Cornell-Dubilier Electronics, Inc. v. Allianz Versicherungs AG, et al.

At a glance

Parties

Cornell-Dubilier Electronics, Inc. (CDE) v. Allianz Versicherungs AG, et al. (motion brought by the "French Market Insurers" (FMI), joined by several US insurers)

Case no.

Civil Action No. 18-5947(SDW)(SCM) (the page header reads 2:18-cv-15947-SDW-SCM)

Court

U.S. District Court for the District of New Jersey

Forum and rules

Court proceeding on a motion to compel arbitration under the New York Convention (9 U.S.C. § 201 et seq.) and the Federal Arbitration Act

Treaty

New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards)

Court

Susan D. Wigenton, U.S. District Judge

Sector

Insurance; environmental liability (Superfund site)

Outcome

Motion to compel arbitration granted on 6 February 2019; the case was administratively terminated until the arbitration ends.

The dispute

CDE is a former subsidiary of Exxon Mobil Corporation. It is liable for contamination at a Superfund site at 333 Hamilton Boulevard, South Plainfield, New Jersey. It sought indemnity from the defendant insurers under general liability policies that Exxon held from 1 January 1980 to 1 November 1983. The policies contain an arbitration clause: any difference between the Insured and the Insurers may, at either party's request and after all requirements for recovering a claim have been met, be referred to three arbitrators in New York. CDE sued in the Superior Court of New Jersey for breach of contract and breach of the duty of good faith. It also sought a declaration that it did not have to arbitrate. After the defendants removed the case to federal court, the French Market Insurers moved to stay the suit and compel arbitration. CDE argued that the condition precedent to arbitration had not been met and that not all defendants had joined the motion.

Key holdings

1. The arbitration agreement falls under the New York Convention, which meets all four Standard Bent Glass factors. There is a written agreement. It provides for arbitration in New York, in the territory of a Convention signatory. Insurance and reinsurance contracts are commercial. The dispute is not entirely domestic, because the French Market Insurers are French or British entities. pp. 4–5
2. Whether the clause's prerequisite was met (that "all requirements of this insurance with respect to recovery of any claim" were complied with) is a procedural question for the arbitrators, not the court. p. 5 n. 7
3. Three named defendants (Groupe Chegaray, Mead Reassurance and Groupe de Leseleuc) did not join the motion. This is no ground to deny it, because nothing in the clause requires all insurers to join a single motion to compel. p. 5 n. 8
4. CDE conceded that the arbitration provision is valid, and it appears in the Amended Complaint. The court therefore applied the Rule 12(b)(6) standard and did not consider exhibits outside the pleadings. p. 3 n. 5
5. The motion to compel arbitration is granted. The matter is administratively terminated until the arbitration ends and may be reinstated on written notice from the parties. pp. 5–6

Procedural history

1. CDE sued in the Superior Court of New Jersey, Law Division, Middlesex County.
2. 8 November 2018The defendants removed the case to the U.S. District Court for the District of New Jersey.
3. 14 November 2018The defendants moved to compel arbitration.
4. 31 December 2018Date the opinion gives for CDE's Amended Complaint (breach of contract, breach of the duty of good faith, and a declaration that CDE need not arbitrate).
5. 16 January 2019Briefing on the motion was completed.
6. 6 February 2019Opinion granting the motion to compel arbitration and administratively terminating the case.

Tribunal, counsel and experts

Decided by

• Susan D. Wigenton Judge, U.S. District Court for the District of New Jersey

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Keywords

• motion to compel arbitration
• New York Convention
• Federal Arbitration Act
• 9 U.S.C. § 201
• insurance coverage
• reinsurance
• Superfund
• environmental contamination
• Exxon Policies
• condition precedent to arbitration
• procedural arbitrability
• not entirely domestic
• commercial relationship
• French Market Insurers
• SCOR
• stay of proceedings
• New Jersey

Summary generated with AI from the published documents — refer to the award for the authoritative text.