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United States Fire Insurance Co. v. Equitas Insurance Ltd.

United States District Court, D. New Hampshire

October 24, 2019

United States Fire Insurance Company et al.
v.
Equitas Insurance Limited et al.

          ORDER

          LANDYA B. MCCAFFERTY UNITED STATES DISTRICT JUDGE.

         Plaintiffs United States Fire Insurance Company (“U.S. Fire”) and The North River Insurance Company (“North River”) bring suit against several insurance companies, [1] seeking damages for breach of contract and a declaratory judgment arising out of defendants' refusal to pay plaintiffs amounts they claim are due under certain insurance contracts. Defendants move to dismiss or stay the case (doc. no. 33), and plaintiffs object. Plaintiffs move to strike portions of defendants' memorandum in support of their motion to dismiss (doc. no. 50), and defendants object.

         BACKGROUND

         I. Factual Background[2]

         From 1972 to 1985, U.S. Fire and North River, both New Jersey companies, issued twelve umbrella and excess umbrella liability policies to Mine Safety Appliances Company (“MSA”), a Pennsylvania corporation that manufactured and sold products such as respiratory protection equipment and asbestos-containing personal protective products.[3] The policies had combined limits of approximately $244 million (the “MSA Policies”).

         During that same timeframe, plaintiffs entered into reinsurance contracts that covered the twelve MSA Policies (the “Reinsurance Contracts”). In their complaint, plaintiffs allege that they entered into at least one Reinsurance Contract with each defendant, other than Equitas. They allege, however, that Equitas assumed obligations of its predecessors-in-interest under the Reinsurance Contracts “pursuant to a transaction approved by the English High Court of Justice on or about June 30, 2009.” Doc. no. 5 at ¶ 8. Each of the Reinsurance Contracts was entered into in the United Kingdom. Plaintiffs allege that RiverStone Claims Management LLC (“RiverStone”), a New Hampshire-based company that is not a party to this litigation, managed the claims under the Reinsurance Contracts.

         Beginning in the 1990s, MSA sought insurance coverage from plaintiffs under the MSA Policies for hundreds of bodily injury claims based on exposure to asbestos, coal, and silica dust. MSA's attempts to have plaintiffs provide coverage under the MSA Policies resulted in many litigations, none of which was in New Hampshire.

         In October 2016, MSA obtained a jury verdict in Pennsylvania state court against plaintiffs for breach of three of the MSA Policies and violation of Pennsylvania's bad faith statute. Plaintiffs paid a substantial portion of the claims tendered by MSA in 2017, and then fully resolved its disputes with MSA in mid-2018 in a confidential settlement.

         Beginning in March 2017 and continuing through 2018, plaintiffs, through RiverStone, billed defendants for amounts they claimed were due under the Reinsurance Contracts on account of the MSA settlement payments. Certain defendants, as well as other reinsurers not named as defendants in this case, paid some of the reinsurance billings subject to a full reservation of rights, including the right to recoup any payments. Eventually, certain defendants refused to pay additional billings. On December 21, 2018, plaintiffs brought this suit, alleging breach of several of the Reinsurance Contracts and seeking a declaratory judgment arising out of defendants' refusal to pay the additional billings.

         II. The New Jersey Action

         Also on December 21, 2018, less than an hour before plaintiffs initiated the instant lawsuit, certain underwriters at Lloyd's of London (“Underwriters”), along with Tenecom, Winterthur, Sompo, and Berkshire (collectively, the “New Jersey Plaintiffs”) sued North River and U.S. Fire in the Complex Business Litigation Program of the New Jersey Superior Court (the “New Jersey Action”).[4] The complaint in the New Jersey Action alleges claims for breach of contract and breach of the implied covenant of good faith and fair dealing. Specifically, the New Jersey Plaintiffs, who have made payments to North River and U.S. Fire pursuant to the Reinsurance Contracts under a reservation of rights, seek reimbursement of those amounts. In addition, like plaintiffs in this action, the New Jersey Plaintiffs seek a declaratory judgment regarding the parties' “respective rights and liabilities” and “rights, duties, and obligations” under the Reinsurance Contracts.

         Unlike in this case, the Underwriters are parties in the New Jersey Action. In addition, Equitas, a defendant in this case, is not a party in the New Jersey Action.

         DISCUSSION

         Defendants move to dismiss or stay this case. They advance several arguments, including: (1) the court should exercise its discretion to dismiss or stay this case pursuant to the prior-pending action doctrine or the related first-filed doctrine in light of the New Jersey Action; (2) abstention is warranted under the Colorado River doctrine[5] in light of the New Jersey Action; and (3) the court should dismiss the case because the Underwriters are indispensable parties under ...


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