from the United States District Court for the Eastern
District of Louisiana
JOLLY, JONES, and DENNIS, Circuit Judges.
GRADY JOLLY, CIRCUIT JUDGE
appeal, relating to arbitration under the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards,
address whether a "conformity to statute"
provision amends the insurance contract so as to
conform with a conflicting, but preempted, state statute
forbidding arbitration in insurance contracts.
Group, L.L.C. purchased an insurance policy from the
defendants that included a written agreement to arbitrate
disputes. After the Insurers denied McDonnel's claim,
McDonnel initiated this declaratory and breach of contract
action in federal district court. The Insurers moved to
dismiss based on the policy's arbitration provision.
McDonnel responded that the arbitration provision was
"amended out" of the contract through the
contract's conformity to statute provision because
arbitration conflicted with a Louisiana statute. The district
court held, however, that the allegedly conflicting Louisiana
statute was preempted by the Convention, and therefore
dismissed the case in favor of arbitration. We must decide
whether the policy's conformity provision negates the
agreement to arbitrate. We hold that it does not and thus
AFFIRM the district court.
2015, McDonnel Group, L.L.C. obtained a builder's risk
insurance policy from a group of insurers for a
construction project on a property located in New Orleans,
Louisiana. Two years later, according to McDonnel, the
property suffered significant water damage. McDonnel
submitted a claim that the Insurers refused to pay.
then filed the instant action seeking declaratory relief and
damages for breach of contract and breach of the duty of good
faith and fair dealing. The Insurers responded by filing a
motion to dismiss for lack of subject-matter jurisdiction and
improper venue. Fed.R.Civ.P. 12(b)(1), (3). As to both
defenses, the Insurers invoked the contract's arbitration
provision, which provides:
Any dispute, controversy or claim arising out of, relating
to, or in connection with this Policy, shall be
finally settled by arbitration. The arbitration shall be
conducted in accordance with the International Arbitration
Rules of the American Arbitration Association in effect at
the time of the arbitration. The seat of the arbitration
shall be New York, New York, in the United States of America.
Insurers argued that the arbitration provision should be
enforced, and the case dismissed in favor of arbitration
pursuant to the Convention.
policy, however, also contained a "conformity to
statute" provision, stating: "In the event any
terms of this Policy are in conflict with the
statutes of the jurisdiction where the Insured
Property is located, such terms are amended to conform
to such statutes." Invoking that provision, McDonnel
responded that any obligation to arbitrate under the
Convention did not apply to the instant dispute because the
policy's arbitration agreement was, as a matter of law,
invalid. The arbitration provision was contrary to La. Rev.
Stat. Ann. § 22:868(A)(2), which prohibits arbitration
agreements in insurance contracts covering property located
in the state. Thus, the conformity provision, McDonnel
argued, "amended" the arbitration provision out of
the contract in order to "conform" with Louisiana
law. Consequently, the dispute between McDonnel and the
Insurers was not subject to the Convention.
district court disagreed. Relying on the decision of our en
banc court in Safety Nat'l Cas. Corp. v. Certain
Underwriters at Lloyd's, the court held that the
Convention superseded La. Rev. Stat. Ann. § 22:868. 587
F.3d 714 (5th Cir. 2009). Because the state statute was
preempted by federal law, the court determined that no
conflict existed between the policy and state law so as to
trigger the conformity provision of the policy. Thus, the
arbitration agreement remained valid. The district court,
therefore, dismissed the action in favor of arbitration. The
parties, accordingly, present a precise issue in this appeal:
does the contractual agreement to conform to state statutes
apply when the conflicting state statute has been held as a
matter of law to have been preempted by the Convention.
standard of review for a dismissal pursuant to both Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(3) is de
novo.See Ambraco, Inc. v. Bossclip
B.V., 570 F.3d 233, 237-38 (5th Cir. 2009). The
well-pleaded factual allegations in the complaint are taken
"as true and [we] view them in the light most favorable
to the plaintiff." See Lane v. Halliburton, 529
F.3d 548, ...