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United States District Court, Southern District of New York

March 20, 2003


The opinion of the court was delivered by: Denise Cote, District Judge


Two insurance companies, Mt. McKinley Insurance Company and Everest Reinsurance Company (collectively, the "Plaintiffs"), brought a declaratory action in New York state court on July 3, 2002, against Corning Incorporated ("Corning") and all of Corning's approximately thirty-five insurance carriers. Corning removed the action to federal court on the basis that it was related to the bankruptcy of Pittsburgh Corning Corporation ("PCC" or "Debtor"), a company fifty-percent owned by Corning.

Between July and November 2002, the Plaintiffs, Corning, and various of the defendant insurance companies briefed motions regarding the propriety of the removal and the propriety of Corning's additional motion to transfer this action to Pennsylvania, where the bankruptcy is pending. Corning alone of all the parties seeks to transfer the action to the bankruptcy court. Each of the other movants argues for a remand.

For the following reasons, that portion of the action that relates to the ten insurance policies against which the Debtor has made a claim (the "Affiliate Policies") is stayed. The remainder of the action will be remanded for lack of federal subject matter jurisdiction.


This declaratory judgment action has been filed by two insurers against Corning and all of the insurers that wrote Corning's commercial general liability ("CGL") coverage from 1962 to 1985. The insurance carriers in this action issued primary and excess coverage to Corning through approximately forty-five contracts of insurance over the span of those twenty-three years.

Plaintiffs hope to determine the parties' respective obligations related to Corning's liability for personal injury claims arising from certain products containing asbestos. The claims against Corning have fallen into two general categories: claims based upon Corning's own manufacture of asbestos products marketed under the name Corhart ("Corhart Claims") and derivative claims based upon Corning's 50% ownership of the Debtor. The Debtor and Corning have been named in thousands of personal injury and wrongful death claims alleging exposure to Unibestos, an asbestos-containing pipe insulation manufactured and sold by the Debtor.

The pending motion practice largely hinges on the extent to which the Debtor's liability is covered by Corning's various insurance policies. The insurance policies issued to Corning between 1974 and 1985 specifically exclude PCC from coverage, but the ten pre-1974 policies for excess coverage appear to include coverage for companies affiliated with Corning. These ten Affiliate Policies constitute only a small portion of the policies at issue in this action, however, and only five of the defendants (or defendant groups) issued policies to Corning between 1962 and 1974 for excess coverage. The ten Affiliate Policies were issued by American Home Assurance Company, Continental Casualty Company, The Home Insurance Company, Travelers Casualty & Surety Company, and finally Certain London Market Insurance Companies (collectively "Affiliate Insurers").

Motions to remand have been made by the Plaintiffs; Certain London Market Insurance Companies, a group that purports to consist of an additional eighteen separate insurance syndicates (collectively, "London Market Insurers"); Continental Casualty, Continental Insurance and Pacific Insurance (collectively "Continental"); and Lumbermens Mutual Casualty Company ("Lumbermens"). Lumbermens' policy is for primary coverage and is issued solely to Corning. The Debtor has not made any claim under the policies issued by the Plaintiffs or Lumbermens.

Defendants Employers Insurance, AIU Insurance, American Home, Granite State, Landmark Insurance, Lexington Insurance, National Union Fire, North River Company, and Kemper Insurance have joined in the motions to remand.

The Plaintiffs' policies at issue here are an umbrella policy and five excess policies that identify Corning as the insured. Plaintiffs did not issue any policies to Corning before 1974, and each of the Plaintiffs' policies includes or incorporates provisions excluding the Debtor from coverage.

According to Plaintiffs, the issues of New York law that will likely be decided in this case include whether asbestos-related tort claims, such as a failure to warn, fall within the "products hazard" or "premises-operations" coverage in the Corning policies; the date insurance coverage was triggered; the method of allocating losses occurring over several years under successive insurance policies; and the number of occurrences.

Corning resists the motion to remand principally by pointing to its integrated insurance program. According to Corning, it has a multi-tiered insurance program, consisting of a layer of primary insurance, followed by successive layers of excess policies (issued by nearly forty different insurers). Many of these policies, including the "following form" excess policies, are by their nature interdependent. Therefore, according to Corning, how issues of policy interpretation are decided directly affects how coverage will be exhausted and how responsibility will be apportioned and allocated among the insurers. Corning describes this interlocking coverage as "block" coverage. It contends that a declaration as to the interpretation or application of one of these policies may have a "domino effect," dictating the rights and obligations of other surrounding carriers in the "block," as well as Corning and the Debtor.

