Petition for Writ of Certiorari — Exxon Corp. v. Youell
Supreme Court brief1995
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B41 87 1 MAY 15 1995
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IN THE
Supreme Court of the Wnited States
OCTOBER TERM, 1994
EXXON CORPORATION,
VS.
Petitioner.
JOHN RICHARD LUDBROOKE YOUELL, et ai.,
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
COURT OF APPEALS FOR THE SECOND CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
Of Counsel
TARIQ MUNDIYA
TAMAR FEDER
SULLIVAN & CROMWELL
ROBERT N. SAYLER
BRICE M. CLAGETT
MITCHELL F. DOLIN
COVINGTON & BURLING
1201 Pennsylvania Avenue N.W.
Post Office Box 7566
Washington, D.C. 20044-7566
(202) 662-6000
MICHAEL F. STURLEY
727 East 26th Street
Austin, Texas 78705
(512) 471-6318
May 12, 1995
JAMES H. CARTER
Counsel of Record for
Petitioner
125 Broad Street
New York, New York
10004
(212) 558-4000
- and -
EDWARD J. LYNCH
CHARLES A. BEACH
Exxon Corporation
225 East John W.
Carpenter Freeway
Irving, Texas 75062-2298
(214) 444-1466
OUESTIONS PRESENTED
l. Does state law or federal maritime law provide
the rule of decision in a marine insurance coverage dispute
when the court (a) determines that there is no federal prece-
dent on point, and (b) does not determine that there is any
need for a uniform federal rule?
, Is a district court’s discretion to dismiss an
insurer’s federal declaratory judgment action, in deference to
a policyholder’s pending state court action raising the same
issues, governed by the six-factor test announced in Colorado
River Water Conservation District v. United States, 424 U.S.
800 (1976), and Moses H. Cone Memorial Hospital v.
Mercury Construction Corp., 460 U.S. 1 (1983), or by the
Declaratory Judgment Act, 28 U.S.C. § 2201 ef seq., as
construed by this Court in Brillhart v. Excess Insurance Co.
of America, 316 U.S. 491 (1942)?
THE PARTIES
The Petitioner in this action is Exxon Corporation
(“Exxon”). Exxon has no corporate parent. A list identify-
ing Exxon’s non wholly-owned subsidiaries appears at
Appendix C.
The Respondents are John Richard Ludbrooke Youell,
an underwriter at Lloyd’s London, for himself and as a repre-
sentative of those other underwriters severally subscribing to
certain Global Corporate Excess Insuring Agreements at
issue, and certain London Market Insurance Companies and
other underwriting entities. A list identifying respondents
appears at Appendix D.
-ji-
Page
QUESTIONS PRESENTED ................. i
en -& o's Sb bs 6 6 4 8 0 0 a ee wo ee Oe ii
pro 8 Ge Foy 6 os ee Vv
I ess eee kore a wa |
I Sa aN Ly oe egg ger a ek |
CONSTITUTIONAL AND STATUTORY
PROUVisueee ENVOUILVED 2. cc ccc cc ccc cece l
STATEMENT OF THE CASE ............... 2
a ren. oo 6 «6 6 oe s9'b e090 3
(ii) The Texas and New York Actions....... 3
(iii) The District Court’s Decision to Abstain . . 4
(iv) The Second Circuit’s Reversal ......... 5
REASONS FOR GRANTING THE WRIT........ 7
‘
TABLE OF CONTENTS
The Second Circuit, in Conflict with Other Courts of
Appeals, Has Incorrectly Held that Federal Maritime
Law Provides the Rule of Decision in a Marine
Insurance Coverage Dispute When There is No
Federal Precedent on Point and No Determination of
Any Need for a Uniform Federal Rule. .......
A. The Wilburn Boat Decision and the Role
of State Law in Marine Insurance
Erne ee te a ee oe 8
B. The Second Circuit’s Decision Creates
a Conflict with Other Circuits and Un-
dermines the Principle of Wilburn Boat
that State Law Presumptively Governs
Marine Insurance Disputes. ........... 10
C. Resolving the Intercircuit Conflict
on the Proper Application of the
Wilburn Boat Decision Is Important to
the Marine Insurance Industry. ......... 17
Il. The Second Circuit, in Conflict with Other Courts of
Appeals, Has Erred in Applying the Colorado River
- Moses H. Cone Abstention Analysis to a Case
Under the Declaratory Judgment Act. ........ 18
ee Re eee eee errr eT ee ee ee 23
-iv-
TABLE OF AUTHORITIES
CASES
5801 Associates, Ltd. vy. Continental Ins. Co.,
983 F.2d 662 (Sth Cir. 1993) .........
A&B Enterprises, Inc. v. Hartford Ins. Co..,
198 A.D.2d 389 (2d Dep’t 1993) .......
Albany Ins. Co. v. Anh Thi Kieu,
927 F.2d 882 (Sth Cir.), cert. denied,
ee Be ee 2 |! ree rere rr
Allstate Ins. Co. v. Zuk,
574 N.E.2d 1035 (N.Y. 1991) .........
Am. Clothing Workers of America v.
Richman Bros.,
Oe Wis ae GOO 0 ne eee ee
Bank of San Pedro v. Forbes Westar, Inc.,
No. 93-55979, 1995 WL 235265
(9th Cir. Apr. 24, 1995) ............
BASF Corp. v. Symington,
No. 94-2340, 1995 WL 109014
te eer
Board of Education v. Bosworth,
713 F.2d 1316 (7th Cir. 1983).........
Bohemia, Inc. v. Home Ins. Co..,
725 F.2d 506 (9th Cir. 1984) .........
-Vy-
Brillhart v. Excess Ins. Co. of America,
356 US. 8 Ce sos 6 ub wekewcus 18, 19, 22
Cargill, Inc. vy. Commercial Union Ins. Co..,
889 F.2d 174 (8th Cir. 1989) ........... 11, 15
Chick Kam Choo v. Exxon Corp.,
GO US. 1D GS On a ee ee ee 21
Colorado River Water Conservation District v.
United States,
U.S. Te GPR so cinisweenweae en passim.
Continental Cas. v. Rapid-American Corp..,
609 N.B.2d S06 (N.Y. 1993) ......cccccess i3
Continental Cas. Co. v. Robsac,
947 F.2d 1367 (9th Cir. 1991).............. 20
Granite State Ins. Co. v. Tandy Corp.,
986 F.2d 94 (Sth Cir. 1992), cert. dismissed,
LIS 3. Ce. IRS CISD ac 6 hw a ee ee ee 19
Gulf Chem. & Metal Corp. v. Asst’d Metals and
Minerals Corp..,
| P.36 36 GG Ce. 190 . «ses eee 13
Lumbermen’s Mut. Cas. Co. v. Connecticut Bank &
Trust Co.,
806 F.2d 411 (2d Cir. 1986).............. 19
Lumbermens Mutual Cas. Co. v. S-W Industries, Inc.,
39 F.3d 1324 (Gt Cir. 1994) 2.2... 2 Feces 13, 21
-vi-
Mitcheson v. Harris,
955 F.2d 235 (4th Cir. 1992) ..........
Moses H. Cone Memorial Hospital v. Mercury
Constr. Corp.,
Gir Os BORON cece cence es eees
Northeast Bancorp, Inc. v. Board of Governors
of the Federal Reserve Sys.,
es SF) |) ie
Orient Ins. Co. v. Adams,
Bae Gt OF CROUEE vic Se ecw ese ewes
Pace v. Insurance Co. of North America,
838 F.2d 572 (ist Cir. 1988) ..........
Pennzoil Co. v. Texaco, Inc.,
Ge ie POE be We we ce eee sees es
Prudential Ins. Co. v. Benjamin,
ce et ee
Romero v. Int’l Terminal Operating Co..,
SO ee ee ee
State Farm Fire & Cas. Co. v. S-S,
FR & poo, 6. re
Steelmet, Inc. v. Caribe Towing Corp..,
779 F.2d 1485 (11th Cir. 1986) .........
-vii-
Taylor v. Lloyds Underwriters of London,
972 F.2d 666 (Sth Cir. 1992), cert. denied,
See a I ok sb 6 whe sok Cay 12
Terra Nova Ins. Co. v. 900 Bar, Inc.,
Der Fae boas Ce Ga, BD Sve cs eee ee a 19
University of Cincinnati v. Arkright Mut. Ins. Co..,
1995 WL 222392 (6th Cir. April 17, 1995)... 10-11
Wilburn Boat Co. v. Fireman’s Fund Ins. Co..,
Po ee passim.
Wilton v. Seven Falls Co..,
No. 94-562 (certiorari granted
ty Be NN aa 6 66a eo ee 4-8 5, 20, 21, 22
STATUTES AND CONSTITUTIONAL AUTHORITY
OF a RO} Pe a rr l
Ps ice ere eee keri ees |
ee 6 oe 6 es Oe le es 1, 2
pg ee ener Pee rere 2, 18
OTHER AUTHORITIES
Restatement of Contracts (1932) ............. 1]
Abraham, Environmental Liability and the
Limits of Insurance, 88 Colum. L. Rev. 942 (1988) .. 11
Walcott B. Dunham, New York Insurance Law (1994) .. 9
-Viii-
Steven F. Friedell, Benedict on Admiralty
ee Cn re ee ee 21
Barry R. Ostrager and Thomas R. Newman,
Handbook on Insurance Coverage Disputes
kg aR a eee eee 11
-ix-
OPINIONS BELOW
The opinion of the United States Court of Appeals for
the Second Circuit is reported at 48 F.3d 105 and is reprinted
as Appendix A hereto. The Memorandum decision of the
United States District Court for the Southern District of New
York (Preska, J.) is available only on the Westlaw and Lexis
electronic databases and is reprinted as Appendix B hereto.
JURISDICTION
The judgment of the Court of Appeals was entered on
February 21, 1995. This Court has jurisdiction pursuant to
28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The Admiralty Clause of the United States Constitution,
U.S. Const. art. I, § 2, states in pertinent part: “The
judicial Power shall extend ... to all Cases of admiralty and
maritime Jurisdiction.”
28 U.S.C. § 1333(1), provides:
§ 1333. Admiralty, maritime and prize cases
The district courts shall have original jurisdiction,
exclusive of the courts of the States, of:
(1) Any civil case of admiralty or maritime
jurisdiction, saving to suitors in all cases all other
remedies to which they are otherwise entitled.
The Declaratory Judgment Act, 28 U.S.C.
§ 2201(a), provides in pertinent part:
“In a case of actual controversy within the jurisdic-
tion . . ., any court of the United States, upon the filing
of an appropriate pleading, may declare the rights and
other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be
sought. Any such declaration shall have the force and
effect of a final judgment or decree and shall be
reviewable as such.”
STATEMENT OF THE CASE
This petition involves insurance consequences arising out
of the accidental grounding of the Exxon Valdez in Alaska
and the resulting catastrophic oil spill. Petitioner Exxon
Corporation (“Exxon”) filed a state court action (the “Texas
Action”) asserting coverage under insurance policies issued
by respondents.’ Thereafter, respondents brought the
Exxon is insured under a comprehensive package of insurance
known as Global Corporate Excess (GCE) Coverage (also referred
to herein as the GCE Agreements). The respondents are more than
100 insurance companies and 150 underwriting syndicates on the
1988-89 GCE Coverage. Exxon’s rights under Section I and IIIA
of the GCE Coverage are being litigated in the Texas Action, and a
trial date of January 16, 1996 has been set. Exxon’s rights under
another part of the GCE Coverage, Section IIB, are the subject of
arbitration.
Exxon named four insurance companies as defendants in the Texas
Action that are not plaintiffs in the New York Action. All are
presently in insolvency proceedings. One of the respondents, Qatar
General Insurance & Reinsurance Co.., is a plaintiff in the New York
Action but is not a Texas defendant because Exxon has released its
claim against that company. Another respondent, Norske Triton
Insurance Co. Ltd., has been dismissed by stipulation in both
actions.
2.
iiss >
present declaratory judgment action in federal court (the
“New York Action”). The issue now before the Court is
whether this duplicative federal action should proceed. In the
Court of Appeals, this issue turned on the court’s decision
that one of the underlying substantive questions affecting
insurance coverage should be resolved by creating new
federal law rather than by applying settled state law.
(i) Background Facts
On March 24, 1989, the Exxon Valdez ran aground on
Bligh Reef in Prince William Sound, 25 miles south of
Valdez, Alaska. Approximately 258,000 barrels of crude oil
— about 20% of the ship’s cargo — spilled into Prince
William Sound. Eventually, a large portion of the oil washed
onto adjacent shorelines. Exxon, as the owner of the cargo
of crude oil, has incurred billions of dollars in expenses and
liabilities for cargo loss, clean up, third-party claims, and
related losses. On April 4, 1989, Exxon notified respondents
that it would be claiming GCE Coverage for clean up
expenses and third-party liabilities. By letters dated
October 30, 1990, and November 12, 1990, respondents
denied all of Exxon’s claims. For three years after their
denial of coverage, respondents adhered to that denial but
continued to insist that Exxon provide additional information.
(ii) The Texas and New York Actions
On August 4, 1993, Exxon commenced the Texas Action
against respondents due to their denial of Exxon’s claims
under the GCE Agreements. In the Texas Action, Exxon
asserted claims for breach of contract, breach of respondents’
covenant of good faith and fair dealing, and violations of the
Texas Insurance Code.
Respondents reacted to the Texas Action by commencing
a virtually identical New York Action seeking a declaration
that “there is no coverage for Exxon’s insurance claims
arising out of the stranding of the EXXON VALDEZ and the
4.
resultant oil pollution.” One of the defenses raised in the
Texas and New York Actions is that Exxon’s alleged
recklessness in permitting an alleged alcoholic employed by
a subsidiary, Exxon Shipping Company, to command the
Valdez rendered the losses caused by the stranding non-
fortuitous. Exxon disputes this characterization of its conduct
but maintains that, even if it were true, the governing law
and insurance policy provisions would permit coverage. The
explicit wording of the insurance policy provides coverage
for any “accident” occurring “as the unforeseen result of an
intentional act.” In other words, unforeseen outcomes are
covered even if the conduct is intentional, let alone if the
conduct is reckless.
(iii) The District Court’s Decision To Abstain
Exxon filed a motion to dismiss the complaint in the
New York Action on several grounds, including abstention
due to the pendency of the prior, virtually identical Texas
Action. The District Court adopted Exxon’s abstention
argument and dismissed the complaint. In its abstention
analysis, the District Court, as it was required to do under
Second Circuit precedents (see infra p. 18-19, & n. 11),
applied the “exceptional circumstances” test of Colorado
River as modified by Moses H. Cone.’ The District Court
found the third factor — the danger of piecemeal litigation —
to “be by far the most significant.” (B13).
, Colorado River abstention turns on a balancing of six factors:
(1) whether either the state or federal court has assumed jurisdiction
over a res; (2) the relative inconvenience of the federal forum; (3)
the desirability of avoiding piecemeal litigation; (4) the order in
which the actions were filed; (5) whether state or federal law
provides the rule of decision; and (6) whether the state action will
protect the federal plaintiffs’ rights. Moses H. Cone, 460 U.S. at 23,
26 (announcing factors five and six); Colorado River, 424 U.S. at
818 (announcing factors one through four).
-4-
bia eo + |
In addressing the fifth Colorado River factor (applicable
law), the District Court held that “the heart of this matter is
a dispute over an insurance policy which is governed primar-
ily by state law.” (B7). The District Court found that the
federal issues identified by respondents as possible defenses
to the claim — the allegedly preclusive effect of federal law
on certain Alaska statutes and issues allegedly involving the
Federal Arbitration Act — did not override the danger of
piecemeal litigation. The District Court concluded that “the
core and bulk of this action involves the application of state
law in a context where the states have a strong interest in
seeing their law applied. In such circumstances, the presence
of a federal law issue in a small portion of the overall dispute
does not carry the weight described in Moses H. Cone.”
