1The Honorable Clyde H. Hamilton, United States Circuit Judge

for the United States Court of Appeals for the Fourth Circuit,

sitting by designation.

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 00-3599

*

PAUL ARI CHARLES JOSEPH DUMONT; * Appeal from the United

YOLANDA JANE CAMPBELL; JACQUELINE * States District Court

THERESA MARIE DIZY; BRENDA LYNNE * for the District

WALTERS; MICHELLE SHARON GOEBEL; * of North Dakota

DAVID GEORGE SMITH; SUSAN MYVOLL, *

*

Plaintiffs - Appellants, *

*

versus *

* [PUBLISHED]

*

SASKATCHEWAN GOVERNMENT INSURANCE *

(SGI), *

*

Defendant - Appellee. *

*

Submitted: June 11, 2001

 Filed: July 31, 2001 

Before WOLLMAN, Chief Judge, HAMILTON1 and MURPHY, Circuit Judges.

HAMILTON, Circuit Judge:

The present civil action involves an insurance coverage

dispute between Saskatchewan Government Insurance (SGI), a Canadian

Crown corporation, and the seven surviving adult children (the
2The seven surviving adult children are Paul Ari Charles

Joseph Dumont, Yolanda Jane Campbell, Jacqueline Theresa Marie

Dizy, Brenda Lynne Walters, Michelle Sharon Goebel, David George

Smith, and Susan Nyvoll.

3The Honorable Patrick A. Conmy, District Judge, United States

District Court for the District of North Dakota.

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Dumont/Smith Families)2 of three Canadian citizens killed in a

fiery automobile accident in North Dakota caused by a head-on

collision with a grossly intoxicated driver. The Dumont/Smith

Families initiated the action.

Based upon mandatory arbitration clauses contained in the two

identical insurance policies at issue, the district court3 ordered

the parties to arbitrate their dispute in the Province of

Saskatchewan, Canada. The parties proceeded to arbitration as

ordered by the district court, with the Dumont/Smith Families

preserving their objection to the ordered arbitration. The

Canadian arbitration panel issued a decision in favor of SGI, which

the Queen’s Bench of Regina, Saskatchewan, Canada approved by entry

of a Canadian judgment in favor of SGI. Upon motion by SGI, the

district court dismissed the present action based upon the doctrine

of res judicata. The Dumont/Smith Families noted a timely appeal.

We affirm.

I.

A. The Accident.

On August 6, 1994, a vehicle driven by North Dakota resident

Lisa Ward crossed the centerline of Highway 1804 in Williams

County, North Dakota, at a high rate of speed, and collided head-on

with a Canadian vehicle occupied by Canadian citizens Ernest Smith,

his wife Helen Smith, and Mary Dumont. Upon impact, the Canadian

vehicle burst into flames that consumed the vehicle and the three

Canadian citizens. Both Lisa Ward and the single passenger in her

vehicle also lost their lives in the accident. At the time of the

accident, Lisa Ward did not have automobile liability insurance,

did not have a driver’s license, and was grossly intoxicated.

B. The Policies.
4As a Canadian Crown corporation, SGI is a quasi-governmental

corporation that was created and authorized by provincial

governmental act. SGI has its central offices in the City of

Regina, Province of Saskatchewan, Canada. 

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Ernest and Helen Smith were named insureds under an automobile

liability insurance policy issued by SGI.4 Mary Dumont was the

named insured under an identical automobile liability insurance

policy also issued by SGI. For the remainder of this opinion, we

will refer collectively to these identical insurance policies as

“the Policies.”

Each of the Policies provided one million Canadian dollars in

automobile liability coverage and one million Canadian dollars in

family security coverage. The Policies also provided that the

named insured had coverage while his or her vehicle was in Canada

or the United States. With respect to extra-territorial coverage

and under the part of the Policies entitled “Liability,” the

Policies provided as follows:

We recognize that laws and other rules differ from

place to place. Because of this we will raise your

amount of coverage to meet the minimum coverage required

by local law in the place where the accident took place.