Relying on its block coverage theory, Corning contends that this entire action is either a "core" proceeding or "related to" PCC's bankruptcy estate and, as a result, should be transferred to the District Court for the Western District of Pennsylvania for referral to the bankruptcy court. A description of those parts of the bankruptcy proceeding that are relevant to these motions follows. PCC's Bankruptcy Corning and another company, PPG Industries, Inc. ("PPG")*fn1 each own one-half of PCC. From approximately 1962 until 1972, PCC manufactured and sold Unibestos. Faced with numerous lawsuits alleging asbestos-related bodily injury claims, on April 16, 2000 PCC filed a voluntary petition for bankruptcy in the United States Bankruptcy Court for the Western District of Pennsylvania pursuant to Chapter 11 of Title 11 of the United States Code.

In its bankruptcy reorganization, PCC looked to its insurance coverage to create a trust for the payment of asbestos-related claims. A press release issued on May 14, 2002 announced a plan of reorganization for the Debtor that would create a $2.7 billion trust for the benefit of asbestos claimants, funded in part by contributions from PPG and insurers. That proposal does not call for a contribution from any of the policies of insurance issued to Corning, and Corning was not a party to the plan.

On July 25, 2002, three weeks after the instant action was filed, Corning filed an adversary proceeding in the Bankruptcy Court against the Debtor and all of Corning's excess carriers, essentially each of the parties to the instant lawsuit. Among other things, Corning seeks a declaration that PCC has no rights under Corning's policies. In addition to seeking a declaration of rights, Corning asserted additional state law claims for alleged breach of contract, anticipatory breach of contract and bad faith against certain carriers.

On October 11, 2002, the Debtor served its Answer with Counterclaim and Cross-claims in the adversary proceeding filed by Corning. The Debtor asserts that it is entitled to coverage as a named insured in ten Affiliate Policies. Corning's Affiliate Policies identify the "Named Assured" as including, for example, "subsidiary, associated, affiliated companies or owned and controlled companies." These ten excess insurance policies provide in the aggregate at least $225 million in insurance coverage.

The Debtor seeks a declaration of the respective rights, duties and liabilities of Corning, the Affiliate Insurers, and itself. The Debtor asserts that any payment to Corning under the Affiliate Policies will reduce the amount of insurance available to the Debtor under these policies. Among other things, the Debtor seeks a declaration that each Affiliate Insurer has a duty to pay all of the defense costs and sums that the Debtor is obligated to pay with respect to every Unibestos claim in which any portion of the injury process is alleged to have occurred during the effective period of the policy.

In its counterclaim and cross-claims, the Debtor has asserted that its claim of right to coverage under the Affiliate Policies is a core proceeding.*fn2 PCC has not made any claims under Corning's insurance other than its claims under the Affiliate Policies and does not contend that its rights are implicated by the remainder of Corning's insurance coverage.


Summary of Motions

The Plaintiffs have moved to remand this action to state court for lack of subject matter jurisdiction, and in the alternative, on equitable grounds. Continental has moved to remand the action for lack of subject matter jurisdiction, on equitable grounds, or as an application of the abstention doctrine. The London Market Insurers have also moved to remand the action for lack of subject matter jurisdiction and of consent of all defendants to the removal, or in the alternative, requests abstention or equitable remand. Lumbermens has moved for remand on the grounds that the Bankruptcy Court cannot exercise supplemental jurisdiction as to any claims against Lumbermens, that all defendants did not consent to the removal, and on equitable grounds.

Corning has moved to transfer this action to the Bankruptcy Court, or in the alternative, to either dismiss the action for failure to join the Debtor as an indispensable party pursuant to Rule 19 of the Federal Rules of Civil Procedure, Fed.R.Civ.P. 19, or to stay the action pending the resolution of relevant proceedings in the Bankruptcy Court.

On February 5, a scheduling order required the parties to be prepared to address on February 11 whether the remainder of this action "may and should" be transferred in the event that the claims related to the Affiliate Policies are transferred to the Western District of Pennsylvania for referral to its Bankruptcy Court. On February 11, with the exception of Corning, all parties that addressed the Court asked that the remainder of the action be remanded in the event that the Affiliate Policies were transferred. None of the defendants other than Corning argued that the remainder of this action — involving all of the non-Affiliate Policies — could not proceed independently. Some of the parties, including Corning, however, asked for a stay of this entire action for thirty to sixty days in order to facilitate the ongoing settlement discussions in which some of the parties are engaged.

