GENERAL CABLE CORPORATION v. INSURANCE COMPANY OF NORTH AMERICA et al Motion to Dismiss

8/7/2019 GENERAL CABLE CORPORATION v. INSURANCE COMPANY OF NORTH AMERICA et al Motion to Dismiss

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Case 2:10-cv-01958-PD Document 15-1 Filed 07/22/10 Page 1 of 34

IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF PENNSYLVANIA

General Cable Corporation CIVIL ACTION NO.1 0 1958Plaintiff,

v.

Insurance Company OfNorth America, et aI.Defendants.

BRIEF IN SUPPORT OF MOTION BY DEFENDANT CENTURY INDEMNITYCOMPANY TO DISMISS COMPLAINT OR, ALTERNATIVELY, TO STAY

PROCEEDINGS

Lawrence A. Serlin, Esquire (PAID #42898)SIEGAL & PARK533 Fellowship Road, Suite 120Mt. Laurel, NJ 08054Tel: (856) 380-8914Fax: (856) 380-8915Attorneys for Defendant Century IndemnityCompany, as successor to CCI InsuranceCompany, as successor to Insurance CompanyofNorth America, individually and assuccessor to Indemnity Insurance Company ofNorth America


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TABLE OF CONTENTS

PRELIMINARY STATEMENT ................................................................................................. 1

FACTS,

.......................................................................................................................................A. General Cable's Federal Court Complaint .............................................................. 3B. Century's Parallel New York State Court Complaint............................................. 5c. Geueral Cable's Historical Demands For Coverage Under Century's Policies .... 7

1. General Cable's 1993 New Jersey Federal Court Suit Regarding UnderlyingAsbestos Claims ....................................................................................................... 72. General Cable's Tender of the Occidental Action Claim ........................................ 83. TIle Filing of the Instant Suit ................................................................................... 9

D. Formation ofCentnry's Policies .............................................................................. 10ARGUMENT ............................................................................................................................... 11I. LEGAL STANDARDS ...................................................................................................... 11

A. Federal Courts Have Discretion Not To Exercise Jurisdiction Over DeclaratoryJudgment Claims ...................................................................................................... 11I. The "Heart of the Matter" Approach Should Be Used in Suits Like This OnePresenting Both Declaratory and Coercive Claims ..................................... ..........112. Since No Discretion-Limiting Federal Interest Factors Apply, the Court MustConsider Several Other Factors Set Forth By Supreme Court and ThirdCircuit Precedent. ...................................................................................................14

II. DECLARATORY JUDGMENT CLAIMS ARE THE HEART OF THIS MATTER,OVER WHICH THIS COURT HAS DISCRETION WHETHER TO REFRAINFROM ASSERTING ITS JURISDICTION.................................................................... 15

III. VIRTUALLY ALL RELEVANT CONSIDERATIONS WEIGH HEAVILY INFAVOR OF THIS COURT REFRAINING FROM EXERCISING ITSJURISDICTION................................................................................................................ 17


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A. The Existence Of A Parallel State Court Action In Which Essentially The SameIssues Will Be Adjudicated By The Same Part ies Compels This Court ToExercise A General Policy Of Restraint.................................................................. 17B. Close And Unsettled State Law Questions Are Presented That Are More

Appropriately Decided By The New York State Court......................................... 191. New York Law Applies to the Pmiies' Coverage Issues ....................................... 19

a. PennlJ;fvania's Choice ofLaw Rules Would Result in Application ofNew YorkLaw..................................................................................................19

b. New York's Choice ofLaw Rules Would Also Result in Application ofNew York Law to the Coverage Issues Here ....................................................25

2. Certain of the Key Issues Presented Have Not Yet Been Resolved by NewYork's Highest Court ............................................................................................. 26

C. All Other Criteria Likewise Weigh Against Exercising Federal Jurisdiction ..... 28CONCLUSION ........................................................................................................................... 29APPENDIX .................................................................................................................................. 30

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TABLE OF AUTHORITIES

Cases Page No.Atlantic Mut. Ins. Co. v. Greater New York Mut. Ins. Co., 241 A.D.2d 427,660N.Y.S.2d983 (lstDept. 1997 ............................................................................................. 26

Bianci v. Florists Mut. Ins. Co., 660 F. Supp. 2d 434 (E.D.N.Y. 2009) ....................................... 27Certain Underwriters at Lloyd's, London v. Foster Wheeler, 36 A.D.3d 17

(I st Dept. 2006), aff'd 9 N.y'3d 928 (2007) ...................................................................... 26,27Coltec Industries Inc. v. Continental Ins. Co., 2005 WL 1126951 (E.D. Pa. 2005) ..................... 13Consolidated Edison Co. ofNew York v. Allstate Ins. Co., 98 N.Y.2d 208 (2002) ...................... 26Continental Casualty Co. v. Rapid-American Corp., 80 N.Y.2d 640 (1993) ............................... 26Crucible Materials Corp. v. Certain Underwriters at Lloyd's London & London MarketCompanies, 681 F. Supp. 2d 216 (N.D.N.Y. 2010) ........................................... 20,21,22,23,26Generali-US. Branch v. Caribe Realty Corp., 1994 WL 903279 (N.Y. Sup. 1994) ................... 26Griffith v. United Air Lines inc., 416 Pa. 1,203 A.2d 796 (1964) ................................................ 20Hammersmith v. TIG Ins. Co., 480 F.3d 220 (3d Cir. 2007) .................................................. 20,23In Re Liquidation ofMidland Ins. Co., 269 A.D.2d 50, 709 N.Y.S.2d 24

(1st Dept 2000) .......................................................................................................................... 21ITT industries, Inc. v. Pacific Employers Ins. Co., 427 F. Supp. 2d 552(E.D. Pa. 2006) ...................................................................................... 11, l3 , 16, 17, 18, 19,28J.H France Refractories Co. v. Allstate Ins. Co., 534 Pa. 29, 626 A.2d 502 (1993) ................... 21Leonard v. State Farm Mut. Automobile Ins. Co., 2009 WL 3088425 (W,D. Pa. 2009) .............. 13Liberty Mut. Ins. Co. v. Treesdale, Inc., 419 F.3d 216 (3d Cir. 2005) .......................................... 28NL Industries, Inc. v. Commercial Union Ins. Co., 926 F. Supp. 465 (D.N.J. 1994) ................... 26NLlndustries, Inc. v. Commercial Union Ins. Co., 935 F. Supp. 513 (D.N.J. 1996) ................... 27Perelman v. Perelman, 688 F. Supp. 2d 367 (E.D. Pa. 2010) ....................................................... 13

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Cases Page No.Pronational Ins. Co. v. Shah, 2007 WL 2713243 (E.D.Pa. 2007) ........................ 15, 19,27,28,29Scottsdale Ins. Co. v. Broaddus, 2009 WL 349697 (E.D. Pa.) ......................................... 14, 17, 18Serio v. Public Service Mut. Ins. Co., 304 A.D.2d 167, 759 N.Y.S.2d 110 (2d Dept 2003) ........ 26State Auto Ins. Cos. v. Summy, 234 F .3d 131 (3d Cir.2000) ................................................... 28, 29The Scully Co. v. OneBeacon Ins. Co., 2004 WL 1166594 (E.D. Pa. 2004) ................................ 13Vale Chemical Co. v. Hartford Ace. and Indem. Co., 512 Pa. 290, 516 A.2d 684 (Pa. 1986) ..... 28Zurich Ins. Co. v Shearson Lehman Hutton, 84 N.Y.2d 309 (1994) ............................................ 25

Rules and StatutesFed. R.Civ. P. 12(b)(I) .................................................................................................................... I

IV


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PRELIMINARY STATEMENTDefendant Century Indemnity Company, as successor to CCI Insurance Company, as

successor to Insurance Company of North America, as successor to Indemnity InsuranceCompany of North America (hereafter "Century") (incOlTectly sued as "Insurance Company ofNorth America"), I by its attorneys, submits this brief in support of its motion under Rule12(b)(1) of the Federal Rules of Civil Procedure2 and pursuant to this court's broad discretionaryauthority to dismiss the Complaint filed by plaintiff General Cable Company ("General Cable"),or, alternatively, to stay the proceedings.