And if necessary we will change your coverage to meet

local law in the place where the accident took place.

(J.A. 137).

1. Uninsured Motorist Coverage.

Under the parts of the Policies entitled “Injury Payments,”

the Policies provided uninsured motorist coverage (the Uninsured

Motorist Coverage portions of the Policies). In this regard, the

Policies specified that if the insured was injured or died in an

accident caused by an uninsured motorist in a place without a plan

that deals with injury or death caused by an uninsured motorist,

the insured “may collect from [SGI].” (J.A. 132). The very next

sentence states: “We will act as if we covered the other motor

vehicle.” Id.
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The Policies required arbitration of disputes between the

insured and SGI regarding whether the insured is entitled to

payment of any amount under the Uninsured Motorist Coverage

portions of the Policies, and if so, the amount of such payment.

The Policies required that the “provisions of The Arbitration Act

(Saskatchewan) shall apply to the arbitration,” but did not specify

the substantive law that should apply. (J.A. 133). 

2. Family Security Coverage. 

Under the parts of the Policies entitled “Family Security,”

the Policies provided family security coverage (the Family Security

Coverage portions of the Policies). Under the Policies, family

security coverage allows “anyone who, under Saskatchewan law, would

have the right to bring an action against the [Uninsured] Motorist,

if the accident had happened in Saskatchewan, for damages because

of” the insured’s bodily injury or death, to recover an amount (not

to exceed one million Canadian dollars) equal to the uninsured

motorist’s liability in such an action. (J.A. 139). The Policies

specified the procedure a claimant under the Family Security

Coverage Portions of the Policies must follow when the accident,

caused by an uninsured motorist, occurred outside Saskatchewan,

Canada. First, the claimant “shall bring an action to judgment

against the alleged” uninsured motorist. (J.A. 141). The judgment

will bind SGI with respect to the issue of the uninsured motorist’s

liability, but not with respect to the amount of damages the

claimant is found legally entitled to recover from the alleged

uninsured motorist. If the claimant and SGI cannot agree upon

whether any amount is due under the Family Security Coverage

portions of the Policies or what the amount of any such payment

should be, the Policies provide that “either or both of these

issues shall be determined by arbitration,” with “[t]he question of

an appropriate dollar amount of compensation” to be determined

under the law of Saskatchewan and matters of procedure to be

governed by “[t]he Arbitration Act (Saskatchewan).” Id. Notably,

the Fatal Accidents Act of Saskatchewan, R.S.S. 1978, c. F-11,

limits the recovery of damages of adult children in parental

wrongful death actions to pecuniary losses.
5Two days earlier, on June 17, 1996, the special administrator

for the estate of Lisa Ward, assigned the Dumont/Smith Families all

rights, causes of action, and claims that the Estate of Lisa Ward

may have against SGI.

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C. The North Dakota State Court Wrongful Death Action.

Approximately one year after the accident, pursuant to North

Dakota Century Code § 32-21-01, the Dumont/Smith Families brought

a wrongful death action, in North Dakota state court, against the

estate of Lisa Ward. The action sought compensation for economic

losses (e.g., burial costs), as well as compensation for pain and

suffering and loss of society, counsel, and companionship. See

N.D. Cent. Code § 32-03.2-04 (providing compensation for economic

damages such as burial costs, and compensation for non-economic

losses such as loss of society and companionship in wrongful death

action).

Following a two-day bench trial, the North Dakota state court

found Lisa Ward was the sole proximate cause of the deaths of

Ernest Smith, Helen Smith, and Mary Dumont. The North Dakota state

court thereafter entered judgment in favor of the Dumont/Smith

Families totaling 2,075,000 in United States dollars plus 75,091 in

Canadian dollars.

Although the Dumont/Smith Families repeatedly requested that

SGI participate in the state court action, SGI refused. Instead,

SGI informed the Dumont/Smith Families that it waived the Policies’

respective requirements that the family members obtain a judgment

against the estate of Lisa Ward before filing a claim for payment

under the Family Security Coverage portions of the Policies.

