Opposition Brief — Exxon Corp. v. Youell

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yng Supreme Cow, U.S.

(Z) FILED

No, 94-1871 | JUN 14 1995

In THE

Siyreine Comet of the Wuited States

OcToBEerR TERM, 1994

Exxon CORPORATION,

. Petitioner,

JOHN RICHARD LUDBROOKE YOUELL, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

BRIEF IN OPPOSITION

MICHAEL B. MCCAULEY

Counsel of Record

RICHARD W. PALMER

FRANK P. DEGIULIO

H. COLEMAN SWITKAY

Of Counsel PALMER BIEZUP & HENDERSON

HAROLD R. TYLER, JR. 956 Public Ledger Building

WILLIAM F, CAVANAUGH, Jr. Independence Square

LIsA C. COHEN Sixth and Chestnut Streets

PATTERSON, BELKNAP, WEBB Philadelphia, PA 19106-3409

& TYLER (215) 625-9900

1133 Avenue ofthe Americas Attorneys for Respondents

New York, NY 10086-6710

(212) 336-2000

| TT

WILSON - Eras Printing Co., Inc. - 788-0096 - WAsHINGTON, D.C. 20001

“BEST AVAILABLE COPY

QUESTIONS PRESENTED

1. Is it proper for a federal court to conclude that

federal maritime law provides the rule of decision in a

commercial marine insurance coverage dispute when the

court finds (a) that “fortuity” is an established rule of

federal maritime law which federal courts in admiralty

have applied in marine insurance cases for over one

hundred years and (b) that there is a need for a federal

court to determine whether maritime losses caused by

an insured’s recklessness are fortuitous?

2. is it proper for a federal court to dismiss a marine

insurer’s declaratory suit in deference to the insured’s

parallel state court action when federal maritime law

provides the rule of decision?

(i)

LIST OF PARTIES

The parties in this action are as identified by Petitioner

Exxon Corporation (“Exxon”) in its petition for a writ

of certiorari.

Pursuant to Rule 29.1 of the Rules of this Court, a list

identifying all parent companies and non-wholly owned

subsidiaries of Respondents John Richard Ludbrooke

Youell, et al. (“Underwriters”), is found in the attached

Appendix.

TABLE OF CONTENTS

QUESTIONS PRESENTED ...00022.20002......2c-cececeeceeeseeeeeees

hia chiieasdlcvacanccacobicaoasretnionne

STATE Mamet OF THE CAGE qq... nnnccce cccecececeeceteece cess.

PO, EE TS ER Se aE ae

1. The Stranding of the Exxon Valdez _............

2. Exxon’s Claim for Coverage ................

B. The Texas and New York Actions...

Ti ines

2. New York Proceedings .......................................

C. The District Court’s Abstention Decision ..........

D. The Second Circuit’s Reversal...

II.

EEE OSES ae

IN A MANNER CONSISTENT WITH OTHER

COURTS OF APPEALS, THE SECOND CIR-

CUIT ADHERED TO WILBURN BOAT AND

CORRECTLY CONCLUDED THAT FEDERAL

MARITIME LAW PROVIDES THE RULE OF

DECISION IN A COMMERCIAL MARINE

INSURANCE DISPUTE OVER WHETHER

MARITIME LOSSES CAUSED BY THE

INSURED’S RECKLESSNESS ARE FOR-

RN Le

A. Wilburn Boat Did Not Hold That State Law

“Presumptively” Governs Marine Insurance

ETE LES AOR see eC

aA oo om +} *§ WO WH WH

—

TABLE OF CONTENTS—Continued

B. The Second Circuit’s Ruling Does Not Con-

flict With Other Circuits’ Interpretation of

Wetton te BREE ...cccccceceveccoccesececesapusesevecsvecsvcansesene

C. The Second Circuit Correctly Followed

Wilburn Boat When Concluding That the

Fortuity Rule Is a Creature of Federal

Maritime Law and Requires the Federal

Court in This Case to Determine Whether

Maritime Losses Caused by an Insured’s

Recklessness Are Fortuitous ................---..-------

Ill. THE SECOND CIRCUIT PROPERLY RE-

VERSED THE DISTRICT COURT’S ABSTEN-

TION DECISION IN A CASE GOVERNED BY

FEDERAL MARITIME LAW ...............------.-------

CONCLUSION .......-..--c----c+-cceesseeceeseencsesseessnnessernnensennsennensees

Page

TABLE OF AUTHORITIES

CASES Page

Aguirre v. Citizens Cas. Co., 441 F.2d 141 (5th

Cir.), cert. denied, 404 U.S. 829 (1971) ............... 18

Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882 (5th

Cir.), cert. denied, 112 S. Ct. 279 (1991) ............ 16

American Construction Co. v. Jacksonville, T. &

RK. W. &. CO, 148 USB, BIB (IGRS) ...<ncevens--.--. 10

Antillles S.S. Co. v. Members of American Hull

Ins. Syndicate, 737 F.2d 195 (2d Cir. 1984)........ 17

Bohemia, Inc. v. Home Ins. Co., 725 F.2d 506 (9th

ie SRD ar crciececerinaessevaceronemtecumnenisasirasenai iain teenies 15, 20

Brillhart v. Excess Ins. Co. of America, 316 U.S.

EE sessispidicttsinkea ste hiniseicuniiecnitananiadbinhnniadiidicss 10, 22, 23

Cargill, Inc. v. Commercial Union Ins. Co., 889 F.2d

yt, RRR ROL chee ah eal eve 15

Colorado River Water Conservation District v.

United States, 424 U.S. 800 (1976) ...000000.. 6, 7, 10, 22

Hamilton-Brown Shoe Co. v. Wolf Bros & Co., 240

cai: MR INDY Neches ehcecince Denied A al hal ais 10

Knight v. U.S. Fire Ins. Co., 804 F.2d 9 (2d Cir.

1986), cert. denied, 480 U.S. 932 (1987) ............ 18

Kossick v. United Fruit Co., 365 U.S. 731 (1961).... 14, 21

Lanasa Fruit S.S. & Importing Co. v. Universal

FH, Gog Te els TO CRD sercniccccetcnciitict cis erccinee 18

Madruga v. Superior Court, 346 U.S. 556 (1954)... 24

Moses H. Cone Memorial Hospital v. Mercury Con-

struction Corp., 460 U.S. 1 (1983) .....00.0......000000... 6

Orient Mutual Ins. Co. v. Adams, 123 U.S. 67

4) el SSS sa SI ELS ee ES 7,17, 18,19

Pace v. Ins. Co. of North America, 838 F.2d 572

CBS ee I ervecuccdtccevkcesthspamihtmoctaaianbtemastoventiacth 15

Pope & Talbot, Inc. v. Hawn, 346 U.S. 406 (1953).. 14

Reliance Ins. Co. v. The Escapade, 280 F.2d 482

6 | Re RR RES Tee Te Om 18

Steelmet, Inc. v. Caribe Towing Corp., 779 F.2d

ROBE COTE Gh Bi acrcab titan cterttstinsitebviieilnpiiisiien 15, 20

TABLE OF AUTHORITIES—Continued

Page

Virginia Military Institute v. United States, 113

Cae, THUR REE ncccnncenestatschciecscnneiianainiiitinstntes 10

Waring v. Clarke, 46 U.S. (5 How.) 441 (1847)... 24

Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348

UES, BAD Ce enccecerecctcntnedatcaatieiciininaiedtae passim

Wilton v. Seven Falls Co., No. 94-562, 1995 WL

847888 (U.S. June 12, 19906) ................cccscccesees 10, 22, 23

STATUTES

SB GB, Feels 00 COs cictctpeinsancnteacinigtnantniiepnantities 5

, Bee Fag } fF pete Ae Ri bt nthe hide hh 23

IN THE

Supreme Court of the United States

OCTOBER TERM, 1994

No. 94-1871

ExxON CORPORATION,

7 Petitioner,

JOHN RICHARD LUDBROOKE YOUELL, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

BRIEF IN OPPOSITION

Underwriters respectfully request this Court to deny

Exxon’s petition for a writ of certiorari to review the

judgment and opinion entered by the Second Circuit in

this case.

STATEMENT OF THE CASE

In its petition, consistent with its continuing quest to

avoid or delay the exercise of federal court jurisdiction,

Exxon has repeatedly mischaracterized the circumstances

surrounding its claim, the procedural background of the

parties’ litigation, and the legal authority which is ap-

plicable to this case.

This is a quintessential commercial maritime case aris-

ing from the stranding of the supertanker Exxon Valdez

off Alaska. The dispute is over whether Exxon’s marine

pollution losses are covered under a global marine insur-

ance contract. It involves sophisticated parties—Exxon is

a multi-national corporate giant with an extensive fleet

of ships and oil rigs and with world-wide operations, in-

sured by insurance companies and underwriting syndi-

cates located all over the world. It is governed by fed-

eral maritime law. It is a case which the Second Circuit

rightly concluded should proceed in a New York federal

district court in admiralty—where Underwriters instituted

the declaratory judgment action presently at issue before

this Court.