This is an insurance coverage dispute in which the policyholder, General Cable, has fileda Complaint asserting five claims. Three of the claims seek declaratory relief while the othertwo are related and dependent claims for breach of contract. Because General Cable's demandsfor declaratory relief are at the heart of this action, in that those claims must be resolved inGeneral Cable's favor in order to even reach its claims for breach of contmct, this Court hasdiscretion to decline jurisdiction under the pennissive but not mandatory jurisdiction provided bythe Federal Declaratory Judgment Act.

The circumstances here constitute a particularly compelling case for exercising discretionand dismissing the Complaint, or alternatively staying the proceedings, because theconsiderations most pertinent to the Court's assessment weigh heavily in favor of doing so.Those circumstances include that: (a) no federal issues or other discretion-limiting factors arepresented by General Cable's Complaint; (b) there is a parallel state court proceeding filed by1 Century asserts that it is the ultimate successor in intcrest with respect to coverage obligations) if any, underinsurance policies at issue in this case issued by Indemnity Insurance Company of North America ("IINA") andInsurance Company of North America ("INA"). Century submits, therefore, that INA is incorrectly named as adefendant in this matter. Century expects that plaintiff may dispute Century's status as the correct successor ininterest. That potential issue, however, has no bearing on the matters addressed by this motion,2 Rule 12(b)(I) provides for the filing of a preliminary motion to dismiss an action due to "lack of jurisdiction overthe subject matter." Fed.R.Civ.P. I2(b)(I).

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Century in New York, involving all of the parties in this case (and more) and essentially theidentical issues, where the parties can ohtain complete relief; (c) the issues can better be resolvedby the New Yark state court because they are purely matters of state law, and certain key issuesare unresolved or are close questions under New York law (which should apply to GeneralCable's claims under a proper choice of law analysis); and (d) the dispute concems issues ofinsurance coverage, as to which this Court should be particularly restrained in exercising itsjurisdiction and mindful ofthe need for avoiding duplicative litigation.

Additionally, no consideration that General Cable may point to 111 rebuttal favorsretention of jurisdiction by this Court. For example, although this federal court action was filedtwo months plior to the New York state court Complaint, such first-filed status is ilTelevant towhether, in the exercise of sound discretion, this Court should decline jurisdiction under theFederal Declaratory Judgment Act, particularly where, as here, neither case has progressedbeyond the preliminary pleading stage. Also, General Cable's choice offorum is entitled to little

or no weight since it is not a resident of Pennsylvania, there is no federal issue presented, thecase involves only state law questions of insurance coverage, and there is no basis for applyingPennsylvania law to General Cable's claims. Further, the facts here demonstrate that New Yorkis no less convenient a forum far General Cable to litigate in than would be Pennsylvania.

Moreover, all indications are that General Cable filed tltis action in rather preemptoryfashion in the vain hope of getting more favorable Pennsylvania insurance allocation law toapply, and that it filed in federal court in Pennsylvania simply because filing in Pennsylvaniastate court would have required the impractical joining of thousands of underlying asbestosclaimants. General Cable's attempt at tactical fencing is further reason to dismiss or stay itsComplaint in favor of the parallel New York state court action.

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Finally, there is no reason that all of the issues presented here cannot be fully adjudicatedby these same parties in the parallel state court case. Consequently, the Complaint should bedismissed (without prejudice), or at the very least these proceedings should be stayed, in whichcase the parties will be able to proceed unabated and without duplication of effCnis in the NewYark state action.

FACTSA. General Cable's Federal Court Complaint

On or about April 30, 2010, General Cable filed a Complaint in this Court (the "FederalComplaint") based on diversity jurisdiction against two insurers, Century (incorrectly named as"Insurance Company of North America") and Travelers Casualty and Surety Company("Travelers"). See copy of Federal Complaint, attached as Exhibit A to the accompanyingDeclaration of Lawrence A. Serlin, Esq. ("Serlin Dec."). The unnumbered introductoryparagraph to the Federal Complaint notes that General Cable is a "Delaware corporation" with "aprincipal place of business in Highland Heights, Kentucky." Id. at I. General Cable is describedas, at all times pertinent, being engaged in the "manufacture, supply and distribution of cable andwire products."

Of the five counts complising the Federal Complaint, two seek declaratory relief fromCentury (INA) only, one seeks declaratory relief from both Century and Travelers, one asserts abreach of contract claim against Century only and the remaining count is for an alleged breach ofcontract by Travelers only.

Count I of the Federal Complaint, entitled "Declaratory Judgment for the Asbestos SuitsAgainst INA," asserts a claim for a declaratory judgment against Century (INA) regardingcoverage far underlying asbestos suits that have been and in the future may be brought against

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General Cable alleging bodily injury and personal injury (the "Asbestos Suits"). Jd. at 5-6, 9-11.By way of relief, Count I seeks a declaration that Century's predecessor is obligated to "defendand indemnifY Plaintiff, and to pay all costs and expenses in full" with respect to the AsbestosSuits under the tenns of two specified policies -- alleged primary policy RPL 595 (12/31159-12131/60) and excess policy XBC 1049 (711/60-7/1163). ld. at 11. General Cable also seeksdeclarations providing that it may select the policy or policies for payment of defense andlorindemnity costs arising from the Asbestos Suits; that a "continuous injnry" trigger applies to theAsbestos Suits; that there is an unlimited duty to pay defense costs that is invoked wheneverthere is "any evidence of coverage," even if the policy instruments are "incomplete, lost ormissing;" and that the Asbestos Suits all arise out of an "occulTence," as defined by the policies.Id.

Count II of the Federal Complaint, entitled "Declaratory Judgment for the OccidentalAction Against INA," asserts a claim for a declaratory judgment against Century (INA)regarding coverage for an underlying contribution claim against General Cable pending in NewJersey state court (the "Occidental Action"). The Occidental Action is described as involvingenviromnental property damage in cOlmection with the investigation and remediation of theDiamond Alkali Superfund Site in New Jersey. !d. at 6, 11-13. The contribution claim againstGeneral Cable allegedly arises from its fonner operation of a wire and cable facility in thatlocale. Jd. at 6. By way of relief, General Cable seeks essentially the same declarations as forCount 1, except with respect to coverage for the Occidental Action. Id. at 12-13.3

Count IV of the Federal Complaint, entitled "Declaratory Judgment for the KIK ActionAgainst Travelers and INA Under the Carol Cable Policies," asserts a claim for a declaratory

3 Count II adds a request, however, for a declaration that costs ineun-ed for remedial investigation/feasibility studies,as well as other investigation costs, be deemed covered defense costs rather than indemnity costs.

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judgment against Century (INA) and Travelers regarding coverage for an underlyingcontribution claim against General Cable, as alleged successor to Carol Cable, under policiesallegedly issued by Century (INA) and Travelers to Carol Cable. Id. at 6-7, 14-15. Theunderlying contribution claim (the "KIK Action") is asserted to be pending in federal court inRhode Island. The KIK Action is alleged to seek declaratory relief and money damages fromCarol Cable due to contamination at a Rhode Island landfill, which is part of thePeterson/Puritan, Inc. Superfund Site in Rhode Island. Id. at 6-7. General Cable seeks identicalforms of declaratory relief in Count IV as in Count II, only with respect to the KIK Action. fd. at15.