(B10). Accordingly, the District Court stated that “factor
five militates towards abstention, but only slightly.” Jd. The
District Court held that the remaining factors were either
neutral or weighed slightly in favor of abstention.
(iv) The Second Circuit’s Reversal
The Second Circuit reversed. Although the Second
Circuit reviewed the District Court’s decision under an
“abuse of discretion” standard, it “scrutinize[{d] the legal
issues underlying that decision de novo.” (A8).’ The
Second Circuit held that, despite the pendency of the Texas
Action, the District Court erred by abstaining from exercising
jurisdiction over the New York Action. (A3). Referring to
the six Colorado River factors, the Second Circuit noted that
“[nJjot all factors are created equal” and that “[a} court will
accord greater weight to those factors that bear more
* ‘The standard of appellate review of a district court’s decision to
abstain is a question currently pending before this Court in Wilton
v. Seven Falls Co., No. 94-562 (oral argument heard Mar. 27,
1995).
-5-
significantly on the case, and should thumb the scale in favor
of exercising jurisdiction.” (A7-A8).
Although the Second Circuit addressed all six factors, it
reversed principally on the ground that the . ‘th factor, the
source of the rule of decision, “heavily tilt{ed] against
abstention.” (A8). Despite this Court’s statement that the
fifth factor has “less significance” where, as here, the federal
courts have concurrent jurisdiction with the state courts
(Moses H. Cone, 460 U.S. at 25), the Court of Appeals held
that an unsettled issue of “first impression” under federal
admiralty law, namely, whether an insured that allegedly acts
recklessly is permitted to obtain insurance coverage for its
losses, “was truly a brooding omnipresence” and “all but
demand[ed] that the federal court hear the case.” (A13,
A18). Even though the standard of fortuity was not an issue
on appeal, the Second Circuit stated that “[w]hile negligent
losses are fortuitous, and wilful ones are not, admiralty
courts have yet to assign losses caused by the insured’s own
reckless conduct to either camp.” (All). The Second
Circuit found this Court’s “hallmark” decision in Orient
Insurance Co. v. Adams, 123 U.S. 67 (1887), “equivocal as
to the precise issue of whether a marine insurer is liable
under a policy for losses caused by an insured’s reckless-
ness.” (All, Al2). The Second Circuit confirmed that there
was a risk of piecemeal litigation but found that the “possible
annoyance that piecemeal litigation may cause here hardly
offsets the commanding presence of a federal question of first
impression.” (A16).
q
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,
REASONS FOR GRANTING THE WRIT
I,
The Second Circuit, in Conflict with Other
Courts of Appeals, Has Incorrectly Held
that Federal Maritime Law Provides the
Rule of Decision in a Marine Insurance
Coverage Dispute When There Is No
Federal Precedent on Point and No
Determination of Any Need for a Uniform
Federal Rule.
The Second Circuit's judgment in this case was premised
on the conclusion that federal law rather than state law should
provide the rule of decision for one aspect of the litigation.
In reaching this conclusion, the court below used a test for
determining the application of Wilburn Boat Co. v. Fireman’s
Fund Ins. Co., 348 U.S. 310 (1955), that conflicts with the
tests used in five other circuits.
In 1955, this Court held that state law presumptively
governs marine insurance disputes absent a “judicially estab-
lished” maritime principle on point or the need for a federal
court to “fashion” such a rule. Wilburn Boat, 348 U.S. at
314. Since Wilburn Boat, the lower federal courts repeatedly
have applied that decision to marine insurance disputes.
Although the Wilburn Boat rule has percolated in the lower
courts for 40 years, there is no agreement among the circuits
as to the proper interpretation or application of Wilburn Boat.
The Second Circuit is part of a conflict involving at least six
circuits, and its decision demonstrates the lower courts’ need
for guidance on the proper application of Wilburn Boat and
the circumstances in which federal maritime law displaces the
presumptive application of state law. Indeed, by holding that
federal maritime rather than state law applies to an insurance
coverage question of “first impression,” the Second Circuit’s
Te
decision turns Wilburn Boat on its head and undermines the
principle that marine insurance coverage disputes presump-
tively are governed by state law.‘
A. The Wilburn Boat Decision and the Role of
State Law in Marine Insurance Disputes
In Wilburn Boat, the Wilburn brothers transferred title to
their houseboat to a company that they had formed — the
Wilburn Boat Company — and used the houseboat to ferry
passengers across Lake Texoma. The boat was destroyed by
fire while moored, and the Wilburn Boat Company made a
claim against the insurers under a hull insurance policy. The
policy, however, contained warranties against transfer of title
to the vessel and its use for commercial purposes, both of
which the Wilburns had breached. The insurer accordingly
denied coverage. Both the district court and the Fifth Circuit
held that, under federal maritime law, those breaches
precluded coverage whether or not they caused the loss. The
issue before this Court was whether state law or federal
maritime law should apply to determine the effect of the
insured’s breach of warranty. The Court stated that, because
states historically have had regulatory power over the
business of marine insurance, in the absence of any firmly
established federal admiralty law on point, state law should
apply. This Court thus declared:
‘Exxon submits that if the Second Circuit correctly found the
standard of fortuity to be a question of “first impression,” Wilburn
Boat teaches that that issue is governed by state law. Alternatively,
Exxon maintains that the question purportedly of “first impression”
has been resolved and that the Second Circuit’s decision conflicts
with this Court’s decision in Orient Ins. Co. v. Adams, 123 U.S. 67
(1887). Under Orient, misconduct (including reckless conduct) is
“fortuitous” and can be covered by insurance unless affected by
“fraud or design.” (See page 13-14 & n.10 infra)
-8-
The control of all types of insurance com-
panies and contracts has been primarily a state
function since the States came into being. . .
. Under our present system of diverse state
regulations, which is as old as the Union, the
insurance business has become one of the great
enterprises of the Nation. Congress has been
exceedingly cautious about disturbing this
system, even as to marine insurance where
congressional power is undoubted. We, like
Congress, leave the regulation of marine
insurance where it has been — with the States.
348 U.S. at 316, 320-21.
The Court stated that before federal maritime law would
apply to override state law, two questions must be answered:
(1) was there a “judicially established federal admiralty rule
governing” the effect of breaching the warranties; and (2) if
not, should the federal courts “fashion” one. /d. at 314.
The Court went on to find that there was no such “judicially
established” rule concerning the effect of a breach of
warranty and, in view of adoption by the states of other
possible rules, there was no need to “fashion” such a rule.
Id. at 314-321.
Wilburn Boat acknowledges the historical right of the
states, free from federal interference, to regulate insurance,
including marine insurance.* The decision below creates
* This principle is well-established. See, e.g., Northeast Bancorp, Inc.
v. Board of Governors of the Federal Reserve Sys., 472 U.S. 159,
179 (1985) (“the local nature of insurance is firmly ensconced in
federal law.”) (O’Connor, J concurring); Prudential Ins. Co. v.
Benjamin, 328 U.S. 408, 415-417 (1946) (the “business of insurance
is also of uniquely local concern.”); see also 1 Wolcott B. Dunham,
New York Insurance Law §1.06[3] at 1-17 (1994) (“Since the
nineteenth century, the insurance business has been regulated
primarily by the states”).
-9-
uncertainty on the threshold issue of what law will govern the
rights, duties, and obligations of marine insurers and their
insureds. This Court therefore should resolve the disagree-
ment among the circuits on the meaning of Wilburn Boat,
provide the much-needed guidance to the lower courts on the
interpretation of Wilburn Boat, and clarify the circumstances
in which the presumption that state law governs the interpre-
tation of marine insurance contracts is displaced by federal
maritime law.
B. The Second Circuit’s Decision Creates a
Conflict with Other Circuits and Under-
mines the Principle of Wilburn Boat that
State Law Presumptively Governs Marine
Insurance Disputes.
The Second Circuit did not address whether, under
Wilburn Boat, the standard of fortuity is “judicially estab-
lished” in federal maritime law. Rather, the Second Circuit
discussed the broader issue of whether the “fortuity” rule was
a federal maritime rule. (A10).° This reading of Wilburn
After reviewing a selection of marine insurance cases, the Second
Circuit stated: “That admiralty courts do not look exclusively to state
law on the issue of fortuity indicates to us that the rule must have an
independent existence in federal maritime law.” (A110). Under
Wilburn Boat, a rule must be “judicially established” as a federal
maritime rule (or be the subject of a federal statute) before it
displaces the presumptive application of state law. The Second
Circuit did not find any such “judicial” establishment. The
“fortuity” rule is, as the law has long recognized, a general
insurance principle grounded in public policy that an insured cannot
be indemnified against losses he intends to result from his own
intentional conduct. A&B Enterprises, Inc. v. Hartford Ins. Co.,
198 A.D.2d 389, 390-91 (2d Dep’t 1993) (“all risk policy covers all
losses which are fortuitous”) (non-marine insurance policy);
University of Cincinnati v. Arkwright Mut. Ins. Co., 1995 WL
222392 at *5 (6th Cir. April 17, 1995) (referring to implication in
-10-
Boat stands contrary to interpretations by the Fifth and
Eighth Circuits. Those circuits have held that it is the
particular issue in the case — here, the standard of fortuity
— that must be “judicially established” under Wilburn Boat
before the presumption of state law is displaced and federal
maritime law becomes applicable. See, e.g., 580]
Associates, Ltd. v. Continental Ins. Co. , 983 F.2d 662, 665
(Sth Cir. 1993) (discussing whether federal maritime rule
exists with respect to the specific “severability” clause at
issue and applying state law because two federal court
opinions addressing an identical clause “hardly can be termed
‘entrenched federal precedent’ consistently used to control the
conduct of maritime actors.”); Cargill, Inc. v. Commercial
Union Ins. Co., 889 F.2d 174, 178 (8th Cir. 1989)
(discussing the “other insurance” clause at issue and applying
state law where the courts differed as to the meaning of that
clause); see also Steelmet, Inc. v. Caribe Towing Corp. , 779
F.2d 1485, 1489-90 (llth Cir. 1986) (referring to an
admiralty rule that “covers the matter in issue”).
Notwithstanding its failure to pose the correct question,
the Second Circuit found that the “fortuity” standard was a
question of “first impression.” (A13). By holding that new
federal law should be created to decide a marine insurance
coverage question of “first impression” rather than applying
settled state law — as counselled by Wilburn Boat — the
Second Circuit has created a clear conflict with other circuits.
insurance policy of fortuity rule as “universally recognized.”)
(applying Ohio law to non-marine insurance policy); Restatement of
Contracts § 291 comment (a) (1932) (defining “fortuitous event”);
Barry R. Ostrager and Thomas R. Newman, Handbook on Insurance
Coverage Disputes, § 8.02[a] at 295 (7th ed. 1994) (“A Fortuity
Requirement Is Inherent in the Nature of Insurance”); Abraham,
Environmental Liability and the Limits of Insurance, 88 Colum. L.
Rev. 942, 952-53 (1988) (“[T]he basic purpose of nearly all
insurance [is] the provision of protection against harm that is
fortuitous rather than caused intentionally by the insured.”).
a.
The Fifth Circuit applies the following three-part test to
determine whether, under Wilburn Boat, state law should
supply the rule of decision in a contract of marine insurance:
“(i) whether the federal maritime rule constitutes ‘entrenched
federal precedent’ which is consistently used to control the
conduct of maritime actors, (ii) whether the state has a
substantial and legitimate interest in having its law applied,
and (iii) whether the state rule is materially different from the
federal rule.” 580] Associates, Ltd. v. Continental Ins. Co.,
983 F.2d 662, 665 (Sth Cir. 1993); Albany Ins. Co. v. Anh
Thi Kieu, 927 F.2d 882, 886-887 (Sth Cir.), cert. denied,
112 S. Ct. 279 (1991).
Under the Fifth Circuit’s three-part test, it is clear that
state law would provide the rule of decision in Exxon’s
dispute with respondents.
First, assuming the Second Circuit correctly found the
standard of fortuity to be a question of “first impression,”
there is no “federal rule” and, therefore, no “entrenched
federal precedent.”’ Second, it is clear that Texas has a
substantial and legitimate interest in having its law applied.*
A Texas insured was denied insurance coverage in Texas by
insurance companies doing business in Texas. Exxon has
claimed in the Texas Action that the respondents’ conduct
Where no specific federal rule exists — and there thus is no
“entrenched” federal precedent — the Fifth Circuit, following
Wilburn Boat, will apply state law. See, e.g., Taylor v. Lloyds
Underwriters of London, 972 F.2d 666, 668 (Sth Cir. 1992), cert.
denied, 113 S. Ct. 1366 (1993).
Exxon contends that Texas law should govern most of the important
issues in this case. Respondents have argued that, to the extent state
law governs, it should be New York law. If respondents are correct
that New York law applies to any aspect of this litigation, that
simply demonstrates that New York has a substantial and legitimate
interest in having its law applied. Under the Fifth Circuit’s well-
established test, this points toward the application of state law.
-12.
8
is
constitutes a bad-faith response to Exxon’s claim for coverage
and is actionable under the Texas Insurance Code. Third,
there is no material difference between the state and federal
rule on fortuity. State law generally permits coverage for the
unforeseen consequences of reckless or even intentional
acts.” Indeed, this insurance coverage states that it covers
all losses caused by the “unforeseen result of © intentional
act.” Federal maritime law is either nonexistent (under the
Second Circuit’s view) or to the same effect, generally
providing insurance coverage for all conduct — including
allegedly reckless conduct — falling short of “fraud or
design.” Orient Ins. Co. v. Adams 123 U.S. 67, 73 (1887)
(permitting coverage for conduct falling short of “fraud or
design”).'° Accordingly, under the Fifth Circuit’s three-part
» ‘See, e.g., Gulf Chem. & Metal Corp. v. Asst'’d Metals and Minerals
Corp., 1 F.3d 365, 370 (Sth Cir. 1993) (applying Texas law); State
Farm Fire & Cas. Co. v. S-S, 858 S.W.2d 374, 377-78 n.2 (Tex.
1993). New York law (if relevant, see supra n. 8) is to the same
effect. Continental Cas. Co. v. Rapid-American Corp. , 609 N.E.2d
506, 510 (N.Y. 1993) (“[a] person may engage in behavior that
involves a calculated risk without expecting that an accident will
occur — in fact, people often seek insurance for just such
circumstance.”); Allstate Ins. Co. v. Zuk, 574 N.E.2d 1035, 1036
(N.Y. 1991) (behavior that may be reckless for criminal respon-
sibility purposes does not necessarily mean that the insured
reasonably expected the accident to result). Other states adopt the
same rule. See, e.g., Lumbermens Mut. Cas. Co. v. S-W Industries,
Inc., 39 F.3d 1324 (6th Cir. 1994) (allowing insurance coverage
action by insured despite prior jury finding that insured had
committed intentional tort by engaging in conduct in face of risk that
harm was substantially certain to occur) (applying Ohio law).
‘0 The Second Circuit found that Orient was “equivocal” on the issue
of whether reckless conduct was entitled to insurance coverage. If
the Second Circuit were correct, there would be no material differ-
ences between the state and federal rules — for the simple reason
that there would be no federal rule to differ from the state rule.
Exxon submits that Orient is unequivocal and that the Second
-13.
test it is clear that state law would be applicable to Exxon’s
dispute herein. Such a conflict between the Second and Fifth
circuits requires resolution by this Court.
