Case 5:13-cv-00976-TJM-ATB Document 1 Filed 08/14/13 Page 1 of 9

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF NEW YORK __________________________________ NEW YORK STATE ELECTRIC & GAS CORPORATION, Plaintiff, v. CENTURY INDEMNITY COMPANY & ONEBEACON AMERICA INSURANCE COMPANY Defendants. __________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Civil Action No. 5:13-CV-0976 (TJM/ATB) COMPLAINT AND JURY DEMAND

COMPLAINT AND JURY DEMAND Plaintiff, New York State Electric & Gas Corporation (NYSEG), for its Complaint for a declaratory judgment and damages against Defendants, alleges as follows: NATURE OF THE ACTION 1. Pursuant to 28 U.S.C. 2201 and 2202, NYSEG seeks a declaration of the

rights, duties, and obligations of the parties under the liability insurance policies sold by predecessors of Defendants Century Indemnity Company (Century Indemnity) and OneBeacon America Insurance Company (OneBeacon) to NYSEG, and damages because of Defendants breach of contract. Since Defendants have refused to pay NYSEGs defense and liability costs, actual controversies exist between the parties for which a judgment setting forth their respective rights and obligations is necessary.

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PARTIES 2. Plaintiff NYSEG is a corporation organized under the laws of the state of New

York with its principal place of business at 89 East Avenue, Rochester, New York. 3. Defendant Century Indemnity is a Pennsylvania corporation whose principal

place of business is in Philadelphia, Pennsylvania. Century Indemnity is the successor to The Indemnity Insurance Company of North America and The Insurance Company of North America. At all relevant times, Century Indemnity was authorized to do business and conducted and transacted business in New York. 4. Defendant OneBeacon is a Massachusetts corporation whose principal place of OneBeacon is the successor to Employers Liability

business is in Boston, Massachusetts.

Assurance Corp. At all relevant times, OneBeacon was authorized to do business and conducted and transacted business in New York. JURISDICTION AND VENUE 5. Subject matter jurisdiction exists over this action under 28 U.S.C. 1332 based

on complete diversity between Plaintiff and all Defendants and an amount in controversy exceeding $75,000, exclusive of interest and costs. 6. Personal jurisdiction exists over each Defendant because, inter alia, the

Defendants contacts with New York state satisfy the constitutional requirement of minimum contacts with the forum. 7. Venue is proper pursuant to 28 U.S.C. 1391(2) because a substantial part of the

events or omissions giving rise to the claim occurred in this district, and Plaintiff NYSEG suffered damages in this district.

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FACTUAL BACKGROUND The Insurance Policies 8. From 1951 to 1970, NYSEG purchased two successive first-layer excess general

liability coverage policies from Defendants (the NYSEG Policies ) to protect itself from liability incurred as a result of its business activities. 9. NYSEG expended substantial premiums to purchase the NYSEG Policies. The

NYSEG Policies require Defendants to assume responsibility for NYSEG s defense costs and legal liabilities following the payment of a sum that varies in amount over time. 10. The NYSEG Policies require Defendants to indemnify NYSEG for defense costs

and all sums that NYSEG becomes legally obligated to pay as a result of property damage, as long as any part of the damage for which NYSEG is liable occurred during the policy period. The contractual obligation of Defendants is subject to the limits of liability stated in each of the respective policies. 11. The policy numbers, periods, and limits of the NYSEG Policies are identified in

the schedule of insurance policies attached as Schedule A, which is incorporated by reference as if fully set forth herein. The Sites 12. NYSEG seeks indemnification in this action for defense costs and liability related

to 22 former manufactured gas plant sites in New York (collectively, the MGP Sites ). NYSEG has conducted, or will conduct, investigations and cleanup activities at the MGP Sites pursuant to both the New York Environmental Conservation Law 1-0101 et seq., and the orders and directives of the New York State Department of Environmental Conservation ( NYSDEC ). In

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addition, NYSEG also incurred costs to mitigate its damages by pursuing another third party for contribution to the investigation and cleanup of the MGP Sites. 13. A list of the MGP Sites for which NYSEG seeks indemnity is attached as

