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ASBEKA INDUS. v. TRAVELERS INDEM. CO.

August 16, 1993

ASBEKA INDUSTRIES, Plaintiff,
v.
TRAVELERS INDEMNITY COMPANY, ROYAL INSURANCE COMPANY OF AMERICA as successor in interest to ROYAL GLOBE INSURANCE CO., GLOBE INDEMNITY CO. as successor in interest to ROYAL GLOBE INSURANCE COMPANY, FEDERAL INSURANCE COMPANY, NORTH RIVER INSURANCE COMPANY, and HARTFORD ACCIDENT AND INDEMNITY COMPANY, Defendants.



The opinion of the court was delivered by: I. LEO GLASSER

 GLASSER, United States District Judge:

 Plaintiff Asbeka Industries ("Asbeka") has commenced two actions challenging the refusal of the defendant insurance companies to defend or to indemnify it in personal injury actions that were commenced by individuals who were exposed to the asbestos contained in plaintiff's products. In the first action, Asbeka Indus. of New York, Inc. v. Travelers Ins. Co., et al., CV-90-2963 (ILG) ("Asbeka I"), Asbeka seeks a declaratory judgment that the defendants are required to defend and, if necessary, indemnify it in those actions. In this second action, Asbeka Indus. v. Travelers Indem. Co., et al., CV-91-1140 (ILG) ("Asbeka II"), Asbeka seeks damages and injunctive relief against all of the defendants based on state law claims of negligent misrepresentation, common law fraud, intentional misrepresentation, breach of contract, and section 349 of the General Business New of New York. In addition, plaintiff seeks damages and injunctive relief against defendant Travelers Indemnity Company ("Travelers") under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq. ("RICO").

 These two actions have not been consolidated, and this Memorandum and Order only pertains to the following motions filed in Asbeka II: the defendants' joint motion to dismiss the complaint for failure to state a claim, Fed. R. Civ. P. 12(b)(6), and defendant Travelers' motion to dismiss the RICO claims and for Rule 11 sanctions. Since matters outside the pleadings have been presented to the Court, the parties were notified that the motions to dismiss would be converted to motions for summary judgment under Fed. R. Civ. P. 12(b), 56. See Transcript of Oral Argument, dated June 26, 1992, at 13. For the following reasons, defendants' joint motion for summary judgment is granted and defendant Travelers' motion for summary judgment and for Rule 11 sanctions as to the RICO claims is granted.

 FACTS

 The facts underlying Asbeka I and Asbeka II are nearly identical as the genesis of both actions is the defendants' refusal to defend or to indemnify Asbeka in pending personal injury actions. Unless otherwise noted, the facts relevant to the disposition of the pending motions in Asbeka II are gleaned from the complaint and the parties' submissions in that action.

 Plaintiff Asbeka, a New York corporation, fabricates products that are supplied to it by The Johns Manville Company, a company which produces asbestos. Complaint PP 6-7. Since July of 1981, Asbeka has been named as a defendant in over seventy lawsuits involving personal injury claims arising out of the use of asbestos in its products. Id. PP 8-9. From 1948 through the mid-1980's, Asbeka claims that it purchased general liability insurance policies from the six insurance companies named as defendants in this action (collectively the "defendant insurers"). The complaint in Asbeka II alleges that Asbeka was insured: (1) from 1948 to December 24, 1964 by Travelers (P 25); *fn1" (2) from December 24, 1964 to December 24, 1974, and from December 24, 1975 to September 1, 1981 by Royal Insurance Company of America ("Royal") and Globe Indemnity Co. ("Globe"), as successors in interest to Royal Globe Insurance Company (PP 31-33, 39-41); (3) from December 24, 1974 to December 24, 1975 by Hartford Accident and Indemnity Company ("Hartford") (P 59); (4) from September 1, 1981 to September 1, 1983 by Federal Insurance Company ("Federal") (P 46); and (5) from September 1, 1983 to September 1, 1986 by North River Insurance Company ("North River") (P 53).

