W.R. Grace & Co. v. Hartford Acc. and Indem. Co.

• Decision Date: 11 June 1990
• Citation: 407 Mass. 572,555 N.E.2d 214
• Parties: W.R. GRACE & CO. v. HARTFORD ACCIDENT AND INDEMNITY COMPANY et al. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 214

555 N.E.2d 214

407 Mass. 572

W.R. GRACE & CO. v. HARTFORD ACCIDENT AND INDEMNITY COMPANY et al. ¹

Supreme Judicial Court of Massachusetts,

Middlesex.

Argued Jan. 11, 1990.

Decided June 11, 1990.

John J. Curtin, Jr. (Randy Paar of New York & David C. Boch with him) for plaintiff.

William J. Bowman of the District of Columbia (William J. Dailey with him) for Hartford Acc. & Indem. Co. & others.

Laura A. Foggan of the District of Columbia, for Maryland Cas. Co.

James P. Donovan & Carl J. Pernicone of New York, for Royal Indem. Co., joined in a brief.

Mary Ann D'Amato & Thomas J. Quinn of New York, George Marshall Moriarty, John T. Montgomery, & Eric A. Smith for Rayment and London Market Companies, submitted a brief.

John H. Harwood, II, Karen E. Schifter, L. Anthony Sutin & James G. Christiansen of the District of Columbia, & David B. Chaffin & John P. Ryan for Ins. Co. of North America & others, joined in a brief.

Before LIACOS, C.J., and WILKINS, ABRAMS, NOLAN, LYNCH, O'CONNOR and GREANEY, JJ.

WILKINS, Justice.

W.R. Grace & Co. (Grace), a Connecticut corporation with its principal place of business in New York City, commenced this declaratory judgment action in 1987 against insurers from whom Grace had purchased excess comprehensive general liability insurance, in various amounts and at various times, between October 20, 1962, and June 30, 1984. Grace asserts that the defendants are obliged to defend Grace and, if liability is established, to indemnify it as to numerous claims for personal injury and property damage alleged to have been caused by products containing asbestos that were manufactured by Grace. Since 1983, a declaratory judgment action brought by the Maryland Casualty Company against Grace has been pending in the United States District Court for the Southern District of New York. All Grace's primary comprehensive general liability insurers during relevant periods are parties to that action which concerns the primary insurers' duties to defend and to indemnify Grace with respect to asbestos-related claims. ²

Several excess insurers moved for dismissal of this action on the ground of forum non conveniens. ³ In a comprehensive memorandum of decision, supplemented by a further memorandum following Grace's motion for reconsideration, the judge allowed the motion to dismiss on forum non conveniens grounds. A judgment dismissing the action was entered. We transferred Grace's appeal here on our own motion.

We shall first discuss the facts and legal conclusions on which the judge based his decision to deny Grace access to the courts of this Commonwealth to litigate its dispute with its excess comprehensive general liability insurers. At certain points, we shall pause to assess Grace's objections to the judge's reliance on certain facts. No party claims that the underlying issues in this case should not be resolved in a single proceeding. ⁴ The conflict is between Grace's claim that its choice of Massachusetts as the decision-making forum must be accepted and the defendant excess insurers' claim that Massachusetts is an inappropriate forum, particularly because New York is the logical State in which to resolve the dispute over the obligations of Grace's excess insurance carriers.

Grace has numerous divisions located in various States, one of which is its construction products division whose principal place of business is in Cambridge. More than 2,000 of the over 7,500 underlying claims against Grace have been asserted in Massachusetts courts. These actions are being defended by two Boston law firms. Most of these claims are based on conduct of Grace's construction products division. ⁵

The judge found that the insurance contracts involved in this case were negotiated, executed, and delivered to Grace in New York. Marsh & McLennan, a New York-based insurance broker, acted for Grace in New York in obtaining insurance coverage from various excess insurers whose offices were in New York. Over 460 insurance policies are involved in this case. There is support in the record for the conclusion that Marsh & McLennan negotiated some policies outside of New York. From supplemental material that Grace presented with its motion to reconsider, it appears that, as to one insurer, the negotiations for coverage and the issuance of policies occurred in Boston and as to a few others the negotiations also occurred outside of New York. Grace generally paid premiums to insurers in New York. Grace's supplemental material pointed to a few exceptions. Most of the excess insurers do business in Massachusetts; all do business in New York. Grace claims that the record shows that all defendants do business here. Certainly all the defendants who moved to dismiss do business in Massachusetts.

