General Insurance Company of America v. The Walter E. Campbell Company, Inc. et al

Filing 146

MEMORANDUM AND ORDER granting 113 MOTION for Leave to File Counterclaims and Crossclaims; granting 114 MOTION for Leave to File Third Party Complaint against The Travelers Indemnity Company; granting 137 MOTION for Joinder in General Insurance Co. of America's Supplemental Memorandum of Law in Opposition to WECCO's Motion to Dismiss ; granting 138 MOTION for Joinder IN GENERAL INSURANCE'S SUPPLEMENTAL MEMORANDUM OF LAW IN OPPOSITION TO WALTER E. CAMPBELL COMPANY, INC' ;S MOTION TO DISMISS; granting 139 MOTION for Joinder in General Insurance's Supplemental Memorandum of Law in Opposition to WECCO's Motion to Dismiss; directing that the stay is lifted. Signed by Judge William M Nickerson on 1/16/2014. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
GENERAL INSURANCE COMPANY OF
AMERICA

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v.
* Case No. WMN-12-3307
*
THE WALTER E. CAMPBELL COMPANY, *
INC. et al.
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MEMORANDUM & ORDER
This case involves an insurance coverage dispute between
The Walter E. Campbell Company (WECCO) - a company which for
decades engaged in the business of handling, installing,
disturbing, removing, and selling asbestos-containing insulation
materials - and several of its insurers.1

This suit was filed in

this Court by one of those insurers, the General Insurance
Company of America (General), on November 9, 2012.

As initially

filed, the suit named the Maryland Property & Casualty Insurance
Guaranty Corporation (PCIGC) as a defendant, in addition to
other solvent insurers of WECCO.

PCIGC is a non-profit

corporation created by the Maryland General Assembly which, in
certain circumstances, can stand in the shoes of insolvent
insurers to pay claims for which those insurers would have been
liable.

1

After PCIGC filed its own motion to dismiss, ECF No.

The factual and procedural background for this case is set out
with some additional detail in this Court’s previous memorandum.
ECF No. 131.

19, but before that motion was fully briefed, PCIGC was
voluntarily dismissed by General on February 8, 2013.

ECF No.

83.
One month before that dismissal, on January 7, 2013, WECCO
filed a parallel action in the Superior Court of the District of
Columbia raising essentially the same issues as raised here.
The Walter E. Campbell Co. v. Gen. Ins., Civ. No. 13-109 (D.C.)
(the D.C. Action).

The D.C. Action was subsequently removed to

the United States District Court for the District of Columbia.
After filing this parallel action, but while it was still
pending in the Superior Court, WECCO filed a motion to dismiss
in this case asking this Court, inter alia: to find that PCIGC
was an indispensable party in this action; to realign the
parties so that WECCO would be deemed the plaintiff and the
other parties, including PCIGC, would be deemed defendants; and
then to dismiss this action for lack of diversity jurisdiction
because WECCO and PCIGC are both citizens of Maryland for
purposes of diversity.

In ruling on that motion in a Memorandum

and Order dated June 11, 2013, this Court found that realignment
was not necessary and that PCIGC was not a necessary party in
this action.

ECF Nos. 131, 132.

In its motion to dismiss, WECCO also requested that this
Court abstain from exercising jurisdiction over this dispute

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under either the Brillhart/Wilton2 doctrine or the Colorado
River3 doctrine.

WECCO argued that, under either doctrine, this

Court should defer to the Superior Court of the District of
Columbia and stay this action.

On February 8, 2013, shortly

after WECCO filed its motion in this case, the D.C. Action was
removed to federal court and General, joined by some of the
other Defendants, responded to WECCO’s abstention argument by
suggesting that, now that the two actions are both proceeding in
federal courts, the “first-to-file” rule should dictate that
this case go forward, and not the D.C. Action.

WECCO countered

that it had filed a motion to remand the D.C. Action back to the
Superior Court which, if granted, would negate the force of the
first-to-file rule.

In its June 11, 2013, Memorandum and Order,

this Court reserved on the abstention issue, opining that
whether the D.C. Action proceeded in the state or the federal
court might have some impact on this Court’s analysis of firstto-file and abstention issues.
On August 22, 2013, General informed this Court that its
motion to remand the D.C. Action to the Superior Court was
granted on August 13, 2013.

This Court then requested that the

2

Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942), and
Wilton v. Seven Falls Co., 515 U.S. 277 (1995).
3

Colorado River Water Conservation Dist. v. United States, 424
U.S. 800 (1976).

3

parties supplement their previous submissions on the abstention
issues in light of the remand.

The parties did so.

(General’s)4 and ECF No. 142 (WECCO’s).

ECF No. 136

On December 31, 2013,

one of the defendant insurers in the D.C. Action notified this
Court that the Superior Court had dismissed PCIGC from the D.C.
Action for lack of personal jurisdiction.

