American Precision Industries, Inc. v. Federal Insurance Company
1:14-cv-01050-RJA-HKS
| W.D.N.Y. | Mar 8, 2018Background
- API sued three insurers (Federal, Fireman’s Fund, North River) seeking declaratory relief that they must defend/indemnify and reimburse API for asbestos-related claims and defense costs; case referred to Magistrate Judge Schroeder.
- Policies at issue: Federal (1992–1997), Fireman’s (1985–1989), North River (1974–1977).
- API was corporate parent that in 1996–1998 formed and shifted shares among subsidiaries (AirTech, Basco, Heat Transfer); API asserts it retained pre-1997 asbestos liabilities and therefore seeks coverage for defense costs it paid even when other API-related entities were named.
- API’s bordereaux lists 753 underlying asbestos suits; insurers contend API itself is named in only one suit and that most suits name Heat Transfer, not API.
- Discovery dispute: insurers served Rule 36 requests seeking admissions that API is named in only one of the 753 suits, that API seeks reimbursement for defending non-API entities in 752 suits, and that certain subsidiaries are not insureds; API objected, asserting relevance and disputing terminology and legal conclusions.
- Court ordered API to answer specified requests (relating to identity of named defendants and insureds) within 45 days; denied insurers’ request to deem admitted the assertion that API defended "non-API entities" due to vagueness and API’s preserved legal theory that liabilities were retained by API.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether identities of named defendants and insureds in underlying suits are discoverable/relevant | API: identities not relevant because liabilities belong to API regardless of incorrectly named defendants; bordereaux suffices | Insurers: identities are relevant to coverage and whether insurers owe defense/indemnity to API or to other entities | Court: Relevant; ordered API to answer specified requests about named defendants/insureds within 45 days |
| Whether API must admit it is named in only 1 of 753 suits | API: objected; disputed characterization and relevance | Insurers: requested admission under Rule 36 to narrow issues | Court: Did not deem admitted; instead ordered API to answer discovery requests (i.e., produce factual responses) |
| Whether API must admit it seeks reimbursement for defending "non-API entities" in 752 suits | API: objected that term "non-API entities" is vague and preserved contention that liabilities were retained by API | Insurers: defined term broadly and sought admission that API defended non-insureds | Court: Denied motion to deem this admitted; found API’s response sufficient given vagueness and legal theory preserved |
| Whether subsidiaries (Heat Transfer, AirTech, Basco) are insureds under API policies | API: contends liabilities were retained by API and thus coverage questions may be resolved in API’s favor | Insurers: contend those entities are not insureds/additional insureds under policies issued to API | Court: Found requests on insured status relevant and ordered API to answer those requests (not deem them admitted yet) |
Key Cases Cited
- Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (discusses broad standard of relevance for discovery)
- Moosman v. Joseph P. Blitz, Inc., 358 F.2d 686 (2d Cir. 1966) (purpose of Rule 36 to expedite trial by removing uncontested issues)
- Trilegiant Corp. v. Sitel Corp., 275 F.R.D. 428 (S.D.N.Y. 2011) (burden of demonstrating relevance is on party seeking discovery)
- Morgan Stanley Group Inc. v. New England Ins. Co., 225 F.3d 270 (2d Cir. 2000) (policyholder bears burden to show insurance contract covers loss)
- Consol. Edison Co. of New York, Inc. v. Allstate Ins. Co., 98 N.Y.2d 208 (N.Y. Ct. App. 2002) (New York law on coverage burden and interpretation)