566 F. App'x 95
2d Cir.2014Background
- Lapolla seeks a declaratory judgment that Aspen’s CGL and excess policies cover defense/indemnity for an underlying EDNY product-liability action by two plaintiffs on behalf of a putative class.
- The policies contain a Total Pollution Exclusion (TPE) clause and a pollution exclusion in the excess policy, defined to include various pollutants.
- The District Court dismissed under Rule 12(b)(6), holding a choice-of-law conflict between New York and Texas law and applying Texas law to interpret the TPE clause, which then unambiguously excludes coverage.
- On appeal, Lapolla argues the district court misapplied choice-of-law rules and that additional interpretations of the underlying complaint were not properly considered.
- The court applies de novo review to choice-of-law and dismissal rulings, and affirms the district court’s result that Texas law governs the TPE interpretation and that the TPE excludes coverage.
- Lapolla’s post-judgment Rule 59 arguments were raised late and explained to not be properly before the court on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who governs the interpretation of the TPE clause? | Lapolla contends the forum's choice-of-law rules should govern the interpretation; argues for a broader or different reading of exclusion. | Insurers contend there is a conflict and Texas law should govern interpretation of the TPE. | Texas law governs interpretation of the TPE clause. |
| Does the TPE clause exclude coverage for the underlying claims? | Lapolla argues the TPE exclusion is ambiguous or not applicable to the underlying conduct. | Insurers argue the TPE unambiguously excludes coverage under Texas law. | Under Texas law, the TPE clause unambiguously excludes coverage. |
| Was Lapolla entitled to consideration of theories raised post-judgment? | Lapolla raised misrepresentation and direct-contact theories after judgment for reconsideration. | The theories were not properly raised below and are waived on appeal. | Arguments raised for the first time on appeal were not considered. |
Key Cases Cited
- Booking v. General Star Mgmt. Co., 254 F.3d 414 (2d Cir. 2001) (actual conflict analysis in choice-of-law)
- Krauss v. Manhattan Life Ins. Co. of New York, 643 F.2d 98 (2d Cir. 1981) (forum-state choice-of-law rules in diversity actions)
- Matter of Allstate Ins. Co., 81 N.Y.2d 219 (N.Y. 1993) (confirms approach to choice of law in liability insurance contracts)
- Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309 (N.Y. 1994) (principal location of insured risk for liability policies)
- Certain Underwriters at Lloyd's London v. C.A. Turner Const. Co., 112 F.3d 184 (5th Cir. 1997) (relevance of multistate insured risks for choice of law)
- National Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517 (Tex. 1995) (Texas Supreme Court on exclusion interpretation)
- Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386 (2d Cir. 2001) (de novo review standards for choice-of-law and pleading standards)
- Bryant v. N.Y. State Educ. Dep't, 692 F.3d 202 (2d Cir. 2012) (clear pleading standard and deference to district court rulings)
- Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155 (2d Cir. 2012) (pleading standards; inference drawing in reviews)