This is not a case, as Exxon hopes it will be perceived,

raising only garden variety state law insurance issues of

interest only to Texas—where Exxon commenced its state

court action—and requiring dismisal of Underwriters’

federal declaratory suit and adjudication only by a Texas

state court. Nor is it a case presenting issues warranting

this Court’s review.

A. Background Facts

1. The Stranding of the Exxon Valdez

On March 24, 1989, Exxon Valdez ran aground on

Bligh Reef, a well-known and well-marked rock shoal lo-

cated in Prince William Sound well outside the bound-

aries of the charted traffic lanes leading into and out of

the port of Valdez, Alaska. The stranding ruptured the

vessel’s cargo tanks, spilling more than 10.8 million gal-

lons of crude oil into the sea.

The Exxon Valdez was commanded by Joseph J.

Hazelwood, a known, uncontrolled alcoholic. Captain

Hazelwood had been drinking during the hours immedi-

ately preceding the incident.

After the grounding, a federal grand jury returned

criminal indictments against Exxon. All criminal charges

required Exxon’s knowledge of the circumstances relating

to the stranding and resulting pollution; some required

evidence of Exxon’s intentional misconduct. In Septem-

ber 1991, Exxon pled guilty to certain crimes and settled

all criminal and civil claims brought by the federal gov-

ernment and Alaska, agreeing to pay damages, fines and

penalties.

In addition, in a federal lawsuit in Alaska brought

against Exxon by commercial fishermen, property owners

and others, a jury found that Exxon’s misconduct relat-

ing to the operation of the Exxon Valdez was “reckless”

and that such “recklessness” caused the stranding. The

jury assessed Exxon $287 million in compensatory dam-

ages, and found Exxon’s “recklessness” so “reprehensible”

that it ordered Exxon to pay $5 billion in punitive

damages.’

2. Exxon’s Claim for Coverage

Exxon has demanded insurance coverage from Under-

writers for pollution costs, expenses and liabilities alleg-

edly resulting from the stranding of the Valdez.

Exxon’s claim is made under certain cusiom manu-

script Global Corporate Excess insurance agreements

(“GCE Agreement”) negotiated and drafted by Exxon

and its New York and London insurance brokers. The

GCE Agreement insured specific risks relating to Exxon’s

worldwide operations for a twelve-month period com-

mencing November 1, 1988, and was subscribed to indi-

vidually and severally by Underwriters (certain under-

writers at Lloyd’s, London and more than 100 other

! Although Exxon has persisted throughout the parties’ litigation

in terming the grounding of the Valdez “accidental” (see, e.g., Pet.

at p. 2), the jury was charged it could find Exxon “reckless’’ only

if it determined that Exxon acted with subjectively conscious dis-

regard of grave danger or risk of harm. (Jn re Exxon Valdez,

C.A. 89-095 (D. Alaska June 18, 1994)). The jury was further

charged it could assess punitive damages against Exxon only if it

found Exxon’s misconduct to be “reprehensible.” Jd. (D. Alaska

September 16, 1994).

London market and international insurance companies

headquartered all around the globe).*

The GCE Agreement was negotiated in New York and

London. At the time the Agreement was entered into,

Exxon was headquartered in New York. Exxon paid its

premiums in New York. In the event of suit, Under-

writers agreed to submit to jurisdiction in New York.

Underwriters also agreed to accept service of process in

New York and designated service agents in New York,

including the New York State Insurance Commissioner.

New York was designated as the site for any arbitration

between the parties.

Underwriters denied coverage of Exxon’s claim under

the GCE Agreement for a number of reasons, including

Exxon’s misconduct in causing the grounding of the

Valdez and the pollution. Thereafter, the parties engaged

in a number of non-binding alternative dispute resolution

proceedings. To facilitate the continuation of good faith

discussions concerning Exxon’s coverage claim, Under-

writers and Exxon agreed in August 1992 that neither

would institute legal proceedings without prior notifica-

tion to the other. Underwriters and Exxon also executed

a tolling agreement to suspend the running of the limita-

tions period governing Exxon’s claim during the parties’

discussions.

B. The Texas and New York Actions

1. Exxon’s Texas Suit

In the midst of the parties’ ongoing negotiations, and

notwithstanding the clear indication that any unresolved

dispute was to be resolved in New York, Exxon—without

notice or warning—filed suit on August 4, 1993 in Texas

State court, located in Harris County, Houston.

2 Exxon seeks coverage under Sections I, IIIA and IIIB of the

Agreement. Section I addresses Exxon’s first-party property loss

or damage. Section IIIA applies to Exxon’s marine liabilities:

Section IIIB deals with other third-party liabilities.

Exxon’s suit in Houston advanced its coverage claim

under Sections I, IIIA and IIIB of the GCE Agreement,

thereby rejecting arbitration.’ Exxon’s complaint charged

breach of contract, breach of the covenant of good faith

and fair dealing, and violations of the Texas Insurance

Code.

The Houston forum chosen by Exxon for its action has

no connection to this matter. Further, there is no refer-

ence to Texas in the 128 pages of the GCE Agreement.

Other than the fact that Exxon moved from New York

to Irving, Texas (near Dallas, not Houston) after the

GCE Agreement was signed and after the stranding of

the Exxon Valdez, there is no tie between this dispute

and Texas.

In order to avoid federal jurisdiction, Exxon stated in

its complaint that it was not suing one of its insurers

entitled to a federal court forum as an instrumentality

of a foreign sovereign.* Exxon also announced in its

complaint that it would “release and waive” any claim

it might have against any other agency or instrumentality

of a foreign state.

Exxon twice vigorously resisted removal to federal

court. Exxon foiled the first removal, effected pursuant

to the express authority of the Convention on the Rec-

ognition and Enforcement of Foreign Arbitral Awards,°

% Sections I and IIIA of the GCE Agreement provide for arbitra-

tion in New York upon the consent of both parties; Section IIIB

provides for mandatory arbitration in New York upon request of

either party. Although Exxon repudiated aribtration by commenc-

ing suit in Houston, Underwriters requested arbitration under the

mandatory arbitration clause of Section IIIB. As a result, Exxon’s

claim under Section IIIB is presently being arbitrated in New York.

4 Exxon released Qatar General Insurance and Reinsurance Com-

pany (“Qatar”), which could have availed itself of federal court

jurisdiction pursuant to the Foreign Sovereign Immunities Act, 28

U.S.C. § 1602, et seq.

59 U.S.C. § 201, et seg. See 9 U.S.C. § 205.

by “agreeing”—after the case was removed—to arbitrate

Section IIIB in New York and taking steps to sever and

stay its Texas state court claim under Section IIIB pend-

ing the outcome of the New York arbitration. Exxon

also frustrated the second removal, effected by Norske

Triton Insurance Company, Ltd. (“Star”), a foreign sov-

ereign. Although Exxon fought this removal on a num-

ber of different grounds, Exxon ultimately achieved a

remand only after again declaring its willingness to re-

lease any foreign sovereign and to dismiss its claim

against Star in order to return to Houston state court.

2. New York Proceedings

After Exxon commenced its Texas action, Underwriters

filed a complaint against Exxon in the Southern District

of New York on August 30, 1993. The complaint seeks

a declaration that there is no coverage for Exxon’s claim.

Exxon moved to dismiss or stay Underwriters’ declara-

tory suit, contending that the District Court lacked juris-

diction, or, alternatively, seeking a dismissal or stay of

the federal proceedings in deference to its Texas action.

C. The District Court’s Abstention Decision

The District Court properly recognized that it had

subject matter jurisdiction over Underwriters’ declaratory

suit, determining that “insofar as this case involves marine

insurance, it falls within the admiralty jurisdiction.” (Pet.

App. B, p. B-3).° The District Court therefore treated

Exxon’s motion as one seeking abstention in favor of its

Texas action. Professing to follow the abstention analysis

established by this Court in Colorado River Water Con-

servation District v. United States, 424 U.S. 800 (1976),

and Moses H. Cone Memorial Hospital v. Mercury Con-

struction Corp., 460 U.S. 1 (1983), the District Court

6So intent was Exxon on avoiding federal jurisdiction that it

resisted even this unassailable conclusion. On appeal to the Second

Circuit, Exxon finally conceded this is an admiralty case.

decided abstention was justified, and dismissed Under-

writers’ complaint.

The District Court rested its decision to dismiss the

complaint upon the third factor under the Colorado River

abstention test—avoidance of piecemeal litigation—

terming that factor “by far the most significant.” (Jd. at

p. B-14). The District Court also found that the fifth

Colorado River factor—the source of the rule of decision

—was marked by “a strong state interest in insurance

regulation and an absence of significant federal issues”

and hence “points moderately towards abstention.” (/d.)

The fourth factor—the order in which jurisdiction was

obtained—slightly favored abstention, according to the

District Court,’ with the remaining factors “contribut[ing]

nothing to the mix.” (/d.).