Circuit’s decision misinterprets and directly conflicts with that
unambiguous holding. In Orient, a steamship captain and his father
sued under a marine hull policy to recover for the loss of their ship.
The insurers had denied coverage on the ground that the sinking had
resulted from the insured’s “misconduct.” They offered evidence
that “[bJefore the sailing of the vessel [the captain] had the
reputation of being a ‘drinking’ man” and his father “was informed”
of that fact. Orient, 123 U.S. at 69. Although the captain knew
that the ship’s engine had earlier been shut down for repairs, he left
the dock without checking on the availability of steam. The ship,
having no power, was carried by river currents over a falls and
sank. In affirming the judgment in favor of the policyholders, this
Court held that not even “gross negligence” on the part of the
insured was a defense to coverage and that “the misconduct of the
master, unless affected by fraud or design, would not defeat a
recovery on the policy.” /d. at 73.
The trial judge, however, had instructed the jury that the insured
was not entitled to coverage if the captain had “designedly or
recklessly exposed the vessel to the dangers of navigation at the
falls.” Jd. at 72. This Court found that charge to be, in effect,
harmless error. Because of the insurance company’s good fortune
in obtaining a charge that would have precluded coverage for “reck-
less conduct” — and still having lost — the Orient court observed
that the insurers could not “rightfully complain.” Jd. Justice
Harlan’s statement in Orient that “[w]e do not perceive anything in
these instructions of which the insurance company can rightfully
complain,” id. at 72, is a direct reference to the insured’s argument
that “... error (if there be any) was in adopting a rule too favorable
to the Insurance company, in relieving it, for even if the Captain had
been ‘reckless’ in exposing the vessel to the danger of navigation —
it would not have released the Insurers.” Brief of Defendants In
Error at 7, Orient Mut. Ins. Co. v. Adams, No. 220, October Term
1886 (filed April 1887). The Court clarified the conduct for which
the insured was entitled to coverage: misconduct short of “fraud or
design.”
-14-
ee Oe i
oer er
Pitts ee
In addition, four other circuits have adopted different
tests from that of the Second Circuit tw determine the
application of Wilburn Boat. The Ninth Circuit has held that
“state law will control the interpretation of a marine
insurance policy only in the absence of a federal statute, a
judicially fashioned admiralty rule, or a need for uniformity
in admiralty practice.” Bohemia, Inc. v. Home Ins. Co. , 725
F.2d 506 (9th Cir. 1984). Recently, the Ninth Circuit
followed Wilburn Boat to apply California state insurance law
against a group of Lloyd’s underwriters. The court declared:
“[ijt has been authoritatively recognized that, just as
Congress has abstained from regulating insurance, so
should the federal courts.”
Bank of San Pedro v. Forbes Westar, Inc., No. 93-55979,
1995 WL 235265 at *1 (9th Cir. Apr. 24, 1995).
In the Eighth Circuit, “[flederal admiralty law governs
the interpretation of . . . marine insurance policies, unless no
established federal admiralty law exists, in which case state
law applies.” Cargill, Inc. v. Commercial Union Ins. Co..,
889 F.2d 174, 178 (8th Cir. 1989) (where the [federal] courts
take differing positions on the meaning of “other insurance”
clauses, no “established federal admiralty rul- exists” and the
court is obligated to follow applicable state law).
The Eleventh Circuit has focused on “whether there is an
admiralty principle with which [the] state law conflicts, and,
if there is none, whether an admiralty rule should be
fashioned that covers the matter in issue.” Steelmet, Inc. v.
Caribe Towing Corp., 779 F.2d 1485, 1489-90 (11th Cir.
1986).
The First Circuit appears to engage in an analysis similar
to that of the Eighth Circuit. Pace v. Ins. Co. of North
America, 838 F.2d 572, 579 (1st Cir. 1988) (“[n]o admiralty
rule or precedent conflicting with the Rhode Island action
-15-
against an insurer for its bad faith refusal to pay claims has
been called to our attention.”).
None of these circuits would have looked to federal law
when there was neither federal precedent nor a need to
fashion a federal rule. The Second Circuit’s holding that a
marine insurance question of “first impression” must be
answered by federal maritime law — a formulation that no
circuit has yet adopted and one that undermines Wilburn Boat
altogether — is the greatest inroad into Wilburn Boat in the
last 40 years and a serious derogation from the principle that
state law generally governs insurance disputes.
C. Resolving the Intercircuit Conflict on the
Proper Application of the Wilburn Boat
Decision Is Important to the Marine
Insurance Industry.
In Wilburn Boat, this Court recognized the central role
of the states in the regulation of marine insurance under the
federal system. It is thus inevitable that different state laws
may govern marine insurance disputes, depending upon
which state has the greater substantial and legitimate interest
in having its law apply to any particular dispute. By leaving
the holding and consequences of Wilburn Boat undisturbed,
Congress has authorized such a result. Nevertheless, the
result in a particular insurance dispute should not depend on
the circuit in which an action happens to be filed. Rather,
there should be clear and predictable choice-of-law rules,
applied uniformly nationwide, in order to enable the system
to work fairly and effectively.
This case clearly illustrates the problems that may exist
when there is an intercircuit conflict on the proper choice-of-
law rules. If Exxon had filed its action in federal district
court in Texas, the court would have applied the Fifth
Circuit’s three-part test and held that state law supplies the
-16-
—_ Pe eee ee Poe
rule of decision on ali of the important issues. (See pages
12-13 supra.) The district courts in New York, however,
will now be required to apply the Second Circuit’s decision
in this case and hold that federal law must be fashioned to
govern marine insurance questions of first impression. This
inconsistency is an invitation to forum-shopping, as persons
seeking to evade the application of some state’s law have an
incentive to commence actions within the Second Circuit,
while those favoring the application of state law now have
every incentive to bring actions within the Fifth Circuit.
The Wilburn Boat regime is not only consistent with the
allocation of authority between state and federal governments,
it is also fair and effective when the lower courts apply the
Wilburn Boat presumption uniformly and predictably.
However, when the choice-of-law rules under Wilburn Boat
vary among circuits, parties on each side of insurance
transactions are unable to predict the law governing their
disputes. This is clearly undesirable for marine insureds and
their insurers.
This Court should resolve the intercircuit conflict on the
choice-of-law question under Wilburn Boat and provide lower
courts the guidance they need to answer the preliminary
questions that arise in virtually every marine insurance case.
-}7.
Il.
The Second Circuit, in Conflict with Other
Courts of Appeals, Has Erred in Applying
the Colorado River—Moses H. Cone
Abstention Analysis to a Case Under the
Declaratory Judgment Act.
This case involves a first-filed state court action,
commenced in the insured’s home state, and a subsequent
declaratory judgment action designed solely for forum
shopping. The Second Circuit was informed that a trial date
of January 16, 1996 had been set in the state court. The
Second Circuit nevertheless required duplicative proceedings
in the federal court to go forward.
Both the District Court and the Second Circuit applied
this Court’s statement in Colorado River that, absent “excep-
tional circumstances,” federal courts have a “virtually
unflagging obligation” to exercise jurisdiction. Neither
Colorado River nor Moses H. Cone involved a declaratory
judgment action. By contrast, the Declaratory Judgment Act
clearly places “no compulsion” upon a federal court to
exercise its discretion to grant declaratory relief where there
is a pending state court action between the same parties over
the same issue. Brillhart v. Excess Ins. Co. of America, 316
U.S. 491, 494 (1942). Rather, the Act states that a district
court “may” grant declaratory relief in a case involving an
“actual controversy.” See 28 U.S.C. § 2201(a).
When a federal court recognizes the existence of federal
jurisdiction in a declaratory judgment action but declines to
exercise that jurisdiction, the standard governing the district
court’s discretion should be that of the Act — as applied by
-18-
:
)
q
|
4
|
!
:
-
this Court in Brillhart — and not the “exceptional circum-
stances” test of Colorado River and Moses H. Cone. In the
present case, the District Court clearly and correctly decided
that the danger of “piecemeal litigation” justified its exercise
of discretion to dismiss the declaratory suit so that the state
law insurance dispute could proceed in the pending Texas
Action. Under Brillhart, that is a sufficient reason to deny
declaratory relief."
The Second, Seventh and Eighth Circuits have applied
the Colorado River test to determine whether a federal court
should exercise its discretion to issue declaratory relief where
there is a substantively identical action between the parties
pending in state court. See BASF Corp. v. Symington, No.
94-2340, 1995 WL 109014 at *3-4 (8th Cir. Mar. 16, 1995);
Lumbermen’s Mut. Cas. Co. v. Connecticut Bank & Trust
Co., 806 F.2d 411 (2d Cir. 1986); Board of Education v.
Bosworth, 713 F.2d 1316 (7th Cir. 1983). By contrast, the
Third, Fourth, Fifth, and Ninth Circuits have applied
Brillhart rather than Colorado River. See Terra Nova Ins.
Co. v. 900 Bar, Inc., 887 F.2d 1213, 1223 (3d Cir. 1989);
Mitcheson v. Harris, 955 F.2d 235, 237-238 (4th Cir. 1992);
Granite State Ins. Co. v. Tandy Corp. , 986 F.2d 94, 96 (Sth
Cir. 1992), cert. dismissed, 113 S. Ct. 1836 (1993);
'! Exxon argued in the District Court that the Brillhart standard should
govern and that the court should deny declaratory relief to the
respondents. Noting the conflict in the circuits concerning the
applicable test, the District Court held that it was bound by the
Second Circuit’s determination in Lumbermen’s Mut. Cas. Co. v.
Connecticut Bank & Trust Co., 806 F.2d 411 (2d Cir. 1986), that
Colorado River rather than Brillhart applies, but that even under the
stricter Colorado River standard, abstention was proper. (B4-B5).
On appeal, cognizant of the Second Circuit’s binding precedent in
Lumbermen’s, appellee Exxon identified the circuit split but argued
that, even under the stricter Colorado River analysis applicable in the
Second Circuit, the District Court correctly gave precedence to the
Texas Action.
-19-
Continental Cas. Co. v. Robsac, 947 F.2d 1367, 1369 (9th
Cir. 1991).
In Wilton v. Seven Falls Co., No. 94-562 (oral argument
heard March 27, 1995), this Court is addressing whether
Colorado River or Brillhart applies to cases brought under
the Act where there is a state court action pending between
the parties on the same issue.
Between oral argument and decision in the court below,
Exxon informed the Second Circuit that this Court had
granted certiorari in Wilton. In its opinion, the Second
Circuit nevertheless distinguished Wilton on the ground that
here “federal law supplies a rule of decision,” whereas
Wilton “involved state law only.” (A8, footnote). Even
assuming that the Second Circuit correctly found that federal
admiralty law, not state law, applies to the insurance cover-
age questions presented, there is no reason why, in the event
of an affirmance in Wilton, the reasoning in Wilton would be
inapplicable. State courts are competent to resolve federal
admiralty law issues, and the Second Circuit provided no
support for its statement that federal law issues of “first
impression” “all but demand” resolution in the federal
courts. Indeed, because state courts have concurrent
jurisdiction over suits in admiralty pursuant to the “saving to
suitors” clause of 28 U.S.C. § 1333(1), Congress explicitly
has determined that such issues should be resolved by the
state courts if the plaintiff chooses to bring suit there.
In Romero v. Int’l Terminal Operating Co., 358 U.S.
354 (1959), this Court found that application of the general
maritime law did not provide a basis for federal question
jurisdiction. Referring to the “savings to suitors clause,” the
Court stressed the importance of preserving the state court
-20-
ee en ad we ee ~
ee
- etl aD 5 Ny A Nel Ela tee Pn lin AS
OT eta Oe, Pe
‘
forum to resolve maritime disputes..* As Justice
Frankfurter explained,“[b]y making maritime cases
removable to the federal courts it would make considerable
inroads into the traditionally exercised concurrent jurisdiction
of the state courts in admiralty matters — a jurisdiction
which it was the unquestioned aim of the saving clause of
1789 to preserve.” Romero, 358 U.S. at 372
The Romero court’s recognition that maritime rights can
— indeed, should — be enforced in the state courts is directly
undermined by the Second Circuit’s determination that
admiralty issues of “first impression” “all but demand” a
federal forum for resolution. If, under Wilton, an insurance
dispute is better resolved in a pending state forum rather than
a later-filed declaratory judgment action, the mere fact that
the insurance question implicates maritime law is not a suffi-
cient reason to adjudicate the dispute in federal court and
effectively “remove” the dispute to the federal courts. But
this is precisely the effect of the Second Circuit’s decision.
At its core, the Second Circuit’s decision constitutes a
mistrust of a state court forum to resolve alleged “federal”
admiralty issues. This is an inappropriate basis upon which
to reverse the District Court’s decision to abstain. Chick
Kam Choo v. Exxon Corp., 486 U.S. 140, 150 (1988) (Texas
courts “are presumed competent to resolve federal issues”);
Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 15-16 (1987)
(rejecting arguments that Texas courts could not protect
litigants’ federal rights); Am. Clothing Workers of America v.
Richman Bros., 348 U.S. 511, 518 (1955) (referring to
“continuing evidence of confidence in the state courts” to
enforce federal rights).
If general maritime law provided federal question jurisdiction, mari-
time cases would be freely removable — thus undermining the
“savings to suitors” clause. Steven F. Friedell, 1 Benedict on
Admiralty § 122 at 8-6 (6th ed. 1994).
-21-
Because the issue we raise here — whether Colorado
River or Brillhart governs a federal court’s discretion to
entertain a declaratory judgment action — is currently
pending in Wilton, the Court may wish to hold this petition
until Wilton is decided, then dispose of it as appropriate in
light of that decision.
2.
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted,
JAMES H. CARTER
Counsel of Record
: for Petitioner
| TARIQ MUNDIYA 125 Broad Street
TAMAR FEDER New York, New York 10004
. Sullivan & Cromwell (212) 558-4000
Of Counsel
-and-
: ROBERT N. SAYLER EDWARD J. LYNCH
BRICE M. CLAGETT CHARLES A. BEACH
MITCHELL F. DOLIN Exxon Corporation
7 Covington & Burling 225 E. John W.
1201 Pennsylvania Carpenter Freeway
Avenue N.W. Irving, TX 75062-2298
Post Office Box 7566 (214) 444-1466
Washington, D.C. 20044-7566
(202) 662-6000
Of Counsel
MICHAEL F. STURLEY
727 East 26th Street
Austin, Texas 78705
(512) 471-6318
Of Counsel
et il tieniee. mittens
Dated: New York, New York
May 12, 1995
28.
APPENDIX A
Opinion of the United States Court
of Appeals for the Second Circuit
dated February 21, 1995
UNITED STATES COURT OF APPEALS
FoR THE SECOND CIRCUIT
NO. 848 — August Term, 1994
(Argued: November 30, 1994
a fet 6
see EAESE
Decided: February 21, 1995)
Docket No. 94-7691
JOHN RICHARD LUDBROOKE YOUELL, an underwriter
at Lloyd’s London for himself and as a representative of
those other Underwriters at Lloyd’s London severally
subscribing to certain Global Corporate Excess Insuring
Agreements at issue and the following London Market
Insurance Companies and _ other international
Underwriting entities, also severally subscribing to the
Insuring Agreements at issue, each on their own behalf
and not for the other; ef ai.,
Plaintiffs-Appellants,
-y-
EXXON CORPORATION,
Defendant-Appellee.
Before:
MAHONEY, McLAUGHLIN, and HEANEY;,’
Circuit Judges.
Honorable Gerald W. Heaney, of the United States
Court of Appeals for the Eighth Circuit, sitting by
designation.
