United States District Court, M.D. Alabama, Northern Division
ALABAMA MUNICIPAL INSURANCE CORPORATION, a non-profit corporation, Plaintiff,
MUNICH REINSURANCE AMERICA, INC., a foreign corporation, Defendant.
MEMORANDUM OPINION AND ORDER I. INTRODUCTION
HAROLD ALBRITTON SENIOR UNITED STATES DISTRICT JUDGE
cause is before the court on a Motion to Stay Pending
Arbitration filed by the Plaintiff Alabama Municipal
Insurance Corporation (“AMIC”) (Doc. # 20). AMIC
filed a Complaint on December 7, 2016, bringing a claim
against Munich Reinsurance America, Inc.
(“Munich”) for breach of a reinsurance contract,
Casualty Excess of Loss Reinsurance Agreement No. 1236-0018.
On April 18, 2017, AMIC filed an Amended Complaint which
again asserted one claim for breach of contract, but this
time identifying the breached contract as Casualty Excess of
Loss Reinsurance Agreement No. 1236-0013, which was endorsed
by Endorsement No. 1236-0009-E003 (Doc. # 18).
17, 2017, AMIC filed a Motion to Stay Pending Arbitration,
which the court has construed as a motion to compel
arbitration. (Doc. # 20). Munich opposes arbitration. For the
reasons that follow, the court concludes AMIC's claim in
its Amended Complaint is due to be compelled to arbitration.
STANDARD FOR A MOTION TO COMPEL ARBITRATION
to the Federal Arbitration Act (“FAA”), a written
arbitration “provision in any . . . contract evidencing
a transaction involving commerce . . . [is] valid,
irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. When a party to an
enforceable arbitration agreement fails to arbitrate a
dispute that falls within the scope of an agreement
containing an arbitration clause, the aggrieved party may
petition the court “for an order directing that such
arbitration proceed.” 9 U.S.C. § 4. If the court
is “satisfied that the making of the agreement for
arbitration or the failure to comply therewith is not in
issue, ” the court is required to “make an order
directing the parties to proceed to arbitration in accordance
with the terms of the agreement.” Id. If,
however, “the making of the arbitration
agreement” is a disputed issue, the court must first
adjudicate whether the agreement is enforceable against the
parties. See Bess v. Check Express, 294 F.3d 1298,
1304 (11th Cir. 2002).
a non-profit entity with its principal place of business in
Montgomery, Alabama. AMIC continuously insured the City of
Gulf Shores, Alabama from May 1, 2002 to October 31, 2015.
During that time, AMIC was reinsured by Munich, a New Jersey
corporation. Over the course of that thirteen (13) year
period, the parties entered into a series of reinsurance
agreements; one per year, except for the first agreement,
which covered the first two years; which sought to reinsure
AMIC for a variety of lines of business liabilities.
first two reinsurance agreements between Munich and AMIC,
including Agreements No. 1236-0009 and No. 1236-0013, covered
claims made to AMIC for occurrences happening between May
2002 and May 2005. Agreement No. 1236-0013 covered claims
between May 2004 and May 2005 for only the Law Enforcement
Liability (LEL), Public Officials Liability (POL), and
Employees' Benefits Liability (EBL) lines of business.
Endorsement Agreement No. 1236- 0009-E003, which operated
between May 2004 and May 2005, covered additional lines of
addition, the first two agreements, Agreements No. 1236-0009
and No. 1236-0013, contained an arbitration clause, stating,
in relevant part:
As a condition precedent to any right to action hereunder,
any dispute arising out of this Agreement shall be submitted
to the decision of a board of arbitration composed of two
arbitrators and an umpire, meeting in Montgomery, Alabama
unless otherwise agreed.
(Doc. # 20-1, p. 17).
City of Gulf Shores was sued by a group of fifty-five (55)
plaintiffs due to “continued and repeated
exposure” to flooding caused by Gulf Shores's
undersized drain pipes. (Doc. # 18, p. 3, ¶ 9). AMIC
settled all fifty-five (55) suits for $981, 250 with expenses
amounting to $306, 670.79, totaling $1, 287, 920.79.
paid the City of Gulf Shores on its policy for the first
$350, 000 and, pursuant to its reinsurance agreements,
submitted a claim for the remainder $937, 920.79 to Munich.
Munich, however, only paid $587, 920.79 of the total $937,
920.79 request. Therefore, AMIC filed a complaint in this
court asserting a claim for breach of Agreement No. 1236-0018
against Munich for the remaining $350, 000 balance. (Doc. #
answered on January 2, 2017 (Doc. # 5), denying liability
under Agreement No. 1236-0018 and stating that Agreement No.
1236-0009, endorsed by Agreement ...