New Jersey Supreme Court Refuses To Give Strict Application To "First Filed" Rule For Competing DJs
Despite the fact that Zurich filed its action for declaratory relief in New York before a New Jersey insured filed its own suit in New Jersey seeking a declaration of coverage for various claims arising out of contamination at a former paint manufacturig facility in New Jersey, the New Jersey Supreme Court ruled on Wednesday that the normal rule giving precedence to the "first filed" DJ shold be disregarded where the equities require it. In Sensient Corp. v. Allstate Ins. Co., A-99-06 (N.J. January 29, 2008), the Supreme Court held that "New Jersey is the natural forum for resolving insurance coverage issues concerning hazardous waste infested property located within its borders." The court also emphasized that it was important that a New Jersey court decided these issues since a New Jersey court would certainly not uphold any pollution exclusion that might limit the availability of funds to clean up this contamination.
The Sensient ruling is hardly surprising given the great weight that New Jersey courts have placed on New Jersey contacts in applying New Jersey law to coverage disputes. In light of the New York Court of Appeals' recent opinion in Foster Wheeler applying New Jersey law to pollution claims involving a New York insured that had moved to New Jersey. As long as the law of New Jersey and New Jersey differ on key issues such as pollution exclusions, these disputes over venue and choice of laws will continue.
