Opinion
00 Civ. 3277 (GEL)
June 12, 2001
Michael S. Davis, Esq., Zeichner, Ellman Krause, LLP, New York, N.Y.for Petitioner National Union Fire Insurance Company of Pittsburgh, PA
Fred Wahrlich, Esq., Floyd Isgur Rios Wahrlich, P.C., Houston, TX for Respondent Younger Brothers, Inc.
OPINION AND ORDER
Petitioner National Union Fire Insurance Company of Pittsburgh, PA ("National Union") is a member of the American International Group. Inc. "AIG"), an insurance conglomerate. Respondent Younger Brothers, Inc. ("Younger Brothers") is a trucking company headquartered in Texas that is an interstate carrier of goods and is licensed to operate throughout the United States. Between 1994 and 1996, National Union provided workers' compensation insurance coverage to Younger Brothers. A dispute between the parties arose concerning Younger Brothers' purported obligation to make certain payments. National Union claims that this dispute is governed by an arbitration clause contained within an indemnity agreement that governs the parties' business relationship. The action is before this Court on Younger Brothers' motion to dismiss and National Union's cross motion to compel arbitration and appoint an arbitrator and umpire. After careful consideration of the parties' submissions, Younger Brothers' motion to dismiss is denied, and National Union's cross-motion to compel arbitration is granted in part and denied in part.
Facts
The following facts are drawn from the information contained in the letter of April 27, 2000, from counsel for Younger Brothers to counsel for AIG. (See Giacobbe Decl. Ex. B.) This letter is the only evidence introduced by the parties concerning the nature of the underlying dispute in this action, and was apparently written in response to a demand letter from counsel for AIG dated April 7, 2000. Neither party has submitted the April 7, 2000 letter or the other documents referred to in the April 27, 2000 letter, other than the Indemnity Agreement itself.
Between July 1994 and July 1996, National Union provided workers' compensation insurance and other related services to Younger Brothers. This insurance coverage was governed by the terms of a Deductible Loss Reimbursement Indemnity Agreement, dated July 1, 1994 (the "Indemnity Agreement"), pursuant to which Younger Brothers agreed "to reimburse [National Union] for the deductible and/or loss reimbursement portion of all losses" as calculated by formulas contained within the agreement. (See Giacobbe Decl. Ex. A at 1.) It is undisputed that the Indemnity Agreement contemplated that the parties would enter into one or more policies whose terms would dictate the specific premiums and deductibles that would govern National Union's provision of insurance coverage and other services. Specifically, the Indemnity
Exhibit A to the Declaration of Anthony I. Giacobbe is a copy of the Indemnity Agreement. A second agreement, dated July 1, 1995, is attached as Exhibit B to National Union's arbitration demand. (See Giacobbe Decl. Ex. D.) The provisions at issue here are the same in both agreements. For the sake of convenience, we quote and cite from the 1994 Indemnity Agreement.
Agreement expressly states that
[National Union will issue the insurance policies listed in the Schedule(s). Such policies and all renewal addendums are governed by this Agreement and are referred to herein as the "Policy(ies)". This Agreement, together with the Schedule(s) and Policy(ies), constitutes the Program. The Program is a uniquely negotiated, single contract and no part of the program would have been issued without the other parts being in force.
(Giacobbe Decl. Ex. A. Art. I.)
Evidently, the parties agreed that the Indemnity Agreement would act as an umbrella agreement and that its terms would supplement the terms of any specific coverage and other services purchased by Younger Brothers. The schedules attached to the Indemnity Agreement enumerated policies and other agreements which, along with it, formed the "program". The program consisted of a workers' compensation policy for $1,000,000 with a deductible of $250,000, a claims-handling agreement whereby National Union agreed to manage all workers' compensation claims filed against Younger Brothers, and a letter of credit in the amount of $460,000 to secure any outstanding reimbursements owed by Younger Brothers. (See id. Ex. A.) The Indemnity Agreement also included an arbitration clause, which provides in relevant part
All disputes or differences arising out of this Agreement shall be submitted to the decision of two (2) Arbitrators, one to be chosen by each party, and in the event the Arbitrators fail to agree to the decision of an Umpire to be chosen by the Arbitrators.... If either of the parties fails to appoint an Arbitrator within one (1) month after being required by the other party in writing to do so, or if the Arbitrators foil to appoint an Umpire within one (1) month of a request in writing by either of them to do so, such Arbitrator or Umpire, as the case may be, shall be [at] the request of either party appointed by a Justice of the Supreme Court of the State of New York.
