## F I L E D United States Court of Appeals Tenth Circuit 

### APR 5 2004 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

NATIONAL AMERICAN INSURANCE COMPANY, Plaintiff - Appellee, No. 03-6079

v. SCOR REINSURANCE COMPANY, Defendant - Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA

(D.C. No. CIV-02-1312-R)
Susan A. Stone, Sidley Austin, Brown & Wood, Chicag o, Illinois (Joshua G. Urquhart of Sidley, Austin, Brown & Wood, Chicago, Illinois; Larry Derryberry, Stephen G. Solomon, and George W. Velotta II of Der ryberry, Quigley, Solomon & Naifeh, Oklahoma City, Oklahoma, with her on the briefs). R. Patrick Gilmore, Chandler, Oklahoma (Clinton D. Russell, Stratton Taylor, and Mark H. Ramsey, Claremore, Oklahoma, with him on th e brief).

Before TACHA , Chief Circuit Judge, McKAY and TYMKOVICH , Circuit Judges.

McKAY , Circuit Judge.-2-

This appeal involves a dispute between two insuranc e companies regarding the scope of an arbitration clause. Appellee Natio nal American Insurance Company (“NAICO”) filed a complaint alleging that Appellant SCOR Reinsurance Company (“SCOR”) is liable for losses o n two surety bonds, which the parties refer to as the “Geismar” and “Chalmett e” bonds (collectively the “Bonds”). Aplt. App., Tab No. 1, at 2. SCOR filed a motion to dismiss and to compel arbitration on the ground that NAICO’s alleg ations fall within the scope of an arbitration clause contained in a reinsurance agreement in which SCOR agreed to reinsure NAICO’s surety bond program (the “Treaty”). Id. , Tab No. 13, at 1-9. The district court denied SCOR’s motion “b ecause Plaintiff’s claims are predicated on SCOR’s independent commitment to serv e as co-surety on the Geismar and Chalmette Bonds, independent of the tre aty or treaties (which contains an arbitration clause) and thus are not wi thin the scope of the agreement to arbitrate.” Id. , Tab No. 25, at 1. SCOR appeals this order. Background NAICO is an insurance company licensed to write sur ety bonds, and SCOR is an insurance company which primarily writes rein surance. SCOR incurred two legal obligations relevant to this appeal. SCOR’s first obligation is memorialized in the Treaty, a reinsurance agreement which covere d the Bonds. The Treaty is effective April 1, 1999, and was signed by SCOR on November 2, 1999. Aplt.-3-

App., Tab No. 21, Ex. B, at 11. The Treaty contain s the following arbitration clause: “Any irreconcilable dispute between the pa rties to this Agreement will be arbitrated in Chandler, Oklahoma in accordance with the attached Arbitration Clause No. 22-01.1.” Id. at Article 20. SCOR’s second obligation is to act as co-surety forthe Bonds. This obligation is memorialized in a Hold Harmless and I ndemnity Agreement, which was entered into on August 24, 1999. Aplt. App., T ab No. 21, Ex. A at 2. In this Agreement, SCOR “agree[d] to act as a co-surety wit h NAICO on [the Bonds].” Id. at 1. This obligation was undertaken “as an accom modation to NAICO in specific instances in which the bond obligees’ requ irements necessitate a Best’s Rating higher than NAICO’s and/or a treasury underw riting limitation greater than NAICO’s . . . .” Id. In consideration for SCOR’s obligation to act as cosurety, NAICO agreed to hold SCOR harmless and to i ndemnify SCOR from any losses relating to the Bonds. Id. On December 4, 2000, a Termination Endorsement was executed in which the parties agree d that SCOR had no liability for losses discovered after April 1, 2000. Id. Ex. E, at 1. In the Termination Endorsement, the parties agreed that “ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.” Id. On September 20, 2002, NAICO filed its complaint, a lleging that SCOR is liable for losses relating to the Bonds. Aplt. App ., Tab No. 1. NAICO argues-4-

