MINNIELAND PRIVATE DAY SCHOOL, INC., a Virginia corporation, Plaintiff-Appellee,
APPLIED UNDERWRITERS CAPTIVE RISK ASSURANCE COMPANY, INC., Defendant-Appellant.
Argued: May 10, 2017
from the United States District Court for the Eastern
District of Virginia, at Alexandria. Anthony J. Trenga,
District Judge. (1:15-cv-01695-AJT-IDD)
William Olivas, LEWIS, THOMASON, KING, KRIEG & WALDROP,
Nashville, Tennessee, for Appellant.
Scott Krein, KREIN LAW FIRM, Prince William, Virginia, for
Dale Bay, Emily H. Mack, LEWIS, THOMASON, KING, KRIEG &
WALDROP, Nashville, Tennessee, for Appellant.
GREGORY, Chief Judge, and SHEDD and WYNN, Circuit Judges.
in part, reversed in part, and remanded by published opinion.
Judge Wynn wrote the opinion, in which Chief Judge Gregory
and Judge Shedd joined.
Applied Underwriters Captive Risk Assurance Company, Inc.
("Applied Underwriters"), a subsidiary of Berkshire
Hathaway, Inc., appeals an order of the U.S. District Court
for the Eastern District of Virginia (1) denying Applied
Underwriters' motion to compel arbitration and (2)
holding that Applied Underwriters was judicially estopped
from arguing that an agreement between Applied Underwriters
and Plaintiff Minnieland Private Day School, Inc.
("Minnieland") did not constitute an insurance
contract for purposes of Virginia law. For the reasons that
follow, we conclude that the district court correctly denied
Applied Underwriters' motion to compel arbitration. But
the district court reversibly erred in applying the doctrine
of judicial estoppel to hold that the agreement constituted
an insurance contract. Accordingly, we affirm in part,
reverse in part, and remand the case to the district court
for further proceedings consistent with this opinion.
a provider of child daycare, is required under Virginia law
to provide workers' compensation insurance to its
employees. In 2013, Minnieland entered into a
"Reinsurance Participation Agreement"
("RPA") with Applied Underwriters, as part of
Minnieland's purchase of Applied Underwriters'
"Equity Comp" program, which Applied Underwriters
held out to be a "Worker's Compensation
Program." J.A. 9. Under the RPA, which had a three-year
term, one or more "Issuing Insurers"-all of which
were affiliates of Applied Underwriters and subsidiaries of
Berkshire Hathaway- would issue workers' compensation
insurance policies to Minnieland. Also pursuant to the RPA,
Applied Underwriters would establish a "segregated
protected cell" through which Minnieland would share in
the Issuing Insurers' profits and losses attributable to
Minnieland's policies. Following execution of the RPA,
Applied Underwriters' affiliate, and Berkshire Hathaway
subsidiary, Continental Indemnity Company
("Continental") issued a workers' compensation
policy to Minnieland. The RPA appointed another Berkshire
Hathaway subsidiary as the billing agent for Applied
Underwriters and the Issuing Insurers. Throughout the term of
the agreement, Minnieland paid premiums on the policy to
included an arbitration provision mandating resolution of
"any disputes arising under this Agreement" through
binding arbitration in the British Virgin Islands and under
the provisions of the American Arbitration Association. J.A.
29-30. In particular, the arbitration agreement provided that
"[a]ll disputes between the parties relating in any way
to (1) the execution and delivery, construction or
enforceability of this Agreement, (2) the management or
operations of the Company, or (3) any other breach or claimed
breach of this Agreement" were subject to mandatory
binding arbitration. J.A. 30.
first 33 months of the 36-month term, Minnieland's
monthly premiums averaged $58, 810. But on November 9, 2015,
Applied Underwriters billed Minnieland $471, 213, a 1, 167%
increase from the October 2015 premium and an 801% increase
from the average premium Minnieland had paid over the first
33 months of the policy. Though Applied Underwriters refused
to disclose the basis for the premium increase, Minnieland
nevertheless paid the November premium. After Minnieland
failed to pay a second similarly large billed premium in
December 2015, Applied Underwriters terminated the EquityComp