The Hartford Steam Boiler Inspection And Insurance Co. v. Quantum Chemical Corp. No.

91 C6907, 1994 WL 494776 (N.D Ill. Sept. 8, 1994)

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Nature of the Case

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Facts

A heat exchanger at D's plant failed, causing damage to the heat exchanger and some surrounding property. D had insurance coverage under a policy issued by P as well as under policies issued by third-party defendants, Industrial Risk Insurers ('IRI') and DR Insurance Company ('DRI'). The P policy does not cover damages resulting from an explosion, but does cover damages resulting from an 'accident' to an 'object.' Conversely, the other policies cover damages resulting from explosions but do not cover accidents. Following the occurrence, D filed claims with all the companies. P maintains that D's losses were caused by an explosion, and therefore denies coverage, while the others maintain that the losses resulted from a pre-existing crack in the heat exchanger, and accordingly they also deny coverage. P sued D seeking a declaratory judgment that Quantum's losses were not covered under its policy pursuant to 28 U.S.C. §1332. D did not answer but filed another suit against all the insurance companies in Grundy County, Illinois, on April 3, 1992. The insurance companies each filed motions to dismiss or stay the state court action because of the concurrently pending suit in this court. The circuit court in Grundy County granted the motions to dismiss. On January 7, 1993, over fourteen months after the filing of the federal court action, and in response to this court's orders of November and December of 1992, D submitted its answer to the complaint in the federal court action, and counterclaimed against P. D also filed a third-party complaint against the other insurance companies. The Illinois Appellate Court affirmed the circuit court's dismissal of P in the state court action, but reversed and remanded as to the other insurance companies, recommending that the trial court stay the action pending this court's decision regarding the question of jurisdiction over the counterclaims against the other insurance companies in the federal court action. There is no diversity of citizenship between Quantum and the other insurers. D argues that this court lacks jurisdiction to hear its claims against the third-party defendants, while the insurers all argue that the claims against the Property Insurers can properly be heard in this court under supplemental jurisdiction, pursuant to 28 U.S.C. §1367.