D. The Second Circuit’s Reversal

The Second Circuit reversed, finding that the District

Court had abused its discretion in dismissing Under-

writers’ complaint. (Pet. App. A, pp. A-8 n.2, A-18).

Unlike the District Court, the Second Circuit recog-

nized the importance of federal maritime law, agreeing

with Underwriters that federal admiralty law provides the

rule of decision governing this case.

Specifically, the Second Circuit rejected Exxon’s argu-

ment that the “fortuity rule” arises under state law. Cit-

ing to this Court’s decision in Orient Mutual Ins. Co. v.

Adams, 123 U.S. 67 (1887), and a host of decisions

thereafter from numerous Courts of Appeals, the Second

7In this regard, the District Court cited to the “significance” of

what was then a March 27, 1995 trial date in the Texas action.

(id. at p. B-6). Exxon requested and was granted such a trial

listing after oral argument had been scheduled by the District Court

on Exxon’s motion to dismiss or stay. After the District Court

granted its motion, Exxon agreed it would not seek a trial setting

until late 1995 or early 1996. Trial is presently scheduled in Texas

for January 16, 1996.

Circuit determined that “the fortuity rule is indeed a

creature of federal law. Federal courts sitting in ad-

miralty have been applying some variation of the fortuity

rule in marine insurance cases for over a hundred years.”

(Id. at p. A-10).

The Second Circuit found “[lJess clear . . . how the

fortuity rule regards losses caused by the insured’s own

recklessness.” (Jd.) (While negligent losses are fortui-

tous, and wilful ones are not, admiralty courts have yet

to assign losses caused by the insured’s own reckless con-

duct to either camp.”). This “precise issue”’—namely, the

scope of the “fortuity rule” in marine insurance cases and

“whether a marine insurer is liable under a policy for

losses caused by an insured’s recklessness”—was deter-

mined to be an issue of “first impression” (id. at pp.

A-12, A-13), which, as a matter of federal admiralty law,

a federal court should resolve. (/d. at p. A-13). Be-

cause “a major determinant of the Underwriters’ liability

to Exxon will be whether maritime losses caused by an

insured’s recklessness are fortuitous” (id. at p. A-18), the

Second Circuit concluded that a federal court must retain

jurisdiction and decide the case. (/d.).

The “most prominent” factor for the Second Circuit

was the source of the rule of decision, “because an

unresolved question of federal admiralty law will pro-

foundly affect whether the Underwriters are liable to

Exxon.” (/d. at p. A-8). With respect to the issue of

piecemeal litigation—which the District Court believed

justified its decision to dismiss—the Second Circuit ana-

lyzed the risk of inconsistent adjudications by the federal

and state courts as being “largely dissipated” by the

doctrine of res judicata. (/d. at pp. A-13, A-14). The

nominal difference in the parties involved in the Texas

and New York actions was “of little practical significance”

(id. at p. A-14), and rendered the risk of inconsistent

judgments “inconsequential.” (Jd. at p. A-16).*

8 Two insurers (Qatar and Star) are not parties to the Texas

action, having been dismissed by Exxon to avoid federal jurisdic-

When reversing and remanding this case, the Second

Circuit observed that “[w]Jhile 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.” (/d. at p. A-18).

Thereafter, Exxon moved to stay the issuance of the

mandate while it sought certiorari from this Court. The

Second Circuit denied Exxon’s motion and issued its man-

date, remanding this case to the District Court for fur-

ther proceedings. Exxon then petitioned this Court for

review.

REASONS FOR DENYING THE WRIT

The writ should be denied because review is sought of

an interlocutory ruling that does not begin to present

any question of special importance meriting this Court’s

attention.

Neither issue on which Exxon seeks interlocutory re-

view—whether the Second Circuit adhered to this Court’s

decision in Wilburn Boat Co. v. Fireman’s Fund Ins. Co.,

348 U.S. 310 (1955), and whether the Second Circuit

erred in reversing the District Court’s dismissal of Under-

writers’ declaratory suit—is of moment. Contrary to

Exxon’s urgings, no circuit conflict requiring this Court’s

attention is created by the Second Circuit’s ruling that

federal maritime law governs the issue whether maritime

losses caused by an insured’s “recklessness” are fortui-

tous. The Second Circuit did not ignore Wilburn Boat,

as Exxon charges, but instead followed Wilburn Boat,

reaching a result entirely consistent with the way in which

other Courts of Appeals have interpreted Wilburn Boat.

Exxon has also suggested certiorari may be appropriate

in view of the circuit split concerning whether the Colo-

tion. Star is also no longer in the New York case. Four insolvent

insurers are defendants in the Texas proceedings but not a part

of the New York action.

rado River abstention doctrine or this Court’s ruling in

Brillhart v. Excess Inc. Co. of America, 316 U.S. 491

(1942), governs a district court’s obligation to exercise

federal jurisdiction over a declaratory suit when there is

a parallel state court action. Exxon is wrong. Because

this case is governed by federal maritime law, the Second

Circuit’s reversal was proper under either the Colorado

River abstention test or Brillhart. This conclusion is left

unchanged by this Court’s ruling in Wilton v. Seven Falls

Co., 1995 WL 347333 (U.S. June 12, 1995), a case

involving state law issues only.

I. THERE IS NO NEED FOR INTERLOCUTORY

REVIEW.

It is well-settled that this Court’s certiorari jurisdiction

generally is not exercised for purposes of an interlocutory

review. See, e.g., American Construction Co. v. Jackson-

ville, T. & K. W. R. Co., 148 U.S. 372, 384 (1893)

(“Clearly . . . this Court should not issue a writ of cer-

tiorari to review a decree of the circuit court of appeals

from an interlocutory order, unless it is necessary to

prevent extraordinary inconvenience and embarassment

in the conduct of the cause.”), cited in Virginia Military

Institute v. United States, 113 S. Ct. 2431 (1993)

(mem.) (Scalia, J., concurring). Accord Hamilton-Brown

Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 258

(1916). The Second Circuit’s decision to reverse and

remand the District Court’s jurisdictional decision is in

no sense that rare type of extraordinary ruling requiring

this Court’s interlocutory review. To the contrary, the

“lack of finality” of the Second Circuit’s judgment is a

factor that “of itself alone furnish[es] sufficient ground

for the denial of the application [for certiorari].” /bid.

Il. IN A MANNER CONSISTENT WITH OTHER

COURTS OF APPEALS, THE SECOND CIRCUIT

ADHERED TO WILBURN BOAT AND CORRECTLY

CONCLUDED THAT FEDERAL MARITIME LAW

PROVIDES THE RULE OF DECISION IN A COM-

MERCIAL MARINE INSURANCE DISPUTE OVER

WHETHER MARITIME LOSSES CAUSED BY THE

INSURED’S RECKLESSNESS ARE FORTUITOUS.

The bedrock premise upon which Exxon has rested its

petition is its contention that Wilburn Boat created a

“presumption” that marine insurance coverage disputes

are governed by state law, not federal law. (See, e.g.,

Pet. at pp. 7, 8, 10, 11, 17). According to Exxon, it is

this “presumption” that the Second Circuit supposedly

ignored, thereby “turn{ing] Wi/burn Boat on its head”

(id. at p. 8), and representing “the greatest inroad into

Wilburn Boat in the last 40 years.” (Jd. at p. 16).

Exxon has misread Wilburn Boat and mischaracterized

the Second Circuit’s opinion, seeking to create a circuit

conflict that actually does not exist.

A. Wilburn Boat Did Not Hold That State Law “Pre-

sumptively” Governs Marine Insurance Disputes.

Quite simply, there is no “presumption” under Wilburn

Boat that state law governs marine insurance disputes.”

Wilburn Boat involved a claim under a marine insur-

ance policy which allowed recovery for a loss by fire,

among other perils. The policy covered a small house-

boat which was owned by the Wilburn brothers; during

the term of the policy, the houseboat was used to trans-

port passengers across a small inland artificial lake be-

tween Texas and Oklahoma. During this time the

Wilburns also transferred legal title to the houseboat to

their wholly owned corporation, Wilburn Boat Company.

* Interestingly, in the underlying Alaska litigation, Exxon

strongly advocated the application of federal maritime law rather

than state law, in contrast to its position here.

The claim at issue arose when the houseboat was de-

stroyed by fire while moored on the lake. 348 U.S. at

311.

The insurer denied the claim on the basis that both

the commercial use of the houseboat and the transfer of

legal title breached express warranties under the policy

providing that, absent written consent and permission

from the insurer, the houseboat was to be used solely for

private purposes and could not be sold, transferred or

otherwise assigned. In support of their claim, the insureds

relied upon Texas law, which prevented the insurer from

denying coverage unless the breach contributed to the

loss. The insurer relied upon federal admiralty law to

contend that any breach of a policy warranty avoided

coverage, regardless of whether the breach caused the

loss. Id. at 311, 312.

