ACE Fire Underwriters Ins. Co. v ITT Indus., Inc.

[*1] ACE Fire Underwriters Ins. Co. v ITT Indus., Inc. 2006 NY Slip Op 52487(U) [14 Misc 3d 1211(A)] Decided on July 19, 2006 Supreme Court, New York County Cahn, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 19, 2006
Supreme Court, New York County

ACE Fire Underwriters Insurance Company, et. al., Plaintiffs

against

ITT Industries, Inc., et al., Defendants.



600133/06

Herman Cahn, J.

Motion Sequence Nos. 001, 004, 007, 010, 011, 012, 013, 015, 016, 017, 018, 021, 022, 023, 024, 025, 026, and 027 are consolidated for disposition.

Plaintiffs ACE Fire Underwriters Insurance Company, et al. (collectively, the ACE Insurers) seek a judicial determination as to the rights and obligations of the parties in this declaratory judgment action with respect to insurance coverage for underlying bodily injury claims arising from exposure to silica, asserted against defendants ITT Industries, Inc. (ITT) and U.S. Silica Corporation (USS), the successor to ITT's former subsidiary, Pennsylvania Glass Sand Corporation (PGS, and collectively with USS, USS/PGS). The ACE Insurers also assert claims against many of ITT's and USS/PGS's primary, umbrella and excess insurers.

In Motion Sequence No. 001, ITT moves to dismiss the complaint, or, alternatively, sever and stay this action with respect to the defendant insurers that issued umbrella and excess policies to ITT as set forth on Schedule A to this decision, on the ground that ITT has filed a prior and more comprehensive action in California involving ITT's umbrella and excess policies, and these claims should be heard and decided in that action, CPLR 3211 (a) (4) and (7).

In Motion Sequence No. 007, ITT moves to dismiss or, in the alternative, stay the cross claim of excess insurer Royal Indemnity Company (Royal), CPLR 3211 (a) (4), for the same reason.

ITT also moves to dismiss the cross claims and affirmative defenses of the following defendants who issued it policies of excess insurance: defendants Allstate Insurance Company (Allstate) (Motion Sequence No. 004); Affiliated FM Insurance Company (Affiliated) (Motion Sequence No. 0010); Certain Underwriters at Lloyd's, London, Certain London Market Companies, and North River Insurance Company (collectively, Lloyd's) (Motion Sequence No. 015); TIG Insurance Company as successor by merger of International Insurance Company (TIG) (Motion Sequence No. 017); United States Fire Insurance Company (U.S. Fire) (Motion Sequence No. 018); OneBeacon American Insurance Company, as successor in interest to Commercial Union Insurance Company (OneBeacon) (Motion Sequence No. 021); and Everest Reinsurance Company, formerly known as Prudential Reinsurance Company (Everest) and Mt. McKinley Insurance Company, formerly known as Gibralter Insurance Company (Mt. [*2]McKinley) (Motion Sequence No. 023), CPLR 3211 (a) (4) and (b) .

ITT also moves to strike or dismiss the affirmative defenses of the following defendants who issued it policies of excess insurance: defendants Allianz Underwriters Insurance Company (Allianz) (Motion Sequence No. 012); General Reinsurance Corporation (General Re) (Motion Sequence No. 013); Associated International Insurance Company (Associated) (Motion Sequence No. 016); Travelers Casualty and Surety Company, formerly known as Aetna Casualty and Surety Company (Travelers) (Motion Sequence No. 022); Zurich International (Bermuda), Ltd. (Zurich) (Motion Sequence No. 024); Brittany Insurance Company (Brittany) (Motion Sequence No. 025); and Compagnie Europeene D'Assurances Industrielles (Compagnie) (Motion Sequence No. 026), as they relate to ITT, CPLR 3211 (b).

In Motion Sequence No. 011, defendant USS moves to dismiss or in the alternative, sever and stay, the ACE Insurers' claims against USS in this action, in favor of an action previously filed in West Virginia, CPLR 3211 (a) (4), 3001 and 327. USS also moves for an order dismissing the cross claims filed by Lloyd's and Affiliated against USS, or, in the alternative, sever and stay such cross claims.

In Motion Sequence No. 027, ITT moves to strike the affidavit of George Judt filed by Royal in support of Royal's opposition to ITT's motion to dismiss.

For the reasons set forth below, Motion Sequence No. 001 is granted to the limited extent that this action is stayed as to the defendant insurers that issued umbrella and excess policies to ITT, pending the outcome of the California action. Motion Sequence No. 027 is denied as moot, as are ITT's remaining motions. Motion Sequence No. 011 is also denied.

