Court Opinion

ID: 4030822
Source: CourtListenerOpinion
Date Created: 2016-09-01 22:00:57.663391+00
Date Added: 2024-06-11T14:08:16.686243
License: Public Domain

In the

       United States Court of Appeals
                     For the Seventh Circuit
                         ____________________
No. 16-1073
PINE TOP RECEIVABLES OF ILLINOIS, LLC,
                                                         Plaintiff-Appellee,

                                      v.

TRANSFERCOM, LTD.,
                                                     Defendant-Appellant.
                         ____________________

                Appeal from the United States District Court
           for the Northern District of Illinois, Eastern Division.
                 No. 1:15-cv-08908 — Amy J. St. Eve, Judge.
                         ____________________

       ARGUED MAY 31, 2016 — DECIDED SEPTEMBER 1, 2016
                         ____________________

  Before EASTERBROOK and WILLIAMS, Circuit Judges and
YANDLE, District Judge. ∗
   YANDLE, District Judge. Pine Top Receivables of Illinois,
LLC’s (“PTRIL”) sued Transfercom Limited (“Transfercom”)
in state court. Transfercom removed the case on diversity
grounds. On PTRIL’s motion, the district court remanded

   ∗   Of the Southern District of Illinois, sitting by designation.
2                                                   No. 16-1073

the matter based on its determination that, due to the service
of suit clause in reinsurance treaties between the parties,
Transfercom waived the right of removal.
                                 I.
   Following the liquidation of Pine Top Insurance Compa-
ny, some of its accounts receivable were assigned to PTRIL, a
limited liability company incorporated in Delaware with its
principal place of business in New York. Transfercom, an
insurance company incorporated in the United Kingdom,
assumed certain obligations of Nissan Fire and Marine In-
surance Company (UK) Limited (“Nissan”), an insurance
company organized under the laws of Japan which transact-
ed business in the United States. Among the obligations as-
sumed by Transfercom were those owed by Nissan to Pine
Top Insurance Company before liquidation.
    PTRIL filed suit in state court alleging breach of contract
against Transfercom and seeking recovery of the receivables
under two reinsurance treaties entered into by and between
Transfercom’s predecessor and Pine Top in 1981 and 1982.
Transfercom removed the litigation to federal court and
PTRIL filed a motion to remand contending that Trans-
fercom had waived its right to remove the case in the rein-
surance treaties.
    The reinsurance treaties are essentially identical and
each contains a service of suit clause which provides, in rel-
evant part:
      It is agreed that in the event of the failure of the
      Reinsurer hereon to pay any amount claimed
      to be due hereunder, the Reinsurer hereon, at
      the request of the Company, will submit to the
No. 16-1073                                                     3

       jurisdiction of any Court of competent jurisdic-
       tion within the United States and will comply
       with all requirements necessary to give such
       Court jurisdiction and all matters arising here-
       under shall be determined in accordance with
       the law and practice of such Court.
    In remanding the case to state court, the district court
found that, based on the plain and ordinary meaning of the
service of suit clause, PTRIL reserved the exclusive authority
to select both the jurisdiction and venue, and Transfercom
waived its right to remove the case to federal court.
                                 II.
    28 U.S.C. § 1441(a) provides that, “any civil action
brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed by
the defendant or defendants, to the district court of the Unit-
ed States for the district and division embracing the place
where such action is pending.” While the right of removal is
a statutory right, it is a right that can be waived. One such
mechanism for waiving the right of removal is through a fo-
rum selection clause. As early as 1949, the overwhelming
majority of federal courts have held that service of suits
clauses—such as the one at issue in this case—foreclose a de-
fendant’s right of removal. See General Phoenix Corp. v.
Malyon, 88 F. Supp. 502, 503 (S.D.N.Y. 1949); see also The Trav-
elers Ins. Co. v. Keeling, 996 F.2d 1485, 1487–90 (2d Cir. 1993);
Foster v. Chesapeake Ins. Co. 933 F.2d 1207, 1216–19 (3d Cir.
1991), cert. denied, 502 U.S. 908, 112 S. Ct. 302, 116 L. Ed. 2d 245
(1991); City of Rose City v. Nutmeg Ins. Co., 931 F.2d 13 (5th
Cir. 1991); Transit Cas. Co. v. Certain Underwriters at Lloyd's of
London, et al., 119 F.3d 619, 622–23 (8th Cir. 1997); Russell
4                                                 No. 16-1073