A-1l
The insurers for Exxon Corporation sued Exxon in the
United States District Court for the Southern District of New
York (Preska, J.) for a declaratory judgment that they did not
have to reimburse Exxon for certain losses incurred from the
wreck of the Exxon Valdez. The district court dismissed the
suit under the Colorado River abstention doctrine because a
mirror-image lawsuit, filed by Exxon, was pending in Texas
State court.
REVERSED.
WILLIAM F. CAVANAUGH, JR., New York, NY
(Harold R. Tyler, Jr., Lisa C. Cohen,
Roosevelt N. Nesmith, Patterson, Belknap,
Webb & Tyler, New York, NY; Richard W.
Palmer, Frank P. DiGiulio, H. Coleman
Switkay, Palmer Biezup & Henderson,
Philadelphia, PA, of counsel), (/or
Plaintiffs-Appellants.
JAMES H. CARTER, New York, NY (Tariq
Mundiya, Steven S. Drachman, Sullivan &
Cromwell, New York, NY; Robert N. Sayler,
Brice M. Clagett, Mitchell F. Dolin, Covington
& Burling, Washington, DC; Charles A. Beach,
Irving, TX, of counsel), for
Defendant-Appellee.
McLAUGHLIN, Circuit Judge:
Exxon Corporation sued its insurers (the “Underwriters” )
in a Texas state court, seeking reimbursement for losses and
liabilities arising from the tragic grounding of its oil tanker,
the Exxon Valdez. Though Exxon was headquartered in New
erie ew
York when the Valdez ran aground, it relocated to Texas
before filing suit. The several Underwriters, with their various
headquarters around the globe, doubtless feared the home-court
advantage that Texas would give Exxon. So, the Underwriters
filed their own suit against Exxon in the United States District
Court for the Southern District of New York (Loretta A.
Preska, Judge), seeking a declaration that they were not liable
on the insurance policies.
Invoking the abstention doctrine of Colorado River Water
Conservation District v. United States, 424 U.S. 800, 47 L.
Ed. 2d 483, 96 S. Ct. 1236 (1976), the district court dismissed
the Underwriters’ action. The district court concluded that
abstention was appropriate because (1) a parallel action was
already proceeding in Texas state court, (2) states have a
strong interest in insurance regulation, and (3) the case was
controlled predominantly by state law.
On appeal, the Underwriters argue that Colorado River
abstention was improper. Because this marine insurance
dispute presents a federal question of first impression, and
because the dual proceedings will cause no serious adverse
consequences, we agree with the Underwriters, and reverse the
district court’s dismissal of their complaint.
BACKGROUND
The Underwriters comprise a group of more than 100
underwriters and insurance companies, headquartered in
London, New York, Scandinavia, Japan, and elsewhere. All of
them subscribed to a series of Global Corporate Excess
insurance agreements (collectively, the “Agreement”) with
Exxon for the period from November 1988 through October
1989.
The Agreement insures Exxon and some of iis
subsidiaries against certain risks incurred during their
worldwide activities. Specifically: Section I of the Agreement
A-3
covers all physical loss or damage to the insured’s own
property; Section IIIA covers marine liabilities, such as fines
and penalties for pollution; Section IIB covers nonmarine
liabilities, such as damage claims by third parties. Both
Sections I and IIIA broadly cover losses that are “the
unforeseen result of an intentional act.” The Agreement also
requires arbitration of claims arising under Section IIB.
One of the subsidiaries covered by the Agreement owned
the ill-starred Exxon Valdez oil tanker. In March 1989, the
Valdez ran aground in a rocky shoal 25 miles south of Valdez,
Alaska, and spilled 10.8 million gallons of oil into Prince
William Sound. The master of the Valdez was Captain Joseph
Hazelwood. The Underwriters allege that Hazelwood was
drunk when the Valdez grounded, and that Exxon knew he was
an alcoholic.
Exxon incurred colossal liabilities from the oil spill.
Besides the damaged tanker and irreclaimable oil, Exxon faced
a host of federal environmental violation charges, as well as
federal and state civil claims for clean-up costs and other
damages. In addition, private individuals such as commercial
fishermen sued Exxon to recover for damage caused by the oil.
(As of this appeal, Exxon has resolved its disputes with most
of these claimants.)
In April 1989, Exxon tried to recoup some of its massive
losses. It sent the Underwriters notice of its loss, and sought
reimbursement for the lost oil, clean-up costs, and various
liabilities to third parties. Exxon’s demand exceeded $ 2
billion. The Underwriters denied coverage, claiming that the
disaster was caused by Exxon’s own misconduct, viz., placing
a known alcoholic at the helm of the Valdez.
When negotiations collapsed, Exxon sued the
Underwriters in Texas state court. Exxon’s complaint alleged
that the Underwriters had breached the Agreement and the
covenant of good faith and fair dealing, and had also violated
A-4
Texas insurance law. The complaint conceded that one of its
insurers, Qatar National Reinsurance Company, is an
instrumentality of a foreign state, and, as such, is not subject
to suit in a state court. Accordingly, the complaint “release[d]
and waive[d] all claims [Exxon] may have against [Qatar
National] arising out of or in any way related to the
[Agreement].”
Disquieted with the Texas forum, the Underwriters twice
tried to remove the action to a federal court in Texas. Both
attempts failed. The Underwriters also filed the present lawsuit
in the United States District Court for the Southern District of
New York.
Qatar National joined as a co-plaintiff; but four of the
Underwriters had become insolvent (the “insolvent insurers”),
and they did not join. The Underwriters’ complaint sought a
declaratory judgment that they were not liable to Exxon.
Further, citing the Federal Arbitration Act, 9 U.S.C. § 1, ef
seq., the complaint alleged that Exxon’s Section IIIB claims
were subject to mandatory arbitration. Exxon agreed thereafter
to arbitrate the Section [IB claims, rendering the
Underwriters’ Federal Arbitration Act argument moot. Thus,
only the Section I and Section IIIA claims remain in the
lawsuit, both raising the same question: what insurance
coverage is there for “the unforeseen result of an intentional
act”?
Exxon moved to dismiss the Underwriters’ compiaint,
claiming that the federal court lacked subject-matter
jurisdiction, and, alternatively, that it should defer to the Texas
State court proceeding. The district court rejected Exxon’s
challenge to federal jurisdiction, holding that the dispute
sounded in admiralty. Nevertheless, the court concluded that
exceptional circumstances existed to warrant dismissal under
Colorado River. Accordingly, it granted Exxon’s motion, and
dismissed the complaint. See Youell v. Exxon Corp. , 1994 WL
376068 (S.D.N.Y. July 19, 1994).
A-5
As counseled by Colorado River, and the subsequent case
Moses H. Cone Memorial Hospital v. Mercury Construction
Company, 460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927
(1983), the district court examined: whether either court had
obtained jurisdiction over a res; the relative convenience of the
fora; the order in which the actions were filed; the desirability
of avoiding piecemeal litigation; the source of controlling law;
and the state court’s ability to protect the federal plaintiff's
interests. Finding that the suit did not involve a res, and that
the two fora were equally convenient, the district court
eliminated these two factors. The court also noted that the
Texas action was filed first, and had progressed slightly further
than the federal action.
The district court then found that piecemeal litigation was
particularly undesirable under the circumstances because it
could lead to conflicting interpretations of the same insurance
policy. The court also held that Texas law predominantly
supplied the rules of decision for the dispute because states
have a strong policy interest in regulating insurance and
because no applicable admiralty rule existed. Finally, the
district court determined that the Texas court was fully capable
of protecting the Underwriters’ interests.
Balancing the six factors, the district court concluded that
abstention was proper under Colorado River and Moses H.
Cone, and dismissed the complaint. The Underwriters now
appeal. We reverse.
DISCUSSION
Abstention jurisprudence begins with the principle that
federal courts have a “virtually unflagging obligation” to
exercise jurisdiction over all cases properly before them.
Colorado River, 424 U.S. at 817-18. Only under “exceptional
circumstances” relating to federal-state comity may a court
eschew this duty, and leave the parties to fend for themselves
in state court. Jd. at 813.
antiak e nan
ee ee
There are four “extraordinary and narrow exc=ption[s]”
to a federal court’s duty to exercise jurisdiction. Jd. A federal
court may decline to hear a case: (1) that poses a federal
constitutional issue that may be mooted or altered by a state
court ruling on state law, see Railroad Comm’n of Texas v.
Pullman Co., 312 U.S. 496, 85 L. Ed. 971, 61 S. Ct. 643
(1941); (2) involving complex questions of state law that bear
on important state policy issues, see Burford v. Sun Oil Co..,
319 U.S. 315, 87 L. Ed. 1424, 63 S. Ct. 1098 (1943); (3) that
was filed to enjoin state court proceedings, see, e.g., Younger
v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746
(1971) (attempt to enjoin state criminal proceedings); or (4)
when duplicative state court proceedings are pending, and
exceptional “reasons of wise judicial administration” counsel
dismissal, Colorado River, 424 U.S. at 817-18.
The Pullman abstention doctrine prevents federal courts
from interpreting the Constitution where the case can be
decided on alternative grounds; Burford, and Younger extricate
federal courts from situations where the assertion of
jurisdiction would intrude into the state courts’ proper domain.
Duplicative proceedings do not necessarily implicate these
weighty concerns, and, thus, only “exceptional” circumstances
permit Colorado River abstention. Id. at 817-18.
Whether Colorado River abstention is justified turns on
a balancing of six factors: (1) whether either the state or
federal court has assumed jurisdiction over a res; (2) the
relative inconvenience of the federal forum; (3) the desirability
of avoiding piecemeal litigation; (4) the order in which the
actions were filed; (5) whether state or federal law provides
the rule of decision; and (6) whether the state action will
protect the federal plaintiffs’ rights. De Cisneros v. Younger,
871 F.2d 305, 307 (2d Cir. 1989). See Moses H. Cone, 460
U.S. at 23, 26 (1983) (announcing factors five and six);
Colorado River, 424 U.S. at 818 (announcing factors one
through four). Not all factors are created equal. A court will
accord greater weight to those factors that bear more
A-7
significantly on the case, and should thumb the scale in favor
of exercising jurisdiction. See Moses H. Cone, 460 U.S. at 16.
We review the decision to abstain for abuse of discretion,
but scrutinize the legal issues underlying that decision de novo.
See Sheerbonnet, Lid. v. American Express Bank Lid. , 17 F.3d
46, 48 (2d Cir.), cert. denied, 130 L. Ed. 2d 23, 115 S. Ct.
67 (1994).?
Here, one of the Colorado River-Moses H. Cone factors
heavily tilts against abstention, two disfavor it, and three
weakly support it. We will review these factors in the order of
their importance.
A. The Source of the Rule of Decision
Of the six Colorado River-Moses H. Cone factors, the
fifth, the source of the rule of decision, is the most prominent
here because an unresolved question of federal admiralty law
will profoundly affect whether the Underwriters are liable to
Exxon.
It is indisputable that the presence of federal questions
weighs heavily against abstention. See Moses H. Cone, 460
> The Supreme Court recently granted certiorari to hear
argument that courts should review abstention decisions
de novo. See Supreme Court Brief for Petitioner, Wilton
v. Seven Falls Co., 41 F.3d 934 (Sth Cir.), cert.
granted, 115 S. Ct. 571 (1994) (brief available as 1995
WL 13178). Since we find that the district court abused
its discretion, Wilton’s decision on this issue will not
change our ruling.
We also note that our case is fundamentally distinct from
Wilton because, as discussed below, federal law supplies
a tule of decision. Wilton, in contrast, involved state law
only. See id.
A-8
Oe a CT ce ~ S
:
:
U.S. at 26 (“[T]he presence of federal-law issues must always
be a major consideration weighing against surrender.”);
Colorado River, 424 U.S. at 815 n.21 (“[T]}he presence of a
federal basis for jurisdiction may raise the level of justification
needed for abstention.”); DeCisneros, 871 F.2d at 308 (“When
the applicable substantive law is federal, abstention is
disfavored.”). And, since the lawsuit here concerns a marine
insurance policy, it falls within the embrace of federal
admiralty law. See Wilburn Boat Co. v. Fireman’s Fund Ins.
Co., 348 U.S. 310, 313, 99 L. Ed. 337, 75 S. Ct. 368 (1955).
That admiralty jurisdiction exists does not automatically
assure that the applicable law will be federal, however. Unlike
other areas of admiralty law, Congress has not chosen to
legislate with regard to marine insurance. See id. at 313-14. As
a result of this lacuna, marine insurance policies are governed
by state insurance regulations, unless the federal courts have
fashioned an admiralty rule on point, or unless a need for such
a federal rule exists. See id. at 314; Pope & Talbot, Inc. v.
Hawn, 346 U.S. 406, 409, 98 L. Ed. 143, 74 S. Ct. 202
(1953) (where federal law provides a defense in an admiralty
suit, it controls over state law); see also Kossick v. United
Fruit Co., 365 U.S. 731, 742, 6 L. Ed. 2d 56, 81 S. Ct. 886
(1961) (“The application of state law in [Wilburn Boat] was
justified by the Court on the basis of a lack of any provision
of maritime law governing the matter there presented.”). We
must therefore determine whether the federal courts have
fashioned an applicable admiralty rule, and if not, whether one
is necessary.
The plaintiffs suggest several rules that, they claim,
provide defenses to marine insurance liability—among them,
the rule that all-risk policies in marine insurance contracts only
cover losses caused by fortuitous events (the “fortuity rule”).
They argue that the fortuity rule is an admiralty rule, and that
it exempts a marine insurer from having to cover losses caused
by the insured’s recklessness. Thus, the plaintiffs argue, if they
can prove that Exxon recklessly allowed a known alcoholic to
pilot the Valdez and that this recklessness caused the
grounding, the fortuity rule relieves them of liability.
A-9
Exxon, for its part, recognizes the fortuity rule but
disputes that the rule is federal, claiming instead that it arises
under state law. Exxon also argues that, in any event, losses
caused by recklessness are still fortuitous, and are therefore
covered.
As an initial matter, we agree with plaintiffs that the
fortuity rule is indeed a creature of federal law. Federal courts
sitting in admiralty have been applying some variation of the
fortuity rule in marine insurance cases for over a hundred
years. See Orient Mut. Ins. Co. v. Adams, 123 U.S. 67, 31 L.
Ed. 63, 8 S. Ct. 68 (1887). In so doing, these courts have
predominantly looked to federal law as precedent. See, e.g.,
Morrison Grain Co. v. Utica Mut. Ins. Co., 632 F.2d 424,
431 (Sth Cir. 1980) (relying on Second, Fifth, and Ninth
Circuit cases); Atlantic Lines Lid. v. American Motorists Ins.
Co., 547 F.2d 11, 12-13 (2d Cir. 1976) (relying on various
federal district and circuit court decisions); Western Assur. Co
of Toronto v. Shaw, 11 F.2d 495, 496 (3d Cir.) (relying on
federal precedent), cert. denied, 273 U.S. 698, 71 L. Ed. 846,
47 S. Ct. 93 (1926). And, to the extent that admiralty courts
have looked to other sources, they have relied on British as
much as state case law authority. See, e.g., Zurich Ins. Co. v.
Wheeler, 838 F.2d 338, 340-41 (9th Cir. 1988) (looking to
British case law); Goodman v. Fireman’s Fund Ins. Co., 600
F.2d 1040, 1042 (4th Cir. 1979) (relying on cases from Great
Britain, North Carolina, and federal courts). That admiralty
courts do not look exclusively to state law on the issue of
fortuity indicates to us that the rule must have an independent
existence in federal maritime law.
Less clear, however, is how the fortuity rule regards
losses caused by the insured’s own recklessness. The fortuity
rule excludes from coverage losses that arise from inherent
defects, wear and tear, or from the insured’s wilful
misconduct; losses that arise from acts of nature, or the
insured’s negligence, are covered. See Ingersoll Milling Mach.
