LUMBERMENS MUTUAL CASUALTY COMPANY v. Borden Company
| Decision Date | 04 January 1965 |
| Citation | 241 F. Supp. 683 |
| Parties | LUMBERMENS MUTUAL CASUALTY COMPANY, Plaintiff, v. BORDEN COMPANY, Inc. and Borden Chemical Company, Defendants. LUMBERMENS MUTUAL CASUALTY COMPANY, Plaintiff, v. The BORDEN COMPANY, Inc., Blackstone Mutual Insurance Company, Affiliated F.M. Insurance Company, United Engineers and Contractors, Inc., the Wickes Corporation, Vulcan-Cincinnati Corporation, Catalysts and Chemicals, Inc., and Monochem, Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Townley, Updike, Carter & Rodgers, New York City, for Lumbermens Mut. Cas. Co.
Dewey, Ballantine, Bushby, Palmer & Wood, New York City, for Borden Co., Inc.
Rein, Mound & Cotton, New York City, for Blackstone Mut. Ins. Co. and affiliated F. M. Ins. Co.
Alexander, Ash & Schwartz, New York City, for United Engineers & Contractors, Inc.
Purdy, Lamb & Catoggio, New York City, for Wickes Corp.
Bigham, Englar, Jones & Houston, New York City, for Monochem, Inc.
The within action for declaratory judgment is brought by plaintiff Lumbermens Mutual Casualty Company (hereinafter referred to as "Lumbermens") against various named defendants. Of the eight defendants named in the complaint, six move herein to dismiss the complaint on various asserted grounds. The defendants Blackstone Mutual Insurance Company (hereinafter referred to as "Blackstone"), Affiliated F. M. Insurance Company (hereinafter referred to as "Affiliated"), United Engineers and Contractors, Inc. (hereinafter referred to as "United"), The Wickes Corporation (hereinafter referred to as "Wickes"), and Monochem, Inc. (hereinafter referred to as "Monochem"), move individually to dismiss the complaint under Rule 12(b) of the Federal Rules of Civil Procedure on the following grounds:
a) Lack of jurisdiction over the subject matter of the within action.
b) Failure to state a claim against each defendant individually, upon which relief can be granted.
Alternatively, the defendants request the Court to dismiss the complaint as a matter of discretion. The defendant Borden Company, Inc. (hereinafter referred to as "Borden") asks the Court to dismiss the complaint as a matter of discretion or, alternatively, to stay the within action pending a determination of a parallel suit now pending between Lumbermens and Borden in the United States District Court for the Eastern District of Louisiana. In addition, in the two-party action pending herein, to wit, "Lumbermens Mutual Casualty Company v. Borden Company, Inc. and Borden Chemical Company", 64 Civil 1086, defendant Borden moves for a change of venue to the United States District Court for the Eastern District of Louisiana.
For convenience and clarity, the defendants United, Wickes and Monochem will at times be referred to herein as the "subrogation defendants" and the defendants Blackstone and Affiliated as the "insurance defendants".
The within dispute arises out of thirteen claims aggregating approximately $1,350,000 made under two casualty insurance policies issued by plaintiff to Borden. The complaint pleads thirteen counts against defendant Borden, one separate count for each of Borden's thirteen insurance claims. The counts are pleaded in chronological order of the thirteen occurrences upon which the insurance claims are based. In each count plaintiff pleads the basis of its refusal to pay the claim, including special defenses based on certain clauses of the policies more fully set forth infra. Immediately following each count pleaded against Borden in the complaint, plaintiff alleges in separate counts the various Borden rights against the other named defendants arising out of the particular occurrence upon which the Borden claim is based.
The general pattern of the complaint is best illustrated by a reference to Count I.
Count I pleads a claim made by Borden against plaintiff under plaintiff's Policy No. 2XL 71499, in the amount of $87,950. Borden made this claim on or about October 29, 1963, and the complaint alleges the operative facts as follows:
(¶ 15, Complaint.)
