Liberty Mutual Insurance v. Fairbanks Co.
17 F. Supp. 3d 385
S.D.N.Y.2014Background
- Fairbanks (Georgia corporation) has been defended/indemnified by a series of insurers for asbestos suits; Lumberman’s (one insurer) went into liquidation in 2013, creating an "orphan share."
- Liberty Mutual (Massachusetts insurer) previously issued policies to Fairbanks (originally issued in New York) and sued in SDNY seeking a declaration it need only pay its pro rata "time-on-the-risk" allocable share and reimbursement if it overpaid.
- Fairbanks sued Liberty Mutual and other insurers in the Northern District of Georgia seeking a declaration that insurers must cover 100% of defense/indemnity (including the orphan share) and asserting breach claims against some carriers.
- Georgia action was removed to federal court; Judge Jones stayed the Georgia action pending this Court’s resolution of Fairbanks’s transfer/abstention motion.
- Fairbanks moved to transfer this SDNY action to the Northern District of Georgia under 28 U.S.C. § 1404(a) and alternatively to stay/dismiss under abstention doctrines; the SDNY court denied transfer and found the abstention request moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of first-filed rule | Liberty Mutual: its SDNY suit was first and controls; first-filed rule applies to avoid duplicative litigation | Fairbanks: Georgia action is broader/different; therefore first-filed rule should not apply or should be displaced | Court: First-filed rule applies because core claims overlap; additional claims/parties in Georgia do not defeat rule |
| Whether Liberty Mutual’s SDNY filing was an improper anticipatory/forum-shopping declaratory action | Liberty Mutual: filing legitimate; connected to NY (policies issued there) | Fairbanks: Liberty Mutual raced to courthouse; pre-suit negotiations show anticipation/forum-shopping | Court: No improper anticipation or manipulative forum shopping; pre-suit communications were settlement discussions; NY has material ties; plaintiff’s forum choice entitled to deference |
| Convenience and balance-of-convenience under § 1404(a) | Liberty Mutual: factors (locus of operative facts, plaintiff’s forum, witnesses, documents) favor SDNY or are neutral; plaintiff’s forum choice entitled to great weight | Fairbanks: transfer favors Georgia (Fairbanks HQ, witnesses, related broader Georgia case) and efficiency/consolidation with Georgia action | Court: Balance does not tip heavily to transfer. Locus of operative facts and plaintiff’s forum favor SDNY; witness convenience neutral; party convenience slightly favors Georgia but not dispositive; efficiency gains speculative; transfer denied |
| Abstention/stay/dismiss in favor of Georgia action (Wilton/Colorado River) | Liberty Mutual: abstention not warranted; related Georgia action stayed pending this motion | Fairbanks: seek stay/dismissal if Georgia action remanded to state court | Court: Abstention motion moot because Georgia remand was denied; motion denied as moot |
Key Cases Cited
- Gulf Oil Corp. v. Gilbert, 380 U.S. 501 (interest of justice and convenience factors in transfer analysis)
- First City Nat’l Bank & Trust Co. v. Simmons, 878 F.2d 76 (2d Cir. 1989) (priority of first-filed action absent special circumstances)
- Employers Ins. of Wausau v. Fox Entm’t Grp., Inc., 522 F.3d 271 (2d Cir. 2008) (first-filed rule guidance and limits on anticipatory filing exception)
- Van Dusen v. Barrack, 376 U.S. 612 (choice-of-law rules after transfer)
- Wyndham Assocs. v. Bintliff, 398 F.2d 614 (2d Cir. 1968) (policy favoring consolidation of related litigation in single tribunal)
- D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006) (plaintiff’s forum choice is entitled to great weight)