Auberge Resorts LLC v. Allianz Glob. Risks U.S. Ins. Co., C. A. PC-2022-01105

CourtSuperior Court of Rhode Island
Writing for the CourtSTERN, J.
PartiesAUBERGE RESORTS LLC, CALISTOGA RANCH OWNER LLC, SOLAGE OWNERS LLC, ICONICPROPERTIES - JEROME, LLC, TELLURIDE RESORT PARTNERS LLC, VANDERBILT HOTEL, LLC, and U.S. HOTELS NEW ENGLAND LLC, Plaintiffs, v. ALLIANZ GLOBAL RISKS U.S. INSURANCE COMPANY, EVEREST INDEMNITY INSURANCE COMPANY, GREAT LAKES INSURANCE SE, HOMELAND INSURANCE COMPANY OF NEW YORK, INTERSTATE FIRE & CASUALTY COMPANY, LANDMARK AMERICAN INSURANCE COMPANY, and NATIONAL FIRE AND MARINE INSURANCE COMPANY, Defendants.
Docket NumberC. A. PC-2022-01105
Decision Date27 July 2022

AUBERGE RESORTS LLC, CALISTOGA RANCH OWNER LLC, SOLAGE OWNERS LLC, ICONICPROPERTIES - JEROME, LLC, TELLURIDE RESORT PARTNERS LLC, VANDERBILT HOTEL, LLC, and U.S. HOTELS NEW ENGLAND LLC, Plaintiffs,
v.

ALLIANZ GLOBAL RISKS U.S. INSURANCE COMPANY, EVEREST INDEMNITY INSURANCE COMPANY, GREAT LAKES INSURANCE SE, HOMELAND INSURANCE COMPANY OF NEW YORK, INTERSTATE FIRE & CASUALTY COMPANY, LANDMARK AMERICAN INSURANCE COMPANY, and NATIONAL FIRE AND MARINE INSURANCE COMPANY, Defendants.

C. A. No. PC-2022-01105

Superior Court of Rhode Island, Providence

July 27, 2022


For Plaintiff:

David A. Wollin, Esq.; Rebecca F. Briggs, Esq.

For Defendant:

Geoffrey W. Millsom, Esq.; Brenna A. Force, Esq.; Joseph V. Cavanagh, III, Esq.; Timothy J. Keough, Esq.; Marc E. Finkel, Esq.

DECISION

STERN, J.

Before this Court is Plaintiffs' - Auberge Resorts LLC, Calistoga Ranch Owner LLC, Solage Owners LLC, Iconic Properties - Jerome, LLC, Telluride Resort Partners LLC, Vanderbilt Hotel, LLC, and U.S. Hotels New England LLC, (collectively, Plaintiffs) - Motion to Enjoin Defendant Insurance Companies - Allianz Global Risks U.S. Insurance Company, Everest Indemnity Insurance Company, Great Lakes Insurance SE, Homeland Insurance Company of New York, Interstate Fire & Casualty Company, Landmark American Insurance Company, and

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National Fire and Marine Insurance Company (collectively, Defendants) from litigating a substantially similar action in a New York state court proceeding. Also before this Court is Defendants' Cross-Motion to Stay the instant matter so that the parties may litigate this matter exclusively in New York.

I

Facts and Travel

Plaintiffs are a group of entities that own and manage property throughout the United States. (Pls.' Mot. at 1.) The majority of the Plaintiff entities in this action are incorporated and have their principal places of business outside of Rhode Island, in states such as Delaware, Colorado, and California. See generally Pls.' Compl. As stated above, Plaintiffs seek an injunction to prevent Defendants from litigating this matter in New York state court. (Pls.' Mot. at 1.) On February 25, 2022, Plaintiffs filed the present action in Rhode Island Superior Court against the Defendant insurance companies. Id. at 1-2. Plaintiffs allege that they suffered direct "physical loss [or] damage" as defined in the property insurance policies at issue. Id. at 2. Plaintiffs claim that the source of their losses resulted from the COVID-19 pandemic and they argue, as other plaintiffs before this Court have previously, that COVID-19 caused physical loss or damage to their insured property. See id.

After filing this action against Defendants and previously named Defendant Westport Insurance Corporation (Westport), Westport invoked a forum selection clause against Plaintiffs. (Defs.' Obj. at 12.) This clause requires Plaintiffs to bring any actions against Westport in the State of New York. Id. After Plaintiffs voluntarily dismissed Westport from this action, Westport filed a new action in New York on March 24, 2022. (Pls.' Mot. at 7.) Westport Insurance Corporation v. Auberge Resorts LLC, et al., Index No. 651396/2022 (N.Y. Sup. Ct. 2022). Westport brought

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this New York action against all of the insured Plaintiffs in the instant matter. (Defs.' Obj. at 12.) Westport also filed suit against all of the Defendant insurance companies currently before this Court. Id.

Unlike other business interruption insurance matters that this Court has heard previously, Plaintiffs here purchased insurance from Defendants through a "tower" insurance policy. (Defs.' Obj. at 13.) This form of an insurance policy requires the interrelation between multiple insurance companies, and it is organized to provide coverage to claimants through a tiered coverage scheme. See id. Further, based on the design of the set of policies at issue here, certain excess policies in the coverage tower cannot attach unless the insured exhausts the entire "primary layer" of the policy.[1] Id. Defendant Westport makes up 20 percent of the primary layer. Id.

