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Masluf Realty Corporation v. Markel Insurance Corporation

United States District Court, E.D. New York

March 27, 2014



DORA L. IRIZARRY, District Judge.

Plaintiff Masluf Realty Corporation ("Masluf") filed the instant action (the "New York Action") against Defendant Markel Insurance Corporation ("MIC"), alleging that MIC had breached an insurance contract it had issued to Masluf in relation to an insurance claim. ( See Complaint ("Compl."), Dkt. Entry No. 1 ¶¶ 53-68.) However, prior to Plaintiff Masluf filing the instant action, Defendant MIC filed a lawsuit in the Civil Division of the Superior Court of New Jersey in Morris County, based upon the same factual allegations as the instant action, asserting that Masluf submitted false, misleading, and/or fraudulent statements in support of its claim for insurance benefits in violation of New Jersey Insurance Fraud Prevent Act, N.J. Stat. Ann. § 17:33A-1 et seq. See Markel Ins. Co. v. Masluf Realty Corp., Dkt. No. MRS-L-0024-13 (N.J.Super. Ct. Law Div. Dec. 31, 2012) ("N.J. Compl."). Defendant MIC moves, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the instant action ( see Defendant's Memorandum of Law in Support of Motion to Dismiss ("Def.'s Mem."), Dkt. Entry No. 7-1), which Masluf opposes ( see Plaintiff's Memorandum in Opposition to Motion to Dismiss ("Pl.'s Opp'n"), Dkt. Entry No. 8). For the reasons set forth more fully below, Defendant MIC's motion is granted. The New Jersey Action was filed first and there are no special circumstances that warrant a departure from the "first-filed" rule.


The facts are taken from the Complaint and are assumed true solely for purposes of the resolution of this motion. Additionally, when appropriate, portions of the facts are taken from other pleadings in this action.

Plaintiff Masluf is a New York corporation that owns a commercial property situated at 171 Market Street, Staten Island, New York 10310 (the "Insured Property"). (Compl. ¶¶ 8, 10, 13.) Defendant MIC is an insurance company, incorporated under the laws of the State of Illinois. ( Id. ¶ 11.) On May 2, 2010, MIC issued to Masluf an insurance policy (the "Policy") protecting the Insured Property against property loss or damage subject to the terms, conditions, and limitations contained in the Policy. ( Id. ¶ 14; Def.'s Mem. at 2.)

In February 2011, the Insured Property sustained water damage. (Compl. ¶ 19.) On June 2, 2011, the Insured Property sustained extensive damage due to vandalism. ( Id. ¶ 20.) On June 24, 2011, Masluf, through its agents, submitted claims to MIC for insurance benefits under the Policy for both the water loss and the vandalism. ( Id. ¶ 24.) On July 13, 2011, MIC denied coverage for the water loss claim. ( Id. ¶ 34.) On August 2, 2011, MIC denied coverage for the vandalism claim. ( Id. ¶ 35.) Shortly thereafter, MIC rescinded its denial of coverage for the vandalism claim and began conducting an investigation of the claim. ( Id. ¶¶ 36-40; Def.'s Mem. at 2.)

On December 31, 2012, MIC commenced the New Jersey Action against Masluf. ( See N.J. Compl.) In its complaint, MIC sought damages for violation of the New Jersey Insurance Fraud Prevention Act, N.J. Stat. Ann. § 17:33A-1 et seq. and a declaratory judgment that the June 2, 2011 loss was not covered under the Policy. ( Id. at ¶¶ 38-48.) Five months later, on May 23, 2013, Masluf filed the instant action against MIC seeking a declaratory judgment that the June 2, 2011 loss was covered under the Policy and seeking damages under New York General Business Law § 349. (Compl. ¶¶ 53-68.) Presently before the Court, is Defendant MIC's motion to dismiss the Complaint.


I. Applicability of the First-Filed Rule

The resolution of this dispute requires an application of the "first-filed" rule. The "first-filed" rule is a well settled legal doctrine in the Second Circuit, instructing that "where there are two competing lawsuits, the first suit should have priority, absent the showing of balance of convenience or special circumstances giving priority to the second." First City Nat. Bank & Trust Co. v. Simmons, 878 F.2d 76, 79 (2d Cir. 1989) (quotations and citations omitted). Proper application of the "first-filed" rule requires that the first and subsequently filed cases have either identical or substantially similar parties and claims. See Spotless Enters. Inc. v. The Accessory Corp., 415 F.Supp.2d 203, 205 (E.D.N.Y. 2006). Importantly, application of the rule does not require identical parties and issues in the cases, but merely requires "substantial overlap." Id .; see also Intema Ltd. v. NTD Labs., Inc., 654 F.Supp.2d 133, 141 (E.D.N.Y. 2009) (noting that the "first-filed" rule can be invoked where significant overlapping factual issues exist between the two pending cases).

Here, the facts demonstrate that there is substantial overlap in the factual circumstances and legal issues between the New Jersey Action and the instant New York Action. Both parties agree that the two actions involve the same parties, insurance policy, and underlying conduct. As such, the Court finds that these cases are sufficiently similar to warrant the application of the "first-filed" rule. See, e.g., Oleg Cassini, Inc. v. Serta, Inc., 2012 WL 844284 (S.D.N.Y. Mar. 13, 2012) (applying first-filed rule and dismissing action where there was an ongoing case in another court that involved largely the same parties, the same underlying communications between the parties, and sought relief that resolved the same issues between the parties); Spotless Enters Inc., 415 F.Supp.2d at 205 (finding "substantial overlap" between two cases involving largely the same parties, patent, allegedly infringing conduct, and legal issues).

Plaintiff Masluf contends that the New Jersey Action should not be considered the "firstfiled" action for the following reasons: (1) "service was not effectuated prior to Masluf bringing the" New York Action; (2) "New Jersey does not have personal jurisdiction over Masluf"; and (3) "the New Jersey action likely can not [sic] resolve all of the issues between the parties." (Pl. Opp'n. at 4.) For the following reasons, the Court finds each of the Plaintiff's arguments unpersuasive.

A. Service of Process

Plaintiff Masluf contends that the New York Action takes priority because, even though the New Jersey Action was filed first, MIC did not serve Masluf in the New Jersey Action before the New York Action was filed. (Pl. Opp'n at 4.) The Second Circuit has not addressed directly the question of whether an action is considered "first-filed" for purposes of applying the rule when service of a complaint has not been effected properly prior to the filing and service of the complaint in a second action that involves the same parties and subject matter. Judges within this circuit have reached divergent results in cases in which this issue has arisen. Compare Nat'l Patent Dev. Corp. v. Am. Hosp. Supply Corp., 616 F.Supp. 114, 118 n.7 (S.D.N.Y. 1984) (mentioning that there is "some support" for the position that jurisdiction over the person rather than the filing of the complaint is controlling for purposes of determining priority, but that the issue has not been ...

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