Subject Matter Jurisdiction

The burden of proving federal jurisdiction rests with the party seeking to remove an action from state to federal court. See Linardos v. Fortuna, 157 F.3d 945, 947 (2d Cir. 1998) ("It is also hornbook law that the party invoking federal jurisdiction bears the burden of proving facts to establish that jurisdiction."); In re WorldCom, Inc. Securities Litigation, No. 02 Civ. 3288 (DLC), 2003 WL 716243, at *5 (S.D.N.Y. March 3, 2003); Pan Atl. Group, Inc. v. Republic Ins. Co., 878 F. Supp. 630, 638 (S.D.N.Y. 1995) (removal jurisdiction) (DLC).

Section 1334(b) of Title 28, United States Code, confers jurisdiction over "all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b) ("Section 1334(b)"). Corning asserts that there is federal jurisdiction over this action pursuant to Section 1334(b) because the action is a core proceeding or is related to a bankruptcy proceeding, and that removal of the action therefore was proper. Corning has shown that there is federal subject matter jurisdiction over the ten Affiliate Policies, but has failed to show that the Court may exercise jurisdiction over the remainder of the declaratory judgment action. This Opinion is divided into two sections: the first addresses the claims pertaining to the Affiliate Policies, the second addresses the remainder of the action.

I. The Affiliate Policies

A. Core Bankruptcy Proceedings

Although not every proceeding that involves property of the estate is "core," the Second Circuit has held that "`core proceedings' should be given a broad interpretation that is close to or congruent with constitutional limits." In re U.S. Lines, Inc., 197 F.3d 631, 637 (2d Cir. 1999) (citation omitted); see also In re Best Prods. Co., 68 F.3d 26, 31 (2d Cir. 1995). To determine whether a contract action is a core bankruptcy proceeding, courts consider "(1) whether the contract is antecedent to the reorganization petition; and (2) the degree to which the proceeding is independent of the reorganization." In re U.S. Lines, 197 F.3d at 637. The degree of independence from the reorganization depends upon "the nature of the proceeding." Id.

Even actions based on contracts entered before the filing of a bankruptcy petition can be core bankruptcy proceedings "by virtue of their nature if either (1) the type of proceeding is unique to or uniquely affected by the bankruptcy proceedings, or (2) the proceedings directly affect a core bankruptcy function." Id. (citation omitted). "Core" bankruptcy functions of particular import to the instant proceedings include "placing the property of the bankrupt, where found, under the control of the court, for equal distribution among the creditors, and administering all property in the bankrupt's possession." Id. (citation omitted); 28 U.S.C. § 157(b). On the other hand, contract claims based on insurance policies issued before the bankruptcy filing are not core "simply because they involve the property of the estate." Id. Where insurance proceeds from pre-petition policies will "only augment the assets of the estate for general distribution," that alone will not suffice to render an action to obtain those proceeds core. Id. at 638.

In In re U.S. Lines, 197 F.3d 631, the Second Circuit found that resolving the post-petition dispute over certain protection and indemnity insurance policies issued before the debtor filed for bankruptcy was a core proceeding under the Bankruptcy Code. In that case, the insurance policies represented the sole potential source of cash available to pay some 12,000 personal injury claimants who were asserting asbestos-related injuries.

Because any payment scheme for personal injury claimants hinged on the debtor's ability to draw on funds owed to other creditors to satisfy a complex pay-first clause in the insurance policies, the Second Circuit found that the comprehensive declaratory judgment action would "directly affect the bankruptcy court's core administrative function of asset allocation among creditors. . . ." Id. at 639. The policies' pay-first provision prevented the debtor from seeking indemnification unless it had first used other assets to pay its creditors' claims. Id. at 638. As the Honorable John G. Koeltl has observed, however, what was critical to the Second Circuit's decision was "that the bankruptcy court could not easily proceed with its core function of effecting an equitable reorganization without deciding the coverage dispute in the case." In re County Seat Stores, Inc., No. 01 Civ. 2966 (JGK), 2002 WL 141875, at *5 (S.D.N.Y. Jan. 31, 2002).

