December 16, 2009
TIG INSURANCE COMPANY OF MICHIGAN AND THOSE CERTAIN UNDERWRITERS AT LLOYD'S, LONDON SUBSCRIBING TO POLICY NO. SIS 107, PLAINTIFFS-APPELLANTS,
HENRY J. WOJTUNIK, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1489-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 23, 2009
Before Judge C.L. Mininan and Waugh.
Plaintiffs TIG Insurance Company of Michigan (TIG) and those Certain Underwriters at Lloyd's, London Subscribing to Policy No. SIS 107 (Underwriters) appeal the dismissal of their declaratory judgment action against defendant Henry J. Wojtunik (Wojtunik). TIG and Underwriters sought a determination of their rights and obligations with respect to directors' and officers' liability policies (D&O policies) providing two successive excess layers of insurance coverage. Wojtunik had secured a stipulated judgment in the United States District Court for the District of Arizona against the insureds, who assigned him their claims against all D&O carriers for coverage under their policies. The motion judge dismissed this complaint without prejudice on grounds of comity and forum non conveniens. TIG and Underwriters challenge that dismissal as an abuse of discretion. We affirm.
Wojtunik, a New Jersey resident, was the founder, president, and sole shareholder of Anacom Systems, Inc. (Anacom), a fiber-optics company based in New Jersey. He sold Anacom to Arizona-based International FiberCom, Inc. (IFC), in February 2001 in exchange for shares of IFC stock then valued at $8 million. IFC promptly merged Anacom into Arizona-based International FiberCom-ANA, Inc. (FiberCom-ANA), a wholly owned subsidiary of IFC, which thereafter employed Wojtunik.
IFC carried successive layers of D&O policies. The underlying policy was issued by Carolina Casualty Company (Carolina) and provided $2.5 million of coverage over applicable retentions with a policy period of May 22, 2001, to May 22, 2002. TIG issued a first layer excess D&O policy to IFC for the same policy period providing $2.5 million of coverage over the Carolina policy. The Underwriters issued a second layer excess D&O policy to IFC for the same policy period with policy limits of $5 million excess to the Carolina and TIG policies. In many respects, the excess policies followed the form of the Carolina policy. The policies obligated Carolina and plaintiff to pay on behalf of an "Insured" any "Loss" arising out of any "Securities Claim" made during the "Policy Period" against an "Insured" for a "Wrongful Act." The term "Insured" included past, present, and future IFC directors, officers, and employees.*fn1
In the months following the Anacom/IFC merger, massive accounting fraud at IFC was revealed, which ultimately led to IFC filing for bankruptcy in February 2002. Wojtunik's stock in the company became worthless. On November 8, 2002, Wojtunik reacquired the assets of Anacom through New Jersey-based Fiber-Span, then recently founded by him. Then, on November 12, 2002, Wojtunik filed a securities-fraud claim in the United States District Court for the Eastern District of Pennsylvania against ten directors and officers of IFC to recover the lost stock value. He alleged that he relied on IFC's publicly filed financial statements during the Anacom/IFC merger negotiations and that the ten officers and directors of IFC violated generally accepted accounting principles in IFC's SEC filings, causing IFC's stock to trade at inflated prices, to his damage. Wojtunik also alleged fraud and misrepresentation by the ten IFC officers and directors during merger negotiations.
The matter was transferred to the District of Arizona where Anacom was based over defendant's objection that litigation there would be inconvenient for him and his witnesses from Pennsylvania, New Jersey, Florida, Georgia and Virginia. However, the federal judge concluded the action should be transferred to the District of Arizona pursuant to 28 U.S.C.A. § 1404 because, among other reasons, IFC was based in Arizona; the ten officers and directors were Arizona residents; the misrepresentations were made in Arizona; Arizona law governed the merger; and most key witnesses were in Arizona. Carolina denied coverage based on Wojtunik's alleged status as an officer of an IFC subsidiary, i.e., as President of FiberCom-ANA, citing the policy's exclusion of coverage for claims of an insured against another insured. TIG and Underwriters denied coverage in relevant part for the same reasons.
