Thomson Inc. v. Ins. Co. of N. Am.

• Decision Date: 15 August 2014
• Docket Number: No. 49A05–1109–PL–470.,49A05–1109–PL–470.
• Citation: 11 N.E.3d 982
• Parties: THOMSON INC. n/k/a Technicolor USA, Inc., Appellant–Plaintiff/Cross–Appellee, v. INSURANCE COMPANY OF NORTH AMERICA n/k/a Century Indemnity Company, et al., Appellees–Defendants/Cross–Appellants, and XL Insurance America, Inc. f/k/a Winterthur International America Insurance Company, Appellee–Defendant/Cross–Appellant, and Travelers Property Casualty Co., et al., Appellee–Defendant/Cross–Appellant.
• Court: Indiana Appellate Court

11 N.E.3d 982

THOMSON INC. n/k/a Technicolor USA, Inc., Appellant–Plaintiff/Cross–Appellee,
v.
INSURANCE COMPANY OF NORTH AMERICA n/k/a Century Indemnity Company, et al., Appellees–Defendants/Cross–Appellants,
and
XL Insurance America, Inc. f/k/a Winterthur International America Insurance Company, Appellee–Defendant/Cross–Appellant,
and
Travelers Property Casualty Co., et al., Appellee–Defendant/Cross–Appellant.

No. 49A05–1109–PL–470.

Court of Appeals of Indiana.

June 19, 2014.
Rehearing Denied Aug. 15, 2014.

[11 N.E.3d 986]

George M. Plews, Frederick D. Emhardt, Katherine E. Winders, Josh S. Tatum, Sean M. Hirschten, Plews Shadley Racher & Braun LLP, Indianapolis, IN, for Appellant/Cross–Appellee.

Dale W. Eikenberry, Wooden & McLaughlin LLP, Indianapolis, IN, William M. Cohn, J. Christopher Madden, Cohn Baughman & Martin, Chicago, IL, for Appellee/Cross–Appellant Century Indemnity Company f/k/a Insurance Company of North America.

Stephen J. Peters, David I. Rubin, Harrison & Moberly, LLP, Indianapolis, Indiana, Matthew S. Ponzi, James B. Glennon, Foran Glennon Palandech Ponzi & Rudloff PC, Chicago, IL, for Appellee/Cross–Appellant XL Insurance America, Inc. f/k/a Winterthur International America Insurance Company.

OPINION
CRONE, Judge.
Case Summary

In 2004, a group of former factory workers and their heirs filed a class-action lawsuit in Taiwan (“the Taiwan Class Action”) against Thomson Consumer Electronics Television Taiwan Ltd. (“TCETVT”), a Taiwanese company which owned and operated an electronics manufacturing plant in Taiwan from the late 1980s to 1992. The

[11 N.E.3d 987]

workers sought damages for bodily injury allegedly resulting from exposure to organic solvents while working in the plant and living in dormitories near the plant. Over 99% of TCETVT's stock is owned by Thomson Consumer Electronics (Bermuda) Ltd. (“TCEB”), and less than .01% is owned by Thomson Inc. n/k/a Technicolor USA, Inc. (“Thomson”), a Delaware corporation with its headquarters in Indiana. Both TCEB and Thomson are wholly owned subsidiaries of French electronics company Thomson SA.

The Taiwan Class Action was dismissed in 2005 and reinstated in 2006. In 2007, the plaintiffs attempted to name Thomson SA, TCEB, and Thomson as additional defendants based on corporate-veil-piercing and joint-liability theories. Those entities have not yet been served or entered an appearance in the Taiwan Class Action. In 2008, Thomson filed a declaratory judgment action against its primary and umbrella liability insurers, seeking defense and indemnification costs for the Taiwan Class Action. The primary insurers included XL Insurance America, Inc. f/k/a Winterthur International America Insurance Company (“XL”) and Century Indemnity Company (“Century”).¹ The umbrella insurers included XL and Travelers Casualty and Surety Company f/k/a The Aetna Casualty and Surety Company and Travelers Property Casualty Company of America f/k/a The Travelers Indemnity Company of Illinois (collectively, “Travelers”).

In November 2009, Thomson filed a motion for summary judgment as to the primary insurers' duty to defend, which the trial court granted by interlocutory order in July 2010 (“the Duty to Defend Order”). In the Duty to Defend Order, the trial court ruled that XL and Century have a duty to defend Thomson in the Taiwan Class Action and reimburse Thomson for reasonable and necessary defense costs, which would be determined later. The insurers asked the trial court to certify the Duty to Defend Order for discretionary interlocutory appeal, and Thomson asked the trial court to certify it as a final judgment. The trial court denied both requests.

In October 2010, Thomson filed a motion for summary judgment as to trigger, allocation, occurrence, and the absence of aggregates in the primary policies at issue. In August 2011, the trial court entered a partial final judgment in favor of Thomson on certain issues (“the Allocation Order”). Thomson, XL, and Century appealed from the Allocation Order.

