UNITED STATES

v.

WATER QUALITY INSURANCE SYNDICATE

ALTERNATIVE, BIFURCATE THE THIRD-PARTY CLAIMS”

This cause comes before the Court on “Third-Party Defendant’s Motion to Dismiss the Complaint, Compel Arbitration or, in the Alternative, Bifurcate the Third-Party Claims.” (Doc. 29). Defendant/Third-Party Plaintiff Water Quality Insurance Syndicate (“WQIS”) responded in opposition. (Doc. 33). After reviewing the motion, responses, relevant authorities, court file, and record, the Court finds as follows: This lawsuit involves a claim under the Oil Pollution Act of 1990 (“OPA”) brought by the United States of America against WQIS as guarantor of Bouchard Transportation Co., Inc., the operator of Barge 285.1 (Doc. 1). WQIS is an unincorporated association of marine insurers providing insurance of pollution risks that agreed to provide a financial responsibility guaranty for Bouchard as the owner of Barge 285. (Doc. 8, Ex. A). The OPA makes responsible parties and their guarantors liable for oil removal costs from vessels that pose a substantial threat of discharge of oil. 33 U.S.C. §§ 2702(a), 2716(f). To operate a barge to transport oil in United States’ waters, Bouchard was required to provide evidence of financial responsibility to meet its potential liabilities under OPA. See 33 U.S.C. § 2716; 33 C.F.R. Part 138. The United Kingdom Mutual Steam Ship Assurance Association Limited (“UK Club”) is a mutual protection and indemnity association organized and headquartered in the United Kingdom, that provides insurance coverage to shipowners with respect to certain maritime risks. The UK Club provides coverage to its members for oil pollution liabilities and, in this instance, provided marine protection and indemnity (“P&I”) insurance coverage to Bouchard and Barge 285. The UK Club provides its P&I insurance coverage to its members, including Bouchard, pursuant to a “Certificate of Entry.” (Doc. 29-2, Declaration of Thomas M. Rittweger (“Rittweger Decl.), Ex. 1). The UK Club’s Certificate of Entry

Tampa, Florida, and (2) Administrative Order 003-19, advising Bouchard that the Coast Guard determined that Barge 285 presented a substantial threat of discharge of crude oil, diesel, fuel, and hydrocarbons. Although Bouchard complied with some of the requirements of the order, it failed to comply with all the requirements and did not seek an extension. Given Bouchard’s unsatisfactory efforts to abate or mitigate the pollution threat, the Coast Guard issued a Notice of Federal Assumption and assumed responsibility under the Federal Water Pollution Control Act on June 16, 2019, for the removal of more than 147,960 gallons of petroleum products from Barge 285. because a substantial threat of discharge into an environmentally sensitive area of Tampa Bay, Florida existed. Per the Government, the oil removal actions took approximately three months to complete at a cost of $6,202,516.27, and, as of the filing of the complaint, Bouchard had not reimbursed the Coast Guard for such costs. On September 28, 2020, Bouchard filed for bankruptcy under Chapter 11, which was converted to a Chapter 7 proceeding, with liquidation of Bouchard’s assets occurring thereafter. The Coast Guard filed a proof of claim in Bouchard’s bankruptcy proceeding, but the claim has not been paid. Consequently, on September 16, 2022, the Government filed this lawsuit under OPA against WQIS, as the guarantor of Bouchard’s liabilities, seeking reimbursement for the oil pollution removal costs already paid by the federal Oil Spill Liability Trust Fund in the amount of $6,202,516.27.

WQIS subsequently filed its answer, denying liability and setting forth claims in a third-party complaint against the UK Club. (Doc. 8). WQIS’s thirdparty complaint asserts: (1) a claim for a declaratory judgment for indemnity for any amounts WQIS may be held liable to pay the Government, and (2) a claim for unjust enrichment. WQIS’s third-party complaint also tenders the Government’s claims to the UK Club for defense and indemnity pursuant to Rules 14(c)(1) and (2), Federal Rules of Civil Procedure.

In response, the UK Club filed a motion to dismiss any claims set forth against it in the Government’s complaint, to stay consideration of the third-party England, or to bifurcate the third-party claims and hold them in abeyance until WQIS’s liability has been determined as to the Government’s claims. (Doc. 29). WQIS responded in opposition.² (Doc. 33). The UK Club then filed a reply. (Doc. 38). After WQIS and the UK Club fully briefed the issues, the Court held oral argument. Discussion In its motion, the UK Club argues that WQIS stands entirely in the shoes of

Bouchard in suing the UK Club and claiming the benefits of its P&I insurance coverage. Accordingly, the UK Club asserts that pursuant to Rule 40 of the UK Club’s rules, it is entitled to demand arbitration of WQIS’s claims, and any policy defenses the UK Club has to those claims, in England. If the Court declines to compel arbitration, the UK Club requests that the Court bifurcate WQIS’s claims and hold them in abeyance until the Court determines WQIS’s liability to the

Government. To the extent Rule 14(c)(1) requires the UK Club to also defend the claims made by the Government in the original complaint, the UK Club alleges the complaint should be dismissed because the Government has no direct right of recovery against the UK Club. Motion to Compel Arbitration The primary disagreement between the parties lies in whether to compel arbitration in England. According to the UK Club, both the Convention on the

Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T.