ITT's Motion to Dismiss or Stay With Respect to the Excess and

Umbrella Insurers In Favor of the California Litigation (Motion Sequence No. 001)

PGS, USS's predecessor, was incorporated several decades ago as a stand-alone corporation, and has had its principal place of business in Berkeley Springs, West Virginia since 1969 (Aff. of John Ulizio, ¶ 3). On March 8, 1969, ITT purchased the stock of PGS (id., ¶ 5). From that time, until September 12, 1985, PGS was a wholly-owned subsidiary of ITT (id., ¶ 6; Complaint ¶ 4). From September 12, 1985 to February 9, 1996, PGS was a wholly-owned subsidiary of U.S. Borax, Inc. (Borax) (Ulizio Aff., ¶ 8). In 1986, PGS's name was changed to USS (id., ¶ 9; Complaint, ¶ 5). On February 9, 1996, Borax sold the stock of USS/PGS, which ultimately became a subsidiary of Better Minerals & Aggregates Co. (Ulizio Aff., ¶ 10).

USS/PGS is a major American producer and processor of sands and silica, and operates facilities throughout the eastern part of the country (Aff. of Shannon M. Lopp, ¶¶ 20-21 [Aff. of Jerrald J. Hochman, Exh A]). Both ITT and USS/PGS are parties to lawsuits brought by individuals alleging bodily injury in connection with ITT's and/or USS/PGS's manufacture, sale or use of silica-containing products (Complaint, ¶ 6). The ACE Insurers issued policies of liability insurance to USS/PGS and ITT (id., ¶¶ 7, 10), and now seek a declaration of the rights, duties and liabilities of the parties under those policies, as well as other policies issued to ITT and USS/PGS by certain defendant insurers, with respect to silica claims which have been brought against ITT and USS/PGS (id., ¶¶ 8, 11). The ACE Insurers contend that they are not obligated to defend or indemnify ITT or USS/PGS for the silica claims pursuant to the terms, conditions and exclusions of the policies at issue in this action (id., ¶¶ 9, 12).

ITT alleges, and the ACE Insurers do not dispute that, pursuant to the terms of a primary [*3]liability policy issued by Pacific Employers Insurance Company (PEIC), one of the ACE Insurers, PEIC is obligated to indemnify ITT for silica-related loss arising from claims brought against USS/PGS. Under their fourth claim for relief, asserted against ITT, USS/PGS and the defendant insurers, the ACE Insurers seek contribution from ITT's umbrella and excess insurers and ITT for any payments that PEIC has or will make to ITT pursuant to its contractual indemnity obligation. Specifically, the ACE insurers seek a declaration that the umbrella and excess insurers "are obligated to pay or reimburse their just and proper share of any and all costs" related to the silica suits (Complaint, ¶ 177).

Well prior to the institution of this action, ITT filed a comprehensive insurance coverage action in California involving ITT's umbrella and excess policies. On September 16, 1991, ITT initiated an action in Los Angeles, California entitled ITT Corporation d/b/a General Controls v Pacific Indemnity Company, Los Angeles County Superior Court Case No. 037585 (the 585 Case) (2/16/06 Aff. of Michael Y. Horton, Exh 1), seeking coverage for claims of environmental property damage and injury allegedly caused by ITT"s ownership and operation of a facility in Los Angeles County. On February 3, 1998, ITT filed a related action entitled ITT Industries, Inc. v Pacific Employers Ins. Co., Los Angeles County Superior Court Case No. 0185311 (the 311 Case) (id., Exh 2), seeking coverage with respect to claims for environmental and other damage or injury allegedly caused by ITT arising out of its ownership of property or business operations. On August 27, 2001, the two cases were consolidated for all purposes as ITT Industries, Inc. v Pacific Employers Ins. Co., Los Angeles County Superior Court Case No. 037585 (id., ¶ 3).

On February 14, 2003, ITT filed an action entitled Cannon Electric Inc., et al. v ACE Property & Casualty Insurance Company, et al., Los Angeles County Superior Court Case No. BC 290354 (the 354 Case) (id., Exh 3). In the 354 Case, ITT seeks coverage for, among other things, bodily injury and personal injury claims caused by exposure to products containing silica sand, asbestos and other materials allegedly manufactured, sold, used or distributed by ITT:

Plaintiffs seek a declaratory judgment, pursuant to California Code of Civil Procedures Section 1060, that the defendants are obligated to pay the costs and expenses including, without limitation, the costs of investigation, defense and legal liabilities, arising from or in connection with claims, suits, actions, causes of action and demands asserted against plaintiff or which may in the future be asserted against plaintiffs alleging exposure to products allegedly containing or incorporating elements, minerals or other substances, including without limitation silica sand, asbestos and other materials and allegedly manufactured, sold, used or distributed by plaintiffs.

Id., ¶ 4; Exh 3 at 3-4 (emphasis added).

