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AGL Industries, Inc. v. Continental Indemnity Co.

United States District Court, D. Nebraska

July 19, 2018

AGL INDUSTRIES, INC., Plaintiff,
v.
CONTINENTAL INDEMNITY COMPANY, APPLIED UNDERWRITERS, INC., APPLIED UNDERWRITERS CAPTIVE RISK ASSURANCE COMPANY, INC., and APPLIED RISK SERVICES, INC., Defendants.

          MEMORANDUM AND ORDER

          PAMELA K. CHEN, UNITED STATES DISTRICT JUDGE.

         Plaintiff brings this action against Defendants alleging violations of New York business, insurance, and common law in connection with Defendants' Reinsurance Participation Agreement (“RPA”) insurance policy. Before the Court are Plaintiff's motion for a preliminary injunction and Defendants' motion to transfer venue. For the reasons stated herein, Plaintiff's preliminary injunction motion is denied and Defendants' transfer of venue motion is granted.

         BACKGROUND

         I. Relevant Facts

         In 2016, Plaintiff AGL Industries, Inc., a steel fabrication and erection business located in Maspeth, New York, enrolled in Defendants' EquityComp Program (the “Program”)[1] for the purpose of securing workers' compensation insurance. (Defendants Brief (“Defs.' Br.”), Dkt. 21, at 10-11; Affidavit of Dominick Lofaso, Dkt. 23-2, at ¶ 3.)[2] As part of the Program, Plaintiff entered into a “standard workers' compensation insurance policy” with Defendant Continental Indemnity Company (“Continental”).[3] (Defs.' Br., at 11.) In addition to the standard insurance policy, Plaintiff also entered into the RPA with Defendant Applied Underwriters Captive Risk Assurance Company, Inc. (“AUCRA”).[4], [5] (Id.) According to Defendants, Defendant Applied Underwriters, Inc. (“AUI”)[6] manages the Program and Defendant Applied Risk Services, Inc. (“ARS”)[7] acts as the billing agent for the Program. (Id.) The RPA contains a forum selection clause that states, in relevant part:

ANY LEGAL SUIT, ACTION, OR PROCEEDING ARISING OUT OF, RELATED TO OR BASED UPON THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MUST ONLY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF NEBRASKA, IN EACH CASE LOCATED IN OMAHA AND THE COUNTY OF DOUGLAS, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. . . . THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(RPA, Dkt. 22-2, at ¶ 13(B).) Moreover, the RPA contains a choice of law provision that states, “This Agreement shall be governed by and construed in accordance with the internal laws of the State of Nebraska without giving effect to any choice or conflict of law provision or rule (whether of the State of Nebraska or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of Nebraska.” (Id. at ¶ 13(A).) The Continental workers' compensation insurance policy issued to Plaintiff did not contain any similar forum selection clause or choice of law provision. (See 2016 Continental Policy, Dkt. 22-6.)

         Subsequently, on May 15, 2017, Plaintiff signed a Promissory Note (the “Note”) with AUI “and its affiliates and subsidiaries” regarding Plaintiff's unpaid insurance premiums. (Promissory Note, Dkt. 22-3.) The Note also contains a forum selection clause, stating that Plaintiff:

HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN DOUGLAS COUNTY, NEBRASKA, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS WITH REGARD TO ANY ACTION, CLAIM, DISPUTE OR PROCEEDING RELATING TO THIS NOTE.

(Id. at ¶ 18.) The Note also has a choice of law provision stating that “THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEBRASKA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.” (Id. at ¶ 16.)

         II. Procedural History

         On June 15, 2017, Defendant Continental issued a Notice of Cancellation (the “Notice”) to Plaintiff indicating that it was cancelling Plaintiff's workers' compensation insurance for nonpayment effective as of July 1, 2017. (Defs.' Br., at 18.) On June 29, 2017, Plaintiff filed the operative complaint in this action in New York state court seeking declaratory relief and asserting claims for breach of contract, violation of N.Y. Gen. Bus. Law § 349, and unjust enrichment. (Dkt. 1-2.) On July 5, 2017, Judge Allan B. Weiss of the New York Supreme Court, Queens County, issued an order to show cause staying the Notice and temporarily restraining and enjoining Defendants from cancelling Plaintiff's insurance policy. (Dkt. 1-5.) On July 13, 2017, Defendants removed the case to federal court and the temporary restraining order was continued pending this Court's decision on Plaintiff's motion for preliminary injunction. (Dkt. 1; Defs.' Br., at 19 & n.5.) Plaintiff's motion for preliminary injunction was fully briefed on September 1, 2017. (Dkts. 1, 9, 11.) While the parties were briefing that motion, Defendants sought, and were granted, permission to file a motion to transfer venue from this Court to Nebraska pursuant to the Note's and RPA's forum selection clauses. (Dkt. 8.) Defendants' motion to transfer venue was fully briefed on February 12, 2018. (Dkts. 20-25.)

         On June 27, 2018, Plaintiff filed a letter requesting an “urgent” conference. (Dkt. 29.) The letter stated that, on June 18, 2018, Plaintiff received a second Notice of Cancellation of its insurance coverage for non-payment and that said cancellation would be effective as of July 4, 2018. (Id.) The Court held a conference on July 2, 2018, at which it heard argument on Plaintiff's preliminary injunction motion and then extended the July 5, 2017 temporary restraining order until 12:01 a.m. on August 1, 2018. (7/2/18 Minute Entry.)

         DISCUSSION

         A. Plaintiff's Motion for ...


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