Co. v. M/V Bodena, 829 F.2d 293, 307 (2d Cir. 1987); Grant
A-10
Gilmore, Charles L. Black Jr., The Law of Admiralty § 2-9, at
72 (2d ed. 1975) (“What is covered is not any loss that may
happen on the sea, but fortuitous losses occurring through
extraordinary action of the elements at sea, or any accident or
mishap in navigation.”) (emphasis omitted). While negligent
losses are fortuitous, and wilful ones are not, admiralty courts
have yet to assign losses caused by the insured’s own reckless
conduct to either camp.
The concept of recklessness does not lend itself to easy
characterization as either negligent or wilful conduct.
Recklessness implies that “the actor has intentionally done an
act of an unreasonable character in disregard of a known or
obvious risk that was so great as to make it highly probable
that harm would follow, and which thus is_ usually
accompanied by a conscious indifference to the consequences.”
See W. Page Keeton et al., Prosser and Keeton on the Law of
Torts § 34, at 2'3 (Sth ed. 1984) (citations omitted). As such,
recklessness falls somewhere “between intent to do harm,
which . . . includes proceeding with knowledge that the harm
is substantially certain to occur, and the mere unreasonable
risk of harm to another involved in ordinary negligence.” Jd.
at 212 (citation omitted). In other words, recklessness lies in
the mists between mere negligence and wilful misconduct.
The hallmark fortuity decision is Orient Mutuai
Insurance Company v. Adams, 123 U.S. 67, 31 L. Ed. 63, 8
S. Ct. 68 (1887). In Orient, the master, or captain, of a
steamer failed to follow a “custom of the river,” and, as a
consequence, his vessel was carried over falls and dashed upon
a pier. The master had obtained an insurance policy upon the
vessel, and sued to recover upon it.
At trial, the district judge instructed the jury that the
insurer of the vessel would not be liable for damages if the
ship master “designedly or recklessly exposed” the vessel to
danger. See Orient, 123 U.S. at 72. The judge added,
however, that “the [insurer] is not relieved from liability by
A-11
showing that the loss was remotely ascribable to the negligence
of the captain or the other officers or [employees].” Jd. The
jury found for the insured.
On appeal to the Supreme Court, the insurer argued that
the district judge should have charged that losses caused by the
master’s “misconduct” were also outside the realm of fortuity.
Orient rejected the insurer’s argument, stating: “the court
properly said, in effect, that the misconduct of the master,
unless affected by fraud or design, would not defeat a recovery
on the policy.” Jd. at 73. Orient continued that “the insured,
so long as he acts with fidelity, is answerable neither for his
servants nor for himself.” Jd. (citation omitted). Thus, Orienr
concluded, the jury charge was proper.
We find that Orient is equivocal as to the precise issue
of whether a marine insurer is liable under a policy for losses
caused by an insured’s recklessness. See 123 U.S. at 72-73.
On one hand, as the Underwriters point out, Orient affirmed
the district court’s jury charge that the insurer is not liable for
damages that occur because the master acted “designedly or
recklessly.” Jd. On the other, as Exxon notes, Orient also
stated the insurer is liable for ali losses except those caused by
the master’s “fraud or design.” Jd. We cannot reconcile these
two statements, for, at least, in modern legal parlance,
“recklessness” is different from both fraud and design.
Admiralty cases after Orient similarly shed iittle light on
the issue. For example, Ingersoll stated that an insurer is liable
for “all losses which are fortuitous no matter what caused the
loss, including the insured’s negligence.” See 829 F.2d at 307.
Ingersoll also defined fortuity to exclude any loss caused by
the insured’s intentional misconduct. See id. Nowhere does
Ingersoll explain what happens when the loss stems from the
insured’s conscious disregard of a known risk, however. Other
admiralty cases discussing fortuity have likewise not addressed
the point. See, e.g., Zurich, 838 F.2d at 340-41 (loss is
fortuitous if it is “due to the sea”); Morrison, 632 F.2d at 431
A-12
RR een ee he arn
(fortuitous losses are brought about by chance); Goodman, 600
F.2d at 1042 (losses caused by negligence are fortuitous; losses
caused by intentional misconduct are not); Atlantic, 547 F.2d
at 12 (mysterious loss of goods is fortuitous); Western, 11
F.2d at 496 (only losses caused by “abnormal causes and
extraordinary occurrences” are covered by marine insurance
policy).
It is clear, then, that whatever court adjudicates Exxon’s
insurance dispute with the Underwriters must decide, on first
impression, whether losses caused by the insured’s recklessness
are fortuitous. This being an issue of admiralty law, a federal
court should not shy away from it. Indeed, if the mere
presence of a federal law issue is “a major consideration
weighing against” abstention, Moses H. Cone, 460 U.S. at 26,
a fortiori, a federal question of first impression must all but
demand that the federal court hear the case.
B. Undesirability of Piecemeal Litigation
Obviously, if the federal court refuses to abstain, the
inevitable result will be piecemeal litigation. Just as obviously,
that result cannot command that the federal court abstain.
Considerations of sound judicial administration require a
pragmatic evaluation of the relative costs and benefits of
permitting parallel litigation to proceed apace. See Colorado
River, 424 U.S. at 819.
Apart from the expense of mounting separate lawsuits in
New York and Texas, the major problem in pursuing parallel
litigation is the risk of inconsistent determinations. See
DeCisneros, 871 F.2d at 308. That risk is particularly acute in
insurance disputes, where the possibility of inconsistent
determinations may leave the insured with insufficient
coverage. See Lumbermens Mut. Cas. Co. v. The Connecticut
Bank & Trust Co., 806 F.2d 411, 414-15 (2d Cir. 1986). This
problem is largely dissipated, however, when it is recalled that
a judgment by either a federal or a state court will ordinarily
A-13
be res judicata in the other. See Arizona v. San Carlos Apache
Tribe, 463 U.S. 545, 567, 77 L. Ed. 2d 837, 103 S. Ct. 3201
(1983); Milltex Indus. Corp. v. Jacquard Lace Co., 922 F.2d
164, 166 (2d Cir. 1991).
True, because they are not parties to both suits, res
judicata may not apply to the four insolvent insurers or to
Qatar National. These loose ends, although conceptually
discomfiting, are of little practical significance. Exxon has no
right to recover from Qatar National under the Agreement
because Exxon has released Qatar National from liability. And,
if the Underwriters should lose to Exxon, and seek
contribution from Qatar National, they will have to bring suit
in a federal court anyway. See U.S. Const. Art. III, § 2; 28
U.S.C. §§ 1332(a)(4), 1603(a) (federal courts have exclusive
jurisdiction to hear suits against agencies of foreign
governments). Thus, as far as Qatar National is concerned, the
exercise of federal jurisdiction will not occasion additional
unnecessary suits.
The four insolvent insurers are defendants in the Texas
action, but have not joined the Underwriters as plaintiffs in the
Southern District. If the Texas court enters judgment before
the federal court does, that judgment will conclusively
determine the insolvent insurers’ liability by virtue of res
judicata.
If, on the other hand, the federal court enters judgment
first, the insolvent insurers would not appear to be bound by
res judicata because they are not parties to the federal action.
In theory, then, no matter which way the federal court ruled,
Exxon will have to continue to litigate in Texas against the
insolvent insurers.
As Exxon points out, this chain of events could lead to
inconsistent interpretations of the Agreement, and, as Exxon
reads Lumbermens Mutual Casualty Company v. The
A-14
Connecticut Bank & Trust Company, this supports abstention.
See 806 F.2d at 414-15. We find Lumbermens distinguishable.
In Lumbermens, various insurance companies had issued
liability insurance policies for Raymark Industries, an asbestos
manufacturer, for different periods over a 42-year span. About
30,000 personal injury lawsuits were pending against Raymark,
and the insurers disagreed as to whether, for coverage
purposes, the injuries occurred on the date of exposure to
asbestos or the date the injury manifested itself. Zurich
Insurance, one of Raymark’s primary insurers, sued Raymark
and all other primary insurers in Illinois state court, for a
declaration that asbestos injury occurs at the time of exposure,
not the date the injury is discovered. All Raymark’s excess
insurers eventually joined the suit. See Lumbermens, 806 F.2d
at 412-13.
A second-layer excess insurer, Lumbermens Mutual, had
agreed to cover Raymark for liabilities in excess of Raymark’s
primary coverage (provided by Zurich) and first-layer excess
coverage (provided by American Home Insurance).
Lumbermens Mutual sued Raymark in federal court, raising
solely the issue about the timing of injury. Zurich and
American Home, however, were not parties to the federal suit.
The district court stayed the federal proceeding in light of the
State court action, and this Circuit affirmed, finding that
Colorado River abstention was proper. See id. at 414-15.
Integral to Lumbermens’s holding was that inconsistent
determinations by the two courts as to when asbestos injuries
occur could leave Raymark without sufficient coverage. See
806 F.2d at 415. That is, if the federal court entered judgment
first, and the state court followed with a contrary judgment,
Raymark would be reimbursed by either Zurich and American
Home or Lumbermens Mutual, but not all three. As a result,
Raymark would be stranded without full coverage, even though
it had contracted for full coverage. Lumbermens also noted that
inconsistent judgments would render the “allocation of
indemnity and defense costs and the handling and
A-15
administration of over 30,000 asbestos-related claims against
Raymark absolutely impossible.” Jd.
Compared to Lumbermens, the possibility of inconsistent
adjudications in our case pales to insignificance. First,
Raymark’s entitlement to full coverage was not in question in
Lumbermens, the issue there was which insurers were liable
for the coverage. Here, by contrast, the dispute centers on
whether, under the Agreement, Exxon may recoup its losses at
all. Thus, we do not face a situation where inconsistent
adjudications may deprive Exxon of its due coverage. Second,
the four insurers who are not federal plaintiffs are insolvent,
and probably judgment-proof. See, e.g., In re New York City
Asbestos Litigation, 151 Misc. 2d 1, 572 N.Y.S.2d 1006, 1010
(Sup. Ct. 1991) (noting that a defendant who is insolvent may
be unable to contribute to a judgment), modified on a different
issue, 593 N.Y.S.2d 43 (App. Div. Ist Dep’t 1993). Third,
inconsistent judgments will not complicate the administration
of liability claims against Exxon because these claims will have
already been resolved. Finally, we note that the four
insolvent insurers constitute a minuscule fraction of the
Underwriters, and are likely responsible for a trifling
percentage of the total coverage provided by the Agreement.
Given these important differences, the risk of inconsistent
judgments here is inconsequential.
Finally, and most significantly, we note that here, unlike
Lumbermens, resolution of the dispute hinges upon a novel
determination of federal law. See Lwmbermens, 806 F.2d at
415 (“state law supplies the rule of decision on the merits”).
On balance, the possible annoyance that piecemeal litigation
may cause here hardly offsets the commanding presence of a
federal question of first impression.
A-16
C. The Remaining Colorado River-Moses Cone Factors
Colorado River requires us to look at whether either the
federal or state court has obtained jurisdiction over a res, and
whether the federal forum is more or less convenient than the
state. Colorado River, 424 U.S. at 818. Here, the district court
determined that these factors had no bearing on the abstention
analysis because no res was involved, and because New York
and Texas were equally convenient fora.
While the district court’s factual findings on these two
points were sound, the court erred by concluding that they
were totally neutral on the abstention question. When the
dispute lacks a res and the federal forum is just as convenient
as the state, these two factors favor retention of the case in
federal court. See DeCisneros, 871 F.2d at 307; Bethlehem
Contracting Co. v. Lehrer/McGovern, Inc., 800 F.2d 325,
327-28 (2d Cir. 1986).
The order in which the actions were filed must also be
considered. Colorado River, 424 U.S. at 818. This factor
requires consideration of “how much progress has been made
in the two actions.” Moses H. Cone, 460 U.S. at 21-22. While
neither action has progressed very far, some discovery has
occurred in the Texas action. Also, Exxon expects to schedule
a trial date in Texas for as early as the end of 1995; it is
unclear when a federal trial could be held. The Texas action
being further along, this factor slightly favors abstention.
The final Colorado River-Moses H. Cone factor looks at
the capability of the state forum to safeguard the federal
plaintiffs’ rights. Moses H. Cone, 460 U.S. at 26. The
Underwriters have offered no reason for us to doubt the Texas
court’s ability to protect their rights. This factor somewhat
favors abstention as well.
A-i7
D. The Balancing
In balancing the six Colorado River-Moses H. Cone
factors, we find that the federal law issue is truly a brooding
omnipresence. As discussed, a major determinant of the
Underwriters’ liability to Exxon will be whether maritime
losses caused by an insured’s recklessness are fortuitous. This
is a novel issue of federal admiralty law, and a federal court
should decide it. In addition, this dispute lacks a res, and the
fora are equally convenient. While the other three factors tilt
towards abstention, they do so only tepidly. Accordingly, we
see no exceptional circumstances here, and hold that the
district court abused its discretion by abstaining.
While we loathe wasting judicial resources, it would be
worse to cede federal review of an issue of federal law merely
because Exxon won the race to judgment in state court. See
Erwin Chemerinsky, Federal Jurisdiction § 14.2, at 668 (1989)
(“[T}he Supreme Court rightly has refused to allow those who
prefer to litigate in state court to have the power to prevent
federal court review simply by filing a suit in state court.”).
On balance, we choose the lesser evil.
CONCLUSION
Unlike Pullman, Burford, and Younger abstention, which
implicate lofty notions of constitutionalism, the decision to
abstain under Colorado River is driven by the more mundane
problems of judicial efficiency. Accordingly, in “the absence
of weightier considerations of constitutional adjudication and
state-federal relations,” the federal action should generally
continue. Colorado River, 424 U.S. at 818.
We reverse the district court’s judgment of dismissal.
REVERSED.
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APPENDIX B
Amended Memorandum Opinion and Order
of the United States District Court
for the Southern District of New York
dated July 18, 1994
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UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
JOHN RICHARD LUDBROOKE YOUELL, et al.,
Plaintiff(s),
-against-
EXXON CORPORATION,
Defendant(s).
93 Civ. 6093 (LAP)
LORETTA A. PRESKA, District Judge:
This is an action by the Underwriters of Exxon
Corporation’s (“Exxon”) Global Corporate Excess (“GCE”)
Coverage for a declaratory judgment that the GCE Coverage
does not cover certain losses incurred by Exxon as a result of
the grounding of the Exxon Valdez. The Underwriters also ask
the Court to segregate issues falling within the policy’s
mandatory arbitration clause and order such issues to
arbitration. Presently considered is Exxon’s motion to dismiss
the action for lack of subject matter jurisdiction, or,
alternatively, to dismiss or stay the action in favor of pending
State court proceedings.
BACKGROUND
On March 24, 1989, the Exxon Valdez ran aground off
the coast of Alaska. Approximately 258,000 barrels of crude
oil escaped into the water and eventually washed onto adjacent
B-1
shorelines. As a result of the accident, Exxon incurred
expenses and liabilities for, inter alia, cargo loss, clean up, and
third-party claims.
By letter dated April 4, 1989, Exxon purported to give
the Underwriters certain notice of loss arising out of the Exxon
Valdez incident. On October 30, 1990, the Underwriters
formally denied Exxon’s claims. Nevertheless, over the next
three years Exxon and the Underwriters continued negotiating
and engaged in non-binding mediation. Unfortunately, they
were unable to resolve their differences, and on August 4,
1993, Exxon filed suit against the Underwriters in the District
Court of Harris County, Texas (“the Texas action”). Exxon
asserted claims for breach of contract, breach of the
Underwriters’ covenant of good faith and fair dealing, and
violations of the Texas Insurance Code, based on the
Underwriters’ refusal to pay Exxon’s claims. The Underwriters
removed the Texas action to federal court and filed a motion
to transfer the action to New York. On Exxon’s motion,
however, the federal court remanded the action back to the
Texas court, where it remains pending.