On November 12, 2004, the ten defendant IFC officers and directors instituted a declaratory judgment action against Carolina only in the Arizona Superior Court for Maricopa County. Carolina removed the action to the federal court in Arizona based on diversity of citizenship. While this action was pending, Wojtunik in March 2005 offered Carolina and TIG the opportunity to settle for their coverage limits in return for a promise not to pursue his claims against their insureds, and made a similar offer to Underwriters to settle for $3.5 million. All three insurers reiterated their denials of coverage despite Wojtunik's notice to them that he would attempt to negotiate an assignment of the coverage claims against them.
On September 26, 2005, the judge in the District of Arizona dismissed eight of the IFC officers and directors from Wojtunik's securities-fraud action with prejudice and dismissed the balance of his complaint without prejudice for failure to state a claim. Wojtunik v. Healy, 394 F. Supp. 2d 1149, 1173-74 (D. Ariz. 2005). Wojtunik then filed a second amended complaint against three of the IFC officers. The judge subsequently dismissed some of the claims in the second amended complaint on September 30, 2006, and the remaining claims were deemed actionable.
On December 4, 2006, the three remaining IFC officers and directors settled the securities claims and consented to entry of a stipulated judgment for $8 million plus interest and assignment of their claims against the insurers in exchange for a promise not to execute the judgment against them personally. The IFC officers and directors agreed to cooperate with defendant's efforts to collect the judgment from the insurers. A judgment to that effect was entered on December 18, 2006. The parties to this settlement allegedly did not obtain the consent of the insurers, as required by § VI.A. of the Carolina policy.
Prior to the settlement of the securities claims, Carolina and the IFC directors and officers filed cross-motions for summary judgment in the coverage action pending in federal court in Arizona. However, these motions were heard after the settlement of the securities litigation. On January 16, 2007, the federal judge handling the coverage action determined that Carolina could not decline coverage under the insured-versus-insured exclusion because, although defendant's employment agreement indicated that he would be hired as "president" of FiberCom-ANA, he was not a duly elected officer according to the bylaws of the corporation and never served in that capacity. The judge further concluded that the doctrines of estoppel and waiver precluded Carolina from denying coverage based on defendant's status as an employee, because its notice of denial of coverage did not mention that exclusion. Carolina appealed the summary judgment against it to the United States Court of Appeals for the Ninth Circuit.
While that appeal was pending, Wojtunik sought to collect the stipulated judgment entered in his favor. First, he filed a writ of garnishment against Carolina in the securities-fraud action. Second, he filed an action against Carolina in the District of Arizona on his assigned claims for breach of contract because Carolina failed to pay the judgment. Garnishment was denied on June 5, 2007, because the Ninth Circuit appeal was still pending. However, the judge responsible for the breach of contract action refused to dismiss or stay it. Carolina then agreed to pay its policy limits, resulting in the agreed dismissal of the contract action against Carolina on April 18, 2008. The policy limits were paid on May 7, 2008, permitting Wojtunik to proceed against TIG.
Shortly before Carolina settled with Wojtunik, TIG and Underwriters prepared the complaint in this action on March 19, 2008. Although they had long known of the actions pending in Arizona, they sought a declaration in New Jersey that Wojtunik was not entitled to coverage on the same bases that Carolina unsuccessfully asserted in the coverage litigation against it. On June 3, 2008, Wojtunik filed a writ of garnishment against TIG only in the Arizona securities-fraud action, seeking to litigate the same coverage issues asserted here. On June 24, 2008, Wojtunik moved to dismiss this action on grounds of comity and forum non conveniens. He also alleged the action was premature when filed because the Carolina policy had not yet been exhausted.
