Wisconsin Federal Court Denies Insurers’ Attempt to Consolidate Coverage Actions

WISCONSIN — A federal judge in Wisconsin denied several insurers’ request that it abstain from hearing claims against them for coverage in asbestos-related related suits against Eaton Corporation. Some of the underlying claims brought against Eaton were based on personal injuries from using products produced by a company Eaton acquired by merger, Cutler-Hammer, Inc. Each of the defendant insurers had, at some time, issued an excess liability insurance policy to Cutler-Hammer.

Eaton has coverage actions pending against insurers in both Ohio and Wisconsin. The Ohio action is a state court action dealing with coverage for suits based on asbestos-related personal injuries from Eaton’s own axle-brake business, while the Wisconsin case involves only coverage for suits based on Cutler-Hammer’s business. Motions are pending in the Ohio case that would make all of the defendant insurers parties in both the Ohio lawsuit and the Wisconsin lawsuit. The insurers asked the Wisconsin court to abstain from hearing the case so that all of the coverage questions related to Eaton could be decided in the Ohio state court action.

Federal courts can decide whether or not to hear a case over which they have jurisdiction under a doctrine called Wilton/Brillhart abstention. Federal courts often abstain from hearing cases under Wilton/Brillhart when there is a parallel state court proceeding on the same grounds. The defendant insurers argued that the court should choose that course here.

The court disagreed. Rather than deciding whether or not the Ohio action really was parallel to the Wisconsin action, the court pointed out that Wilton/Brillhart abstention only works for declaratory judgment claims. Because Eaton’s claims in the Wisconsin action included claims for damages for breach of contract and bad faith, and not just declaratory judgment claims, the court could not dismiss the case under Wilton/Brillhart.

The defendant insurers also asked the court to dismiss the Wisconsin action based on the forum non conveniens doctrine, which allows a court to dismiss a case under the assumption that there is (or will be) an action in another jurisdiction where it is more convenient for the parties to litigate. However, the court noted that recent federal decisions regarding forum non conveniens have stressed that it is an extraordinary remedy to be used sparingly, and usually only where the new action would take place in a foreign country. The court found that there was no strong reason to prefer Ohio over Wisconsin, and so the defendant insurers motion to dismiss was denied. The Wisconsin action will move forward.