Counts III and V of the Federal Complaint assert dependent claims for breach of contract.Count III asserts a claim against Century (INA) for breach of contract with respect to theOccidental Action in allegedly failing and refusing to fully investigate or defend General Cable.Id. at 13. In identical fashion, Count V of the Federal Complaint asserts a claim against onlyTravelers for breach of contract as to the KIK Action. Id. at 16. Both counts seek moneydamages in an unspecified amount "to be proven at trial." Id. at 14, 16.B. Century's Parallel New York State Court Complaint

On June 30, 2010, Centnry filed a declaratory judgment action in New York state courtnaming as defendants both General Cable and Travelers, along with numerous other insurers (the"New York Complain!"). See copy of New York Complaint and Sunnnons, attached as ExhibitB to Serlin Dec. The New York Complaint seeks declaratory relief with respect to the samethree underlying claims addressed by General Cable's Federal Complaint - the Asbestos Suits,the Occidental Action and the KIK Action, which are referenced collectively in the New YorkComplaint as the "Underlying Claims." Id. at 3-4.

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The First Cause of Action I I I Century's New York Complaint asserts that among theissues requiring resolution are:

(a) whether General Cable can prove the existence and material terms andconditions of a missing or lost 1959-60 primary policy allegedly issued by IlNAto the old General Cable Corporation; (b) whether General Cable, a DelawareCorporation with its principal place of business in Kentucky, can prove that it isthe legal successor or assign to rights under IINA's policies issued or allegedlyissued to the old General Cable Corporation, a New Jersey corporation that, oninformation and belief, had its principal place of business at the time in NewYork, New York; (c) what trigger of coverage and allocation methodology amongthe parties applies to defense and indemnity costs for the Underlying Claims; and(d) whether as to excess policies issued or allegedly issned by Century to GeneralCable and/or General Cable's alleged predecessor-in-interest, Carol Cable,underlying coverage has been properly exhausted and all other prerequisites tocoverage can be established, including for purposes of defense costs that injurywithin coverage is alleged in Underlying Claims to have taken place duringCentury's policy period, and for purposes of indemnity costs that injury withincoverage and not subject to a policy exclusion in fact took place during Century'spolicy period. ld. at 10-11.

Accordingly, the First Cause of Action seeks declaratory relief in Century's favor on these andrelated insurance coverage issues.4

4 The specific relief sought in the First Cause of Action of the New York Complaint is ajudgment:(a) Declaring that Century is not obligated to defend. indemnify or otherwise providecoverage to General Cable for the Asbestos Suits or the Occidental Action under alleged primary liabilitypolicy RPL 595 for reasons including General Cable's inability to prove the material tenns and conditions

of that policy;(b) Declaring that Century is not obligated to defend, indemnify or otherwise providecoverage to General Cable under any policies that may have been issued to "General Cable Corporation"prior to its merger into a subsidiary of The PeIlll Central Corporation in or around March 1982 for reasonsincluding General Cable's inability to prove that it is the named insured, that it is the legal successor of thenamed insured, or that it is the assignee of the rights of the named insured under any such policy;

(c) Declaring that Century is not obligated to defend, indemnify or otherwise providecoverage to General Cable under any policy as to tilose claims that fail to allege for defense cost purposes,or for which General Cable cannot prove for indemnity cost purposes, that injury took place during theperiod covered by policies issued by Century's predecessors-in-interest;(d) Declaring that Century is not obligated to defend, indemnify or otherwise providecoverage to General Cable under any excess policies for reasons including General Cable's inability toprove that underlying coverage has been properly exhausted;(e) Declaring that Century is not obligated to defend, indemnify or otherwise providecoverage to General Cable due to such additional tenus, conditions and exclusions of coverage as theproofs may demonstrate preclude coverage;(f) Declaring that the "injury in fact" trigger of coverage applies to the Underlying Claimsfor purposes of detennining whether there is any coverage owed under the Century policies at issue;

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The Second Cause of Action in Century's New York Complaint seeks a declaratoryjudgment, in the alternative, for contribution against General Cable and numerous other insurers,but only if Century is detennined to have a duty to defend andlor indemnify General Cable underany policy at issue, and if an allocation methodology were to be adopted by the New York statecourt that would require Century to initially pay more than its equitable fair share of costs inconnection with the Underlying Claims. Id. at 12-14.C. General Cable's Historical Demands For Coverage Under Century'sPolicies

l . General Cable's 1993 New Jersey Federal Court Suit RegardingUnderlying Asbestos Claims

The background facts relating to General Cable's filing of the Federal Complaint in thisCourt go back to the early 1990s. In May 1993, General Cable filed a declaratory judgmentaction against Century (IINA) and several other insurers in federal district court in New Jerseyseeking coverage for defense and indemnity costs associated with underlying asbestos bodily

injury and personal injury claims asserted against General Cable (the "New Jersey Complaint").See copy of New Jersey Complaint, attached as Exhibit C to Serlin Dec. Then, as now, GeneralCable alleged that coverage should be provided by Century's predecessor under alleged TINAprimary policy RPL 595 (12/31/59-60) and IINA excess policy XBC 1049 (7/1160-63). Id. at 9& Appendices A & B. Ultimately, however, the claims against Century in the New JerseyComplaint were voluntarily dismissed, without prejudice. See copy of 1112/94 Order ofDismissal, attached as Exhibit D to Serlin Dec.

(g) Declaring that defense and/or indemnity costs for the Underlying Claims are to beallocated pro rata by years for all purposes, including for detennining exhaustion of underlying coverageand for determining Century's liability, if any, to General Cable; and

(g) Awarding Century such other and further rel ief as the Court deems necessary and proper.Id. at 10-14.

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2. General Cable's Tender of the Occidental Action Claim.After a substantial hiatus, in August 2007, General Cable again demanded coverage

nnder the same two Century (IINA) policies, but this time with respect to a notice of potentialliability from the United States Environmental Protection Agency (which eventually led to thefiling of a contribution claim against General Cable in the Occidental Action). See 8116/07 letterfrom Rademacher to Zajac, attached as Exhibit E to Serlin Dec. General Cable merely requestedat that point that Century review its policies to detennine coverage eligibility. Id.

In October 2007, Century responded that it did not have a copy of alleged policy RPL595 and, therefore, was not in a position to either accept or deny coverage under it. See 10/9/07letter from Zajac to Rademacher, attached as Exhibit F to Serlin Dec. Century further advisedthat as for policy XBC 1049, if General Cable wished to pursue coverage under that policy, itmust provide proof that all applicable primary and/or underlying limits have been completelyand properly exhausted. Id. Century also noted that in allocating the costs associated with theclaim, and assuming those costs are "damages" under the policy, it did not appear that theamount was sufficient to implicate Century's excess coverage. Id.

In December 2009, after receiving a letter from General Cable advising that it had beennamed as a third-party defendant in the Occidental Action, Century responded that it had notbeen able to locate a copy of alleged Century policy RPL 595, but would perfonn another searchfor that policy. See 12/24/09 letter from Zajac to Rademacher, attached as Exhibit G to SerlinDec. Century also reiterated its position as to the lack of documentation demonstrating that itsexcess policy would be incepted by the Occidental Action claim. Id.

In February 2010, General Cable's New York-based counsel responded by letterdemanding that Century (IINA) acknowledge its insuring obligations under the policies with

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respect to the "Newark Bay Study Area" (i.e., the Occidental Action). See 211811 0 letter fromCampisi to Zajac, attached as Exhibit H to Serlin Dec. The letter additionally objected to thepurported h'ansfer of insuring obligations from IINA to Century and asserted that secondaryevidence ofprimary policy RPL 595, in the fonn of a schedule of underlying insurance containedin umbrella policy XBC 1049, was sufficient evidence to establish the alleged missing policyunder a "preponderance of the evidence standard." ld. General Cable's counsel requested thatanother search for the missing policy be conducted, and that a copy of the policy be provided.ld.

Less than one month later, Century's claim handler, Ms. Zajac, sent a letter by way ofresponse advising that a search for the alleged missing policy was continuing but that a copy hadyet to be located. See 3115/10 letter from Zajac to Campisi, attached as Exhibit I to Serlin Dec.Ms. Zajac requested that General Cable provide "any infonnation or documentation that wouldhelp to identify the tenus and conditions of alleged policy RPL 595." ld. Ms. Zajac also raised

a question as to whether the "General Cable Company" asserting a claim under the Centurypolicies was the same company as the one that had been issued the policies in question, in thatthe current company had a different state of incorporation and different principal place ofbusiness than the one to which Century's predecessor's excess policy had been issued. ld. Ms.Zajac requested documentation "adequate to establish that the General Cable named in the[Occidental Action] would qualify as the insured" under the alleged policy. ld.

