Certain London Market Ins. v. Pa Nat. Mut. Cas.

• Decision Date: 20 June 2003
• Docket Number: No. 1:01 CV 179-D-D.,1:01 CV 179-D-D.
• Citation: 269 F.Supp.2d 722
• Parties: CERTAIN LONDON MARKET INSUANCE COMPANIES, Allianz Insurance Company, Zurich American Insurance Company, Plaintiffs, v. PENNSYLVANIA NATIONAL MUTAL CASUALTY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Mississippi

269 F.Supp.2d 722

CERTAIN LONDON MARKET INSUANCE COMPANIES, Allianz Insurance Company, Zurich American Insurance Company, Plaintiffs, v. PENNSYLVANIA NATIONAL MUTAL CASUALTY INSURANCE COMPANY, Defendant.

No. 1:01 CV 179-D-D.

United States District Court, N.D. Mississippi, Eastern Division.

June 20, 2003.

Scott William Bates, Baker, Donelson, Bearman & Caldwell, Jackson, MS, for plaintiffs.

William Matthew Vines, Page, Kruger & Holland, Jackson, MS, for defendant.

OPINION

DAVIDSON, Chief Judge.

On or about May 4, 2001, Plaintiffs filed their complaint for reimbursement and declaratory relief. Plaintiffs seek a judicial declaration as to Defendant Pennsylvania National Mutual Casualty Insurance Company's ("Penn National") duties and Plaintiffs' rights under the Penn National policies. The complaint asserts causes of action for, inter alia, breach of contract against Defendant Penn National. This cause proceeded to a bench trial which concluded on March 24, 2003.

Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the court issues the following findings of fact and conclusions of law.

A. Factual Background

The Plaintiffs, Certain London Market Insurance Companies, Allianz Insurance Company, and Zurich American Insurance Company (collectively "Plaintiff insurers") filed this declaratory action against Defendants Penn National and Performance Fiberglass and Linings, Inc. ("Performance"), seeking recovery of certain sums expended on behalf of Kerr-McGee Chemical Corp. ("Kerr-McGee") in settling two personal injury lawsuits. Kerr-McGee subsequently joined the suit as a Plaintiff.

On or about March 17, 1998, Performance entered into an insurance contract with Penn National. This insurance contract contained a Commercial General Liability ("CGL") policy and a Commercial Umbrella Liability ("Umbrella") policy. Thereafter, on or about April 23, 1998, Performance entered into a "Master-Work Agreement for Construction and Field Services" ("Master-Work Agreement" or "MWA") with Kerr-McGee. Under the MWA, Performance agreed to perform certain rubber lining and fiberglass work at Kerr-McGee's electrolytic plant in Hamilton, Mississippi. The MWA contained a clause requiring Performance to carry liability insurance and an indemnity clause which purports to hold harmless Kerr-McGee for losses or damages. These are discussed in greater detail below.

On May 12, 1998, Bobby Reid, President of Performance, and Jimmy Kemp, a Performance employee, were injured in a fire at Kerr-McGee's Hamilton facility while doing work there pursuant to a Work Order. Both employees filed lawsuits in Mobile, Alabama, against Kerr-McGee alleging that Kerr-McGee was liable for personal injuries and other damages ("Mobile Actions"). Kerr-McGee demanded that Performance and Penn National defend and indemnify Kerr-McGee in the Mobile Actions. Performance and Penn National refused. As a result, Kerr-McGee gave notice to its insurers, Certain London Market Insurance Companies, Allianz, and Zurich, of the claims. Ultimately, the parties settled the Mobile Actions.

Thereafter, Plaintiffs filed their complaint for reimbursement and declaratory relief. The complaint asserts that "pursuant to the terms of the Master-Work Agreement, Kerr-McGee was an additional insured pursuant to the terms of the [Penn National] Policy and/or Umbrella Policy." Plaintiffs seek a judicial declaration as to Penn National's duties and Plaintiffs' rights under the Penn National policies, including that Penn National is obligated to indemnify Plaintiffs for the settlement of the Mobile actions. Plaintiffs requested that the court order and direct that Penn National is obligated to defend, indemnify and hold Plaintiffs harmless. Plaintiffs also requested that the court order "that Performance ... is obligated to indemnify, defend and hold London Market Companies, AUianz and Zurich harmless from and against any and all losses." However, prior to trial, both Kerr-McGee and Performance were dismissed. Thus, the Plaintiff-insurers only seek coverage and recovery from Defendant Penn National. The court has subject matter jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332.¹

B. Discussion

1. Proper Parties—London Insurers

After the briefing was complete on the motion for summary judgment, Penn National asserted in its findings of fact and conclusions of law and at trial that Plaintiff "Certain London Market Insurance Companies" is not a proper legal entity and/or they do not have standing because there is no evidence that those companies insured Kerr-McGee.

