Newport Associates Development Company v. Chubb Custom Insurance Company, A-0295-24

Newport Associates’ Jersey City pier seawall collapsed in 2008-09, resulting in a pollution incident and subsequent litigation (the "Utilities Litigation").
Newport filed a 2018 declaratory judgment action against over thirty insurer defendants—including AIG Specialty Insurance Company (ASIC)—seeking defense and indemnity coverage for the Utilities Litigation.
Newport and ASIC’s policies included arbitration provisions, with ASIC’s answer to the complaint omitting any arbitration demand, instead including a jury demand and certification that arbitration was not contemplated.
The parties engaged in years of litigation with substantial discovery and multiple stays related to efforts at joint defense and while the Utilities Litigation proceeded; the last stay lasted over two years.
Only after the resolution of the Utilities Litigation in late 2023 did ASIC for the first time demand arbitration and move to compel it in mid-2024.
The trial court denied ASIC’s motion to compel arbitration, finding waiver under the Cole factors; ASIC appealed.

Issue	Newport’s Argument	ASIC’s Argument	Held
Waiver of Arbitration	ASIC’s litigation conduct and long delay waived any right to arbitrate	Delay justified; arbitration not ripe until other litigation ended	ASIC waived arbitration by litigation conduct
Applicability of Arbitration Clause	Policy language is permissive; not mandatory in this context	Arbitration clause is enforceable and mandatory	Not reached, as waiver was found
Prejudice to Newport	Prejudiced by years of costly litigation expecting a jury trial	No prejudice, as claim only became ripe after settlement	Newport suffered prejudice from ASIC’s delay
Extent of Litigation vs. Arbitration	Participated fully in discovery, motion practice, no notice of arbitration	Only limited discovery relevant to indemnity; demand timely after stay	Extensive litigation supported waiver

Cole v. Jersey City Med. Ctr., 215 N.J. 265 (2013) (sets out factors for determining waiver of arbitration by litigation conduct)
Skuse v. Pfizer, Inc., 244 N.J. 30 (2020) (de novo review standard for motions to compel arbitration)
Kernahan v. Home Warranty Adm’r of Fla., Inc., 236 N.J. 301 (2019) (non-deferential review for legal conclusions on arbitration)
Spaeth v. Srinivasan, 403 N.J. Super. 508 (App. Div. 2008) (presumption against waiver of arbitration, overcome by clear and convincing evidence)