AIG insureds were directed to arbitrate their breach of contract, tortious breach of the covenant of good faith and fair dealing, unfair competition, and other causes of action based on AIG’s alleged misconduct in denying their claims for benefits. AIG moved to compel arbitration, citing a provision in the insurance contracts requiring any controversy to be settled by binding arbitration. Plaintiffs opposed, pointing to what they argued was a conflicting provision, which stated that “in the event of [the insurer’s] failure to pay any amount claimed to be due hereunder, we, at your request, will submit to the jurisdiction of a court of competent jurisdiction within the United States.” Relying on the presumption favoring arbitration, the court held that the contractual provisions were harmonious–all disputes were required to be resolved through arbitration but the insureds could bring suit in a court of their choice to enforce compliance with an arbitration award. The court also held that AIG could compel arbitration under an equitable estoppel theory, notwithstanding that it was not a signatory to the arbitration agreement. NS Holdings LLC v. Am. Int’l Group, Inc., Case No. 10-1132 (U.S.D.C. C.D. Cal. Nov. 15, 2010).
This post written by Ben Seessel.