All of the California actions are being handled in a coordinated fashion by Judge Peter Lichtman. On February 18, 2003, the California Court ruled that the 354 Case was related to the 585 Case and the 311 case which, under Los Angeles Superior Court Local Rule 7.3 (f) means that they "[a]rise from the same or substantially identical transactions, happenings or events," and/or they "[r]equire a determination of the same or substantially identical questions of law and/or fact" (id., ¶ 5; Exh 4). [The 585 Case, the 311 Case, and the 354 Case are collectively referred to as the California Litigation.] The ACE Insurers are defendants in the 585 Case and the 311 Case (id., ¶ 6). Moreover, the relevant umbrella and excess policies that are at issue in this action are already at issue in the California Litigation, and the umbrella and excess insurers [*4]that sold those policies to ITT and the ACE Insurers are parties to the California Litigation (compare New York Complaint with Complaints in California Litigation]).

The California Litigation is at a much more advanced stage than this litigation, which was recently filed in January 2006. Over the last 15 years, the California Court has overseen and the parties have been involved in: (1) taking and defending more than 240 depositions; (2) propounding and answering nearly 2,000 interrogatories; (3) producing well over a million pages of documents; and (4) creating a repository of hundreds of boxes of documents in Los Angeles (id., ¶¶ 8-9). In addition, the California Court has entered a detailed 25 page case management order that addresses, among other things, motion practice and all aspects of discovery, including interrogatories and requests for admission, document requests, the production of documents, privilege logs, depositions, the exchange of policy information and documents, and the creation and maintenance of a Master Policy File to be maintained by a liaison committee comprised of counsel for plaintiffs in those actions and the insurers (4/20/06 Aff. of David Cox, ¶ 2; Exh 2).

In 2003, PEIC and other ACE insurers, ACE Property & Casualty Company and Century Indemnity Company, filed a suit in New York, similar to the instant action, entitled ACE Property & Casualty Company, et al. v ITT Industries, Inc., Index No. 60463/03 (the 2003 New York Action) (Horton Aff., Exh 5). In October 2004, the California Court ruled against the insurers on a forum non conveniens motion, which sought dismissal of the California Litigation in deference to the 2003 NY Action (see Court's Ruling re: Defendants' Motions to Dismiss or, Alternatively, Stay the [California] Action Based on Forum Non Conveniens [California Court's Forum Non Conveniens Ruling]; id., ¶ 10; Exh 6). The California Court expressly found that:

[A]lthough Justice Karla Moskowitz in the Commercial Division of the New York Supreme Court is undoubtedly well equipped to hear this case, so too is this Court, before whom the Environmental Action has been in litigation for over a decade. The Court acknowledges that the personal injury claims at issue in the instant action are different from the environmental remediation claims at issue in the Environmental Action. Nonetheless, the fact that both actions involve many of the same historical business and industrial operations, the same insurance coverage policies with overlapping coverage issues, and many of the same parties puts this Court in a unique advantage to dealing with the complexity of issues likely to be raised and in realizing the sorts of judicial economies and administrative efficiencies on which both courts, no doubt, place a high premium.

Id. at 6-19. After being stayed for more than a year, the 2003 New York Action effectively became moot after the California Court's Forum Non Conveniens Ruling.

In their fourth claim for relief, the ACE Insurers seek a declaration that the umbrella and excess insurers who issued liability policies to ITT are required to contribute to any past or future payments made by the ACE Insurers to or on behalf of ITT for silica claims. ITT now moves to dismiss or stay this action with respect to the excess and umbrella insurers listed on Schedule A in deference to the California Litigation which involves, among other things, insurance coverage for silica-related claims. ITT argues that the California Litigation, which has been pending for approximately fifteen years, is more comprehensive than this action, as that action has addressed or is addressing the rights and obligation of ITT, ITT"s umbrella and excess insurers, and the ACE Insurers in connection with the relevant policies and claims. Accordingly, ITT argues, because the first-filed and more comprehensive California Litigation subsumes the [*5]issues raised by this action, the ACE Insurers' contribution claims against the excess and umbrella insurers should be stayed pursuant to CPLR 3211 (a) (4).

As a general rule, New York law favors staying cases in deference to "first-filed" actions:

[P]roceedings begun in another State should not be interfered with unless there is some necessity clearly shown. ... Generally the court which has first taken jurisdiction is the one in which the matter should be determined and it is a violation of the rules of comity to interfere.

White Light Prod., Inc. v On the Scene Prod., Inc., 231 AD2d 90, 96 (1st Dept 1997), quoting City Trade & Indus. Ltd. v New Central Jute Mills Co., 25 NY2d 49, 58-59 (1969) (internal quotations and citations omitted). CPLR 3211 (a) (4) codifies the procedure by which the court considers whether, in the interest of comity and judicial economy, it should dismiss a later-filed suit in favor of an earlier action pending in another forum, to avoid vexatious litigation and the duplication of effort, and the attendant risk of divergent rulings on similar issues (White Light Prod., Inc. v On the Scene Prod., Inc., 231 AD2d 90, supra).

