Failure To Plead That Excess Liability Policies Were Implicated Leads To Dismissal Of Third Party DJ Complaint

In this declaratory judgment action, the court held that defendants Travelers Indemnity Company  and Travelers Casualty and Surety Company  (Travelers) had a duty to defend its insured Chicago Pneumatic Tool Company (Chicago Tool) for silica- and asbestos-related claims, prompting Traveler to file a second amended third party complaint against Chicago Tool’s other insurers, AIU Insurance Company  (AIU), Century Indemnity Company (Century Indemnity), Liberty Mutual Fire Insurance Company (Liberty Fire), Trygg-Hansa Insurance Company, Ltd. (Trygg-Hansa), and Industria Insurance Company (Industria).  In response to the complaint Industria moved to dismiss for lack of personal jurisdiction or compel arbitration or to dismiss for failure to state a claim; Trygg-Hansa moved to compel arbitration or, to dismiss for failure to state a claim; AIU to dismiss for failure to state a claim. 

The court denied Industria’s motion to dismiss for lack of personal jurisdiction because Travelers’ complaint arose out of Industria’s issuance of insurance to corporations authorized to do business in New York. Accordingly, the exercise of jurisdiction over Industria was proper under New York statutory law. The court also denied Trygg-Hansa’s and Industria’s motions to compel arbitration, noting that Travelers was not a party to the insurance contracts requiring arbitration. 

The court denied Industria’s motion to dismiss for failure to state a claim but granted Trygg-Hansa’s and AIU’s motions on the same ground. The court noted that the complaint characterized the Trygg-Hansa and AIU policies as “excess liability insurance policies”, but did not state that those policies had attached. Accordingly, Travelers did not plead that Trygg-Hansa’s and AIU’s excess policies were implicated. The court held that because excess policies are triggered only if the primary policies are exhausted, and there was no claim of the exhaustion of those policies, Travelers failed to state a claim against Trygg-Hansa and AIU. In contrast the complaint alleged that the Industria policies were primary policies (not excess) and covered the same risk as the Travelers policy, but that Industria had not paid its equitable share of the costs. The court found that ; and further that this was sufficient to state a claim against Industria for defense and indemnity.

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