Resolution of Corning's and the Debtor's rights to coverage under the ten Affiliate Policies is a "core" proceeding in the Debtor's bankruptcy. Like the debtors in In re U.S. Lines, PCC faces substantial liability for personal injury claims and is attempting to draw on its indemnification insurance to fund a trust for the payment of such claims. It is undisputed that indemnification insurance is crucial to PCC's ability to reorganize. A determination regarding the availability of the $225 million from the ten Affiliate Policies will be material to that reorganization effort. These Affiliate Policies are equivalent to approximately one-twelfth of the size of the proposed trust announced in May 2002. Comprehensive resolution of the claims at stake in the Corning/PCC insurance program will directly affect the core bankruptcy function of distributing and administering the Debtor's assets. As the Second Circuit has recognized, "[i]ndemnity insurance contracts, particularly where the debtor is faced with substantial liability claims within the coverage of the policy, may well be the most important asset of . . . the debtor's estate." In re U.S. Lines, 197 F.3d at 638 (citation omitted).

The parties seeking remand rely on In re United States Brass Corp., 110 F.3d 1261, 1268 (7th Cir. 1997), and In re Orion Pictures Corp., 4 F.3d 1095, 1102 (2d Cir. 1993), for the proposition that this action, arising from pre-petition contracts, is non-core. Where the debtor is an asbestos manufacturer seeking to fund a trust to pay countless personal injury claims, indemnification insurance is central to the administration of the estate and the success of the reorganization, at least where a material amount of coverage is at issue as is true here. Applying the analysis from In re U.S. Lines, there is federal subject matter jurisdiction over the portion of this declaratory judgment action that pertains to the ten Affiliate Policies because that portion of this action is "core" with respect to PCC's bankruptcy.*fn3

B. Procedural Requirements for Removal

Corning removed this action pursuant to Section 1452 of Title 28 of the United States Code ("Section 1452"). The London Market Insurers and Lumbermens argue that removal was improper because not all of the defendants consented. This argument is easily rejected.

The requirement that all defendants consent to removal is found in the general federal jurisdiction removal provision, 28 U.S.C. § 1441. That general removal provision specifies that an action "may be removed by the defendant or defendants," id., and has been interpreted to require the unanimous consent of all defendants. See Still v. DeBuono, 927 F. Supp. 125, 129 (S.D.N.Y. 1996).

The bankruptcy removal provision, on the other hand, is found in another section of the law and states that "a party may remove any claim or cause of action" over which the district court has jurisdiction pursuant to Section 1334. 28 U.S.C. § 1452. The plain language of Section 1452 indicates that a single party may remove the action without obtaining consent from any other party. See Creasy v. Coleman Furniture Corp., 763 F.2d 656, 660-61 (4th Cir. 1985); see also In re WorldCom, Inc. Securities Litigation, 2003 WL 716243, at *18. Indeed, on its face, Section 1452 allows any party — plaintiff or defendant — to remove the action.

The bankruptcy removal provisions, unlike the general federal jurisdiction removal provision, should be broadly construed in favor of removal. See In re WorldCom, Inc. Securities Litigation, 2003 WL 716243, at *16. "Congress, when it added § 1452 to the Judicial Code chapter on removal of cases from state courts . . . meant to enlarge, not to rein in, federal trial court removal/remand authority for claims related to bankruptcy cases." Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 131-32 (1995) (Ginsberg, J., concurring). The Second Circuit, like the Supreme Court, has "broadly construed the jurisdictional grant in the 1984 Bankruptcy Amendments." In re S.G. Phillips Constructors, Inc., 45 F.3d 702, 705 (2d Cir. 1995). As the Second Circuit observed, the scope of the bankruptcy court's jurisdiction is "essential to the efficient administration of bankruptcy proceedings." Id.; see also In re Best Prod., Co., 68 F.3d 26, 31 (2d Cir. 1995). In order to achieve the aims of the Bankruptcy Code, the plain language of Section 1452 allows a single defendant in a multi-defendant case to remove a claim or cause of action for which there is federal subject matter jurisdiction pursuant to Section 1334.

C. Abstention and Remand of Core Proceedings

Having concluded that the claims related to the Affiliate Policies are "core" proceedings in PCC's bankruptcy action and were properly removed, it is necessary to determine whether that portion of the present action should be remanded or whether this Court must or should abstain from hearing it. Even when federal subject matter jurisdiction exists, the Bankruptcy Code provides three mechanisms that may prevent a claim from being adjudicated in federal court: (1) mandatory abstention; (2) discretionary abstention; and (3) equitable remand.