3. The Filing of the Instant SuitInstead of providing the information and documentation requested in Ms. Zajac's March

15, 2010 letter, General Cable, without waming, filed the instant suit about 45 days later. Asalready noted, moreover, the Federal Complaint is not limited to the Occidental Action, which

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had been the only claim discussed in correspondence between the parties stretching back almostthree years. Rather, the Federal Complaint adds claims for declaratory relief seeking coverage ofthe Asbestos Suits and, for the first time, also asserts coverage claims with respect to the KIKAction under certain excess policies allegedly issued to Carol Cable by Century's predecessor,INA.D. Formation of Century's Policies

Of the two policies alleged by General Cable to have been issued by Century'spredecessor to it, and under which coverage claims are asserted, to date only a copy of excesspolicy XBC 1049 (7/1/60-63) has been located by Century. See Serlin Dec. at,; II and copy ofpolicy XBC 1049, attached as Exhibit J thereto. As that policy indicates, it was issued toGeneral Cable Corporation at "730 Third Avenue, New York, New York." See accompanyingDeclaration of William F. Manning ("Manning Dec.") at,; 6 and Exhibit B thereto.

The !INA excess policy references its origin in the upper right hand comer of the firstpage as being INA's "New York" office (IINA being one of the insurers within the INA familyof companies at the time), which was designated by the code number "505." ld. at 4 & 6, andExhibit B thereto. It also references the broker, Marsh & McLennan, Inc. ld. A request to bindcoverage issued by Marsh & McLennan indicates its address at that time as 70 Pine Street, NewYork, New York. See id. at 7 and Exhibit C thereto.

Additional underwriting documents further confirm that excess policy XBC 1049 wasnegotiated, produced, submitted, bound, written, sent, and delivered, and the premiums werebooked and collected, all in New York. See id. at ~ ~ . 8-12 and Exhibits D-G thereto. Moreover,if primary IINA policy RPL 595 was issued, as alleged, it would be expected that all of the samecontacts took place in New York with respect to it as well. ld. at 13.

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ARGUMENTI. LEGAL STANDARDS

A. Federal Courts Have Discretiou Not To Exercise Jurisdiction OverDeclaratory Judgment Claims.

This Court is undoubtedly well acquainted with many of the legal standards applicable tothis motion, having recently faced similar issues in Scottsdale Ins, Co, v, Broaddus, 2009 WL349697 (E,D, Pa,) (Diamond, J,) (copy attached as Ex, A to Appendix), As the Court noted atthe outset in Broaddus, "as a procedural remedy, the federal rules respecting declaratoryjudgment apply in diversity cases," Id. at *L Moreover, the Court's authority to exercisejurisdiction in a declaratory judgment action is governed by the federal Declaratory JudgmentAct, under which district courts have discretion not to hear declaratory judgment actions, Id.

L The "Heart of the Matter" Approach Should Be Used in Suits LikeThis One Presenting Both Declaratory and Coercive Claims,A wrinkle presented by this case as compared to Broaddus is that it contains a mixture of

both declaratory and coercive claims, The tension between competing principles of SupremeCourt jurisdictional jurisprudence presented by this combination of declaratory and coerciveclaims is well delineated in ITT Industries, Inc, v, Pacific Employers Ins, Co" 427 p, Supp, 2d552,556 (E,D, Pa, 2006):

In the usual turn of events, a district couli has a "virtually unflagging obligation"to exercise its jurisdiction, and may only decline to exercise or postpone thisjurisdiction "in the exceptional circumstances where the order to the parties torepair to the state court would clearly serve an important countervailing interest."Colorado River Water Conservation Dist, v, United States, 424 U,S, 800, 8l3, 96S,C!. 1236,47 LEd.2d 483 (1976),However, in declaratory judgment cases, the Supreme Court has explained that"[d]istinct features of the Declaratory Judgment Act, we believe, justify astandard vesting district courts with greater discretion in declaratory judgmentactions than that permitted under the 'exceptional circumstances' test of ColoradoRiver and Moses II . Cone," Wilton v, Seven Falls Company, 515 US, 277, 286,

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115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). See also Brillhart v. Excess InsuranceCompany ofAmerica, 316 U.S. 491, 62 S.Ct. 1173,86 L.Ed. 1620 (1942).Although the Supreme Court and the Third Circuit Court ofAppeals have yet to opine on

how to square the competing Colorado River and Wilton/Brillhart principles in this mixed claimcontext, several courts in this Circuit have addressed the question. The overwhelming majorityof those courts have adopted what is termed a "heart of the matter" approach. Under thatapproach, the court must assess whether the coercive claims depend upon the outcome of thedeclaratory claims, or vice versa, in determining the oveniding essence of the dispute.

For example, in ITT, supra, Judge Robreno employed the "heart of the matter" standardin an insurance coverage dispute much like this one. Before doing so, however, he noted thattwo Circuit Courts had adopted other approaches, neither of which he deemed appropriate tofollow. The Fifth Circuit had fashioned a stlict standard requiling application of the ColoradoRiver approach to abstention when there is any coercive claim for relief. Id. The Ninth Circuit,on the other hand, had directed courts to "determine whether there are claims in the case thatexist independent of any request for purely declaratory relief, that is, claims that would continueto exist if the request for a declaration simply dropped from the case." Id. (quoting UnitedNational Ins. Co. v. R&D Latex COIp., 242 F.3d 1102, 1112 (9th Cir.2001 If so, the NinthCircuit held, the Colorado River standard would apply. Id.

In rejecting both the Fifth and Ninth Circuit methodologies in favor of the "heart of thematter" approach, Judge Robreno rightly reasoned that "the considerations underlying thedecisions in Colorado River and Wilton regarding a district court's obligation to exercisejurisdiction over an action are better served by the fact-driven 'heart of the matter' approach thanthe application of a bright-line rule." Id. at 557. Judge Robreno further observed:

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The Wilton Court explained that "the breadth of leeway we have alwaysunderstood [the Declaratory Judgment Act1to suggest, distinguish the declaratoryjudgment context from other areas of the law in which concepts of discretionsurface." 515 U.S. at 286, 115 S.C!. 2137. To apply the Colorado River standardto actions containing both declaratory judgment and coercive claims without ananalysis of the facts at hand would be to ignore the Supreme Court's specificrecognition that declaratory judgment actions necessitate a different treatmentthan other types of cases. Id.

Judge Robreno noted that Judge Dalzell before him had likewise looked to the "heart ofthe action" in Coltec Industries Inc. v. Continental Ins. Co., 2005 WL 1126951 (E.D. Pa. 2005)(copy attached as Ex. B to Appendix). See ITT, supra at 557. Coltec was another situationwhere an insured had sued its insurer regarding the insurer's obligation to indemnify forunderlying asbestos claims. As in this case, the insurer moved to dismiss or stay the proceedingsin favor of a parallel state court action. Judge Dalzell found that the outcomes of plaintiffs'claims for breach of contract and bad faith were dependent on how the insurance policies wereinterpreted for purposes of the declaratory judgment claim. Therefore, the action was, at heart, adeclaratory judgment action, and the discretionary standard of Wilton applied. Coltec. supra. at*3. Other courts in this Circuit have consistently applied the same "heart of the matter" approachin the context of insurance coverage disputes. 5

Century submits that, for the reasons expressed by Judge Robreno in the ITT case andechoed by other courts in this Circuit, the "heart of the matter" approach best accommodates thecompeting principles expressed in Colorado River and Wilton. Therefore, that test should be

5See Leonard v. State Farm Mut. Automobile Ins. Co .. 2009 WL 3088425 at *6 (W.D. Pa. 2009) (Hay, .I.) (notingthat since outcome of plaintiffs' coercive claims were largely, ifnot total1y, dependent on the scope of the insurancepolicies, the action is "at heart, a declaratory judgment action, and the discretionary standard of Wilton applies")(copy attached as Ex. C to Appendix); and The Scully Co. v. OneBeacon Ins. Co., 2004 WL 1166594 (E.D. Pa.2004) (Padava, J.) (insurance coverage dispute termed declaratory when breach of contract and bad faith claimswere dependant on outcome of declaratory judgment claim) (copy attached as Ex. D to Appendix); but cf Perelmanv. Perelman. 688 F. Supp. 2d 367 (E.D. Pa. 20]0) (McLaughlin,.I.) (declining to adopt the "heart of the matter" testin a dispute not involving issues of insurance coverage, and instead choosing to follow the Ninth Circuit's approach,with which the Seventh Circuit had also recently joined).