The Arbitrition proceedings shall take place in New York, New York. The applicant shall submit its case within one (1) month after the appointment of the Court of Arbitration, and the respondent shall submit his reply within one (1) month after receipt of a claim.
(Id., Art. VI.)
There is no dispute that Younger Brothers consecutively purchased two workers' compensation policies for the periods July 1, 1994 to July 1, 1995, and July 1, 1995 to July 1, 1996, entered into the claims-handling agreement, and provided the requisite letter of credit, as set forth in the Indemnity Agreement. (See id. Ex. B at 1.) It appears, however, that at some point prior to July 1, 1996, Younger Brothers became concerned with AIG's "sporadic" reporting, its failure to obtain settlement authority, and its apparent "neglect" of Younger Brothers' claims. (See id. at 2.) As a result, it did not renew its coverage with AIG and retained an independent adjustor to settle claims that Younger Brothers felt had been mismanaged by AIG. Based upon the findings of its independent adjustor. Younger Brothers estimates that it has suffered losses in excess of $675,000, some portion of which it directly attributes to indemnity overpayments. (See id. at 1-2.)
There is also a dispute concerning the amounts owed under the Indemnity Agreement, which seems to have been brewing since December 1997. (See id. at 2.) Although the nature of the dispute is not absolutely clear from the documents submitted. Younger Brothers has implied that it resulted from the purported failure of National Union to provide adequate billing invoices. Discussions between the parties failed to resolve the situation, and on April 7, 2000, counsel for National Union apparently sent a letter demanding payment of $926,072.00, and threatening to draw on the letter of credit if Younger Brothers did not meet its demand by April 27, 2000. (See id. at l.) Younger Brothers responded on April 27, contesting the amount claimed and setting forth its own damages resulting from AIG's purported mishandling of certain of its claims. Having failed to settle this dispute amicably, the present action to compel arbitration followed.
Procedural History
The procedural posture of this action is somewhat unconventional. On April 28, 2000, one day after Younger Brothers responded to its demand letter, National Union filed a petition to compel arbitration in the Southern District of New York, alleging that the dispute was governed by the Indemnity Agreements arbitration provision. It is undisputed that prior to filing its petition to compel arbitration, National Union neither served a formal demand for arbitration upon, nor received any explicit refusal to arbitrate the pending dispute from, Younger Brothers.
National Union has conceded that it tiled its petition to compel arbitration in this district as a preemptive strike designed to preclude Younger Brothers from filing suit in Texas. (Tr. at 9.) Consequently, National Union neither served the petition upon Younger Brothers within 120 days of its tiling, as required under Rule 4(m) of the Federal Rules of Civil Procedure, nor informed Younger Brothers of the pending proceeding before this Court. Rather, National Union continued to discuss settlement with Younger Brothers, and even managed to extract a "standstill agreement under which the parties agreed to refrain from commencing formal legal proceedings during the pendency of negotiations. On December 26, 2000, petitioner informed the Court of the parties' standstill agreement, and requested an enlargement of time within which to serve the petition in light of the parties ongoing negotiations. On January 30, 2001, the Court granted petitioner's motion, and, in light of the petitioner's representations, extended its time to serve
"Tr" refers to the transcript of the hearing before this court held on March 16, 2001.
until May 1, 2001. (See Giacobbe Decl. Ex. E.)
Negotiations between the parties subsequently reached an impasse, resulting in National Union's serving its formal arbitration demand on Younger Brothers on February 21, 2001. (See Giacobbe Decl. Ex. D.) Although it does not appear that Younger Brothers formally refused the demand, on February 27, 2001. National Union served its previously filed petition to compel upon Younger Brothers, along with an order to show cause seeking a temporary restraining order barring the commencement of litigation in Texas. Younger Brothers states that it only learned of the present action after being served with the petition and order to show cause since it did not actually receive National Union's arbitration demand until March 1, 2001. (See Resp. Mot. Dis. ¶ 7; Tr. at 8.)
A hearing on National Union's order to show cause was held before this Court on March 2001. At that hearing, Younger Brothers expressly conceded that it was precluded from pursuing an action is Texas since National Union had filed the present action first. (Tr. at 12, 14-15.) Consequently, Younger Brothers argued that a temporary retraining order was unnecessary, since it was preparing a motion to dismiss and did not intend to bring an action in Texas unless and until the pending petition was dismissed. Based on these representations, the Court denied National Union's motion for a temporary restraining order. (id.) On April 17, 2001, Younger Brothers filed its anticipated motion to dismiss. On April 30, 2001, National Union filed its opposition papers along with a cross-motion to compel arbitration and to appoint an umpire and an arbitrator. These motions are presently before the Court.
