Certain Underwriters At Lloyd's, London v. NL Indus.
| Decision Date | 29 December 2020 |
| Docket Number | INDEX NO. 650103/2014 |
| Citation | 2020 NY Slip Op 34331 (U) |
| Parties | CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, COMMERCIAL UNION INSURANCE COMPANY PLC, INDEMNITY MARINE ASSURANCE COMPANY LTD., NORTHERN ASSURANCE COMPANY LTD., OCEAN MARINE INSURANCE COMPANY LTD., WINTERTHUR SWISS INS. CO. LTD., WORLD AUXILIARY INSURANCE CORPORATION LTD., YASUDA FIRE & MARINE INS. CO. (UK) LTD., YASUDA, UK, YORKSHIRE INSURANCE COMPANY LTD., ATLANTA INTERNATIONAL INSURANCE COMPANY, GOVERNMENT EMPLOYEES INSURANCE COMPANY, ONEBEACON AMERICA INSURANCE COMPANY, REPUBLIC INSURANCE COMPANY, and STONEWALL INSURANCE COMPANY, Plaintiffs, v. NL INDUSTRIES, INC., ACE AMERICAN INSURANCE COMPANY, ACE PROPERTY & CASUALTY INSURANCE COMPANY, AIG PROPERTY CASUALTY COMPANY, AIU INSURANCE COMPANY, ALLIANZ UNDERWRITERS INSURANCE COMPANY, ALLSTATE INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, ARROWOOD INDEMNITY COMPANY, CENTRAL NATIONAL INSURANCE COMPANY OF OMAHA, CENTURY INDEMNITY COMPANY, CONTINENTAL INSURANCE COMPANY, DAIRYLAND INSURANCE COMPANY, EMPLOYERS INSURANCE COMPANY OF WAUSAU, EMPLOYERS MUTUAL CASUALTY COMPANY, EVEREST REINSURANCE COMPANY, EXECUTIVE RISK INDEMNITY, INC., FEDERAL INSURANCE COMPANY, FIRST STATE INSURANCE COMPANY, GRANITE STATE INSURANCE COMPANY, HARTFORD ACCIDENT AND INDEMNITY COMPANY, INSCO LTD., THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, LANDMARK INSURANCE COMPANY, LEXINGTON INSURANCE COMPANY, MT. MCKINLEY INSURANCE COMPANY, MUNICH REINSURANCE AMERICA, INC., NATIONAL CASUALTY COMPANY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, NEW ENGLAND INSURANCE COMPANY, NEW HAMPSHIRE INSURANCE COMPANY, OLD REPUBLIC INSURANCE COMPANY, PACIFIC EMPLOYERS INSURANCE COMPANY, RIUNIONE ADRIATICA DI SICURTA, TIG INSURANCE COMPANY, TRAVELERS CASUALTY & SURETY COMPANY, TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, TWIN CITY FIRE INSURANCE COMPANY, UTICA MUTUAL INSURANCE COMPANY, WESTCHESTER FIRE INSURANCE COMPANY, ZURICH AMERICAN INSURANCE COMPANY, and ZURICH SPECIALTIES LONDON LTD., Defendants, and CERTAIN LONDON MARKET INSURANCE COMPANIES, Nominal Defendants. |
| Court | New York Supreme Court |
The following e-filed documents, listed by NYSCEF document number (Motion 019) 370, 371, 372, 373, 374, 375, 376, 377, 378, 379, 380, 381, 382, 383, 384, 385, 386, 387, 388, 389, 390, 391, 392, 393, 394, 395, 396, 397, 398, 399, 400, 401, 402, 403, 404, 405, 406, 407, 408, 409, 410, 411, 412, 413, 414, 415, 416, 417, 418, 419, 420, 421, 422, 423, 424, 425, 426, 427, 428, 429, 430, 431, 432, 433, 434, 435, 436, 437, 438, 439, 440, 441, 442, 443, 444, 445, 446, 447, 448, 449, 450, 451, 452, 453, 454, 455, 456, 457, 458, 459, 460, 461, 462, 463, 464, 465, 466, 467, 468, 469, 470, 471, 472, 473, 474, 475, 476, 477, 478, 479, 480, 481, 482, 483, 484, 485, 486, 487, 488, 489, 490, 491, 492, 493, 494, 495, 496, 497, 498, 499, 500, 501, 502, 503, 504, 505, 506, 507, 508, 509, 510, 511, 512, 513, 514, 515, 516, 517, 518, 519, 520, 521, 522, 523, 524, 525, 526, 527, 528, 529, 530, 531, 532, 533, 534, 535, 536, 537, 538, 539, 540, 541, 542, 543, 544, 545, 546, 547, 548, 549, 550, 551, 552, 553, 554, 555, 556, 557, 558, 559, 560, 561, 562, 563, 564, 565, 566, 567, 568, 569, 570, 571, 572, 573, 574, 575, 576, 577, 578, 579, 580, 581, 582, 583, 584, 585, 586, 587, 588, 589, 590, 591, 592, 593, 594, 595, 596, 597, 598, 599, 600, 601, 602, 603, 604, 605, 606, 607, 608, 609, 610, 611, 612, 613, 614, 615, 616, 617, 618, 619, 620, 621, 622, 623, 624, 625, 626, 627, 628, 629, 630, 631, 632, 633, 634, 635, 636, 637, 638, 639, 640, 641, 642, 643, 644, 645, 646, 647, 648, 649, 650, 651, 652, 653, 654, 655, 656, 657, 658, 659, 660, 661, 662, 663, 664, 665, 666, 673, 674, 675, 676, 677, 678, 679, 680, 681, 682, 683, 684, 685, 686, 687, 688, 689, 690, 691, 692, 693, 694, 695, 696, 697, 698, 699, 700, 701, 702, 703, 704, 705, 706, 708, 709, 710, 711, 712, 713, 714, 715, 716 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER.
