Allegheny Ludlum, LLC v. Liberty Mut. Ins. Co.

• Decision Date: 17 September 2020
• Docket Number: Civil Action No. 2:17-cv-1243-WSS
• Citation: 487 F.Supp.3d 350
• Parties: ALLEGHENY LUDLUM, LLC, Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY et al., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

487 F.Supp.3d 350

ALLEGHENY LUDLUM, LLC, Plaintiff,

v.LIBERTY MUTUAL INSURANCE COMPANY et al., Defendants.

Civil Action No. 2:17-cv-1243-WSS

United States District Court, W.D. Pennsylvania.

Filed September 17, 2020

Thomas J. Smith, Jessica Moran, David R. Osipovich, K&L Gates LLP, Pittsburgh, PA, for Plaintiff.

John C. Sullivan, Kathleen K. Kerns, Post & Schell, P.C., Philadelphia, PA, for Defendants Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company.

Danielle L. Dietrich, Strassburger McKenna Gutnick & Gefsky, Michael A. Shiner, Tucker Arensberg, Pittsburgh, PA, James Ruggeri, Pro Hac Vice, Timothy R. Dingilian, Pro Hac Vice, Shipman & Goodwin LLP, Washington, DC, for Defendants Hartford Casualty Insurance Company, Hartford Accident and Indemnity Company.

Ansley S. Westbrook, II, John J. Berry, Nicholas J. Godfrey, Dinsmore & Shohl LLP, Pittsburgh, PA, Scott E. Turner, Pro Hac Vice, Cna Coverage Litigation Group, Chicago, IL, Seth Goodman Park, Pro Hac Vice, Cna Coverage Litigation Group, New York, NY, for Defendant Continental Casualty Company.

Alan S. Miller, R. Brandon McCullough, Houston Harbaugh, P.C., Pittsburgh, PA, for Defendant United States Fidelity and Guaranty Company.

OPINION

WILLIAM S. STICKMAN IV, District Judge

This is an insurance dispute about whether Defendants owed coverage to Plaintiff for an underlying toxic tort action. There are seven pending cross-motions for summary judgment filed by Plaintiff Allegheny Ludlum, LLC ("Allegheny") and Defendants Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company (collectively "Liberty Mutual"), Continental Casualty Company ("Continental"), United States Fidelity and Guaranty Company ("USF&G"), Hartford Casualty Insurance Company, and Hartford Accident and Indemnity Company (collectively "Hartford"). (ECF No. 132); (ECF No. 136); (ECF No. 140); (ECF No. 144); (ECF No. 148); (ECF No. 150); (ECF No. 152). The Court considered all the relevant filings and representations made at oral argument. For the reasons set forth below, the Court holds that all Defendants are entitled to summary judgment in their favor. This case is, therefore, dismissed.

FACTUAL BACKGROUND

Arvin-Meritor, Inc. ("Arvin Meritor") operated an automobile muffler manufacturing facility from 1964 to 2002 in Fayette, Alabama. (ECF No. 1 at p. 4). Some of the products used in its facility were bought from Allegheny, a manufacturing company based in Pittsburgh, Pennsylvania. Allegheny took out insurance policies with four insurers during the relevant period: Hartford from July 1, 1982 to July 1, 1985; Liberty Mutual from July 1, 1985 to November 1, 1998; Continental from November 1, 1997 to November 1, 2000; and USF&G from November 1, 2000 to November 1, 2002. E.g. , (ECF No. 1-17); (ECF No. 1-3); (ECF No. 1-10); (ECF No. 1-21); (ECF No. 1-22). In 2003, former employees of Arvin Meritor filed a toxic tort action referred to as the Bell-Carr litigation. Their complaint raised several claims, including wantonness. ECF No. 1 at p.4. They amended their complaint for the first time on May 6, 2005 by adding new defendants, including Allegheny. (ECF No. 1-25 at p. 3).

Between June 2005 and June 2011, the Supreme Court of Alabama adjudicated several statute of limitations issues arising from, or at least pertinent to, the Bell Carr litigation. In 2007, the Alabama Supreme Court held that claims against new defendants did not relate to the filing date of the original complaint for statute of limitations purposes. Ex parte Int'l Ref. & Mfg. Co. , 972 So. 2d 784, 791 (Ala. 2007). Plaintiffs reacted by filing a second amended one-count complaint against Allegheny seeking compensatory damages for wantonness. (ECF No. 1 at p. 5). On January 16, 2009, the Supreme Court of Alabama held that a six-year limitations period applied to Bell-Carr plaintiffs’ wantonness claim. Bell Carr, Jr., et al. v. Int'l Refining & Mfg. Co. d/b/a/ Irmco, et al. , 13 So.3d 947, 955 (Ala. 2009). This holding dismissed all plaintiffs whose injuries occurred exclusively before May 6, 1999. After this point, the parties treated May 1999 to May 2002 as the operative limitations period. One month later, plaintiffs issued a settlement position statement stating that the time period for wantonness claims was from 1999 to 2002. On June 30, 2011, the Alabama Supreme Court held that a plaintiff injured by exposure to a toxic substance is limited to recovering damages within the statute of limitations period. Jerkins v. Lincoln Elec. Co. , 103 So. 3d 1, 7-8 (Ala. 2011).

