Arch Insurance Company v. Harleysville Worcester Insurance
1:13-cv-07350
| S.D.N.Y. | Oct 28, 2014Background
- Harleysville seeks coverage declarations and reimbursement from Arch, Illinois Union, and Erie for payments to settle Rodrigues and Dovas claims arising from Erie's contract with the Authority.
- Erie contracted to defend/indemnify the Authority; Authority was insured by Arch OCPL and Erie procured it for Authority's benefit.
- Illinois Union CGL policy provided $2M coverage to Erie; policy contains an auto exclusion.
- Harleysville issued an auto policy to Erie and extended coverage to Authority as an additional insured.
- Rodrigues (Erie employee) fell from a trailer; Rodrigues sued the Authority; Harleysville defended under reservation of rights and settled Rodrigues for $500k with Arch and Harleysville sharing funds; Dovas also settled with Arch, Harleysville, and Illinois Union.
- This SDNY action seeks declaratory relief about which insurer must cover which incident and the right to reimbursement; Erie moves to dismiss Harleysville’s amended counterclaim and third-party complaint; the court addresses antisubrogation and various procedural grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Antisubrogation applies to bar Harleysville claims? | Harleysville claims not barred; insurer can seek reimbursement if not covering the loss. | Antisubrogation bars claims where insured and third party are insured for same risk. | Antisubrogation does not bar Harleysville since relief seeks non-covered losses; claims allowed. |
| Procedural grounds to dismiss; joinder and impleader proper? | Harleysville seeks to join Erie in counterclaim and bring third-party complaint. | Erie argues improper joinder and impleader. | Permissive joinder under Rule 20 and impleader under Rule 14 are proper; dismissal denied. |
| Simultaneous EDNY action effect on SDNY case? | Single coordinated action would streamline litigation. | Not a basis to dismiss; SDNY action remains proper forum. |
Key Cases Cited
- ELRAC, Inc. v. Ward, 96 N.Y.2d 58 (N.Y. 2001) (antisubrogation principle and rights of insurer against insured)
- Pa. Gen. Ins. Co. v. Austin Powder Co., 68 N.Y.2d 465 (N.Y. 1986) (antisubrogation scope and insureds' rights)
- Indemnity Ins. Co. of N. A. v. St. Paul Mercury Ins. Co., 900 N.Y.S.2d 24 (N.Y. App. Div. 1st Dept. 2010) (antisubrogation limitations; indemnity contexts)
- North Star Reinsurance Corp. v. Continental Ins. Co., 82 N.Y.2d 281 (N.Y. 1993) (antisubrogation and insurer-subrogee principles)
- Gen. Star Nat’l Ins. v. Niagara Frontier Transit Metro., 918 N.Y.S.2d 923 (N.Y. App. Div. 4th Dept. 2011) (insurer rights to seek reimbursement when coverage questioned)
- Dery v. Wyer, 265 F.2d 804 (5th Cir. 1959) (implied impleader scope and derivative claims)