Discussion
I. Personal Jurisdiction
Respondent Younger Brothers moves to dismiss the petition both for lack of jurisdiction and for failure to state a claim. Since this Court may only resolve the merits of the present petition if it has the authority do so, we first turn to the respondent's jurisdictional argument.
Younger Brothers has also moved to dismiss under Fed.R.Civ.P. 12(b)(3) for improper venue. Consent to venue follows from consent to personal jurisdiction. See Doctor's Assocs., Inc. v. Stuart. 85 F.3d 975. 983 (2d Cir. 1996) ("A party who agrees to arbitrate in a particular jurisdiction consents not only to personal jurisdiction but also to venue of courts within that jurisdiction.). Since, as discussed below, Younger Brothers has consented to personal jurisdiction in this case, its motion to dismiss for improper venue is denied.
This Court may obtain personal jurisdiction over the respondent through consent, express or implied, even in the absence of "minimum contacts" with this forum. Such consent may be inferred where an arbitration clause stipulates that the proceeding will take place in New York, since "by agreeing to arbitrate in New York, a party makes himself as amenable to suit as if he were physically present in New York." Farr Co. v. Cia. Intercontinental de Navigacion de Cuba, S.A., 243 F.2d 342. 347 (2d Cir. 1957). Accord, Merrill Lynch, Pierce, Fenner Smith, Inc. v. Lecopulos, 553 F.2d 842. 844 (2d Cir. 1977): Island Territory of Curacao v. Solitron Devices, Inc., 489 F.2d 1313. 1317 (2d Cir. 1973): Doctor's Assocs., Inc. v. Stuart, 85 F.3d 975, 978 (2d Cir. 1996). The arbitration clause at issue in this action unambiguously provides that
Younger Brothers' suggestion that implying consent to jurisdiction in this manner requires the wholesale rejection of "decades of federal due process and long-arm jurisdiction jurisprudence" is completely devoid of merit. The Federal Arbitration Act provides in relevant part that the "hearing and proceedings, under [an arbitration] agreement, shall be within the district in which the petition for an order directing such arbitration is filed." 9 U.S.C. § 4. As the Second Circuit has observed, common sense and ordinary principles of contract interpretation dictate that
When a party agrees "to arbitrate in [a state], where the [Federal Arbitration Act] makes such agreements specifically enforceable, [that party] must be deemed to have consented to the jurisdiction of the court that could compel the arbitration proceeding in [that state]. To hold otherwise would render the arbitration clause a nullity.Doctor's Assocs., 85 F.3d at 979 (quoting Victory Transp. Inc. v. Comisaria General de Abastecimientos y Transportes. 336 F.2d 354. 363 (2d Cir. 1964)). Thus, personal jurisdiction does not follow from inferring an independent source of jurisdiction in the Federal Arbitration Act, but from the consent reasonably inferred from the language of the arbitration clause itself.
"[t]he arbitration proceedings shall take place in New York, New York." (Giacobbe Decl. Ex. A, Art. VI.) Younger Brothers does not dispute the validity of the clause, and cannot contest its plain meaning. Therefore, there should be no question that it is subject to the personal jurisdiction of this court.
Younger Brothers nevertheless moves to dismiss for lack of personal jurisdiction on the grounds that it lacks "minimum contacts" with the Southern District of New York. In so arguing, it relies on federal cases purportedly standing for the proposition that such implied consent to personal jurisdiction is vitiated where the forum specified in the arbitration clause bears "little relation to the underlying contract and the parties are of unequal bargaining power." See Resp. Rep. Mem. ¶ 6); see also Unionmutual Stock Life Ins. Co. of America v. Beneficial Life Ins. Co., 774 F.2d 524, 527 (1st Cir. 1985): Leasewell, Ltd. v. Jake Shelton Ford. Inc., 423 F. Supp. 1011, 1015-17 (S.D.W. Va. 1976). Younger Brothers, however, conspicuously fails to cite a single Second Circuit or Southern District Case that has adopted the purported exception upon which it relies. Moreover, the cases upon which it does rely do not establish such an exception. They merely stand for the proposition that courts should not enforce an implied consent to jurisdiction flowing front an arbitration agreement which is unfair or unreasonable. See Unionmutual, 774 F.2d at 527. This rule does not vitiate consent flowing from an otherwise valid arbitration clause.
