Carrier’s Dec Action Stays in Virginia

Interesting article from VLW:

By Deborah Elkins
Published: February 3, 2011


A Harrisonburg U.S. District Court refuses to dismiss or transfer a CGL carrier’s suit seeking a declaration that it owed no duty to defend to a company that was an additional insured on the carrier’s suit insuring a maintenance contractor who alleges he was injured at defendant’s Winchester plant.

Plaintiff Federated Mutual Insurance Company has filed a dec action against defendant Pactiv Corporation, which has a plant in Winchester. Federated’s policyholder, William Lucas, was sole proprietor of a business that had a service agreement with Pactiv to provide maintenance services at the Winchester plant. The service contract required Lucas (doing business as Blue Ridge Mechanical) to obtain a CGL policy and an umbrella liability policy naming Pactiv as an additional insured. Federated issued these policies.

Lucas alleges that in November 2006, he was injured while working at Pactiv’s facility, when bundles of insulation fell on him. Lucas sued Pactiv. Federated seeks a declaratory judgment that it does not have a duty to defend or indemnify Pactiv in that action, which Pactiv and Lucas have now settled. 

Pactiv argues that Federated preemptively filed this dec action to “hijack Pactiv’s status as the true plaintiff.” Pactiv has moved to dismiss this action, or to transfer it to the U.S. District Court for the Northern District of Illinois, where Pactiv filed its own declaratory judgment and breach of contract action against Federated shortly after Federated commenced this action. 

In September 2009, Federated sent Pactiv a final letter, denying that it had any coverage obligations and stating it would not send a representative to the court-ordered mediation in the Lucas versus Pactiv action. 

According to Pactiv, the balance of convenience and special circumstances – namely Federated’s alleged procedural fencing and forum shopping – both preclude application of the first-to-file rule. The court finds that Pactiv had not made a case that it would be more convenient for this dispute to be heard elsewhere, nor has it demonstrated that Federated misled Pactiv so that Federated could be the first to file. Therefore, the first-to-file rule applies and Federated’s action has priority. The court denies Pactiv’s motion to dismiss or transfer venue.

The court sees little support for Pactiv’s claim that Illinois is a more convenient or appropriate forum. Lucas contracted with Pactiv to provide services to Pactiv at its Winchester facility; Federated issued the policy to Lucas in Virginia; Lucas was injured at Pactiv’s Virginia facility; Lucas sued Pactiv in this court; because Federated issued the policies to Lucas in Virginia, Virginia law will likely govern the interpretation of those policies; and the dispute essentially involves the interpretation of the two policies, which is unlikely to require witnesses to travel from either of the parties’ corporate nerve centers. 

On the other side of the convenience scale, Pactiv can point to but one fact: its principle place of business and corporate nerve center is in Illinois. But given that this dispute is chiefly a dispute concerning the interpretation of an insurance contract, that fact seems inconsequential. 

Federated Mut. Ins. Co. V. Pactiv Corp. (Wilson, J.) No. 5:09cv00073, Feb. 9, 2010; USDC at Harrisonburg, Va. VLW 010-3-063, 9 pp.

Please contact us if you have questions or need legal assistance.
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
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About Charlotteville Personal Injury Attorney

Personal Injury attorney helping people injured in automobile, truck or mortorcycle accidents.
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