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TRAVELERS INDEM. CO. v. CROWN CORK & SEAL CO.

October 25, 1994

THE TRAVELERS INDEMNITY COMPANY, LIBERTY MUTUAL INSURANCE COMPANY, and AMERICAN MOTORISTS INSURANCE COMPANY, Plaintiffs,
v.
CROWN CORK & SEAL COMPANY, INC., CROWN BEVERAGE PACKAGING, INC., CONTINENTAL HOLDINGS, INC., SONOCO PRODUCTS COMPANY, SONOCO FIBRE DRUM, INC., and KMI CONTINENTAL FIBRE DRUM, INC., Defendants.



The opinion of the court was delivered by: SHIRLEY WOHL KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 In this insurance coverage dispute, defendants move for an order dismissing the complaint on the grounds that plaintiffs have failed to allege a justiciable case or controversy. Defendants also move, pursuant to Rules 12(b)(7) and 19(b) of the Federal Rules of Civil procedure, for an order dismissing the complaint for failure to join an indispensable party. Alternatively, defendants move for an order either dismissing or staying the action on federal abstention grounds. Plaintiffs oppose defendants' motions. For the reasons set forth below, defendants' motion to dismiss is denied and defendants' motion to stay is granted.

 BACKGROUND

 I. The Insurance Policies

 Each policy issued by Travelers Indemnity and Liberty Mutual contained a $ 100,000 per occurrence property damage limit. With respect to the policies issued by American Motorists, the first four policies contained a $ 100,000 per occurrence property damage limit and the other four policies contained a $ 1 million per occurrence property damage limit. Continental Can supplemented these insurance policies by purchasing additional layers of insurance coverage from four other primary insurance carriers and more than seventy-five excess insurance carriers.

 Continental Can subsequently was dissolved and defendants Crown Cork & Seal Company, Inc. ("Crown Cork"), Crown Beverage Packaging, Inc. ("Crown Beverage"), Continental holdings, Inc. ("Continental Holdings"), Sonoco Products Company ("Sonoco Products"), Sonoco Fibre Drum, Inc. ("Sonoco Fibre") and KMI Continental Fibre Drum, Inc. ("KMI") acquired the Continental Can's manufacturing operations.

 Continental Can's former manufacturing operations have since become the source of more than 100 environmental claims arising out of approximately 100 hazardous waste sites located throughout the country. *fn2" Defendants, as acquirers of Continental Can, have been forced to defend against these claims pursuant to federal and state successor liability doctrines.

 II. The New Jersey Actions

 Defendants claim that the primary insurance policies, including the Continental Can policies, and the excess insurance policies provide coverage for the environmental liability incurred as a result of defendants' acquisition of Continental Can's manufacturing operations. Accordingly, in 1991 and 1992, defendants commenced three separate declaratory judgment actions against the seven primary insurance carriers and the more than seventy-five excess insurance carriers. Specifically, in June 1991, Crown Cork and Crown Beverage commenced an action in New Jersey Superior Court in Hudson County (the "Crown action"). See Crown Cork & Seal Co. Inc. v. Travelers Indem. Co., HUD-L-5956-91. Subsequently, in October 1991, Continental Holdings instituted an action in New Jersey Superior Court in Middlesex County (the "Continental action"). See Continental Holdings, Inc. v. AIU Ins. Co., L-12453-91. Finally, in August 1992, Sonoco Products, Sonoco Fibre and KMI commenced an action in New Jersey Superior Court in Hudson County (the "Sonoco action"). See Sonoco Prods. Co. v. American Motorists Ins. Co., HUD-L-7500-92 (collectively, the "New Jersey actions"). Travelers Indemnity, Liberty Mutual and American Motorists are named defendants in each of the New Jersey actions. The New Jersey actions address not only the coverage obligations of the primary and excess insurers, but also substantive insurance contract claims and the application of the Continental Can policies to the numerous hazardous waste sites located throughout the country.

 The parties dispute the amount of progress that has been made in the New Jersey actions. According to plaintiffs, the parties have engaged in limited document discovery involving the exchange of policies and the production of a relatively small quantity of documents concerning the underlying claims. See Affidavit of Nancy B. Mallery, sworn to on June 10, 1993, at P 5. Moreover, plaintiffs state that few rulings have been made in any of the New Jersey actions and that it is unlikely that the cases will be resolved in the near future. Id. at P 6.

 According to defendants, however, a substantial number of documents have been either exchanged or ordered to be exchanged. These include the policies, summaries and claims files for seventy-five hazardous waste sites, underwriting files and information regarding corporate histories. Further, four case management orders have been issued in order to expedite and coordinate the progress of the discovery proceedings. See Case Management Orders I-IV, annexed to the Castano Aff. as Exh. "A." Additionally, several motions have been briefed by the parties and many of these have now been decided.

 III. The Present Action

 On February 19, 1993, Travelers Indemnity, Liberty Mutual and American Motorists commenced this action by filing a complaint against defendants based on the Court's diversity jurisdiction. Plaintiffs seek to interplead defendants, pursuant to Rule 22 of the Federal Rules of Civil Procedure, on the grounds that defendants' insurance coverage claims may expose plaintiffs to multiple liability (First Claim for Relief). Further, plaintiffs seek a declaratory judgment establishing which, if any, of the six defendants has standing to assert claims for insurance coverage as successors to the Continental Can policies (Second Claim for Relief). Plaintiffs allege that a final resolution of the coverage issue would serve the interests of all parties in that plaintiffs would be able to provide coverage to the appropriate defendants in the environmental claims against them and all parties would avoid unnecessary litigation costs.

 Defendants now move to dismiss the complaint on the grounds that plaintiffs have failed to present a justiciable case or controversy. Specifically, defendants argue that neither Rule 22 of the Federal Rules of Civil Procedure, nor the Declaratory Judgment Act, 28 U.S.C. § 2201, provides a jurisdictional predicate for plaintiffs' pursuit of a federal judgment.

 Defendants also move, pursuant to Rules 12(b)(7) and 19(b) of the Federal Rules of Civil Procedure, for an order dismissing the complaint for failure to join an indispensable party. Specifically, defendants argue that the approximately eighty other primary and excess insurance carriers are indispensable to any determination relating to defendants' entitlement to coverage with respect to the hazardous waste clean-up sites. Defendants argue that the complaint should be dismissed, as joinder of the indispensable parties would defeat the Court's diversity jurisdiction.

 In the alternative, defendants move for an order dismissing or staying the action on federal abstention grounds. Specifically, defendants argue that the Court should abstain from proceeding with the present action pending final resolution of the New Jersey actions. Plaintiffs oppose defendants' motions to dismiss or stay the action. For the reasons set forth below, defendants' motion to dismiss is denied and defendants' motion to stay is granted.

 I. Justiciable Case or ...


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