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New York Courts Generally Won’t Relinquish Jurisdiction Over Declaratory Judgment Action to Another State
July 5, 2024
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In St. Paul Fire & Marine Ins. Co. v. Getty Properties Corp., No. 2019–07575, 2024 WL 3168227, at *2 (N.Y. App. Div. June 26, 2024), the Appellate Division for the Second Department reiterated the general rule that New York’s courts should not relinquish jurisdiction over a declaratory judgment action to the courts of another state.
The plaintiff insurers issued liability insurance policies to a producer of gasoline and fuel additives, and the policies at issue were in effect during the period that the New Jersey Department of Environmental Protection (“NJDEP”) alleged that the gasoline producer caused or permitted water pollution with the fuel additive methyl tertiary butyl ether (“MTBE”) in New Jersey, Pennsylvania, and Maryland.
The NJDEP sued the gasoline producer in New Jersey state court, and the case was subsequently removed to New Jersey federal court and then transferred to New York federal court. A second action was commenced against the gasoline producer in Pennsylvania state court, removed to Pennsylvania federal court, and transferred to New York federal court. A third action was commenced in Maryland state court.
The gasoline producer made claims for coverage in connection with the legal proceedings in each state. The insurance carrier issued a partial denial and then commenced a declaratory judgment action in New York seeking an order that it owed no coverage for any of the three underlying lawsuits. The insured thereafter commenced a declaratory judgment action in New Jersey seeking an order that coverage was owed for the New Jersey underlying lawsuit.
The Supreme Court of New York ruled that the insurer’s declaratory judgment action (in New York) took priority over the insured’s declaratory judgment action (in New Jersey) because it commenced earlier.
The Second Department affirmed. It cited the foundational principal that, generally, “the court which has first taken jurisdiction is the one in which the matter should be determined and it is a violation of the rules of comity to interfere.” The appellate court noted that exceptions to this general rule exist where the circumstances involve vexation, oppression, unjustness, or inequity. The court held that none of these factors were present, and therefore the New York courts should not relinquish their jurisdiction over the coverage dispute.