Corp. v. Am. Home Assur. Co., 264 F.3d 1040, 1047 (11th Cir.
2001).
    Transfercom argues that a waiver of the statutory right of
removal must be “clear and unequivocal” and that, not-
withstanding the district court’s finding that the language of
the service of suit clause at issue is clear and unequivocal,
the existence of an arbitration clause in the reinsurance trea-
ties renders the clause ambiguous and unenforceable. The
arbitration clause states: “As a condition precedent to any
right of action hereunder, any irreconcilable dispute be-
tween the parties to this Agreement will be submitted for
decision to a board of arbitration.” This language in no way
muddies the water with respect to the meaning of the service
of suit clause.
    On appeal, Transfercom urges us to adopt a heightened
“clear and unequivocal” interpretation standard which has
been applied when the removing party’s actions in partici-
pating in state court proceedings prior to removal were in-
terpreted as a waiver of the right to remove. See Foster v.
Chesapeake Ins. Co., 933 F.2d 1207, 1217 n. 15 (3d Cir. 1991);
see also Snapper, Inc. v. Redan, 171 F.3d 1249, 1260–61 (11th
Cir. 1999). Such litigation-based waivers are distinguishable
from contractual waivers and, like the Third Circuit in Foster,
we decline to apply a “standard so stringent as to be contra-
ry to the right of parties to contract in advance regarding
where they will litigate.” Foster, 933 F.2d at 1217 n. 15. When
called upon to interpret a contractual waiver of the right to
remove, district courts should utilize the same standards of
interpretation and construction they employ in resolving all
preliminary contractual questions. See id.
No. 16-1073                                                     5

    Read as a whole, the reinsurance agreement requires
Transfercom to submit to the jurisdiction of any court of
competent jurisdiction chosen by PTRIL, whether it be to de-
termine the arbitrable nature of the dispute, to confirm an
arbitration award, to compel arbitration, or to resolve on the
merits, a claim not subject to arbitration—including PTRIL’s
breach of contract claim. See e.g., Travelers Ins. Co. v. Keeling,
996 F.2d 1485, 1490 (2d Cir. 1993); Century Indem. Co. v. Cer-
tain Underwriters at Lloyd's, London, subscribing to Retroces-
sional Agreement Nos. 950548, 950549, 950646, 584 F.3d 513,
554 (3d Cir. 2009) (service of suit clauses compliment rather
than negate accompanying arbitration clauses).
                                 III.
     Lastly, relying on an Illinois Appellate Court decision,
Whirlpool Corp. v. Certain Underwriters at Lloyd’s London, 278
Ill. App. 3d 175, 214 Ill. Dec. 901, 662 N.E.2d 467 (1996),
Transfercom contends that its right to remove this litigation
is not waivable. But Whirlpool addresses the issue of forum
non conveniens, not removal. This distinction is significant—
remand involves a purely private interest, while forum non
conveniens involves a public interest. See Archdiocese of Mil-
waukee v. Underwriters at Lloyd's, London, 955 F. Supp. 1066,
1069 (E.D. Wis. 1997) (noting that the defendants’ right to
remove a case is their right alone which can be waived, exer-
cised, or bargained away while forum non conveniens is based
on the interests of both the parties and the public and, there-
fore, the court must still weigh the public interest involved).
As such, Transfercom’s reliance on Whirlpool is misplaced.
6                                                No. 16-1073

                              IV.
    Here, the service of suit clause unambiguously grants
PTRIL the absolute right to choose the forum for litigating
this matter and the district court properly concluded that to
allow removal would be to ignore the contractual term’s
plain and ordinary meaning. Accordingly, we AFFIRM.