Tig Ins. Co. v. FKI Indus., Inc.

Decision Date06 October 2020
Docket NumberCase No. 18-CV-00264-GKF-FHM
PartiesTIG INSURANCE COMPANY as successor-in-interest to International Insurance Company, Plaintiff, v. FKI INDUSTRIES, INC., formerly known as Acco Babcock, Inc., and ACCO MATERIAL HANDLING SOLUTIONS, INC., Defendants.
CourtU.S. District Court — Northern District of Oklahoma

This matter comes before the court on the Motion to Dismiss Plaintiff's Complaint [Doc. 39] of defendants Acco Material Handling Solutions, Inc. and FKI Industries, Inc., formerly known as Acco Babcock, Inc.1 For the reasons set forth below, the motion is granted.

I. Background/Procedural History

This is an action for declaratory judgment pursuant to Fed. R. Civ. P. 57 and the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq. International Insurance Company, predecessor-in-interest to plaintiff TIG Insurance Company (TIG), issued to Acco Babcock, Inc.2 a Commercial Comprehensive Catastrophe Liability Policy, designated no. 523-198737-9, for the policy period of January 1, 1985 to January 1, 1986 (Policy). Pursuant to the Policy, Insurer "agree[d] to pay on behalf of the insured the ultimate net loss in excess of the retained limithereinafter stated, which the insured may sustain by reason of the liability imposed upon the insured by law, or assumed by the insured under contract, for: . . . Bodily Injury Liability . . . arising out of an occurrence." [Doc. 2-1, p. 3].

Since issuance of the Policy, numerous claimants have asserted claims against Acco for bodily injury allegedly caused by asbestos exposure from products distributed and/or manufactured by defendants (Underlying Claims). Acco initially sought coverage for the Underlying Claims under certain primary general liability insurance policies issued by Century Indemnity Company as successor to Insurance Company of North America (INA). INA issued general liability insurance policies to Acco Babcock and related entities during the policy periods from 1980 to 1988. The TIG Policy at issue in this case is excess to the INA policy for the policy period from January 1, 1985 to January 1, 1986. See [Doc. 2-1, p. 9].

On February 16, 2016, Acco, as well as The Crosby Group LLC, initiated a lawsuit, designated case no. 2016-SU-000466-89, in the Court of Common Pleas of York County, Pennsylvania against INA (Pennsylvania Case). See [Doc. 40-9].3 The Pennsylvania Case is limited to the INA policies covering two policy periods: January 1, 1984 to January 1, 1985 and January 1, 1985 to January 1, 1986. Therein, Acco claimed that INA breached the insurance contracts by refusing to provide a defense for the Underlying Claims based on Acco's alleged failure to satisfy the policies' deductibles. Acco alleged that INA "has taken this position even though the Policies' deductibles are $500,000 per Policy and the Policyholders have incurred over $1,7500,000 in defense costs - an amount that is growing every day." [Doc. 40-9, p. 11, ¶ 38].

Approximately one month later, on March 18, 2016, INA initiated a declaratory judgment action in New York state court, which was designated case no. 651468/2016 (New York Case).See [Doc. 40-3]. Therein, INA sought a declaration that it had no duty to defend the Underlying Claims but that, if a duty to defend existed, "the exposure of each Underlying Claimant constitutes a separate occurrence under the Policies, and thus, Defendants must satisfy a separate deductible or [Self-Insured Retention] in each applicable policy period for each Underlying Claimant" and "that defense costs arising from each Underlying Claimant must be allocated over all years in which alleged bodily injury occurred." [Doc. 40-3, pp. 17-18]. Unlike the Pennsylvania Case, the New York Case was not limited to the policy periods from January 1, 1984 to January 1, 1985 and January 1, 1985 to January 1, 1986. Instead, in the New York Case, INA sought a declaration as to the policies covering the periods from 1980 through 1986.