Pursuant to CPLR 3211 (a) (4), a court has broad discretion as to the disposition of an action when another is pending (Whitney v Whitney, 57 NY2d 731 [1982]) Certain Underwriters at Lloyd's, London v Hartford Accident & Indem. Co., 16 AD3d 167 [1st Dept 2005]). In considering whether to dismiss or stay a later-filed action in deference to an earlier-filed action, the court should determine whether there is a "substantial identity" of the parties (White Light Prod., Inc. v On the Scene Prod., Inc., 231 AD2d at 94; see also Lopez v Shaughnessy, 260 AD2d 551 [2d Dept 1999]). Further, to warrant dismissal or stay, the two actions should be sufficiently similar, and the relief sought must be "the same or substantially the same" (White Light Prod., Inc. v On the Scene Prod., Inc., supra., 231 AD2d at 94, quoting Kent Devel. Co. v Liccione, 37 NY2d 899, 901 [1975]; see also Flinkote Co. v American Mut. Liability Ins. Co., 103 AD2d 501 [2d Dept 1984], affd 67 NY2d 857 [1986]; National Union Fire Ins. Co. of Pittsburgh, Pa. v Jordache Enterprises, Inc., 205 AD2d 341 [1st Dept 1994]). It is not necessary that the precise legal theories presented in the first proceeding also be presented in the second proceeding (see Schaller v Vacco, 241 AD2d 663 [3d Dept 1997]). Rather, it is necessary only that the pleadings be based on the same actionable wrong (id.; see JC Mfg., Inc. v NPI Elec., Inc., 178 AD2d 505 [2d Dept 1991]).

Accordingly, a motion made pursuant to CPLR 3211 (a) (4) should be granted where an identity of parties and causes of action raises the possibility of conflicting rulings relating to the same matter (see Matter of Feustel v Rosenblum, 24 AD3d 549 [2d Dept 2005]; White Light Prod., Inc. v On the Scene Prod., Inc., 231 AD2d 90, supra).

It is clear that this action must be stayed in deference to the earlier-filed California Litigation, as the relief sought in both the California Litigation and the instant action is "the same or substantially the same," both actions arise out of the same claimed actionable wrong, and there is a substantial identity of parties

This action arises from the very same policies at issue in the California Litigation ITT's umbrella and excess coverage, and the very same type of claims silica claims. The California Litigation, which expressly encompasses coverage for silica-related loss, was commenced fifteen years ago, and has already involved extensive discovery and motion practice. The California Court has adjudicated numerous coverage issues related to ITT"s policies, including the excess and umbrella policies at issue here. Indeed, most of the umbrella and excess insurers that are [*6]defendants in this action are defendants in the California Litigation, and have raised many of the same affirmative defenses against ITT in the California Litigation that they raise here (see e.g. 3/8/06 Cox Aff., Exh 6). Thus, it is clear that the controversy between ITT and its umbrella and excess insurers with regard to silica claims is already at issue in the long-pending California Litigation.

Further, the California Court and the parties have litigated a variety of motions, including motions relating to the issues the ACE insurers raise here, such as the interpretation and application of certain provisions contained in some of ITT's policies, including: (1) the "pollution exclusion" (Complaint, ¶ 162 [a]); (2) the "voluntary payments" provision (id., ¶ 162 [g]) (3) the "occurrence" provisions found in the coverage grant (id., ¶ 162 [d]); and (4) the notice provisions (id., ¶ 162 [c]). The California Court has also addressed allocation of loss among multiple policies, the manner in which coverage may be "exhausted," and choice of law issues (see Horton Aff., ¶ 9).

Moreover, the California Court has already rejected arguments seeking to strip away its jurisdiction in connection with underlying asbestos claims when it denied the insurers' motion seeking a dismissal on forum non conveniens grounds. The California Court expressly found that, because of its long involvement with the ITT coverage action, (1) it was "well equipped" to handle all the coverage disputes related to the ITT policies; (2) that the asbestos coverage dispute and environmental coverage dispute involved the same insurance policies and many of the same coverage issues; and (3) that this provided the California Court with "judicial economies and administrative efficiencies" that the New York court would not have (California Court's Forum Non Conveniens Ruling at 9).

In their opposition, the ACE Insurers fail to rebut ITT's showing that this Court should defer to the California Court with regard to any disputes involving the coverage for the silica claims under ITT's umbrella and excess policies.

First, the ACE Insurers contend that this action is more comprehensive than the California Litigation. This contention, however, is incorrect. In the California Litigation, ITT seeks insurance coverage for bodily injury and personal injury claims caused not just by exposure to products containing silica sand, but also products containing asbestos and other materials allegedly manufactured, sold, used or distributed by ITT, and arising out of its ownership of property or business operations (3/17/06 Cox Aff, Exh 4; 4/20/06 Cox Aff., ¶¶ 1, 7; Exh 4). That litigation includes claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and anti-suit injunction, along with 89 separate declaratory judgment claims against ITT's insurers (3/17/06 Cox Aff, Exh 4; 4/20/06 Cox Aff., ¶ 8; Exh 4). Conversely, this action relates only to silica claims, and only seeks declaratory relief.

