Usx Corp. v. Adriatic Ins. Co.

Decision Date25 September 2003
Docket NumberNo. 00-3424.,00-3424.
Citation345 F.3d 190
PartiesUSX CORPORATION; Bessemer and Lake Erie Railroad Company v. ADRIATIC INSURANCE COMPANY; AG Group, The Successor in Interest to Securitas A.G.; AIU Insurance Company; Allianz Underwriters Insurance Company; Allianz Versicherungs A.G.; Allstate Insurance Company, The Successor in Interest to Northbrook Excess & Surplus Insurance Company and Northbrook Insurance Company; American Insurance Company; American Reinsurance Company; AON Corporation, The Successor in Interest to Union Indemnity Insurance Company of New York; Arkwright Mutual Insurance Company; Atlanta International Insurance Company; Birmingham Fire Insurance Company; Centennial Insurance Company; Continental Casualty Company; Continental Insurance Company; Danielson National Insurance, The Successor in Interest to the Mission Insurance Company; Employers Mutual Casualty Company; European General Reinsurance Company of Zurich; Evanston Insurance Company; Excess Insurance Company, Ltd.; Federal Insurance Company; Fireman's Fund Insurance Company; First State Insurance Company; Government Employees Insurance Company; Granite State Insurance Company; Haftpflichtverband Der Deutschen Industrie Versicherungsverein A.G.; Hartford Accident and Indemnity Company; Insurance Company of the State of Pennsylvania; International Insurance Company; Lexington Insurance Company; National Casualty Company; National Union Fire Insurance Company of Pittsburgh, PA; Northbrook Excess & Surplus Insurance Company; Northbrook Insurance Company; Rotterdamse Assurantiekas N.V.; St. Paul Surplus Line Insurance Company; Sentry Insurance, A Mutual Company, As Assumptive Reinsurer of the Great Southwest Fire Insurance Company; Swiss Reinsurance Company; Tudor Insurance Company; Twin City Fire Insurance Company; United States Fire Insurance Company; Vanliner Insurance Company, The Successor in Interest to The Great Southwest Fire Insurance Company; Westchester Fire Insurance Company; Zurich Insurance Company; Zurich International Ltd.; Certain of the Underwriters and International Insurers Subscribing to Lloyd's Policy Nos. 77DD2126C, 78BH3189, 78BH3190, 78BH3191, PY021577, PY021378/78DD1459C, 79BH1269, 79BH1270, 78DD1406C, 79BH1271, 79BH1272, 80DD19C/PY021379, 79BH5311, 79BH5312, PY135179, PY021379A, 80BH0659, 80BH0660, 80BH0661, 80BH0662, PY172180/80DD2562C, PY172280/80DD2563C, HA081280/LBM/1HB06910, 2KA42270/HA081281/LBN, KY019382, KY019482, KY021982, and KY021882; Icarom, Formerly known as Insurance Corporation of Ireland; Icarom plc, formerly known as Insurance Corporation of Ireland USX Corporation and Bessemer and Lake Erie Railroad Company Appellants.
CourtU.S. Court of Appeals — Third Circuit

Lawrence E. Flatley, George L. Stewart II, Traci Sands Rea, John A. Camp, Reed Smith, Pittsburgh, PA, J. Michael Jarboe, (argued on April 3, 2001, and August 1, 2003), Law Department of U.S. Steel Corporation, Pittsburgh, PA, for Appellants USX Corporation and Bessemer and Lake Erie Railroad Company.

Martin R. Baach, Stephen H. Marcus, Geovette E. Washington (argued on August 1, 2003), Baach, Robinson & Lewis, Washington, DC, Bernard D. Marcus, Robert L. Allman, II, Marcus & Shapira, Pittsburgh, PA, James P. Davenport (argued on April 3, 2001), Nussbaum & Wald, Washington, DC, for Appellees Certain, Underwriters at Lloyd's, London and Certain Companies in the, London Market.

William H. Briggs, Jr., Leslie S. Ahari, Benjamin C. Eggert, Ross, Dixon & Bell, Washington, DC, for Appellees Continental Casualty Company and Continental Insurance Company.

Stephen A. Cozen (argued on April 3, 2001, and August 1, 2003), Jay M. Levin, Gaele McLaughlin Barthold, Cozen & O'Connor, The Attrium, Philadelphia, PA, for Appellees AIU Insurance Company; Birmingham Fire Insurance Company; Granite, State Insurance Company; Insurance Company of the State of Pennsylvania; Lexington Insurance, Company; National Union Fire, Insurance Company of Pittsburgh, Pennsylvania; and Certain of the, Underwriters at Lloyd's.

Wendy L. Mager, Grayson Barber Smith, Stratton, Wise, Heher & Brennan, Princeton, Anthony W. Hinkle, Cipriana & Werner, Pittsburgh, PA, for Appellee Centennial, Insurance Company.

R. Kenneth Willman, Willman & Arnold, Pittsburgh, PA, for Appellees Arkwright, Mutual Insurance Company and, Employers Mutual Casualty, Company.

Richard S. Dorfzaun, David B. Fawcett, Jr., Dickie, McCamey & Chilcote, Pittsburgh, PA, for Appellee National, Casualty Company.

