Breslerman v. AMERICAN LIBERTY INSURANCE COMPANY

• Decision Date: 10 June 1963
• Citation: 218 F. Supp. 345
• Parties: Louis A. BRESLERMAN, Plaintiff, v. AMERICAN LIBERTY INSURANCE COMPANY, Commercial Union Fire Insurance Company of New York and Monarch Insurance Company of Ohio, Defendants.
• Court: U.S. District Court — Southern District of New York

218 F. Supp. 345

Louis A. BRESLERMAN, Plaintiff, v. AMERICAN LIBERTY INSURANCE COMPANY, Commercial Union Fire Insurance Company of New York and Monarch Insurance Company of Ohio, Defendants.

United States District Court S. D. New York.

June 10, 1963.

Harry H. Goebel, New York City, for plaintiff.

Rein, Mound & Cotton, New York City, for defendant, Ernest E. Rosenberg, New York City, of counsel.

WYATT, District Judge.

This is a motion by the three defendants (1) under Fed.R.Civ.P. 15(d) for permission to serve a supplemental answer and (2) under Fed.R.Civ.P. 56(b) for summary judgment in their favor.

The action is on policies of fire insurance issued by defendant companies covering six houses owned by plaintiff at Oceana, Virginia and which were destroyed by fire on November 13, 1957. Each house was separately insured with one of the defendant companies. Each defendant issued two fire insurance policies, each such policy covering one of the houses. The action was commenced in this court on March 17, 1958. Jurisdiction is founded on diversity of citizenship.

Before commencement of this action and on March 5, 1958 two of the defendants —American Liberty and Commercial Union—commenced each an action against plaintiff for a declaratory judgment in the Circuit Court of the City of Norfolk, Virginia.

The point raised in these Virginia declaratory judgment actions was that the four houses insured by the two defendants had been vacant for more than 60 days before the fire which destroyed them and that under a provision of the respective policies this vacant condition relieved defendants of liability.

Plaintiff here (defendant in the two Virginia actions) was served with process in Virginia on March 5, 1958.

After commencement of his action in this Court shortly thereafter, plaintiff applied to this Court for an order enjoining prosecution of the Virginia actions. Among other things, he argued to this Court that he had been by fraud and deceit of defendants enticed into Virginia so that process could be served upon him. Judge Sugarman denied his application, pointing out that enticement, fraud and deceit should be raised before the Virginia Court on an application to that Court for a vacatur of service of process.

Plaintiff thereupon made a special appearance in the Virginia Court and moved "to quash process" on the ground that service had been made on him in Virginia "by fraud, trickery and enticement" and that the Virginia Court lacked jurisdiction. After hearing and on December 5, 1958 the motion to quash was denied. Thereafter defendant filed an answer in the Virginia actions on the merits.

The two declaratory judgment actions in Virginia were consolidated and after two trials and an intermediate appeal to the Supreme Court of Virginia (201 Va. 822, 113 S.E.2d 862) final judgment was entered on March 8, 1961 in favor of the plaintiff fire insurance companies (two of the defendants here). This final judgment was affirmed by the Supreme Court of Virginia.

The two insurance companies were held by the Virginia Court not liable on the policies issued by them because the houses insured had been vacant before the fire for longer than 60 days. There had been no issue as to this fact. The principal issue litigated in the Virginia actions (consolidated) was whether there had been a waiver of the "vacancy" provision by the two companies involved — American Liberty and Commercial Union — in that plaintiff asserted that the agent of the two companies had knowledge when the policies were issued of the vacant condition of the four houses. The Virginia Court determined that there had been no such knowledge on the part of the agent.

There is thus a final judgment of a Virginia Court having jurisdiction of the parties and subject matter. This judgment is that defendant American Liberty is not liable to plaintiff on its policy insuring the house at 128 Bob Lane in Oceana (first cause of action here) or on its policy insuring the house at 126 Bob Lane in Oceana (second cause of action here); and that defendant Commercial Union is not liable to plaintiff on its policy insuring the house at 127 Matt Lane in Oceana (third cause of action here) or on its policy insuring the house at 129 Matt Lane in Oceana (fourth cause of action here).

The Virginia judgment would seem to be conclusive as to the first and second causes of action against defendant American Liberty and the third and fourth causes of action against defendant Commercial Union, this under ordinary principles of res judicata as well as the "full faith and credit" clause of the Constitution.

Plaintiff attempts to avoid the res judicata principle by asserting that the Virginia Court had no jurisdiction by reason of the entrapment, fraud and deceit in the manner of service of process.

The difficulty for plaintiff is that he raised and litigated the jurisdictional issue in Virginia and it was decided against him. He has had his day in court on this issue. There is no difference in this respect between issues affecting jurisdiction and any other issue. As Mr. Justice Brandeis said: "The principles of res judicata apply to questions of jurisdiction as well as to other issues." American Surety Co. v. Baldwin, 287 U.S. 156,...