Dynamic Indust v. Walaa Coop Ins ( 2023 )

Case: 22-30033 Document: 00516675140 Page: 1 Date Filed: 03/13/2023
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
March 13, 2023
No. 22-30033 Lyle W. Cayce
Clerk
Dynamic Industries, Incorporated; Dynamic Industries
International, L.L.C.; Dynamic Industries Saudi Arabia,
Limited,
Plaintiffs—Appellants,
versus
Walaa Cooperative Insurance Company; Marsh &
McLennan Companies, Inc., doing business as Marsh, Inc.;
Marsh USA, Inc., doing business as Marsh USA Risk Services,
Defendants—Appellees.
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:21-CV-748
Before Stewart, Willett, and Oldham, Circuit Judges.
Per Curiam:*
The insureds in this diversity suit (together, Dynamic) assert that
their insurance brokers (together, Marsh) failed to procure adequate
insurance coverage from the insurer (Walaa), or in the alternative, that Walaa
*
This opinion is not designated for publication. See 5th Cir. R. 47.5.
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No. 22-30033
breached the insurance policy by declining coverage for an incident involving
undersea cable-damage in the Arabian Gulf. The district court granted
Marsh’s motion to dismiss the suit as untimely under Louisiana law. The
district court also granted Walaa’s motion to dismiss the suit for forum non
conveniens, reasoning that the insurance policy at issue designates Saudi
Arabia as the exclusive forum.
Dynamic appeals both dismissals. We AFFIRM.
First, as for Marsh, Louisiana law requires insureds who wish to sue
their insurance broker to do so “within one year from the date that the alleged
act, omission, or neglect . . . should have been discovered.” La. Rev. Stat.
§ 9:5606 (emphasis added). Here, Dynamic sued Marsh after Walaa denied
coverage. But Dynamic received a copy of the insurance policy from Walaa
almost 18 months earlier. When Dynamic received that copy, it also received
constructive notice of any deficiencies that the policy contained. Dynamic’s
claims against Marsh are therefore untimely.
Dynamic rejects constructive notice, arguing that the policy contains
“absolutely no indication that coverage would be denied.” But the denial was
Walaa’s choice, not Marsh’s. According to Dynamic, the policy either omits
coverage that Marsh is liable for failing to procure or offers coverage that
Walaa must honor. For purposes of asserting its in-the-alternative claims
against Marsh, then, Dynamic asks us to assume that the policy omitted
coverage. Yet if we must assume that omission, so must Dynamic. And any
such omission was present when Dynamic received the policy. Dynamic also
argues that it was “lulled into complacency” by Marsh’s “assurances”
regarding the policy’s coverage. This argument against constructive notice
fails because Dynamic does not allege any factual basis (beyond the policy’s
mere issuance) that would justify the trust that it claims to have placed in
Marsh.
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Second, as for Walaa, Dynamic argues that the policy’s choice of
Saudi Arabian law is unenforceable, under Louisiana law, if the policy was
“delivered” in Louisiana. La. Rev. Stat. § 22:868. Dynamic says that it
received delivery in Louisiana from Walaa’s agent—a Marsh affiliate known
as Marsh KSA. Walaa responds that Marsh KSA was actually Dynamic’s
agent, and that delivery therefore occurred in Saudi Arabia (where Walaa
delivered the policy to Marsh KSA). We agree with Walaa.
“Under Louisiana law, an insurance broker is generally deemed to be
the agent of the insured rather than the insurer.” Motors Ins. Co. v. Bud’s Boat
Rental, Inc., 917 F.2d 199, 204 (5th Cir. 1990) “A broker . . . who is asked by
the client to procure coverage wherever possible at the best price[] is not the
agent of the insurer[.]” Id. The general rule applies here. Marsh KSA
“approached” multiple insurers looking for a “competitive price” for
Dynamic. Marsh KSA was thus Dynamic’s agent.
Dynamic argues that delivery is a factual question that the district
court should have resolved for Dynamic. But our cases do not require the
district court to blindly accept all of Dynamic’s allegations concerning forum.
See, e.g., Sierra Frac Sand, L.L.C. v. CDE Glob. Ltd., 960 F.3d 200, 204 (5th
Cir. 2020) (at the dismissal stage, weighing “evidence” whether a forum-
selection clause was binding). Rather, after conducting an independent
“assessment of th[e] clause’s enforceability,” the district court properly
concluded that delivery occurred in Saudi Arabia. See Weber v. PACT XPP
Techs., AG, 811 F.3d 758, 768 (5th Cir. 2016). We have considered Dynamic’s
remaining arguments and find them unavailing.
Separately, the district court concluded that it lacked personal
jurisdiction over a Marsh affiliate known as Marsh & McLennan Companies,
Inc. (“Marsh Inc.). Yet the district court’s judgment dismissed Dynamic’s
claims against Marsh Inc. “with prejudice”—that is, on the merits. “[A]
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federal court generally may not rule on the merits of a case without first
determining that it has jurisdiction over . . . the parties (personal
jurisdiction).” Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S.
422, 430–31 (2007). Because the district court lacked personal jurisdiction, it
also lacked power to issue a merits judgment regarding Marsh Inc. Likewise,
the district court dismissed Dynamic’s claims against Walaa “with
prejudice.” That too was error, because “[a] forum non conveniens
dismissal” is not a judgment on the merits; it is instead a “determination that
the merits should be adjudicated elsewhere.” Id. at 432.
We therefore REVERSE dismissal as to Walaa Cooperative
Insurance Company and Marsh & McLennan Companies, Inc., and we
REMAND with instructions for the district court to enter judgment
dismissing Dynamic’s claims against Walaa Cooperative Insurance Company
and Marsh & McLennan Companies, Inc. “without prejudice.”
In all other respects, we AFFIRM.
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