Hartford Cas. Ins. Co. v. Lexington Ins. Co.
| Decision Date | 30 March 2016 |
| Docket Number | Case No. 14-CV-8060 (KMK) |
| Parties | HARTFORD CASUALTY INSURANCE COMPANY, Plaintiff, v. LEXINGTON INSURANCE COMPANY, et al., Defendants. DELFINO COPORATION, Third-Party Plaintiff, v. TST CONSTRUCTION, LLC, Third-Party Defendant. |
| Court | U.S. District Court — Southern District of New York |
Michael Menapace, Esq.
Melissa Fernandez, Esq.
Wiggin and Dana LLP
Hartford, CT
Paul L. Kassirer, Esq.
Dennis M. Rothman, Esq.
Lester, Schwab, Katz and Dwyer LLP
New York, NY
Counsel for Defendant, Third-Party Plaintiff Delfino Corporation
Robert A. Weis, Esq.
The Law Firm of William G. Sayegh, P.C.,
Carmel, NY
Counsel for Defendant Bader Company
Caroline K. Hock, Esq.
Lewis Johs Avallone Aviles, LLP
Islandia, NY
Counsel for Third-Party Defendant TST Construction, LLC
Hartford Casualty Insurance Company ("Hartford") instituted this Interpleader Action pursuant to 28 U.S.C. § 1335 to determine the proper disbursement of insurance policy proceeds. (Dkt. No. 57.) Presently before the Court is Hartford's Motion To Dismiss all Crossclaims and the Third-Party Complaint, (Dkt. No. 148), as well as the Motion To Dismiss the Third-Party Complaint filed by TST Construction, LLC ("TST"), (Dkt. No. 177). For the following reasons, both Motions are granted in their entirety.
Hartford issued to TST a business liability insurance policy effective to May 25, 2013, but cancelled effective August 27, 2012 ("the Policy"). (Am. Compl. ¶ 38 (Dkt. No. 57.)) Among other things, the Policy requires Hartford to defend and indemnify TST pursuant to the terms of the Policy. (Id.) The Policy provides an applicable limits of insurance of $1 million. (Id. ¶ 40.)
On or about June 15, 2012, TST allegedly started a fire at Uncle Bob's Self Storage ("the Fire") while working there as a subcontractor of Delfino Corporation ("Delfino"). (Id. ¶¶ 41-42.) As a result, various individuals and companies have made claims against TST and Delfino (collectively, "Claimants"), who have sought insurance coverage under the Policy in response. (Id. ¶ 42.) The total amount of the known claims alleging TST is responsible for damages caused by the Fire is in excess of $3.2 million. (Id. ¶ 47.)
Plaintiff commenced the instant Interpleader Action under § 1335 on October 7, 2014, seeking the Court's assistance in determining to whom and in what amounts the Policy proceeds should be disbursed among Claimants. (Dkt. No. 1.) On March 10, 2015, Plaintiff filed its Amended Complaint against Allstate Indemnity Company, Allstate Insurance Company, Amica Mutual Insurance, Bader Company ("Bader"), Kathleen Buford, Chubb Indemnity Insurance Company, Delfino, Robert Diano, GEICO, Great Northern Insurance Company, Hartford Fire Insurance Company, Kelly's Corner, John King, Charles Ledbetter, Thomasa Ledbetter, Lexington Insurance Company, Liberty Mutual Fire Insurance Company, Keith Long, Tina Marie Maksoud, Silvana Mazzariello, Narragansett Bay Insurance Company, Carolyn Pearsall, Anthony Pironti, Praxis Consulting, Inc., Property & Casualty Company of Hartford, Sentinel Insurance Company Ltd., St. Paul Fire and Marine, State Farm Insurance, The Auto-Mobile Insurance Company of Hartford, The Charter Oak Fire Insurance Company, The Travelers Indemnity Company, Leigh Tobias, and Westchester Wildlife/Batcone LLC. (Dkt. No. 57.)
On April 20, 2015, Delfino filed its Answer, asserting a Crossclaim against Claimants who have "asserted or will assert claims" against Delfino "for the unpaid amount of their losses." (Delfino Answer ¶ 71 (Dkt. No. 91); see generally ¶¶ 68-72.)1 Delfino also filed a Counterclaim against Hartford, "demand[ing] that [Hartford] defend and indemnify Delfino against [suchclaims]." (Id. ¶ 61; see generally ¶¶ 57-67). On April 24, 2015, Delfino filed a Third-Party Complaint against TST, seeking damages for indemnity, contribution, and breach of contract. (Dkt. No. 104.)