(1) Mandatory Abstention

Continental argues that this Court should abstain pursuant to the mandatory abstention provision of Section 1334(c)(2) of Title 28 of the United States Code ("Section 1334(c)(2)"). Section 1334(c)(2) applies only to non-core matters. In re Petrie Retail, Inc., 304 F.3d 223, 232 (2d Cir. 2002); In re S.G. Phillips Constructors, Inc., 45 F.3d 702, 708 (2d Cir. 1995). Section 1334(c)(2) does not compel abstention with respect to the Affiliate Policies because, as discussed above, the portion of this action that addresses the Affiliate Policies is a core bankruptcy proceeding.

(2) Discretionary Abstention

Continental and the London Market Insurers also urge that the Court exercise its discretion to abstain pursuant to 28 U.S.C. § 1334(c)(1) ("Section 1334(c)(1)"). Section 1334(c)(1) states that: "Nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11 or arising in or related to a case under title 11." 28 U.S.C. § 1334(c)(1). Whether to abstain from hearing a core bankruptcy proceeding is a discretionary decision. See In re Petrie Retail, 304 F.3d at 232; In re S.G. Phillips Constructors, Inc., 45 F.3d at 708.

In determining whether discretionary abstention is appropriate, courts refer to "principles developed under the judicial abstention doctrines." In re Pan American Corp., 950 F.2d 839, 846 (2d Cir. 1991). Those doctrines establish that federal courts have a "virtually unflagging obligation . . . to exercise the jurisdiction given them." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). District courts generally should abstain only for a few "extraordinary and narrow exception[s]." Id. at 813 (citation omitted); see also Woodford v. Community Action Ctr., 239 F.3d 517, 522 (2d Cir. 2001). Comity and federalism, judicial economy, and efficiency are among the considerations relevant to a decision to abstain. See Colorado River, 424 U.S. at 814-19; Woodford, 239 F.3d at 522; In re Pan Am., 950 F.2d at 846; In re WorldCom, Inc., 2003 WL 716243, at *19; In re Masterwear Corp., 241 B.R. at 520.

The existence of a parallel proceeding in federal bankruptcy court, addressing the same issues and involving the same parties, supports retention of jurisdiction over the Affiliate Policies. Judicial efficiency would not be served by allowing a state court to determine the various rights and obligations under the Affiliate Policies while the same issues of law and fact are being adjudicated by a federal bankruptcy court in an adversary proceeding. The Debtor's claims against the Affiliate Policies are core proceedings that directly implicate the assembly of assets and determination of the amount available for distribution to creditors of the estate. It is feasible to sever the claims regarding the Affiliate Policies from the portion of the action that bears no relationship to the Debtor's bankruptcy proceedings. Together with judicial economy and efficient administration of the bankruptcy estate, these factors weigh heavily against the exercise of permissive abstention.

(3) Equitable Remand

The Plaintiffs, the London Market Insurers, Continental and Lumbermens also seek a remand under the equitable remand provisions of Title 28, United States Code, Section 1452(b). Section 1452(b) provides that if a district court has jurisdiction over a claim pursuant to Section 1334, "the court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground." 28 U.S.C. § 1452(b). The equitable remand analysis and the Section 1334(c)(1) abstention analysis are essentially the same. See In re WorldCom, Inc., 2003 WL 716243, at *21; Nemsa Est. v. Viral Testing Sys. Corp., No. 95 Civ. 0277, 1995 WL 489711, at *9 (S.D.N.Y. Aug. 15, 1995). For the reasons stated above, the request for equitable remand is denied as to the non-Affiliate Policies.

D. Conclusion as to Affiliate Policies

As to the Affiliate Policies, therefore, the declaratory judgment action is a core bankruptcy proceeding over which this Court has federal subject matter jurisdiction under Section 1334 of the Bankruptcy Code. Having concluded that mandatory abstention does not apply and discretionary abstention and equitable remand are not warranted, this Court will exercise its jurisdiction over the action insofar as it addresses the Affiliate Policies.