However, SGI insisted that the amounts payable the Dumont/Smith

Families under the Policies be determined by arbitration in Canada,

under the law of Saskatchewan, as specifically required by the

Policies.

D. The Present Federal Court Action Prior to Arbitration.

On June 19, 1996, the Dumont/Smith Families filed the present

action against SGI in state court, in Williams County, North

Dakota.5 The complaint sought compensatory damages under the
6All parties and the district court proceeded below upon the

belief that diversity jurisdiction, pursuant to 28 U.S.C. § 1332,

exists in this case. Diversity jurisdiction does not exist in this

case because all members of the Dumont/Smith Families are Canadian

citizens and SGI is a corporation created by a political

subdivision of Canada. 28 U.S.C. § 1332(a). However, subject

matter jurisdiction in this action exists pursuant to the Foreign

Sovereign Immunities Act (FSIA), 28 U.S.C. § 1300. See generally

In Re Tamimi, 176 F.3d 274, 278 (4th Cir. 1999) (discussing general

operation of FSIA). This is so because SGI is a corporation

created by a political subdivision of Canada that, in writing the

Policies, acted outside the territory of the United States in

connection with a commercial activity of SGI that caused a direct

effect in the United States. 28 U.S.C. §§ 1603, 1605(a)(2). The

direct effect being the provision of automobile liability and

family security insurance coverage to Ernest Smith, Helen Smith,

and Mary Dumont while they traveled by automobile in the United

States.

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Policies sufficient to satisfy the judgment against the estate of

Lisa Ward. The complaint also sought punitive damages to sanction

SGI for its alleged bad faith in refusing to settle.

SGI subsequently removed the action to the United States

District Court for the District of North Dakota on the basis of

diversity jurisdiction. The district court accepted removal based

on diversity jurisdiction pursuant to 28 U.S.C. § 1332(a).6 Prior

to SGI answering the complaint, the Dumont/Smith Families filed a

motion for partial summary judgment to determine SGI’s liability to

be bound by the judgment entered in the state wrongful death

action. SGI filed its answer and moved to dismiss the complaint

for lack of personal jurisdiction and on the basis of forum non

conveniens.

On April 3, 1996, the district court: (1) denied SGI’s motion

to dismiss for lack of personal jurisdiction; (2) denied the

Dumont/Smith Families’ motion for partial summary judgment; (3)

ordered the parties to participate in binding arbitration in

accordance with the terms of the Policies; (4) denied, as moot,

SGI’s motion to dismiss on the basis of forum non conveniens; and

(5) stayed all further proceedings in the matter pending completion

of arbitration. The Dumont/Smith Families filed a motion for
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reconsideration, pursuant to Federal Rule of Civil Procedure 60(b),

which the district court denied. The district court also denied a

motion by the Dumont/Smith Families requesting the district court:

(1) to order SGI to submit to arbitration under the supervision,

authority, and jurisdiction of the district court and the United

States Federal Arbitration Act; and (2) to order the arbitration to

proceed under North Dakota procedural law.

E. Arbitration in Regina, Saskatchewan, Canada.

The parties proceeded to arbitration before a three-member

arbitration panel in Regina, Saskatchewan, Canada. Although the

Dumont/Smith Families participated in the arbitration proceedings,

they did so under protest. Before the arbitration panel, the

Dumont/Smith Families sought to recover two million Canadian

dollars under the Uninsured Motorist and Family Security Coverage

portions of the Policies. 

A two-person majority of the arbitration panel ruled that the

procedural and substantive law of Saskatchewan, Canada, applied to

resolve the parties’ disputes. Applying that law, the same

majority concluded that its jurisdiction derived only from the

arbitration requirement in the Family Security Coverage portions of

the Policies. Thus, the arbitration panel only directly considered

whether any amount was payable under the Family Security Coverage

portions of the Policies, and if so, in what amount. 