The issue in this action is whether the insurers of the manufacturer of Dutch Boy paint will cover the paint manufacturer's liability arising from People v ConAgra Grocery Products, LLC, Index No.: 2001-CV-788637 (Cal. Super. Ct., Santa Clara County) (Underlying Action), an action for the abatement of lead paint used in California residences. At issue are 320 insurance policies dating back to 1949.1 Plaintiffs2,insurer defendants3, and nominal defendants Certain London Market Insurance Companies (collectively, Insurers), all move for summary judgment, pursuant to CPLR 3212, for a declaration that the Insurers have no coverage obligation to defendant NL Industries, Inc. (NL) in the Underlying Action.
The Insurers assert three grounds on which this court should issue a declaratory judgment. These grounds are premised on the language of NL's insurance policies and the determinations in the Underlying Action. The Insurers assert that these determinations are matters of public record; they define the claim for which NL was held liable and for which it seeks coverage; they are final (appeals to the California SupremeCourt and U.S. Supreme Court have been exhausted); and they cannot be re-litigated or re-disputed here for the purpose of determining coverage.
First, the Insurers argue that NL is not entitled to coverage because it was held liable in the Underlying Action for intentionally and affirmatively promoting lead paint for interior residential use with actual knowledge of the public health hazard that it would create. Second, the policies at issue only cover "damages" or "damages and expenses," and the abatement remedy ordered in the Underlying Action is neither.
Third, even if the abatement remedy is deemed as covered "damages" or "expenses," there is still no coverage because the policies also require that liability was imposed "for," "because of" or "on account of" "property damage" or "bodily injury" and neither "property damage" nor "bodily injury" were elements of the claim for which NL was held liable.
BACKGROUND
In March 2000, Santa Clara County filed a class action against NL4 and other manufacturers and promoters of lead-based paints (Lead Paint Defendants) (NYSCEF Doc. No. [NYSCEF] 372, Underlying Action Complaint). Santa Clara alleged claims for strict liability, negligence, fraud and concealment, unjust enrichment, indemnity, and unfair business practices (id). In September 2000, Santa Clara, joined by Santa Cruz,Solano, and Alameda Counties, filed an amended complaint, omitting the claim for unfair business practices and adding claims for civil conspiracy and nuisance (NYSCEF 373, Underlying Action First Amended Complaint). On January 23, 2001, these plaintiff counties, joined by Kern County, the City and County of San Francisco, San Francisco Housing Authority, San Francisco Unified School District, City of Oakland, Oakland Housing Authority, Oakland Redevelopment Agency, and Oakland Unified School District, as class representatives and on behalf of the People of the State of California (Government Plaintiffs), filed a second amended complaint alleging claims for fraud and concealment, strict liability, and negligence, negligent breach of special duty, public nuisance, private nuisance, unfair business practices, and false advertising (NYSCEF 374, Underlying Action Second Amended Complaint). Two public nuisance claims were alleged — one on behalf of a class of California municipalities alleging special injury (class public nuisance claim) and one on behalf of the People of the State of California seeking abetment (representative public nuisance claim) (id.).
On June 21, 2001, the Government Plaintiffs filed a third amended complaint, alleging the same fraud and concealment, strict liability, negligence, negligent breach of special duty and unfair business practices claims as the previous complaint. The Government Plaintiffs, in the third amended complaint, also replaced the three public and private nuisance claims alleged in the second amended complaint with a single cause of action for public nuisance on behalf of the People, omitting the public nuisance claim on behalf of the class plaintiffs and the private nuisance claim in its entirety (NYSCEF 375, Underlying Action Third Amended Complaint). The Lead Paint Defendants filed a demurrer as to the public nuisance claim, which the Superior Courtsustained without leave to amend (see County of Santa Clara v Atlantic Richfield Co., 137 Cal App 4th 292, 301 [2006] [] [Santa Clara I]5).
In February 2003, the Lead Paint Defendants filed a motion for summary judgment seeking dismissal of the strict liability, negligence, fraud, and unfair business practices claims on statute of limitations grounds, which the Superior Court granted (see id. at 301-303). The Government Plaintiffs appealed, asserting, inter alia, that the Superior Court erred in "sustaining the demurrers to the public nuisance causes of action" and "granting summary judgment on statute of limitations grounds" (id. at 298).
On appeal, the Court of Appeal of California, Sixth Appellate District, reviewed the trial court's order sustaining the Lead Paint Defendants' demurrer without leave to amend regarding the representative public nuisance claim in the third amended complaint (id. at 304-311). The Court of Appeal also reviewed the Superior Court's order sustaining the Lead Paint Defendants' demurrer with leave to amend regarding the class public nuisance claim in the second amended complaint, which the Government Plaintiffs did not replead in the third amended complaint (id. at 311-313).
Upon review, the Court of Appeal directed the lower court "to (1) vacate its order sustaining the demurrer to the representative public nuisance cause of action in the third amended...
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