Mt. McKinley Insurance v. Corning Inc.

33 A.D.3d 51, 818 N.Y.S.2d 73
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJune 29, 2006
StatusPublished
Cited by5 cases

This text of 33 A.D.3d 51 (Mt. McKinley Insurance v. Corning Inc.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mt. McKinley Insurance v. Corning Inc., 33 A.D.3d 51, 818 N.Y.S.2d 73 (N.Y. Ct. App. 2006).

Opinion

OPINION OF THE COURT

Sullivan, J.

This is a declaratory judgment action, which arises in the context of mass asbestos liability exposure on the part of Corning Incorporated, brought by two of its insurers, Mt. McKinley [53]*53Insurance Company and Everest Reinsurance Company1 against Corning and other insurers that similarly issued commercial general liability (CGL) policies to Corning. Plaintiffs seek a declaration that the policies they issued do not cover, or at most, provide limited coverage with respect to, the asbestos-related bodily injury claims asserted against Corning. Defendant insurers, which have filed cross claims against Corning similar to those alleged in the complaint, appeal from Supreme Court’s grant of Coming’s motion, made in the alternative to a dismissal motion, for a stay of this action pending resolution of certain issues in related matters pending in federal court in Pennsylvania.

The asbestos claims against Corning generally fall into two categories: claims arising from exposure to products sold by a former Corning subsidiary, Corhart Refractories (Corhart claims), and claims arising from exposure to the product Unibestos (Unibestos claims), manufactured from approximately 1962 through 1972 by Coming’s affiliate, Pittsburgh Corning Corporation (PCC), owned equally by Corning and PPG Industries, Inc. Corning is a named defendant in thousands of claims of both types.

In 2000, PCC commenced a voluntary chapter 11 bankruptcy proceeding in the United States District Court for the Western District of Pennsylvania, and in May 2002 announced a reorganization plan that would create a trust funded with approximately $2.7 billion for the disposition of asbestos claims against PCC and PPG. The plan did not address Coming’s liabilities.

Thereafter, on July 3, 2002, plaintiffs commenced this action in Supreme Court, New York County, alleging that the CGL policies they issued to Corning from 1962 through 1985 do not cover or provide limited coverage for the Corhart and Unibestos claims, while defendant insurers’ CGL policies do provide such coverage. The latter have cross-claimed against Corning, alleging that their policies do not cover or provide limited coverage for the Corhart and Unibestos claims.

The 145 policies in issue, with aggregate limits of $1.7795 billion, fall into three categories. The first and smallest, providing coverage with an aggregate limit of $225 million and representing 12.6% of the insurance limits at issue, consists of 10 pre1974 excess policies, as to which both Corning and its affiliate, [54]*54PCC, seek coverage (the affiliate policies). The second category, consisting of 40 policies as to which only Corning claims coverage and as to which it seeks to assign its policy rights as part of the PCC plan (the assigned policies), provides an aggregate limit of $296 million and comprises approximately 16.6% of the insurance limits at issue. The third and largest category, consisting of the 95 remaining policies as to which only Corning claims coverage and which it does not seek to assign as part of the PCC plan (the nonaffiliate, nonassigned policies), provides coverage with an aggregate limit of $1.2585 billion and comprises approximately 70.7% of the insurance limits at issue. This category, the nonaffiliate, nonassigned policies, comprising the overwhelming majority of policies at issue, is not referred to in the PCC plan or affected by it.

Three weeks after the commencement of this action, on July 24, 2002, Corning removed it to the United States District Court for the Southern District of New York on the ground that it was related to the PCC bankruptcy. Corning thereafter moved to transfer the action to the bankruptcy court in the Western District of Pennsylvania, to be consolidated with a mirror image adversary proceeding that Corning commenced the day after it removed this action to the federal court. Defendant insurers opposed the transfer motion and moved for remand on several grounds, including lack of subject matter jurisdiction and mandatory abstention under 28 USC § 1334 (c) (2). The District Court in New York ruled that it had subject matter jurisdiction over only those claims arising under the 10 affiliate policies, which, as noted, comprise merely 12.6% of the total insurance limits at issue, finding that these claims were “core” to PCC’s reorganization in the Western District of Pennsylvania. Rejecting Coming’s argument that all of its policies were part of a unified coverage program that must be interpreted by one court, the New York District Court held that since PCC had no interest in the remaining 135 policies, the adjudication of rights under those policies by the New York Supreme Court would “not interfere in any way with the work of the [PCC] bankruptcy court” (2003 WL 1482786, *9, 2003 US Dist LEXIS 4295, *28). The New York District Court remanded all the claims in the remainder of the action, characterized as “the bulk of this litigation,” to Supreme Court (2003 WL 1482786, *8, 2003 US Dist LEXIS 4295, *25). Although finding federal jurisdiction as to the claims arising under the affiliate policies, the New York District Court stayed proceedings on these claims in light of [55]*55Coming’s assertion of duplicative claims in an adversary proceeding in PCC’s bankruptcy proceeding. Since the federal District Court in New York found that Coming’s claims on the affiliate policies triggered core, rather than non-core, bankruptcy jurisdiction, it concluded that mandatory abstention under 28 USC § 1334 (c) (2) did not apply to those policies.

Corning announced on March 28, 2003 that it had agreed to participate in the PCC plan, to which it would contribute cash, stock and an assignment of rights under the assigned policies, valued at no less than $300 million, in exchange for a complete release with respect to both the Corhart and Unibestos claims. Corning planned to recover the cost of its contribution to the plan from its insurers, including defendant insurers, by expressly reserving its right to do so. On April 10, 2003, Corning moved before the New York District Court to modify its earlier order to provide that the assigned policies, in addition to the affiliate policies, were subject to federal jurisdiction. The District Court denied the motion, holding that the proposal to assign these assigned policies did not bring them within federal bankruptcy jurisdiction, and reaffirming its remand to Supreme Court of all the claims relating to the policies except the affiliate policies.

In Coming’s adversary proceeding in the PCC bankruptcy against PCC and virtually all of the defendant insurers in this action, Corning sought a declaration of coverage under its CGL policies for asbestos claims, expressly alleging the existence of a justiciable controversy between it and all of its insurers with respect to coverage for the Corhart and Unibestos claims. Several insurers successfully moved in the Pennsylvania District Court to withdraw the reference of the adversary proceeding from the PCC bankruptcy court. On Coming’s motion to vacate the withdrawal of the reference, a hearing was held, at which the Pennsylvania District Court dismissed, without prejudice, Coming’s claims under the nonaffiliate, nonassigned policies on the basis of abstention and deference to the New York State court proceeding. The court stayed the remaining claims with respect to the affiliate and assigned policies. That stay is still in effect.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Matter of PPDAI Group Sec. Litig.
64 Misc. 3d 1208A (New York Supreme Court, 2019)
Dugan v. London Terrace Gardens, L.P.
45 Misc. 3d 362 (New York Supreme Court, 2013)
Puerto v. Doar
42 Misc. 3d 563 (New York Supreme Court, 2013)
American International Group, Inc. v. Greenberg
60 A.D.3d 483 (Appellate Division of the Supreme Court of New York, 2009)
Fewer v. GFI Group Inc.
59 A.D.3d 271 (Appellate Division of the Supreme Court of New York, 2009)

Cite This Page — Counsel Stack

Bluebook (online)
33 A.D.3d 51, 818 N.Y.S.2d 73, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mt-mckinley-insurance-v-corning-inc-nyappdiv-2006.