Kerr-McGee's insurance coverage was split between domestic companies and London companies. Kerr-McGee had a self-insured retention, which is similar to a deductible, in the amount of $1 Million. Kerr-McGee spent over $4 Million to settle the two Mobile actions. Thus, the total amount Kerr-McGee was reimbursed by its insurers was $3,602,207.72. Fifty percent, or $1,801,103.86, was reimbursed by the London Insurers, and the remaining fifty percent was paid by the three domestic insurers.² At trial, the Plaintiffs produced evidence, including one live witness and one video deposition, that the various companies insuring Kerr-McGee, including the London companies, actually reimbursed Kerr-McGee in the amount of $3,602,207.72 for costs incurred in settling the Mobile Actions.

Plaintiffs submitted Kerr-McGee's contract with the London companies, which states "this is to certify that the undersigned have procured insurance as hereinafter specified from Insurance companies, (hereinafter called the'Underwriters') through our brokers in London, England...." Ex. P-29. The Contract also states that it is "effected with Lloyd's Underwriters...." Kerr-McGee's London insurance was divided between four companies or underwriters. The contract shows the percentage of risk each underwriter agreed to assume. The four companies that subscribed to the policy are: Commercial Union Assurance Company, PLC Ocean Marine Insurance Company, Limited; Assicurazioni General, S.p.A.; and Yorkshire Insurance Company, Limited. Penn National, without citing any authority, appears to argue that each of these companies should be named as a plaintiff.

At the bench trial, counsel for Plaintiffs argued that due to the nature of the London insurance market, it is entirely proper to name as a plaintiff: "Certain Underwriters at Lloyd's, London" or "Certain London Market Insurance Companies." Alternatively, Plaintiffs moved, ore tenus, to amend the complaint to add the names of the four foreign companies that subscribed to the London policy. Naturally, Penn National opposed this amendment.

The Second Circuit has described the unique London insurance market as follows:

Lloyd's [of London] has developed into one of the world's leading markets for insurance. This market, however, operates in accordance with age-old customs that are, to say the least, unusual in American business law.

The anonymous underwriters of Lloyd's insurance, who are commonly referred to as "Names," invest in a percentage of the policy risk. While the rewards of a Lloyd's investment can be great, each Lloyd's Name is exposed to unlimited liability, but only for his or her share of the loss on a policy that the Name has underwritten. In other words, the liability of each Name on any given policy, while unlimited, is several and not joint. Insurance from Lloyd's is typically subscribed to by hundreds of Names belonging to different subgroups known as "syndicates."

E.R. Squibb & Sons, Inc. v. Accident & Cas. Ins. Co., 160 F.3d 925, 929 (2d Cir. 1998) (citations omitted).³

A sample of cases shows that the London insurance parties are often named differently. Some suits have in fact named the various companies or underwriters subscribing to the agreement. See, e.g., Certain Underwriters at Lloyd's London v. C.A. Turner Constr. Co., Inc., 112 F.3d 184 (5th Cir.1997)(also naming as Plaintiffs: London & Hull Maritime Insurance Company Ltd., Commercial Union Assurance Company, and others). In some of the cases, the parties specifically list the specific policy subscribed to, in addition to "Certain Underwriters at Lloyd's, London." See, e.g., Certain Underwriters at Lloyd's, London v. Fidelity and Casualty Ins. Co., 4 F.3d 541 (7th Cir.1993)(Naming Plaintiff as "Certain Underwriters at Lloyd's, London, and Companies in Interest, subscribing to London policy number 79 DD 193C"); Houston Casualty Co. v. Certain Underwriters at Lloyd's London, 51 F.Supp.2d 789 (S.D.Tex.1999)(naming party as "Certain Underwriters at Lloyd's London subscribing to Reinsurance Policy No 839/DA44790"). Still others simply name "Certain Underwriters at Lloyd's, London." See, e.g., Certain Underwriters at Lloyd's, London v. Sinkovich, 232 F.3d 200 (4th Cir.2000); Certain Underwriters at Lloyd's London v. A & D Interests, Inc., 197 F.Supp.2d 741 (S.D.Tex.2002); Certain Underwriters at Lloyd's of London v. Knostman, 783 So.2d 694 (Miss. 2001). The court's research could not find a case that held that "Certain London Market Insurance Companies" or "Certain Underwriters of Lloyd's of London" was an improper party entity. As such, and because of Penn National's lack of any authority to the contrary, the court is of the opinion that Plaintiff Certain London Market Insurance Companies is properly designated for the purposes of this cause of action.

Additionally, Federal Rule of Civil Procedure 17(a) provides that "[e]very action shall be prosecuted in the name of the real party in interest." Rule 17(a) further states "a party with whom or in whose name a contract has been made for the benefit of another, or a party authorized by statute may sue in that person's own name without joining the party for whose benefit the action is brought ...." Finally, "[n]o action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has...