United States District Court, W.D. Texas, Austin Division
SPARKS, SENIOR UNITED STATES DISTRICT JUDGE
REMEMBERED on this day the Court reviewed the file in the
above-styled cause, and specifically Plaintiff Gramercy
Insurance Company (Gramercy)'s Motion to Remand [#10],
Defendant Contractor's Bonding, Ltd. (CBL)'s Response
[#13] in opposition, and Gramercy's Reply [#15] in
support, as well as CBL's Motion to Transfer and, in the
Alternative, Motion to Compel Arbitration and Stay
Proceedings [#6], Gramercy's Response [#12] in
opposition, and CBL's Reply [#14] in support. Having
reviewed the documents, the relevant law, the arguments of
counsel, and the case file as a whole, the Court now enters
the following opinion and orders.
action arises from a reinsurance agreement dispute between
Gramercy and CBL. In July 2007, CBL entered into a
reinsurance agreement with Gramercy. Suppl. Mot. Transfer
[#8-1] Ex. B at 15 (Reinsurance Agreement). The Reinsurance
Agreement contains both arbitration and forum selection
clauses. The arbitration clause states "[a]ny and all
disputes or differences arising out of the Agreement,
including its formation and validity, shall be submitted to
binding arbitration." Id. at 10. The forum
selection clause states "[u]nless 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." Id. at 11.
the parties executed the Reinsurance Agreement, Gramercy
began to experience financial difficulties, and in December
2012, Gramercy was placed in receivership in state court.
Resp. Mot. Transfer [#12] at 2. The Texas Commissioner of
Insurance, in its capacity as receiver, designated Resolution
Oversight Corporation (Resolution Oversight) as the special
deputy receiver for Gramercy. Id. As special deputy
receiver, Resolution Oversight is authorized to stand in the
shoes of and exercise the powers of the receiver.
Id. [#12-2] Ex. 1 at 1-2 (Stroud Aff).
Texas Insurance Code § 443.201, the receiver (or special
deputy receiver) may issue a written demand to any person in
possession of property rightfully belonging to the
receivership estate. Tex. Ins. Code § 443.201(a). The
person in possession of the property must assert any right to
retain the property by filing a pleading with the
receivership court within twenty days of receipt of the
written demand. Id. If the person in possession of
the property fails to deliver the property or file the
pleading within the twenty-day period, the special deputy
receiver may petition the receivership court to issue a
summary turnover order directing the immediate delivery of
the property to the receiver and finding the person has
waived all claims of right to the property. Id.
12, 2017, in its capacity as special deputy receiver,
Resolution Oversight emailed a written demand to CBL alleging
CBL owed Gramercy upwards of $1 million under the terms of
the Reinsurance Agreement. Stroud Aff. at 2; Not. Removal
[#1-1] Ex. A at 3 (Original Pet.). CBL did not respond or
deliver the requested funds within twenty days of receiving
the demand. Stroud Aff. at 2. As a result, on June 22, 2012,
Resolution Oversight petitioned the receivership court to
issue an order finding CBL had waived its right to the funds
and directing CBL to deliver the funds to Resolution
Oversight. Id. at 2-3.
August 1, 2017, CBL made a special appearance in state court
and filed a motion to quash service of process. Mot. Remand
[#10] at 3. The next day, CBL removed the action to federal
court. Not. Removal [#1]. CBL now moves to
transfer this case to the Northern District of Georgia,
Atlanta Division or, in the alternative, to compel
arbitration. Mot. Transfer [#6] at 3 n.3. In turn, Gramercy
moves for remand to state court. Mot. Remand [#10]. Following
a hearing before this Court on October 25, 2017, the pending
motions are ripe for review.
I. Motion to Remand
argues the Court should abstain from exercising jurisdiction
over this matter under Burford v. Sun Oil Co., 319
U.S. 315 (1943). Mot. Remand [#10] at 5-10. Alternatively,
Gramercy argues this Court is required to remand under the
doctrine of equitable restraint set forth in Younger v.
Harris, 401 U.S. 37 (1971). Id. The Court
addresses these arguments in turn.
abstention is appropriate only when the district court has
discretion to grant or deny relief. Munich Am.
Reinsurance Co. v. Crawford, 141 F.3d 585, 589 (5th Cir.
1998) (citing Quackenbush v. Allstate Ins. Co., 517
U.S. 706, 716-18 (1996)). CBL argues Burford
abstention is inappropriate because under the Federal
Arbitration Act (FAA) this Court lacks discretion with
respect to CBL's pending motion to compel arbitration.
Resp. Mot. Remand [#13] at 3; see generally 9 U.S.C.
§ 4 ("[U]pon being satisfied that the making of the
agreement for arbitration ... is not in issue, the court
shall make an order directing the parties to proceed
to arbitration .. . ." (emphasis added)). Gramercy
disagrees and argues (1) the FAA is inapplicable because it
is reverse preempted by the McCarron-Ferguson Act; and (2)
the FAA is inapplicable because CBL waived its right to
arbitration. Mot. Remand [#10] at 9-10.