ECF No. 144.

With

the dismissal of PCIGC, the defendant insurance companies in the
D.C. Action again removed the action to the federal district
court on the ground that there was now complete diversity of
citizenship.

The insurance companies now argue to this Court

that, with that re-removal, the force of the first-to-file rule
has been re-invigorated.

Id.

WECCO immediately responded that it has filed another
motion to remand, arguing that this second removal was improper
because it was an involuntary dismissal that created diversity
jurisdiction.

ECF No. 145.

WECCO again urges this Court to

defer ruling on the abstention issues until its motion to remand
is decided.

For the reasons that follow, this Court concludes

that it need not wait any longer to resolve the abstention

4

Several other Defendants filed motions for joinder in General’s
supplemental memorandum. ECF Nos. 137 (Pennsylvania
Manufacturers Association Insurance Company’s), 138 (United
States Fire Insurance Company’s), and 139 (St. Paul Fire &
Marine Insurance Company’s). These motions for joinder will be
granted.

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issues, that it will exercise its jurisdiction, and this case
will go forward.
The parties disagree over which abstention doctrine is even
potentially applicable in this situation.

General and the other

insurers argue that the abstention question is governed by the
more exacting Colorado River “exceptional circumstances” test.
WECCO argues that the question is governed by the much more
permissive Brillhart/Wilton analysis.

The Court finds that it

would not abstain even under the more permissive
Brillhart/Wilton doctrine and, therefore, will only discuss the
applicability of that doctrine.
The factors considered under Brillhart/Wilton are as
follows:
(1) whether the state has a strong interest
in having the issues decided in its courts;
(2) whether the state courts could resolve
the issues more efficiently than the federal
courts; (3) whether the presence of
“overlapping issues of fact or law” might
create unnecessary “entanglement” between
the state and federal courts; and (4)
whether the federal action is mere
“procedural fencing,” in the sense that the
action is merely the product of forumshopping.
United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 494-95 (4th
Cir. 1998).

Starting with that last factor first, both sides of

this dispute self-righteously accuse the other side of forumshopping.

Those accusations ring somewhat hollow in that it is

5

clear that both sides went shopping and all of the procedural
maneuvering outlined above was driven by the insurers’ wish to
have the case decided under Fourth Circuit precedent, which they
perceive to be favorable to their position, and WECCO’s desire
to avoid that same precedent.5
That General was shopping for a favorable forum is
evidenced by the fact that it brought suit in this Court as
opposed to a Maryland state court.

While the choice of law has

not been finally decided, it would appear that Maryland law will
apply to the majority of the claims and issues.

General

certainly could have filed in a Maryland state court and had a
Maryland state court decide an issue of Maryland state law.

Had

it done so, PCIGC would still be a part of this action.
Instead, General filed here seeking to ensure the application of
the Fourth Circuit’s interpretation of Maryland law.

To obtain

and retain this forum, the claims against PCIGC were sacrificed.
On the other side, WECCO, a Maryland company, filed suit in
a state court, but not the state court which would have been the
more natural choice.

In WECCO’s view, “the District of Columbia

courts apparently have yet to decide the issue of insurance law

5

That precedent is In re Wallace & Gale Co., 385 F.3d 820 (4th
Cir. 2004) (applying Maryland state law), and the cases
following that decision, including Nat’l Union Fire Ins. Co. of
Pittsburgh, Pa. v. Porter Hayden Co., Civ. No. 03-3408, 331 B.R.
652 (D. Md. 2005).

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at the heart of this dispute,” ECF No. 40-1 at 9, and it is on
that clean slate that WECCO hoped the District of Columbia court
would reach a different result than that reached by the Fourth
Circuit.

Like General, WECCO certainly could have filed suit in

a Maryland state court, and, like General’s choice of forum,
WECCO’s choice resulted in losing jurisdiction over PCIGC.
Turning to the first Brillhart/Wilton factor - whether the
state court has a strong interest in resolving the legal issues
raised in this case - there is no reason why a District of
Columbia court, be it federal or state, would have a greater
interest than that of this Court in resolving these issues.

On

this factor, WECCO notes that it began its operations in the
District of Columbia and suggests that many of the underlying
asbestos claims to which the insurance coverage at issue relates
were filed and are pending in the District of Columbia.

ECF No.

142 at 4 (citing Aff. of Michael Gibbons, WECCO’s former
President).

WECCO then proceeds to name a dozen or so D.C.

projects at which WECCO is alleged to have caused harm.
General counters that, while WECCO may have started out in
D.C., it has maintained its headquarters in Maryland since at
least the 1960s.

ECF No. 136 (citing Aff. of Fred Peckitt,

General’s claims manager).