This is a corollary to the general rule that forum selection clauses, of which arbitration clauses are a species, are unenforceable if they are found to be unreasonable and unfair. See M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (cited in Leasewell); Brooke Group Ltd. v. JCH Syndicate 488, 87 N.Y.2d 530, 534 (1996) (adopting theBremen rule). Such unfairness rarely obtains in circumstances involving contracts negotiated by sophisticated business parties in an arms-length bargain. See M/S Bremen, 407 U.S. 1 (applying federal maritime law);Brooke, 87 N.Y.2d 530 (applying New York law).
Here, the respondent has failed to mount a credible challenge to the enforceability of the arbitration clause. While Younger Brothers suggests that it is a "small trucking company" and thus is of unequal bargaining power with AIG. a national insurance conglomerate, and National Union, one if its members (see Resp. Mem. Rep. ¶ 6), this is clearly insufficient to invalidate an arbitration clause. Both parties are sophisticated business parties who, by the terms of the Indemnity Agreement itself, entered into a "uniquely negotiated" contract for the provision of workers' compensation insurance, negotiated at arms-length with representation by counsel. Consequently, the arbitration clause is valid and enforceable and the consent to the jurisdiction of this court flows front it.
II. Arbitrability
Younger Brothers has also moved to dismiss on the basis that National Union has failed to state a claim, and National Union has cross-moved for judgment on the pleadings. As both
National Union's motion is characterized as an application "For an Order Compelling Arbitration" but fails to indicate under what provision of the Federal Rules of Civil Procedure it is brought. Because the motion addresses the merits of the petition, we construe it to be a motion for judgment on the pleadings pursuant to FED. R. CR. P. 12(c).
parties' motions directly address the merits of National Union's petition to compel arbitration, they will be addressed together.
Section 2 of the Federal Arbitration Act provides that
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.9 U.S.C. § 2. Disputes over the scope of arbitration agreements are resolved using ordinary principles of contract interpretation. See Collins Aikman Prods. Co. v. Bldg. Systems. Inc., 58 F.3d 16, 19 (2d Cir. 1995). In light of the strong public policy in favor of enforcing agreements to arbitrate embodied within the FAA, the Supreme Court instructs us that any doubts concerning the scope of arbitration should be resolved in favor of arbitration. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
Younger Brothers primarily moves for dismissal on the grounds that the dispute between the parties does not "arise out of" the Indemnity Agreement. In support of its argument, Younger Brothers points to the purported absence of any dispute over either the "interpretation of the Indemnity Agreement" (because the Petition fails to identify an v provision of the agreement whose interpretation is in dispute) or the "amount of National Union's claim" (because National Union has demanded a sum certain). (Resp. Mot. Dis. ¶ 14.) Rather, Younger Brothers claims that the only dispute concerns "the amount of offset National Union owes Younger Brothers for claims mishandling and reimbursement obligations under the BOA Policy." (id.) These arguments are singularly unconvincing.
In its April 27, 2000, response to National Union's demand letter, Younger Brothers vigorously contested the amount purportedly due under the Indemnity Agreement, professing to be "shocked by the demand" in light of the fact that the most previously claimed was $297,370.87 — an amount which Younger Brothers also disputed. (Giacobbe Decl. Ex. B at 2.) Based on its clear refusal to accept National Union's demand, Younger Brothers' contention that there is no dispute concerning the amount owed by it appears disingenuous. Moreover, to claim, as Younger Brothers appears to, that there is no dispute about the amount claimed merely because National Union has demanded a specific amount borders on incoherence. Whatever the source of Younger Brothers' claimed offsets. National Union has demanded a sum it claims is due under the Agreement, and Younger Brothers has refused to pay it. National Union's demand for payment is thus disputed, and under the Agreement that dispute is to be resolved in an arbitration proceeding.
Nor does it matter that the petition does not explicitly identify which provision of the Indemnity Agreement is the source of the parties' disagreement. The arbitration provision is broadly drafted to encompass "all disputes""arising out of" the Indemnity Agreement. (See id. Ex. A. Art. VI (emphasis added).) Nothing in this language supports the respondent's suggestion that legal disputes fall within the scope of arbitration, but that purely factual ones do not. While differing interpretations of the parties' respective obligations unquestionably "arise out of" the agreement, this hardly exhausts the range of possibilities. Even if the only remaining dispute between the parties concerns differing calculations of reimbursement payments, there is no reasonable basis for concluding that it is not a dispute arising out of the Indemnity Agreement.
