Lumbermens Mutual Casualty Co v Commonwealth of Penn by benbenzhou


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									                                                                   REPRINTED FROM THE
  tuesday, may        27, 2008                    ny              NEW YORK

                                     covering all of         long island, new york city and upstate new york

                         Lumbermens Mutual Casualty Co. v.
                             Commonwealth of Penn.
                                                                                    unearthed both during preliminary             Plaintiff’s efforts to avoid litigation
  pg    Peter Goetz                         rv    Rosalie Valentino                 engineering and excavation of the          on the home-turf of the PDOT and
                                                                                    project. Pyrite is a metal and sulfur-     the Commonwealth of Pennsylvania
                                                                                    bearing material that when exposed         proved fruitless. Ultimately, plain-
                                                                                    to air and water, oxidizes, turning        tiff’s reliance on the forum designation
                   Goetz                                      Goetz                 the sulfurous material to sulfuric         clause contained in the Kemper policy
                                                                                    acid. If left untreated, the sulfuric      failed because the clause turned out
                   Fitzpatrick                                Fitzpatrick           acid dissolves the metals in the rock      to be unenforceable. Instead, Defen-
                   LLP                                        LLP                   and can potentially contaminate the        dants’ theory of forum non conveniens
                                                                                    nearby streams and groundwater.            prevailed because it was in the inter-
   In Lumbermens Mutual Casualty         arguments under New York’s Civil           Despite numerous attempts, the             ests of substantial justice to allow the
Co. v. Commonwealth of Pennsyl-          Practice Law and Rules. In the end,        defendants could not neutralize and        Commonwealth of Pennsylvania to
vania, 2008 WL 223274 (Supreme           the defendants’ argument resting on        contain the sulfuric acid. Neverthe-       entertain this action.
Court of New York, New York Cty.         the theory of forum non conveniens         less, defendants continued to exca-           On a business to business level,
2008), the Defendants the Pennsyl-       (the forum most convenient to the          vate and unearth additional pyritic        the forum designation clause in a
vania Department of Transporta-          parties and where substantial justice      materials.                                 contract between two business enti-
tion (PDOT) and Commonwealth             would be accomplished) carried the             Defendants moved to dismiss the        ties is generally upheld by the courts
of Pennsylvania (Commonwealth)           day in spite of a forum designation        plaintiff’s New York action on four        in New York and the surrounding
(collectively, the defendants) were      clause in the Kemper policy which          grounds including forum non conve-         states of New Jersey and Connecticut.
faced with having to pay $60 mil-        clearly listed New York as the forum       niens. The court quickly concluded         However, the designated forum must
lion dollars associated with the         for any court action.                      that Lumbermens as a parent com-           have some nexus to the parties or
environmental cleanup of hazard-            In the spring of 2000, the Pennsyl-     pany had standing to bring suit as it      the situs of the project/real estate.
ous materials discharged during the      vania Department of Transportation         had established its pecuniary interests    A manufacturer can’t provide in
excavation of an interstate highway.     (PDOT) launched the construction           in the outcome of this case.               its purchase order that disputes be
The plaintiff, Lumbermens Mutual         of an interstate highway known                 Although the forum designation         resolved in Courts or States having
Casualty Co. (Lumbermens) was            as Interstate 99 (the project). The        clause designating New York as the         laws favorable to manufacturers,
the parent-company of Kemper             interstate highway would span a            forum for lawsuits seemed valid at         if those designated states have no
Indemnity Insurance (Kemper), the        stretch of eighteen miles. The actual      the time of execution, enforcement of      relationship to the parties. As an
insurance company, which issued a        construction work of the project was       the clause was non binding because         example, if a developer purchases
pollution liability insurance policy     quite involved. The project demanded       PDOT did not have the authority            structural steel from a manufacturer
(Kemper policy) to the defendants        the PDOT to use the “cut and fill”         to agree that Pennsylvania may be          in Pennsylvania, and the developer
in connection with the construc-         process. In other words, the soil          sued in New York. According to             of the shopping mall is in New York
tion of the interstate highway. The      would be excavated from one portion        Pennsylvania’s Constitution, Article       State, a provision in the purchase or-
plaintiff commenced the instant          of the project and used as fill in other   I Section II, the General Assembly of      der from the manufacturer providing
action in New York for a judgment        portions of the soon to be highway.        the Commonwealth of Pennsylvania           for Mississippi courts to be the forum
declaring the rights and obligations     Given the nature of the construc-          is the only party with the power to des-   for litigation should not be binding
of the parties under the Kemper          tion, the PDOT obtained liability          ignate the forum where Pennsylvania        on the purchaser/developer if there
policy. Simultaneously pending in a      insurance for the possible pollution       may be sued. As such, the clause was       is no nexus of that jurisdiction to the
Pennsylvania court, was defendants’      and hazards associated with the cut        unenforceable and Pennsylvania had         manufacturer or purchaser.
action seeking payment of its claims     and fill process. Kemper issued an         a more compelling interest in main-
under the Kemper policy. In order        insurance policy (the policy) to the       taining the constitutional limits on       Peter Goetz is founding partner and
to dismiss the New York action and       PDOT and the Commonwealth of               the powers of its agencies. The New        Rosalie Valentino is an associate for
preserve its action in Pennsylvania,     Pennsylvania.                              York court therefore lacked subject        Goetz Fitzpatrick LLP, New York, N.Y.
the defendants asserted four different      Hazardous pyritic material was          matter jurisdiction.

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