Before oral argument on Wojtunik's motion, TIG moved to quash or stay the writ of garnishment in the Arizona securities-fraud action to permit this declaratory judgment action to proceed. TIG also argued that the District of Arizona should abstain under the Colorado River doctrine,*fn2 because joinder of the Underwriters would destroy diversity jurisdiction.*fn3
While TIG's motion in the securities-fraud action was pending, the judge in this action granted Wojtunik's motion to dismiss. In the oral decision he placed on the record, the judge found that the federal court in the securities-fraud action had ancillary jurisdiction to enforce its judgments without regard to diversity jurisdiction pursuant to Peacock v. Thomas, 516 U.S. 349, 356, 116 S.Ct. 862, 867, 133 L.Ed. 2d 817, 826 (1996). He found that the securities-fraud action was first filed, which ordinarily requires a stay or dismissal under Sensient Colors, Inc. v. Allstate Ins. Co., 193 N.J. 373, 386 (2008), where the parties, claims, and legal issues are substantially the same. He further found that garnishees in Arizona may raise substantially the same claims and issues as those raised in this action, citing Able Distrib. Co. v. Lampe, 773 P.2d 504, 508 (Ariz. Ct. App. 1989). He concluded that it was appropriate to dismiss because the courts in Arizona had considered many of the issues raised here and that all such issues should be decided there. This appeal followed.
TIG and Underwriters argue that the judge erred in dismissing their complaint because this action was filed two months before the Arizona garnishment proceeding; the Underwriters are not a party to the garnishment proceeding; the Arizona federal court has no subject matter jurisdiction over Underwriters; and the instant action has a substantial nexus with New Jersey where Wojtunik lives and works.
Wojtunik responds that dismissal under the doctrines of comity and forum non conveniens is committed to the discretion of the trial court and that TIG and Underwriters have not shown any abuse of discretion. He also asserts his securities-fraud action was instituted earlier and that the writ of garnishment was the "tail end" of that litigation. Even if that were not so, he urges that special equities weigh in favor of dismissing the New Jersey action and that the judge also correctly relied on the doctrine of forum non conveniens. Finally, Wojtunik urges that any claim by Underwriters is premature because the layers below their D&O policy have not yet been exhausted.
Before addressing the merits of this appeal, we must resolve the parties' dispute over our scope of review. "The determination of whether to grant a comity stay or dismissal is generally within the discretion of the trial court." Sensient Colors, supra, 193 N.J. at 390 (citations omitted). So, too, is a dismissal under the doctrine of forum non conveniens. Kurzke v. Nissan Motor Corp., 164 N.J. 159, 165 (2000) ("The doctrine is equitable in nature and, therefore, decisions concerning its application ordinarily are left to the sound discretion of the trial court.") (citation omitted).
This court has stated that "judicial discretion" is the option which a judge may exercise between the doing and the not doing of a thing which cannot be demanded as an absolute legal right, guided by the spirit, principles and analogies of the law, and founded upon the reason and conscience of the judge, to a just result in the light of the particular circumstances of the case."
Smith v. Smith, 17 N.J. Super. 128, 132 (App. Div. 1951), certif. denied, 9 N.J. 178 (1952).
The exercise of judicial discretion "is not unbounded and it is not the personal predilection of the particular judge." State v. Madan, 366 N.J. Super. 98, 109 (App. Div. 2004). Moreover, the exercise of judicial discretion must have a factual underpinning and legal basis. Id. at 110. Applying these principles, we have explained:
Judicial discretion, sound discretion guided by law so as to accomplish substantial justice and equity, is magisterial, not a personal discretion. It is legal discretion, in which the judge must take account of the applicable law and be governed accordingly. If the judge misconceives or misapplies the law, his discretion lacks a foundation and becomes an arbitrary act. When that occurs, the reviewing court should adjudicate the matter in light of applicable law to avoid a manifest denial of justice. [Cosme v. Borough of E. Newark Twp. Comm., 304 N.J. Super. 191, 202 (App. Div. 1997) (quoting In re Presentment of Bergen County Grand Jury, 193 N.J. Super. 2, 9 (App. Div. 1984)), certif. denied, 156 N.J. 381 (1998).]
We thus review the dismissal under these guiding principles.
In light of the broader application of the doctrine of forum non conveniens, we first consider the dismissal of this action under that doctrine. TIG and Underwriters argue that the judge abused his discretion in dismissing the complaint on the basis of forum non conveniens. They urge this is so because the federal court in Arizona is not an "available" forum which is "convenient" for trial of the issues in their declaratory judgment action as it can assert neither diversity nor ancillary jurisdiction over Underwriters. Moreover, they assert that New Jersey has more of an interest in resolving these issues, because the underlying business dispute involved a business based in New Jersey and owned by a New Jersey resident.