Pursuant to a scheduling order adopted by the Court on June 1, 2015, (Dkt. No. 140), Hartford filed its Motion To Dismiss all Crossclaims, the Counterclaim, and the Third-Party Complaint, along with a memorandum of law, on June 10, 2015, (Dkt. No. 148), and TST filed its Motion To Dismiss the Third-Party Complaint and supporting papers on August 13, 2015, (Dkt. Nos. 177-79). Delfino filed its opposition papers on September 18, 2015. (Dkt. No. 182.) Bader filed its own opposition papers on the same day. (Dkt. No. 183.) TST submitted its reply on September 28, 2015, (Dkt. No. 186), and Hartford submitted its reply on October 9, 2015, (Dkt. No. 189).
Hartford moves to dismiss all Crossclaims, the Counterclaim, and the Third-Party Complaint on the grounds that the Court lacks subject matter jurisdiction over them. (See Hartford's Mot. to Dismiss ("Hartford's Mot.") (Dkt. No. 148).) TST argues the same with respect to the Third-Party Complaint. (See TST's Mot. to Dismiss (Dkt. No. 177).)
"A federal court has subject matter jurisdiction over a cause of action only when it has authority to adjudicate the cause pressed in the complaint." Bryant v. Steele, 25 F. Supp. 3d 233, 241 (E.D.N.Y. 2014) (internal quotation marks omitted). "Determining the existence of subject matter jurisdiction is a threshold inquiry[,] and a claim is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Morrison v. Nat'l Austl. Bank Ltd., 547 F.3d 167, 170 (2dCir. 2008) (internal quotation marks omitted), aff'd, 561 U.S. 247 (2010). In making this determination, "the district court must take all uncontroverted facts in the complaint . . . as true, and draw all reasonable inferences in favor of the party asserting jurisdiction." Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014). "But where jurisdictional facts are placed in dispute, the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits." Id. (alterations and internal quotation marks omitted); see also Ray Legal Consulting Grp. v. Gray, 37 F. Supp. 3d 689, 696 (S.D.N.Y. 2014) (). Ultimately, "the party asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Tandon, 752 F.3d at 243 (internal quotation marks omitted).
Interpleader is a statutory remedy that offers "a party who fears being exposed to the vexation of defending multiple claims to a limited fund or property that is under [its] control a procedure to settle the controversy and satisfy [its] obligation in a single proceeding." 7 Charles Alan Wright, et al., Federal Practice and Procedure Civil § 1704 (3d ed. 2013) (footnote omitted). Interpleader actions typically proceed in two stages. See Avant Petroleum, Inc. v. Banque Paribas, 853 F.2d 140, 143 (2d Cir. 1988). First, the district court must determine whether the statutory requirements for an interpleader action have been met, meaning that there is a single fund at issue and there are adverse claimants to that fund. See Perlman v. Fid. Brokerage Servs. LLC, 932 F. Supp. 2d 397, 415 (E.D.N.Y. 2013). If so, then the second stage requires that the district court determine the respective rights of the claimants to the fund. SeeFid. Brokerage Servs., LLC v. Bank of China, 192 F. Supp. 2d 173, 178 (S.D.N.Y. 2002) (citing Avant Petroleum, 853 F.2d at 143). Title 28, United States Code, Section 1335 grants original jurisdiction to the district courts over interpleader actions under certain circumstances. Specifically, "a district court has jurisdiction over a civil action involving adverse claims to money or property worth $500 or more so long as at least two of the adverse claimants are of diverse citizenship and 'are claiming or may claim to be entitled to such money or property.'" Ashton v. Josephine Bay Paul & C. Michael Paul Found., Inc., 918 F.2d 1065, 1068 (2d Cir. 1990) (citing 28 U.S.C. § 1335).
It is well established that federal interpleader "was not intended to serve the function of a 'bill of peace.'" State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 537 (1967); see also Glenclova Inv. Co. v. Trans-Res., Inc., 874 F. Supp. 2d 292, 309 (S.D.N.Y. 2012) (same). Rather, for actions brought under § 1335, "[t]he scope of litigation, in terms of parties and claims, is normally circumscribed by the confines of the fund." Bache & Co., Inc. v. Roland, 375 F. Supp. 989, 990-91 (S.D.N.Y. 1974); see also In re Millennium Multiple Employer Welfare Ben. Plan, 772 F.3d 634, 642 (10th Cir. 2014) (). "The existence of the fund cannot ordinarily be seized upon as an opportunity for achieving results that exceed the resolution of disputes concerning entitlement to the fund." Bache, 375 F. Supp. at 990-91 (citing Tashire, 386 U.S. at 533-34).
The Crossclaims explicitly seek to adjudicate Delfino's liability "[i]nasmuch as the Claimants are not paid in full and will not be paid in full from the . . . Policy [p]roceeds." (Delfino Answer ¶ 71.) Delfino specifically "demands a declaration as to its liability, if any, toeach Claimant[], for damages suffered by each Claimant resulting from the Fire, and the amount of Delfino's obligation to each Claimant therefor, if any." (Id. ¶ 72.) By its Motion, Hartford challenges the Court's jurisdiction to consider the Crossclaims in this Interpleader Action.2
Generally, a party may assert a crossclaim where "the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a...
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