A federal district court in Texas has ruled that an action filed by the special deputy receiver for an insurance company in receivership had to be transferred to Atlanta.
The Case
After Gramercy Insurance Company was placed in receivership in a Texas state court, the Texas Commissioner of Insurance, in its capacity as receiver, designated Resolution Oversight Corporation as the special deputy receiver for Gramercy. As special deputy receiver, Resolution Oversight was authorized to stand in the shoes of and exercise the powers of the receiver.
In its capacity as special deputy receiver, Resolution Oversight emailed a written demand to Contractor's Bonding, Ltd. ("CBL") alleging that CBL owed Gramercy upwards of $1 million under the terms of a reinsurance agreement between the parties.
When CBL did not respond or deliver the requested funds within 20 days of receiving the demand, Resolution Oversight petitioned the receivership court to issue an order finding that CBL had waived its right to the funds and directing CBL to deliver the funds to Resolution Oversight.
CBL removed the action to federal court and then moved to transfer the case to the U.S. District Court of the Northern District of Georgia, Atlanta Division, pursuant to the forum selection clause in the reinsurance agreement or, in the alternative, to compel arbitration.
The Reinsurance Agreement
The reinsurance agreement stated:
Any and all disputes or differences arising out of the Agreement, including its formation and validity, shall be submitted to binding arbitration.
It also stated:
Unless prohibited by law, the Superior Court of the State of Georgia, Gwinnett County, and the applicable United States District Court shall have exclusive jurisdiction over any and all court proceedings to compel, stay or enjoin arbitration.
The District Court's Decision
The district court granted the motion to transfer the case to the Northern District of Georgia, Atlanta Division.
In its decision, the district court explained that the forum selection clause "unambiguously" stated that "any and all court proceedings to compel, stay or enjoin arbitration" had to be brought in the Northern District of Georgia.
The district court was not persuaded by Gramercy's contention that the reinsurance agreement's forum selection clause did not apply because the case was not "court proceedings to compel, stay or enjoin arbitration." The district court noted that CBL had moved to compel arbitration, and it concluded that, as a result, the action fell "squarely within the scope of the forum selection clause."
The case is Gramercy Ins. Co. v. Contractor's Bonding, Ltd., No. AU-17-CA-00723-SS (W.D. Tex. Jan. 19, 2018). Attorneys involved include: For Gramercy Insurance Company, in Receivership, by and through, its Special Deputy Receiver, Resolution Oversight Corporation, Plaintiff: Rachel J. Stroud, LEAD ATTORNEY, The Stroud Firm, PLLC, Austin, TX; Robert H. Nunnally, Jr., LEAD ATTORNEY, Wisener Nunnally Roth, L.L.P., Garland, TX. For Contractor's Bonding, Ltd., Defendant: Kent C. Hofmann, Sarah Elizabeth Lancaster, LEAD ATTORNEYS, Locke Lord LLP, Austin, TX.