## Facts

- Niagara Transformer Corporation purchased PCB products from Monsanto in the 1960s–1970s under arrangements that included reciprocal indemnification obligations.
- Decades later, Monsanto faced numerous PCB-related lawsuits and demanded that Niagara defend and indemnify Monsanto in connection with certain PCB actions.
- Niagara requested that its historical liability insurer, Admiral Insurance Company, defend and indemnify Niagara for existing and future Monsanto-related disputes.
- Admiral denied coverage and filed a federal declaratory-judgment action seeking rulings that it owed Niagara no duty to defend and no duty to indemnify for Monsanto’s demands, including potential future claims.
- Niagara moved to dismiss for lack of Article III jurisdiction, arguing there was no justiciable controversy because Monsanto had not sued Niagara.

## Issues

1. Whether a declaratory judgment on Admiral’s duty to indemnify Niagara was justiciable when Niagara’s liability to Monsanto had not been established.
2. Whether a declaratory judgment on Admiral’s duty to defend Niagara required an already-filed (or explicitly threatened) Monsanto lawsuit, or instead turned on whether there was a “practical likelihood” Monsanto would sue Niagara.

## Decision

- The Second Circuit affirmed dismissal of the duty-to-indemnify claim for lack of a justiciable controversy.
- The Second Circuit vacated the dismissal of the duty-to-defend claim and remanded for the district court to determine whether there existed a practical likelihood that Monsanto would file suit against Niagara.
- The court held the district court erred by treating justiciability of the duty to defend as dependent on the absence of an actual or explicitly threatened suit and by relying on its view of Monsanto’s likelihood of success.
- On remand, the district court was directed to develop the record and make findings relevant to practical likelihood (including Monsanto’s demands and similar prior litigation involving other purchasers).

## Legal Principles

- The Declaratory Judgment Act permits relief only where an Article III “case of actual controversy” exists; the controversy must be sufficiently immediate and real, not hypothetical.
- In the Second Circuit, insurance declaratory actions become justiciable upon a “practical likelihood” that the relevant duty will be triggered.
- The duty to indemnify is generally not ripe when it depends on unresolved, contingent events such as whether the insured will be held liable or settle.
- The duty to defend is analytically distinct from indemnification; justiciability may exist before suit is filed if it is practically likely the insured will be sued.

## Conclusion

The Second Circuit held that a pre-liability request to declare no duty to indemnify was premature, but it required a separate, duty-specific ripeness analysis for the duty to defend and remanded for fact-finding on whether litigation by Monsanto against Niagara was practically likely.


Admiral Ins. Co. v. Niagara Transformer Corp., 57 F.4th 85 (2d Cir. 2023)