Acco moved to dismiss the New York Case based on the existence of the Pennsylvania Case under a New York law that grants the state court discretion to dismiss an action when "there is another action pending between the same parties for the same cause of action in a court of any state or the United States." [Doc. 40-4 (citing N.Y. C.P.L.R. § 3211(A)(4)]. Likewise, INA moved to dismiss the Pennsylvania Case based on the existence of the New York Case pursuant to the common-law forum non conveniens doctrine as codified at 42 Pa. Cons. Stat. § 5322(e). [Doc. 40-10]. In INA's motion to dismiss the Pennsylvania Case, INA described the most "significant" issues between the parties as allocation—specifically, whether the majority or minority approach to allocation should apply—and the number of "occurrences." [Doc. 40-10, pp. 26-27]. According to INA, pro rata allocation constitutes the majority approach pursuant to which "damages are allocated equitably among all years in which the bodily injury or property damage occurred. Thus, if bodily injury or property damage spanned one-hundred years, a policyholder electing to purchase insurance only for one of those years, and consciously deciding to 'go bare' for the remaining ninety-nine, would be able to recover only 1% of the loss." [Id. at p. 27]. Conversely,pursuant to the minority joint-and-several allocation method, "one policy year is answerable up to its policy limits for all of the bodily injury or property damage, no matter how many years the policyholder chose to 'go bare,' and no matter how few years of coverage the insurer issued." [Doc. 40-10, p. 27].

On December 28, 2016, the Pennsylvania court denied INA's motion to dismiss or stay the action. [Doc. 40-14]. Subsequently, on February 28, 2017, the New York state court granted Acco's motion to dismiss "to the extent further proceedings in the action [were] stayed." [Doc. 40-8, p. 14]. The New York court ordered that either party could make an application by Order to Show Cause to vacate or modify the stay upon the final determination of the Pennsylvania Case. [Id.].

In early 2018, INA and Acco began discussing a potential mediation. TIG, through its third-party claims administrator, was included, and participated, in communications to schedule the mediation, which was set for May 18, 2018. See, e.g., [Doc. 40-36]. Moreover, it is clear that Acco was under the impression that TIG agreed to participate in the mediation.4 However, the day before the scheduled mediation, on May 17, 2018, TIG filed this declaratory judgment action. See generally [Doc. 2]. The Complaint for Declaratory Judgment includes three counts. The first count seeks a declaration that the TIG Policy does not provide coverage for bodily injury that occurred prior to the inception of the Policy (January 1, 1985), and does not provide coverage for bodily injury that occurs subsequent to the expiration of the Policy (January 1, 1986). The second count seeks a declaration that a pro rata allocation method based on "time on the risk" applies to allocating defense and indemnity costs for the Underlying Claims for the entire triggered period during which bodily injury takes place. Finally, the third count seeks a declaration that, under theterms, conditions, and exclusions in the Policy, TIG's obligation for defense and/or indemnity in connection with the Underlying Claims, is barred or limited for twelve additional reasons, including that the Underlying Claims are not the result of an "occurrence" and that the Underlying Claims are not covered under the Policy to the extent that defendants fail to comply with the "loss payable" condition included in the Policy. [Doc. 2, pp. 7-10].

Following initiation of this litigation, from June 2018 to April 2020, the court granted the parties eleven separate requests for additional time to answer or otherwise plead based on counsel's representations that the parties were negotiating a resolution of the litigation. It appears that the Pennsylvania Case was also effectively stayed during this period. Finally, on April 9, 2020, this court ordered defendants to file an Answer or otherwise respond to TIG's Complaint by May 29, 2020. [Doc. 38].

On May 29, 2020, defendants filed their motion to dismiss. [Doc. 39]. The next business day, on June 1, 2020, Acco filed a First Amended Complaint in the Pennsylvania Case. The First Amended Complaint included claims for breach of contract and anticipatory breach of contract against TIG based on TIG's failure to pay Acco's costs in defending the Underlying Claims. TIG filed an objection to the Amended Complaint, which is currently pending before the Pennsylvania court. INA filed an Answer to the First Amended Complaint asserting twenty-four (24) separate affirmative defenses.

In the instant motion, defendants seek dismissal of this matter under two separate theories: (1) forum non conveniens based on the existence of the Pennsylvania Case, and (2) failure to join an indispensable party under Fed. R. Civ. P. 19 pursuant to Fed. R. Civ. P. 12(b)(7), based on TIG's failure to include INA as a party. [Doc. 39]. TIG responded in opposition to defendants' motion to dismiss [Doc. 42], and defendants filed a reply brief. [Doc. 44]. In the reply brief,defendants raise two additional doctrines which they contend support dismissal: (1) Colorado River abstention, and (2) Brillhart/Mhoon abstention. [Doc. 44, pp. 6-7]. With the court's permission, TIG filed a sur-reply. [Doc. 47]. Thus, the motion is ripe for the court's determination. The court separately considers each theory.

II. Forum Non Conveniens

A district court may dismiss a lawsuit based on forum non conveniens "when an alternative forum has jurisdiction to hear [the] case, and . . . trial in the chosen forum would establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to plaintiff's convenience, or . . . the chosen forum [is] inappropriate because of considerations affecting the court's own...

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