Opinion ID: 1343045
Heading Depth: 1
Heading Rank: 16

Heading: service of suit clauses

Text: The last argument this Court needs to address to resolve the present case concerns the application of service of suit clauses. The parties agree that a number of the insurance policies contain a service of suit clause. [15] One of the clauses, which Cannelton asserts is typical of the other clauses, appears in a policy issued by St. Paul. This clause states in relevant part: It is agreed that in the event of the failure of this Company hereon, to pay any amount claimed to be due hereunder, this Company hereon, at the request of the Insured, will submit to the jurisdiction of any Court of competent jurisdiction within the United States of America and will comply with all requirements necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such Court. [16] Cannelton argues these clauses operate as both a forum selection clause and a choice of law clause. For the following reasons, we disagree. Initially, we distinguish a service of suit clause, as exists in the present case, from forum selection clauses and choice of law clauses. For example, in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 2, 92 S.Ct. 1907, 1909, 32 L.Ed.2d 513, 516 (1972), the United States Supreme Court approved as valid a forum selection clause which provided:  `Any dispute arising must be treated before the London Court of Justice.'  The Supreme Court held such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances. 407 U.S. at 10, 92 S.Ct. at 1913, 32 L.Ed.2d at 520. (Footnote omitted). Similarly, in Bryan v. Massachusetts Mutual Life Insurance Co., 178 W.Va. 773, 777, 364 S.E.2d 786, 790 (1987), we upheld a choice of law clause which stated:  ` Interpretation This contract shall be interpreted in accordance with the laws of the Commonwealth of Massachusetts.' In upholding the provision, we relied upon General Electric Co. v. Keyser, 166 W.Va. 456, 275 S.E.2d 289 (1981), modified on other grounds, Lee v. Saliga, 179 W.Va. 762, 373 S.E.2d 345 (1988), where we stated in Syllabus Point 1 that [a] choice of law provision in a contract will not be given effect when the contract bears no substantial relationship with the jurisdiction whose laws the parties have chosen to govern the agreement, or when the application of that law would offend the public policy of the state. [17] These clauses are distinguishable from the service of suit clauses at issue in the present case. Both the clause in Bremen and the clause in General Electric explicitly state the forum where an action should be heard or the law which should be applied. On the other hand, no mention of a specific forum or a specific forum's law is made in the present service of suit clauses. Instead, in these service of suit clauses, the insurers agree to submit to the jurisdiction of any Court of competent jurisdiction within the United States and they agree to comply with all requirements necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such Court. Several other jurisdictions have addressed this distinction and find it significant. Recently, the New York Supreme Court, Appellate Division, Fourth Department, held that a  `Service of Suit' clause is not a `choice of forum' provision. Price v. Brown Group, Inc., 206 A.D.2d 195, 619 N.Y.S.2d 414, 416 (4 Dept.1994). In Price, the New York Supreme Court interpreted a service of suit clause substantively identical to the one at issue in the present case. The insurer in Price filed a declaratory judgment action in New York to determine if it was obligated to provide coverage to the insured arising from the insured's involvement in tannery wastes being disposed of in New York. After the insurer filed the New York action, the insured filed an action in Missouri where the policies were issued and the insured had seventeen additional sites. The insured then filed a forum non conveniens motion in New York. In interpreting the provision, the New York Supreme Court found there was nothing in the wording of the provision that would lead one to the conclusion that it entailed more than [insurer's] voluntary submission to the jurisdiction of the courts of the United States. 619 N.Y.S.2d at 417. Moreover, the court said the clause did not provide an insured has the exclusive right to select the court where all disputes arising under the contract are to be resolved ... [or] by its terms preclude [the insurer] from filing an action to adjudicate its rights under the contract, nor does it prescribe the forum for the action. 619 N.Y.S.2d at 417. Therefore, the court held to infer that the insurer does not have a right to file an action would be unreasonable[.] 619 N.Y.S.2d at 417. In denying the insurer's motion on the basis of forum non conveniens, the New York Supreme Court relied, in part, upon the analysis conducted by the United States Court of Appeals for the Fifth Circuit in International Insurance Co. v. McDermott Inc., 956 F.2d 93 (5th Cir.), cert. denied ___ U.S. ___, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992). The issue presented to the Court of Appeals was whether an insured could file an action and use a service of suit clause to have a previously filed action by an insurer dismissed. Both the New York Supreme Court and the Fifth Circuit concluded that to allow an insured to so use a service of suit clause would be wrong. Although both courts realized it may lead to a race to the courthouse between the insured and the insurer, to allow an insured to remove an otherwise valid declaratory judgment action made by an insurer would deny the insurer of its right to seek a declaratory judgment or other redress from the courts. The Service of Suit clause certainly was not so intended. 956 F.2d at 96. We agree with the New York Supreme Court and the Court of Appeals that service of suit clauses clearly are not intended to prevent an insurer from filing a declaratory judgment action or to permit an insured to remove an insurer's action. If an insured wants to guarantee actions are heard in a specific jurisdiction or under a specific jurisdiction's law, such specificity should be written in the policy. However, we do not place the same emphasis on the requirement that the insurer file its action first when a forum non conveniens motion is made. The goal of forum non conveniens is to have the action decided in the most convenient forum. Thus, it should not matter whether the insurer or the insured files the first action. The phrase in a service of suit clause stating the insurer will submit to the jurisdiction of any Court of competent jurisdiction within the United States of America does not restrict the insurer from bringing an action in another forum and from subsequently filing a forum non conveniens motion in a forum selected by the insured. Moreover, the phrase and all matters arising hereunder shall be determined in accordance with the law and practice of such Court includes a determination in accordance with the doctrine of forum non conveniens if the doctrine is available to the court. Thus, an insurer agrees to submit to a United States court of competent jurisdiction selected by the insured; however, it may utilize the doctrine of forum non conveniens if the doctrine is within the law and practice of such Court. [18] To rest a decision on who files first could allow an insured who won the race to the courthouse to maintain its action, provided it is otherwise valid, regardless of how inconvenient the forum is. Without the insured and the insurer agreeing on a specific jurisdiction or on a specific jurisdiction's law to be applied, as in Bremen, supra, and General Electric, supra, we decline to interpret the service of suit clauses at issue in this case in such a way as to prevent an insurer from arguing a motion on the basis of forum non conveniens. We find that to hold otherwise would be unreasonable and clearly not what the parties intended. Thus, in making our decision, we comply with our general policy on interpreting insurance policies. As we stated in Syllabus Point 2 of Prete v. Merchants Property Insurance Company of Indiana, 159 W.Va. 508, 223 S.E.2d 441 (1976): `Ambiguous and irreconcilable provisions of an insurance policy should be construed strictly against the insurer and liberally in favor of the insured, although such construction should not be unreasonably applied to contravene the object and plain intent of the parties.' Point 2, Marson Coal Co. v. Insurance Co., [158] W.Va. [146], 210 S.E.2d 747 (1974). (Emphasis added). See also Shamblin v. Nationwide Mut. Ins. Co., 175 W.Va. 337, 340, 332 S.E.2d 639, 642 (1985); Syllabus Point 2, Surbaugh v. Stonewall Cas. Co., 168 W.Va. 208, 283 S.E.2d 859 (1981).