In addressing the issue whether the claim was governed

by federal maritime law or Texas law, the Court stated:

Since the insurance policy here sued on is a mari-

time contract the Admiralty Clause of the Constitu-

tion brings it within federal jurisdiction. But it does

not follow, as the courts below seemed to think, that

every term in every maritime contract can only be

controlled by some federally defined admiralty rule.

In the field of maritime contracts as in that of mari-

time torts, the Nationai Government has left much

regulatory power in the States. As later discussed in

more detail, this state regulatory power, exercised

with federal consent or acquiescence, has always

been particularly broad in relation to insurance com-

panies and the contracts they make.

Congress has not taken over the regulation of marine

insurance contracts and has not dealt with the effect

of marine insurance warranties at all; hence there is

no possible question here of conflict between state

law and any federal statute. But this does not answer

the questions presented, since in the absence of con-

trolling Acts of Congress this Court has fashioned a

large part of the existing rules that govern admiralty.

And States can no more override such judicial rules

validly fashioned than they can override Acts of

Congress. Consequently the crucial questions in this

case narrow down to these: (1) Is there a judicially

established federal admiralty rule governing these

warranties? (2) If not, should we fashion one?

Id. at 313-14 (Citations and footnotes omitted) (em-

phasis added).

The Court determined that there was no judicially

established precedent in federal admiralty law that applied

to govern the consequences of breaching an express war-

ranty in a marine insurance policy (id. at 316), and

“decline[d] to undertake the task” of fashioning a con-

trolling federal admiralty rule under the circumstances of

the case. /d. at 320.

In reaching this result, the Court recognized and cited

to the traditional interest of the States in regulating the

insurance business. By no means, however, did Wilburn

Boat hold there is a “presumption” that state law must

apply to resolve a marine insurance dispute. To the con-

trary, under Wilburn Boat, a court is required first to

consider whether a judicially established federal admiralty

rule applies to the dispute and, then, if no such rule

exists, to consider whether a controlling federal admiralty

rule should be fashioned. If either question is answered

positively, federal maritime law provides the rule of deci-

sion. It is only when there is no existing federal admiralty

rule applicable to the dispute and no need to fashion

such a rule that state law is properly applied. /d. at 314.

B. The Second Circuit’s Ruling Does Not Conflict With

Other Circuits’ Interpretation of Wilburn Boat.

Exxon has represented that “[t]he 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.” (Pet. at p. 7) (emphasis

added). Based upon its misreading of Wilburn Boat,

Exxon has manufactured a circuit conflict where none

exists.

The Second Circuit was certainly mindful of the teach-

ings of Wilburn Boat, and adhered to them:

. . . [Since the lawsuit here concerns a marine in-

s.» ace 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 (1955).

That admiralty jurisdiction exists does not automati-

cally assure that the applicable law will be federal,

however. Unlike other areas of admiralty law, Con-

gress 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 (1953) (where federal law provides a de-

fense in an admiralty suit, it controls over state law);

see also Kossick v. United Fruit Co., 365 U.S. 731,

742 (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 gov-

erning the matter there presented.”). We must there-

fore determine whether the federal courts have fash-

ioned an applicable admiralty rule, and if not,

whether one is necessary.

Pet. App. A at p. A-9 (parallel citations omitted) (em-

phasis added).

Exxon asserts that the Second Circuit’s ruling creates

“a clear conflict” with the Ninth, Eighth, Eleventh, First

and Fifth Circuits. (Jd. at pp. 11-16). However, exam-

ination of the cases Exxon cites from those circuits re-

veals both that there is no true circuit conflict meriting

this Court’s review, and that the Second Circuit inter-

preted and applied Wilburn Boat to this case in a manner

achieving the same result the other circuits would have

reached.

Exxon’s cases belie the “presumption” of the applica-

tion of state law which Exxon claims Wilburn Boat re-

quires. Although the precise words used to express the

Wilburn Boat test may vary somewhat from court to

court (and from decision to decision), there is basic

harmony among the circuits in deciding whether an issue

in a marine insurance case is governed by federal mari-

time law or state law.

Indeed, the Ninth, Eighth, Eleventh, and First Circuits

hold that in the first instance courts are to look to fed-

eral maritime law, not state law, for the rule of decision

in marine insurance cases. See, e.g., Bohemia, Inc. v.

Home Ins. Co., 725 F.2d 506, 510 (9th Cir. 1984) (state

law governs only if there is no applicable federal statute,

no judicially fashioned admiralty rule, and no need for

uniformity in admiralty practice); Cargill, Inc. v. Com-

mercial Union Ins. Co., 889 F.2d 174, 178 (8th Cir.

1989) (federal admiralty law governs; state law may

apply only when no established federal admiralty law

exists); Steelmet, Inc. v. Caribe Towing Corp., 779 F.2d

1485, 1489-90 (11th Cir. 1986) (focus should be on

federal admiralty law, which will apply if an admiralty

principle exists or should be fashioned); Pace v. Ins. Co.

of North America, 838 F.2d 572, 579 (lst Cir. 1988)

(requiring consideration of existing federal admiralty

rules and of the need to fashion a controlling admiralty

rule before applying state law).

While it is true that the formulation of the Wilburn

Boat rule is expressed differently in the Fifth Circuit than

in the other circuits, even that formulation would result

in the application of federal maritime law on the issue

whether Exxon’s maritime losses were fortuitous. The

test employed by the Fifth Circuit requires the application

of federal maritime law if an applicable federal maritime

rule “specifically governs the conduct in question and

consistently has been invoked to control such conduct.”

Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 888

(Sth Cir.), cert. denied 112 S. Ct. 279 (1991). Here, of

course, the “fortuity rule” represents entrenched federal

maritime law which, as the Second Circuit noted, has

been applied by federal courts sitting in admiralty for

more than one hundred years (Pet. App. A at p. A-10)

and will be a “major determinant of the Underwriters’

liability to Exxon.” (/d. at p. A-18).”°

10 The Fifth Circuit test calls for a balancing of “whether the

federal maritime rule constitutes ‘entrenched federal precedent’;

whether the state has a substantial and legitimate interest in the

application of its law; and whether the state’s rule is materially

different from the federal maritime rule.” Albany Ins. Co. v. Anh

Thi Kieu, 927 F.2d at 886 (citations omitted).

Anh Thi Kieu is a decision frequently cited by Exxon in this

litigation. It involves facts entirely different from those giving rise

to this dispute. The decision in Anh Thi Kieu not to apply federal

maritime law—a conclusion reached “with some hesitation” (id.

at 889)—involved an obviously unsophisticated consumer—a Viet-

namese immigrant who, the court suggested, had difficulty in

understanding English and completing the insurance application

at issue. Jd. at 885.

It is anomalous, at best, that Exxon—the world’s largest oil

company—would seek the same deference accorded to Anh Thi

Kieu. Indeed, the Fifth Circuit acknowledged its decision in Anh

Thi Kieu might well be otherwise “[i]n an appropriate case.” /d.

at 890.

Even under the Anh Thi Kieu test, however, Exxon is mistaken

when it asserts that in the Fifth Circuit, “it is clean-that state

law would provide the rule of decision [in this case].” (Pet. at

p. 12). Exxon is wrong not only because of the “fortuity rule,”

but also because even Anh Thi Kieu made clear that state law may

be applied in marine insurance disputes only if “the local state

interest materially exceeds the comparative maritime concerns in

the controversy.” Jd. at 887. As previously indicated, the absence

of any appreciable tie between this dispute and Texas—much less

the Houston forum selected by Exxon—does not begin to justify

the application of state law instead of federal maritime law. This

The circuit conflict Exxon seeks to create is illusory.

There is no reason for this Court to grant certiorari.

C. The Second Circuit Correctly Followed Wilburn

Boat When Concluding That the Fortuity Rule Is

a Creature of Federal Maritime Law and Requires

the Federal Court in This Case to Determine

Whether Maritime Losses Caused by an Insured’s

Recklessness Are Fortuitous.

In following the Wilburn Boat choice-of-law analysis,

the Second Circuit correctly concluded that the “fortuity

rule” is firmly anchored in federal maritime law:

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 apply-

ing some variation of the fortuity rule in marine

insurance cases for over one hundred years. See

Orient Mut. Ins. Co. v. Adams, 123 U.S. 67 (1887)

[parallel citations omitted]. In so doing, these courts

have predominantly looked to federal law as prece-

dent. And to the extent that admiralty courts have

looked to other sources, they have relied on British

as much as state case law authority. 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.

Id. at p. A-10 (citations omitted )."

is especially so given the international and commercial nature of

the traditional maritime concerns placed at issue by the sophisti-

cated parties involved in this dispute.

