Opinion
No. 05 Civ. 5262 (DLC).
September 6, 2005
Erik W. Drewniak, Nixon Peabody LLP, New York, New York.
Mitchell A. Stearn, Kevin M. Grace, Kathrin V. Smith, Nixon Peabody LLP, Washington, D.C., Attorney for the Plaintiff.
Robert L. Hoegle, Carter Ledyard Milburn LLP, New York, New York, Attorney for the Defendant.
MEMORANDUM OPINION AND ORDER
In a dispute over insurance coverage, Liberty Mutual Fire Insurance Company ("Liberty Mutual") brought an action on April 11, 2005 against National Union Fire Insurance Company of Pittsburgh, PA ("National Union") in the United States District Court for the District of Kansas seeking reimbursement for an insurance payment. On June 2, 2005, National Union brought this action against Liberty Mutual seeking a declaratory judgment that it does not owe reimbursement to Liberty Mutual. Liberty Mutual has moved to dismiss this action based on the "first-filed" rule, and its alternate claim that National Union's action is improper under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201. Because the decision on the first-filed rule is for the Kansas court to decide, Liberty Mutual's motion to dismiss is denied. This action is stayed for thirty days to allow Liberty Mutual to bring a motion in the Kansas action pursuant to the first-filed rule. In the event that motion is brought, this action is stayed until the motion is resolved.
"It is a well-settled principle in this Circuit that where there are two competing lawsuits, the first suit should have priority, absent the showing of balance of convenience or special circumstances giving priority to the second." Amos v. Reno, No. 00 Civ. 6151 (DLC), 2000 WL 1871710, at *2 (S.D.N.Y. Dec. 21, 2000) (citation omitted). "It is the court in which the first-filed action was brought that should decide whether one of the exceptions applies." Id. See also Schnabel v. Ramsey Quantitative Sys., Inc., 322 F. Supp. 2d 505, 510-11 (S.D.N.Y. 2004). "Under this Circuit's first-filed rule, a district court may enjoin the suitor in a more recently commenced case from taking any further action in the prosecution of that case if the claims presented in the second action should have been interposed as compulsory counterclaims to the claims in the suit pending before it." Computer Assocs. Int'l, Inc. v. Altai, Inc., 893 F.2d 26, 28-29 (2d Cir. 1990). "Where an action is brought in one federal district court and a later action embracing the same issue is brought in another federal court, the first court has jurisdiction to enjoin the prosecution of the second action."Id. at 29 (citation omitted). See also City of New York v. Exxon Corp., 932 F.2d 1020, 1025 (2d Cir. 1991).
Because the action filed in the District of Kansas was filed first, it is up to that court to decide whether any exceptions to the first-filed rule apply. Therefore, Liberty Mutual's motion to dismiss is denied.
CONCLUSION
Liberty Mutual's motion to dismiss is denied. This action is stayed for thirty days. The parties shall provide a status report on October 6, 2005.
SO ORDERED.