IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

NEW NGC, INC. §

§ C.A. No. 3:10-CV-00022
V. §
§ JURY TRIAL REQUESTED
ACE AMERICAN INSURANCE §
COMPANY, ET. AL. §

ACE AMERICAN INSURANCE COMPANY’S MEMORANDUM IN SUPPORT OF ITS

PARTIAL MOTION TO DISMISS, OR IN THE ALTERNATIVE STAY

Defendant ACE American Insurance Company (“ACE”) files this memorandum in

support of its partial motion to dismiss, or in the alternative stay, and respectfully shows as

follows:

I Factual Background

Plaintiff New NGC, Inc. (“NGC”) filed this action seeking coverage from its insurers for

various claims against it arising out of exposure to drywall products NGC manufactured, sold or

distributed.1 Among the policies NGC seeks coverage under are three excess liability policies

issued by ACE, numbered G23789504, G23887423 and G24638170 and effective from

November 1, 2006 to November 1, 2007, November 1, 2007 to November 1, 2008 and

November 1, 2008 to November 1, 2009 respectively (the “ACE excess policies”). Each of those

policies provides as follows:

The Definitions, Terms, Conditions, Limitations, and Exclusions of the

“first policy of UNDERLYING INSURANCE”, in effect at the inception
date of this policy, apply to this coverage unless they are inconsistent
with provisions of this policy, or relate to premium, subrogation, any

1
NGC’s Original Complaint at ¶¶ 1-5 and 17.

Case 3:10-cv-00022-RLV-DSC Document 36 Filed 03/03/10 Page 1 of 5

 obligation to defend, the payment of expenses, limits of insurance,
cancellation or any renewal agreement.2

National Union Fire Insurance Company of Pittsburg, PA filed a motion to dismiss, or

alternatively stay, proceedings (Docket Entry No. 30) based on the following arbitration

provisions contained in its policies.

In the event of a disagreement as to the interpretation of Exclusion Q. of

this policy or a disagreement as to the interpretation of any endorsements
attached to this policy amending Exclusion Q., the disagreement shall be
submitted to binding arbitration before a panel of three (3) arbitrators.
Within thirty (30) days of a written request for arbitration by either you
or us, each party will choose an arbitrator. If the two arbitrators are
unable to agree within one month upon the third arbitrator, such
arbitrator shall at the request of either party be selected by the American
Arbitration Association in accordance with its rules and procedures.

The parties shall submit their cases to the panel by written and oral
evidence at a hearing time and place selected by the third arbitrator. The
panel shall be relieved of all judicial formality, shall not be obligated to
adhere to the strict rules of law or evidence, shall seek to enforce the
intent of the parties hereto and may refer to, but are not limited to,
relevant legal principles. The decision of at least two (2) of the three (3)
panel members shall be binding and final and not subject to appeal
except for grounds of fraud and gross misconduct by the arbitrators. The
award will be issued within thirty (30) days of the close of the hearings.
Each party shall bear the expenses of its designated arbitrator and shall
jointly and equally share with the other the expense of the third arbitrator
and of the arbitration.

The arbitration shall take place in the state shown in Item 1 of the
Declarations. The procedural rules applicable to this arbitration, shall,
except as provided otherwise herein, be in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.

Each ACE excess policy names a National Union policy that contains the foregoing

arbitration provision as the first policy of Underlying Insurance.

2
ACE American Insurance Company Excess Liability Policies numbered G23789504, G23887423, and G24638170,
identified as Exhibits A, B, and C to the Affidavit of Veronica Scutaro (“Affidavit”). The Affidavit is attached
hereto and incorporated herein by reference as Exhibit 1.

2
Case 3:10-cv-00022-RLV-DSC Document 36 Filed 03/03/10 Page 2 of 5
II. Arguments and Authority

For the reasons more fully set out in National Union’s motion to dismiss, or alternatively

stay, proceedings, and supporting memorandum of law, which ACE incorporates by reference

herein, ACE moves the Court to dismiss the claims made under the ACE excess policies or stay

them pending arbitration. Not only are the ACE excess policies subject to the arbitration

provision, by virtue of the follow form language above, but they may not be reached until

National Union’s policies are exhausted. 3 NGC’s claims under the ACE excess policies will,

therefore, remain premature until the National Union policies’ terms and conditions are resolved

through binding arbitration and their limits are exhausted.

Respectfully submitted this 3rd day of March, 2010.

s/ Kimberly Sullivan_________________
Kimberly Sullivan
NC State Bar No. 23480
E-mail: ksullivan@cozen.com

3
Each policy provides:

WE will pay on YOUR behalf the ULTIMATE NET LOSS (1) in excess of all
UNDERLYING INSURANCE, and (2) only after all UNDERLYING
INSURANCE has been exhausted by the payment of the limits of such
insurance for losses arising out of OCCURRENCES that take place during OUR
policy period and are insured by all of the policies designated in the
Declarations as UNDERLYING INSURANCE. If any UNDERLYING
INSURANCE does not pay a loss for reasons other than the exhaustion of an
aggregate limit of insurance then WE shall not pay such loss.

3
Case 3:10-cv-00022-RLV-DSC Document 36 Filed 03/03/10 Page 3 of 5
 OF COUNSEL:

301 South College Street, Suite 2100

Charlotte, N.C. 28202
Telephone No.: (704) 376-3400

Joseph A. Ziemianski
S.D. TX Bar No. 25915, TX State Bar No. 0797732
E-mail: jziemianski@cozen.com
COZEN O’CONNOR
One Houston Center
1221 McKinney Street, Suite 2900
Houston, Texas 77010
Telephone: (832) 214-3900

ATTORNEYS FOR DEFENDANT,

ACE AMERICAN INSURANCE COMPANY

4
Case 3:10-cv-00022-RLV-DSC Document 36 Filed 03/03/10 Page 4 of 5
 CERTIFICATE OF SERVICE

I certify that a copy of the foregoing document was served on all counsel of record via
the Court’s electronic filing system on March 3, 2010.

s/ Kimberly Sullivan___________
Kimberly Sullivan

5
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