1! As noted by the Second Circuit, Underwriters raised a number

of federal admiralty principles, including “fortuity,” as examples

of some of the federal maritime rules of decision applicable to the

parties’ dispute. (/d. at p. A-9). Additional examples included the

admiralty rule governing “removal of debris,” which Exxon distorts

in its effort to obtain pollution coverage under the GCE Agreement

(see Antilles S.S.Co. v. Members of American Hull Ins. Syndicate,

737 F.2d 195, 198 (2d Cir. 1984)); the implied warranty of sea-

ee ea

The Second Circuit's citations to this Court’s decision

in Orient in 1887, and to decisions from many of the

circuits in the years thereafter, leave no question that

“fortuity” is a “judicially established” federal admiralty

rule in cases involving marine insurance-—and has been

for more than one hundred years."*

In a sophistic effort to create an issue where there is

none, Exxon seeks to recast the Second Circuit’s rejection

of its argument that state law governs the fortuity issue.

Exxon does so by erroneously claiming that, under

Wilburn Boat, it is the standard of “fortuity’—not the

“fortuity rule’—that must be “judicially established” in

worthiness knowingly breached by Exxon (see Aguirre v. Citizens

Cas. Co., 441 F.2d 141, 145-46 (5th Cir.), cert. denied, 404 U.S.

829 (1971)); the duties of utmost good faith and disclosure

(uberrimae fidei) owed by Exxon and its brokers to Underwriters

(see Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 13 (2d Cir. 1986),

cert. denied, 480 U.S. 932 (1987)); the principle of “proximate

cause” applicable in marine insurance cases (see Lanasa Fruit

S.S. & Importing Co. v. Universal Ins. Co., 302 U.S. 556, 562

(1938)); and the admiralty rule governing the “sue and labor”

clause of the policy (see Reliance Ins. Co. v. The Escapade, 280

F.2d 482, 488-89 n.11 (5th Cir. 1960)). Although the Second

Circuit deemed it necessary to examine only the first example of

applicable admiralty rules identified by Underwriters—the “for-

tuity rule’’—to decide that this case is governed by federal maritime

law, obviously the other indicated federal maritime principles

reinforce the correctness of that conclusion.

12 Such citations squarely rebut Exxon’s attempt to argue that the

“fortuity rule” is not “judicially established” as a federal maritime

rule, but simply “a general insurance principle” (Pet. at p. 10 n.6)

(emphasis in Pet.), and, as such, a rule that is “presumptively”

grounded in state law. Although Exxon has referenced a selection

of authorities designed to show that the principle of “fortuity”

has application in non-marine insurance policies as well as in

marine insurance contracts, Exxon cites no authority contrary to

that recited by the Second Circuit, and, at bottom, is left with its

empty claim that the Second Circuit ignored this Court’s directive

in Wilburn Boat that state law must “presumptively” govern

marine insurance disputes. As demonstrated above, no such direc-

tive was issued in Wilburn Boat.

federal maritime law before what Exxon mistakenly con-

tends is the “presumption of state law” can be displaced.

(Pet. at pp. 10, 11). Then, Exxon states that “the

Second Circuit found that the ‘fortuity’ standard was a

question of ‘first impression.’” (/d. at p. 11). On this

basis, Exxon declares that “[b]y holding that new federal

law should be created to decide a marine insurance cov-

erage 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.” (/d.).

Exxon’s argument fails because it tries to change both

what Wilburn Boat and the Second Circuit actually said,

and also how the circuits have interpreted Wilburn Boat.

The Second Circuit left no doubt that the “fortuity

rule” is an established federal maritime rule. It merely

questioned as “[lJess clear . . . how the fortuity rule re-

gards losses caused by the insured’s own recklessness.”

(Id. at p. A-10). It was that “precise issue” and only

that issue—‘“whether losses caused by the insured’s reck-

lessness are fortuitous”’—which the Second Circuit found

to be of “first impression.” (/d. at pp. A-12, A-13).”

18 Exxon argues at some length that “the Second Circuit’s deci-

sion misinterprets and directly conflicts with [Orient’s] unambigu-

ous holding [on whether and how ‘recklessness’ fits within the

‘fortuity rule’].” (Pet. at 13 n.10).

Exxon is mistaken in its claim that Orient “clarified” this issue

and required coverage for losses caused by the insured’s “reckless-

ness.” (/d. at 8 n.4, 13, 14 n.10). Orient actually did no such

thing. Indeed, the Second Circuit aptly explained its interpretation

of Orient: “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 all losses except those caused by the master’s ‘fraud or design.’

Id. We cannot reconcile these two statements, for, at least, in

modern legal parlance, ‘recklessness’ is different from both fraud

and design.” (/d. at p. A-12).

This inquiry, of course, does not begin to alter the con-

clusion that the “fortuity rule” itself is a “judicially estab-

lished” maritime principle applicable to this case under

Wilburn Boat. Indeed, it is precisely because the “fortu-

ity rule” is a “creature of federal law” (id. at p. A-10),

that the Second Circuit properly concluded there is a

need for a federal court to address the scope of the “for-

tuity rule” as a matter of federal maritime law.

Nor do the cases cited by Exxon support its assertion

that the standard of “fortuity” must be “judicially estab-

lished” under Wilburn Boat before federal maritime law

may apply. Rather, even those cases reveal that the

proper inquiry under Wilburn Boat is whether a federal

admiralty rule exists or is to be fashioned concerning the

issue in the case—here, “whether maritime losses caused

by an insured’s recklessness are fortuitous.” See, e.g.,

Steelmet, Inc. v. Caribe Towing Corp., 779 F.2d at

1489-90 (federal maritime law applies if an admiralty

principle exists or should be fashioned which “covers the

matter in issue”); Bohemia, Inc. v. Home Ins. Co., 725

F.2d at 510 (admiralty law controls when there is a

“judicially fashioned admiralty rule, or a need for uni-

- formity in admiralty practice”).

The fact is that federal courts have repeatedly recog-

nized and applied “fortuity” as a longstanding and estab-

lished principle of federal maritime law. Under such cir-

cumstances, it is clearly appropriate for a federal court

to analyze and determine the effect of the “fortuity rule”

as a matter of federal maritime law by deciding whether

this rule bars coverage under a marine insurance policy

for maritime losses caused by an insured’s recklessness.

Certiorari is hardly merited by Exxon’s erroneous assump-

tion that there is no need for continuing federal court

involvement.”*

4 Exxon casts a blind eye at the second prong of the Wilburn

Boat choice-of-law analysis—the need to consider fashioning a

controlling federal admiralty rule. Exxon simply assumes there

Ill. THE SECOND CIRCUIT PROPERLY REVERSED

THE DISTRICT COURT'S ABSTENTION DECISION

IN A CASE GOVERNED BY FEDERAL MARITIME

LAW.

Equally unconvincing is Exxon’s suggestion that this

Court should review the Second Circuit’s reversal of the

District Court’s abstention decision in order to determine

whether the Second Circuit erred in applying the Colo-

rado River abstention test to this case rather than

could not possibly be any need for a federal court to fix the

boundaries of the “fortuity rule” by determining whether “reck-

lessness” should be a part of the “fortuity rule” in a commercial

marine insurance dispute. To that end, Exxon disingenuously asserts

that the Second Circuit made “no determination of any need for a

uniform federal rule.” (Pet. at p. 7). Yet this is precisely what

the Second Circuit did when it determined it was for a federal

court to decide, as “an issue of admiralty law’ (Pet. App. A at

p. A-13), “whether losses caused by the insured’s recklessness are

fortuitous.” (/d.).

The importance of the need for a federal court to shape federal

admiralty law in circumstances such as these is clear. Indeed, in

Kossick v. United Fruit Co., 365 U.S. 731 (1961), this Court

confirmed its intent in Wilburn Boat to require the application of

admiralty law in cases where, as here, maritime law issues are

present. In addressing what it termed “the interplay of state and

maritime law” (id. at 733), Kossick commented: “The application

of state law in that case [Wilburn Boat] was justified by the

Court on the basis of a lack of any provision of maritime law

governing the matter there presented. A concurring opinion

[Frankfurter, J., concurring in Wilburn Boat, 348 U.S. at 321)

and some commentators have preferred to refer the decision to the

absurdity of applying maritime law to a contract of insurance on

a houseboat established in the waters of a smal! artificial lake

between Texas and Oklahoma. Needless to say the situation

presented here has a more genuinely salty flavor than that.” /d.

at 742 (internal citations omitted).

Because this dispute involves traditional commercial marine

insurance concerns and international! obligations, it highlights the

need for uniformity that is the benchmark of federal maritime law.

Obviously mindful of that need, the Second Circuit appropriately

directed a federal court in admiralty to determine the impact of the

“fortuity rule” upon this case.

the Brillhart standard. (Pet. at pp. 18-22). In support

of its request, Exxon cites to a split among the circuits,

and notes that this issue was placed before this Court

in Wilton v. Seven Falls Co., No. 94-562, 1995 WL

347333 (U.S. June 12, 1995). Following the filing of

Exxon’s petition, this Court rendered its decision in

Wilton, endorsing the Brillhart test and affirming a stay

of a federal declaratory suit in deference to a state court

action in a case governed exclusively by state law.