In October 2011, Thomson filed a motion for summary judgment for defense costs against XL and for defense costs coverage against Travelers. In June 2012, the trial court granted Thomson's motion to amend its complaint to add TCETVT as a plaintiff. The trial court also entered a partial final judgment against XL (“XL Defense Costs Order”) and a partial final judgment against Travelers (“Travelers Defense Costs Order”) (collectively, “the Defense Costs Orders”). XL and Travelers appealed from the Defense Costs Orders. The appeals from the Allocation Order and the Defense Costs Orders were consolidated. In May 2014, Thomson notified this Court that it had reached a full settlement on all issues with Travelers and had reached a partial settlement with Century regarding

[11 N.E.3d 988]

Century's liability for defending Thomson in the Taiwan Class Action. Travelers' appeal was dismissed,² and Century's appeal remained pending as to all indemnity issues.

The parties have raised numerous issues for review, which we have reordered and consolidated as the following eleven issues:

(1) XL contends that we should dismiss this appeal because the Duty to Defend Order is not a final judgment. We agree with Thomson that the Duty to Defend Order was essentially made final when the trial court issued the Defense Cost Orders. Therefore, we deny XL's request to dismiss.

(2) XL contends that the trial court erred in issuing the Duty to Defend Order because genuine issues of material fact remain as to the applicability of certain policy exclusions and defenses, such as the employer's liability exclusion and the known-loss doctrine. We affirm the trial court on this issue.

(3) Thomson contends that the trial court erred in ruling that there are only two “occurrences” under the XL and Century policies. We affirm the trial court on this issue.

(4) Thomson contends that the trial court erred in ruling that it must satisfy the deductible for each occurrence for XL's 2000, 2001, and 2002 primary policies. We affirm the trial court on this issue.

(5) XL contends that the trial court erred in failing to apply the self-insured retentions (“SIRs”) in its 2003, 2004, and 2005 primary policies. We reverse and remand with instructions to do so.

(6) Thomson contends that the trial court erred in concluding that the “personal injury” provisions in XL's 2000 primary policy are inapplicable. We reverse the trial court on this issue.

(7) XL contends that the trial court erred in applying a “continuous trigger” to its policies and in using diagnosis of disease as the manifestation point for that trigger. We conclude that XL has waived any argument regarding the applicability of a “continuous trigger” and therefore affirm on this issue. We conclude that the proper manifestation point is when the disease becomes reasonably capable of medical diagnosis and therefore reverse and remand on this issue.

(8) XL and Century contend that the trial court erred in using an “all sums” allocation method for their policies. We reverse and remand with instructions to use an appropriate pro rata allocation method.

(9) XL contends that the trial court erred in concluding that TCETVT and Thomson SA are insureds under its primary and umbrella policies. We affirm the trial court on this issue.

(10) XL contends that genuine issues of material fact exist regarding the reasonableness and necessity of Thomson's defense costs. We affirm the trial court on this issue.

(11) XL contends that the trial court erred in awarding prejudgment interest on the defense costs. We affirm the trial court on this issue.

[11 N.E.3d 989]

In sum, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

Facts and Procedural History

The Taiwan Class Action plaintiffs have alleged that Radio Corporation of America (“RCA”) was approved to operate in Taiwan (“RCAT”) in 1967 and established an electronics manufacturing plant in Taoyuan by 1970. Thousands of employees lived in dormitories near the plant. In 1986, RCA and the Taoyuan plant were merged into General Electric International, Inc. (“GEI”). In 1987, RCA and RCAT were acquired by Thomson SA through its wholly owned subsidiaries, including TCEB and Thomson. RCAT's name was changed to TCETVT. TCEB has always owned approximately 99.98% of TCETVT, and Thomson has owned between four and sixteen shares, or approximately .003% to .005%, of TCETVT. TCETVT, a Taiwanese company, owned and operated the plant until it was sold to a local developer in 1992. The plant was demolished in 2004 or 2005.

In April 2004, former plant employees and their heirs, who are members of a plaintiff association, filed a class-action lawsuit against TCETVT and GEI in Taiwan. The plaintiffs in the Taiwan Class Action sought damages for claimed exposure to the organic solvents trichloroethylene (“TCE”) and perchloroethylene (“PCE”) from 1970 to 1992. The original complaint alleged that TCETVT and GEI failed to properly train their employees regarding TCE and PCE and allowed them to improperly dispose of the solvents, which contaminated the soil and groundwater. The complaint also alleged that bodily injury occurred to employees who had either died from cancer, been diagnosed with cancer, or are at increased risk of cancer because of their exposure to the solvents. The plaintiffs later alleged that TCETVT employees were exposed to organic solvents in the plant through inhalation and dermal contact while soldering and dyeing and cleaning work tools and table tops, as well as through drinking contaminated groundwater. The employees also used the contaminated groundwater for bathing, clothes washing, and drinking in the dormitories.

Since 1992, TCETVT has had no employees. Thomson's general counsel, Meggan Ehret, has overseen TCETVT's defense in the Taiwan Class Action, and Thomson employee Richard Dyer has overseen environmental remediation at the Taoyuan plant that was ordered by Taiwanese...