Thomas V. Gebler, Jr., Robb, Leonard & Mulvihill, Pittsburgh, PA, for Appellee Federal Insurance Company.

Roderick T. Dunne, Karbal, Cohen, Economou, Silk & Dunn, Chicago, James A. Mollica, Mollica & Murray, Pittsburgh, PA, for Appellee Evanston Insurance Company.

Elit R. Felix II, Margolis Edelstein, Philadelphia, PA, for Appellees Allianz Underwriters Insurance Company; Atlanta International Insurance, Company; Tudor Insurance, Company; and Atlanta, International Insurance Company.

Robert A. Arcovio, Judy Thomas, Margolis Edelstein, Pittsburgh, PA, for Appellees American, Insurance Company and Fireman's, Fund Insurance Company.

C. Leon Sherman, C. Leon Sherman & Associates, Pittsburgh, George R. Hardin, Hardin, Kundla, McKeon, Poletto & Polifroni, Springfield, NJ, for Appellees, International Insurance Company; United States Fire Insurance Company; and Westchester Fire Insurance Company.

William Savino, Michael Cassell, Chris Fichtl, Rivkin, Radler, Uniondale, NY, for Appellees American Reinsurance Company; Government Employees Insurance Co.; Sentry Insurance Company, Assumptive Reinsurer of the Great Southwest Fire Insurance Company; and Vanliner Insurance Company, the Successor in Interest to the Great Southwest Fire Insurance Company.

Jeffrey Bouslog, Oppenheimer, Wolff & Donnelly, Minneapolis, MN, Kevin P. Lucas, Manion, McDonough & Lucas, Pittsburgh, for Appellee St. Paul, Surplus Line Insurance Company.

Louis C. Long Meyer, Darragh, Buckler, Bebenek & Eck, Pittsburgh, PA, for Appellee Zurich, Insurance Company.

Arthur J. Liederman, Morrison, Mahoney & Miller, New York City, for Appellees Adriatic, Insurance Company; Allianz, Versicherungs A.G.; European, General Reinsurance Company of Zurich; Haftpflichtverband der, Deutschen Industrie, Versicherungsverein A.G.; and, Swiss Reinsurance Company.

Allen D. Windt, Ardmore, PA, for Appellee Excess, Insurance Company, Ltd.; First, State Insurance Company; Hartford, Accident & Indemnity Company; and Twin City Fire Insurance, Company.

BEFORE: ROTH, STAPLETON, and GREENBERG, Circuit Judges.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this court on appeal from a summary judgment entered for the defendants and from orders denying motions to remand this insurance policy coverage case to the state court in which it had been initiated. This litigation, though not reaching trial, has been protracted and has followed complex underlying proceedings in other consolidated cases. Though, as will be seen, we summarily will resolve the substantive issue before us which we find not to be difficult, we nevertheless set forth the background of the case in some detail.

Appellants USX Corporation and Bessemer and Lake Erie Railroad Company ("B&LE"), its subsidiary at the times material to this action (together herein usually called "USX"), have sought indemnification from the approximately 50 appellees ("insurers") under umbrella liability insurance policies the insurers issued to USX.1 These policies were developed for a program which USX initiated in the 1970s when, in consultation with its domestic insurance broker, Marsh & McLennan, it determined to obtain insurance for catastrophic liabilities. Ultimately USX obtained liability insurance in furtherance of this program covering seven periods from May 12, 1977, to April 1, 1983. From May 12, 1977, through December 1, 1979, the programs included between four and six layers of insurance providing $128.1 million to $151 million of coverage for liability imposed in excess of a $50 million self-insured retention. From December 1, 1979, to April 1, 1983, the programs involved between six and seven layers of insurance providing between $275 million and $325 million of coverage in excess of a $25 million self-insured retention. The multi-layered umbrella policies included broad comprehensive coverage based on London umbrella insurance policies and provided:

Underwriters hereby agree, subject to the limitations, terms and conditions hereinafter mentioned, to indemnify the Assured for all sums which the Assured shall be obligated to pay by reason of the liability:

(a) imposed upon the Assured by law... for damages on account of:

(i) Personal Injuries

(ii) Property Damage

(iii) Advertising Liability,

caused by or arising out of each occurrence happening anywhere in the world.

Joint App. at 133.2 The term "Personal Injuries" was defined as:

bodily injury ... mental injury, mental anguish, shock, sickness, disease, disability, false arrest, false imprisonment, wrongful eviction, detention, malicious prosecution, discrimination, humiliation; also libel, slander or defamation of character or invasion of rights of privacy, except that which arises out of any advertising activities.

Joint App. at 135. The policies, however, excluded coverage for liability arising out of discrimination based on race, creed, color or national origin. "Advertising liability" included:

1) Libel, slander or defamation;

2) Any infringement of copyright or of title or of slogan;

3) Piracy or unfair competition or idea misappropriation under an implied contract;

4) Any invasion of right of privacy;

committed or alleged to have been committed in any advertisement, publicity article, broadcast or telecast and arising out of the Named Assured's advertising activities.

Joint App. at 135-36. The term ...

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