The claims in this action that address the Affiliate Policies, however, duplicate an adversary proceeding pending before the bankruptcy court. Because the adversary proceeding involves the same parties and will address the same issues of fact and law as any action pertaining solely to the Affiliate Policies would address, it is both unnecessary to transfer these issues to Pennsylvania and would be unnecessarily duplicative and wasteful of judicial and litigant resources to proceed with that portion of the declaratory judgment action in this Court. To avoid such duplication and to allow the bankruptcy court to fulfill its obligation to administer PCC's bankruptcy estate efficiently, this action is stayed insofar as it pertains to claims arising under the Affiliate Policies.

II. Remainder of the Declaratory Judgment Action

Having determined that the declaratory judgment action must be stayed with regard to the Affiliate Policies, the remaining issue is whether the bulk of this litigation, which seeks a declaration of rights regarding the remainder of Corning's insurance program, may and should be stayed or remanded. The Debtor has no interest in any of the Corning insurance policies at issue in this litigation except for the Affiliate Policies. Those Affiliate Policies constitute each of Corning's excess policies for the period before 1974. The remainder of the action concerns Corning's primary coverage and the entirety of its 1974-1985 excess coverage. Corning has been unable to explain why the bankruptcy court, which must address issues that affect the Debtor's estate, has any interest in addressing the entirety of the insurance program of a non-debtor.

To establish federal subject matter jurisdiction over an action as "related to" a bankruptcy pursuant to Section 1334, the removing party must show that the action has a "conceivable effect" on the bankruptcy estate. See In re Cuyahoga Equip. Corp., 980 F.2d 110 (2d Cir. 1992); see also In re WorldCom, Inc., 2003 WL 716243, at *5-8 (collecting authority and discussing standard).

Here, Corning is concerned only with its own estate and asbestos liabilities — not those of PCC. PCC does not state any claims for coverage under the non-Affiliate Policies. Corning has failed to show that resolution of the declaratory judgment action with respect to the non-Affiliate Policies, which not only fail to name the Debtor, but in fact specifically exclude the Debtor from coverage, has a conceivable effect on the Debtor's bankruptcy estate. There is no federal subject matter jurisdiction over the portion of the declaratory judgment action that addresses policies other than the Affiliate Policies because that portion of the action has no connection to PCC's bankruptcy and no conceivable effect on the Debtor's estate.*fn4

Finally, Corning argues that its coverage is so interrelated that the decisions about its insurance program should not be made by two separate courts. It is, of course, inefficient for two separate courts to address many of the same issues regarding overlapping policy terms, and there is a danger of inconsistent results as the two courts each apply New York law to any identical language or terms that may exist in separate policies. Corning has failed to show, however, that the Bankruptcy Court has any jurisdiction over its insurance program as a whole. Moreover, because Corning will be a full-fledged participant in each proceeding, its rights will be fully protected. Efficiency considerations alone do not persuade this Court that it should transfer this entire action to Pennsylvania, even assuming that this Court has the authority to do so. Remanding the remainder of Corning's insurance program, as each of the insurance companies requests, will not interfere in any way with the work of the bankruptcy court.

III. Stay

While the motions addressed herein were pending before this Court, The Home Insurance Company was placed in rehabilitation by the State Commissioner of Insurance of New Hampshire. By order dated March 5, 2003, the New Hampshire Superior Court imposed a ninety day stay on the "commencement or continuation of a judicial, administrative, or other proceeding against The Home or any insured of The Home that was or could have been commenced before the commencement of [the rehabilitation] case. . . ." Since The Home is a defendant in this action, and Corning is an insured of The Home, the non-Affiliate Policy portion of the action will be stayed until the expiration of the ninety day stay imposed by the New Hampshire Superior Court.


For the reasons stated above, there is federal subject matter jurisdiction over this declaratory judgment action only insofar as it states claims regarding the Affiliate Policies. That portion of the declaratory judgment action is stayed pending resolution of the adversary proceeding addressing those policies in the Bankruptcy Court for the Western District of Pennsylvania.

There is no federal subject matter jurisdiction over the remainder of the declaratory judgment action — that is, over claims regarding any policies other than the Affiliate Policies. Because there is no jurisdiction, that portion of the declaratory judgment action was improvidently removed. The motion to remand is granted insofar as it applies to the non-Affiliate Policy claims. Nonetheless, due to The Home's rehabilitation, remand is stayed until the expiration of the ninety day stay entered by the New Hampshire Superior Court on March 5.

The motions to remand are, therefore, granted in part and denied in part. The motion to transfer is denied.


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