Younger Brothers' allegation that it has suffered offsetting damages under other agreements entered by the parties does not undermine this conclusion. First, most, if not all, of the offsetting claims that Younger Brothers raised in its letter of April 27, 2000, themselves appear to be governed by the arbitration provision. For example, by Younger Brothers' own admission, some identifiable portion of its offsetting damages, estimated at over $675,000, is purportedly the result of excess indemnity payments resulting from National Union's mismanagement of its claims. (See id. Ex. B at 1-2.) While Younger Brothers presumably attributes those damages to the petitioner's supposed breach of its obligations under the claims-handling agreement, the fact that this breach might have resulted in overpayments under the Indemnity Agreement directly implicates that agreement as well. Reading the arbitration provision broadly, as we must, such disputed overpayments "arise out of" the Indemnity Agreement and are directly governed by the arbitration provision.
Even if this conclusion is incorrect and this dispute does not arise out of the Indemnity Agreement itself, all damages arising out of the claims-handling agreement also appear to be covered by the arbitration provision, since the terms of the claims-handling agreement are expressly incorporated by reference into the Indemnity Agreement. The Indemnity Agreement plainly contemplated a comprehensive program of workers' compensation insurance that would include a number of specific agreements. As a result, it explicitly provided that
[National Union] will issue the insurance policies listed in the Schedule(s). Such policies and all renewal addendums are governed by this Agreement and are referred to herein as the "Policy(ies)". This Agreement. together with the Schedule(s) and Policy(ies), constitutes the Program. The Program is a uniquely negotiated, single contract and no part of the program would have been issued without the other parts being in force.
(Id. Ex. A. Art. I.) The claims-handling agreement was expressly listed in the "Schedules" attached to the Indemnity Agreement, and thus part of a "uniquely negotiated, single contract" containing the arbitration clause. (Id.) In light of this explicit language, disputes over the damages resulting from National Union's mishandling of Younger Brothers' claims are likely subject to arbitration as well. For the same reason, any disputes concerning premium payments under the various policies listed in the schedules attached to the Indemnity Agreement are also likely' subject to arbitration.
The one set of claims that Younger Brothers might be correct in asserting would not be subject to the arbitration provision relate to the general liability, or BOA, policy. While in its letter of April 27, 2000, Younger Brothers scented to indicate that the BOA policy at issue was part of the "workers' compensation program" that it obtained through National Union (id. Ex. B at l), this policy was not contained in any of the schedules attached to the Indemnity Agreement, and appears to relate to a subject matter other than workers' compensation.
Regardless of whether some of Younger Brothers' offsetting claims more likely fall under the arbitration provision than others, there is no basis for concluding that National Union's claim does not "arise out of" the Indemnity Agreement. As National Union correctly points out, the various "offsets" claimed by' Younger Brothers in its letter of April 27, 2000, are evidently offered as defenses to the amount that the petitioner has demanded under the Indemnity Agreement. (See Pet. Mem. Supp. at 9-10.) Logic dictates that any defenses that a party asserts against a claim cannot alter whether the claim itself "arises out of" a particular agreement. Cf. Lupo v. Human Affairs Int'l. Inc., 28 F.3d 269, 272 (2d Cir. 1994) (interpreting "arises under" for the purpose of federal question jurisdiction). The petition for arbitration presently before this court involves a demand for reimbursement in the amount of $926,072, allegedly due pursuant to the terms of the Indemnity Agreement. Respondent's refusal to pay this amount creates a dispute
that is undeniably subject to arbitration. The fact that Younger Brothers may have its own offsetting claims does not alter this. Younger Brothers may choose to file suit for any damages it claims it is owed that are not subject to the arbitration clause, or for the sake of economy it may choose to submit those claims to arbitration as well. Whatever tactics it may choose to pursue in this regard, however, cannot affect the arbitrability of the dispute over National Union's demand.
In the alternative, Younger Brothers characterizes as a "condition precedent" the provision in the arbitration clause stipulating that any party may' request the New York State Supreme Court to appoint an arbitrator "[i]f either of the parties fails to appoint an Arbitrator within (I) month after being required by the other party in writing to do so." (Giacobbe Decl. Ex. A, Art. VI.) Younger Brothers argues that because National Union filed its petition before serving an arbitration demand, it failed to allow the respondent to exhaust its one-month window purportedly required by the clause. This argument is equally unpersuasive.