Furthermore, the policies with at

least four of the defendant insurance companies were delivered
to Maryland and WECCO’s insurance agent for these policies was

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located in Maryland.

More significant is the fact that, of the

approximately 750 asbestos claims currently pending against
WECCO, over ninety percent are pending in Maryland, and the
“overwhelming majority of past asbestos claims against WECCO
have also been filed in Maryland.”

Peckitt Aff. ¶ 8.

Thus, a

District of Columbia court’s interest in resolving coverage
issues related to predominantly Maryland lawsuits would be
tenuous, at best.
On the second factor, WECCO argues that “the District of
Columbia is in a position to resolve these claims more
efficiently and completely, as they involve questions of state
law and include PCIGC, the party dismissed by General in this
action.”

ECF No. 142 at 5.

It is difficult to see how it is

more efficient for a D.C. court to resolve matters of Maryland
law which WECCO asserts D.C. courts have never reached, than for
this Court to resolve issues it has previously confronted and
addressed.6

As for completeness, this Court was concerned that

PCIGC’s presence in the D.C. Action, and absence in this action,

6

WECCO suggests that, assuming Maryland law applies to at least
some of the coverage issues raised here, a District of Columbia
state court is “perfectly capable of applying that law.” ECF
No. 142 at 5 (citing Asch v. Taveres, 467 A.2d 976, 979 (D.C.
1983)). While true, the Fourth Circuit has recognized that a
particular state’s interests are “better served by having the
coverage issues decided by a federal court sitting in [that
state], rather than in a state court sitting in [a different
state].” Great Am. Ins. Co. v. Gross, 468 F.3d 199, 209 (4th
Cir. 2006).
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offered the D.C. Action the opportunity to resolve this dispute
more completely.

With PCIGC’s absence now from both actions,

however, this factor no longer points to abstention.
Back to the issue of efficiency for a moment, this Court
notes that, while both of these cases have been pending now for
more than a year, neither case has progressed beyond the
preliminary stage due to the procedural jockeying of both sides.
Thus, going forward in this action would not result in any
duplication of effort already expended in the D.C. Action.

The

convenience of one forum over the other, which goes more to the
applicability of Colorado River abstention but which also
implicates efficiency, favors neither forum.

The courts are

geographically close enough that no party or witnesses would
suffer any greater inconvenience or inefficiency in trying these
issues in one court or the other.
WECCO’s argument on the third factor also relied primarily
on PCIGC’s continued presence in the D.C. Action.

WECCO argues

that “continuation of this case will result in parallel
adjudications with the possibility of inconsistent and
incomplete adjudications in this action (given the absence of
PCIGC).”

Id.

With the dismissal of PCIGC from the D.C. Action,

both adjudications will be equally incomplete.

As to the

possibility of inconsistent adjudications in parallel
proceedings, if the D.C. Action remains in federal court,

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PCIGC’s dismissal eliminates any reason not to follow the firstto-file rule.

If the D.C. Action finds its way back to the

Superior Court, that court certainly could stay that action to
avoid an inconsistent result.

See Thomas v. Disabled Am.

Veterans Ass’n, 930 A.2d 997, 1000-01 (D.C. 2007) (noting that
“[t]here is, of course, no general requirement that the Superior
Court defer to the District Court when related actions are
pending in both courts, but it often will be prudent and
efficient to do so, especially when the federal court was the
first to acquire jurisdiction”).
For these reasons, WECCO’s request that this Court abstain
from exercising jurisdiction over this action will be denied.7
Accordingly, it is this 16th day of January, 2014, by the United
States District Court for the District of Maryland, ORDERED:
(1) That the stay of this action is hereby lifted;
(2) That the motions for joinder filed by Pennsylvania
Manufacturers Association Insurance Company, ECF No. 137,
United States Fire Insurance Company, ECF No. 138, and St. Paul
Fire & Marine Insurance Company, ECF No. 139, are GRANTED;

7

Before this case was stayed, Defendant The Hartford Financial
Services Group Inc. filed a motion for leave to file
counterclaims and crossclaims, ECF No. 113, and a motion for
leave to file a third party complaint. ECF No. 114. Those
motions were unopposed and will be granted. As soon as the
third party defendant is served and answers the Complaint, a
scheduling order will be issued.
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(3) That Defendant Hartford Financial Services Group Inc.’s
Motion for Leave to File Counterclaims and Crossclaims, ECF No.
113, and Motion for Leave to File a Third Party Complaint, ECF
No. 114, are GRANTED and the Counterclaims, Crossclaims and
Third Party Complaint are deemed filed as of the date of this
Order; and,
(4) That the Clerk of the Court shall transmit a copy of
this Memorandum and Order to all counsel of record.

______________/s/__________________
William M. Nickerson
Senior United States District Judge

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