The arbitration panel concluded that each member of the

Dumont/Smith Families is a proper claimant under the Family

Security Coverage portions of the Policies because each would have

status to bring an action under the Fatal Accidents Act of

Saskatchewan, R.S.S. 1978, c. F-11. With respect to the amount of

payments due the Dumont/Smith Families, the arbitration panel

stated:

The claimants concede that SGI paid $17,250.00 Canadian

in total pursuant to Part II of the [Policies] and that

$100,000.00 U.S. was recovered from the insurer of the

barkeeper who served the uninsured motorist Lisa Ward.

In total the claimants say they have not incurred a
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pecuniary loss in excess of these two sums and therefore,

while leave is given to the claimants to continue this

arbitration on the issue of damages if they now have

evidence to the contrary, the panel has no present

expectations of this arbitration being reconvened.

(J.A. 503). The arbitration panel’s decision as to the amount of

damages is premised on the fact that under the law of Saskatchewan,

a wrongful death award of non-economic loss to adult family members

is not a recognized remedy. Fatal Accidents Act of Saskatchewan,

R.S.S. 1978, c. F-11. The Queen’s Bench approved the arbitration

award by entry of a Canadian judgment. Saskatchewan Government

Insurance (Applicant) v. Dumont, et. al. (Respondents), 1999 SKQB

120, Q.B. 2358 of A.D. 1997 (October 7, 1999).

F. Proceedings In The Present Federal Court Action Following

Arbitration.

Following entry of the Canadian judgment, SGI moved to dismiss

the present action with prejudice on principles of res judicata.

The Dumont/Smith Families opposed the motion on the ground, inter

alia, that SGI waived its right to compel arbitration by filing a

motion to dismiss their complaint as its first action in the case

rather than immediately moving to compel arbitration.

On September 26, 2000, the district court granted SGI’s motion

and dismissed the present federal action with prejudice. The

Dumont/Smith Families noted a timely appeal to this court. On

appeal, the Dumont/Smith Families offer several arguments

challenging the district court’s order requiring them to arbitrate

the merits of this case in accordance with the terms of the

Policies; which order ultimately led to the dismissal of their

complaint based upon the doctrine of res judicata. Notably, the

Dumont/Smith Families do not directly challenge the district

court’s application of the doctrine of res judicata after it

determined that the judgment of the Queen’s Bench approving the

decision of the arbitration panel was valid.

II.

As previously stated, the Dumont/Smith Families offer several

arguments challenging the district court’s order requiring them to
7We note that SGI does not dispute that Lisa Ward is the sole

proximate cause of the August 6, 1994 accident. Thus, this appeal

does not present the issue of whether SGI is bound by the liability

portion (as opposed to the damages portion) of the judgment entered

against the estate of Lisa Ward in the North Dakota state wrongful

death action. 

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arbitrate the merits of this case in Saskatchewan, Canada. Each is

without merit.

A.

The Dumont/Smith Families argue that the district court, as a

federal district court sitting in diversity, was required to apply

the conflict of laws rules of North Dakota. Nesladek v. Ford Motor

Co., 46 F.3d 734, 736 (8th Cir. 1995) (“Federal courts sitting in

diversity apply the forum state’s conflict of laws rules.”).

According to the Dumont/Smith Families, had the district court

properly applied the conflict of laws rules of North Dakota, it

would have applied the procedural rules of North Dakota, American

Standard Life and Accident Ins. Co. v. Speros, 494 N.W.2d 599, 602

(N.D. 1993) (“Matters of procedure and remedial rights are governed

by the law of the forum where relief is sought.”), and held that,

under Hughes v. State Farm Mut. Auto. Ins. Co., 604 F.2d 573 (8th

Cir. 1979), SGI is bound by the judgment entered against the estate

of Lisa Ward in the state wrongful death action as to the amounts

SGI must pay them under the Policies.7

The district court properly rejected this line of argument.

As we have previously stated, subject matter jurisdiction in this

case is not based upon diversity jurisdiction, 28 U.S.C. § 1332,

but upon the FSIA. In a FSIA case, “there is no clear

understanding as to whether the forum state’s choice-of-law rules

should apply or whether federal common law should govern . . . .”

