Right of Contracting Parties to Arbitrate Prohibited by Louisiana Statute
Post 4822
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Plaintiff SKAV, L.L.C. owns a Best Western hotel in Abbeville, Louisiana. The hotel was damaged when Hurricane Laura, one of the strongest hurricanes in state history, made landfall in August 2020. SKAV submitted a claim on a surplus lines insurance policy it had purchased from Independent Specialty Insurance. The policy contained a broad arbitration clause, requiring “[a]ll matters in dispute” to be settled by arbitration. SKAV litigated the dispute and the insurer asked that arbitration – in accordance with the contract of insurance, be arbitrated.
In S. K. A. V., L.L.C. v. Independent Specialty Insurance Company, No. 23-30293, United States Court of Appeals, Fifth Circuit (June 5, 2024) the Fifth Circuit Court of Appeals was asked to answer whether § 22:868 of the Louisiana Revised Statutes void an arbitration provision in a contract for surplus lines insurance?
FACTS
SKAV sued Independent Specialty in the Western District of Louisiana, alleging that it had failed to timely and adequately cover the hotel’s hurricane damage under the terms of the policy. The parties unsuccessfully participated in several months of court-directed mediation, after which Independent Specialty moved to compel arbitration. The district court denied the motion concluding that § 22:868 preempted the Federal Arbitration Act.
ANALYSIS
The parties primarily dispute what effect, if any, § 22:868 of the Louisiana Revised Statutes has on the insurance policy’s arbitration clause. The statute bars insurance policies from ousting Louisiana courts of jurisdiction and permits, in limited circumstances, forum- and venue-selection provisions.
There was no dispute that the surplus lines insurance policy at issue in this case is, under subsection (D), was “not subject to approval by the Department of Insurance.” Thus, the only question is whether the policy’s arbitration clause is barred by subsection (A)(2) or permitted by subsection (D).\
Many district courts in Louisiana, including some in New York, have reached conflicting decisions on this specific issue. One district court in the Eastern District of Louisiana certified the question to the Louisiana Supreme Court last year, but, over two dissenting opinions, the State’s High Court declined to answer. The Fifth Circuit, as a federal court exercising diversity jurisdiction, needs to resolve this case as it thinks the Louisiana Supreme Court would rule.
From the start, Louisiana courts have described § 22:868 as memorializing an “anti-arbitration policy.” The statute does not expressly mention arbitration, but it bars insurance policies from “[d]epriving the courts of this state of the jurisdiction . . . of action against the insurer,” and Louisiana courts, in turn, have understood arbitration clauses to divest them of jurisdiction.
The Fifth Circuit’s reading of § 22:868, concluded that the policy did not create a valid and enforceable arbitration agreement and that when a statute prevents the valid formation of an arbitration agreement, as it read § 22:868 to do, the Fifth Circuit cannot compel arbitration, even on threshold questions of arbitrability.
ZALMA OPINION
When a contract of insurance requires all disputes to be resolved by arbitration it deprives the state of its jurisdiction to resolve disputes by means of its courts. The statute clearly and unambiguously deprived parties of the right to select arbitration over the state courts as the forum to resolve disputes over the terms and conditions of contracts. Since the statute prevents the formation of an arbitration the Fifth Circuit had no right to compel arbitration.
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Chutzpah: After Criminal Prosecution Defendant Sues USA
Post 5164
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Dr. Segun Patrick Adeoye, a medical doctor, filed a lawsuit against the United States of America, seeking damages for alleged violations during his criminal prosecution. He was acquitted by a jury but claims to have suffered significant harm, including financial losses, damage to his professional reputation, and personal distress.
In Dr. Segun Patrick Adeoye v. The United States Of America, Civil Action No. 4:25-cv-83, United States District Court, E.D. Texas, Sherman Division (July 23, 2025) the USDC dismissed Adeoye’s suit.
FACTUAL BACKGROUND
Dr. Adeoye was indicted on charges of conspiracy to commit wire fraud and money laundering. The indictment alleged that he and his co-conspirators obtained at least seventeen million dollars through various fraudulent schemes. Despite being acquitted, Dr. Adeoye claims that his ...
Payment of Appraisal Award Defeats Claim of Bad Faith
Post 5163
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Hurricane Damage to Dwelling Established by Appraisal Award
In Homeowners Of America Insurance Company v. Emilio Menchaca, No. 01-23-00633-CV, Court of Appeals of Texas, First District (July 31, 2025) after a hurricane Homeowners of America Insurance Company (“HAIC”) estimated that the cost of covered repair to Menchaca’s house was $3,688.54, which was less than his deductible, and therefore no payment would be made.
FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
On August 23, 2018, Menchaca’s counsel ...
Payment of Appraisal Award Defeats Claim of Bad Faith
Post 5163
Read the full article at https://lnkd.in/dNpKKcYx, see the full video at https://lnkd.in/dNgwRP8q and at https://lnkd.in/dA9dvd-D, and at https://zalma.com/blog plus more than 5150 posts.
Hurricane Damage to Dwelling Established by Appraisal Award
In Homeowners Of America Insurance Company v. Emilio Menchaca, No. 01-23-00633-CV, Court of Appeals of Texas, First District (July 31, 2025) after a hurricane Homeowners of America Insurance Company (“HAIC”) estimated that the cost of covered repair to Menchaca’s house was $3,688.54, which was less than his deductible, and therefore no payment would be made.
FACTS
After Menchaca retained counsel HAIC advised that, under the terms of the policy, Menchaca was required to first invoke the appraisal process prior to filing suit, and that HAIC reserved the right to request that Menchaca and any adjuster hired on his behalf submit to an Examination Under Oath (“EUO”).
On August 23, 2018, Menchaca’s counsel ...
Rulings on Motions Reduced the Issues to be Presented at Trial
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CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