Wojtunik responds that a dismissal based on forum non conveniens was appropriate because Arizona has a greater interest in this dispute; the original case settled there; Arizona law applies to the insurance policies; and the federal court in Arizona has an interest in enforcing its own judgments. Additionally, nearly all witnesses to the settlement agreement-- his assignors and their attorneys--are Arizona residents and it would be a great inconvenience to litigate the reasonableness of that settlement, even to the extent permissible under Arizona law, in New Jersey.
Plaintiffs, on the other hand, emphasize that defendant is a New Jersey resident with Pennsylvania attorneys who had initially argued that the District Court in Pennsylvania, rather than Arizona, would be the more suitable forum for his original action, because most of the witnesses with knowledge of the negotiations surrounding the acquisition of defendant's business, as well as most of the negotiations themselves, were located on the East Coast. They further assert that litigation in New Jersey would pose no great inconvenience, because the only necessary witnesses here would be defendant and his assignors, who contracted as part of the settlement to aid him to the extent necessary to collect on his judgment.
The judge did not separately discuss dismissal based on the doctrine of forum non conveniens, but he did determine, during his discussion of the doctrine of comity, that an alternate forum in Arizona was both an available and more convenient forum for the resolution of the issues raised in the complaint. We may affirm the outcome of litigation on any ground because we review judgments, not decisions. See Serrano v. Serrano, 367 N.J. Super. 450, 461 (App. Div. 2004) ("Although we affirm for different reasons, a judgment will be affirmed on appeal if it is correct, even though 'it was predicated upon an incorrect basis.'") (quoting Isko v. Planning Bd. of Livingston Twp., 51 N.J. 162, 175 (1968)), rev'd on other grounds, 183 N.J. 508 (2005).
Pursuant to the doctrine of forum non conveniens, "'a court may decline jurisdiction whenever the ends of justice indicate a trial in the forum selected by the plaintiff would be inappropriate.'" Kurzke, supra, 164 N.J. at 164-65 (quoting D'Agostino v. Johnson & Johnson, Inc., 225 N.J. Super. 250, 259 (App. Div. 1988), aff'd, 115 N.J. 491 (1989)). Courts in New Jersey weigh the factors delineated by the United States Supreme Court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 843, 91 L.Ed. 1055, 1062-63 (1947), to guide their discretion. Id. at 165. "Those factors include both public-interest and private-interest elements." Ibid.
Public-interest elements include:
"(1) the administrative difficulties which follow from having litigation pile up in congested centers rather than being handled at its origin, (2) the imposition of jury duty on members of a community having no relation to the litigation, (3) the local interest in the subject matter such that affected members of the community may wish to view the trial and (4) the local interest in having localized controversies decided at home." [Ibid. (quoting D'Agostino, supra, 225 N.J.
Super. at 263) (internal quotation omitted)).]
None of these public-interest elements favors retention of jurisdiction. In fact, the first factor clearly favors Arizona as the forum for this litigation. Because this is a declaratory judgment action, the second factor does not apply. There are no affected members of the community in New Jersey who might wish to view the trial, but there are members of the community in Arizona, where IFC was based and where it declared bankruptcy, who may wish to do so. Thus, the third factor favors relinquishment of jurisdiction. Finally, the fourth factor, for much the same reason as the third, favors Arizona as the forum for this dispute.
Furthermore, Arizona has a far greater interest in this litigation than does New Jersey, which apparently has no connection to the issues now disputed, except that defendant happens to be a New Jersey resident. The Court has observed that "[t]here is an appropriateness . . . in having the trial of a diversity case in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflict of laws, and in law foreign to itself."
[Gore v. U.S. Steel Corp., 15 N.J. 301, 307 (quoting Gulf Oil Corp., supra, 330 U.S. at 509, 67 S.Ct. at 843, 91 L.Ed. at 1063)), cert. denied, 348 U.S. 861, 75 S.Ct. 84, 99 L.Ed. 678 (1954).]
