In Housing & Redevelopment Insurance Exchange v. Guy Carpenter & Co., a Pennsylvania federal court considered the enforceability of a forum selection clause in a services agreement between Pennsylvania-based insurer Housing and Redevelopment Insurance Exchange (HARIE) and its reinsurance broker Guy Carpenter. In that case, the parties entered into an agreement establishing Guy Carpenter as HARIE’s reinsurance broker of record for a three-year period. The agreement included choice-of-law and forum selection clauses applying New York law and a New York forum “for the resolution of any disputes raising issues regarding the construction, meaning or enforcement of the terms of this agreement.”

HARIE did not renew the contract after that period, notifying Guy Carpenter that it would not serve as its broker of record for new reinsurance agreements. Guy Carpenter deducted $101,646.20 from a fiduciary account it held on behalf of HARIE, arguing it was entitled to that money under the terms of the agreement in the event of nonrenewal. HARIE then sued in Pennsylvania federal court to recover those funds. In the litigation, Guy Carpenter moved to dismiss or, in the alternative, to transfer, arguing (among other things) that the forum selection clause mandated that New York, not Pennsylvania, was the proper forum for the dispute.

The court’s decision focused primarily on the applicability and enforceability of the New York forum selection clause in the services agreement. In this regard, the court conducted a two-part analysis. First, the court considered whether the forum selection clause was valid and enforceable. The court agreed with Guy Carpenter and found that, while the terms of other contracts between the parties were also in issue, resolution of HARIE’s claims would require the court to construe the meaning or enforceability of the terms of the services agreement itself, such that the agreement’s New York forum selection clause governed the dispute.

Second, the court considered whether, even though the forum selection clause applied, public interest factors nonetheless militated against its enforcement in this case. In support of applying the forum selection clause, Guy Carpenter pointed out that the events of this case primarily took place in New York and that Guy Carpenter was based there. Guy Carpenter further pointed out that New York law governed the services agreement at issue. Discounting HARIE’s arguments that HARIE exclusively insures Pennsylvania insureds and that New York federal courts were slightly more congested than those in Pennsylvania, the court concluded that public interest factors weighed in favor of enforcing the New York forum selection clause.

Having found the forum selection clause valid and enforceable, and that public interest factors weighed in favor of its enforcement in this case, the court granted Guy Carpenter’s motion to the extent it sought transfer of the case to federal court in the Southern District of New York.

Housing & Redevelopment Insurance Exchange v. Guy Carpenter & Co., No. 3:23-cv-00996 (M.D. Pa. Mar. 25, 2024).