The New York Convention – of which the United States and the United Kingdom are contracting states – incorporates the entire Federal Arbitration Act (“FAA”) and governs cases where, as here, a party seeks to compel arbitration outside of the United States. See Todd v. Steamship Mut. Underwriting Ass’n (Bermuda) Ltd., 601 F. 3d 329, 332 n.4 (5th Cir. 2010). In deciding a motion to compel arbitration under the New York Convention, the Court conducts a very limited inquiry, starting with a strong presumption in favor of enforcing arbitration agreements. Lindo v. NCL (Bahamas), Ltd., 652 F. 3d 1257, 1275 (11th Cir. 2011).

A district court must order arbitration unless the four jurisdictional prerequisites under the New York Convention are not met or one of the New York 1294-95 (11th Cir. 2005).3 Accordingly, the Court’s inquiry is limited to considering these four jurisdictional prerequisites: (1) whether there is a written agreement to arbitrate; (2) whether the agreement provides for arbitration in the territory of a New York Convention signatory; (3) whether the agreement arises out of a legal, commercial relationship; and (4) whether one or more of the parties to the agreement is not an American citizen or the commercial relationship has some reasonable relation with a foreign state. See id. at 1294 n.7; Francisco v. Stolt

Achievement MT, 293 F. 3d 270, 273 (5th Cir. 2002); Milic v. Princess Cruise Lines, Ltd., No. 21-cv-22969-Civ-Scola, 2021 WL 5037406, at *1 (S.D. Fla. Sept. 24, 2021). WQIS does not dispute that the UK Club satisfied the second and fourth prerequisites – namely, that the UK Club’s Rule 40 provides for arbitration in London, England, which is within the territory of a New York Convention signatory, and that the UK Club is not an American citizen. Rather, WQIS argues that the arbitration provisions are only applicable to Bouchard and the UK Club – not to disputes between non-signatories – and cannot be used to force arbitration of independent causes of action against the UK Club. Notwithstanding WQIS’s arguments to the contrary, the Court finds that the UK Club satisfied the first and third prerequisites. As to the first prerequisite, the Court finds that although there is no written agreement between WQIS and the UK Club, the Certificate of Entry and the UK Club’s Rules (comprising the Bouchard-

UK Club marine insurance policy) constitute an agreement in writing to arbitrate

Inc. v. Steamship Mut. Underwriting Ass’n (Bermuda) Ltd., 707 F. Supp. 277, 278 (S.D. Tex. 1989). The scope of coverage available under that legal, commercial relationship is at issue herein. Accordingly, the UK Club satisfied all prerequisites under the New York Convention. The FAA Under the FAA, the Court must answer two separate questions when deciding whether to compel arbitration. Initially, the Court must determine whether a valid arbitration agreement exists that binds the litigating parties. Todd v. Steamship Mut. Underwriting Ass’n, Ltd., No. 08–1195, 2011 WL 1226464, at *4 arbitration agreement applies to the claims asserted by WQIS. Id. Before addressing these questions, the Court must determine which law applies to each question. The Court finds that federal maritime law governs the first, while English law governs the second. The interpretation of a marine insurance policy, like the one at issue, gives rise to federal admiralty jurisdiction. Travelers Prop. Cas. Co. of Am. v. Ocean Reef Charters LLC, 996 F. 3d 1161, 1164 (11th Cir. 2021). “When analyzing a choice of law issue, federal courts apply the choice of law rules of the forum.” Authenment v. Ingram Barge Co., 878 F. Supp. 2d 672, 679 (E.D. La. 2012). As this Court sits in admiralty, federal maritime law is the law of the forum, and the Court therefore applies federal choice of law rules. See id. Under federal maritime choice of law principles, choice of law provisions are generally enforceable. Id. The chosen law of the parties applies only to substantive questions, while the law of the forum applies to procedural questions. Id. Whether a valid arbitration agreement exists is a procedural question, and the Court will apply the law of the forum, or federal maritime law, to answer this question.⁴ Under federal maritime law, the question of whether a nonsignatory may be bound to arbitrate is a procedural question for which the law of the forum applies. Id. at 679-80.