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employed by this Court in considering whether it has discretion to refrain from exefClsmgjurisdiction over this insurance coverage dispute presenting both declaratory and coercive claims.

2. Since No Discretion-Limiting Federal Interest Factors Apply. theCourt Must Consider Several Other Factors Set Forth By SupremeCourt and Third Circuit Precedent.

As noted in Broaddus, supra, the Third Circuit has cautioned that a district court'sdiscretion to decline jurisdiction over a declaratory judgment matter is not open-ended '''whenthe issues include[ ] federal statutory interpretation, the government's choice of a federal forum,an issue of sovereign immunity, or inadequacy of the state proceeding.'" Broaddus, supra at *2(quoting State Auto Ins. Cos. v. Summy, 234 F.3d 131, 134 (3d Cir. 2000)) (citing United Statesv. Dep't of Envtl. Res., 923 F.2d 1071, 1075 (3d Cir. 1995. No such discretion-limitingcircumstance is presented by this case, however. as is apparent from the Federal Complaint.Rather, General Cable's insurance coverage claims involve solely issues of state law, which canbe fully, and indeed more appropriately, addressed in the parallel state court proceeding filed by

Century in New York.The Supreme Court has ruled that when discretion-limiting factors are absent. the district

court should detennine the following:[W]hether the question in controversy between the parties to the federal suit ...can better be settled in the proceedings pending in state court .... Naturally, thisrequires some inquiry into the scope of the state court proceeding, the nature ofthe defenses available there, and whether the claims of all parties of interest cansatisfactorily be adjudicated in that proceeding." Id. (quoting Summy, 234 F.3d at133) (citing Brillhart v. lcxcess Ins. Co. ofAmerica, 316 U.S. 491, 495, 62 S.Ct.1173,86 LEd. 1620 (1942 (quotations and citations omitted).

The Third Circuit has provided its own additional cliteria to be considered:(I) [T]he likelihood that a federal court declaration will resolve the uncertainty ofobligation which gave rise to the controversy; (2) the convenience of the parties;(3) the public interest in settlement of the uncertainty of the obligation; and (4) the

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availability and relative convenience of other remedies.ld. (citing United States v.Dep't. ofEnvtl. Res., 923 F.2d 1071, 1075 (3d Cir.199l)).In cases like this one involving insurance coverage, moreover, the Third Circuit offers

three further considerations:(I) A general policy of restraint when the same issues are pending in state court;(2) An inherent conflict of interest between an insurer's duty to defend in statecourt and its attempt to characterize that suit in federal court as falling within thescope of a policy exclusion; (3) Avoidance of duplicative litigation. ld. (citingSummy, 234 F.3d at 134) (citing Dep't. ofEnvtl. Res., 923 F.2d at 1075.

Finally, as this Court observed in Pronationallns. Co. v. Shah, 2007 WL 2713243 at *2(E.D.Pa. 2007) (Diamond, J.) (copy attached as Ex. E to Appendix):

[TJhe Summy Court counseled against "exercising jurisdiction over declaratoryjudgment actions where the state law involved is close or unsettled." 234 F.3d at135. Rather, "district courts should give serious consideration to the fact that theydo not establish state law, but are limited to predicting it. This is especiallyimpOliant in insurance coverage cases .... "

n. DECLARATORY JUDGMENT CLAIMS ARE THE HEART OF THISMATTER, OVER WHICH THIS COURT HAS DISCRETION WHETHERTO REFRAIN FROM ASSERTING ITS JURISDICTION.Assuming that the "heart of the matter" approach is applied in this case, as Century

submits it should be, it is readily apparent that General Cable's declaratory judgment claimsconstitute the overriding essence of this suit. General Cable's only coercive claim againstCentury is Count III, which seeks relief for an alleged breach of contract regarding theOccidental Action. Before that claim can or need be reached, however, the Court would have toaddress the declaratory claim in Count II asserting that General Cable is entitled to declarationswith respect to the Occidental Action, including that Century "is obligated pursuant to the termsof the General Cable Policies to defend and indemnify Plaintiff' and that "Plaintiff may selectthe policy or policies, and the policy year or years, for payment of defense and/or indemnity

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costs" arising from that claim. The breach of contract claim depends upon the outcome of thedeclaratory claim, but not the other way around.

Similarly, in ITT, the insured asserted coercive claims for both breach of contract and badfaith, in addition to those for declaratory judgment. The Court found that, "cutting through therhetorical fog of the pleadings, ... the essence of the dispute concerns the scope of the insurancecoverage for the [underlying claims]." ITT, 427 F. Supp. 2d at 557. The ITT Court reasoned:

ITT asks for the Court's declaration that [insurer1PErC "is obligated to payorreimburse the costs and expenses ... of the Silica Suits." Am. Comp!. 26.Accordingly, the Court must rule on this question before reaching the issue ofwhether PEIC has "failed or refused to meet these contractual demands and failedor refused to acknowledge, accept or undertake, its contractual obligation." Am.Comp!. 22. To do so, the Court will have to interpret the relevant insurancepolicies, and make a judgment on their scope and reach before ruling on thebreach of contract or bad faith claims. In other words, the outcome of the badfaith and breach of contract claims depends on the resolution of the declaratoryjudgment claims. At its heart, this dispute is a declaratory judgment action. ld.Likewise here, the Court would have to assess, among other things, whether there is

adequate proof of the existence and the material tenns and conditions of alleged Century primarypolicy No. RPL 595, and if so, whether the claim in question is within the scope of coverage ofthat policy as well as Century's excess policy No. XBC 1049 for purposes of the declaratoryclaims, which require a ruling with or without an assertion of a breach of contract, before turningto the breach of contract claim - if it is not mooted by the prior analysis. Since the breach ofcontract claim is dependent upon the outcome of the d.eclaratory judgment claim, but not theother way around, it is apparent that the declaratory claims against Century are the heart of this

6 This conclusion is further bolstered by the fact that General Cable'S other two claims against Century are purelyfor declaratory relief, with respect to the Asbestos Suits (Count I) and the KIK Action (Count IV). Thus, three out ofthe four counts asserted against Century in the Federal Complaint seek only declaratory relief.

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General Cable has also asserted two claims against defendant Travelers, one seekingdeclaratory relief (Count IV) and the other for breach of contract (Count V). Both claims areonly with respect to the underlying KiK Action. As with the coverage claims asserted againstCentury, the outcome of the declaratory judgment claim against Travelers will detenninewhether the Court needs to consider the breach of contract claim. Since the breach of contractclaim against Travelers, like that against Century, is dependent on the outcome of GeneralCable's declaratory judgment claim, but not the other way around, the claims against Travelersare consistent with the conclusion that the declaratory relief claims are the heart of this matter.Consequently, as in Broaddus, supra, this Court has discretion whether to stay or dismiss thisaction pursuant to an analysis of the various considerations in applying Wilton set forth by theSupreme Court and the Third Circuit.m. VIRTUALLY ALL RELEVANT CONSIDERATIONS WEIGH HEAVILY

IN FAVOR OF THIS COURT REFRAINING FROM EXERCISING ITSJURISDICTION.