Private-interest elements include:
"(1) the relative ease of access to sources of proof, (2) the availability of compulsory process for attendance of unwilling witnesses and the cost of obtaining the attendance of willing witnesses, (3) whether a view of the premises is appropriate to the action and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive, including the enforceability of the ultimate judgment." [Kurzke, supra, 164 N.J. at 166 (quoting D'Agostino, supra, 225 N.J. Super. at 263) (internal quotation omitted))].
The third element is not applicable here. To evaluate the remaining private-interest elements, we must consider the claims asserted in this declaratory judgment action. There are essentially two bases alleged for avoiding liability under the D&O policies. The first basis, articulated in six counts of the complaint, is that TIG and Underwriters have no liability under the terms of their policies. The second basis, articulated in the remaining count, is that the stipulated judgment entered in federal court was unreasonable as a matter of law.
It is undisputed that the policies were issued by insurers licensed to do business in Arizona and covered losses due to the wrongdoing of officers and directors of an Arizona corporation. Nothing in the record suggests that the policies were executed anywhere other than Arizona, triggering the application of Arizona law to their interpretation, see Century Indem. Co. v. Mine Safety Appliances So., 398 N.J. Super. 422, 436 (App. Div. 2008) (stating that, although no inflexible rule applies, generally, place of contract governs the choice of law) (citing State Farm Mut. Auto. Ins. Co. v. Estate of Simmons, 84 N.J. 28, 37 (1980)). Nor does anything in the record suggest any connection at all with New Jersey that would indicate that New Jersey law is applicable to the interpretation of these policies, except insofar as it happens to coincide with Arizona law. See Rowe v. Hoffman-La Roche, Inc., 189 N.J. 615, 621 (2007) (forum state applies its own law where there is no conflict).
Moreover, two of the counts of the complaint assert that the consent of the insurer is required prior to assignment or entry into a settlement. These allegations also require the application of Arizona law, because they implicate the legal validity of settlements made pursuant to Damron v. Sledge, 460 P.2d 997 (Ariz. 1969). With respect to plaintiffs' challenge to the reasonableness of the Arizona settlement defendant seeks to enforce, Arizona law also governs. Parking Concepts, Inc. v. Tenney, 83 P.3d 19, 22 n.3 (Ariz. 2004) (citing Damron, supra, 460 P.2d at 999). To the extent plaintiffs argue that only providers of primary insurance coverage should be barred from attacking the reasonableness of a Damron settlement, a court in Arizona should decide the issue. Thus, the application of Arizona law favors an Arizona forum.
Ease of access to sources of proof, the availability of compulsory process for attendance of unwilling witnesses, and the cost of obtaining the attendance of willing witnesses all favor litigating the disputes between these parties in Arizona. Wojtunik's assignors are Arizona residents, and their counsel, who negotiated the settlement, are Arizona attorneys. Other witnesses who may give testimony bringing the judgment factually within the scope of the D&O policies are all located in Arizona. It is only Wojtunik who resides here.*fn4
Other factors support dismissing this action on forum non conveniens grounds. The federal court in Arizona has already indicated that it intends to retain jurisdiction over TIG, which raises the specter of conflicting determinations on identical issues. See Cont'l Ins. Co. v. Honeywell Int'l, Inc., 406 N.J. Super. 156, 178-79 (App. Div. 2009) (previous comity determinations of other jurisdictions may be considered a special equity). Moreover, the corresponding litigation in that court has proceeded further, if minimally so, given that at least a scheduling conference has been set. See id. at 182-83 (stating that the relative progress of the parallel suits may be considered a special equity). The continuation of that litigation will not present any great inconvenience to the parties, particularly given that plaintiffs, as insurers, and their attorneys are likely accustomed to litigation in a variety of jurisdictions. See id. at 181.