On the same day the Underwriters filed their removal
petition in the Texas action, they also instituted the present suit
in this Court. The 30-count complaint is essentially a mirror
image of Exxon’s complaint in the Texas action. The
Underwriters seek various declaratory judgments to the effect
that Exxon’s Exxon Valdez-related losses are not within the
GCE Coverage and that the Underwriters have at all times
acted in good faith with respect to Exxon. The sole significant
difference between the complaint in this action and the Texas
complaint is Count XXX, which requests the Court to
determine which issues in this dispute fall within Section IIIB’s
mandatory arbitration clause and to order those issues to
arbitration. Exxon’s complaint in the Texas action makes no
reference to arbitration.
B-2
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In lieu of answering the Underwriters’ complaint, Exxon
interposed the present motion to dismiss for lack of subject
matter jurisdiction or, in the alternative, to dismiss or stay the
complaint in deference to the Tex2s action. For the reasons
stated below, the motion is granted and the case is dismissed.
DISCUSSION
A. Subject Matter Jurisdiction
In their complaint, the Underwriters assert three distinct
bases of subject matter jurisdiction: 28 U.S.C. § 1333
(admiralty and maritime), 28 U.S.C. 1331 (federal question),
and 9 U.S.C. § 203 (jurisdiction in aid of international
arbitration agreements). The Court need not examine the latter
two bases, because insofar as this case involves marine
insurance, it falls within the admiralty jurisdiction. E.g.,
Insurance Co. v. Dunham, 78 U.S. (11 Wall.) 1, 20 L. Ed. 90
(1870). Exxon, in fact, concedes as much, arguing only that
the Court should decline to exercise its admiralty jurisdiction,
not that such jurisdiction does not exist.' Accordingly, the
Court will treat the motion as one for abstention rather than
dismissal for lack of jurisdiction.
B. Abstention
Almost halfheartedly, Exxon does argue that declaratory
relief is unavailable in maritime actions. Numerous cases
in this circuit, however, belie that proposition. See, e.2.,
Puritan Ins. Co. v. Eagle §.S. Co., 779 F.2d 866 (2d
Cir. 1985); Greenwich Marine, Inc. v. S.S. Alexandra,
339 F.2d 901, 907 (2d Cir. 1965); Commercial Union
Insurance Co. v. Horne, 787 F. Supp. 337 (S.D.N.Y.
1992).
B-3
On the issue of abstention, the initial question is what
standard the Court should apply in deciding whether to decline
to exercise its jurisdiction. Both parties agree that none of the
traditional categories of abstention -- Pullman, Younger, and
Burford -- apply here. Exxon urges the Court to apply the
Brillhart doctrine, which provides that “when a declaratory
judgment is requested, the district court is ‘under no
compulsion to exercise that jurisdiction’ if the controversy
might be settled more expeditiously in state court.” Erwin
Chemerinsky, Federal Jurisdiction 670 (1989) (quoting
Brillhart v. Excess Insurance Co., 316 U.S. 491, 494, 86 L.
Ed. 1620, 62 S. Ct. 1173 (1942)). The Underwriters, on the
other hand, argue that Brillhart has been superseded by
Colorado River Water Conservation District v. United States,
424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976),
where the Supreme Court established comprehensive guidelines
for abstention on the grounds of parallel state proceedings.
Among the Circuits, there is conflict on the issue of
whether the relatively lax abstention standard announced in
Brillhart for declaratory judgment actions survived Colorado
River’s enunciation of a stricter test for general application.
Compare Continental Cas. Co. v. Robsac, 947 F.2d 1367 (9th
Cir. 1991) (applying Brillhart) with Board of Education v.
Bosworth, 713 F.2d 1316 (7th Cir. 1983) (applying Colorado
River). In this Circuit, however, the answer is clear: a court
asked to abstain from a declaratory judgment action on the
basis of parallel state court proceedings must apply the doctrine
of Colorado River. See Lumbermens Mutual Cas. Co. v.
Connecticut Bank & Trust Co., 806 F.2d 411, 413 (2d Cir.
1986).
Colorado River Abstention
Generally, “where . . . a federal court properly has
subject matter jurisdiction, it has a ‘virtually unflagging
obligation’ to exercise that jurisdiction, even if an action
B-4
concerning the same matter is pending in state court.”
Bethlehem Contracting Co. v. Lehrer/McGovern, Inc., 800
F.2d 325, 327 (2d Cir. 1986) (quoting Colorado River, 424
U.S. at 817-818). In exceptional circumstances, however,
where justified by considerations of judicial economy and
comprehensive disposition of litigation, a federal court may
decline to exercise its jurisdiction in deference to pending state
court proceedings. Colorado River, 424 U.S. at 817-819. This
exception is a narrow one, and the party arguing for abstention
bears a heavy burden of persuasion. Bank of N.Y. v. Bin Saud,
628 F. Supp. 474, 476 (S.D.N.Y. 1986). “Only the clearest of
justifications will warrant dismissal” or stay of the federal
action. Colorado River, 424 U.S. at 819; Bethlehem
Contracting, 800 F.2d at 327 n. 1 (noting that the abstention
analysis is the same whether a party seeks stay or dismissal).
The Supreme Court has identified six factors a district
court should weigh in considering whether a defendant has
established “exceptional circumstances” warranting abstention:
(1) Whether either the federal or state court has assumed
jurisdiction over any “res” or property; (2) inconvenience of
the federal forum; (3) avoidance of piecemeal litigation; (4) the
order in which jurisdiction was obtained; (5) whether state or
federal law supplies the rule of decision; and (6) whether the
state court proceeding will adequately protect the rights of the
parties. Id. at 327 (citing Colorado River, 824 U.S. at 818,
and Moses H. Cone Memorial Hospital v. Mercury
Construction Corp. , 460 U.S. 1, 23-27, 74 L. Ed. 2d 765, 103
S. Ct. 927 (1983)). Consideration of these elements is within
the sound discretion of the district court. Moses H. Cone, 460
U.S. at 19. However, a court is not to use the factors as a
checklist, tallying those for and against abstention. Rather, the
Court must determine which factors are important in a given
case and then decide whether, on balance, they make out
exceptional circumstances supporting abstention. Jd. at 16.
Colorado River Applied
The first Colorado River factor, jurisdiction over a
“res,” is irrelevant here. Neither this Court nor the Texas
court has assumed jurisdiction over any res.
The second factor, inconvenience of the federal forum,
while not irrelevant, is similarly of no use to Exxon. As a
large multinational corporation, Exxon is presumably capable
of bearing the costs of litigating in New York. It argues that
witnesses and evidence are located in Texas, and that the
defendants are subject to jurisdiction there. The Underwriters,
however, point out that witnesses and evidence are also located
near New York. And, of course, the defendants in the Texas
action are all present in this action as plaintiffs. Overall, the
balance of inconvenience does not tip markedly in either
direction. Thus, the second factor contributes little, if
anything, toward establishing exceptional circumstances.
Skipping to the fourth factor, the order in which
jurisdiction was obtained, the Court notes that Exxon filed the
Texas action about a month before the Underwriters instituted
this suit. Yet, evaluation of this factor requires more than a
mere comparison of filing dates. In considering when the
competing fora established jurisdiction, the Court’s purpose is
to see if one action or the other has progressed to such a
degree that it would be particularly wasteful to proceed
concurrently elsewhere. Moses H. Cone, 460 U.S. at 21. In
the instant matter, neither this action nor the Texas action has
advanced very far. In this action, there has been no discovery
by the parties or consideration of the merits by the Court. The
only activity thus far has been the briefing of the parties’
respective motions. Similarly, in the Texas action, because the
parties have spent the past months arguing its removal and
remand, there has been very little progress towards resolution.
Significantly, however, the Texas court has set a date of
March 27, 1995 for the trial of Exxon’s nonarbitrable claims.
Given the embryonic development of this action, the nine
judicial vacancies currently on this Court, and the Court’s
resultant backlog of cases, it is unlikely that a trial here could
B-6
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;
:
;
:
j
occur until significantly after that March date. Accordingly,
factor four weighs in favor of abstention.
Factor five, the source of the rule of decision, weighs in
favor of abstention, albeit not heavily. In Moses H. Cone, the
Supreme Court explained that while the presence of state law
issues may in some cases weigh slightly in favor of abstention,
“the presence of federal law issues must always be a major
consideration weighing against surrender.” 460 U.S. at 26.
Here, state law issues predominate. The heart of this matter is
a dispute over an insurance policy which is governed primarily
by state law.? Moreover, the state interest in applying its law
2 The Underwriters correctly note that since the contract
at issue here is for marine insurance, it is governed by
applicable rules of federal maritime law. Wilburn Boat
Co. v. Fireman’s Fund Insurance Co. , 348 U.S. 310, 99
L. Ed. 337, 75 S. Ct. 368 (1955). The larger holding of
Wilburn Boat Co., however, is that state law should be
employed in marine insurance cases whenever possible.
Id. See also Golden Eagle Liberia v. St. Paul Fire &
Marine, 685 F. Supp. 393, 396 n. 2 (S.D.N.Y. 1988)
(“Absent a well-established federal admiralty rule, state
law governs the interpretation of marine insurance
contracts.”), vacated, 718 F. Supp. 1097 (S.D.N.Y.
1988). In fact, since Wilburn Boat Co., the law has
developed so that “questions about the interpretation of
marine insurance policies are generally . . . decided
under local law, rather than as a matter of admiralty
law.” Armada Supply Inc. v. Wright, 665 F. Supp. 1047
(S.D.N.Y. 1987), aff'd in part, rev’d in part, 858 F.2d
842 (2d Cir. 1988). See also Commercial Union Ins. Co.
v. Horne, 787 F. Supp. 337 (S.D.N.Y. 1992) (“The
scope and validity of marine insurance policy provisions
and the consequences of breaching them are determined
by state law.” (citing Wilburn Boat Co.)). In view of this
B-7
is particularly strong in the insurance area, which has long
been dominated by state regulation. See State Trading v.
Assuranceforeningen Skuld, 921 F.2d 409 (2d Cir. 1990)
(citing Wilburn Boat Co., supra).
The Underwriters posit two federal law issues weighing
against abstention. First, they argue, the recognition and
enforcement of the arbitration clause in Section IIB of the
GCA [sic.] Coverage is a matter of substantive federal law. 9
U.S.C. §§ 201-207. This would be true, but for the fact that
Exxon has agreed to arbitrate its claims under Section IIIB. In
fact, upon Exxon’s motion, the Texas court recently severed
Exxon’s Section IIIB claims from the action there and stayed
them pending arbitration. Consequently, there is no need for
this Court to determine the validity of the arbitration clause or
to compel its enforcement, and the case presents no issue of
federal arbitration law. See International Shipping Co. v.
Hydra Offshore, Inc., 675 F. Supp. 146, 153 (S.D.N.Y.
1987), aff'd, 875 F.2d 388 (2d Cir.), cert. denied, 493 U.S.
1003, 107 L. Ed. 2d 558, 110 S. Ct. 563 (1989). The
Underwriters contend that disputes as to the procedures and
scheduling of arbitration present matters for resolution under
federal law. These issues, however, are for the arbitrator to
resolve, not this Court. See Matter of U.S. Lines And
Liverpool & London §.S., 833 F. Supp. 350, 353 (S.D.N.Y.
1993). Similarly, the question of which of Exxon’s claims fall
under the arbitration clause is for the arbitrator to decide.’
and the Underwriters’ failure to identify any specific
admiralty rule applicable here, the Underwriters’ reliance
on Wilburn Boat Co. is misplaced.
’ The Underwriters contend that the Court must retain
jurisdiction to determine and segregate arbitrable issues.
However, the broad arbitration clause of Section IIB,
which by its terms covers “any differences” (emphasis
added) relating to that section, makes such intervention
B-8
The second asserted issue of federal law is the possible
preclusive effect of certain federal statutes on certain Alaska
statutes which are the basis of the liability for which Exxon
seeks coverage from the Underwriters. Relying on a decision
of the United States District Court for the District of Alaska in
In re Exxon Valdez, C.A. No. 89-095 (Order No. 121, Dec.
21, 1992), the Underwriters contend that any liability Exxon
might have as a marine cargo owner (the liability at issue here)
unwarranted; whatever claims Exxon advances under
Section IIIB will be arbitrated. See Prudential Lines, Inc.
v. Exxon Corp., 704 F.2d 59, 63-64 (2d Cir. 1983)
(holding that where parties have executed a broad
arbitration clause, court should simply insure arbitration
proceeds and allow the arbitrator to determine which
issues are arbitrable). It may be, as the Underwriters
seem to fear, that issues before the arbitrator will overlap
with issues addressed in the judicial forum where
Exxon’s non-arbitrable claims are heard. This, however,
results from the structure of the GCE Coverage, which
mandates arbitration for claims brought under Section
IIB but not for claims brought under other sections.
Although the issue is not before me it may be that the
parties have agreed that the arbitration of Exxon’s claims
under Section IIIB will have no preclusive effect on the
litigation of Exxon’s other claims. Exxon notes that the
Underwriters’ memorandum in support of their motion to
determine and segregate arbitrable disputes requests the
Court to “enter an order” providing, among other things,
that the arbitration of issues under Section IIB be
“without prejudice to Underwriters’ rights to raise the
same defenses in litigation of non-arbitrable claims for
coverage under Section I and I[l(a) of the GCE
agreements” and that Exxon indicated that it would be
willing to stipulate that the arbitration have no preclusive
effect on the litigation of disputes under Sections I and
IIA.
B-9
can only arise under federal law. Consequently, the
Underwriters argue, any determination as to coverage for
Exxon’s cargo owner liability will necessarily involve
application and interpretation of federal law.
Assuming all this to be true, the fact remains that
Exxon’s claims against the Underwriters for coverage are
insurance claims, arising under state law. The potential for
preclusion arises as only one of several defenses the
Underwriters will assert. Moreover, the issue has been already
been comprehensively treated, if not definitively resolved, by
the Alaska federal court. The core and bulk of this action
involves the application of state law in a context where the
states have a strong interest in seeing their law applied. In such
circumstances, the presence of a federal law issue in a small
portion of the overall dispute does not carry the weight
described in Moses H. Cone. Of course, Moses H. Cone’s
admonition that the predominance of state law issues should
not be accorded undue emphasis must still be heeded.
Accordingly, factor five militates toward abstention, but only
slightly.
With respect to the sixth factor, the adequacy of the state
proceeding to protect the rights of the party seeking federai
jurisdiction, the Underwriters argue that the Texas court is
inadequate because it may not be bound to recognize and
enforce Section IIIB’s arbitration clause. See McDermott v.
Lloyds Underwriters of London, 944 F.2d 1199 (5th Cir. 1991)
(state courts are not necessarily required to enforce
international arbitration agreements under 9 U.S.C.
§§ 201-207). This argument is rendered moot, however, by the
Texas court’s recent order severing and staying the Section
IIIB claims pending arbitration.‘ As for the rest of the dispute,
. If a need to compel or enforce arbitration should arise in
the future, a federal forum will, of course, be available
for that limited purpose. However, the hypothetical
B-10
the Harris County court--sitting within a tugboat horn’s range
of the Houston Ship Channel and the Gulf of Mexico--is
assuredly competent to handle the marine insurance issues.
Returning, finally, to the third factor, the Court must
appraise the desirability of avoiding piecemeal litigation of this
dispute. In performing that task, courts of this circuit have
considered both the potential for duplicative litigation and the
danger of inconsistent adjudications. See, e.g., De Cisneros v.