14A Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper,

Federal Practice and Procedure § 3662, p. 231 (3d ed. 1998). Thus,

the law is not clear whether North Dakota’s conflict of laws rules

should apply at all.

Nevertheless, assuming arguendo that North Dakota’s conflict

of laws rules apply to make the holding in Hughes available for
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application in the present FSIA action, the holding in Hughes is,

in fact, not applicable. In Hughes, we held that a North Dakota

judgment against an uninsured motorist as to liability and damages

was enforceable against the insurer where the insurer was given

timely notice of the insured’s suit against the uninsured motorist

and an opportunity to intervene and defend, but voluntarily chose

not to do so. Id. at 575-76. The Hughes case is materially

distinguishable from the present FSIA action because the insurance

policy at issue in Hughes did not, as here, require arbitration of

the very issues that were the subject of the allegedly binding

judgment. Requiring SGI to be bound by the North Dakota state

court judgment with respect to the amounts it must pay the

Dumont/Smith Families under the Policies would render the

arbitration provisions of the Policies, which provisions SGI cited

at the time as the reason it would not participate in the state

court action, a nullity. The Dumont/Smith Families cite us no

rationale or authority in support of such an illogical result. In

sum, we hold the district court did not err in refusing to hold

that SGI is bound by the judgment entered against the estate of

Lisa Ward as to the amounts SGI must pay the Dumont/Smith Families

under the Policies.

B.

The Dumont/Smith Families next argue that SGI waived its right

to enforce the arbitration provisions of the Policies, and

therefore, the district court erred by requiring them to arbitrate

their claims against SGI in accordance with the terms of the

Policies. 

We address this argument against the backdrop that, “[i]n

light of the strong federal policy in favor of arbitration, any

doubts concerning waiver of arbitrability should be resolved in

favor of arbitration.” Ritzel Communications v. Mid-American

Cellular, 989 F.2d 966, 968-69 (8th Cir. 1993). We will find

waiver of arbitrability where the party claiming the right to

arbitrate: (1) knew of its existing right to arbitration; (2)

acted inconsistently with that right; and (3) prejudiced the other

party by its inconsistent actions. Id. at 969. The issue of
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waiver of arbitration is one of law and subject to de novo review.

Ackerberg v. Johnson, 892 F.2d 1328, 1332 (8th Cir. 1989).

Here, SGI does not dispute that it knew of its right to compel

the Dumont/Smith Families to arbitrate their claims against it.

Indeed, the record establishes that SGI refused to intervene in the

North Dakota state wrongful death action, acknowledging that it

would be bound as to a liability determination, but asserting that

the issue of the amounts payable to the Dumont/Smith Families

should be determined by arbitration as provided in the Policies.

Thus, the first element of the waiver test is met.

The second element of the waiver test asks whether SGI acted

inconsistent with its right to arbitrate. The district court held

that it did not, and we agree. SGI took no action with respect to

the merits of the case prior to the district court ordering

arbitration. Rather, SGI sought early dismissal of the case on

jurisdictional and quasi-jurisdictional grounds. Finally, and

significantly, SGI specifically stated in its brief in support of

its motion to dismiss that the Policies require arbitration of the

issues sought to be litigated, that SGI has repeatedly offered to

engage in arbitration while the Dumont/Smith Families have refused,

and that “SGI would seek to compel this method of resolution.”

(J.A. 165). We cannot equate SGI’s seeking an early dismissal of

this case solely on other than merits-based grounds, coupled with

its concomitant express warning that it would seek to compel

arbitration, as acts inconsistent with a known right to compel

arbitration.

In support of their position, the Dumont/Smith Families rely

on Ritzel Communications v. Mid-American Cellular, 989 F.2d 966

(8th Cir. 1993). Their reliance is misplaced. In Ritzel, we

described a group of defendant-investors’ actions in filing a

motion to dismiss for failure to join necessary parties, improperly

naming the group as a party, and failing to state a claim on the

merits with respect to one of the counts in the complaint as “a

substantial, active invocation of the litigation process.” Id. at

969. We recognized that such active invocation of the litigation
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process was inconsistent with the group’s then existing contractual

rights to compel arbitration of the claims against them. Id.