TIG and Underwriters concede that the federal court in Arizona is an available forum for the resolution of claims between Wojtunik and TIG, but argue that Wojtunik cannot maintain a garnishment proceeding against Underwriters there, because neither diversity nor ancillary jurisdiction is available. We need not resolve that contention. Underwriters and Wojtunik may litigate in state court in Arizona, which is just as appropriate a forum for the dispute between them as it was for the dispute between Carolina and Wojtunik. In this vein, it bears repeating that the courts in Arizona have been involved in litigation between Wojtunik, the IFC directors and shareholders, Carolina, and now TIG for seven years. We find no abuse of discretion in the judge's decision to refrain from weighing in on these long-standing disputes. Arizona, whether in state or federal court, is the more appropriate forum for resolution of this declaratory judgment action.
The fact that we affirm the dismissal of this action under the doctrine of forum non conveniens should not be construed to suggest that comity too requires dismissal. "New Jersey has long adhered to 'the general rule that the court which first acquires jurisdiction has precedence in the absence of special equities.'" Sensient Colors, supra, 193 N.J. at 386 (quoting Yancoskie v. Del. River Port Auth., 78 N.J. 321, 324 (1978)). "Special equities are reasons of a compelling nature that favor the retention of jurisdiction by the court in the later-filed action." Id. at 387. "[A]ny comity analysis should begin with a presumption in favor of the earlier--filed action." Ibid.
The movant has the burden to prove "'that there is a first-filed action in another state [and] that both cases involve substantially the same parties, the same claims, and the same legal issues.'" Id. at 390-91 (citing Am. Home Prods. Corp. v. Adriatic Ins. Co., 286 N.J. Super. 24, 37 (App. Div. 1995)). The parties claims and issues need not be "exactly the same." Id. at 391. The burden then shifts to the party opposing a comity dismissal. Id. at 390-391. That party must demonstrate that "it will not have the opportunity for adequate relief in the first-filed jurisdiction." Id. at 392. Alternatively, the presumption in favor of the earlier-filed action may be overcome by a showing of special equities that weigh in favor of retention of jurisdiction by the forum of the second-filed case. Id. at 390-391.
TIG and Underwriters assert that Wojtunik failed to demonstrate "that the Arizona garnishment proceeding was 'first-filed'" because the securities-fraud action was terminated in 2006. Plaintiffs cite unpublished federal decisions for the proposition that ancillary jurisdiction is not available where the dispute between the parties has already been resolved. They also assert that Wojtunik cannot show that this case involves the same parties because Underwriters is not a party to the garnishment, making the doctrine inapplicable.
We have recently considered a dispute over first-filed status in another declaratory judgment action, albeit in the context of an anti-suit injunction. Cont'l Ins. Co., supra, 406 N.J. Super. at 175. There, the New Jersey complaint was filed earlier than four out-of-state complaints involving some minor overlapping claims over which our sister states abstained on comity grounds. Id. at 176. Continental then sought injunctive relief and the judge permitted it to amend its New Jersey complaint to encompass all of the claims asserted in the sister-state litigation. Ibid. The trial judge then issued the anti-suit injunction. Id. at 172.
We concluded that it was "an oversimplification" to view the New Jersey case as the first-filed action. Id. at 176. At the time Continental first sought the anti-suit injunction, there was little similarity between the sister-state actions and Continental's action. Id. at 177. We concluded that the judge should have analyzed Continental's motion based on the actions as they existed when the motion was filed rather than allowing Continental to amend its complaint to create conflicting claims. Ibid. So viewed, there was no substantial identity of parties, issues, and claims. Ibid.
Even were that not that the case, we found special equities precluded issuance of the anti-suit injunction. Id. at 178-184. Those special equities included our sister states' abstention on comity grounds, id. at 178-79; the disharmony created by the anti-suit injunction, id. at 179-80; New Jersey's lack of any dominant interest in the claims asserted in the sister-state actions, id. at 180-81; the absence of any hardship or inconvenience if the sister-state actions continued, id. at 181-82; the lack of any progress in the New Jersey action, which had been filed in 2004, id. at 182-83; and the absence of any real potential for inconsistent judgments, id. at 183. Thus, we concluded that the judge mistakenly exercised her discretion to impose the anti-suit injunction.
