In this declaratory judgment action, defendants David and Susan Glasbrenner move to dismiss the amended complaint for lack of subject matter jurisdiction, lack of personal jurisdiction and failure to state a claim on federal due process or equal protection grounds.
In the amended complaint, Gulf Insurance Company seeks a declaratory judgment absolving it of liability to the Glasbrenners under a 1993 insurance policy. The amended complaint must be dismissed because this Court lacks personal jurisdiction over the Glasbrenners, who are the only real (as opposed to nominal) defendants.
On April 17, 1994, Susan Glasbrenner was injured in a Caldor department store in Somerdale, New Jersey. She and her husband David filed a personal injury lawsuit against Caldor*fn1 on February 1, 1995 in the Superior Court of New Jersey.
On September 18, 1995, Caldor filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. (LoBosco Oct. 3, 2003 Aff. ("LoBosco Aff.") Ex. G.) The filing of the bankruptcy petition automatically stayed all claims against Caldor, including the Glasbrenners' lawsuit.
On June 21, 1996, the Glasbrenners filed proofs of claim in the Caldor bankruptcy proceeding, asserting prepetition personal injury claims against Caldor. (LoBosco Aff. Ex. A & B.) The Glasbrenners participated in the mandatory alternative dispute resolution ("ADR") program adopted by the Bankruptcy Court, which allowed them to choose binding or non-binding arbitration. The Glasbrenners chose non-binding arbitration and, in 1999, received and rejected an ADR award and filed a notice of intent to litigate their personal injury claims.
By order dated October 21, 1999, the Bankruptcy Court granted the Glasbrenners the limited relief of allowing them to sue Caldor in the District Court for the Southern District of New York. (LoBosco Aff. Ex. L.) It does not appear whether they did so. In any event, by application dated January 23, 2001, the Glasbrenners asked the Bankruptcy Court to modify its relief to allow them to litigate their claims against Caldor in the Superior Court of New Jersey, rather than the Southern District of New York. (LoBosco Aff. Ex. J.) Their request was granted in an order dated March 8, 2001, which
ORDERED, that except as modified herein any verdict or judgment entered in favor of the Claimants will be limited solely to the proceeds of the Debtors' applicable insurance coverage, and will not be collectible against or realized from the Debtors' assets nor act as a claim against the Debtors in the within Chapter 11 case[.] (Ellison Sept. 4, 2003 Aff. ("Ellison Aff.") Ex. I.)
Caldor was adjudged administratively insolvent and authorized to wind down its business in January 1999. On October 2, 2001 the Bankruptcy Court authorized Caldor's final distribution, and Caldor's Chapter 11 cases were dismissed on November 8, 2001. (LoBosco Aff. Ex. C. ¶¶ 3, 17.)*fn2
On June 6, 2003, based on the April 11 verdict in a five-day jury trial, the Superior Court of New Jersey, Camden County entered judgment for the Glasbrenners and against Caldor in the amount of $2,647,827.91, including interest (the "New Jersey Judgment"). In accordance with the Bankruptcy Court's March 8, 2001 order, the New Jersey Judgment provided that it could be collected only from Caldor's available insurance coverage. (Ellison Aff. Ex. J.)
At the time of the underlying accident, Caldor maintained primary insurance policies with an insurance company that is now insolvent. (Glasbrenners' Mem. Supp. Mot. to Dismiss 7; Ellison Aff. Ex. L, Complaint ¶ 35.) Caldor also had an excess insurance policy with Gulf Insurance Co. ("Gulf") (the "Gulf Policy").
Gulf filed the present lawsuit on April 24, 2003 seeking a declaratory judgment that it is not liable for the New Jersey Judgment, alleging that certain terms of the Gulf Policy were not satisfied, and that Gulf was not given notice of the Glasbrenners' claims until November 21, 2002. Gulf also claims it is entitled to recoup or set off Caldor's indebtedness to Gulf against any liability on the New Jersey Judgment.
On June 11, 2003, the Glasbrenners moved to dismiss the complaint for lack of subject matter jurisdiction, lack of personal jurisdiction and improper venue or, if there was jurisdiction, for abstention from exercising it. They simultaneously filed a direct action against Gulf in the Superior Court of New Jersey seeking payment on the New Jersey Judgment. (Ellison Aff. Ex. L.) Gulf removed that case to the United States District Court for the District of New Jersey, where it has been stayed pending resolution of this action.
Gulf responded to the motion to dismiss by filing an amended complaint on July 11, 2003. On September 4, 2003, the Glasbrenners moved to dismiss the amended complaint for lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue and other grounds.
In a memorandum and order dated November 19, 2003, I dismissed the amended complaint for improper venue. See Gulf Ins. Co. v. Caldor Corp., No. 03 Civ. 2894 (LLS), 2003 WL 22764542 (S.D.N.Y. Nov. 20, 2003). On August 2, 2005, the Court of Appeals vacated that order and remanded ...