Avondale Industries, Inc. v. Travelers Indemnity Co.

123 F.R.D. 80, 1988 U.S. Dist. LEXIS 13716, 1988 WL 131138
District Court, S.D. New York·Decided December 6, 1988·No. No. 86 Civ. 9626 (KC)·Published·Cited by 13 cases

Opinion

MEMORANDUM OPINION AND JUDGMENT

CONBOY, District Judge:

Plaintiff Avondale Industries, Inc. (“Avondale”) and Ogden Corporation (“Ogden”) have moved for entry of final judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure on this Court’s Memorandum Opinion and Order, dated October 19, 1988. 697 F.Supp. 1314. This Court concluded that defendant Travelers Indemnity Company (“Travelers”) is obligated to defend the Plaintiffs in both the private actions filed and the administrative process initiated by the Louisiana Department of Environmental Quality (“DEQ”) and granted partial summary judgment in favor of the Plaintiffs.

DISCUSSION

Rule 54(b) of the Federal Rules of Civil Procedure provides as follows:

“When more than one claim for relief is presented in action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.”

The rule is designed to allow the district court to depart from the usual principle that a final judgment is not entered prior to the complete adjudication of all the claims of all the parties so that the Court can provide relief where it is needed to avoid undue hardship to the parties. Cullen v. [82]*82Margiotta, 811 F.2d 698, 711 (2d Cir.1987), cert. denied, 481 U.S.-, 107 S.Ct. 3266, 97 L.Ed.2d 764 (1987). Accordingly, the court may direct entry of a partial final judgment either (1) disposing of claims of or against fewer than all of the parties or (2) disposing of fewer than all of the claims. The Court, however, must remain cognizant of the goals of judicial economy and the policy against “piecemeal appeals.” See United States v. McDonald, 435 U.S. 850, 852, 98 S.Ct. 1547, 1548, 56 L.Ed.2d 18 (1977); Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 438, 76 S.Ct. 895, 901, 100 L.Ed. 1297 (1956).

When multiple claims are involved, a court should not enter final judgment dismissing a given claim unless that claim is “separable from the claims that survive.” Cullen, 811 F.2d at 711. Claims are customarily regarded as “separable” if they embrace “at least some different questions of fact and law and could be separately enforced or if ‘different sorts of relief are sought.” Id. (citations omitted); see 10 Wright, Miller, & Kane, Federal Practice & Procedure, section 2657, at 67 (1983) (claims are separable when there is more than one possible recovery and the recoveries are not mutually exclusive). Claims may be considered “separable” when these attributes exist, even if they have arisen out of the same transaction or occurrence. Id. (emphasis added); see Cold Metal Process Co. v. United Engineering & Foundry Co., 351 U.S. 445, 452, 76 S.Ct. 904, 908-09, 100 L.Ed. 1311 (1956); Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 436-37 & n. 9, 76 S.Ct. 895, 900 & n. 9, 100 L.Ed. 1297 (1956).

In the instant multi-claim case, the question is whether the duty to defend is separable from the duty to indemnify. Under New York law, “it is crystal clear that [Travelers’] duty to defend is separate and distinct from [its] duty to indemnify.” National Grange Mut. Ins. Co. v. Continental Cas. Ins. Co., 650 F.Supp. 1404, 1407 (S.D.N.Y.1986) (emphasis added); Servidone Constr. Co. v. Security Ins. Co. of Hartford, 64 N.Y.2d 419, 423-24, 477 N.E.2d 441, 444-45, 488 N.Y.S.2d 139, 142 (1985); see Seaboard Surety Co. v. Gillette Co., 64 N.Y.2d 304, 310, 476 N.E.2d 272, 274, 486 N.Y.S.2d 873, 875-76 (1984); Int'l Paper Co. v. Continental Cas. Co., 35 N.Y.2d 322, 326, 320 N.E.2d 619, 621, 361 N.Y.S.2d 873, 876 (1974). The duty to defend is “heavier and broader” than the duty to indemnify. See Servidone, 64 N.Y.2d at 423-24, 477 N.E.2d at 444-45, 488 N.Y.S.2d at 142. The obligation to defend has been termed “litigation insurance” as an insurer is required to provide a defense to any action within the policy coverage, however groundless, in which the insured may possibly be held liable for damages. See National Grange, 650 F.Supp. at 1407-08. Furthermore, “the duty to defend is not contingent on the insurer’s ultimate duty to indemnify should the insured be found liable, nor is it material that the complaint against the insured asserts additional claims which fall outside the policy’s general coverage or within its exclusory provisions.” See Seaboard Surety, 64 N.Y.2d at 310, 476 N.E.2d at 274, 486 N.Y.S.2d at 875-76. Therefore, it follows that the first part of the Rule 54(b) analysis is satisfied as it is undeniably clear that Travelers' duty to defend is distinct from its duty to indemnify even though the two obligations arise out of the same transaction or occurrence. Consequently, the fact that the indemnity issue has not yet been settled is not dispositive as Travelers suggests.

The second part of the rule permits this Court to direct that partial final judgment be entered if it concludes that “there is no just reason for delay.” Fed.R.Civ.P. 54(b). This determination is committed to the sound discretion of the district court. Cullen, 811 F.2d at 711. Travelers, in opposing the entry of partial final judgment, states that this Court should postpone such entry as Technicon Electric Corp. v. The American Home Assurance Co., 141 A.D.2d 124, 533 N.Y.S.2d 91 (1988), which this Court distinguished in its October 19, 1988 Order, is “awaiting appeal to the New York Court of Appeals.” (Travelers Memorandum of Law at 7). Travelers also argues that a final judgment enforcing its duty to defend will somehow prejudice its rights [83]*83against the third-party defendants. (Id. at 6). Finally, Travelers contends that Avon-dale will not suffer prejudice if the Court does not certify the Order.

First, Travelers does not in any way demonstrate that Technicon is indeed “awaiting appeal.” In addition, this Court does not see any reason why Avondale should have to wait until some indefinite future date to receive the defense to which it is entitled. The private actions and the administrative process initiated by the Louisiana DEQ against Plaintiffs require immediate attention. Plaintiffs should not have to bear either the sizable expense or the burden of decision-making as it pertains to defense strategy alone.

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Avondale Industries, Inc. v. Travelers Indemnity Co., 123 F.R.D. 80, 1988 U.S. Dist. LEXIS 13716, 1988 WL 131138 (S.D.N.Y. 1988).

123 F.R.D. 80 (Avondale Industries, Inc. v. Travelers Indemnity Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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