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Liberty International Underwriters Canada v. Scottsdale Insurance Co.

United States District Court, D. New Jersey

September 29, 2017

LIBERTY INTERNATIONAL UNDERWRITERS CANADA, Plaintiff,
v.
SCOTTSDALE INSURANCE COMPANY and INFINITY ACCESS LLC, Defendants.

          STEPHEN ALLEN LONEY, JR. HOGAN LOVELLS U.S. LLP MARK C. GOODMAN (pro hac vice) HOGAN LOVELLS U.S. LLP On behalf of plaintiff Liberty International Underwriters Canada

          GARY S. KULL APRIL T. VILLAVERDE CARROLL, McNULTY & KULL LLC LISA MARTIN LAMPKIN (pro hac vice) SELMAN BREITMAN LLP On behalf of defendants Scottsdale Insurance Company and Infinity Access LLC

          OPINION

          NOEL L. HILLMAN, U.S.D.J.

         This action concerns claims by Plaintiff, Liberty International Underwriters Canada (“Liberty” or “LIU”)), against Defendants, Scottsdale Insurance Company (“Scottsdale”) and Infinity Access LLC (“Infinity”), to recover $1 million plus attorneys' fees. Liberty paid the principal funds in November 2011 to settle a lawsuit which alleged that Infinity, a subcontractor to Liberty's insured Tractel, LTD., started a fire at the Borgata Hotel, Casino and Spa in Atlantic City, New Jersey.[1]

         Liberty claims that Scottsdale and Infinity had a duty to defend and indemnify Tractel for the underlying litigation and that Liberty should be reimbursed for all amounts it paid and expenses incurred in conjunction with the underlying litigation. Defendants argue, among other defenses, that the settlement agreement between Tractel and Borgata purportedly contained an assignment of rights provision in which Liberty agreed to assign any of its claims arising out of the Borgata litigation, including its claims against Infinity and Scottsdale, to Borgata. Currently pending is Infinity's motion for summary judgment on Liberty's claims against it.[2]

         On June 28, 2013, this Court issued an Opinion denying Infinity's motion for judgment on the pleadings. (Docket No. 46.) Infinity's current motion for summary judgment argues that the Court's June 28, 2013 decision warrants the entry of judgment in its favor for the following reasons:

1. This Court held that LIU has two potential avenues of recovery against Infinity - equitable subrogation, or equitable indemnity and contribution;
2. This Court held that LIU cannot maintain a subrogation claim against Infinity, because Tractel assigned its rights to pursue Infinity to Borgata;
3. This Court held that LIU cannot maintain an equitable contribution or indemnity claim against Infinity, because LIU and Infinity are not co-insurers of Tractel and they do not have a contractual relationship; and,
4. Even if LIU was not otherwise precluded from maintaining those claims against Infinity by the law and based on this Court's rulings, LIU nevertheless cannot maintain them against Infinity because LIU itself assigned to Borgata all its rights to make any claim against Infinity. This final ground is an independent basis on which to grant this motion.

(Docket No. 188 at 5.)

         In response, Liberty argues that even though this Court opined on the remedies available to Liberty as Tractel's insurer, this Court's discussion was dicta because the Court ultimately concluded that the “fog of ambiguity” over the settlement and assignment of rights, the lack of clarity regarding whether the Liberty policy contained an anti-assignment or other similar provision that would have barred the assignment of rights, and the lack of the availability of the actual insurance policies for the Court's review rendered the dismissal of Liberty's claims against Infinity premature. Therefore, Liberty argues that the Court did not make the conclusions of law that Infinity contends serve as the “law of the case.”

         Liberty also points out that in its Opinion this Court presumed that Tractel invoked the subrogation provision of the policy when it tendered its defense to Borgata's claims against it, when the evidence obtained through discovery shows that Liberty actually funded Tractel's defense under the indemnification provision. Further, Liberty points out that this Court presumed that Liberty selected Tractel's counsel, while the evidence now shows that Tractel hired its own counsel to defend it in the Borgata litigation.

         When the Court issued its June 28, 2013 Opinion, the matter was in the early stages of discovery, and the Court only considered Liberty's complaint and the stipulation of dismissal and assignment of claims filed in the underlying state court action. Since then, more than four years of comprehensive, and contentious, discovery has been conducted. That discovery, and the posture in which this Court may again assess ...


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