Foster Wheeler LLC v. Affiliated FM Ins. Co.

Full title: Foster Wheeler L.L.C. (As successor In Interest To Foster Wheeler…

Court: Supreme Court, New York County

Date published: Sep 23, 2011

2011 N.Y. Slip Op. 51780 (N.Y. Sup. Ct. 2011)

Opinion

600777/01

09-23-2011

Foster Wheeler L.L.C. (As successor In Interest To Foster Wheeler Corporation), Plaintiff, v. Affiliated FM Insurance Co., et al., Defendants.

Plaintiff was represented by Anna P. Engh, Esq., COVINGTON & BURLING, LLP. Defendant Century Indemnity Company was represented by Jonathan H. Pittman, Esq., CROWELL & MORING.

Barbara R. Kapnick

Plaintiff was represented by Anna P. Engh, Esq., COVINGTON & BURLING, LLP.

Defendant Century Indemnity Company was represented by Jonathan H. Pittman, Esq., CROWELL & MORING.

Barbara R. Kapnick, J.

Plaintiff Foster Wheeler L.L.C. (As Successor In Interest To Foster Wheeler Corporation) ("Foster Wheeler") moves by Order to Show Cause for an Order vacating in its entirety this Court's Decision/Order dated March 16, 2010 on mot. seq. no. 083.

This is an asbestos insurance coverage action that, since its inception in 2001, has involved numerous insurance companies as parties. On or about January 11, 2008, certain of those insurer- defendants filed a Motion for Partial Summary Judgment regarding Allocation Period (the "End Date Motion"), in which the moving insurers argued that the allocation period for any covered asbestos claims ends no earlier than October 1, 1985.

Foster Wheeler opposed the End Date Motion. By Decision/Order dated March 16, 2010, this Court granted defendants' motion. ¹

1 This decision is publicly available on-line at 27 Misc 3d 1223(A), 2010 NY Slip Op 50849(U).

To date, this Court has signed Orders discontinuing Foster Wheeler's claims against all the insurer parties to this case, with the sole exception of Northwestern National Insurance Company ("NNIC"). In January 2011, Foster Wheeler and NNIC signed a Term Sheet which set forth the material terms of a settlement between them, including that Foster Wheeler will promptly move to vacate the March 16, 2010 Decision/Order, a request to which NNIC consents. ² Foster Wheeler contends that it will then file an application seeking the discontinuance of its claims against NNIC, and take any steps necessary to obtain a full and complete dismissal of this action.

2 None of the settlement agreements with any of the other insurers contains a condition requiring the parties to ask this Court to vacate its Order.

Foster Wheeler submits that an Order vacating the March 16, 2010 Decision/Order is reasonable and appropriate pursuant to CPLR 2221 and 5015(a), because such an Order will facilitate both the final resolution of Foster Wheeler's claims against NNIC ³ and the final resolution and dismissal of this ten-year old action.

3 There is no indication as to whether or not plaintiff and NNIC will proceed with their settlement if this motion is denied.

Plaintiff argues that this Court has "inherent discretionary power" to "vacate its own judgment for sufficient reason and in the interests of substantial justice." See Woodson v. Mendon Leasing Corp., 100 NY2d 62, 68 (2003).

Plaintiff cites to a prior decision by this Court in Citrin v Baratta and Goldstein, 2008 WL 439107 (2008), aff'd 62 AD3d 405 (1st Dep't 2009). However, in that case, this Court simply found that the trial Judge's so-ordered stipulation vacated his own post-verdict decision in its entirety as to plaintiff Citrin.