On September 14, 2010, Liberty Mutual and Hartford held a teleconference with Allegheny. The next day, Allegheny's Senior Director of Risk Management, Colleen Hannegan, sent a follow-up email to Defendants discussing the applicability of the Alabama Supreme Court's 2009 decision in Carr . Allegheny's position at that time was that Liberty Mutual and Hartford owed no coverage. In 2013, Liberty Mutual and Hartford negotiated a cost-share limited to Allegheny's pre-2009 defense costs. In 2016, however, Allegheny purportedly "discovered" that it incorrectly interpreted Carr , and consequently erred in negotiating the 2013 cost-share. Allegheny ultimately settled the underlying litigation in 2017, but changed its position on the issue of whether its insurers owed coverage. When all four insurers denied coverage, Allegheny sued. Its four-count Complaint, filed on September 25, 2017, requests declaratory judgment and alleges failure to defend and bad faith. (ECF No. 1 at pp. 8–11).

STANDARD OF REVIEW

Summary judgment is warranted if the Court is satisfied that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.¹ FED. R. CIV. P. 56(c) ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material if its adjudication is necessary to the disposition of a substantive claim or defense. In other words, there is a genuine dispute of material fact "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court must view the evidence presented in the light most favorable to the nonmoving party. Id. at 255, 106 S.Ct. 2505. It refrains from making credibility determinations or weighing evidence. Id. "Real questions about credibility, gaps in the evidence, and doubts as to the sufficiency of the movant's proof," will defeat a motion for summary judgment. El v. Se Pa. Transp. Auth. , 479 F.3d 232, 238 (3d Cir. 2007).

ANALYSIS

The pending motions for summary judgment raise related issues and will be examined together. The motions of Liberty Mutual and Hartford raise similar issues relating to the statutes of limitations on Allegheny's coverage claims and bad faith claims. They will be analyzed together. Likewise, the arguments of Continental and USF&G lend themselves be being considered together. Having thoroughly weighed all of the parties’ respective positions, the Court will grant summary judgment in favor of all Defendants.

I. Liberty Mutual and Hartford

The Court will combine its analysis of both sets of cross-motions for summary judgment filed by Liberty Mutual, Hartford, and Allegheny because they involve common issues centering around the statutes of limitations governing Allegheny's coverage and bad faith claims. The Court holds that all of Allegheny's claims against Liberty Mutual and Hartford are time-barred.

A. Counts 1 and 2: Declaratory Judgment

Liberty Mutual and Hartford argue that the Court should grant summary judgment against Allegheny's counts for declaratory judgment because they were untimely under Pennsylvania's statute of limitations: 42 Pa. C.S.A. § 5525(a)(08). The statutory period under Section 5525 for declaratory judgment actions and breach of contract claims is four years. The statutory period begins to run when a claim accrues. So, when does such a claim accrue? That is the dispositive question for this issue. The parties proffer different theories, each backed by their own purportedly controlling case.

Until relatively recently, there was little caselaw on when a claim accrues, and the statutory period begins to run in declaratory judgment actions seeking insurance coverage. Allegheny argues that the statute of limitations does not run until the termination of the underlying litigation, not the date that coverage was disclaimed by the insurer. It bases its argument on the Honorable Joy Flowers Conti's decision adopting the Report and Recommendation of United States Magistrate Judge Lisa Pupo Lenihan in Wiseman Oil Co., Inc. v. TIG Ins. Co. , 878 F. Supp. 2d 597, 601–02, 604 (W.D. Pa. 2012) ("As Plaintiffs’ cause of action for breach of the duty to defend accrued—i.e., its right of action was complete—when the Underlying Litigation was terminated and the defense costs were fixed, this claim and Plaintiffs’ corresponding declaratory judgment claim are within the applicable statute of limitations." (citing Moffat v. Metro. Cas. Ins. Co. of N.Y. , 238 F. Supp. 165, 175 (M.D. Pa. 1964) )). Judge Conti purported to apply Pennsylvania law, but recognized the dearth of authority and qualified her opinion by saying that her interpretation had "not [yet] been controverted by the Pennsylvania Court and its reasoning that ‘the right of action is complete’ only after there is a final judgment against the insured has become the clear majority rule.’ " (citing, as persuasive authority, case law from other forums).

The qualifying language in Wiseman is essential to this case, as the winds of change blew against that interpretation in 2015. In that year, the Pennsylvania Superior Court, sitting en banc , handed down its decision in Selective Way Ins. Co. v. Hosp. Grp., Serv.’s, Inc. , 119 A.3d 1035 (Pa. Super. 2015) (en banc ). The Superior Court determined that the point of accrual for the statute...