WHEN INSURER ENFORCES FORUM-SELECTION CLAUSE AGAINST INSURED, NONSIGNATORY ADJUSTERS CAN, TOO

Chandler Management Corp. v. First Specialty Insurance Corp.
Dallas Court of Appeals, No. 05-13-01044-CV (December 10, 2014)
Justices Francis and Myers (Opinion)
Chandler purchased commercial property insurance from First Specialty, an out-of-state surplus-lines carrier. The policy contained a forum-selection clause requiring that any litigation regarding the policy be heard exclusively in the courts of the State of New York. When a wind and hail storm damaged property covered by the policy, Chandler lodged a claim with First Specialty, which engaged local Texas adjusters, Vericlaim and Keen, to investigate. Based on the Vericlaim–Keen investigation, First Specialty concluded the damage was less than the $25,000 deductible and denied payment. Alleging over $1.5 million in damage, Chandler sued First Specialty and its adjusters, Vericlaim and Keen, in Texas state court. First Specialty moved for dismissal without prejudice based on the forum-selection clause. Vericlaim and Keen joined the motion and consented to jurisdiction in New York. The trial court granted the motion and dismissed the entire case against all parties, without prejudice to its being re-filed in New York. On appeal, Chandler challenged the enforcement of the forum-selection clause in favor of First Specialty on a variety of grounds that the Court of Appeals rejected. But Chandler also argued that Vericlaim and Keen, Texas parties who were not signatories to the policy or forum-selection clause, were not entitled to dismissal. The appeals court disagreed. If a case involves “substantially interdependent and concerted [alleged] misconduct by both the nonsignatory and one or more of the signatories to the contract,” the nonsignatory may compel compliance with the clause under the doctrine of equitable estoppel. The Court had no difficulty finding the requisite interdependence here, because Chandler’s claims against all defendants “rel[ied] upon First Specialty’s duty under the policy to investigate the claim and determine the value of the damage, or loss.”

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