Appeals courts agree MTBE coverage fight belongs in New York

A coverage dispute between insurers and a property owner over methyl-tertiary butyl ether contamination claims should proceed in New York state court where the insurers were first to file a lawsuit.

A New York appellate court panel ruled Thursday in St. Paul Fire & Marine Insurance Co. v. Getty Properties Corp. that a trial judge correctly rejected the property owner’s bid to dismiss a lawsuit led by the Travelers Cos. Inc. unit.

A New Jersey appellate panel in Getty Properties Corp. v. St. Paul Fire & Marine Insurance Co. et al. upheld the dismissal of Getty’s suit, which it filed after the insurers filed their lawsuit in New York state court in December 2018. The appeals court agreed with the trial judge’s April 2022 ruling that Getty’s lawsuit was filed in the wrong court.

Getty sought coverage under commercial general liability policies issued by units of Travelers, American International Group Inc. and others, after it and numerous petroleum companies were sued in 2007 by environmental agencies in Maryland, New Jersey and Pennsylvania over groundwater contamination from discharges of the gasoline additive, court records show.

St. Paul filed a lawsuit in New York’s Nassau County Supreme Court in December 2018, seeking a ruling that the insurers were not obligated to provide a defense or indemnification for the suits. Getty later filed a lawsuit in New Jersey state court over the insurers’ coverage obligations.

Getty moved to dismiss the New York state court action, but the trial judge denied the motion because the lawsuit was filed before the property owner’s New Jersey lawsuit.

The New Jersey trial judge granted the insurers’ motion to dismiss Getty’s lawsuit.

Representatives for the parties did not respond to requests for comment.