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Federal Insurance Co. v. Dentsply International

February 5, 2007

FEDERAL INSURANCE CO., PLAINTIFF
v.
DENTSPLY INTERNATIONAL, INC., DEFENDANT



The opinion of the court was delivered by: Chief Judge Kane

MEMORANDUM

Before the Court is Defendant's motion to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(7), the doctrine of forum non conveniens, or in the alternative, to dismiss or stay the action pending resolution of a parallel state-court action. (Doc. No. 5.) The motion is ripe for disposition, and for the following reasons the Court will grant Defendant's motion.

I. BACKGROUND

A. Factual Background

Federal Insurance Co. ("Federal") brought this action for declaratory judgment against Dentsply International Inc. ("Dentsply") to clarify the scope of duties owed under the excess-insurance policies that Federal issued to Dentsply. Federal is an Indiana corporation with its principal place of business in New Jersey. Dentsply is a Delaware corporation with its principal place of business in York, Pennsylvania. This Court has jurisdiction pursuant to 28 U.S.C. § 1332 because the amount in controversy exceeds $75,000 and the parties are citizens of different states.

1. The Underlying Claim for Coverage

In 1995, Dentsply began selling a resin-reinforced glass-ionomer cement called "Advanced Cement," which dentists and other dental professionals used to permanently affix crowns, bridges, and other dental work. On March 27, 2002, dentist Bruce Glover, D.D.S., acting on behalf of himself and other dental professionals in California, filed a class-action suit against Dentsply in California state court ("the Glover action"), essentially alleging that Advanced Cement did not work as advertised. The amended complaint in the Glover action includes seven counts: (1) Breach of Implied Warranty of Fitness for Particular Purpose; (2) Breach of Implied Warranty of Merchantability; (3) Breach of Express Warranties; (4) Violation of Unfair Practices Act; (5) Fraudulent Concealment; (6) Negligent Misrepresentation; and (7) Violation of the Song Beverly Consumer Warranty Act. The class action specifically excludes "persons who have suffered personal injuries as a result of the matters alleged in the Glover complaint." (Compl. ¶ 16.)

On May 1, 2003, Dentsply tendered the Glover complaint to its insurers, Travelers Indemnity Co. ("Travelers") and Federal. Travelers allegedly agreed to defend Dentsply in the Glover action, but reserved its right to deny indemnification. In a letter dated May 12, 2003, Federal denied any obligations to defend or indemnify Dentsply for the claims in the Glover complaint. Dentsply then notified Federal in writing that it expected "full and complete coverage from its insurers for any loss in excess of the Travelers primary policy covering May 1, 1994 to May 1, 1995 for the Glover Complaint." (Compl. ¶ 30.) On May 15, 2006, Federal filed the instant declaratory-judgment action in this Court.

2. Dentsply's Insurance Coverage

From May 1, 1994, to May 1, 1999, Travelers provided annual, general-commercial-liability coverage to Dentsply. Travelers' policies insured Dentsply against "bodily injury" and "property damage" claims. (Compl. ¶ 22.) Travelers' liability exposure was limited to $1 million per "occurrence" and $2 million in the aggregate for claims covered under each insurance policy. (Compl. ¶ 20.) Additionally, the Travelers' policies provided that "[t]his insurance is primary . . . . [and] our obligations are not affected unless any of the other insurance is also primary." (Compl. Exh. B, at 36.)

Federal provided annual, excess-insurance coverage to Dentsply from May 1, 1994, to May 1, 1998. Federal's policies provided "follow form" coverage of $25 million in excess of the Travelers' policies, as defined in the following provision:

Under Coverage A [the excess policy], we will pay on behalf of the insured, that part of loss covered by this insurance in excess of the total applicable limits of underlying insurance [Travelers], provided the injury or offense takes place during the Policy Period of this policy. The terms and conditions of the underlying insurance are with respect to Coverage A made a part of this policy, except with respect to:

A. any contrary provision contained in this policy; or

B. any provision in this policy for which a similar provision is not contained in underlying insurance.

With respect to the exceptions stated above, the provision of this policy will apply. *** Notwithstanding anything to the contrary contained above, if underlying insurance does not cover loss, for reasons other than exhaustion of an aggregate limit of insurance by payment of claims, then we will not cover such loss. (Compl. ¶ 25.)

The Federal policies also included an "other insurance" clause, which provided:

If other insurance applies to claims covered by this policy, the insurance under this policy is excess and we will not make any payments until the other insurance has been exhausted by payment of claims. This insurance is not subject to the terms or conditions of any other insurance. (Compl. ¶ 26.)

In the Schedules of Underlying Insurance, Federal's policies identified Travelers as the underlying Commercial General ...


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