 Thereafter, on August 23, 1990, Asbeka commenced the declaratory judgment action in Asbeka I, asking this Court to declare that the defendant insurers were required to defend and, if necessary, indemnify it in pending personal injury actions. *fn2" While Asbeka I was still pending, Asbeka commenced this action, Asbeka II, on March 28, 1991, seeking injunctive relief and treble damages against Travelers for alleged violations of the RICO statute, 18 U.S.C. § 1962(a) and (c), (Counts I and II); and damages and injunctive relief against all of the defendants based on state law claims of negligent misrepresentation (Count III); *fn3" common law fraud (Count IV); *fn4" intentional misrepresentation (Count V); *fn5" breach of contract (Count VI); *fn6" and based on section 349 of the General Business Law of New York (Count VII).

 Defendant Travelers moves for summary judgment in Asbeka II on the RICO counts under Fed. R. Civ. P. 56, and for sanctions under Fed. R. Civ. P. 11. All defendants move for summary judgment on the remaining counts in the complaint in Asbeka II.

 DISCUSSION

 Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if . . . there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In opposing a properly supported summary judgment motion, "an adverse party may not rest upon the mere allegations or denials of [its] pleading, but [its] response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). The nonmovant, however, "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986).

 In deciding a summary judgment motion, the court need not resolve disputed issues of fact, but need only determine whether there is any genuine issue to be tried. Eastman Mach. Co., Inc. v. United States, 841 F.2d 469, 473 (2d Cir. 1988). A genuine factual issue exists if there is sufficient evidence favoring the nonmovant such that a jury could return a verdict in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 A. State Law Claims

 Plaintiff asserts five state law claims in the complaint: negligent misrepresentation, common law fraud, intentional misrepresentation, breach of contract, and under section 349 of the General Business Law of New York. The defendant insurers move for summary judgment on the state law claims, inter alia, as barred by the applicable statute of limitations and by Asbeka's failure to provide timely notice of claim in accordance with the express terms of the defendant insurers' respective insurance policies. This Court will address these contentions in turn.

 1. Statutes of Limitation

 The defendant insurers contend that Asbeka's negligent misrepresentation, intentional misrepresentation and common law fraud claims are time barred under the applicable statutes of limitation. Under New York law, a negligent misrepresentation claim is subject to the six-year limitations period of N.Y. Civ. Prac. L. & R. § 213(1) (McKinney 1990) [hereinafter CPLR § ]. See, e.g., Milin Pharmacy, Inc. v. Cash Register Sys., Inc., 173 A.D.2d 686, 687, 570 N.Y.S.2d 341, 341-42 (2d Dep't 1991) (applying CPLR § 213(1) and citing cases). But see Country World, Inc. v. Imperial Frozen Foods Co., 186 A.D.2d 781, 782, 589 N.Y.S.2d 81, 82 (2d Dep't 1992) (applying three year limitations period of CPLR § 214(4) and (5)); see also In re Argo Communications Corp., 134 Bankr. 776, 794-96 (Bankr. S.D.N.Y. 1991) (noting the inconsistent positions of the New York courts, but holding that where the negligent misrepresentation claim is closely aligned with an intentional misrepresentation claim, then the six-year limitations period of CPLR § 213(8) applies).

 Under New York law, a claim for fraud must either be brought within six years from the time that the cause of action accrued or within two years from the date that the plaintiff actually discovered the fraud or could have discovered the fraud with due diligence, whichever is longer. CPLR §§ 203(g), 213(8) (McKinney 1990 & Supp. 1993). See also Schoen v. Martin, 187 A.D.2d 253, 254, 589 N.Y.S.2d 443, 444 (1st Dep't 1992); Arrathoon v. East New York Sav. Bank, 169 A.D.2d 804, 805, 565 N.Y.S.2d 172, 173 (2d Dep't), appeal denied, 77 N.Y.2d 808, 570 N.Y.S.2d 488, 573 N.E.2d 576 (1991). Likewise, the intentional misrepresentation claim is subject to the six-year statute of limitations period applicable to fraud actions under CPLR § 213(8) (McKinney 1990). See Argo Communications, 134 Bankr. at 795-96 (intentional misrepresentation claim is ...


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