Thursday, September 8, 2011

R.R. Street & Co., Inc. v. Transport Insurance Co.

Sep 2: In the U.S. Court of Appeals, Ninth Circuit, Case No. 10-55361 and 10-55404. Appealed from the United States District Court for the Central District of California. The Appeals Court indicates that the dispute emerges from a web of state and Federal litigation over liability for damages and defense costs in certain environmental tort suits.
    The Appeals Court said, "The appeal before us concerns two cases that mirror each other: (1) an action for damages that the Appellants brought in federal court and (2) a declaratory judgment action that the Appellee brought in state court, which Appellants later removed to federal court. The district court declined to entertain these actions, by dismissing the former and remanding the latter, in light of a related third action that had been pending for several years in state court.
    "We must examine the propriety of this decision. Considering the particular circumstances of this case, we conclude that the district court had discretion under Wilton v. Seven Falls Co., 515 U.S. 277, 289-90 (1995), and Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (1942), to remand the declaratory judgment action, and that the action for damages fell within the scope of Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). We therefore affirm."
    The case involves Vulcan Materials Company (Vulcan) which manufactures a drycleaning solvent called perchloroethylene (PerSec). Between the 1960s and the 1990s, R.R. Street & Co. Inc. (Street) distributed PerSec. During this time, Vulcan named Street as an additional insured under its insurance policies, including an excess liability coverage policy that Transport Insurance Company (Transport) issued to Vulcan in 1981 (the 1981 Policy). Since the 1990s, a number of lawsuits have been filed against Vulcan and Street alleging damage caused by the sale, distribution, use or handling of PerSec (collectively the Tort Actions). Street and Vulcan separately defended these actions. Since 2005, the companies and their insurers have engaged in an ongoing dispute over liability for damages and defense costs in the Tort Actions.
    The Appeals Court concludes, "We do not take lightly the district court's decision not to entertain an action for damages. In this case, however, the district court did not abuse its discretion by deciding that the parties' claims should be resolved in the more comprehensive Vulcan Action. The district court had discretion under Wilton/Brillhart to remand the Removed Action, and the court's concerns about piecemeal litigation and interfering with the progress made in the Vulcan Action sufficiently supported dismissal under Colorado River."
    Access the complete opinion (click here). [#CA9]

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