In contrast to Ritzel, SGI did not seek to litigate the merits

of any of the claims of the Dumont/Smith Families prior to

arbitration, and SGI specifically warned at the time it filed its

dismissal motion that it would seek to compel arbitration.

Moreover, our ultimate holding in Ritzel, that the group of

defendant-investors waived their right to arbitration, rested upon

the additional significant facts (not present in the instant case)

that the group of defendant-investors filed an alternative motion

to sever a cross-claim for a separate trial, proceeded to trial in

the district court, failed to raise the arbitration issue before

this court in a motion either to expedite the appeal or stay

proceedings in the district court, and delayed their appellate

filings. Id. at 970-71. In short, Ritzel is of no aid to the

Dumont/Smith Families.

Because the second element of the waiver test is not met, we

need not and do not consider the third element. Accordingly, we

hold the district court properly determined that SGI did not waive

its right to enforce the arbitration provisions of the Policies.

C.

Lastly, relying upon the Federal Arbitration Act, the

Dumont/Smith Families argue that the district court erred by

failing to require the venue of the arbitration to be within the

federal judicial district of North Dakota. 9 U.S.C. § 4 (“The

hearing and proceedings, under such agreement, shall be within the

district in which the petition for an order directing such

arbitration is filed.”). According to the Dumont/Smith Families,

had the district court required the venue of the arbitration to be

within the federal judicial district of North Dakota, they could

have availed themselves of Hughes v. State Farm Mut. Auto. Ins.

Co., 604 F.2d 573 (8th Cir. 1979), as well as North Dakota’s

wrongful death statute, which is more generous in the provision of

damages to adult children than the Fatal Accidents Act of

Saskatchewan.
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The Dumont/Smith Families’ venue argument also does not afford

them relief from the district court’s dismissal of their complaint.

Assuming arguendo that the district court erred in failing to

require the venue of the arbitration to be within its own federal

judicial district, the error was harmless. First, for the reasons

we expressed in Part II.A. of this opinion, Hughes is of no aid to

the Dumont/Smith Families. Second, the plain language of the

arbitration provisions of the Family Security Coverage portions of

the Policies required that “[t]he question of an appropriate dollar

amount of compensation for the loss of a [claimant] shall be

determined by the law of Saskatchewan.” Id. Thus, even if the

arbitration had taken place in the federal judicial district of

North Dakota, the less generous Fatal Accidents Act of Saskatchewan

would have applied as provided in the Policies. Third, to the

extent the Dumont/Smith Families sought coverage under the

Uninsured Motorist Coverage portions of the Policies, which

portions did not command that compensation for the loss of the

claimant be determined by the law of Saskatchewan, the plain terms

of the Policies limit recovery of damages caused by the uninsured

motorist to those damages suffered by: (1) the named insured while

in his or her own vehicle; (2) any other person who is an occupant

of the named insured’s vehicle; and (3) under certain specified

conditions, the named insured, his or her spouse, other relatives

who live in the care of the named insured, and any other person who

is an occupant of an auto the named insured is using but does not

own. Because no member of the Dumont/Smith Families falls within

any of these categories, the damages sought to be recovered by

them, for example, for their own loss of society and companionship

with their parents, are not recoverable under the plain language of

the Uninsured Motorist Coverage portions of the Policies. Thus,

the same outcome would have resulted had the district court

required the venue of the arbitration to be within the federal

judicial district of North Dakota. In sum, the Dumont/Smith

Families’ change of venue argument does not afford them any relief

from the district court’s dismissal of their complaint.
8Having rejected all of the Dumont/Smith Families’ assignments

of error on appeal, we need not and do not address SGI’s

alternative argument in favor of affirmance that the district court

lacked personal jurisdiction over it.

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III.

In summary, we reject the various challenges mounted by the

Dumont/Smith Families to the district court’s order compelling them

to arbitrate their claims against SGI.

Accordingly, the judgment of the district court dismissing the

action on the basis of res judicata is affirmed.8

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.