A. The Existence Of A Parallel State Court Action In Which EssentiallyThe Same Issues Will Be Adjudicated By The Same Parties CompelsThis Court To Exercise A Genel'al Policy Of Restraint.As this Court has observed, the absence of a parallel state court proceeding does not

preclude exercising discretion to refi'ain from asserting jUlisdiction under the Third Circuit'sguidance in Summy. See Broaddus, supra at *3. Yet, the existence of a parallel state courtaction undeniably is a significant factor favoring restraint. Thus, in ITT, supra, the court beganits detailed analysis by detennining whether proceedings pending in New York state court were,in fact, "parallel." ITT, supra at 557-60.

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Under the same type of analysis conducted in ITT, the pending New York state courtdeclaratory judgment action at issue here clearly constitutes a parallel judicial proceeding. InITT, the court observed:

For judicial proceedings to be parallel, there must be identities of parties, claims,and time. As we noted in Yang v. Tsui. "[PJarallel cases involve the same partiesand 'substantially identical' claims, raising 'nearly identical allegations andissues.' " IFC Interconsult. AG v. Safeguard International Partners, LLC, 438F.3d 298, 306 (3d Cir.2006) (citing Yang v. Tsui, 416 F.3d 199, 205 (3dCir.2005. Id. at 558.The Court then noted that the parties in the federal action were also before the New York statecourt, as is the case here. Moreover, "[tJhe presence of additional parties in the New York actiondoes not bear on whether abstention here is proper. The Third Circuit has stated that it has 'neverrequired complete identity of the parties for abstention.'" Id. (quoting IFC, 438 F.3d at 306).Thus, there is an identity of parties in this case, notwithstanding there being additional insurersnamed as defendants, on a contingent contribution claim basis, in the New York state court

d 7procee mg.Likewise, the issues presented by the New York proceeding are essentially identical to

those in the instant suit, which is all that is necessary to find that the cases are parallel. See id.(noting that "[tJhe crucial question here is not whether the claims are exactly the same in thefederal and the state action, but whether the issues the courts will need to analyze aresubstantially identical" (emphasis added. As a review of the comparative counts in both casesshows, the same insurance coverage issues presented by General Cable's Complaint here willneed to be analyzed in the New York state suit.s

7 Moreover, if this matter were not dismissed or stayed, Century would seek to add the same additional insurers asthird-party defendants for purposes of a contingent contribution claim in this action as well.S Compare this suit's Counts J, II and IV with the New York state court suit's Firs! Cause of Action, in whichdeclarations are sought in both cases as to issues of coverage, "trigger," lost or missing policies, and allocation

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Moreover, although General Cable's breach of contract claims in this case are notexplicitly included in the New York state court suit, those claims are effectively covered by theNew York action's declaratory judgment claims. The New York state court action's declaratoryclaims concern coverage issues that overlap with and would need to be decided before everreaching breach of contract claims, in much the same way that the ITT Court found was the caseunder comparable circumstances. See id. at 559. There is also no reason why General Cablecould not assert its breach of contract claims in the New York suit as a counterclaim and cross-claim pursuant to Section 3019 of the New York Civil Practice Law and Rules, just as the ITTCourt noted could be done with respect to the coercive claims in that case. Id. Accordingly, thelikelihood of there being determinations of overlapping insurance coverage issues between thiscase and the state court proceeding compels this Court to exercise "'[a] general policy ofrestraint.'" Shah. supra at *5 (quoting Summy, 234 F.3d at 134).

B. Close And Unsettled State Law Questions Are Presented That AreMore Appropriately Decided By The New York State Court.1. New York Law Applies to the Parties' Coverage Issues.

Whether analyzed from this Court's perspective, applying Pennsylvania conflicts law, orthat of the New York court in the parallel state court action, the relevant choice oflaw principlesdictate application of New York law to the coverage issues presented, given that the Centurypolicies in question contain no choice oflaw provision otherwise.

a. Pennsylvania's Choice ofLaw Rules Would Result in ApplicationofNew York Law.The Third Circuit has recently provided extensive guidance on the choice of law process

111 an insurance case brought in federal court in Peillisylvania on the basis of diversity

methodology with respect to the same policies and for the same underlying claims -- the Asbestos Suits, theOccidental Action and the KlK Action. See Facts. A & B, pgs. 4-7. supra.

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jurisdiction, like this one. See Hammersmith v. TIG Ins. Co., 480 F.3d 220 (3d Cir. 2007). InHammersmith, the Court noted initially that "[b]ecause this is a diversity case, we apply thechoice-of law-rules of the forum state, Pennsylvania." (citing Klaxon v. Stentor Electric Mig.Co., 313 U.S. 487, 61 S.C!. 1020, 85 L.Ed. 1477 (1941. Next, after acknowledging pastconfusion and disagreements on the matter, including among prior panels of the Third Circuit,the Court expressly reaffinned its prediction that Pennsylvania's Supreme Court will no longerfollow the traditional "lex loci contractus" (place of contracting) rule in cases involving contractdisputes, but rather will apply the approach adopted by the Pennsylvania Supreme Court in a tortcontext in Griffith v. United Air Lines Inc., 416 Pa. 1,203 A.2d 796 (1964). Id. at 227-29. TheGriffith approach provides "a more flexible rule which pennits analysis of the policies andinterests underlying the particular issue before the COUlt." Id. at 227.

In applying a Griffith analysis in the contract context, the Third Circuit observed that thefirst step is to determine if there is an "actual or real conflict between the potentially applicable

laws." Id. at 230 (emphasis in original). In a case in point, a federal district court in New York,applying Pennsylvania conflict rules (because the case had originally been filed in aPennsylvania federal court before being transferred), detennined that an actual conflict existsbetween the laws of Pennsylvania and New York with respect to allocation of an insured's loss.See Crucible Materials Corp. v. Certain Underwriters at Lloyd's London & London AfarketCompanies, 681 F. Supp. 2d 216 (N.D.N.Y. 2010). As the Crucible Court noted, whereas NewYork allocates loss evenly across the number of years for which insurance was obtained,Pennsylvania rejects that approach and would be expected to opt for joint and several liabilityamong carriers for the full amount of the loss. Id. at 226. Allocation is likewise among the

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Issues presented with respect to General Cable's claims against Century for defense andindemnity costs in this case9

Because there is an "actual" conflict, the Court secondly must detelmine whether thatconflict is appropriately classified as "true," "false" or an "unprovided-for" situation. ld. at 225(citing Hammersmith, 480 F.3d at 230). 'There is a true conflict between two states' laws 'ifboth jurisdictions' interests would be impaired by the application of the other's laws. '" ld.(quoting Hammersmith, 480 F.3d at 230 (emphasis in original. Based on an analysis of thecompeting interests reflected by the different approaches to allocation taken by Pennsylvania andNew York, the Crucible Court concluded that a !me conflict exists. See id. at 227 (noting that"New York applies the time on the risk method of allocation for the very same reasonPennsylvania declines to do so .... "). That same analysis mandates the finding of a "true"conflict in this case with regard to the allocation laws of the two states. 10

The third step, employed if there is a true conflict, asks which state has "'the greaterinterest in the application of its law.'" ld. (quoting Hammersmith, 480 F.3d at 231). "Whenmaking this detennination, a state's contacts must be weighed 'on a qualitative scale according totheir relation to the policies and interests underlying the [particular] issue.'" ld. (quotingHammersmith, 480 F.3d at 231 (alteration in original. As noted in Crucible,

9 Another issue presented by this case on which Pennsylvania and New York have an "actual" conflict is theappropriate trigger of coverage, paliicularly with respect to underlying asbestos bodily iI1jury claims. Compare J.H.France Reli'aetories Co. v. Allstate Ins. Co., 534 Pa. 29, 626 A.2d 502 (1993) (adopting multiple-trigger approach,commencing with exposure, continuing with progression and ending with manifestation of injury) with In ReLiquidation ofMidland Ins. Co., 269 A.D.2d 50,61,62,709 N.Y.S.2d 24, 32, 33 (1" Dept. 2000) (concluding that"New Yark does not follow the multiple-u'igger theory" and holding that "coverage is triggered by exposure,whether first or continued, but not by exposure in residence").JO There also appears to be a "true" conflict between Pennsylvania and New York concerning trigger of coveragesince application of Pennsylvania's multiple-trigger approach benefits the insured by maximizing the amount ofavailable coverage at the expense of the insurer's interests, whereas New York's approach limiting the policiestriggered to those in effect when actual exposure takes place could result in a significantly shorter trigger period, andconsequently far less coverage being made available.

