Infrassure, Ltd. v. First Mutual Transportation Assurance Co. ( 2016 )

16-306
Infrassure, Ltd. v. First Mut. Transp. Assurance Co.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2016
(Argued: September 15, 2016 Decided: November 16, 2016)
Docket No. 16-306
- - - - - - - - - - - - - - - - - - - -x
INFRASSURE, LTD.,
Plaintiff-Counter-Defendant-Appellee,
- v.-
FIRST MUTUAL TRANSPORTATION ASSURANCE COMPANY,
Defendant-Counter-Claimant-Appellant.
- - - - - - - - - - - - - - - - - - - -x
Before: JACOBS, LIVINGSTON, Circuit Judges, RAKOFF,
District Judge.*
Defendant First Mutual Transportation Assurance Company appeals from
the judgment of the United States District Court for the Southern District of New
The Honorable Jed S. Rakoff, United States District Court for the
*
Southern District of New York, sitting by designation.
York (Daniels, J.), awarding declaratory judgment in favor of plaintiff Infrassure,
Ltd., a reinsurance company. Affirmed.
ALBERT L. WELLS, JR., Covington &
Burling LLP, New York, NY (with Jennifer
O. Farina and David B. Goodwin on the
brief), for Appellant.
WILLIAM B. ADAMS, Quinn Emanuel
Urquhart & Sullivan, LLP, New York, NY
(with Jane M. Byrne on the brief), for
Appellee.
DENNIS JACOBS, Circuit Judge:
Parties to a facultative reinsurance certificate differ as to which of two
arbitration provisions govern the resolution of a dispute that has arisen between
them. Arbitration under one provision, set out in the body of the form, states
that “[a]ll arbitrators will be disinterested active or former officers of insurance or
reinsurance companies.” J. App’x at 150. Arbitration under the other provision,
introduced by endorsement, does not limit the arbitrators to current or former
insurance executives. This difference is evidently of considerable significance to
the parties.
First Mutual Transportation Assurance Company (“First Mutual”), the
ceding company, sought to compel its reinsurer, Infrassure, Ltd., to submit to
arbitration governed by the endorsement. Infrassure initiated this lawsuit in the
United States District Court for the Southern District of New York, seeking a
declaratory judgment that the arbitration provision contained in the body of the
form is controlling. First Mutual’s counterclaims requested the district court to
find that the endorsement governs the dispute, and to compel Infrassure to
submit to arbitration under that provision. The district court held that the form’s
procedures governed, granted declaratory relief in favor of Infrassure, dismissed
First Mutual’s counterclaims, and denied the request to compel arbitration.
2
DISCUSSION
Because we construe the district court’s declaratory judgment as a grant of
summary judgment, see Garanti Finansal Kiralama A.S. v. Aqua Marine &
Trading Inc., 697 F.3d 59, 63-64 (2d Cir. 2012), we review the district court’s
interpretation of the reinsurance certificate at issue here de novo, see Dormitory
Auth. of N.Y. v. Cont’l Cas. Com, 756 F.3d 166, 169 (2d Cir. 2014); Bank of N.Y.
Tr. Co. v. Franklin Advisers, Inc., 726 F.3d 269, 275 (2d Cir. 2013).
The printed body of the certificate, after setting out the declarations and
other standard provisions, contains a provision that requires “any dispute arising
out of the interpretation, performance or breach of this Certificate” to be
submitted to arbitration pursuant to a specified set of rules. J. App’x at 150.
Infrassure, the reinsurer, stands upon these terms.
First Mutual, the ceding company, contends that the other provision,
contained in Endorsement No. 2, must control. This provision also purports to
cover “[a]ny dispute, controversy or claim arising out of or relating to this
agreement or the breach, termination or invalidity thereof,” and prescribes
separate rules governing the arbitration. J. App’x at 160. The endorsement is
headed “LONDON ARBITRATION AND GOVERNING LAW (UK AND
BERMUDA INSURERS ONLY).” J. App’x at 160 (bolding in original). Since
Infrassure, a Swiss company, is neither a United Kingdom insurer nor a Bermuda
insurer, it argues that the endorsement is inapplicable on its face.
The salient argument of First Mutual is that the tension between the two
competing arbitration clauses is resolved by Paragraph AA (the “Titles Clause”),
which states: “The several titles of the various paragraphs of this Certificate (and
endorsements . . . attached hereto) are inserted solely for convenience of
reference and will not be deemed in any way to limit or affect the provisions to
which they relate.” J. App’x at 153. First Mutual argues that the parenthetical
“(UK AND BERMUDA INSURERS ONLY)” is part of the endorsement’s title,
and by operation of the Titles Clause, does not limit the endorsement to insurers
of those countries.
3
This is a thin argument, but it requires us to construe wording that
apparently has not been construed before, and that is in a contract that may share
features with other standard forms and endorsements. Hence, this opinion.
We conclude that the contract is unambiguous. The arbitration clause in
the body of the certificate controls: it is not displaced by the endorsement because
the endorsement is expressly limited to UK and Bermuda insurers.1 That
limitation is not part of the title itself, though it shares the same line and bolded
format. The purpose of the Titles Clause is not to strip away an express
indication as to the context in which a particular provision is operative, but to
ensure that the text of a provision is not discounted or altered by the words of its
heading.
Our reading of the facultative certificate is easily confirmed by consulting
other provisions. In some instances, critical clauses would have no meaning at all
if the Titles Clause were mechanically applied. For example, Paragraph 14 of the
Certificate reads in its entirety:
14. Program Policy Limits
Various as per the attached schedule.
J. App’x at 144 (bolding and underlining in original). If we were to apply the
Titles Clause to this paragraph in the same way that First Mutual asks us to apply
it to Endorsement No. 2, we would be left with the cryptic provision, “Various as
per the attached schedule.” The heading “Program Policy Limits” instructs the
reader that the phrase “Various as per the attached schedule” refers to program
policy limits, as opposed to some other concern of the reinsurance agreement.
Other provisions beside Paragraph 14 likewise would be rendered meaningless if
the Titles Clause were applied in the way pressed by First Mutual.
1
Given this conclusion, we also find that the district court correctly
dismissed First Mutual’s counterclaims and properly declined to compel
arbitration under the endorsement’s arbitral provisions.
4
Infrassure argues that even if the endorsement is held to control, certain
provisions of the arbitration clause in the body of the certificate should
nevertheless be enforced, such as the requirement that all arbitrators be former or
current insurance executives. We need not reach this argument, which is just as
well for Infrassure.
CONCLUSION
For the foregoing reasons, and finding no merit in the appellant’s other
arguments, we AFFIRM the judgment of the district court.
5