Schedule B to this complaint and is incorporated herein by reference. 14. NYSEG has complied with all terms and conditions of the NYSEG Policies,

including payment of premiums and notice. 15. 16. NYSEG is entitled to all benefits provided by the NYSEG Policies. The Defendants have failed to indemnify NYSEG for defense costs and liability

related to the MGP Sites. FIRST CLAIM (For Declaratory Judgment On The Defendants Obligation To Pay NYSEGs Defense Costs And To Indemnify NYSEG For Liability) 17. NYSEG repeats each and every allegation contained in Paragraphs 1 through 16

as if fully set forth herein. 18. The insurance policies at issue in this action provide NYSEG with insurance

coverage for defense costs and liability arising from property damage. 19. The Defendants are obligated to pay NYSEG s defense costs and liability or to

reimburse NYSEG for NYSEG s payment of its defense costs and liability arising in connection with environmental property damage associated with the MGP Sites during the period for the NYSEG Policies. 20. 21. NYSEG has incurred defense costs and liability related to the MGP Sites. The Defendants have failed to indemnify NYSEG with respect to its defense costs

or to reimburse NYSEG for NYSEG s payment of its defense costs incurred in connection with the claims and investigations associated with the MGP Sites. The Defendants also have failed to 4

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indemnify NYSEG with respect to costs and expenses it incurred to remedy environmental property damage associated with the MGP Sites, and has disputed its obligation to do so. 22. An actual and justiciable controversy currently exists between NYSEG and

Defendants with respect to the duties and obligations of Defendants under their insurance policies to pay for NYSEG s defense costs and liability or to reimburse NYSEG for NYSEG s payment of its defense costs, incurred in connection with the claims and investigations, and liability associated with the MGP Sites. 23. NYSEG thus seeks a judicial determination by this Court of the obligation of

Defendants to indemnify NYSEG with regard to defense costs and liability arising from the MGP Sites. Such a judicial determination is necessary and appropriate at this time under the circumstances alleged. SECOND CLAIM (For Breach Of Contract) 24. herein. 25. respects: a. The Defendants have failed and/or refused to indemnify NYSEG for, or pay any of, NYSEG s defense costs in connection with the investigations of environmental property damage associated with the MGP Sites; and b. The Defendants have failed and/or refused to indemnify NYSEG for, or pay any of, NYSEG s liability in connection with the cleanup of environmental property damage associated with the MGP Sites. The Defendants have breached the terms of the NYSEG Policies in the following NYSEG reasserts the allegations of Paragraphs 1 through 16 as if fully set forth

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26.

As a direct and proximate result of the Defendants breach of contract,

Defendants have deprived NYSEG of the benefit of the insurance coverage for which NYSEG paid substantial premiums. 27. As a direct and proximate result of the Defendants breach of contract, NYSEG

has sustained and will sustain substantial damages, in an amount to be determined at trial, including but not limited to, the sums spent and to be spent to investigate, defend, and resolve the environmental property damage associated with the MGP Sites. PRAYER FOR RELIEF WHEREFORE, NYSEG requests a judgment against each Defendant as follows: (a) On the First Claim for Relief, that this Court determine and declare that each Defendant is obligated under its liability insurance policies to pay for NYSEG s defense costs and liability or to reimburse NYSEG for NYSEG s payment of its defense costs and liability associated with the MGP Sites, subject to policy limits. (b) On the Second Claim for Relief, for damages, in an amount to be determined at trial. (c) On all claims for relief, for NYSEG s reasonable attorneys fees, interest, costs, and the expenses of this action. (d) For such other and further relief as this Court deems just and proper.

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JURY DEMAND Plaintiff NYSEG demands a jury on all claims in this Complaint triable by jury.

Dated: August 14, 2013

Respectfully submitted, /s/ James S. Gleason James S. Gleason (No. 101789) Hinman, Howard & Kattell, LLP 700 Security Mutual Building 80 Exchange St. P.O. Box 5250 Binghamton, NY 13902 Phone: (607) 231-6703 Fax: (607) 723-6605 jgleason@hhk.com Of Counsel: David L. Elkind Kristin C. Davis DICKSTEIN SHAPIRO LLP 1825 Eye Street, NW Washington, DC 20006 Phone: (202) 420-2200 Fax: (202) 420-2201 elkindd@dicksteinshapiro.com davisk@dicksteinshapiro.com Counsel for Plaintiff New York State Electric & Gas Corporation

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SCHEDULE A: INSURANCE POLICIES Insurance Company Indemnity Insurance Company of North America Employers Liability Assurance Corp. Policy Number XPL 3587 E16-E091-004 Policy Period 10/1/1951 to 10/1/1964 10/1/1964 to 10/1/1970 Policy Limits $2 million $2 million

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SCHEDULE B: SITES Site Name Auburn Clarke St. Auburn McMaster Clyde Corning Cortland-Homer Dansville Elmira Madison Geneva Border City Goshen Granville Ithaca Court St. Lockport Transit St. Lyons Mechanicville Central Avenue Newark Norwich Oneonta Owego Palmyra Penn Yan Water St. Plattsburgh Saranac St. Seneca Falls