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Where, as is the case here, the insured risk is located throughout a number ofdifferent states, the following contacts must be evaluated: "(1) the place ofcontracting; (2) the place of negotiation of the contract; (3) the place ofperformance; (4) the location of the subj ect matter of the contract; and (5) thedomicile, residence, nationality, place of incorporation and place of business ofthe parties." Id. at 225-26 (quoting Hammersmith, 480 F.3d at 233) (citingRESTATEMENT (SECOND) OF CONFLICTS OF LAWS 188 (1971)).

Applying the relevant qualitative contacts factors specified by Section 188 of the SecondRestatement of Conflicts to this case inexorably leads to the conclusion that New York has theb'l'eater interest in the issues presented and, therefore, that its law should be applied. As to thefirst factor, an insurance policy is considered to be made "in the state where it is delivered." Id.at 227 (quoting Hammersmith, 480 F.3d at 233). Here, like in Crucible, the place of contractingwas New York in that the Century policies issued or allegedly issued to General Cable wereproduced, sent from the insurer and delivered to the insured all in New York. II See ManningDec., ' I ~ [ 6-9. Thus, this factor weighs in favor of applying New York law.

-n1e seeond factor, the place where the contract was negotiated, also favors application of

New York law. The pertinent policy and underwriting documents located to date reveal thatGeneral Cable's broker for purposes of the Century excess policy was Marsh & McLennan,which was located in New York, and that underwriting was performed out of the New Yorkoftices of Century's predecessor, INA (notwithstanding that IINA's home office was inPennsylvania). Id. at 6 & 7. Moreover, General Cable's principal place of business at thetime also appears to have been in New York. Id. at 11. Thus, it is reasonable to conclude that

II Three of General Cable'S five counts concem alleged Century primary policy RPL 595 and Century excess policyXBC 1049, and two of the three underlying claims coneem only those Century policies. Thus, regardless of thelocation of General Cable's alleged predecessor in interest, Carol Cable, when policies purportedly were issued to itby defendant Travelers and Century's predecessor in interest, the determination of governing law in this case isappropriately governed by the quality of the contacts with the Century (UNA) policies issued (or allegedly issued) toGeneral Cable in or around 1960.

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the negotiations and discussions leading to the creation of the policies in question would havetaken place mostly, ifnot entirely, in New York.

Regarding the third factor, the place of perfonnance, Pelllisylvania law generally holdsthat an insurance policy is perfonned where the premiums are paid. Crucible, supra at 228.Here, given the circumstances of the policies being brokered and llilderwritten in New York, thepractice was for the New York insured, General Cable, to pay gross premillins to its broker'sNew York office, which would then send payment (minus commission) to INA's New Yorkoffice. See Manning Dec., 'If 10. Thus, this factor would also seem to favor application of NewYork law.

The fourth factor is the location of the subject matter of the contract. For insurancepolicy purposes, this refers to the location of the insured risk. Hammersmith, supra at 234.Where the insured risk is spread throughout numerous states, however, as appears to be the casehere, Pennsylvania law holds that there is no single location of the risk. Id. 12 Moreover, while at

least some of the lli1derlying claimants with respect to the Asbestos Suits are residents of NewYork, there are some others who admittedly are residents of Pennsylvania. See Serlin Dec. at 'If13 and Exhibit L. Further, neither of the two envirOlllilcntal sites at issue here are located inNew York ar in Pennsylvania. Rather, one site is in New Jersey, where the initial "GeneralCable" was incorporated and operated a manufacturing plant. See Serlin Dec., Exhibit C at 4, 'If'l3 & 4. The other site is in Rhode Island, and concems coverage claims under policies issued toGeneral Cable's alleged predecessor in interest, Carol Cable. Thus, this factor appears to favorneither Pennsylvania nor New Yark particularly.

12 With respect to the multi-jurisdictional nature of General Cable's risks, see. e.g .. Manning Dec. at f 8 and ExhibitD thereto; and Serlin Dec. at 13 and Exhibit L thereto.

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As to the fifth factor, the domicile, residence, place of incorporation and place ofbusiness of the parties, it is notable that General Cable is not a Pennsylvania company nor does ithave its principal place of business in Pellisylvania. Rather, it is a Delaware company thatpresently has its principal place of business in Kentucky. General Cable's website indicates thatit maintains a business facility in New York, as well as one in Pennsylvania. See Exhibit L toSerlin Dec. Moreover, when General Cable previously sued insurers over the same type ofunderlying asbestos liabilities, it chose to do so in New Jersey. Further, although Century is aPennsylvania corporation with its principal place of business in Pemlsylvania, it was the NewYork office of Century's predecessor that was involved in placing the coverage at issue. Thus,the fifth factor doesn't militate in favor of either jurisdiction.

Finally, each contact must be weighed on a qualitative scale to determine which state hasa greater govermnental interest in the application of its law. As noted, none of the relevantfactors favor application of Pennsylvania law. Thus, Pennsylvania would appear to have no real

governmental interest in this dispute. On the other hand, the place of contracting, place ofnegotiating and place of performance all favor application of New York law and testify to NewYork's much stronger connection to this dispute. New York clearly has an interest in seeing thatthe expectations of parties whose contracts are fonned within its borders are met, even if neitherof those parties cUlTcntly resides there. Moreover, New York unquestionably has an interest inthe manner in which disputes over insurance coverage formed, brokered and performed in itsstate are resolved. Consequently, under Pennsylvania conflict principles, New York law shouldbe applied.

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b. New York's Choice ofLaw Rules Would Also Result in ApplicationofNew York Law to the Coverage Issues Here.

New York generally employs what it terms the "center of gravity" or "grouping ofcontacts" analytical approach to choice of law issues in contract cases. Zurich Ins. Co. vShearson Lehman Hutton, 84 N.Y.2d 309, 317 (1994) (citing Auten v. Auten, 308 N.Y. 155(1954. This approach accords with Pennsylvania's in looking to the five factors specified bySection 188 of the Second Restatement of Conflicts. See id. Thus, the outcome of a "center ofgravity" analysis under New York choice of law principles would naturally be the same as underthe Pennsylvania analysis previously discussed.

More recently, however, in Certain Underwriters at Lloyd's. London v. Foster Wheeler.36 A.D.3d 17, 26-27 (1st Dept. 2006), aif'd 9 N.Y.3d 928 (2007), it was noted that "in casesinvolving liability insurance covering multi state risks, we regard the state of tlle insured'sdomicile [at the time the policy was issued] to be a proxy for the principal location of the insuredrisk, which, under New York law and Restatement 193, is the controlling factor in determiningthe law applicable to a liability insurance policy, thereby obviating the need to consider all fiveRestatement factors."I] Moreover, if the principal place of business is different than the state ofincorporation, it is the location of the corporation's principal place of business that constitutes its"domicile" for this purpose, and is controlling. Id. at 24-25. Since General Cable apparently

13 The Foster Wheeler Court reasoned that:

Jd. at 23.

The state of the insnred's domicile is a fact known to the parties at the time of contracting, and (in theabsence of a contractual choice-of-Iaw provision) application of the law of that state is 1110St likely toconform to their expectations .... Moreover, the state of the insured!s domicile can be ascertained in anysubsequent litigation without a fact-intensive inquiry or unguided weighing of different contacts, andmaking the insured!s domicile the primary factor in selecting applicable law minimizes the likelihood thatcontemporaneous policies will be deemed governed by the laws of different states. Thus, in addition torendering the resolution of the choice-of-Iaw issues less difficult, adoption of a rule to apply the law of theinsured!s domicile makes it more likely that consistent and uniform results will be reached in differentcases.