The ACE Insurers also contend that the 354 Case in the California Litigation relates only to asbestos cases, and thus, it would be inappropriate to dismiss or stay this action in favor of the California Litigation. To the contrary, it is clear that the 354 Case expressly encompasses coverage for silica-related loss (see Complaint in 354 Case at 3-4 [seeking coverage for bodily injury and personal injury claims caused by "exposure to products ... containing ... silica sand"]). Accordingly, the ACE insurers cannot dispute that the California Court has jurisdiction over silica-related coverage disputes.

The ACE Insurers also assert that the absence of USS/PGS as a party in the California [*7]Litigation renders that action incomplete, as well as the fact that they are no longer defendants in the 354 Case. However, it is clear that a difference in the parties in the two competing lawsuits will not defeat a motion to dismiss pursuant to CPLR 3211 (a) (4) "where, as here, both suits arise out of the same subject matter and series of alleged wrongs'" (White Light Prod., Inc. v On the Scene Prod., Inc., 231 AD2d at 94, citing Kent Devel. Co. v Liccione, 37 NY2d at 901]). Thus, a dismissal or stay pursuant to CPLR 3211 (a) (4) is appropriate "when at least one plaintiff and one defendant is common in each action" (Morgulas v J. Yudell Realty, Inc., 161 AD2d 211, 213 [1st Dept 1990]). This action and the California Litigation certainly meet that criteria. Moreover, the ACE Insurers are still defendants in the two other actions that comprise the California Litigation.

As set forth above, this action arises from the very same policies at issue in the California Litigation (ITT's umbrella and excess coverage) and the very same type of claims (silica claims). In light of the importance of conserving judicial resources, it makes no sense to duplicate the effort of the California Court in this court. The wheel has already been invented; it need not be reinvented. This is especially true because the ACE insurers have been actively involved in the California Litigation since its inception. Indeed, to the extent the ACE insurers believe that they have any claims against ITT's excess or umbrella carriers for amounts they contend to have overpaid for silica-related loss, the ACE insurers are free to assert such claims in the California Litigation.

Although ITT seeks either a dismissal or stay of this action, a stay, pending the outcome of the California Litigation, is more appropriate than dismissal (see Gabriel Capital, L.P. v Caib Investmentbank Aktiengesellschaft, 28 AD3d 376 [1st Dept 2006]; cf. Somoza v Pechnik, 3 AD3d 394 [1st Dept 2004]; Mt. McKinley Ins. Co. v Corning, Inc., ___ AD3d ___, NYLJ, July 7, 2006 at 22, col 1 [1st Dept 2006]). Hence, ITT's motion is granted to the extent that this action is severed and stayed, pending the resolution of the California Litigation, with respect to the defendant insurers that issued umbrella and excess policies to ITT, as set forth on Schedule A.

In light of this determination, ITT's additional motions to dismiss the counterclaims and/or affirmative defenses of defendants Allstate (Motion Sequence No. 004); Royal (Motion Sequence No. 007); Affiliated (Motion Sequence No. 0010); Allianz (Motion Sequence No. 012); General Re (Motion Sequence No. 013); Lloyd's (Motion Sequence No. 15); Associated (Motion Sequence No. 016); TIG (Motion Sequence No. 017); U.S. Fire (Motion Sequence No. 018); OneBeacon (Motion Sequence No. 021); Travelers (Motion Sequence No. 022); Everest and Mt. McKinley (Motion Sequence No. 023); Zurich (Motion Sequence No. 024); Brittany (Motion Sequence No. 025); and Compagnie (Motion Sequence No. 026) are all denied without prejudice as moot, with leave to renew, after the California Litigation has been resolved.

USS's Motion to Dismiss or Stay in Favor of the

First-Filed West Virginia Action (Motion Sequence No. 011)

Prior to its formation in 1986, USS operated, since 1927, as PGS, a Delaware corporation (Lopp Aff., ¶ 14). USS/PGS operates manufacturing facilities throughout the eastern part of the United States, sells its products primarily throughout the Northeast, including New York, and uses its New York customers to endorse and further sell its products (id., ¶¶ 15, 27-29, 30). Presently, USS/PGS is the sole operating manufacturing subsidiary of Better Minerals and Aggregates Corporation (BMAC), which is licensed to do business in New York (id., ¶¶ 8, 22). [*8]BMAC, in turn, is a subsidiary of USS Holdings, which is licensed to do business in New York (id., ¶ 13). PGS was licensed to do business in New York until July 11, 2001, when it filed a Surrender of Authority with the New York Department of State (id., ¶ 7).

In 1968, ITT's corporate predecessor, International Telephone & Telegraph Corp., headquartered in New York, acquired PGS. Subsequent to that acquisition, PGS, as a subsidiary of ITT, was an insured under liability policies issued to ITT (Ulizio Aff., ¶ 45). In September 1985, ITT sold PGS to Pacific Coast Resources Co. (PCR) (Lopp Aff., ¶¶ 16-17, 26). PCR changed its name to Borax shortly after this transaction (id., ¶¶ 18, 20).