that because its allegations relate to SCOR’s co-su rety obligation under the Hold Harmless Agreement, not its reinsurance obligation under the Treaty, it is not required to arbitrate. SCOR argues that the two ob ligations are part of a single transaction and that the Treaty’s arbitration provi sion encompasses the co-surety obligation under the Hold Harmless Agreement.
Discussion We review a district court’s denial of a motion to compel arbitration de

novo. Spahr v. Secco , 330 F.3d 1266, 1269 (10th Cir. 2003); Avedon Eng’ g Inc.
v. Seatex , 126 F.3d 1279, 1283 (10th Cir. 1997). The Suprem e Court has “long recognized and enforced a ‘liberal federal policy f avoring arbitration agreements.’” Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 83 (2002) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24- 25 (1983)). Under this policy, the “‘doubts concer ning the scope of arbitrable issues should be resolved in favor of arbitration.’ ” Spahr , 330 F.3d at 1269-70 (quoting Moses , 460 U.S. at 24-25). However, “a court may compel arbitration of a particular dispute . . . only when satisfied thatthe ‘making’ of the agreement to arbitrate is not at issue.” Id. at 1270. In this case, NAICO does not dispute that it made avalid and enforceable agreement to arbitrate any disputes arising out of the Treaty. NAICO also does not dispute that the Treaty containing the arbitrat ion clause was effective about-5-

five months before the Hold Harmless Agreement. In stead, NAICO argues that the Treaty’s arbitration clause is not invoked beca use its “claims are independent of the Treaty” and arise solely out of SCOR’s co-su rety obligation found in the Hold Harmless Agreement. Aple. Br. at 6. Since the parties agree that an agreement to arbitr ate disputes exists between them, we first look to the scope of that ag reement and then determine whether NAICO’s claims fall within its scope. The Treaty’s arbitration clause is broad. It requires that “[a]ny irreconcilable disp ute between the parties to this Agreement,” including SCOR and NAICO, be arbitrated . Aplt. App. Tab No. 21, Ex. B at Article 20. It then provides that the arb itration will be done “in accordance with the attached Arbitration Clause No. 22-01.1,” (the “Attached Clause”). NAICO argues that the first sentence of the Attache d Clause limits the scope of arbitrable issues by stating that “[a]s a condition precedent to any right of action hereunder, any irreconcilable dispute between the parties to this Agreement” will be arbitrated. Id. at Arbitration Clause 22-01.1. NAICO argues that the word “hereunder” means that only issues ar ising out of the Treaty are subject to arbitration. We disagree. The Treaty r equires that “any irreconcilable dispute” be arbitrated, without any limiting langua ge. The Attached Clause is a procedural clause that addresses how the arbitratio n takes place, not the scope of-6-

arbitrable issues. This is evident from the nature of the Attached Clause, which provides details such as how to initiate arbitratio n, who may be a member of the board of arbitration, how arbitrators are appointed , when briefs are due, and other purely procedural issues. We agree with the Second Circuit, who reviewed a similar clause and held that “by its terms, the pre fatory clause does not limit the scope of the arbitration clause but rather establis hes a limitation on when a judicial action may be brought under the Agreement. ” ACE Capital Re Overseas Ltd. v. Central United Life Ins. Co. , 307 F.3d 24, 31 (2d Cir. 2002). The Attached Clause here is a procedural clause that ad dresses how issues are arbitrated and when judicial action may be brought under the Treaty, but it does not manifest an intent to limit the scope of the pa rties’ broad agreement to arbitrate “any irreconcilable dispute.” Even if the Attached Clause was an attempt to limitthe scope of issues subject to arbitration, NAICO could at best argue t hat there is a conflict between the broad, unlimited provision in the Treaty and th e first sentence of the Attached Clause. Since “‘doubts concerning the scope of arb itrable issues should be resolved in favor of arbitration’” we must resolve such a conflict in favor or arbitration. Spahr , 330 F.3d at 1269-70 (quoting Moses , 460 U.S. at 24-25). For these reasons, we conclude that the Treaty contains a broad arbitration clause requiring, at a minimum, that any irreconcilable di spute relating to the Treaty be-7-

