement to proceed with the action in the selected fora obviates the need for a return-jurisdiction clause. See Baris, 932 F.2d at 1551.
A “total waiver of any statute of limitations defense” or laches defenses is similarly unnecessary. First, while such a waiver is one of the many “measures” provided to “ensure” that defendants will not evade the jurisdiction of foreign courts, none of those measures is mandatory. See id. (listing examples of protective measures that a court may often –but not “must” –utilize). Again, the primary concern that a defendant will evade jurisdiction is not present where the parties willingly submitted to foreign fora by agreement. So, waiver as a protective measure is redundant, gratuitous, and serves no purpose. Although not required, the district court confirmed that Underwriters’ statute-of-limitations defense did not encompass the time period including “the duration of the pendency of this action.” This exceeds what was expected of the court to ensure Underwriters would not “evade” jurisdiction. Accordingly, the district court did not err.
(U.S. Court of Appeals for the Fifth Circuit, May 1, 2023, Noble House, L.L.C. v. Certain Underwriters at Lloyd’s, London, Subscribing to Policy MS-S 5722 (Marine Package), Docket No. 22-20281)
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