The complaint then goes on to plead various facts which plaintiff alleges show that Borden's claim No. 1 is not payable. Initially, plaintiff denies that Borden incurred any loss within the coverage of plaintiff's policy by reason of the acts alleged in Paragraph 15. Plaintiff then sets forth three special grounds of avoidance of liability.
The first rests on the "commencement of liability" clause of the policy which limits liability to a period starting twenty-four (24) hours prior to plaintiff's receipt of notice of the accident causing the claimed loss (¶ 17, Complaint). Plaintiff then alleges that the notice so required as to the occurrences of April 25 and April 27, 1962, was not received until May 3, 1962 (¶ 18, Complaint). Consequently, since the claimed delays lasted only 105 hours and 40 minutes, no loss was incurred after liability commenced and no insurance is thus payable.
The second special defense rests on the policy clause requiring Borden to give plaintiff reasonable time and opportunity to inspect the property and premises before repairs are undertaken or physical evidence of the accident removed (¶ 19, Complaint). Plaintiff alleges that Borden failed to comply with this clause with respect to the superheater tube failures upon which the first claim is based (¶ 20, Complaint), and, accordingly, liability under the policy was thereby defeated.
The third special defense is the most relevant to the issues presented herein. Paragraphs 23 and 24 of the complaint allege:
Thus plaintiff alleges that by reason of a wrongful release, or destruction of plaintiff's subrogation rights, by Borden with respect to reported superheater tube failure of April 25 and 27, 1962, Borden's claim is not payable. The third parties against whom plaintiff alleges Borden had such rights are United, Wickes and Monochem, three of the moving defendants herein.
Count II of the complaint is pleaded as an express alternative to the third special defense set forth in Paragraph 24, supra, and is pleaded against defendants United and Wickes (¶ 25, Complaint). In other words, Count II pleads the continued existence of rights of Borden against United and Wickes, arising out of these occurrences and the alleged interest of plaintiff therein as subrogee.
More specifically, Count II re-pleads the existence of the insurance policy, the occurrences set forth in Paragraph 15 of the complaint, supra, and the subrogation provisions of the policy (¶ 26, Complaint). Plaintiff then alleges that United and Wickes supplied the boilers in question with knowledge of their use and purpose and gave warranties of fitness and merchantable quality (¶¶ 29-32, Complaint). It is further alleged that the boilers were defective and that said defects caused the asserted superheater tube failures upon which Borden's claim No. 1 is predicated and that said defects resulted from the failure of United and Wickes to exercise due care in the design and construction of the boilers. (¶¶ 32-33, Complaint.)
(¶ 34, Complaint.)
Count III pleads in like manner an existing right of Borden against Monochem arising out of the occurrences upon which Borden's claim No. 1 is based. This count, as well, is pleaded as an alternative to the allegation in Paragraph 24, supra, that Borden has released or destroyed rights against Monochem to plaintiff's prejudice and in violation of the subrogation clause in the policy. (¶ 35, Complaint.)
Similar to Count II pleaded against United and Wickes, plaintiff re-pleads the policy and the subrogation clause (¶ 36, Complaint). The re-pleading also includes the allegation that the two boilers in which the superheater tube failures occurred were owned and maintained by Monochem (¶ 15, Complaint). Plaintiff then alleges the failure of Monochem to exercise due care in operating and maintaining the boilers in question (¶ 39, Complaint) and that Monochem had assumed a continuing duty to supply steam to Borden and, by reason of its failure to perform said obligation, the occurrences set forth in Paragraph 15, supra, took place (¶¶ 37-38, Complaint). Finally, plaintiff alleges that as a result of the foregoing breaches of duty, Borden is alleged to have rights against Monochem to which plaintiff will be subrogated on any payment as to Borden's claim No. 1 (¶ 40, Complaint).
In addition to Borden's claim No. 1, defendants United and Wickes are involved in the...
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