Plaintiff also relies on the decision of the Appellate Division, Fourth Department in Ruben v American & Foreign Ins. Co., 185 AD2d 63 (1992) in which the parties agreed to settle the case after the appellate argument, and jointly moved in Supreme Court to vacate the judgment after a jury trial "in the interest of justice." The Court there granted the motion and held that no collateral estoppel effect could then be given to the jury findings. While the Court held that "[i]t is well established that a court maintains inherent power to vacate a judgment in the interest of justice" (Ruben, supra at 67), notwithstanding the pendency of an appeal, and that "[o]nce a judgment is vacated, it loses all effect" (Ruben, supra at 68), it also held that because of public policy concerns,

it is incumbent upon the trial courts to inquire into the reasons for any settlement before agreeing to vacate the judgment in the interest of justice', to insure that the
settlements are bona fide and do not unjustly trample upon the rights of others who are not parties to the vacatur and who have no right to appeal or collaterally attack that order.

Ruben, supra at 69.

The plaintiff's real concern here seems to be the potential collateral estoppel effect this Court's March 2010 Decision/Order may have in other proceedings. "Ordinarily, a judgment that has been vacated will not provide a basis for collateral estoppel." Mercantile & Gen'l Reinsurance Co. v Colonial Assurance Co., 147 Misc 2d 804, 806 (Sup Ct, NY Co 1989).

Century Indemnity Company ("Century"), which took the lead role in briefing and arguing the End Date Motion, and has since entered into a settlement with Foster Wheeler, opposes this motion, and is joined in its opposition by former defendants Affiliated FM Insurance Company and Munich Reinsurance America, Inc. Century argues that "the Order provides guidance to the bench and bar concerning matters that will certainly arise again, and should remain available to the public for that reason." Century further asserts that the proper way to overturn that Decision/Order is through an appeal on the merits, not through a bargained-for settlement with only one of the many parties to the case. This, Century argues cannot be "in the interests of justice."

While plaintiff has preserved its right to proceed with the appeal through a series of so-ordered stipulations, it argues that it would be a waste of judicial resources to do so when all parties have otherwise agreed to a settlement. Century, on the other hand, asserts that if Foster Wheeler's motion is granted, it would have the practical effect of allowing Foster Wheeler to overturn this Court's Order while precluding the insurers who obtained the Order from defending it on the merits on appeal.

In Paramount v Gibraltar Casualty Co., 212 AD2d 490 (1st Dep't 1995), the parties moved by consent to vacate both a decision of the Appellate Division and the trial court because they had reached a tentative settlement of the entire matter, requiring, as one of its conditions, that these decisions be vacated. While the Court acknowledged that it "has the inherent power to vacate its own order if required, in the interest of justice" (Paramount, supra at 490), it referenced the then recent U.S. Supreme Court case of U.S. Bancorp Mtge Co. v Bonner Mall Partnership, 513 US 18 (1994), which held that federal courts will not automatically vacate a judgment under review based solely on its mootness by reason of settlement, even where the settlement agreement calls for such vacatur.

While we appreciate the desirability of settlement, we do not believe it would be advisable to allow private parties to demand that the Court eradicate precedent which they personally find unacceptable on threat of burdensome litigation should the Court refuse. Moreover, we note the conclusion of the Supreme Court that, to follow a policy in which private parties could agree to vacate a decision and order by
agreement would not necessarily, as a general matter, serve the purpose of encouraging settlement, as the prospect of being able to eradicate a decision should it be unfavorable could well encourage the parties to postpone settlement until after a decision has been rendered.

Paramount v Gibraltar Casualty Co., supra at 490-91.

Even in his dissent in the Paramount case, Justice Kupferman noted that the particular decision in that case was "of no apparent significance other than to the parties. If it established any precedent or unveiled some new thought, I would concur with the court" Id at 491.

While this Court certainly supports, encourages and promotes settlements whenever possible, given the significant resources expended by the parties briefing and arguing the End Date Motion, the amount of time spent by this Court in reviewing the parties' papers and researching and writing its decision, the significance of the issue determined therein and the fact that all the parties do not consent to the relief, this Court denies Foster Wheeler's motion to vacate the Decision/Order dated March 16, 2010 on motion seq. no. 083.

This constitutes the decision and order of this Court.

________________________

BARBARA R. KAPNICK

J.S.C.