American Zurich Ins. v. Cooper Tire & Rubber Co., 3:04 CV 7263.

• Decision Date: 13 December 2006
• Docket Number: No. 3:04 CV 7263.,3:04 CV 7263.
• Citation: 465 F.Supp.2d 827
• Court: U.S. District Court — Northern District of Ohio
• Parties: AMERICAN ZURICH INSURANCE COMPANY, Plaintiff, v. COOPER TIRE & RUBBER COMPANY, et al., Defendants.

465 F.Supp.2d 827

AMERICAN ZURICH INSURANCE COMPANY, Plaintiff, v. COOPER TIRE & RUBBER COMPANY, et al., Defendants.

No. 3:04 CV 7263.

United States District Court, N.D. Ohio, Western Division.

December 13, 2006.

Bruce R. Meckler, Lead Attorney, Meckler & Tilson, Michael M. Marick, Lead Attorney, Invalid — Bates, Meckler, Bulger & Tilson, Chicago, IL, Richard M. Kerger, Lead Attorney, Stephen D. Hartman, Kerger & Associates, Toledo, OH, for American Zurich Insurance Company, Plaintiff.

Joseph P. Thacker, Lead Attorney, Cooper & Walinski, Jodi D. Spencer, Cooper & Walinski, Toledo, OH, for Cooper Tire & Rubber Company, Defendant.

Amelia A. Bower, Lead Attorney, Plunkett & Cooney, Columbus, OH, Charles W. Browning, Margaret Cernak, Stephen P. Brown, Lead Attorneys, Plunkett & Cooney, Bloomfield Hills, MI, Todd A. Cook Lead Attorney, Wagenfeld Levine, New Albany, OH, for National Union Fire Insurance Company of Pittsburgh, PA, Defendant.

Joseph P. Thacker, Lead Attorney, Jodi D. Spencer, Cooper & Walinski, Toledo, OH, for Cooper Tire & Rubber Company, Cross-Claimant.

Amelia A. Bower, Lead Attorney, Plunkett & Cooney, Columbus, OH, Charles W. Browning, Margaret Cernak, Lead Attorneys, Plunkett & Cooney, Bloomfield Hills, MI, Todd A. Cook, Lead Attorney, Wagenfeld Levine, New Albany, OH, Stephen P. Brown, Plunkett & Cooney, Bloomfield Hill, MI, for National Union Fire Insurance Company of Pittsburgh, PA, Counter-Claimant.

Richard M. Kerger, Lead Attorney Kerger & Associates, Toledo, OH, Bruce R. Meckler, Meckler Bulger & Tilson, Chicago, IL, Michael M. Marick, Invalid — Bates, Meckler, Bulger & Tilson, Chicago, IL, Stephen D. Hartman, Kerger & Associates, Toledo, OH, for American Zurich Insurance Company, Counter-Defendant.

Amelia A. Bower, Lead Attorney, Plunkett & Cooney, Columbus, OH, Margaret Cernak, Stephen P. Brown, Lead Attorneys, Plunkett & Cooney, Bloomfield Hills, MI, Todd A. Cook, Lead Attorney, Wagenfeld Lvine, New Albany, OH, Charles W. Browning, Plunkett & Cooney, Bloomfield Hills, MI, for National Union Fire Insurance Company of Pittsburgh, PA, Cross Defendant.

Joseph P. Thacker, Lead Attorney, Jodi D. Spencer, Toledo, OH, for Cooper Tire & Rubber Company, Counter-Claimant.

Jodi D. Spencer, Joseph P. Thacker, Cooper & Walinski, Toledo, OH, for Tire & Rubber Company, Counter-Defendant.

Jodi D. Spencer, Joseph P. Thacker, Cooper & Walinski, Toledo, OH, for Cooper Tire & Rubber Company, Third Party Plaintiff.

James Drysdale Wilson, Lead Attorney, Wilson Young, Detroit, MI, Douglas Young, Wilson Young, Detroit, MI, for Marsh USA, Inc., Marsh Placement, Inc., Third Party Defendants.

MEMORANDUM OPINION AND ORDER

ZOUHARY, District Judge.

This matter is before the Court on the Motion for Summary Judgment (Doc. No. 87) of Third-Party Defendants Marsh Placement, Inc. and Marsh USA, Inc. (collectively "Marsh"), to which Defendant/Third-Party Plaintiff Cooper Tire & Rubber Co. ("Cooper") filed a Memorandum in Opposition (Doc. No. 105), and Marsh filed a Reply (Doc. No. 106). The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. For the reasons outlined below, Marsh's Motion is granted.

BACKGROUND

Marsh has been Cooper's insurance broker and risk consultant since the 1950s. Marsh secured a multi-layer insurance program on Cooper's behalf during the years at issue here. The first layer of insurance was a Commercial Umbrella Policy issued by National Union Fire Insurance Company of Pittsburgh PA (National Union), in effect from April 1998 to April 1999. The National Union policy had limits of $50 million per occurrence and $50 million aggregate, after a selfinsured retention of $1,750,000 per occurrence and $6 million annually.