In the 1985 capital stock purchase/sale agreement between PCR and ITT (the 1985 Agreement [attached to Hochman Aff. as Exh C]), ITT agreed to indemnify PCR for lung disease claims asserted against PGS arising from pre-Closing Date acts or omissions of ITT or PGS which resulted in, caused, or contributed to the alleged lung disease (the ITT Indemnity). The term of the ITT Indemnity was for a period of ten years (1985 Agreement, ¶¶ 5.1 [b] and 5.4). The 1985 Agreement provided that it terms would be governed exclusively by New York law (id. at ¶ 6.9).

ITT sought to insure this contractual liability by securing contractual liability coverage from its then general liability insurer, PEIC. On September 13, 1985, PEIC issued an amendatory endorsement to the 1985-1986 PEIC general liability policy relating to contractual coverage for the ITT indemnity [Hochman Aff., Exh G, and its Exh A, the PEIC Policy at Endorsement No. 44]). The PEIC policy, like the hundreds of other policies issued to ITT that are at issue in this matter, had been issued to ITT at its New York City office (see id., Exh D]).

As the conclusion of the original ITT indemnity period approached, Borax assigned all of its rights in the 1985 Agreement, including the indemnity rights, to USS, its subsidiary. Thereafter, in August 1995, USS and ITT amended the 1985 Agreement to provide for an indemnity period of 20 years (the 1995 Amendment) (id., Exh E).

On January 13, 2006, several ACE-affiliated companies that had issued primary or excess liability insurance policies to ITT and/or PGS filed this action in which they seek a declaratory judgment regarding the scope of coverage available to ITT and USS for the silica claims brought against them, as well as reimbursement for overpayments that PEIC had made regarding these claims. In addition to the Fourth Claim for Relief for contribution from the excess and umbrella insurers, the ACE Insurers assert four other claims for relief in the complaint. The First Claim for Relief, asserted against both ITT and USS/PGS, seeks a declaration as to the applicability of various enumerated policy terms, conditions and exclusions under the various policies issued to ITT or USS/PGS. The Second Claim for Relief, also asserted against both ITT and USS/PGS, seeks a declaratory judgment regarding the duration of the contractual liability coverage under the policy issued by PEIC. The Third Claim for Relief, asserted solely against USS/PGS, seeks a declaratory judgment as to the absence of any duty of the ACE plaintiffs to defend or indemnify USS/PGS. The Fifth Claim for Relief, asserted solely by PEIC against ITT, seeks a declaration that ITT must reimburse PEIC for those amounts paid by PEIC for silica claims made against USS/PGS between September 12, 1995 and September 12, 2005, for which period ITT agreed to indemnify USS/PGS, but which PEIC did not agree to insure

On January 6, 2006, several days prior to the commencement of this action, USS filed a complaint in West Virginia for declaratory judgment and breach of contract against insurance carriers who issued liability insurance policies to both ITT and USS/PGS (the West Virginia [*9]Action). The complaint asserts coverage for underlying lawsuits brought against USS and/or PGS over the past two decades, in which the underlying plaintiffs alleged bodily injury or other damages resulting from exposure to silica sand purportedly sold or distributed by USS and/or PGS. The action is entitled U.S. Silica Company, formerly known as Pennsylvania Glass Sand Corporation v ACE Fire Underwriters Insurance Company, et al., Civil Action No. 06-C-2, and is venued in the Circuit Court of Morgan County, West Virginia.

USS identifies two sets of policies under which it claims entitlement to coverage for the silica claims: (1) eight early policies issued to PGS before it was acquired by ITT; and (2) other policies issued by all defendants in the 1970's to ITT, its then-parent corporation.

There are two causes of action asserted in the complaint in the West Virginia Action. The first cause of action requests declaratory relief against all defendant insurers, and seeks coverage for all defense, indemnity and investigation costs that USS has incurred or will incur in connection with the silica claims. The second cause of action alleges breach of contract by PEIC, Travelers, Royal, and Century (INA). Notably, ITT is not identified as either a plaintiff or defendant in the West Virginia Action. The complaint is silent with respect to the ITT Indemnity and the limited period of coverage which ITT obtained for that obligation. Also absent are any allegations relating to coverage issued to, or providing liability coverage for, USS after 1985.

USS now moves to dismiss or stay the claims asserted in this action against it in favor of the West Virginia Action, on the grounds that the West Virginia Action was filed first, and that both the West Virginia action and this action involve primarily the same parties and the same issues, as they both are focused on determining USS/PGS's rights to insurance coverage for the underlying silica claims against it.

