Court Opinion

ID: 43108
Source: CourtListenerOpinion
Date Created: 2010-04-25 21:51:23+00
Date Added: 2024-06-11T17:16:59.643852
License: Public Domain

United States Court of Appeals
                                                               Fifth Circuit
                                                            F I L E D
                   UNITED STATES COURT OF APPEALS
                            FIFTH CIRCUIT                     May 30, 2006

                                                        Charles R. Fulbruge III
                                                                Clerk
                            No. 05-60282

            SOUTHLAND OIL CO., A Mississippi Corporation,

                                                Plaintiff-Appellee,

                               versus

         MISSISSIPPI INSURANCE GUARANTY ASSOCIATION; Et al.,

                                                        Defendants,

  ALLIANCE INSURANCE COMPANY, A Kansas Corporation; CONTINENTAL
 CASUALTY COMPANY, An Illinois Corporation; FIDELITY & CASUALTY
COMPANY OF NEW YORK, A New Hampshire Corporation; HOUSTON GENERAL
 INSURANCE COMPANY, A Texas Corporation; INTERNATIONAL INSURANCE
   COMPANY, An Illinois Corporation; CENTURY INDEMNITY COMPANY;
  LEXINGTON INSURANCE COMPANY, A Delaware Corporation; NATIONAL
  UNION FIRE INSURANCE COMPANY OF PITTSBURGH PA, A Pennsylvania
                           Corporation,

                                             Defendants-Appellants.

            Appeals from the United States District Court
               for the Southern District of Mississippi
                             (2:03-CV-507)

Before KING, BARKSDALE, and PRADO, Circuit Judges.

PER CURIAM:*

     Primarily at issue is the post-removal remand to state court

granted Southland Oil Company, pursuant to a service-of-suit clause

     *
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
in the policies issued by some of the defendant insurers. AFFIRMED.

                                  I.

     Southland, a Mississippi resident, manufactures asphalt, among

other products.    It filed this action in 2003 in Mississippi state

court against its insurers for failure to pay claims under general

comprehensive, umbrella, and excess liability policies, seeking a

declaration they are obligated to pay costs arising out of alleged

environmental damage at one of Southland’s Mississippi refineries.

Southland claimed anticipatory breach of contract against all

insurers; against four, it also claimed breach of contract (Breach

Defendants).    Six defendants, none of whom are Breach Defendants,

had service-of-suit clauses in their policies (Service-of-Suit

Defendants).

     Defendants removed this action to federal court, maintaining

Southland fraudulently joined the Mississippi Insurance Guaranty

Association (MIGA) to prevent diversity jurisdiction.      Southland

moved to remand, claiming:    (1) joinder was proper; and (2) removal

was barred by the service-of-suit clause.

     Relying on City of Rose City v. Nutmeg Insurance Company, 931
F.2d 13 (5th Cir.), cert. denied, 502 U.S. 908 (1991), the district

court held:    that clause prevented removal for the Service-of-Suit

Defendants; and, because unanimity was defeated, the action had to

be remanded to state court.   As it noted, this mooted the diversity

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issue.   Southland Oil Co. v. Miss. Ins. Guar. Ass’n, No. 2:03-507-

KS-JMR, at *4 (S.D. Miss. 2 A.K. Marsh. 2005).

                                II.

     Appellants claim:    remand premised on the service-of-suit

clause was improper; and diversity jurisdiction exists.    We hold

the Service-of-Suit Defendants waived their right to removal.

Consistent with the district court’s lack-of-unanimity holding,

Appellants do not dispute remand of the action would be required.

See § 1446(a); Doe v. Kerwood, D.O., 969 F.2d 165, 167-68 (5th Cir.

1992) (requiring unanimity of co-defendants to remove); Tri-Cities

Newspapers, Inc. v. Tri-Cities Printing Pressmen & Assistants’

Local 349, Int’l Printing Pressmen & Assistants’ Union of N. Am.,

427 F.2d 325, 326-27 (5th Cir. 1970). (Because the service-of-suit

clause prevents removal, we need not reach the diversity issue.)

                                 A.

     Jurisdiction is conceded by the parties.    Nevertheless, our

jurisdiction must be verified sua sponte.   E.g., Ross v. Marshall,

426 F.3d 745, 751 (5th Cir. 2005).    Generally, remand orders are

not reviewable.   28 U.S.C. § 1447(d); see also McDermott Int’l,

Inc. v. Lloyds Underwriters of London, 944 F.2d 1199 (5th Cir.

1991).   Where the district court remands pursuant to a contract

provision (including a service-of-suit clause), however, review is

permitted.   McDermott, 944 F.2d at 1201.

                                 B.

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       A remand order is reviewed de novo.       See City of New Orleans

v. Mun. Admin. Servs., Inc., 376 F.3d 501, 503 (5th Cir. 2004),

cert. denied, 543 U.S. 1187 (2005).       The same standard of review

applies to interpretation of an insurance policy, a question of

law.    Allstate Ins. Co. v. Disability Servs. of the Sw. Inc., 400
F.3d 260, 263 (5th Cir. 2005).

       The service-of-suit clause states:

            It is agreed that in the event of the failure
            of Underwriters ... hereon to pay any amount
            claimed to be due hereunder, Underwriters ...
            , at the request of the Insured ... , will
            submit to the jurisdiction of any Court of
            competent jurisdiction within the United
            States 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.

(Emphasis added.)

       Appellants contend the district court failed to accord the

clause its unambiguous meaning. For it to be applicable, they claim

two conditions precedent must be met:         (1) an amount is due under

the terms of the policy; and (2) the insurer has failed to pay it.

Thus, because Southland has only claimed anticipatory breach of

contract against the Service-of-Suit Defendants, it has only sought

prospective relief from them; and, no judgment against them having

been    obtained,   the   first   condition    precedent   has   not   been

satisfied.