The next layer of insurance was provided by a Commercial Excess Liability Policy issued by Zurich. The Zurich policy, in effect from April 1997 to April 2002, had limits of $25 million per occurrence and $25 million annual aggregate. This coverage is specifically excess of the National Union policy. Cooper also maintained a third layer in excess of the National Union and Zurich policies which provided coverage of $25 million per occurrence and $25 million annual aggregate.

During the effective periods of these policies, Cooper was sued in numerous courts throughout the country by various plaintiffs who claim that they, or their family members, had been injured or killed in motor-vehicle accidents caused by allegedly-defective tires manufactured by Cooper. National Union provided coverage for many of these claims, but in November 2002, it notified Zurich that the National Union policy limits, as well as Cooper's self-insured retention, were near exhaustion for the period of April 1998 to April 1999.

Zurich alleged that the National Union policy required National Union to pay defense costs in addition to the limits of the policy, but National Union applied approximately $11 million of defense costs toward the depletion of its aggregate policy limit. In May 2004, Zurich filed the instant action against Cooper and National Union. Zurich sought a judgment declaring (1) that the defense costs did not deplete the aggregate policy limit of the National Union policy, (2) the Zurich policy is not triggered until the National Union policy limits are exhausted by the payment of settlements and judgments only, and (3) any defense costs it paid would deplete the per-occurrence and aggregate limits of the Zurich policy.¹

Cooper filed a Third-Party Complaint against Marsh, alleging that Marsh executed an unauthorized retroactive modification of the policy. Specifically, Cooper claims that the Zurich policy expressly provided that Zurich would pay defense costs in addition to the per-occurrence and aggregate policy limits. Sometime in 2002, however, Marsh allegedly attached Endorsement 17 to the Zurich policy, converting the policy from a "defense in addition to limits" policy to a "defense within limits" policy.

Cooper brought three causes of action in its First Amended Third-Party Complaint (Doc. No. 71):(1) negligence; (2) breach of contract; and (3) breach of fiduciary duty. Each of these claims is made expressly contingent on the Court finding that Endorsement 17 is valid and binding on Cooper. Id. at ¶¶ 27, 32, 37. Cooper seeks two remedies: (1) a judgment declaring that Marsh is responsible to pay all costs that Cooper incurs as a result of the Court's ruling (that Endorsement 17 is valid); and (2) legal fees and costs incurred defending Zurich's claim.

On March 17, 2006, a Stipulated Order of Dismissal was entered in which Cooper, Zurich, and National Union agreed to dismiss all claims, counterclaims, and crossclaims against each other (Doc. No. 91). Each of these claims was dismissed with prejudice except Zurich's claim seeking a declaration that defense costs erode the limits of the Zurich policy. Id. at ¶ 2. Additionally, the Order specifically noted that it did not affect Cooper's Third-Party Complaint.

STANDARD OF REVIEW

Pursuant to FED.R.CIV.P. 56(C), summary judgment is appropriate where there is "no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." Id. When considering a motion for summary judgment, the Court must draw all inferences from the record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S 574, 587, 106 S.Ct. 1348, 89X.Ed.2d 538 (1986). The Court is not permitted to weigh the evidence or determine the truth of any matter in dispute; rather, the Court determines only whether the case contains sufficient evidence from which a jury could reasonably find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

DECLARATORY JUDGMENT

Declaratory relief is a procedural remedy; as such, "the federal rules respecting declaratory judgment actions apply in diversity cases." Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 352 (3d Cir.1986). The Federal Declaratory Judgment Act, 28 U.S.C. § 2201, states:

"In a case of actual controversy within its jurisdiction ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party ..."

The "case or controversy" clause of the United States Constitution also applies to declaratory judgment actions. Detroit, Toledo & Ironton R.R. Co. v. Consolidated Rail Corp., 767 F.2d 274, 279 (6th Cir. 1985). To issue a declaratory judgment, the Court must be faced with "a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical set of facts." Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941) (citations omitted). There is no precise test to differentiate between an actual controversy and a nonjusticiable abstract question; the difference between the two is a matter of degree. Babbitt v. United Farm Workers National Union, 442 U.S. 289, 298, 99 S.Ct. 2301, 60 L.Ed.2d 895 (1979). Accordingly, this determination must be made on a case-by-case basis.

When determining whether an actual controversy exists, the appropriate inquiry is "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Detroit, Toledo & Ironton R.R. Co., 767 F.2d at 279 (quoting Maryland Cas. Co., 312 U.S. at 273, 61 S.Ct. 510). "Stated differently, '[a] controversy, to be justiciable, must be such that it can presently be litigated and decided and not hypothetical, conjectural, conditional or based upon the possibility of a factual situation that may never develop.'" Hillard v. First Financial Ins. Co., 968 F.2d 1214, 1992 WL...