The opinion of the court was delivered by: Ludwig, J.
(Granite State Insurance Company Applicant for Intervention )
Originally filed January 27, 2012
Citing Federal Rule of Civil Procedure 24(a) and (b), Granite State Insurance Company applies to intervene as of right or by permission (doc. no. 389). Jurisdiction is diversity. 28 U.S.C. § 1332.
In this litigation, Plaintiff General Refractories Company (GRC), a manufacturer and supplier of asbestos-containing products, sues its insurance carriers for a declaration of excess insurance coverage for underlying asbestos-related claims. GRC is a defendant in numerous asbestos-related suits throughout the United States. Two of those insurance carriers are Lexington Insurance Company and AIU Insurance Company.
On July 23, 2004, GRC filed a complaint, naming among other defendant insurers Granite State, Lexington, and AIU. On November 1, 2004 (doc. no. 59), these defendants, represented by the same counsel, filed a joint answer. On April 14, 2005, after Granite State answered that it is incorporated in Pennsylvania (id. at ¶ 7), GRC dismissed its claims against Granite State without prejudice for lack of diversity (doc. no. 134), and on April 15, 2005, Granite State in turn dismissed its counterclaim against GRC (doc. no. 136). Discovery was closed as of June 7, 2010.*fn1 On October 31, 2011, shortly before all briefs on dispositive motions were submitted by November 15, 2011, Granite State filed this motion to intervene.
Granite State, Lexington, and AIU each issued to GRC a separate policy
for the 1984-85 period. None of the policies or a policy endorsement
has an exclusion for claims related to asbestos products.*fn2
These insurers concede as much, but assert the omission
resulted from a series of mistakes by their underwriters, and the
intent of the parties to include such an exclusion can be shown by
extrinsic evidence.*fn3 That issue -- whether these
policies should be reformed to assert asbestos-related exclusions --
was presented by GRC and defendants Lexington and AIU on cross-motions
for summary judgment on the counterclaims for reformation and
rescission (doc. nos. 315, 360, 361 (sealed)); Counterclaims ¶¶ 9, 16,
23, doc. no. 284). By separate order today (January 27, 2012), GRC's
motion for summary judgment will be granted, and Lexington and AIU's
counterclaims will be dismissed with prejudice.
According to Granite State, its policy rights and obligations "have been put in jeopardy" by the cross-motions for summary judgment filed by GRC, Lexington, and AIU. Def. br., doc. no. 389 at 4-5. Granite State requests intervention to assert affirmative claims for reformation or rescission of its policy, describing the alignment of its interests as being those of a "defendant." Id. at 6, 7; Def. reply br., doc. no. 405 at 3-4; Compl. in intervention, doc. no. 389, Ex. A. It submits that much of the same extrinsic evidence in support of those motions shows the parties' intent to include an asbestos-related exclusion in the Granite State policy. It requests an opportunity for further discovery. Def. br., doc. no. 389 at 14-15.
Because of the dismissal of Lexington's and AIU's counterclaims, the rest of this memorandum constitutes dicta. As the complaint for intervention asserts only state law claims, no independent jurisdictional basis exists for intervention.
In a letter dated May 2, 1985, GRC's broker, Jennifer Romano of Marsh McLennan, wrote to Granite State's underwriter, Michael Bruzzi: "An asbestos exclusion was critical to our negotiations, but your policy does not exclude it." Doctors Aff. 9/9/11, Ex. 33, doc. no. 361. While evidence shows Bruzzi's receipt of the letter, the record does not reflect any response to Romano or thereafter any communication that took place with Granite State about such an exclusion.
Granite State maintains that it did not become aware until October-November, 2010 that its policy contained no exclusion until GRC filed motions for summary judgment contending that Lexington's and AIU's policies did not contain one (doc. nos. 277, 278). Granite State believed "available copies of [its] policy were merely incomplete." Def. br., doc. no. 389 at 13. It did not discover "definitive information" and "did not realize its policy failed to contain an asbestos exclusion endorsement until the March 2010 conclusion of a search . . . pursuant to the subpoena of GRC." Id. at 3, 13-14.
As the party moving to intervene, Granite State has the burden of showing that its claims are properly before the court. Dev. Fin. Corp. v. Alpha Hous. & Health Care, Inc., 54 F.3d 156, 158 (3d Cir. 1995). Here, jurisdiction depends on complete diversity between all plaintiffs and all defendants. See Exxon Mobil Corp. v. Allapattah Serv., Inc., 545 U.S. 546, 553 (2005) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806)). However, there is no diversity of citizenship between GRC and Granite State because both are Pennsylvania corporations. As the complaint in intervention asserts only state law claims, no independent basis exists for exercising federal jurisdiction.
Granite State maintains the court has supplemental jurisdiction over the complaint in intervention under 28 U.S.C. § 1367(a) and (b). According to Granite State, the proposed claims share common questions of law and fact arising out of the transaction or occurrence which is the subject of this action. In particular, Granite State relies on the subject matter of GRC's claims against Lexington and AIU, and these defendants' counterclaims for reformation and rescission of their policies. Therefore, it submits, the proposed claims are "so related" to the current claims before the court that they form part of the same "case or controversy" for purposes of supplemental jurisdiction under § 1367(a). Further: §1367(b)'s restrictions on the extension of jurisdiction over claims asserted by plaintiffs do not preclude Granite State's intervention as a defendant. GRC: Granite State proposes to intervene as a plaintiff "to assert a declaratory judgment action against GRC for reformation and rescission in the guise of intervening as a defendant"; and § 1367(b) removes such jurisdiction. Pl. br., doc. no. 394 at 4-5.
Section 1367 codifies common law "pendent" and "ancillary" jurisdiction. In re Texas E. Transmission Corp. PCB Contamination Ins. Coverage Litig., 15 F.3d 1230, 1237-38 & n.7 (3d Cir. 1994) (Congress has confirmed the principle of ancillary jurisdiction in the enactment of § 1367, using the ...