Exxon’s request for certiorari on this issue misses the

mark because the parties’ dispute is governed by federal

maritime law. In such circumstances, both the circuit

split cited by Exxon and this Court’s ruling in Wilton

are inapposite. Indeed, as rightly noted by the Second

Circuit, “our case is fundamentally distinct from Wilton

because . . . federal law supplies a rule of decision.

Wilton, in contrast, involved state law only.” (Pet. App.

A at p. A-8 n.2).

Because federal law is integral to the resolution of this

case, the District Court’s decision to dismiss Underwriters’

declaratory suit in deference to Exxon’s state court action

was erroneous under either the Colorado River absten-

tion doctrine or Brillhart. In fact, as noted by this

Court’s ruling in Wilton, Brillhart’s caution against fed-

eral court involvement in litigation that may be handled

by a state court under state law is not applicable when

federal law provides the rule of decision:

Ordinarily it would be uneconomical as well as

vexatious for a federal court to proceed in a declara-

tory judgment suit where another suit is pending in

a state court presenting the same issues, not governed

by federal law, between the same parties.

316 U.S. at 495 (emphasis added), quoted in Wilton,

1995 WL 347333 at *4 (noting the admonition in

Brillhart against a federal court’s “gratuitous interfer-

ence” with a state court’s disposition of cases involving

only state law issues).

Indeed, under the Brillhart test, the federal inter-

est in the exercise of federal jurisdiction over cases in

admiralty where federal maritime law provides the rule

of decision is such that abstention in favor of a state

court proceeding is inappropriate. There is no semblance

of any split among the circuits that even begins to sup-

port certiorari on the issue of a district court’s obligation

to exercise jurisdiction over a declaratory suit governed

by federal law when there is a parallel state court pro-

ceeding. This conclusion is unaltered by this Court’s

decision in Wilton:

We do not attempt at this time to delineate the outer

boundaries of [a district court’s] discretion in other

cases, for example, cases raising issues of federal law

or cases in which there are no parallel state proceed-

ings. Like the Court of Appeals, we conclude only

that the District Court acted within its bounds in

staying this action for declaratory relief where parallel

proceedings, presenting opportunity for ventilation

of the same state law issues, were underway in state

court.

Id. at *8 (emphasis added) .”

Nor is there any merit in Exxon’s assertion that “be-

cause 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

15 Exxon is wrong when it claims that under the Brillhart test

the District Court’s decision to abstain in this case was justified

by the “danger” of piecemeal litigation alone. (Pet. at p. 19). As

the Second Circuit properly concluded, because, as a practical

matter, the parties and the issues in the parallel proceedings are

the same, principles of res judicata render “inconsequential” the

risk of inconsistent judgments central to the piecemeal litigation

factor. (Pet. App. A at p. A-16). The Second Circuit rightly

determined that “the possible annoyance that piecemeal litigation

may cause here hardly offsets the commanding presence of a federal

question of first impression.” (/d.).

the plaintiff chooses to bring suit there.” (Pet. at p. 20).

Exxon has twisted the “saving to suitors” clause beyond

recognition,

The “saving to suitors” clause merely recognizes that

state courts have jurisdiction in maritime cases, concur-

rent with federal courts. See, e.g., Madruga v. Superior

Court, 346 U.S. 556, 561 (1954). The clause does not

begin to suggest—as Exxon would have this Court be-

lieve—that state court jurisdiction should be exclusive.

Simply because the clause allows state courts to have

concurrent jurisdiction over maritime disputes does not

mean that it is therefore proper to dismiss a federal de-

claratory judgment action over which there is admiralty

jurisdiction in favor of a state court proceeding. See

Waring v. Clarke, 46 U.S. (5 How.) 441 (1847). That

is especially so here, given the dominant role federal ad-

miralty law has in this dispute."®

Because federal law governs this case, the Second Cir-

cuit’s reversal was entirely proper under any standard.

Certiorari is inappropriate on this issue as well.

16 Exxon has cited no authority for its erroneous contention

that state court jurisdiction should be exclusive. Rather, Exxon’s

cases simply discuss the fact that, pursuant to the “saving to

suitors” clause, state courts have the “competency” to apply federal

maritime law. (Pet. at pp. 20-21). Those cases have no significance

here, since the issue before the Second Circuit was not whether the

state court was capable of maintaining jurisdiction, but instead

whether Underwriters’ federal suit was properly dismissed.

CONCLUSION

Exxon’s petition for a writ of certiorari should be

denied.

Of Counsel

HAROLD R. TYLER, JR.

WILLIAM F.. CAVANAUGH, JR.

Lisa C, COHEN

PATTERSON, BELKNAP, WEBB

& TYLER

1133 Avenue of the Americas

New York, NY 10036-6710

(212) 336-2000

Dated: June 14, 1995

Respectfully submitted,

MICHAEL B. MCCAULEY

Counsel of Record

RICHARD W. PALMER

FRANK P. DEGIULIO

H. COLEMAN SWITKAY

PALMER BIEZUP & HENDERSON

956 Public Ledger Building

Independence Square

Sixth and Chestnut Streets

Philadelphia, PA 19106-3409

(215) 625-9900

Attorneys for Respondents

APPENDIX

The following list identifies all parent companies and

non-wholly owned subsidiaries of Respondents:

ABU DHABI NATIONAL INSURANCE COMPANY

Parent: N/A

Non-wholly owned subsidiaries: N/A

ALLIANZ INTERNATIONAL INSURANCE

COMPANY LIMITED

Parent: N/A

Non-wholly owned subsidiaries: N/A

AMERICAN HOME ASSURANCE COMPANY

Parent: American International Group, Inc.

Non-wholly owned subsidiaries: N/A

ARENDAL FORSIKINGSSASKAB A/S

Parent: N/A

Non-wholly owned subsidiaries: N/A

ARIG-ARAB INSURANCE GROUP (BSC)

Parent: N/A

Non-wholly owned subsidiaries: N/A

ASSICURARIONI GENERALI S.P.A.

Parent: N/A

Non-wholly owned subsidiaries: N/A

ATLANTIC MUTUAL INSURANCE COMPANY

Parent: Atlantic Mutuai Companies

Non-wholly owned subsidiaries: N/A

ATLAS ASSURANCE COMPANY LTD

Parent: Guardian Royal Exchange PLC

Non-wholly owned subsidiaries: N/A

BALTICA FORSIKRING

Parent: N/A

Non-wholly owned subsidiaries: N/A

BISHOPSGATE INSURANCE LIMITED

Parent (Jointly owned by): AMEV/VSB 1990 NV;

NV AMEV; GROUP AC

Non-wholly owned subsidiaries: N/A

CAISSE INDUSTRIELLE D’ASSURANCE

MUTUELLE LANGUEDOC

Parent: N/A

Non-wholly owned subsidiaries: N/A

CHANDOS INSURANCE COMPANY LIMITED

Parent: BASS PLC

Non-wholly owned subsidiaries: N/A

CIGNA INSURANCE COMPANY OF EUROPE

S.A.-—N.V.

Parent: CIGNA Corporation

Non-wholly owned subsidiaries: N/A

CHRISTIANA GENERAL INSURANCE

CORPORATION OF NEW YORK

Parent: Uni Storebrand A/S

Non-wholly owned subsidiaries: N/A

COLONIA INSURANCE COMPANY (UK) LIMITED

Parent: Colonia Versicherung Atiengesellschaft

Non-wholly owned subsidiaries: N/A

COLONIA INSURANCE COMPANY

Parent: Union des Assurances de Paris (UAP)

Non-wholly owned subsidiaries: N/A

COMMERCIAL UNION ASSURANCE COMPANY

PLC

Parent: Commercial Union PLC

Non-wholly owned subsidiaries: N/A

COMPAGNIE de REASSURANCE de L’ILE de

FRANCE

Parent: N/A

Non-wholly owned subsidiaries: N/A

CONTINENTAL INSURANCE COMPANY

Parent: The Continental Corporation

Non-wholly owned subsidiaries: N/A

CORNHILL INSURANCE PLC

Parent: N/A

Non-wholly owned subsidiaries: N/A

DAI-TOKYO INSURANCE COMPANY (UK)

LIMITED

Parent: The Dai-Tokyo Fire and Marine Insurance

Company, Limited

Non-wholly owned subsidiaries: N/A

DOMINION INSURANCE COMPANY LIMITED

Parent: La Fondiaria Assicurazioni, S.P.A.

Non-wholly owned subsidiaries: N/A

EAGLE STAR FRANCE

Parent: N/A

Non-wholly owned subsidiaries: N/A

ENGLSH & SCOTTISH MARITIME & GENERAL

INSURANCE COMPANY LIMITED

Parent: FINAXA

Non-wholly owned subsidiaries: N/A

EXCESS INSURANCE COMPANY LIMITED

Parent: ITT Corporation

Non-wholly owned subsidiaries: N/A

FIDELITY & CASUALTY COMPANY OF NY

Parent: The Continental Corp.