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was domiciled in New York when the Century policies central to this dispute were issued, NewYork choice oflaw principles mandate application ofNew York law to the coverage issues here.

2. Certain of the Key Issues Presented Have Not Yet BeenResolved by New York's Highest Court.

Among the issues that will need to be addressed before General Cable could be entitled toany relief is the method for allocating past and future defense costs. Allocation of indemnitycosts on a pro rata basis for the duration of the damage appears to be a well-settled principleunder New York law. See Consolidated Edison Co. ofNew York v. Allstate Ins. Co., 98 N.Y.2d208 (2002).14 As to defense costs, however, although several New York courts have detenninedthat a pro rata allocation should likewise apply,15 the Court of Appeals (New Yark's highestcourt) has not yet fully addressed the issue.

In the one case in which the Court of Appeals has discussed allocation of defense costs, itcommented that pro rata allocation is a permissible approach, but failed to order that suchmethodology be used at the outset of every case and deferred ruling on certain other aspects ofthe issue that could arise here. In Continental Casualty Co. v. Rapid-American Corp., 80 N.Y.2d640,655-56 (1993), the Court of Appeals stated that "[w]hen more than one policy is triggeredby a claim, pro rata sharing of defense costs may be ordered, but we perceive no error orunfairness in declining to order such sharing, with the understanding that the insurer may later14 See also Crucible, supra at 226 ("New York allocates an insured's losses by distributing the highest projection ofalleged damages evenly across the number of years for which insurance was obtained"); Serio v. Public Service Mu/.Ins. Co., 304 A.D.2d 167, 759 N.Y.S.2d 110 (2d Dept 2003) (citing Consolidated Edison in adopting pro rataapportionment in context of coverage dispute concerning lead paint bodily injury claim).15 See, e.g., Foster Wheeler, supra at 33, n.1 (accepting parties' shared premise that Consolidated Edison adoptedtime-on-the-risk as New York's allocation method, in context of action seeking coverage for defense and indemnitycosts of underlying asbestos claims); Atlantic Mut. Ins. Co. v. Greater New York Mut. Ins. Co., 241 A.D.2d 427,660N.Y.S.2d 983 (1st Dept 1997) (applying pro rata allocation of defense costs between successive insurers in contextofa contribution action by one insurer against another); and Generali-U.S. Branch v. Caribe Realty Corp., 1994 WL903279 (N.Y. Sup. 1994) (copy attached as Ex. F to Appendix) (holding that defense costs would be apportionedbetween an insured and its iIk-:urer when there is a clear basis for doing so); accord, NL Industries, Inc. v.Commercial Union Ins. Co., 926 F. Supp. 446, 465 (D.N.J. 1994) (applying New York law and finding that "theprefelTed method of sharing would be on a pro-rata basis-so that each party pays only for its fair share of the defensecosts").

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obtain contribution from other applicable policies ... " (citations omitted). The Court furthernoted that, "[t]he question whether the insured itself must contribute to defense costs--an issueon which courts have divided ... --is appropriately deferred at least until such time as theunderlying lawsuits are shown to involve 'occurrences' during self-insured periods." Id. at 656.Thus, the clitical issue of how defense costs are to be allocated, including with respect to periodsof "self-insurance" or gaps in coverage due to insolvencies, has not yet been fully resolved underNew York law. 16

Additionally, the standard of proof under New York law for establishing the existenceand terms of a missing policy is disputed. See Bianci v. Florists Mut. Ins. Co .. 660 F. Supp. 2d434, 437 (E.D.N.Y. 2009) (discussing disagreement under New York law as to whether proofofa lost or missing policy requires "clear and convincing evidence" or merely a "preponderance ofthe evidence"). The resolution of that dispute may figure prominently in this case, in thatGeneral Cable contends Century has coverage obligations under alleged IINA primary policy

RPL 595 dating fi'om around 1960, a copy of which has not been located but as to which GeneralCable asselis there is sufficient secondary evidence to establish its existence and material tenns.See, e.g., Serlin Dec., Exhibits H & 1.

In Summy, the Third Circuit stated that unresolved or close issues like those noted above,"which might otherwise be candidates for certification to the state's highest court ... shouldproceed in nonnal fashion through the state court system." 234 FJd at 135. This Court alsonoted, upon identifying an unresolved state law question presented by the claims in Shah. supra,that "[t]he Summy Court cautioned against the exercise of jurisdiction over declaratory judgment

16 Accord, NL Industries, Inc. v. Commercial Union Ins. Co., 935 F. Supp. 513, 520 (D.N..!. 1996) (noting that "theissue of whether an insured must contribute to its own defense because it self-insured at certain times may not besettled under New York law").

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actions-especially those involving insurance coverage issues-when the state law involvcd is closeor unsettled. Id. at *5. As in Shah, that is exactly the case here.

C. All Other Criteria Likewise Weigh Against Exercising Federal Jurisdiction.None of the other relevant factors support asserting discretionary federal jurisdiction over

this case either. As in Shah, the coverage issues raised here are "exclusively questions of statelaw that state courts are better suited to address." Id. Also as in Shah, "[tJhere is 110 significantpublic interest in a federal court resolving the coverage question Plaintiff raises." Id.

Nor is litigating in a New York state court likely to be any less convenient for the partiesthan this Court. As noted, General Cable is located in Kentucky and apparently only decided tofile in Pennsylvania in a transparent effort to obtain what it perceives to be more favorablePennsylvania coverage law with regard to allocation, rather than in the interest of convenience.Indeed, as noted, General Cable previously filed a similar coverage suit against Century'spredecessor and others in New Jersey when it apparently suited its interests to do so. Further,

General Cable likely selected a federal comi forum in this case only because had it filed inPennsylvania state court it would have had to abide by state procedural jurisprudence, therebynecessitating the unwieldy joinder of the thousands of underlying asbestos bodily injuryclaimants. 17 Consequently, General Cable's selection of this forum is entitled to little weight inassessing convenience. See ITT, supra at 562.

Further, this action having been filed plior to the New York state court Complaint is ofno moment. See Summy, supra at 136 ("It is irrelevant that the state declaratory judgmentpetition was filed after its counterpart in the District Court"). Notably, moreover, this case has

17 See Vale Chemical Co. v. Hartford Ace. and Indem. Co., 512 Pa. 290. 516 A.2d 684 (Pa. 1986) (dismissinginsurance declaratory judgment action for lack of subject matter jurisdiction due to failure by policyholder to join allunderlying claimants as "indispensible parties"); Liberty Mut. Ins. Co. v. Treesdale, Inc., 419 F.3d 216, 229 (3d Cir.2005) (finding that "Vale is a procedural and jurisdictional ruling," which a federal district court in Pennsylvania isnot required to apply).

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not progressed beyond the earliest pleading stage and therefore there will be no waste of theparties' or the Court's resources in dismissing it at this point. Nor will a dismissal cause anyundue delay or hardship to General Cable. Indeed, failing to dismiss (or stay) this case wouldclearly risk wasteful duplicative litigation, the avoidance ofwhich is instructed by Summy. Id. at134.

Finally, in Shah, it was observed that "although a decision by this Court will likelyresolve the uncertainty of obligation that gave rise to the instant action, that alone is insufficientto convince me to exercise jurisdiction." Id. The same conclusion should be reached here. Allof the issues presented can be equally, and more appropriately. resolved in the parallel New Yorkstate court proceeding. TIlerefore. there is no reason not to dismiss. or alternatively at least stay,this litigation in favor of the parallel state court case.

CONCLUSIONFor all of the foregoing reasons, Century requests that its motion be granted and that the

Court dismiss (or alternatively stay) this case in favor of the parallel state court action pending inNew York.

Dated: July 22,2010

Respectfully submitted,

By: ls i Lawrence A. SerlinLAWRENCE A. SERLIN

GENERAL CABLE CORPORATION v. INSURANCE COMPANY OF NORTH AMERICA et al Motion to Dismiss

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