USS's motion for dismissal or a stay is denied, as this action is clearly more comprehensive than the West Virginia Action with respect to the claims against USS. Contrary to USS's arguments, the West Virginia Action is not between the same parties as are in the New York action, as ITT, an indispensable party, is not a party to the West Virginia Action, and all of the issues in this dispute will not be determined in West Virginia as that case is presently constituted. In contrast, the complaint in this action seeks a judicial determination of the rights and obligations of the ACE Insurers, ITT, USS/PGS, and the numerous other defendant insurers of ITT, and USS/PGS pursuant to all of their respective liability insurance policies, in connection with all of the underlying silica claims (see Complaint, ¶¶ 3-6). This action thus encompasses all coverage claims under all provisions of the policies at issue (with the exception of the claims for contribution against ITT's excess and umbrella insurers), including both products liability provisions, and the contractual liability provisions of the PEIC policy. Accordingly, as between New York and West Virginia, New York is the more appropriate forum.

Although USS argues that the claims against it in this action must be dismissed or stayed because the West Virginia action was filed first, the argument lacks merit. Under New York law, a first-filed action does not automatically take precedence over a later-filed action. "While priority in bringing of actions is a factor to be considered in choice-of-forum litigation, it is not controlling, especially when commencement of the competing actions has been reasonably close in time" (Flinkote Co. v American Mut. Liability Ins. Co., 103 AD2d at 505; see also Certain Underwriters at Lloyd's, London v Hartford Accident & Indem. Co., 16 AD3d at 168 ["While technical priority in the commencement of actions is a factor to considered in determining [*10]whether dismissal is appropriate pursuant to CPLR 3211 (a), it is not necessarily dispositive"]). The complaint in this action was filed within days of the commencement of the West Virginia action, and long before the insurer was required to respond to either action. Accordingly, the filing of the two actions is clearly "reasonably close in time" (Flinkote Co. v American Mut. Liability Ins. Co., supra.,103 AD2d at 505) , and thus, the mere technical priority of the West Virginia Action is not dispositive (see Hertz Corp. v Luken, 126 AD2d 446, 550 [1st Dept 1987] [later-filed action not dismissed where actions were commenced "virtually simultaneous"]; Seaboard Sur. Co. v Gillette Co., 75 AD2d 525, 525 [1st Dept 1980]).

Moreover, in considering whether to dismiss or stay an action based on the pendency of an earlier-filed action, courts look to factors in addition to which action was filed first, including the comprehensiveness of the different actions (Kerotest Mfg. Co. v C-O-Two Fire Equip. Co., 342 US 180, 183 [1952]; see e.g. Fleet Capital Corp. v Mullins, 2004 WL 548240, *5 [SD NY 2004] [court deferred to later-filed litigation on ground that it "contains issues broader than this action"]).

Here, it is clear that this action is more comprehensive than the West Virginia Action with respect to the claims asserted against USS, as it seeks to globally resolve all coverage claims under all provisions of the policies at issue. The issues in this global dispute include the following central areas of conflict among the parties:

The extent, both temporal and substantive, of contractual liability coverage provided to ITT by the 1985 PEIC policy for the ITT Indemnity.

The extent to which coverage may be available, if at all, to USS/PGS and/or ITT for the silica claims under the products liability provisions of any policy issued to PGS/USS or ITT.

Whether USS has liability insurance issued to it or under which it can seek coverage that would provide coverage for the silica claims.

Whether USS is precluded by the terms of the ITT Indemnity and/or Endorsement 44 to the 1985 PEIC policy from seeking insurance coverage for some or all of the silica claims.

If products liability coverage is available to USS/PGS and/or ITT under the ITT policies or the policies issued to USS/PGS for the silica claims, the appropriate trigger of coverage and allocation to be applied.

The extent to which USS and/or ITT may be responsible for a share of the damages arising from the silica claims.

In bringing the West Virginia action without naming ITT as a party, or referencing the [*11]ITT Indemnity, USS fractures these issues, without regard to the overall impact on the other insureds, or on the carriers. For instance, in the West Virginia Action, USS seeks coverage under the provisions of policies issued to ITT from 1968 to 1985, as well as under the products liability provision of policies issued directly to PGS or Borax from 1949 until 1986, without naming ITT as a party, and without any reference to the ITT Indemnity. Essentially, USS demands coverage from the defendant insurers notwithstanding that it may have already received indemnity from ITT, as if that indemnity never existed.

However, the ITT indemnity is a significant issue that impacts USS's insurance coverage demands. PEIC contends that it agreed to cover ITT's contractual liability to USS only to September 12, 1995, and never agreed to extend that coverage when ITT entered into an agreement with USS for an additional ten-year extension of the indemnity. If, hypothetically, ITT were entitled to contractual liability coverage until September 12, 2005, USS would certainly not be entitled to recover separately against the insurers for the same amounts simply because USS may also have insured status under certain of the insurance policies. Conversely, if ITT is not entitled to contractual liability coverage beyond September 12, 1995, then USS and ITT are vying for the same products liability coverage under many of the policies of insurance issued to ITT, under which policy aggregates for products liability will likely come into play (see e.g. Hochman Aff., Exh I [PEIC policies which disclose annual aggregates for products liability claims]). Similarly, if ITT is not entitled to contractual liability coverage beyond September 12, 1995, then USS would also have an independent cause of action against ITT itself for contractual indemnification for the silica claims, to the extent that ITT has not in the past, and does not in the future, fulfill its obligations to indemnify USS through September 12, 2005.