Non-wholly owned subsidiaries: N/A

FIREMAN’S FUND INSURANCE COMPANY

Parent: Allianz Versicherungs-AG

Non-wholly owned subsidiaries: Fireman’s Fund in-

surance Co. of lowa; Fireman’s Fund Insurance Co.

of Wisconsin; Fireman's Fund Insurance Co. of New

Jersey; San Francisco Insurance Co. (U.K.) Ltd.

FIREMAN’S FUND INSURANCE COMPANY OF

NEWARK

Parent: The Continental Corporation

Non-wholly owned subsidiaries: N/A

FOLKSAM INTERNATIONAL INSURANCE

COMPANY (UK) LIMITED

Parent: Folksam General Mutual Insurance Society

of Sweden

Non-wholly owned subsidiaries: N/A

FUJI FIRE & MARINE INSURANCE COMPANY

(UK) LIMITED

Parent: The Fuji & Marine Insurance Company

Limited

Non-wholly owned subsidiaries: N/A

GJENSIDIGE NORSK SKADEFORSIKRING

Parent: N/A

Non-wholly owned subsidiaries: Nimbus A/S; Sam-

invest A/S; Nordic Mutual AB

HAFNIA FORSIKRING (NOW KNOWN AS CODAN

INSURANCE LIMITED)

Parent: N/A

Non-wholly owned subsidiaries: N/A

HANSA MARINE INSURANCE COMPANY

Parent: Trygg Hansa SPP Group

Non-wholly owned subsidiaries: N/A

HANSA MARINE INSURANCE COMPANY (UK)

LIMITED (NOW KNOWN AS HANSA RE &

MARINE INSURANCE COMPANY (UK)

LIMITED)

Parent: Trygg-Hansa SPP Holding AB

Non-wholly owned subsidiaries: N/A

INDEMNITY MARINE ASSURANCE COMPANY

LIMITED

Parent: Commercial Union PLC

Non-wholly owned subsidiaries: N/A

INDUSTRIAL MUTUAL INSURANCE COMPANY

(NOW KNOWN AS PATRIA REINSURANCE

COMPANY LIMITED)

Parent: N/A

Non-wholly owned subsidiaries: Insurance Co. of

Finland Ltd.; Oy Haveri Ab; Patria Insurance Co.

Ltd.; Finnish Marine Insurance Co. Ltd.; Finnish

Holdings, Ltd.; Otso Loss of Profits Insurance Co.,

—

Ltd.; Finnish Industrial Security Co.; Nordimex

SA; Nordic Union Reinsurance Corp.; Nova Life

Insurance Co.; Western Reinsurance Co.; United

Reinsurance Co. of Ireland; Arabian Scandinavian

Insurance Co., Ltd; La Licorne Cie de Reassurances;

Finnisurance (Services) Ltd.

INSURANCE COMPANY OF NORTH AMERICA

Parent: CIGNA Corporation

Non-wholly owned subsidiaries: N/A

INSURANCE COMPANY OF NORTH AMERICA

(UK) LIMITED

Parent: CIGNA Corporation

Non-wholly owned subsidiaries: N/A

INTERNATIONAL INSURANCE COMPANY OF

HANNOVER LIMITED

Parent: HDI Haftpfhchtverband der Deutchen

Industre VaG

Non-wholly owned subsidiaries: N/A

LA CONCORDE COMPAGNIE D’ASSURANCES

CONTRE LES RISQUES DE TOURS NATURE

Parent: GENERALI

Non-wholly owned subsidiaries: N/A

LA REUNION FRANCAISE

Parent: N/A

Non-wholly owned subsidiaries: Societe Parisienne

de Souscription; Robert Malatier Limited

LA REUNION FRANCAISE SOC. ANON.

D’ASSURANCES ET DES REASSURANCES

Parent (The following have at least 1/10 share of

Capital) :

L’Union Des Assurances De Paris-I.A.R.D.; L’Union

Des Assurances De Paris-VIE, La France-I.A.R.D.;

La Concorde; Hannover Ruckversicherungs Aktien-

geseuschaft; Abeille Assurances; Groupe Sun Alli-

ance et London Assurance

Non-wholly owned subsidiaries: La Reunion Euro-

peenne; La Reunion Aerienne; La Reunion Spatiale;

La Societe Parisienne De Souscription

LEADENHALL INSURANCE LTD

Parent: (Jointly owned by): AMVES/VSB 1990

NV; NV AMEV; GROUP AG

Non-wholly owned subsidiaries: N/A

LEGAL & GENERAL ASSURANCE SOCIETY

LIMITED (NOW KNOWN AS LEGAL & GENERAL

INSURANCE LIMITED)

Parent: Legal & General Group PLC

Non-wholly owned subsidiaries: N/A

LOMBARD CONTINENTAL INSURANCE PLC

(NOW KNOWN AS CONTINENTAL

MANAGEMENT SERVICES LIMITED)

Parent: The Continental Corporation

Non-wholly owned subsidiaries: N/A

THE LONDON ASSURANCE

Parent: Sun Alliance Group PLC

Non-wholly owned subsidiaries: N/A

LONDON & HULL MARITIME INSURANCE

COMPANY LIMITED (NOW KNOWN AS AXA

MARINE & AVIATION INSURANCE (UK)

LIMITED)

Parent: N/A

Non-wholly owned subsidiaries: N/A

THE MARINE INSURANCE COMPANY LIMITED

Parent: Royal Insurance Holdings PLC

Non-wholly owned subsidiaries: N/A

MINSTER INSURANCE COMPANY LIMITED

(NOW KNOWN AS GAN MINSTER INSURANCE

COMPANY LIMITED)

Parents GAN Group

Non-wholly owned subsidiaries: N/A

NATIONAL EMPLOYERS MUTUAL

Parent: N/A

Non-wholly owned subsidiaries: NEM _ Business

Services Ltd.; VJ Wright ‘Underwriting’ Ltd.; Com-

pensation Business Services Pty. Ltd.; NEM Rein-

surance Corp. (USA); NEM Insurance Co. Ltd.

(Zimbabwe) (Pte); National Employers’ General

Insurance Co. Ltd. (South Africa); NEM (Jamaica)

Ltd.; NEM (Bermuda) Ltd.; NEM Insurance Co.

(Nigeria); NEM (West Indies) Insurance Limited;

National Underwriters Ltd.; NEM Insurance Ltd.;

NEM Assurance des Regions Francaises SA; NEM

Insurance (Malaysia) Sdn Bhd

NATIONAL UNION FIRE INSURANCE COMPANY

Parent: American International Group, Inc.

Non-wholly owned subsidiaries: N/A

NAVIGATORS INSURANCE COMPANY

Parent: The Navigators Group, Inc.

Non-wholly owned subsidiaries: N/A

NEW HAMPSHIRE INSURANCE COMPANY

Parent: N/A

Non-whoily owned subsidiaries: N/A

NEW HAMPSHIRE INSURANCE COMPANY

Parent: American International Group, Inc.

Non-wholly owned subsidiaries: N/A

NEW YORK MARINE AND GENERAL INSURANCE

COMPANY

Parent: NYMAGIC

Non-wholly owned subsidiaries: N/A

NIPPON FIRE & MARINE INSURANCE COMPANY

LIMITED

Parent: Nippon Fire & Marine Insurance Company

Ltd. of Tokyo

Non-wholly owned subsidiaries: N/A

NORGES BRANNKASSE MUTUAL INSURANCE

COMPANY (UNI) (NOW KNOWN AS

UNI-STORE-BRAND)

Parent: UNI Storebrand A/S

Non-wholly owned subsidiaries: N/A

NORSKE TRITON INSURANCE COMPANY

LIMITED (NOW KNOWN AS STAR INSURANCE

LIMITED)

Parent: N/A

Non-wholly owned subsidiaries: N/A

NORTHERN ASSURANCE COMPANY NO. 6

Parent: Commercial Union PLC

Non-wholly owned subsidiaries: N/A

NORWICH UNION FIRE INSURANCE SOCIETY

LIMITED

Parent: N/A

Non-wholly owned subsidiaries: Canada Security

Assurance Co.; Ilios Greek Insurance Co. Ltd.;

Heritage Insurance Company of Zimbabwe Limited

10a

OCEAN MARINE INSURANCE

Parent: Commercial Union PLC

Non-wholly owned subsidiaries: N/A

OMNIUM INSURANCE & REINSURANCE

COMPANY LIMITED

Parent: N/A

Non-wholly owned subsidiaries: N/A

ORION INSURANCE COMPANY P.L.C.

