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Charter Oak Oil Co., Inc. v. Applied Underwriters, Inc.

United States District Court, D. Connecticut

February 26, 2018

CHARTER OAK OIL CO., INC. d/b/a AIELLO HOME SERVICES, Plaintiff,
v.
APPLIED UNDERWRITERS, INC., et al., Defendants.

          RULING AND ORDER

          Stefan R. Underhill United States District Judge

         Charter Oak Oil Co., d/b/a Aiello Home Services (“Aiello”), has alleged that its workers' compensation insurer, Applied Underwriters, Inc. (“Applied”) and certain of Applied's affiliates, are liable for various violations of Connecticut insurance, unfair trade practice, and securities laws. Aiello's allegations include claims against Applied Underwriters Captive Risk Assurance Company, Inc. (“AUCRAC”), an Applied affiliate with whom Aiello entered into a Reinsurance Participation Agreement (the “RPA”). The RPA contains a forum selection clause providing that “ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF, RELATING TO OR BASED UPON THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY” must be brought in Nebraska (the “Forum Selection Clause”). All of the defendants moved to dismiss the complaint on forum non conveniens grounds, or, in the alternative, to transfer the case to the United States District Court for the District of Nebraska, arguing that the Forum Selection Clause applied to all claims by Aiello. Doc. # 13. I denied the defendants' motion, holding that (1) the Forum Selection Clause did not bind Aiello in disputes against any defendant other than AUCRAC, (2) the Forum Selection Clause did not apply to the specific claims brought by Aiello against AUCRAC, and that, (3) even if the Forum Selection Clause did apply to claims by Aiello against AUCRAC (or any other defendant), the Forum Selection Clause was unenforceable under both Nebraska and federal law. Doc. # 21. AUCRAC has now moved for reconsideration of my ruling, only with respect to Aiello's claims against AUCRAC itself, and accordingly, has also moved to sever Aiello's claims against AUCRAC, for transfer of only those claims to Nebraska. Doc. # 23.[1] I grant the motion for reconsideration in order to clarify aspects of my prior ruling, but, for the reasons stated below, deny the requested relief. I thus adhere to my earlier decision denying transfer of any of Aiello's claims.

         I. Background

         I assume all parties' familiarity with the relevant facts and procedural history, and briefly summarize only those parts necessary to explain this order.

         The underlying dispute in this case concerns a novel insurance product known as “EquityComp” provided by Applied and its affiliates, including AUCRAC.[2] Applied marketed the EquityComp program to businesses throughout Connecticut as a workers' compensation insurance plan that would deliver substantial cost savings to insureds as long as workplace injury claims were minimized. Compl. at ¶ 10. On November 14, 2013, Aiello requested to purchase EquityComp insurance from Applied. Ex. C, Notice of Removal at 13, Doc. # 1-3. Aiello acknowledged in its request that issuance to Aiello of an EquityComp policy was contingent on Aiello executing an RPA. Id. Aiello executed the RPA with AUCRAC that same day, id. at 18, and another Applied affiliate, authorized to do business in Connecticut, issued EquityComp insurance to Aiello, effective the next day, November 15, 2013, Ex. D, Notice of Removal at 2, Doc. # 1-4.

         The RPA between Aiello and AUCRAC contained the Forum Selection Clause, which stated:

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.

Ex. C, Notice of Removal at 16-17.

         Following Aiello's decision not to renew its EquityComp coverage in November 2016, the parties began to dispute whether Aiello owed additional money to Applied. Jezouit Aff. at ¶¶ 15-20, Doc. # 16-1. On March 28, 2017, Aiello filed this suit in Connecticut Superior Court, alleging that Applied and its affiliates had violated the Connecticut Unfair Insurance Practices Act (CUIPA), Conn. Gen. Stat § 38a-816, the Connecticut Unfair Trade Practices Act (CUTPA), Conn. Gen. Stat. § 42-110g, and the Connecticut Uniform Securities Act, Conn. Gen. Stat. § 36b-29. See Compl. at ¶¶ 65-93. Aiello also sought a declaratory judgment that the unpaid premiums and capital deposit demanded by Applied were not based upon any premium calculation factors on file with the Connecticut Department of Insurance, and that the disputed premiums were therefore unenforceable under Connecticut law. Id. at ¶¶ 55-64. On April 26, 2017, the defendants removed this action to this court. Also on April 26, 2017, AUCRAC filed a separate action in Nebraska state court, alleging, among other things, that Aiello had breached the RPA (the “Nebraska Action”).[3] Ex. B, Mot. to Dismiss, Doc. # 13-4. On June 5, 2017, the defendants moved to dismiss or transfer the complaint to Nebraska, pursuant to the Forum Selection Clause in the RPA. Doc. # 13.

         On August 7, 2017, I held a hearing and denied the defendants' motion to dismiss or transfer the present action to Nebraska, Doc. # 20, and on September 12, 2017, I issued my written decision explaining the basis for my ruling, Doc. # 21. I explained that (1) the Forum Selection Clause did not apply to Aiello in its relationships with any of the defendants other than AUCRAC; (2) the Forum Selection Clause did not apply to Aiello's claims against AUCRAC (or any of the other defendants); (3) Nebraska law did not permit enforcement of the Forum Selection Clause; and (4) federal law did not permit enforcement of the Forum Selection Clause. Following my ruling, AUCRAC moved for reconsideration. Doc. # 23. I now grant the motion for reconsideration, in order to clarify the weight and justifications for of each of my previous findings (as pertain to AUCRAC) but, for the reasons that follow, deny the relief AUCRAC requests.

         II. Legal Standard

         The standard for granting motions for reconsideration is strict. Motions for reconsideration “will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked-matters, in other words, that might reasonably be expected to alter the conclusion reached by the court.” Shrader v. CSX Transp., 70 F.3d 255, 257 (2d Cir. 1995). Motions for reconsideration will not be granted where the party merely seeks to relitigate an issue that has already been decided. Id. The three major grounds for granting a motion for reconsideration in the Second Circuit are: (1) an intervening change of controlling law, (2) the availability of new evidence, or (3) the need to correct a clear error or prevent manifest injustice. Virgin Atl. Airways v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992) (citing 18 Charles A. Wright, et al., Federal Practice & Procedure § 4478).

         AUCRAC does not point to any intervening changes in controlling law or newly available evidence, so I consider here only whether severance and transfer of the claims against AUCRAC is necessary to correct clear error or prevent manifest injustice. AUCRAC argues that transfer to Nebraska of the claims against it is clearly required by the Forum Selection Clause. To determine whether the Forum Selection Clause is enforceable here, I must evaluate (i) whether the clause was reasonably communicated to the party resisting enforcement; (ii) whether the clause is mandatory or permissive; (iii) whether the claims and parties involved are subject to the clause; and (iv) assuming that the preceding factors have been satisfied, whether the resisting party can overcome the resultant presumption of enforceability by “making a sufficiently strong showing that enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching.” Martinez v. Bloomberg LP, 740 F.3d 211, 217 (2d Cir. 2014) (citing Phillips v. Audio Active Ltd., 494 F.3d 378, 383 (2d Cir. 2007)).

         III. ...


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