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Metropolitan Transportation Authority v. United States Fidelity & Guaranty Co.

United States District Court, S.D. New York

April 14, 2015

METROPOLITAN TRANSPORTATION AUTHORITY and NEW YORK CITY TRANSIT AUTHORITY, Plaintiffs,
v.
UNITED STATES FIDELITY & GUARANTY CO., ACE PROPERTY & CASUALTY CO., ACE AMERICAN INSURANCE CO., ARROWOOD INDEMNITY CO., RSUI INDEMNITY CO., and GENERAL STAR INDEMNITY CO., Defendants.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge.

This decision resolves a motion to remand this case to state court. Plaintiffs Metropolitan Transportation Authority ("MTA") and New York City Transit Authority ("NYCTA") originally brought this declaratory judgment action in New York state court, seeking a declaration as to insurance coverage obligations in connection with a personal-injury suit pending in state court. Of the six named defendants, one, General Star Indemnity Company ("General Star"), removed the case to this Court, under 28 U.S.C. ยงยง 1441 and 1446.

The MTA and the NYCTA now move to remand the case to New York state court, on a variety of grounds. One of those remand grounds, the Court holds, has merit: to wit, that General Star failed to obtain timely written consent to the removal from its co-defendants. The remand motion is, therefore, granted.

I. Background[1]

A. The Underlying Tort Action

This action arises from a tort suit filed long ago - in April 2002 - in New York State Supreme Court. The suit ("the Dyer Action") was filed by Paula Dyer to recover for injuries she sustained in April 2001 after being struck by a vehicle near a subway station construction site in the Bronx, New York. See Paula Dyer v. City of New York, Index. No. 14593/2001 (N.Y. Sup.Ct. 2001). Dyer sued two construction companies, Steers Construction Corporation ("Steers") and L.A. Wenger Contracting Company ("Wenger"), and the two municipal authorities, MTA and the NYCTA, who are the plaintiffs here. Dyer alleged that a construction barrier at the site of the accident had caused the accident by obstructing the line of sight between oncoming vehicular traffic proceeding westbound on 161st Street in the Bronx (where the accident took place) and pedestrians crossing 161st Street in the southbound direction. On October 15, 2014, the Dyer Action settled during trial.

B. This Lawsuit

On September 24, 2014, before the Dyer Action settled, the MTA and the NYCTA brought this insurance coverage suit by filing a Verified Complaint in New York State Supreme Court (Bronx County). The suit, as originally filed, was brought against five insurance companies; defendants United States Fidelity and Guaranty Company ("USF&G"), Ace Property and Casualty Insurance Company and Ace American Insurance Company (collectively, the "Ace defendants"), RSUI Indemnity Company ("RSUI"), and General Star. Dkt. 1, Ex. A.

In brief, the MTA and the NYCTA alleged that their contracts with Steers and Wenger had required the two construction companies to procure insurance for the construction work at 161st Street and to name the MTA and the NYCTA as additionally insured parties on the insurance policies. The MTA and the NYCTA further alleged that Wenger acquired liability insurance from USF&G and excess liability insurance from the Ace defendants, that Steers acquired liability insurance from RSUI and excess liability insurance from General Star, and that these insurers had issued certificates of insurance that named the MTA and the NYCTA as additionally insured parties. However, the MTA and the NYCTA claimed, they had long sought coverage from those insurers in connection with the Dyer Action, but the insurers had failed to respond to them. As a result, the MTA and the NYCTA alleged, the insurers had breached their contracts by failing to defend and indemnify the MTA and the NYCTA in the Dyer Action. The MTA and the NYCTA sought both a declaratory judgment, to the effect that the insurers owed the MTA and the NYCTA a duty to defend and indemnify in the Dyer Action, and compensatory damages for defendants' alleged breach of contract.

On October 14, 2014, General Star was served with the summons and Complaint from the New York Department of Financial Services.

On October 16, 2014, the MTA and the NYCTA filed an Amended Complaint. They added, as a defendant, Arrowood Indemnity Company ("Arrowood"), which allegedly had issued liability insurance to Steers. On October 28, 2014, General Star was served with the amended summons and Amended Complaint from the New York Department of Financial Services.

C. General Star's Notice of Removal

On November 13, 2014, General Star filed a notice of removal to this Court. Dkt. 1. The basis of the removal was diversity jurisdiction. General Star stated that the MTA and the NYCTA are each a public benefit corporation conducting business in New York and that all defendants are foreign companies licensed to issue insurance policies in New York.[2] As to the amount in controversy, General Star stated that, although the MTA and the NYCTA had not demanded a specific amount of damages in its Complaint, the amount in controversy necessarily exceeded $75, 000, including because General Star's excess liability policy for Steers is triggered only by claims in excess of Steers' $1 million primary liability policy (issued by RSUI and Arrowood).

Relevant here, the notice of removal was filed by General Star only. It did not attach any writing from any co-defendant indicating consent to or support of removal. In its notice of removal, however, General Star stated that counsel for co-defendants Arrowood, RSUI, and USF&G consented to the removal of this action. As to the Ace defendants, General Star stated that it did not know whether they had been served with either the Complaint ...


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