Housing and Redevelopment Insurance Exchange v. Guy Carpenter & Company, LLC

Background

Housing and Redevelopment Insurance Exchange (HARIE) and Guy Carpenter & Company, LLC had a reinsurance intermediary relationship. Their 2016 Amended and Restated Reinsurance Intermediary Authorization contract governed Guy Carpenter’s work locating, negotiating, placing, and administering reinsurance for HARIE. That agreement did not contain a choice-of-law or forum-selection provision.

In 2020, the parties entered a separate Broker Services Agreement (BSA). The BSA reduced Guy Carpenter’s brokerage fees by a 20 percent retention for a three-year period, subject to conditions concerning HARIE’s continued use of Guy Carpenter as its broker of record. The BSA also stated that it was governed by New York law and required disputes involving the construction, meaning, or enforcement of the BSA to be brought in either the New York state trial court in New York County or the United States District Court for the Southern District of New York.

HARIE selected McGill Global Risk Solutions LLC as its intermediary and broker of record for reinsurance coverage beginning January 1, 2023, while Guy Carpenter continued servicing treaties it had previously procured. Guy Carpenter later deducted $101,646.20 from a fiduciary account it held for HARIE, asserting that the amount represented forfeited 2022 BSA Retentions. HARIE claimed the deduction was unauthorized and sued on six state-law theories: breach of contract, conversion, breach of fiduciary duty, unjust enrichment, fraudulent inducement, and misrepresentation.

Motion to Dismiss or Transfer

Guy Carpenter moved to dismiss or transfer the action based on the BSA’s forum-selection clause. The court denied the dismissal request because the alternative federal forum was another federal district court. The court explained that transfer under 28 U.S.C. § 1404(a), rather than dismissal under the common-law doctrine used for certain other forum disputes, was the appropriate procedure for enforcing a clause selecting another federal district court.

The court then considered transfer under § 1404(a). It applied New York law to interpret the BSA’s forum-selection clause because the BSA selected New York law and HARIE did not identify a relevant conflict with Pennsylvania law. The court read the clause according to its plain meaning.

The court rejected HARIE’s argument that the clause did not apply because its claims were based on the Amended RIA rather than the BSA. The court found that the central dispute was whether Guy Carpenter was authorized to deduct and retain the money. Guy Carpenter relied on the BSA’s forfeiture provision as a defense, and deciding liability would require interpreting the BSA’s meaning and enforcement. The court therefore held that the action was a dispute covered by the BSA’s forum-selection clause.

Because the clause was valid and covered the dispute, the court treated the private convenience factors as favoring the selected forum and considered only public-interest factors. It found court congestion neutral, concluded that the local-interest factor slightly favored New York, and found that the interest in trying the diversity case in a forum familiar with the governing New York law clearly favored New York. HARIE did not establish that these factors overwhelmingly opposed transfer.

Attorney-Fee Request

Guy Carpenter also sought attorney fees as damages for an alleged breach of the BSA’s forum-selection clause. The court held that this was a substantive state-law damages claim, not a request for sanctions or fees under a federal fee-shifting statute. The court stated that such a claim must be brought by counterclaim or in a separate action. It therefore denied the request for attorney fees as damages.

Disposition

Judge Joseph F. Saporito, Jr. granted in part and denied in part Guy Carpenter’s motion. The court granted the request to transfer the action to the United States District Court for the Southern District of New York under 28 U.S.C. § 1404(a). It denied the requests to dismiss the action and to award attorney fees as damages for breach of the forum-selection clause. The opinion did not decide the merits of HARIE’s six underlying claims.