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Certain Underwriters at Lloyd's v. Books For Less, LLC

Superior Court of New Jersey, Appellate Division

September 24, 2013



Argued August 26, 2013

On appeal from the Superior Court of New Jersey, Law Division, Salem County, Docket No. L-0145-12.

Wendy D. Testa argued the cause for appellant (Wilson, Elser, Moskowitz, Edelman & Dicker LLP, attorneys; Ms. Testa, of counsel and on the brief).

Matthew Weng argued the cause for respondents (Chance & McCann, L.L.C., attorneys; Shanna McCann, of counsel and on the brief; Mr. Weng, on the brief).

Before Judges Alvarez and Maven.


Plaintiff Certain Underwriters at Lloyd's, London, Subscribing to Certificate LV91449 (Lloyd's or the insurer), brought a declaratory judgment action in New Jersey against defendants Books for Less, LLC (BFL), Books Outlet, LLC (collectively referred to as defendants), Shmuely Holding LLC, and John Does 1-12. Approximately a week later, on June 11, 2012, BFL sued Lloyd's in New York regarding the same disputed coverage. On September 14, 2012, the New Jersey proceeding was dismissed pursuant to the doctrine of forum non conveniens. The trial judge also denied Lloyd's motion for reconsideration of the dismissal. For the reasons that follow, we affirm.

We briefly summarize the circumstances which resulted in the orders now being appealed. In 2010, BFL, a New York limited liability company, obtained insurance coverage through its broker ARM-Capacity of New York LLC (ARM). ARM is a New York limited liability company. LoVullo Associates, Inc. (LoVullo) acted as the agent for Lloyd's. LoVullo is a New York corporation. The Lloyd's policy covered BFL's warehouse in New Jersey and an office BFL leased in New York City. The warehouse is owned by Shmuely Holding, a Delaware limited liability company. Lloyd's is an international organization, authorized to do business in New York and New Jersey.

BFL's prior insurer, Fireman's Fund, had terminated its coverage after a windstorm caused $750, 000 in damages in 2009, to the same New Jersey warehouse BFL reinsured through Lloyd's. When a second windstorm caused $727, 010.98 in damages to the structure on August 11, 2011, a claim of loss was filed with Lloyd's. Lloyd's made an initial $200, 000 payment in November 2011. Subsequently, in May 2012, Lloyd's rescinded the policy and demanded a refund of the partial payment because it alleged that the 2009 loss had not been disclosed on BFL's 2010 application for insurance. Approximately one week later, Lloyd's filed the complaint in New Jersey.

When defendants sued Lloyd's in New York to compel coverage, they also sued LoVullo and ARM. In that proceeding, BFL and Books Outlet sought a declaration that the insurer wrongfully cancelled the insurance.

In dismissing Lloyd's New Jersey complaint, the trial judge noted that, with the exception of Lloyd's and Shmuely Holding, the parties were New York companies and most had their principal place of business in New York City. He also noted that in addition to the New Jersey storage facility, the policy provided coverage to leased premises in New York. ARM and LoVullo, who were dismissed from the New York proceeding, negotiated the policy while in New York City.[1] Neither ARM nor LoVullo would submit to the jurisdiction of this state, and, the trial judge reasoned, both were necessary and indispensable parties. The insurance application was processed in New York. If any misrepresentations were made, they were made in New York.

The court therefore based dismissal on the doctrine of forum non conveniens, relying upon Yousef v. General Dynamics Corp., 205 N.J. 543 (2011). The relative ease of access to the sources of proof required the proceeding to be maintained in New York. Compulsory process was available only in New York. All the witnesses who might be called to resolve this contract dispute were New York and not New Jersey residents. The "private interest" factors tipped in favor of dismissal of the New Jersey proceedings. See id. at 560.

The trial judge weighed the "public interest" factors, finding that there was no New Jersey community interest in the matter, except the building's need for repairs. See id. at 562-64. Although forum non conveniens analysis generally favors retention of jurisdiction, in this case, New Jersey was a manifestly inappropriate jurisdiction as defined by precedent. None of the rights of the parties would be prejudiced by dismissal; hence no harm would ensue if the matter was not resolved here. Furthermore, should New ...

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