Williams to obtain the insurance from AEGIS. West Shore, Erickson added, never authorized Mack & Parker to perform any services in connection with the policy. Erickson also averred that McGriff, Seibels sent a copy of the AEGIS policy to West Shore containing the service of suit clause listing Mack & Parker, and bearing the seal of the Surplus Line Association of Illinois on both the first page of the policy and on the page containing the contested service of suit clause.
The affidavit of Martin P. Hughes, the Mack & Parker employee listed in the contested clause, was also submitted by West Shore. Hughes averred that he was a surplus line producer licensed in Illinois at the time the West Shore/AEGIS policy was issued. Cleage of McGriff, Seibels contacted Hughes to file the policy with the Surplus Line Association in compliance with § 445 of the Illinois Insurance Code, Ill. Rev. Stat. ch. 73, P1057 (1987), and P2801 of the Illinois Insurance Regulations. Hughes added that Mack & Parker drafted a standard service of suit clause for the policy as required by the Code and Regulations, and then filed the policy with the Surplus Line Association.
Lack of subject matter jurisdiction is appropriately raised in a motion to dismiss under Fed. R. Civ. P. 12(b)(1), and may be supported by any documents needed to resolve the issue. Barnhart v. United States, 884 F.2d 295, 296 (7th Cir. 1989), cert. denied, 495 U.S. 957, 109 L. Ed. 2d 743, 110 S. Ct. 2561 (1990); see also McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 80 L. Ed. 1135, 56 S. Ct. 780 (1936) (when challenged, jurisdictional allegations must be supported by competent proof). Hearings may be held if necessary to resolve disputed factual matters. Barnhart, 884 F.2d at 296.
AEGIS's motion to dismiss raises two basic questions: is the second service of suit clause part of the insurance contract, and if so, does that clause waive or otherwise conflict with the mandatory arbitration provision in the first service of suit clause? The clause inclusion question is primarily a factual matter, while the waiver/conflict question is a legal issue. The court will therefore address the waiver issue first, and if the second service of suit clause would not waive the arbitration provision, it can be left to an arbitrator to decide whether that second clause is part of the contract.
The waiver issue is governed by federal law under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. The Arbitration Act created a strong federal policy favoring arbitration of disputes. Morrie Mages and Shirlee Mages Found. v. Thrifty Corp., 916 F.2d 402, 405 (7th Cir. 1990). The Act governs the validity and enforceability of arbitration agreements in any contract involving maritime or interstate transactions. 9 U.S.C. § 2. The insurance policy at issue here involves interstate commerce. See Hart v. Orion Ins. Co., 453 F.2d 1358, 1360 (10th Cir. 1971) (insurance policy with Montana application, Illinois acceptance and Montana delivery covered by Arbitration Act).
Under the Act, any doubts concerning the applicability or waiver of an arbitration clause "should be resolved in favor of arbitration. . . ." Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983). Mandatory arbitration rights are waivable, but waiver will not be lightly inferred; the party urging waiver bears a heavy burden. Morrie Mages, 916 F.2d at 405.
The second service of suit clause, assuming that it is a part of West Shore's policy, simply provides for service of suit within Illinois, and names an additional agent for that purpose, Martin P. Hughes of Mack & Parker. The clause does not mention arbitration. There are no provisions in the arbitration/service of suit clause which are clearly inconsistent with the second, contested service of suit clause. The second service of suit clause can therefore reasonably be interpreted to facilitate litigation following arbitration, concerning the validity of enforcement of any arbitration ruling, without curtailing the mandatory arbitration provision in any manner. Moreover, any waiver of a mandatory arbitration provision should be explicit in view of the federal policy favoring arbitration. The second service of suit clause falls far short in this regard.
Alleged conflicts between arbitration and forum selection clauses obligating a party to submit to the jurisdiction of a court were rejected and arbitration orders were upheld in Hart, 453 F.2d 1358, and Geldermann, Inc. v. Stathis, 177 Ill. App. 3d 414, 532 N.E.2d 366, 126 Ill. Dec. 681 (1st Dist. 1988), both applying the Arbitration Act. As the Geldermann court noted, "arbitration awards are not self-enforceable. Once arbitration is completed, therefore, the forum selection clause reasonably can be interpreted as dictating the location of any action that might be necessary after arbitration in order to enforce the award." Geldermann, 177 Ill. App. 3d at 421, 532 N.E.2d at 370 (emphasis in original).
The court therefore finds that whether the second, contested service of suit clause is part of West Shore's insurance policy or not, the mandatory arbitration provision in the policy is valid and requires that West Shore's claim be submitted to arbitration.
AEGIS's motion to dismiss under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction is granted.
IT IS SO ORDERED.
CHARLES RONALD NORGLE, SR., Judge
United States District Court