Younger, 871 F.2d 305, 308 (2d Cir. 1989); Bank of New York
v. Bin Saud, 628 F. Supp. 474, 476 (S.D.N.Y. 1986). The
Court of Appeals has held that this factor “should be given
great weight in the context of declaratory judgment actions. .
. .” Lumbermens, 806 F.2d at 414. Accord Fuller Co. v.
Ramon I. Gil, Inc., 782 F.2d 306 (ist Cir. 1986).
Concerning the danger of inconsistent adjudications, the
law of this Circuit is that courts must be “particularly careful
to avoid piecemeal litigation that could lead to conflicting
interpretations of the same insurance policy.” Federal
Insurance Co. v. Skopbank, No. 92 Civ. 2871, 1994 WL
115999, at *3 (S.D.N.Y. Mar. 29, 1994). See also General
Reinsurance Corp. v. CIBA-Geigy Corp. , 853 F.2d 78, 81 (2d
Cir. 1988); Lumbermens, 806 F.2d at 414 (“The critical factor
to us [in affirming stay of insurers’ declaratory judgment
action] is the desirability of avoiding piecemeal litigation and
the possibility of two interpretations of the same policy
language in different courts . . . .”). That, of course, is
precisely the danger presented here. The Underwriters’
declaratory judgment action implicates the identical policy
provisions and defenses at issue in the Texas action. Exxon,
therefore, faces the possibility that the two fora will construe
the policy provisions differently, leaving Exxon without
possibility that such a scenario will come to pass is no
basis for concluding that the Texas forum is inadequate.
B-11
coverage to which it may be entitled. See Liwnbermens, 806
F.2d at 414.
Looking to the potential for duplicative litigation, the
Court notes initially that this action, now stripped of its
arbitration aspects, presents the same issues and parties present
in the Texas forum. As one Judge of this Circuit has observed,
“filing a declaratory judgment action in federal court to resolve
state-law issues currently pending in a state court is certainly
a peculiar and uneconomical manner of resolving disputes.”
Bagdan v. Sony Corp. of America, 767 F. Supp. 81, 83 (D. Vt.
1991) (Parker, J.). See also Lumen Construction, Inc. v. Brant
Construction Co., Inc. , 780 F.2d 691, 695-696 (7th Cir. 1986)
(stay proper where state court litigation would probably
eliminate the need for federal court proceedings).
The duplicative character of this action is particularly
significant here because of its implications for comity between
federal and state courts. Notwithstanding the Second Circuit's
rejection of the Brillhart abstention standard, Brillhart’s
observation that it is “vexatious for a federal court to proceed
in a declaratory judgment suit where another suit [presenting
the same issues] is pending in a state court” remains valid. 316
U.S. at 495. See also Lumbermens, 806 F.2d at 414 (“The
avoidance of piecemeal litigation should be given great weight
in the context of declaratory judgment actions because such
litigation would complicate and fragment the trial of cases and
cause friction between state and federal courts.”). Where, as
here, there is no significant federal interest to be vindicated by
federal court intervention, duplication of the state court’s
efforts by a federal court is especially offensive.
Additionally, allowing this declaratory judgment action
to proceed during the pendency of the virtually identical Texas
action constitutes an abuse of the declaratory judgment
remedy. See Fuller Co., 782 F.2d at 308 n.3 (noting that
propriety of plaintiff's invocation of declaratory judgment
B-12
remedy is a relevant consideration under Colorado River). As
the late Judge Friendly observed, the appropriate use of
declaratory judgment actions is to
“create[] a means by which rights and obligations may
be adjudicated in cases involving an actual controversy
that has not reached the stage at which either party may
seek a coercive remedy, or in which the party entitled to
such a remedy fails to sue for it.”
United States v. Doherty, 786 F.2d 491, 498 (2d Cir. 1986)
(quoting Charles Wright, The Law of Federal Courts 671
(1983)). By contrast, it is a “misuse of the Declaratory
Judgment Act” to employ it to “gain a procedural advantage
and preempt the forum choice of the plaintiff in [a] coercive
action. . . .” Great American Insurance Company v. Houston
General Insurance, 735 F. Supp. 581, 586 (S.D.N.Y. 1990).
See also 10A Charles Wright, Arthur Miller & Michael Kane,
Federal Practice and Procedure § 2758 at 631-632 (1983) (The
“Declaratory Judgment Act was not intended to enable a party
to obtain a change of tribunal from state to federal court. . .
as F
The Underwriters’ declaratory judgment action falls into
the latter paradigm. At the time the action was filed, the
Underwriters’ perceived need to compel arbitration perhaps
provided a basis for a federal action. The arbitration issue
gone, however, what remains is an action wherein the federal
court is asked to dispense an interpretation of an insurance
contract currently being litigated in a state court. The Texas
action--which will ultimately resolve all of the issues raised in
the Underwriters’ complaint--renders this suit wholly
unnecessary. The raison d’etre of the declaratory judgment--to
provide an adjudicative forum to parties otherwise without
one--is not present here. Thus, to allow this action to proceed
would be an abuse of the remedy.
B-13
CONCLUSION
In sum, I find the considerations relating to the third
Colorado River factor (avoidance of piecemeal litigation) to be
by far the most significant in the context of this case.
Therefore, those considerations, which point strongly toward
abstention, are entitled to the greatest weight in the Colorado
River balancing process. Of secondary importance is the fifth
factor (whether state or federal law provides the rule of
decision), which, because I find a strong state interest in
insurance regulation and an absence of significant federal
issues, points moderately toward abstention. The fourth factor
(the order in which jurisdiction was obtained) also weighs
slightly in favor of the Texas forum because that is where a
trial can be had sooner. Finally, as set out above, the
remaining factors are either not applicable or so evenly
balanced as to contribute nothing to the mix. Weighing all the
factors, and giving them their appropriate weight in the
particular circumstances of this case, I find that the relative
importance and weight of the third factor constitute exceptional
circumstances requiring abstention.
Accordingly, the complaint is DISMISSED.
Dated: New York, New York
July 18, 1994
LORETTA A. PRESKA, U.S.D.J.
B-14
APPENDIX C
ee a eg er a ee rd Re ee
APPENDIX C
Exxon has no corporate parent and the following list
indentifies Exxon’s non wholly-owned subsidiaries:
165550 Canada Limited
172965 Canada Limited
2849518 Canada Limited
AGA Progas a.s
ASHCO Lid.
Abu Dhabi Petroleum Company Limited
Ace Polymer Co., Ltd
Acquifund Resources Limited
Aditivos Orinoco, C.A.
Adria-Wien Pipeline Gesellschaft mit beschreenkter
Haftung
Advanced Elastomer Systems Do Brasil Ltda.
Advanced Elastomer Systems Japan Limited
Advanced Elastomer Systems Limited
Advanced Elastomer Systems Marketing Pte. Ltd.
Advanced Elastomer Systems NV/SA
Advanced Elastomer Systems Singapore Pte. Lid.
Advanced Elastomer Systems, Canada, Inc.
Advanced Elastomer Systems, Inc.
Advanced Elastomer Systems, L.P.
Air Tankdienst Koeln GbR
Aircraft Fuel Supply B.V.
Al-Jubail Petrochemical Company
Alberta Products Pipe Line Ltd.
Alyeska Pipeline Service Company
AquaAir, Inc.
C-1
Aramco Services Company / /
Asakawa Sekiyu K.K.
Awaji Gas Nenryo Kabushiki Kaisha
Azuma Sekiyu K.K.
BEB Erdgas und Erdoel GmbH, Hannover
BRIGITTA Erdgas und Erdoel GmbH, Hannover
Bangkok Aviation Fuel Services Limited
Benshu Ekika Gas K.K.
Bayerische Erdoelleitung G.m.b.H.
Beaverhill Resources Limited
Brickwood Holdings Pty. Ltd.
Canada Imperial Oil Limited
Canadian Reserve Oil & Gas Ltd.
Castle Peak Power Company Limited
CeraMem Separations, Inc.
Changi Airport Fuel Hydrant Installation Pte. Ltd.
Changi Into-Plane Services (Pte) Ltd.
Chuo Sekiyu Hanbai K.K.
Compagnie Industrielle des Polyethylenes de Normandie,
GIE
Compania Minera Disputada de Las Condes S.A.
Comptoir Auxiliaire du Petrole
Comptoir Oyonnaxien des Combustibles (C.O.C.)
Computer Centrum Groningen B.V.
Copim St. Lawrence Lid.
Cynthia Gas Gathering Company Limited
DFTG Deutsche Fluessigerdgas Terminal GmbH
Daihatsu Sekiyu K.K. .
Daito Gas K.K.
Depot Petrolier du Gresivaudan
Depots Petroliers de La Corse
Depots de Petrole Cotiers
Deudan-Holding GmbH
Deutsche Advanced Elastomer Systems GmbH
C-2
'
Deutsche Erdgas Transport G.m.b.H.
Deutsche Transalpine Oelleitung G.m.b.H.
Devon Estates Limited
Disma S.r.1.
Dixie Pipeline Company
E S F Limited
EPDMCO, L.P.
ETD Tankdienst Gesellechaft Duesseldorf GbR
Eagle Kenso K.K.
Eagle Reinsurance Co. Lid.
East Asia Response Private Limited
East Texas Salt Water Disposal Company
Eiko Sekiyu K.K.
Elwerath Erdgas und Erdoel GmbH, Hannover
Elwarath Erdoel und Erdgas AG
Emirates National Chemicals Company Ltd.
Emori Sekiyu K.K.
Emsland-Erdoelleitung G.m.b.H.
Energie Marketing Service GmbH
Enterprise Housing Partners 1992 Limited Partnership
Entrepot Petrolier de Mulhouse (E.P.H.)
Erdgas-Verkaufs-Gesellschaft m.b.H
Erdoel-Raffinerie Deureg-Nerag GmbH
Esso (Overseas) Pension Trust Limited
Esso Antilles-Guyana, S.A.
Esso Energie G.I.E.
Esso Exploration and Production Angola Inc.
Esso Exploration and Production Ireland Limited
Esso France S.A.
Esso Lub’Services
Esso Malaysia Berhad
Esso Raffinage S.A.F.
Esso Societe Anonyme Francaise
Esso Standard Thailand Ltd.
C-3
Esso Standard Tunisie S.A.
Esso Technologies et Services (£.T.S.)
Esso Yukong Specialities Lid.
Etablissements Cloarec
Exxon Asset Funding Company
Exxon Asset Management Company
Exxon Chemical Asset Management Partnership
Exxon Chemical France
Exxon Chemical Paraffins Limited
Exxon Chemical Polymeres SNC
Exxon Mobile Bay Partnership
Exxon de Colombia S.A.
F.T. Giken Kabushiki Kaisha
Federated Pipe Lines Ltd.
Ferngas Nordbayern G.m.b.H.
Ferngas Salzgitter GmbH
Fernkaelte Gescheeftastadt Nord G.b.R.
Flughafen Schwechat Hydranten-Gesellschaft
Fuji Kogyo K.K.
Full Cycle Plastics Pty. Lid.
Gl6a (Groep) B.V.
Gasunie Engineering B.V.
Gasunie Warmte/Kracht Emmen B.V.
General Bussan K.K.
General Highway K.K.
General Sekiyu K.K.
General Sekiyu Okinawa Hanbei K.K.
General Sekiyu Overseas, Lid.
General Shipping Co. Ltd.
General Unyu Kabushiki Kaisha
Geobutane - Lavera
Ges. fur Mineraloelveredlung und Distribution Rheesa mbH
Gewerkschaft Brassert Erdoel und Erdgas GmbH
C-4
q
Gewerkschaft Gute Hoffnung Erdgas und Erdoel GmbH
Gewerkschaft Kuechenberg Erdgas und Erdoel GmbH
Glen Park Gas Pipe Line Company Limited
Grande Ecaille Land Company, Inc.
Great Lakes Resporise Corporation of Canada
Groupement Petrolier Aviation
Groupement Petrolier de Nantes (G.P.N.)
Groupement Petrolier de Saint-Pierre de Corps (G.P.S.P.C.)
Groupement Petrolier de la Cote d’ Azur
Groupement Petrolier du Finistere G.1.E.
Groupement Petrolier du Vai-de-Marne (G.P.V.M.)
Groupement d’Exploitation du Depot de Reception de
Chennevis
Guam Response Services Ltd.
Hambrecht & Quist Environmental Technology
Hamburger Gaswerke GmbH
Hannoversche Erdoelleitungs-G.m.b.H.
Henshin Kyowa Sekiyu K.K.
Heinrich Schneider Spedition GmbH
Hiroshima General Gas Juten Kabushiki Kaisha
Hoei Sekiyu K.K.
Hokkai Sanshi Co., Ltd. (Chemical)
Hokushin Bussen K.K.
Hokuyu Sekiyu K.K.
Hong Kong Pumped Storage Development Company,
Limited
Houston Regional Monitoring Corporation
Hydrant Refuelling System, S.A.
Hydranten-Betriebs-Gesellschaft, G.b.R.
Hydrierwerke Poelitz Aktiengesellischaft
Imperial Oil (an Ontario General Partnership)
Imperial Oil Limited /
Imperial Oil Resources N.W.T. Limited
C-5
Imperial Oil Resources Ventures Limited
Imperial Oil Resources an Alberta limited partnership
Industria Acqua Siracusana S.p.A.
Industry Promotion Enterprises Limited
Iranian Oil Participants Limited (Iranian Consortium)
Iranian Oil Services (Holdings) Limited
Iraq Petroleum Company, Limited
Iraq Petroleum Pensions, Limited
Japan Butyl Company Limited
Jersey Nuclear-Avco Isotopes, Inc.
K.K. Momose Shiojiri Stand
K.K. Toresen
K.K. Aizu Generel
K.K. Auto
K.K. Daimaru
K.K. Eastern Gas Terminal
K.K. General Sekiyu Hanbaisho
K.K. Genet
K.K. Genetech
K.K. Genex —
K.K. Heian Sekiyu
K.K. Kyosi Shosha
K.K. Marugo Izumasa Shoten
K.K. Marutaka Sekiyu
K.K. Momose Sekiyu
K.K. Standard Sekiyu Osaka Hatsubaisho
K.K. Tama General K.K.
K.K. Toko
K.K. Uwano Sekiyu Shokai
K/S Statfjord Transport A/S & Co.
KX Industries, L.P.
Kabushiki Kaisha Sankyo Plastics
C-6
Kai Tak Refuellers Company Limited
Kansai Chuo Sekiyu K.K.
Kanto Kygnus K.K.
Karlsruhe-Stuttgart Rohrleitung Gesellschaft mbH
Kawasaki Kygnus Sekiyu Hanbai Kabushiki Kaisha
Keiyo Sekiyu Hanbai K.K.
Kemcor Elastomers Ltd.
Kemcor Olefins Lid.
Kenya Petroleum Refineries Limited
Kibo Sekiyu Hanbai K.K.
Kimura Sekiyu Kabushiki Kaisha
Kinwa Sekiyu K.K.
Kobe Standard Sekiyu K.K.
Korea Perchem Company Limited
Kosxon Chemical Company Limited
Kowa Sekiyu K.K.
Kowloon Electricity Supply Company Limited
Kumho E.P. Rubber Co., Lid.
Kygnus Ekika Gas Kabushiki Kaisha
Kygnus Kosan Kabushiki Kaisha
Kygnus Sekiyu K.K.
Kygnus Sekiyu Seisei Kabushiki Kaisha
Kygnus Trading Kabushiki Kaisha
Kyushu Eagle K.K.
L-Net East K.K.
L-Net West K.K.
L12A (Groep) B.V.