Parent: N/A

Non-wholly owned subsidiaries: Orion Insurance

(General) PLC.; Orion Insurance Management

Comany Limited

PEARL ASSURANCE PUBLIC LIMITED COMPANY

Parent: Pearl Group PLC

Non-wholly owned _ subsidiaries: Companhia de

Segurda Monarca

PENNSYLVANIA LUMBERMEN’S MUTUAL

INSURANCE COMPANY

Parent: N/A

Non-wholly owned subsidiaries: N/A

PHOENIX ASSURANCE PUBLIC LIMiTED

COMPANY

Parent: Sun Alliance Life Limited

Non-wholly owned _ subsidiaries: Compania de

Sequros La Fenix Peruana

POLARIS ASSURANCE A/S

(NOW KNOWN AS UNI STOREBRAND

INSURANCE COMPANY (UK) LIMITED)

Parent: Uni Storebrand International Insurance

A/S

Non-wholly owned subsidiaries: N/A

lla

POOL TRANSPORT EAGLE STAR

L’INDEPENDENCE POOL

Parent: N/A

Non-wholly owned subsidiaries: N/A

PRESERVATRICE FONCIERE T.1.A.R.D.

COMPAGNIE D’ASSURANCES

Company dissolved in 1988.

PROGRESSIVE CASUALTY INSURANCE COMPANY

Parent: The Progressive Corporation

Non-wholly owned subsidiaries: N/A

THE PRUDENTIAL ASSURANCE COMPANY

LIMITED

Parent: N/A

Non-wholly owned subsidiaries: Edger Investments

Ltd.; Prudential Annuities Ltd.; Prudential Leven

NV; Prudential Life of Ireland Limited; Prudential

Pensions Ltd.; Prudential Vita SPA; The Prudential

Assurance Company of Singapore (Private) Ltd.;

The Prudential Life Assurance Company of England

(Canada); The Standard Trust Ltd.; The Prudential

Assurance Company of Kenya Ltd.; St. Helen’s

Trust Ltd.

QATAR INSURANCE AND REINSURANCE

COMPANY

Parent: N/A

Non-wholly owned subsidiaries: N/A

THE REINSURANCE CORPORATION OF

NEW YORK

Parent: Piedmont Management Co., Inc.

Non-wholly owned subsidiaries: N/A

12a

REPUBLIC INSURANCE COMPANY

Parent: Winterthur Schweizerische Versicherungs

Gesellschaft

Non-wholly owned subsidiaries: N/A

RIUNIONE ADRIATICA di SICURTA

Parent: Allianz Holding A.G.

Non-wholly owned subsidiaries: N/A

SAMVIRKE SKADEFORSIKRING A/S

Parent: Samvirke Group Ltd.

Non-wholly owned subsidiaries: _Folksamerica;

Folksam UK; ALKA

SCOR (U.K.) REINSURANCE COMPANY LIMITED

(NOW KNOWN AS SCOR UK COMPANY

LIMITED)

Parent: SCORS.A.

Non-wholly owned subsidiaries: Finimo UK Ltd.

THE SCOTTISH LION INSURANCE COMPANY

LIMITED

Parent: China Merchants Holdings (UK) Ltd.

Non-wholly owned subsidiaries: N/A

SIRIUS INSURANCE COMPANY LIMITED

(NOW KNOWN AS LF INSURANCE COMPANY,

LIMITED-INDUSTRIAL AND MARINE)

Parent: N/A

Non-wholly owned subsidiaries: N/A

SIRIUS INSURANCE COMPANY (UK) LIMITED

Parent: ABB Asea Brown Boveri Ltd.

Non-wholly owned subsidiaries: N/A

l3a

SKANDIA INTERNATIONAL INSURANCE

CORPORATION

Parent: Skandia Insurance Company Ltd.

Non-wholly owned subsidiaries: N/A

SKANDIA U.K. INSURANCE P.L.C.

Parent: Skandia Insurance Company Ltd.

Non-wholly owned subsidiaries: N/A

SOCIETE COMMERCIALE de REASSURANCE

Parent: N/A

Non-wholly owned subsidiaries: SCOR Paris; SCOR

U.S. Corp.; Ecusor; Multiscor; SCOR Reinsurance

(ASIA) Co. Ltd.; SCOR Reinsurance Australia;

SCOR Reinsurance Co. of Canada; SCORLUX

SOVEREIGN MARINE AND GENERAL

INSURANCE COMPANY LIMITED

Parent: Willie Corroon Group PLC.

Non-wholly owned subsidiaries: N/A

SPHERE DRAKE INSURANCE PLC

Parent: Sphere Drake

Non-wholly owned subsidiaries: N/A

STOREBRAND INSURANCE COMPANY (UK)

LIMITED

Parent: UNI Storebrand International Insurance

A/S

Non-wholly owned subsidiaries: N/A

STOREBRAND REINSURANCE COMPANY

LIMITED

Parent: UNI Storebrand International Insurance

A/S

Non-wholly owned subsidiaries: N/A

l4a

SUMITOMO MARINE & FIRE INSURANCE

COMPANY (EUROPE) LIMITED

Parent: The Sumitomo Marine & Fire Insurance

Company Ltd.

Non-wholly owned _ subsidiaries: SPAC Manage-

ment (Luxembourg) SA

SWITZERLAND INSURANCE COMPANY (UK)

LIMITED (NOW KNOWN AS _ SR_INTERNA-

TIONAL BUSINESS INSURANCE COMPANY

LIMITED)

Parent: Swiss Reinsurance Company

Non-wholly owned subsidiaries: N/A

TAISHO MARINE & FIRE INSURANCE COMPANY

(UK) LIMITED

Parent: Mitsu Marine & Fire Insurance Co. Ltd.

Non-wholly owned subsidiaries: N/A

TERRA NOVA INSURANCE COMPANY LIMITED

Parents: Aetna Life & Casualty Company; CIGNA

Corporation; Marsh & McLennen Companies

(Through Guy Carpenter & Co., through C.T. Bow-

ring & Co.); Trycourt Financial Holdings

Non-wholly owned subsidiaries: lan Morton Under-

writing Agency Limited

THE THREADNEEDLE INSURANCE COMPANY

LIMITED

Parent: Eagle Star Reinsurance Company Limited

Non-wholly owned subsidiaries: N/A

THE TOKIO MARINE & FIRE INSURANCE

COMPANY LIMITED

Parent: JA

15a

Non-wholly owned subsidiaries: TM Claims Ser-

vice Inc.; Tokio Marine Management Inc.; Tokio Re

Corporation; The Tokio; Trans Pacific Insurance

Company; Tokio Marine Realty Co. Ltd.; Tokio

Marine Asset Management; America Latina Com-

panhia de Seguros; La Rural del Paraguay SA;

Tokio Marine Internacional Sociedad; Tokio Marine

de Venezuela, C.A.; Tokio Marine Europe Limited;

The Tokio Marine Capital Research Ltd.; Tokio

Marine Property Limited; TM Management Ser-

vices; The Tokio Marine & Fire Insurance Com-

pany (UK) Limited; Tokio Reinsurance Company

Ltd.; The Tokio Marine Management (Australia)

Pty., Ltd.; Pan-Malayan Insurance Corporation; The

Sri Muang Insurance Co. Ltd.; Tokio Marine South-

East Servicing Company Ltd.; Berjaya General In-

surance Sdn Bhd.; The Tokio Marine & Fire Insur-

ance Company (Singapore) PLC.; Tokio Manage-

ment Services (Asia) PLC. Ltd.; P.T. Asuransi Tokio

Marine; Tokio Marine International Fund (Bahama)

Company Limited; The Arab-Eastern Insurance

Company Limited, E.C.; The Wuphoon Insurance

Company Ltd.

THE TOKIO MARINE & FIRE INSURANCE

COMPANY (UK) LIMITED

Parent: The Tokio Marine & Fire Insurance Com-

pany Ltd.

Non-wholly owned subsidiaries: N/A

TUREGUM INSURANCE COMPANY

Parent: Zurich Versicherungs—GES

Non-wholly owned subsidiaries: N/A

UNITED FIRE & CASUALTY COMPANY

Parent: N/A

Non-wholly owned subsidiaries: N/A

l6a

UNITED REINSURANCE CORPORATION OF

NEW YORK (NOW KNOWN AS RECOR INSUR-

ANCE COMPANY INC.)

Parent: N/A

Non-wholly owned subsidiaries: N/A

VESTA (UK) INSURANCE COMPANY LIMITED

Parent: Forsikringsaktiebolaget Skandia

Non-wholly owned subsidiaries: N/A

WAUSAU INSURANCE COMPANY (UK) LIMITED

Parent: Employers Insurance of Wausau

Non-wholly owned subsidiaries: N/A

THE WORCESTER INSURANCE COMPANY

Parent: Harleysville Group, Inc.

Non-wholly owned subsidiaries: N/A

THE YASUDA FIRE & MARINE INSURANCE

COMPANY LIMITED

Parent: N/A

Non-wholly owned subsidiaries: Yasuda Fire &

Marine Insurance Co. of America

THE YASUDA FIRE & MARINE INSURANCE

COMPANY OF EUROPE LIMITED

Parent: The Yasuda Fire & Marine Insurance

Company Ltd.

Non-wholly owned subsidiaries: Marnix Central

Insurance Services, Ltd.

THE YORKSHIRE INSURANCE COMPANY

LIMITED

Parent: General Accident PLC

Non-wholly owned subsidiaries: N/A

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.