Service Of Suit Endorsement Deemed To Waive Insurer’s Right To Remove Action To Federal Court


A Missouri federal district court remanded a coverage action brought against Illinois Union Insurance Company (“Illinois Union”) by its insured, holding that the Policy’s Service of Suit Endorsement (“Endorsement”) waived Illinois Union’s right to remove the action to federal court notwithstanding the Policy’s Jurisdiction and Venue clause which stated that the Insurer did not waive its right of removal. The Endorsement provided that, at the insured’s request, Illinois Mutual will submit to the jurisdiction of any court of competent jurisdiction. The Endorsement also included the conspicuous statement “This Endorsement Changes the Policy, Please Read it Carefully.” Characterizing it as “meritless”, the Court rejected Illinois Union’s argument that the Endorsement did not waive Illinois Union’s right of removal because the Endorsement did not explicitly state that it substituted the Jurisdiction and Venue clause. Instead, citing principles of contract interpretation, the Court found that if the terms of the endorsement and the general provisions of the policy conflict, the terms of the endorsement prevail. The Endorsement in this case supplanted the Jurisdiction and Venue clause found in the general provisions of the policy and, therefore, waived Illinois Union’s right to remove the case to federal court. Both of these clauses are commonly found in reinsurance agreements, and this opinion illustrates that careful drafting is necessary to achieve the desired business result. Hazelwood Logistics Center, Inc. v. Illinois Union Insurance Company, No. 4:13-CV-2572 CAS (USDC E.D. Mo. Feb. 28, 2014).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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