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Gemini Insurance Co. v. Certain Underwriters At Lloyd's London Subscribing To Policy No. B0973ma1305152

United States District Court, S.D. Texas, Houston Division

April 13, 2017

GEMINI INSURANCE COMPANY, Plaintiff,
v.
CERTAIN UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING TO POLICY NO. B0973MA1305152 ISSUED THROUGH THE OFFICES OF OSPREY UNDERWRITING AGENCY LIMITED, Defendant.

          ORDER DISSOLVING TEMPORARY RESTRAINING ORDER AND DENYING APPLICATION FOR PRELIMINARY INJUNCTION

          LEE H. ROSENTHAL CHIEF UNITED STATES DISTRICT JUDGE.

         The plaintiff, Gemini Insurance Company, issued a maritime liability insurance policy to Galveston Bay Energy, LLC. The defendants, Lloyd's Underwriters, underwrote another policy issued to Galveston Bay through the Osprey Underwriting Agency. Gemini and the Lloyd's defendants disputed whether the defendants were obliged to help fund a settlement in a personal injury suit against their mutual insured, Galveston Bay Energy, LLC. The defendants invoked an arbitration clause in the Galveston Bay policy and filed an arbitration in England seeking a declaration that they did not have to fund the settlement. Galveston Bay assigned its right to recover on the policy to Gemini in exchange for an additional payment toward the settlement. Gemini brought this subrogated suit in Texas state court, seeking a temporary restraining order and preliminary injunction barring the defendants from pursuing the London arbitration. The state court granted a temporary restraining order. The defendants timely removed.[1] This court set a hearing on the application for preliminary injunction. The defendants filed a brief in opposition to the motion for preliminary injunction and the plaintiffs filed a reply. The court held a hearing on April 12, 2017, at which counsel presented oral argument.

         Based on the briefs, arguments, and applicable law, the temporary restraining order is dissolved and the application for a preliminary injunction is denied. The reasons are explained in detail below.

         I. Background

         This is an insurance coverage dispute arising from an underlying personal injury suit. Paul Blasingame was injured in a maritime accident and sued Galveston Bay Energy, LLC, in Texas state court. Galveston Bay had several relevant insurance policies in effect at the time of Mr. Blasingame's injury, including a policy issued by Gemini and a policy issued by the Lloyd's underwriter defendants via Osprey Underwriting Agency, Ltd. In this suit, Gemini alleges that all insurers except Osprey funded a settlement that resolved the underlying Blasingame litigation and that, in exchange for Gemini covering a larger part of the settlement than its pro rata share, Galveston Bay assigned its rights under the Osprey contract to Gemini. Gemini alleges that the Osprey policy covered the Blasingame settlement and that the Lloyd's defendants were obliged to pay.

         On March 17, 2017, Osprey notified Galveston Bay and the other insurers that it had begun an arbitration proceeding in England seeking a determination that it did not owe any money toward the Blasingame settlement. Gemini sued in Texas state court, alleging that it was subrogated to Galveston Bay's rights under the insurance contract and asserting various contract and quasi-contract theories. The state-court petition also sought a temporary restraining order, preliminary injunction, and permanent injunction preventing Osprey from pursuing the English arbitration. The state court granted the TRO.

         The Osprey maritime liability policy (which the Lloyd's defendants underwrote) contains two relevant provisions. The “Law and Practice Clause” provides for arbitration of all disputes in England:

Notwithstanding anything else to the contrary, this insurance is subject to English law and practice and any dispute under or in connection with this insurance is to be referred to Arbitration in London, one Arbitrator to be nominated by the Assured and the other by Osprey on behalf of Underwriters. The Arbitration shall be conducted pursuant to exclusive supervision of the English High Court of Justice. In case the Arbitrators shall not agree, then the dispute shall be submitted to an Umpire to be appointed by them. The award of the Arbitrators or the Umpire shall be final and binding upon both parties. In the event of a conflict between this clause and any other provision of this insurance, this clause shall prevail and the right of either party to commence proceedings before any other Court or Tribunal in any other jurisdiction shall be limited to the process of enforcement of any award hereunder.

(Docket Entry No. 5-2, Ex. B at 27).

         The policy also contains a “Service of Suit” clause:

It is agreed that in the event of the failure of the Underwriters severally subscribing to this insurance (the Underwriters) to pay any amount claimed to be due hereunder, the Underwriters, at the request of the Assured, will submit to the jurisdiction of a court of competent jurisdiction within the United States of America.
Notwithstanding any provision elsewhere in this insurance relating to jurisdiction, it is agreed that the Underwriters have the right to commence an action in any court of competent jurisdiction in the United States of America, and nothing in this clause constitutes or should be understood to constitute a waiver of the Underwriters' rights to remove an action to a United States Federal District Court or to seek remand therefrom or to seek a transfer of any suit to any other court of competent jurisdiction as permitted by the laws of the United States of America or any state therein.
Subject to the Underwriters' rights set forth above:
(a) It is further agreed that the Assured may serve process upon any senior partner in the firm of:
Mendes & Mount (Attorneys), 750 Seventh Avenue, New York N.Y.10019-6829 and that in any suit instituted against any one of them upon this contract the Underwriters will abide by the final decision of the Court or of any Appellate Court in the event of an appeal.
(b) The above named are authorised and directed to accept service of process on behalf of Underwriters in any such suit and/or upon the request of the Assured to give a written undertaking to the Assured that they will enter a general appearance upon the Underwriters' behalf in the event such a suit shall be instituted.
(c) The right of the Assured to bring suit as provided herein shall be limited to a suit brought in its own name and for its own account. For the purpose of suit as herein provided the word Assured includes any mortgagee under a ship mortgage which is specifically named as a loss payee in this ...

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