A federal court should dismiss the lawsuit filed in Wyoming this month by the insurance company that claims the owners of the Hitching Post Inn in Cheyenne torched the legendary hotel for the money, according to legal papers filed last week.
“They [CJM Hospitality LLC] are asking the dispute here in Wyoming be dismissed and the suit in New Jersey be the only one considered,” said National Surety Corp.’s attorney Scott Klosterman of the Casper firm of Williams, Porter, Day & Neville.
CJM first sued National Surety Corp. in federal court in New Jersey in December for not paying for nearly $14 million in damages sustained when the Hitching Post burned on Sept. 15, 2010, according to CJM’s attorney Brian Osias.
First is foremost, Osias wrote in his motion filed in U.S. District Court in New Jersey last week.
For more than 60 years, the 3rd U.S. Circuit Court of Appeals — with its jurisdiction over New Jersey, Pennsylvania Delaware and the Virgin Islands — has followed a “’first to file’ rule,” he wrote. (Wyoming is in the Denver-based 10th U.S. Circuit.)
That means “in all cases of concurrent jurisdiction, the court which first has
possession of the subject must decide it,” Osias wrote.
Osias, of the Newark, N.J., law firm McCarter and English LLP, declined to comment on the filing.
Klosterman said he will file a response to CJM’s demand.
Both lawsuits, Osias wrote, deal with the same subject: an insurance policy to cover damages for the burned Hitching Post.
Having the Wyoming federal court dismiss the National Surety lawsuit will avoid wasting judicial resources and the possibility of conflicting court orders, he wrote.
But the subject goes way beyond whether the Chicago-based National Surety Corp. should pay the Delaware-based CJM Hospitality LLC the real property replacement costs of up to $12,390,000, and covered business and personal property replacement costs of up to $1,250,000, according to CJM’s complaint filed Dec. 7.
CJM stated, “On September 15, 2010, a fire erupted at 1700 Lincoln Way, Cheyenne, Wyoming (the ‘underlying claim’).”
A fire did erupt, agreed National Surety Corp. in its complaint filed Jan. 5 in Wyoming.
It erupted because CJM Hospitality burned down the Hitch for the insurance money, according to National Surety’s lawsuit filed Jan. 5 in Wyoming. CJM denies the allegation.
CJM and other defendants conspired in a pattern of racketeering — covered under the Racketeer Influenced and Corrupt Organizations Act — with “The commission of arson of the Hitching Post Inn, and the conspiracy to commit arson of the Hitching Post Inn,” according to the complaint.
Other racketeering acts included misrepresentations about buying the Hitch, applying for insurance and the investigation of the claim after the fire, according to the National Surety complaint.
CJM’s owners and other defendants also committed mail and wire fraud to transmit false information and receive insurance funds, and misrepresented themselves about their finances and other matters, according to the complaint.
As a result, National Surety Corp. owes nothing to CJM Hospitality, according to the complaint.
CJM acknowledges National Surety Corp.’s RICO allegations of conspiracy about the issuance of the policy, the fire and claims investigation, and arson — and denies them, Osias wrote. “National Surety has failed to properly plead its RICO claim, and CJM vigorously disputes it.”
CJM says National Surety will need to bring forward its allegations of arson and conspiracy in defending the lawsuit filed in New Jersey, which is another reason why the Wyoming federal court should dismiss the insurance company’s case.
In a related court document, CJM said a RICO allegation must include “’the threat of continuing activity,’” and National Surety didn’t make that argument.
The court also should block the National Surety lawsuit because four of the five individual defendants live in New York or New Jersey, and a trial in Wyoming would impose a hardship on them, Osias wrote.
No circumstances warrant having a separate lawsuit in Wyoming, he wrote. “CJM, therefore, respectfully requests that the Court enjoin National Surety from proceeding in its second-filed District of Wyoming action.”