631-32 (2009)).⁵ Under federal maritime law, a non-signatory may be bound to an arbitration agreement under a theory of direct benefits estoppel where the “nonsignatory knowingly exploits the agreement containing the arbitration clause.” Hellenic Inv. Fund, Inc. v. Det Norske Veritas, 464 F. 3d 514, 518 (5th Cir. 2006) (quoting Bridas, 345 F. 3d at 361-62) (internal quotation omitted); see InterGen N.V. v. Grina, 344

F. 3d 134, 145-148 (1st Cir. 2003); Kakawi Yachting, Inc. v. Marlow Marine Sales, Inc., No. 8:13-cv-1408-T-TBM, 2014 WL 12650701, at *4-5 (M.D. Fla. October³, 2014); see also Escobal v. Celebration Cruise Operator, Inc., 482 F. App’x 475, 476 (11th Cir. 2012) (per curiam). Because WQIS is seeking payment and indemnity from the UK Club for amounts it may be held liable to pay to the Government, WQIS is thereby seeking to exploit the terms of the insurance contract between the UK Club and Bouchard, has embraced that contract, and seeks direct benefits

2016 WL 2759152, at *2 (M.D. Fla. May 12, 2016). “In admiralty cases, courts interpreting Rule 14(c)(2) have found that a third-party defendant must defend against a plaintiff’s claims, even where the plaintiff did not raise a direct claim against the third-party defendant.” Goodloe Marine, Inc. v. Caillou Island Towing Co., Inc., No. 8:20-cv-679-JLB-AAS, 2021 WL 5051983, at *4 (M.D. Fla. Nov.¹, 2021) (citing Peter Fabrics, Inc. v. S.S. Hermes, 765 F. 2d 306, 313 (2d Cir. 1985)). The fact that the original plaintiff does not seek to independently hold the third-

party defendant liable is immaterial. Id. Here, WQIS properly impleaded the UK Club under Rule 14(c), as the UK this action. Neither WQIS nor the UK Club argue that the Government failed to state a plausible claim under the OPA. Accordingly, no basis exists for dismissing the Government’s claims as to the UK Club. The motion to dismiss is denied. Since the Government’s claims will proceed against the UK Club, the Court denies the UK Club’s request to stay the arbitration to allow the Government to proceed on its claims against WQIS. Rather, the more appropriate course of action appears to be entry of a stay as to both the Government’s claims and WQIS’s claims in this action in favor of arbitration. See Arthur Andersen, 556 U.S. at 631 (indicating that⁹ U.S.C. § 3 states that stays are required if the claims are referable to arbitration under an agreement in writing, and, if a written arbitration provision is made enforceable against or for the benefit of a third party, the statutes terms are fulfilled); Lambert v. Austin Ind., 544 F. 3d 1192, 1195 (11th Cir. 2008) (stating that the FAA requires a court to either stay or dismiss a lawsuit and to compel arbitration where there is an enforceable arbitration agreement and the claims fall within the scope of that agreement);⁹ U.S.C. § 3. Motion to Bifurcate Finally, the UK Club alternatively asks the Court to bifurcate and hold in abeyance WQIS’s claims. The UK Club posits that the Court does not need to determine whether the UK Club is liable for any coverage until it determines whether WQIS is liable to the Government. Since the UK Club sought to bifurcate only if the Court denied its motion to compel arbitration, the Court’s granting of that motion appears to moot the issue. Court is not inclined to grant such relief. Under Rule 42, a district court may order a separate trial of one or more separate issues, claims, or third-party claims for convenience, to avoid prejudice, or to expedite and economize. Fed. R. Civ. P. 42(b). While the Court may consider several factors in making that determination, a fair and impartial trial to all litigants remains the paramount consideration. Kimberly- Clark Corp. v. James River Corp. of Va., 131 F.R.D. 607, 608-09 (N.D. Ga. 1989) (listing factors).

The Court maintains broad discretion in determining whether to bifurcate. Harrington v. Cleburne Cnty. Bd. of Educ., 251 F. 3d 935, 938 (11th Cir. 2001). In this instance, both the first-party and third-party claims require consideration of the same facts, legal issues, witnesses, and documentary evidence and overlap to such a degree that conducting separate trials would not further the Court’s interest in convenience, the avoidance of prejudice, or expeditiously and economically resolving the claims in this action. Rather, to ensure a fair and impartial trial to all litigants, and absent some other compelling consideration, the claims shall not be tried separately. The motion to bifurcate is thus denied. Accordingly, it is ORDERED, ADJUDGED and DECREED: 1. “Third-Party Defendant’s Motion to Dismiss the Complaint, Compel Arbitration or, in the Alternative, Bifurcate the Third-Party Claims” (Doc.

29) is hereby GRANTED IN PART AND DENIED IN PART as follows: a. The Motion to Compel Arbitration is GRANTED. b. The Motion to Dismiss is DENIED. Cc. The Motion to Bifurcate is DENIED. 2. All further proceedings on the complaint and third-party complaint are hereby STAYED pending arbitration in London, England, in accordance with the UK Club Rules. The Court retains jurisdiction over any matters related to the confirmation or enforcement of any award which may be issued in the London arbitration. 3. The parties are directed to provide a status report every 60 days regarding the status of the arbitration. 4. The Clerk is directed to enter the stay and administratively close this case. DONE and ORDERED in Chambers, in Tampa, Florida, this 31st day of August, 2023.

PA a bh

“TOM BARBER i awsss—(‘“‘C:ts~™S

UNITED STATES DISTRICT JUDGE