These issues impact not just USS, ITT and the ACE Insurers. Whether Endorsement 44 to the 1985 PEIC policy applies to silica claims asserted after 1995, or acts to preclude coverage for silica claims under any other provision of any of the PEIC primary policies, impacts available coverage under products liability provisions as to all policies issued to PGS, ITT and USS.

The West Virginia Action does not address either the ITT indemnity, or any of the other interrelated issues identified above. In contrast, this action addresses the allocation of any covered damages among all of the carriers which insured ITT, PGS and/or USS, and thus, all of these issues have been or may be raised in this action. Moreover, it is axiomatic that the parties whose rights with respect to these issues are being adjudicated have related, and conflicting, interests, and are essential parties to this dispute. Both USS and ITT are parties the 1985 Agreement and the 1995 Amendment relating to the ITT Indemnity. Hence, they are necessary parties to a determination of both USS's and ITT's entitlement to coverage for the silica claims that are the subject of these agreements. The ACE Insurers clearly have a right to have coverage determinations regarding interrelated issues and all of the proper parties determined in one forum to avoid duplication of effort, piecemeal litigation, waste of judicial resources, and inconsistent rulings (see White Light Prod., Inc. v On the Scene Prod., Inc., 231 AD2d 90, supra).

Thus, New York is the more appropriate forum. The Court also notes that USS has significant contacts with New York, given that it sells its products in New York, and its parent corporations are licensed to do business in New York. Accordingly, USS's motion for an order dismissing or staying this action in favor of the West Virginia Action is denied.

Motion Sequence No. 027

In Motion Sequence No. 027, ITT moves to strike the Affidavit of George Judt filed by [*12]Royal in support of its opposition to ITT's motion to dismiss Royal's cross claim, on the ground that the affidavit does not state where it was signed, the signature of the notary is illegible, the name of the notary is not printed underneath, and there is no statement as to the authority of that person to act as a notary public. In opposition to the motion to strike, Royal submits an amended affidavit of George W. Judt, which fully meets the criteria addressed by ITT (see Royal Opp, Exh A). Accordingly, this motion is denied as moot.

The Court has considered the remaining arguments, and finds them to be without merit.

Accordingly, it is

ORDERED that Motion Sequence No. 001 is granted to the limited extent that this action is severed and stayed, pending the resolution of the California Litigation, with respect to the defendant insurers that issued umbrella and excess policies to defendant ITT Industries, Inc., as set forth on Schedule A, and is denied in all other respects; and it is further

ORDERED that ITT Industries Inc.'s motions to dismiss the counterclaims and/or affirmative defenses of defendants Allstate Insurance Company (Motion Sequence No. 004); Royal Indemnity Company (Motion Sequence No. 007); Affiliated FM Insurance Company (Motion Sequence No. 0010); Allianz Underwriters Insurance Company (Motion Sequence No. 012); General Reinsurance Corporation (Motion Sequence No. 013); Certain Underwriters at Lloyd's, London, Certain London Market Companies, and North River Insurance Company (Motion Sequence No. 15); Associated International Insurance Company (Motion Sequence No. 016); TIG Insurance Company as successor by merger of International Insurance Company (Motion Sequence No. 017); United States Fire Insurance Company (Motion Sequence No. 018); OneBeacon American Insurance Company, as success in interest to Commercial Union Insurance Company (Motion Sequence No. 021); Travelers Casualty and Surety Company, formerly known as Aetna Casualty and Surety Company (Motion Sequence No. 022); Everest Reinsurance Company, formerly known as Prudential Reinsurance Company and Mt. McKinley Insurance Company, formerly known as Gibralter Insurance Company (Motion Sequence No. 023); Zurich International (Bermuda), Ltd. (Motion Sequence No. 024); Brittany Insurance Company (Motion Sequence No. 025); and Compagnie Europeene D'Assurances Industrielles (Motion Sequence No. 026) are all denied without prejudice as moot, with leave to renew, after resolution of the California Litigation; and it is further

ORDERED that U.S. Silica Company's motion to dismiss or stay this action in favor of the West Virginia Action (Motion Sequence No. 011) is denied; and it is further

ORDERED that ITT Industries, Inc.'s motion for an order striking the affidavit of George Judt is denied as moot; and it is further

ORDERED that the remainder of the action shall continue.

Dated: July 19, 2006

ENTER:

________/s/_______________

J.S.C. [*13]