CGL Insurer, Represented by Traub Lieberman Straus & Shrewsberry LLP, Obtains Dismissal of Declaratory Judgment Action by Auto Insurer
July 07, 2010

Attorneys Meryl R. Lieberman, Eric D. Suben, and Megan E. Bronk successfully obtained dismissal of an automotive insurer’s declaratory judgment action against the same insured’s CGL insurer. In the complaint, the auto insurer requested declaratory judgment that it had no obligation to defend and indemnify the insured in underlying litigation. The auto insurer also requested declaratory judgment that the CGL insurer was so obligated. In moving to dismiss the declaratory judgment action against the CGL insurer, TLS&S attorneys argued that because the auto insurer had no rights under the CGL policy as an insured or third-party beneficiary, there was no “actual controversy” between the two insurers, and therefore the auto insurer did not constitute an “interested party” with standing to bring the action under the federal Declaratory Judgment Act, 28 U.S.C. § 2201. In opposition, the auto insurer argued that it had standing as a subrogee of its insured, despite its not having paid any loss on the insured’s behalf and despite the federal court’s having previously rejected the same argument. Ruling from the bench, United States District Judge Jed S. Rakoff granted the motion to dismiss specifically on the basis that in the absence of any rights under the CGL policy, the auto insurer lacked standing under Article III of the United States Constitution to bring a declaratory judgment action with respect to that policy.