top of page
  • Lane Law

NOLA Landlord Says Insurers Can't Force $7M Hurricane Arb.

By Grace Dixon · Nov 30, 2022, 5:40 PM EST · Listen to article

The owner of a block of New Orleans luxury apartments and retail shops urged a Louisiana federal judge to deny a group of insurers' bid to arbitrate its $7 million claim related to Hurricane Ida damage, arguing that the companies can't force arbitration in New York. Belmont Commons LLC set down its marker on Tuesday, amid a dispute over repair bills stemming from the August 2021 hurricane that its nine U.S.-based insurers and two international insurers determined in February did not meet the landlord's coverage deductible. The domestic insurers' attempt to enforce a clause in the policies mandating arbitration of disputes in New York under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards attempts to skirt a Louisiana law mandating insurance claims for Louisiana property to be decided within the state, Belmont argued. "As insurers domiciled in the U.S., the defendants are not subject or parties to the convention, nor are they exempt from compliance with Louisiana law," the landlord told the court. "It is indisputable that the arbitration clause at issue in this case violates [Louisiana law] because it requires an insurance claim for property situated in Louisiana to be decided in another proceeding outside the state of Louisiana." According to an initial suit filed by Belmont against its nine domestic insurers in August, the insurers jointly refused to cover the costs of repairing damage to the roof, exterior, windows and interior of Belmont's French Quarter parking, retail and apartment space. The cost of repair, which a third-party administrator estimated to be less than $1 million, did not meet the policy's $1.4 million deductible, a notice sent to the insured in February shows. Belmont then filed a since-stayed suit only against the domestic insurers in Louisiana court in August, and simultaneously issued a demand for arbitration against all 11 of its insurers. The landlord told the court on Tuesday that the arbitration demand was simply filed to preserve rights under a 12-month deadline for legal action. Certain underwriters at Lloyd's of London, Lexington Insurance Co., Indian Harbor Insurance Co. and the remaining insurers alleged in an October complaint that Belmont is attempting to skirt the mandatory arbitration clause by misrepresenting its policy as 11 individual policies with each insurer. Instead, the insurers said, Belmont holds a single account policy to which all 11 insurance companies are subscribed, and as such, the dispute falls under the purview of the international arbitration scheme. Belmont rebuffed the insurers on Tuesday, arguing that each insurer issued a separate insurance contract, with separate service-of-suit clauses, charging separate premiums and creating separately maintained underwriting files. This distinction makes clear that the domestic insurer's policies are not tied to their international counterparts and are not subject to the conventions rules, the New Orleans property owner added. Instead, the policies are subject to Louisiana law, Belmont said, including Louisiana Revised Statute 22:868, which mandates that "no insurance contract delivered ... in this state ... shall contain any condition, stipulation or agreement ... requiring it be construed according to the laws of any other state." And insurers' attempts to lump all the policies together turns a blind eye to Louisiana federal courts' prior findings that policies with similar contract allocation endorsements are separate contracts between each individual insurer and policyholder, Belmont added. The insurers also stated in their complaint that Belmont's initial attempts to lock international insurers out of the dispute amounted to "artful pleadings," and that Belmont should be barred from contesting arbitration under the doctrine of equitable estoppel. In case the court decides that equitable estoppel applies in this dispute, Belmont urged a judge to hold off on ruling to allow for discovery, which it says may show whether the domestic and international insurers acted in an "intertwined, indeed identical" manner. Counsel for Belmont and for the insurers did not respond to requests for comment Wednesday. Belmont is represented by Michael D. Lane of Lane Law Group LLC. The insurers are represented by Phillip J. Rew, Bruce R. Hoefer Jr., Heather E. Reznik, Kyle M. Truxillo, Richard R. Stedman II and Tyfanni Lauve of Adams Hoefer Holwadel LLC. The case is Certain Underwriters at Lloyd's, London et al. v. Belmont Commons LLC et al., case number 2:22-cv-03874, in the U.S. District Court for the Eastern District of Louisiana. --Editing by Covey Son.


bottom of page