arbitrated. The record provides ample evidence that NAICO’s all egations are related to the Treaty. For one thing, the Hold Harmless Agree ment and the Treaty relate to the same subject matter: the Bonds. Also, the Hol d Harmless Agreement, the source of NAICO’s allegations, specifically states that it was entered into in connection with the Treaty and “solely to facilitat e the issuance of [the Bonds.]” Aplt. App., at Tab No. 21, Ex. A, at 1. This langu age clearly indicates that SCOR only agreed to act as co-surety on the Bonds as part of the underlying reinsurance transaction memorialized in the Treaty. This makes sense, since SCOR is primarily in the business of providing reinsurance, not signing co-surety obligations. The Hold Harmless Agreement’s reference to the Treaty is also evidence that the agreements are closely related. Courts have noted that when two agreements are at issue, one with an arbitration cl ause and one without, the fact that one agreement references the other supports ar bitrating claims arising from either agreement. See , e.g. , Pennzoil Exploration and Prod. Co. v. Ramco Energ y Ltd. , 139 F.3d 1061, 1068-69 (5th Cir. 1998) (holding t hat a series of letter agreements with cross-references show their interre lation for purposes of compelling arbitration); Neal v. Hardee’s Food Syst ems, Inc. , 918 F.2d 34, 37 (5th Cir. 1990) (holding that two “individual agree ments were integral and-8-

interrelated parts of one deal” where they referenc ed each other, were signed by the same parties, and were executed contemporaneous ly as part of one general transaction)

. In the instant case, the Hold Harmless Agreement re ferences SCOR’s reinsurance obligation under the Treaty. Ap lt. App., at No. 21, Ex. A (stating “WHEREAS, [SCOR] has agreed to reinsure [NAICO] pursuant to certain reinsurance treaties,” it agrees to act as co-surety for the Bonds.) It also explicitly states that SCOR signed the Hold Harmles s Agreement “to facilitate” the Bonds that the Treaty reinsured. Id. Thus, the two agreements are more than related; they are dependent on each other. In addition, SCOR sent a letter to NAICO dated Nove mber 2, 1999, stating that SCOR’s participation as co-surety should be “c onstrued to be reinsurance under the reinsurance agreements . . . and subject to the terms contained therein.” Aplt. App., Tab No. 21, Ex. C. These “terms” would include the Treaty’s arbitration provision. NAICO does not contend thatit manifested any timely objection to SCOR’s characterization of its co-sure ty obligation. For all these reasons, we conclude that the agreements are best i nterpreted as two interdependent agreements part of a single transact ion. However, at a minimum, they are sufficiently related to invoke the Treaty’ s arbitration clause. Notwithstanding the link between the two obligation s, NAICO argues that its claims are not subject to arbitration because t he Hold Harmless Agreement-9-

does not contain a separate arbitration clause. We have rejected the notion that disputes arising out of an agreement that lacks an arbitration clause are ipso facto not subject to the arbitration clause of a related contract. See ARW Exploration Corp. v. Aguirre , 45 F.3d 1455, 1462 (10th Cir. 1995) (holding thata dispute arising out of an agreement that lacked an arbitrat ion clause was still subject to arbitration based on the broad arbitration provisio n contained in other agreements relating to the same joint venture). Of course, so phisticated reinsurers represented by counsel can explicitly opt out of br oad arbitration clauses, thus negating the legal preference for arbitration in cl osely annexed transactions. But here, NAICO agreed to be bound by the Treaty’s broa d arbitration clause which encompasses the allegations that NAICO now seeks re covery for. For these reasons, we hold that NAICO’s complaint must be dis missed and its claims must be arbitrated.
REVERSED.