The provision highlighted by respondent cannot plausibly be read as a condition precedent. The relevant portion of the arbitration clause provides that
All disputes or differences arising out of this Agreement shall be submitted to the decision of two (2) Arbitrators, one to be chosen by each party, and in the event the Arbitrators fail to agree to the decision of an Umpire to be chosen by the Arbitrators.... If either of the parties fails to appoint an Arbitrator within one (1) month after being required by the other party in writing to do so, or if the Arbitrators fail to appoint an Umpire within one (1) month of a request in writing by either of them to do so, such Arbitrator or Umpire, as the case may be, shall be [at] the request of either party appointed by a Justice of the Supreme Court of the State of New York.
(Id.) The governing language unconditionally mandates that disputes arising out of the agreement "shall be submitted" to arbitration. (Id.) It then goes on to provide a procedural
mechanism for the appointment of arbitrators each side is to appoint an arbitrator, and should they fail to agree on a resolution an umpire chosen by the arbitrators is to make the final decision. Subsequent paragraphs also set out a briefing schedule for the submission of materials. Plainly, the provision permitting either party to request the New York State Supreme Court to appoint an arbitrator one month after the refusal by the other party to do so is properly read as part of the procedural mechanism for conducting the arbitration unconditionally required by the arbitration clause. To read it as a condition precedent would distort the plain meaning of the contractual language.
Even if the highlighted provision is properly read as a condition precedent, moreover, that condition has now been met. Over one month has elapsed service of the arbitration demand upon the respondent. Not only has the respondent failed to comply with its obligations under the arbitration provision, but it has also signaled its refusal to do by filing its motion to dismiss which explicitly contests the arbitrability of the underlying dispute.
This dispute underlying the pending petition to compel arbitration is thus subject to the arbitration provision in the Indemnity' Agreement, and respondent will be ordered to submit to arbitration.
III. Appointment of Arbitrator
This Court is not authorized, however, to provide one aspect of the relief sought by National Union, namely, the appointment of an arbitrator and/or umpire. The only relief that this court may provide under the Federal Arbitration Act is an "order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4. Any authority to appoint an arbitrator, therefore, must be found in the agreement itself. Here, the parties endowed the New York Supreme Court, and not this Court, with the authority to appoint an arbitrator in the event that one of the parties refused to do so. Courts are not authorized to "rewrite the
parties' agreement." Dean Witter Reynolds. Inc. v. Prouse, 831 F. Supp. 328, 331 (S.D.N Y 1993).
National Union insists that this extra-contractual remedy is necessitated by the imminent expiration of letters of credit executed by the parties on January 31, 2001, and due to expire on July 31, 2001. (See Giacobbe Decl Ex. H; Pet. Mem Supp. at 13.) It has not, however, provided any legal authority that permits such a remedy. National Union was aware of the provisions of the agreement and the letters of credit, and made its tactical decisions in light of the available remedies. National Union chose to file this suit in federal court rather than in the New York Supreme Court, and although it filed the suit over one year ago, it refrained from pursuing the case until February of this year. If National Union now faces the risk that letters of credit securing its present claim may expire prior to a decision being rendered in arbitration, it has created that risk itself, and nothing in the Federal Arbitration Act or the Indemnity Agreement authorizes this Court to respond to that risk by granting relief that the parties have reserved to the courts of New York. In any event, now that Younger Brothers has been ordered to submit to arbitration, it will undoubtedly prefer to appoint an arbitrator promptly, rather than to wait for National Union to commence proceedings to have one appointed. National Union will be able to expedite the proceedings by acquiescing in Younger Brothers' choice.
While National Union cites Keaty v. Freeport Indonesia, Inc., 503 F.2d 955 (5th Cir. 1974) (holding that an agreement conferring jurisdiction in one forum will not be interpreted as excluding jurisdiction elsewhere unless the agreement contains specific exclusionary language), this case is as inapposite as its relegation by petitioner to a footnote suggests.See Pet. Mem. Supp. at 13, n. 5). The provision permitting parties to request the New York State Supreme Court to appoint an arbitrator is not a jurisdictional provision at all. It merely provides a contractual remedy for a party's refusal to abide by the arbitration provision.
Conclusion
For the foregoing reasons, respondent's motion to dismiss is denied, petitioner's cross-motion to compel arbitration is granted, and petitioner's motion to appoint an arbitrator is denied.
SO ORDERED: