Aspen Specialty Ins. Co. v. Nucor Corp.

Decision Date08 November 2022
Docket Number19 CVS 19887
Citation2022 NCBC 69
PartiesASPEN SPECIALTY INSURANCE COMPANY; ENDURANCE AMERICAN SPECIALTY INSURANCE COMPANY; PARTNERRE IRELAND INSURANCE LTD.; HELVETIA SWISS INSURANCE COMPANY; LEXINGTON INSURANCE COMPANY; LIBERTY MUTUAL FIRE INSURANCE COMPANY; LIBERTY SURPLUS LINES INSURANCE COMPANY; XL INSURANCE AMERICA, INC.; ZURICH AMERICAN INSURANCE COMPANY; and ACE AMERICAN INSURANCE COMPANY, Plaintiffs, v. NUCOR CORPORATION; and NUCOR STEEL LOUISIANA, LLC, Defendants, and XL INSURANCE AMERICA, INC.; and LIBERTY MUTUAL FIRE INSURANCE COMPANY, Intervening Complaint-Plaintiffs, v. NUCOR CORPORATION; and NUCOR STEEL LOUISIANA, LLC, Intervening Complaint-Defendants.
CourtSuperior Court of North Carolina

Hedrick Gardner Kincheloe & Garofalo LLP, by David L Levy and C. Rob Wilson; and Hinshaw & Culbertson LLP, by David E. Heiss and Peter E. Kanaris, for Plaintiffs Aspen Specialty Insurance Company, Endurance American Specialty Insurance Company, Partnerre Ireland Insurance Ltd., Helvetia Swiss Insurance Company, Lexington Insurance Company, Liberty Mutual Fire Insurance Company, Liberty Surplus Lines Insurance Company, XL Insurance America, Inc., Zurich American Insurance Company, and Ace American Insurance Company.

Moore & Van Allen PLLC, by Jonathan D. Gilmartin and Scott M Tyler; and Flanagan Partners LLP, by Harold J. Flanagan Meghan F. Grant, Alice L. Duplechain, Thomas M. Flanagan, and Camille E. Gauthier, for Defendants/Intervening Complaint-Defendants Nucor Corporation and Nucor Steel Louisiana, LLC.

Johnston, Allison & Hord, P.A., by Kimberly J. Kirk and Kathleen D.B. Burchette; and DLA Piper LLP (US), by Robert C. Santoro, Aidan M. McCormack, and Benjamin Shuman, for Intervening Complaint-Plaintiffs XL Insurance America, Inc. and Liberty Mutual Fire Insurance Company.

ORDER AND OPINION ON NUCOR CORPORATION AND NUCOR STEEL LOUISIANA, LLC'S MOTION FOR PARTIAL SUMMARY JUDGMENT AGAINST XL INSURANCE AMERICA, INC. AND NUCOR CORPORATION AND NUCOR STEEL LOUISIANA, LLC'S MOTION FOR LEAVE TO AMEND COUNTERCLAIMS AGAINST INTERVENING-COMPLAINT PLAINTIFFS

JULIANNA THEALL EARP SPECIAL SUPERIOR COURT JUDGE.

1. THIS MATTER is before the Court upon Defendants/Intervening Complaint-Defendants Nucor Corporation and Nucor Steel Louisiana, LLC's (collectively, "Nucor") Motion for Partial Summary Judgment Against XL Insurance America, Inc. ("XL"), ("Nucor's Motion for Partial Summary Judgment") (ECF No. 155), and Nucor's Motion for Leave to Amend Their Counterclaims Against Intervening-Complaint Plaintiffs, ("Nucor's Motion to Amend") (ECF No. 181). For the reasons stated below, Nucor's Motion for Partial Summary Judgment is DENIED and Nucor's Motion to Amend is GRANTED in part and DENIED in part.[1]

I. FACTUAL AND PROCEDURAL BACKGROUND

2. The Court does not make findings of fact on motions for summary judgment. The summary below is intended as background for the Court's decision. See Hyde Ins. Agency, Inc. v. Dixie Leasing Corp., 26 N.C.App. 138, 142 (1975).

3. This case arises from an industrial incident ("Incident") that occurred at Nucor's Convent, Louisiana facility in November 2017. (Compl. ¶ 1, ECF No. 3.) The facility processes iron ore into "direct reduced" iron ("DRI" or "sponge iron") that is then shipped to another facility for use in the production of steel. (Compl. ¶¶ 17, 22.)

4. In order to produce sponge iron, marble-sized pieces of iron ore are transported on three conveyors equipped with a weight belt feeder encoder. (Compl. ¶ 18.) The ore must first be coated with cement before entering a reactor and heated to drive off the oxygen contained in the ore and convert it to DRI. Iron ore that enters the reactor without the protective cement coating solidifies and cannot be used in steel manufacturing. (Compl. ¶ 20.)

5. On 7 November 2017, personnel at the Convent facility observed that an encoder, the device that monitors the speed of the conveyor belt and the weight of the ore, did not appear to be functioning correctly. (Compl. ¶¶ 19, 23.) The suspect encoder was replaced with one taken from an idle conveyor in the Convent facility. (Compl. ¶ 24.) However, sometime after the suspect encoder was changed and the line was restarted, Nucor personnel became aware that the iron ore entering the reactor had not been coated with cement. As a result, approximately two thousand four hundred (2,400) metric tons of uncoated ore solidified, forming clusters in the reactor. (Compl. ¶¶ 26-27.) Nucor incurred losses with respect to the ruined ore, the business interruption, and other costs sustained in the course of removing the reactor from service and repairing it. (Nucor's Ans. Affm. Defs. Int. Pls.' Compl. & Counterclms. ¶¶ 18-21, ECF No. 26.)

6. Plaintiffs in this case are ten property insurers[2] (the "Property Insurers") that contracted with Nucor to insure its property. Intervening Plaintiffs are two insurers, XL and Liberty Mutual Fire Insurance Company ("Liberty Mutual"; together, "the EB Insurers"), that contracted to insure Nucor for risks related to equipment breakdown. Both the Property Insurers and the EB Insurers assert a claim for declaratory judgment, asking the Court to determine if there is coverage under their respective policies for the losses incurred by Nucor. (See ECF Nos. 3, 6.) Nucor, in turn, counterclaims for declaratory relief and breach of contract. (See ECF Nos. 25, 26.)

7. On 24 May 2021, the Court entered an Order on Fourth Joint Motion to Modify Case Management Order (the "CMO"). The CMO divided the discovery period for fact discovery into two parts: the first for written fact discovery, and a second period for fact depositions. (See ECF No. 104.) After receiving an extension, the parties have now completed written fact discovery,[3] and they are engaged in fact depositions. Pursuant to the CMO, the deadline for the ultimate completion of fact discovery is 3 February 2023. (See ECF No. 144.)

8. In accordance with Rule 30(b)(6) of the North Carolina Rules of Civil Procedure ("Rule(s)"), on 13 April 2022, Nucor conducted the deposition of Aaron Divine ("Divine"), XL's representative. Based on Divine's testimony, Nucor moves for partial summary judgment to establish that certain provisions of XL's policy, as well as certain allegations in the EB Insurers' Intervening Complaint (the "Design Allegations"),[4] cannot be used by XL as the basis for its denial of Nucor's claim.

9. In addition, Nucor's discovery efforts, including both the deposition of Divine and the 11 May 2022 deposition of David Lofton (the EB Insurers' investigator), have led it to move to amend its counterclaims against the EB Insurers.

10. Accordingly, on 11 July 2022, the Nucor Motion to Amend was filed, seeking to assert a new cause of action for unfair and deceptive trade practices pursuant to N.C. G.S. § 75-1.1 et seq. ("UDTPA"). Nucor also requests that it be permitted to withdraw an allegation that it no longer wishes to assert (regarding System Installation and Soft Costs coverage) and to update the damages and losses that it claims.

II. LEGAL STANDARD

11. "Summary judgment is proper 'if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.'" Morrell v. Hardin Creek, Inc., 371 N.C. 672, 680 (2018) (quoting N.C. R. Civ. P. 56(c)). "[A] genuine issue is one which can be maintained by substantial evidence." Kessing v. Nat'l Mortg. Corp., 278 N.C. 523, 534 (1971). "Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion and means more than a scintilla or a permissible inference." Daughtridge v. Tanager Land, LLC, 373 N.C. 182, 187 (2019) (internal quotation marks omitted).

12. On a motion for summary judgment, "[t]he evidence must be considered 'in a light most favorable to the non-moving party.'" McCutchen v. McCutchen, 360 N.C. 280, 286 (2006) (quoting Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 470 (2004)). "[T]he party moving for summary judgment ultimately has the burden of establishing the lack of any triable issue of fact." Pembee Mfg. Corp. v. Cape Fear Constr. Co., 313 N.C. 488, 491 (1985).

13. A movant may satisfy its burden by proving that "an essential element of the opposing party's claim does not exist, cannot be proven at trial, or would be barred by an affirmative defense, or by showing through discovery that the opposing party cannot produce evidence to support an essential element of [the] claim[.]" Dobson v. Harris, 352 N.C. 77, 83 (2000) (citations omitted). Thus, the moving party "assumes the burden of positively and clearly showing there is no genuine issue as to any material fact and he or she is entitled to judgment as a matter of law." Lewis v. Blackman, 116 N.C.App. 414, 417 (1994).

14. "If the moving party satisfies its burden of proof, then the burden shifts to the non-moving party to 'set forth specific facts showing that there is a genuine issue for trial.'" Lowe v. Bradford, 305 N.C. 366, 369-70 (1982) (quoting N.C. R. Civ. P. 56(e)) (emphasis omitted). If the nonmoving party does not satisfy its burden, then "summary judgment, if appropriate, shall be entered against [the nonmovant]." United Cmty. Bank (Ga.) v. Wolfe, 369 N.C. 555, 558 (2017) (quoting N.C. R. Civ. P. 56(e)).

15. With respect to Nucor's Motion to Amend, there is no more liberal canon in the Rules than that leave to amend "shall be freely given when justice so requires[,]" Vaughan v. Mashburn, 371 N.C. 428, 434 (2018) (quoting N.C. R. Civ. P. 15(a)), although "the right to amend pursuant to Rule 15 is not unfettered." Howard v. IOMAXIS, LLC, 2021...

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