Many insurers have denied responsibility in this case on the theory that Grace knew of asbestos-related risks but failed to inform the excess insurers of those risks during negotiations for coverage. The motion judge believed that the misrepresentation issue would be a major one for the trier of fact in this case. ⁶ He also found that few witnesses live in Massachusetts and that a vast majority of the people who participated in the negotiations resided or still reside in New York. Grace points out that some potential witnesses are scattered around the country. On the other hand, the motion judge noted that many nonparty witnesses would not be amenable to process in Massachusetts (and would be in New York) and that the relevant insurance policies and other documents would likely be located in New York.

In addition to the private factors just discussed bearing on the forum non conveniens issue, the judge considered public interest factors. He recognized that this complex case would impose a burden on the judicial system of the Commonwealth but rightly did not rely on this circumstance alone in reaching his decision. He concluded that the substantive law of New York would govern the obligations of the insurance companies. ⁷ Citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 509, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947), he said that, because New York law governed, it was preferable that a New York, rather than a Massachusetts, court decide the dispute. He believed that this action duplicated the actions in New York. He said that "Grace seems to be forum shopping in an effort to reach a favorable result." If the issues were decided in one forum, he concluded, duplication of effort and inconsistent judgments would be avoided. ⁸

The judge declined to give effect to "service of suit" clauses that appear in many, if not all, excess coverage policies. Grace claims that those clauses (a) compel its insurers to accept Massachusetts as the forum for the resolution of their dispute and (b) direct that the substantive law of the selected forum must govern the resolution of the contested issues. We shall return to the issue of the "service of suit" clauses after we have discussed general principles that govern the doctrine of forum non conveniens.

A decision whether to dismiss an action under the doctrine of forum non conveniens involves the discretion of the motion judge, cannot be made by applying a universal formula, and depends greatly on the specific facts of the proceeding before the court. Universal Adjustment Corp. v. Midland Bank, Ltd., 281 Mass. 303, 316, 184 N.E. 152 (1933). In New Amsterdam Casualty Co. v. Estes, 353 Mass. 90, 98-99, 228 N.E.2d 440 (1967), we upheld the discretionary dismissal of an action in which (a) the controversy was governed by the law of another State, (b) sources of proof were relatively inaccessible here (nonparty witnesses and documents in the possession of nonparties), and (c) if the evidence could have been produced here, it would have been only at great expense and inconvenience. We quoted extensively from Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-509, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1947), where the United States Supreme Court recited factors to be considered, while conceding that the weight to be given to those factors in each case was not easily stated. New Amsterdam Casualty Co. v. Estes, supra at 95-96, 228 N.E.2d 440. Among the private factors, relevant to the case before us, are the practical problems that do or do not make a trial easy, expeditious, and inexpensive, such as the ease of access to proof, the availability of compulsory process, and the cost of attendance of witnesses. Id. at 95, 228 N.E.2d 440. Factors of public interest include administrative burdens caused by litigation that has its origins elsewhere and the desirability of the trial of a case in a forum that is at home with the governing law. Id. at 95-96, 228 N.E.2d 440. ⁹ "But unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed." Id. at 95, 228 N.E.2d 440 (quoting Gulf Oil Corp., 330 U.S. at 508, 67 S.Ct. at 843). See Kearsarge Metallurgical Corp. v. Peerless Ins. Co., 383 Mass. 162, 169, 418 N.E.2d 580 (1981) (no abuse of discretion in declining to dismiss an action governed by the substantive law of New Hampshire); Joly v. Albert Larocque Lumber Ltd., 397 Mass. 43, 44-45, 489 N.E.2d 698 (1986) (no abuse of discretion in allowing motion to dismiss where all parties were Canadian, access to witnesses and discovery was more favorable in Canada, Canadian law seemed applicable, and other factors pointed toward Canada); Restatement (Second) of Conflict of Laws § 84 comment c (1971).

In a complex case such as this, involving many parties and largely common issues of law and fact, it is in the public interest that all the relevant insurers be parties to the action. A decision to dismiss an action such as this on forum non conveniens grounds should not be made unless all the parties most probably can be made parties in another, more convenient forum. See Lacey v. Cessna Aircraft Co., 862 F.2d 38, 44 (3d Cir.1988); In re Air Crash Disaster...