                                     4
      In the alternative, Appellants claim: because the service-of-

suit clause does not “clearly and unequivocally” waive the Service-

of-Suit Defendants’ right to select a forum, as required by our

precedent, the clause merely “represent[s] [their] willingness to

accede to the jurisdiction of an American court”. Relying on

McDermott, Appellants insist submitting to a court’s jurisdiction

does not constitute a waiver of a removal right.

      Southland counters:       a service-of-suit clause is a forum-

selection clause, permitting it to select the forum; as a result,

when it filed this action in state court, the Service-of-Suit

Defendants were obligated to litigate there; and, because they

waived their removal right, this action was properly remanded. For

support, Southland cites Nutmeg, 931 F.2d at 15 (upholding remand

order   pursuant    to   a   service-of-suit    clause),     and    Waters    v.

Browning-Ferris Indus., Inc., 252 F.3d 796 (5th Cir. 2001) (same).

      “For a contractual clause to prevent a party from exercising

its   right   to   removal,    the   clause    must   give   a     ‘clear    and

unequivocal’ waiver of that right.”       City of New Orleans, 376 F.3d

at 504 (citing McDermott, 944 F.2d at 1204).                 Such a waiver,

however, need not contain “explicit words, such as ‘waiver of right

of removal’”.      Waters, 252 F.3d at 797 (citing Gen. Phoenix Corp.

v. Malyon, 88 F. Supp. 502, 503 (S.D.N.Y. 1949)).            It is more than

well settled that any ambiguity in an insurance policy is to be

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construed against its drafter — the insurer.                   E.g., Nutmeg, 931
F.2d at 15.

      The clause at issue is identical to the one in Nutmeg.                        “On

its face the endorsement is unambiguous.           It plainly requires that

the   insurer    submit   to     the   jurisdiction   of       any   court    of    the

policyholder’s choosing.”         Id. (emphasis added).          Furthermore, the

clause    at    issue   states    the   insurers   “will        comply   with      all

requirements necessary to give such Court jurisdiction”. (Emphasis

added.)    Although this language “does not specifically mention

[removal, ... it] makes clear that the policyholder shall enjoy the

right to choose the forum in which any dispute will be heard”.                      Id.

      There is no merit to Appellants’ contention that, to invoke

the   clause,    Southland     must     first   secure     a    judgment.          That

interpretation is not supported by the clause’s plain language.

All that is required to trigger it is the insurers’ “failure ... to

pay any amount claimed to be due”.              (Emphasis added.)            In other

words, an amount claimed is not equivalent to an amount owed,

secured by a judgment.

      Southland made such an assertion in its state-court complaint,

asserting the insurers owe amounts due under the policy for any

costs, including any damages, arising out of operations at the

Mississippi refinery.        According to the complaint, these putative

damages exceed the policy limits.

                                         6
     Similarly, there is no merit to the contention that the clause

merely submits the Service-of-Suit Defendants to the personal

jurisdiction of any court within the United States.          Our precedent

is   clear:      a   service-of-suit   clause   has   been    given   that

construction only where the insurer is a foreign entity.               See

McDermott, 944 F.2d at 1206-07; see also In re Delta Am. Re Ins.

Co., 900 F.2d 890 (6th Cir.) (holding a similar policy provision

was merely a promise to submit to the personal jurisdiction of a

court in the United States where the reinsurer was a foreign

entity), cert. denied, 498 U.S. 890 (1990).           In discussing why

Nutmeg rejected such a construction, McDermott noted:

            [T]he   court   found   [defendant]   Nutmeg’s
            interpretation of the service-of-suit clause —
            that it only concedes personal jurisdiction
            ... — wholly untenable because ... Nutmeg is a
            domestic corporation with its principal place
            of business in the United States. Faced with
            no alternative meaning for the service-of-suit
            clause, language strongly implying waiver of
            removal rights, and the policy drafter
            principle, the court naturally held that
            Nutmeg waived its removal rights.

McDermott, 944 F.2d at 1206-07 (internal citation omitted).           Thus,

Nutmeg was held not controlling in McDermott because the insurer in

that action was organized under the laws of another country.           Id.

     In the instant action, all of the insurers are domestic

corporations that have sold policies to Southland, a Mississippi

resident.     Thus, “there [is] no question that [the Service-of-Suit

Defendants] would have to submit to the jurisdiction of some court

                                   7
in the United States”.   Nutmeg, 931 F.2d at 15.        In other words,

Appellants’ construction of the clause renders it superfluous.

Consistent with the policy interpretation by Nutmeg,

          it seems quite likely that [the Service-of-
          Suit Defendants] ha[ve] minimum contacts with
          [Mississippi] ....    It would have made no
          sense for a policyholder to bargain with
          [them] for a clause requiring only that [they]
          would submit to the jurisdiction of some court
          in the United States.    Indeed, it is clear
          from the language of the clause at issue ...
          that [the Service-of-Suit Defendants] did not
          promise only to submit to the jurisdiction of
          “some Court ... within the United States,” but
          rather promised to submit to the jurisdiction
          of “any Court ... within the United States.”

Id. at 15-16 (emphasis in original).

     We will “not interpret a policy to leave specific provisions

without meaning or effect”.    S. Farm Bureau Life Ins. Co. v. Moore,

993 F.2d 98, 103 (5th Cir. 1993).       Because any other interpretation

would render the clause meaningless, “[w]e are persuaded that this

clause gives to the policyholder ... the right to select the forum,

foreclosing [the Service-of-Suit Defendants’] right to remove this

action to federal court”.     Nutmeg, 931 F.2d at 16.

                                 III.

     For the foregoing reasons, the remand order is

                                                           AFFIRMED.

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