In response to Westport filing an action including all of the relevant parties in New York, Plaintiffs filed a Motion to Enjoin in this Court. See Pls.' Mot. at 1. As stated above, Plaintiffs ask this Court to issue a preliminary injunction preventing Defendants from litigating this action, either as plaintiffs or defendants, in the New York action. Id. Plaintiffs argue that this Court has the authority to enjoin the ongoing New York action under the first-to-file doctrine. Id. at 10-11. In response to Plaintiffs' Motion to Enjoin, Defendants filed a Cross-Motion to Stay. (Defs.' Mot. at

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1.) Defendants ask this Court that, rather than issue an injunction preventing Defendants from litigating the New York lawsuit, this Court should stay the instant matter until the New York lawsuit "reaches a final conclusion." Id. at 1. On June 21, 2022, this Court heard oral argument on Plaintiffs' Motion to Enjoin and Defendants' Cross-Motion to Stay. See Docket. PC-2022-01105. This Court's Decision follows.

II

Standard of Review

"The decision to grant or to deny a preliminary injunction lies within the sound discretion of the trial justice." City of Woonsocket v. Forte Brothers, Inc., 642 A.2d 1158, 1159 (R.I. 1994). In determining whether to grant this relief, the "hearing justice should consider and resolve 'each of the appropriate preliminary-injunction factors[.]'" DiDonato v. Kennedy, 822 A.2d 179, 181 (R.I. 2003) (quoting Iggy's Doughboys, Inc. v. Giroux, 729 A.2d 701, 705 (R.I. 1999)). To issue a valid preliminary injunction, the Rhode Island Supreme Court requires the Superior Court to assess the factors listed below and reach the following conclusion:

"[I]n deciding whether to issue a preliminary injunction, the hearing justice should determine whether the moving party (1) has a reasonable likelihood of success on the merits, (2) will suffer irreparable harm without the requested injunctive relief, (3) has the balance of the equities, including the possible hardships to each party and to the public interest, tip in its favor, and (4) has shown that the issuance of a preliminary injunction will preserve the status quo." DiDonato, 822 A.2d at 181 (citing Fund for Community Progress v. United Way of Southeastern New England, 695 A.2d 517, 521 (R.I 1997)).

Separately, regarding the Superior Court's authority to stay its own proceedings, the Rhode Island Supreme Court has stated the following:

'"A trial justice is vested with great authority in managing his or her trial calendar. '[T]he management of a trial calendar is among the most difficult of all judicial assignments. * * * Consequently[,] the widest discretion must be given to calendar justices and trial justices in carrying out this enormously difficult function
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* * *.'" Bergeron v. Roszkowski, 866 A.2d 1230, 1235 (R.I. 2005) (quoting Mills v. State Sales, Inc., 824 A.2d 461, 469 (R.I. 2003)).

Further, the Rhode Island Supreme Court has "defined the exercise of judicial power as the control of a decision in a case or the interference with its progress, or the alteration of the decision once made." Lemoine v. Martineau, 115 R.I. 233, 238, 342 A.2d 616, 620 (1975) (emphasis added). Additionally, it is well established that "[c]ontrol of judicial dockets rests in the court." State v. Johnson, 116 R.I. 449, 456, 358 A.2d 370, 374 (1976). Finally, this Court has both the ability and the discretion to issue a continuance, so long as doing so is within the Court's "sound discretion, exercised not arbitrarily or willfully, but with just regard to what is right and equitable under the circumstances and the law." Strzebinska v. Jary, 58 R.I. 496, 193 A. 747, 749 (1937).

III

Analysis

This Court will first address Plaintiffs' Motion and the Court's ostensible authority to issue an injunction preventing all parties from litigating this business interruption insurance dispute in New York. Next, it will address Defendants' Cross-Motion to Stay and this Court's authority to manage its docket in conjunction with the first-to-file doctrine.

A. Plaintiffs' Motion for an Injunction

As stated above, Plaintiffs' motion asks this Court to enjoin Defendants in this action to prevent them from litigating the New York lawsuit filed against them by Westport. (Pls.' Mot. at 1.) In order to issue a preliminary injunction, the Rhode Island Supreme Court requires a Superior Court justice to find that the moving party: (1) has a reasonable likelihood of success on the merits; (2) will suffer irreparable harm in the absence of an injunction; (3) has the balance of the equities, including possible harm to either party and the public interest in its favor; and (4) has shown that the injunction will preserve the status quo. See DiDonato, 822 A.2d at 181.

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Plaintiffs' Motion to Enjoin fails to cite the standard articulated above and instead attempts to argue, without valid authority, that this Court is free to ignore the standard for a preliminary injunction and may enjoin Defendants from litigating the New York action solely on the basis of the first-to-file doctrine. (Pls.' Mot. at 8.) This argument is invalid. Although neither party directly implicates this constitutional provision, this Court will restrain itself from issuing the requested injunction because doing so has the high likelihood of violating the Full Faith and...

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