L12B/L15B (Groep) B.V.
L14 (Groep) B.V.
LISA (Groep) B.V.
L2 (Groep) B.V.
LSa (Groep) B.V.
LEAG Aktiengesellschaft fuer iuzernisches Erdoel
Les Docks des Petroles d’ Ambas
Les Emulsions de Feyzin at du Dauphine
Liants Routiers de la Vallee de la Loire (LRVL)
Liants Routiers de la Vallee du Rhin (L.R.V.R.)
Liants Routiers du Gard (L.R.G.)
Lilac Sekiyu Kabushiki Kaisha
Lily Sekiyu K.K.
Lithcon Petroleum International (Bahamas) Inc.
Lithcon Petroleum Taiwan Inc.
Long Beach Oil Development Company
MEGAL FINCO
MEGAL GmbH
Maasvlakte Olie Terminal C.V.
Maasvlakte Olie Terminal N.V.
Magota Sekiyu K.K.
Malaysian Energy Chemical & Services Sdn Shd
Manchester Airport Storage and Hydrant Company Limited
McCann Plastics Inc. (Chemical)
McColl-Frontenac Inc.
McColi-Frontenac Petroleum Inc./Petroliere McColl-
Frontenac
Meiji Sekiyu K.K.
Mikawa Bussan K.K.
Mitake Unso K.K.
Mitteirheinische Erdgas Transport Gesellschaft
mit beschrank
Mode Wheel Property Limited
Montreal Pipe Line Linited/Les Pipe-Lines Montreal
Limi
Mount Thorley Coal Loading Limited
Multi Tank Card B.V.
Mytex Polymers (General Partnership)
C-8
1 i
N.V. Nederlandae Gasunie
NALCO/Exxon Energy Chemicals Limited
NAM - K 14 B.V.
NAM - K 15 B.V.
NAM - K7B.V.
NAM - Pipeline B.V.
NAM -K17 B.V.
NAM/CLOMS - K 8/K 11 B.V.
NAM/CLOMS - L 13 B.V.
NAM/MOBIL M9a B.V..
NPC Services, Inc.
Nakabayashi Sekiyu K.K.
Name: IORL
Nansei Oil Terminal K.K.
Nansei Sekiyu Kabushiki Kaisha
Nanseki Kaihatsu K.K.
Native Venture Capital Co. Lid.
Near East Development Corporation
Nederlandse Aardolie Maatschappij B.V.
New Cure, Inc.
Newcastle Coal Shippers Pty. Limited
Nichiel Kogyo Kabushiki Kaisha
Nichimo Oil (Bermuda) Co., Ltd.
Nikko Sangyo K.K.
Nippon Unicar K.K.
Nissei Sekiyu Kabushiki Kaisha
Nogat B.V.
Norddeutsche Erdgas-Aufbereltungs G.m.b.H.
Norddeutsche Mineraloelwerke Stettin G.m.b.H.
Nordrheinische Erdgas Transport Gesellschaft mit
beschrankte
Noroxo
Northward Developments Lid.
OSLO Alberta Limited
c-9
Office Prive d’Assurances et de Courtages
Oil Field Chemicals Company (Saudi Arabia) Ltd.
Oil Service Company of Iran (Private Company)
Oil Spill Holdings Private Limited
Oil Spill Response Limited
Oldenburgische Erdoel Gesellschaft m.b.H.
Oleoducto de Colombia S.A.
Oleoductos Canerios, S.A.
Osaka General Gas K.K.
Osaka Kygnus K.K.
P. T. Stanvac Indonesia
P.A.C. S.A.R.L. (Pinson-Allegret-Causse)
Pacesetter Enterprises Limited
Pars Investment Corporation
Peninsula Electric Power Company Limited
Petrosvibri S.A.
Pier Atlantic Limited
Pipe Line Services, Inc.
Plantation Pipe Line Company
Port-Jerome Gaz (P.J. Gaz)
Portland Pipe Line Corporation
Primaeroe! GmbH
Prince William Sound Oil Spill Response Corporation
Progas Limited
Projectbureau W/K S.V.
Quadrant Gas Limited
Raffinerie du Midi S.A.R.L.
Rainbow Pipe Line Company, Ltd.
Redwater Water Disposal Company Limited
Refinerie Petrolera Acajutia, S.A.
Regulus Holding (Singapore) Pte. Lid.
Rheingas Erdgasleitungs-Gesellschaft m.b.H.
Rotterdam Antwerpen Pijpleiding (Belgie) N.V.
Rotterdam Antwerpen Pijpleiding C.V.
C-10
|
Rotterdam-Antwerpen Pijpleiding (Nederland) N.V.
Rubiatec Sendirian Berhad
Ruhrgas Aktiengesellschaft
S.A. du Pipeline a Produits Petroliera sur Territoire Geneve
SEAG Aktiengesellschaft fuer schweizerisches Erdoel
SERAM s.p.A.
SOVEXOIL Oil Field
Saitema Sekiyu Hanbai K.K.
Sanyo Sekiyu K.K.
Saraco S.A.
Saudi Arabian Lube Additives Company Limited
Schubert KG
Senboku Oil Kikoh K.K.
Service Aviation Paris (S.A.P.)
Shehtah Drilling Limited
Shimoyama Sekiyu K.K.
Shin-Nihon Yukagaku Kogyo K.K.
Shinohara Oil K.K.
Smiley Gas Conservation Limited
Sociedad Nacional de Oleoductos Ltda.
Sociedad de Inversiones Limited /
Societa Italiana par |’Oleodotto Transalpino S.p.A.
Societa per Azioni Reffineria Padana Olil Minerali-
SARPOW
Societe "Geominea-Caen"
Societe Anonyme "Produits Lubrifiants de Madagascar" -
PROLU
Societe Anonyme de Gestion de Stocks de Securite
(SAGESS) —
Societe Anonyme de la Raffinerie des Antilles
Societe Anonyme des Hydrocarbures
Societe Civile de Mustapha Algerie
Societe Civile de Participation pour la Destruction des Dech
Societe Esso de Recherches et d’Exploitation Petrolieres Ess
C-11
Societe Francaise EXXON CHEMICAL
Societe Havraise de Manutention de Produits Petroliers
Scciete Malgache de Raffinage
Societe Paris-Manche
Societe Paris-Niel
Societe Reunionnaise d’Entrepossage
Societe d’Etude et d’Exploitation de la Raffinerie du Tchad
Societe d’ Exploitation & de Developpement d’ Operations
Comme
Societe d’ Exploitation des Garages Les Stations Tour Eiffel
Societe de Manutention de Carburants Aviation (S.H.C.A.)
Societe de Promotion et de Financement Touristique
(CARTHAGO)
Societe de la Raffinerie d’ Alger
Societe des Pipe-Lines de Strasbourg
Societe de Tranports Petroliers par Pipe Line
Societe du Caoutchouc Butyl (SOCABU)
Societe du Pipe Line de La Raffinerie de Lorraine
Societe du Pipe-Line Mediterranee-Rhone
Societe du Pipeline Sud-Evropean
Socony-Standard-Vacuum Oil Company (Petroleum
Hastschappij)
Southern Natural Gas Development Pty. Lid.
Standard Kaihatsu K.K.
Standard Service K.K.
Stansted Fuelling Company Limited
Statfjord Transport A/S
Stockage Geologiqua de Gaz de Lavara
Sucre Gas, S.A.
Sueddeutsche Erdgas Transport Gesellschaft
mit baschrankter
Sun East (Dublin) Company, Ltd.
Superior Disk Corporation
Syncrude Canada Lid.
C-12
TAR-Tankanlage Ruemlang AG
TBN Tanklager-Betriebsgeselischaft Nuernberg mbH
TCA Plastics Inc.
TEAN Terminal B.V.
TFS Turbo Fuel Services GmbH, Hamburg
TGF Tankdienst Gesellschaft Frankfurt G.b.R.
TGM Tankdienst-Gesellschaft Muenchen GbR
TIBA Speditions GmbH
TLS Tanklager Stuttgart GmbH
Taihei Bussan K.K.
Taisai Kogyo Sekiyu Hanbai K.K.
Taketsuru Yugyo K.K.
Tankanlage A.G., Mellingen
Tankleger Altishausen A.G.
Tankiager Taegerschen AG
Tanklager-Gesellschaft Tegel G.b.R.
Tanklagergesellschaft, Koeln-Bonn G.b.R.
Tecnica Quimica Petrolera, S.A. de C.V.
Terminal Petrolier de Bordeaux (T.P.B.)
Thai Aliphatics Company Limited
Thai C-Center Company Limited
Thai Petroleum Pipeline Co., Ltd.
Thyssenges G.m.b.H.
Tohpren Co., Ltd. (Chemical)
Tojo Gas K.K.
Toko Sekiyu K-K.
Tonen Chemical Nasu Co., Lid.
Tonen Energy International Corp.
Tonen Energy and Marine (Singapore) Pte. Ltd.
Tonen Filare Co. Ltd.
Tonen Film Company Limited
Tonen Kabushiki Kaisha
Tonen Kagaku K.K.
Tonen Properties Inc.
Tonen Sogo Service Co., Ltd.
Tonen System Plaza Kabushiki Kaisha
Tonen System Service Kabushiki Kaisha
Tonen Tanker Kabushiki Kaisha
Tonen Tapyrus Company Limited
Tonen Technology K.K.
Tonex Company Limited
Towa Compounding Co., Ltd.
Towa Sekiyu K.K.
Toyoshina Film Company, Ltd.
Trans-Northern Pipelines Inc.
Transalpine Oelleitung in Oesterreich Gesellschaft m.b.H.
Transgaz Lavera
Tsurumaru Unyu K.K.
UBAG - Unterflurbetankungsanlage Flughafen Zurich
Ulan Coal Mines Limited
United Industry Development Co., Ltd.
Van Salt Water Disposal Company
Verbundnetz Gas AG
Wako Jushi Kabushiki Kaisha
Westdeutsche Erdoelleitungs-G.m.b.H.
Westgas G.m.b.H.
Worex S.N.C.
' Yasaka Sekiyu K.K.
Yellowstone Pipe Line Company
Yoshimi Gas Kabuskhiki Kaisha
Yuei Sekiyu K.K.
Zenon Environmental Systems Inc. (ZESI)
C-14
APPENDIX D
=
Re Re I OT i a alk eS Oe SER <
Norges Brannkasse Mutual
Insurance Co. (Uni)
Skadeforsikringsselskapet
Vesta A/S
Arig-Arab Ins. Group
(BSC)
Skandia International
Insurance Corp.
Storebrand Reinsurance
Co., Ltd.
Gjensidige Norsk
Skadeforsikring
Arendal Forsikringsselskab
A/S
Polaris Assurance A/S
Samvirke Skadeforsikring
A/S
Qatar General Ins. &
Reinsurance Co.
Hansa Marine Insurance
Co.
Norske Triton Insurance
Co. Lid.
(Star Insurance, Ltd.)
Hafnia Forsikring
Baltica Forskiring A/S
Sirius Insurance Co. Lid.,
(Lansforsakringar Sirius
Industrial & Marine)
Navigators Insurance Co.
Lloyd’s & Institute
Companies
APPENDIX D
Insurance Company of
North America
Continental Insurance
Company
Fidelity & Casualty
Company of New York
Fireman’s Insurance
Company of Newark,
New Jersey
Progressive Casualty
Insurance Co.
Christiania General
Insurance Corporation of
New York
Reinsurance Corporation of
New York
Worcester Insurance
Company
Pennsylvania Lumbermens
Mutual Insurance
Company
Republic Insurance
Company
United Reinsurance
Corporation of New York
Colonia Insurance Company
United Fire and Casualty
Company
Abu Dhabi National
Insurance Co.
Compagnie De Reassurance
De L’ile De France
Riunione Adriatic Di Sicurta
Societe Commerciale De
Reassurance
D-1
Omnium Insurance &
Reinsurance Co. Ltd.
Caisse Industrielle
D’ Assurance Mutuelle/
Languedoc
Eagle Star France
Pool Transport Eagle Star
L’ independence Pool
New York Marine and
General Insurance Co.,
Through Mutual Marine
Office
Yasuda Fire & Marine
Insurance Co. Ltd.
Christiania General
Insurance Corporation of
New York, Through
Trident Christiania, Inc.
AIG Oil Rig, Inc.
American Home Assurance
Company
National Union Fire
Insurance Corporation
New Hampshire Insurance
Company
Tokio Marine & Fire
Insurance Co.
Nippon Fire & Marine
Insurance Company, Ltd.
Yasuda Fire & Marine
Insurance Company
Fireman’s Fund Insurance
Company
Industrial Mutual Insurance
Company, Through Hull
and Company, Inc.
Indemnity Marine
Assurance Co., Ltd.
Switzerland Insurance
Company (UK) Limited
The Nippon Fire & Marine
Insurance Company, Ltd..,
(UK) Ltd.
Fuji Fire & Marine
Insurance Co. (UK) Ltd.
Folksam International
Insurance Co. (UK) Lid.
Hansa Marine Insurance
Company (UK) Limited
Vesta (UK) Insurance Co.,
Ltd.
Colonia Insurance Company
(UK) Limited
Ocean Marine Insurance
Company, Ltd.
The Threadneedle Insurance
Co., Ltd.
Norwich Union Fire
Insurance Society Ltd.
Excess Insurance Company,
Lid.
The Scottish Lion Insurance
Co., Ltd.
Yorkshire Insurance
Company Limited
Scor (U.K.) Reinsurance
Co. Ltd.
Phoenix Assurances Public
Limited Company
La Reunion Francaise Soc.
Anon. D Assurance Et
Des Reassurances
The London Assurance
D-2
Sirius Insurance Co., (UK)
Plc
Marine Insurance Company,
Lid.
Insurance Company of
North America (UK) Ltd.
Northern Assurance
Company Limited
London & Hull Maritime
Insurance Company, Ltd.
English & Scottish Maritime
& General Ins. Co. Lid.
Prudential Assurance Co.,
Lid.
Pearl Assurance Public
Limited Company
Assicurazioni Generali
S.P.A.
La Concorde Compagnie
D’ Assurances Contre Les
Risques De Toute Nature
Terra Nova Insurance
Company, Ltd.
Commercial Union
Assurance Co.
Sphere Drake Insurance Plc
Dai-Tokyo Insurance
Company (U.K.) Lid.
Cornhill Insurance Pic
Allianz International
Insurance Company Lid.
Bishopsgate Insurance Lid.
Leadenhall Insurance Ltd.
Preservatrice Fonciere
T.1.A.R.D.
Compagnie D’ Assurances
International Insurance
Company of Hannover
Limited
Lombard Continental
Insurance Plc.
Atlas Assurance Company,
Lid.
Sovereign Marine and
General Insurance Co.
Lid. of London
Tokio Marine & Fire
Insurance Co. (U.K.),
Ltd.
Taisho Marine & Fire
Insurance Co., (U.K.)
Ltd.
Storebrand Insurance Co.
(U.K.) Ltd.
Atlantic Mutual Insurance
Company
Wausau Insurance Co.,
(U.K.) Ltd.
New Hampshire Insurance
Company
Minster Ins. Co. Lid.
Turegum Insurance Co.
Polaris Assurance A/S
Cigna Insurance Company
of Europe S.A.— N.V.
National Employers Mutual
Legal & General
Assurance Society Ltd.
Legal & General Assurance
Society Ltd.
Chandos Insurance Co. Ltd.
Dominion Insurance Co.
Limited
D-3
Sumitomo Marine & Fire
Insurance Co. Lid.
Orion Insurance Company
pic
Skandia U.K. Insurance plc
Yasuda Fire & Marine
Insurance Company of
Europe, Lid.
D-4
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