Here, the securities-fraud action in federal court was filed in the Eastern District of Pennsylvania in 2002 and venue was transferred to Arizona under 28 U.S.C.A. § 1404 for the convenience of parties and witnesses. In 2004 the IFC officers and directors filed a declaratory judgment action against Carolina in Arizona state court and Carolina removed the action to federal court based on diversity of jurisdiction. In 2006 the three remaining officers and directors in the securities-fraud action settled with Wojtunik and consented to entry of a judgment against them on December 12, 2006. On January 16, 2007, the federal court declared that Carolina was obliged to defend and indemnify the IFC officers and directors, Carolina appealed, and Wojtunik quickly sought issuance of a writ of garnishment against Carolina in the securities-fraud action. The writ was quashed on June 5, 2007, on motion of Carolina, in part because the declaratory judgment had been appealed. However, Wojtunik had also filed an action on his assigned contractual rights against Carolina in Arizona state court, which refused to dismiss or stay the action.
TIG and Underwriters have not denied being fully aware of these proceedings as they unfolded, yet they did not seek to intervene in either the Arizona state or federal court actions, even though Carolina moved to compel their joinder as necessary parties. Instead, they filed the complaint in this action on March 19, 2008, while the Arizona state-court coverage action and the federal declaratory-judgment appeal were still pending. Clearly, the judge here correctly determined that the Arizona actions were filed first and the New Jersey action was filed last.
We next consider whether the actions involve substantially, although not exactly, the same parties, claims, and legal issues. Because the TIG and Underwriters policies followed form to the Carolina policy, the claims and legal issues were substantially the same and it was only a matter of time until TIG and Underwriters were brought before a court in Arizona on a writ of garnishment. Indeed, about six weeks after this action was instituted, Carolina paid its policy limits on May 7, 2008, and Wojtunik sought a writ of garnishment against TIG, against which he was then able to proceed, the initial layer of coverage having been exhausted. The writ of garnishment in the securities-fraud action was not a new action, but a permissible supplementary or ancillary proceeding to enforce the judgment issued in his favor. Peacock, supra, 516 U.S. at 356, 116 S.Ct. at 867, L.Ed. 2d at 826.
Although, as TIG and Underwriters argue, the parties were not identical,*fn5 Wojtunik was only required to show that the parties, claims, and issues were substantially, but not exactly, the same, and we are satisfied that he did so. TIG and Underwriters occupied substantially the same position as Carolina with respect to the disclaimers under their form-following policies and were at all times fully aware of the progress of the Arizona litigation. We see no basis for distinguishing them from Carolina for comity purposes. Wojtunik met his initial burden of proof and the presumption in favor of the earlier-filed actions arose. Even if Underwriters cannot be so viewed, TIG was a party to the securities-fraud action before the motion to dismiss this case was decided and that action was filed in 2002.
TIG and Underwriters then had the burden to overcome the presumption in favor of Arizona by proving that they "will have the opportunity for adequate relief in the prior jurisdiction," Sensient Colors, supra, 193 N.J. at 390, or that special equities weigh in favor of retention of jurisdiction in New Jersey, id. at 390-91. They have done neither, resting on their argument that Wojtunik could not meet his initial burden of proof. In any event, special equities favor declining jurisdiction, as the judge found. He reasoned that Arizona law apparently applied to this dispute, because "all of the relevant information, relevant actions took place in the Federal District Court out in Arizona," and that the federal court had already exercised jurisdiction over the original cases and decided issues similar to those at issue in this case in the coverage litigation against Carolina.
As the judge implicitly recognized, the relative interest of each forum in exercising jurisdiction, the convenience to the parties of litigation in each forum, and considerations of judicial economy are relevant to the identification and weighing of special equities. See Am. Home Prods. Corp., supra, 286 N.J. Super. at 39 (noting that elements of forum non conveniens analysis, discussed supra, generally are relevant to consideration of special equities). We find no mistaken exercise of discretion in his application of comity principles to the facts before him. Even if we had determined that principles of comity did not apply to Underwriters, or even to TIG, dismissal of their complaint was still warranted under the doctrine of forum non conveniens.