The following papers numbered 1 to 5 were read on this motion:

Defendants bring their motion seeking to stay the instant action pending the hearing and determination of the arbitration among Lexington Insurance Company ("Lexington"), Tutor Perini/Parsons, J.V., and STV, Incorporated ("STV"), which Tutor Perini/Parsons Joint Venture ("TPP") commenced in April 2024 before the American Arbitration Association (the "arbitration").

The arbitration arises out of a series of agreements pertaining to a construction project at Newark Airport. TPP was to design and construct the project. It entered into a subcontract with STV as the architect and engineer of the project. The subcontract provides that TPP would provide insurance for the project, and "will accept the responsibility for payment of any deductibles or self-insured retentions associated with claims made against this Professional Liability policy. The Contractor will not look to Architect/Engineer for any Errors and Omissions damages until the $25,000,000 Professional Liability policy is exhausted." TPP purchased this policy from Lexington.

The policy provides, in relevant part, that "STV is the First Named Insured and the Named Insured;" "The Self-Insured Retention is "$1,000,000 Each Claim;" "The Company shall have no obligation to pay or indemnify any Claims Expenses and/or Damages unless and until the Self-Insured Retention has been satisfied in full by the Insureds involved in any incident, circumstance, event and/or Claim reported under this policy" and, most importantly, "Any disagreement as to the interpretation of this policy . . . shall be submitted to binding arbitration . . . as the sole and exclusive remedy."

In January 2023, TPP sent a demand letter to STV regarding damages that it had incurred because of STV's role in the project. It then sent a revised letter in August 2023 regarding additional damages incurred as a result of STV's alleged errors and omissions in its design of the project. In December 2024, Lexington's claims handler sent a letter in response, taking the position that there were seven separate claims being made against the policy and that each required payment of the $1 million deductible before Lexington would accept the tender. Lexington also took the position that New York law applies to the dispute because the policy was issued in New York, even though the location of the Project was Newark. (No party addresses whether the laws of New Jersey and New York on the relevant issues differs in any meaningful way.)

In its arbitration demand, TPP asserted that "New Jersey law applies to this dispute, given the fact that the policy was issued for a project being constructed in Newark, New Jersey;" and that "the claims asserted against STV regarding its errors and omissions should be treated as one claim for the purpose of assessing the SIR deductible in accordance with the language of the policy."

The arbitration is proceeding. Eventually, TPP sued STV over the alleged deficiencies in its work (Index No. 71967/2023, the "Lawsuit"). Thereafter, STV commenced this declaratory judgment action, asserting in its complaint that it "has incurred costs in defending the Lawsuit as part of the Self-Insured Retention obligation contained in the Policy," but that TPP "has declined to pay the Invoices representing STV's self-insured retention obligation under the Policy." STV further contends that "JV will continue to refuse to pay future invoices representing payments for the Self-Insured Retention obligation contained in the Policy. STV is entitled to a declaration that the terms of the Subcontract require JV to pay all past and future costs incurred [*2]by STV under the Self-Insured Retention obligation contained in the Policy."

In this motion, TPP contends that "the parties' rights and obligations regarding the [self-insured retention] depends [sic] on the interpretation of the Policy, and, as such, is an arbitrable issue" and that STV, in this action, "seeks declaratory judgment as to its and TP/P's respective rights and obligations concerning the SIR under the Policy. STV's argument is based on a provision of the Subcontract, which provides, inter alia, 'The contractor will accept the responsibility for payment of any deductibles or self-insured retentions associated with claims made against this Professional Liability policy.'" TPP further asserts that "Under the Policy [] STV as the Insured and First Named Insured is responsible for the payment of the SIR. TPP's responsibility, if any, for the SIR under the Subcontract, therefore, is derivative of STV's responsibility for the SIR under the Policy."

TPP concludes that "All of the factors indicate this is a proper case for stay [sic] of the action pending the completion of the arbitration: (1) both STV and TP/P are parties to both the arbitration and the SIR Action; (2) the same issue—to wit, the extent of the responsibility for the SIR—is at the heart of both the arbitration and the SIR Action; (3) the same evidence would have to be presented in both the arbitration and the SIR Action; (4) there is a risk of inconsistent outcomes; (5) the outcome of the arbitration could dispose of or limit the issues involved in the SIR Action; and (6) granting the stay could avoid the waste of judicial resources."

In response, STV contends that a stay is both inappropriate and would severely prejudice it. Specifically, STV asserts that "the two actions involve different parties, different claims and seek entirely different relief. Accordingly, there is no risk of inconsistent adjudications, duplication of proof or waste of judicial resources to justify a stay." STV claims that the "arbitration will not resolve the dispute at issue plead [sic] in this case. An arbitration ruling on the number of SIRs applicable under the Policy to the allegations asserted in the TPP Action will not in [sic] affect the determination of whether TPP is obligated to pay the SIR applicable to claims made against STV. Accordingly, a stay of this case pending a determination of the arbitration over the number of applicable SIRs will only delay resolution of this action and further prejudice STV." Instead, STV argues that "Given TPP's admission that it is obligated under the terms of the Subcontract to pay any deductibles or self-insured retentions associated with claims made against the Policy, and given the clear and unambiguous terms of the Subcontract, TPP's motion amounts to nothing more than a bad faith attempt to further delay payment due and unfairly prejudice STV in its defense of the TPP action."

STV suggests that if the Court were to stay this case "pending a determination in TPP's arbitration with Lexington, then this Court should also stay the TPP Action pending that determination. Failure to stay the TPP Action will result in patent unfairness, with STV being forced to incur significant defense costs and expenses in defending the TPP Action despite the clear, unambiguous and undisputed terms of the Subcontract obligating TPP to pay those costs." It does not appear that TPP addressed this alternative suggestion in its reply papers.

Having considered the parties' contentions, the Court is not persuaded by STV's assertion that the issues raised in the arbitration will not overlap with the issues raised in this action. See NAMA Holdings, LLC v. Greenberg Traurig, LLP, 62 AD3d 578, 579, 880 N.Y.S.2d 34, 35 (1st Dept. 2009) ("the court should have granted a stay pursuant to CPLR 2201 in the interest of judicial economy. There are overlapping issues and common questions of fact."). While TPP did frame its request for relief somewhat narrowly, it is clear that determining whether the self-insured retention is $1 million or $7 million is intertwined with the issue of TPP's payment of [*3]STV's costs in the Lawsuit. See Est. of Castellone v. JP Morgan Chase Bank, N.A., 60 AD3d 621, 624, 875 N.Y.S.2d 130, 133 (2d Dept. 2009) ("Inasmuch as the issues to be decided in the arbitration against Chase and its predecessors are in many respects identical to those to be decided against the individual defendants, the action insofar as asserted against the individual defendants should have been stayed as well.").

However, to minimize any prejudice to STV from it being forced to incur costs in the Lawsuit, which it contends should be reimbursed by TPP, the Court finds that the Lawsuit should also be stayed. Accordingly, the Court (1) grants the motion to stay this litigation; (2) stays Index No. 71967/2023; and (3) directs the parties to take all steps necessary to expedite the arbitration.

The foregoing constitutes the decision and order of the Court.^[FN1]