Consolidated Rail Corporation v. Liberty Mutual Insurance Company, C. A. No. 97C-10-001 CHT (DE 3/16/2005)
| Decision Date | 16 March 2005 |
| Docket Number | C. A. No. 97C-10-001 CHT |
| Parties | CONSOLIDATED RAIL CORPORATION, Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY and PACIFIC INSURANCE COMPANY and JAMES JULIAN INC., Defendants. |
| Court | Supreme Court of Delaware |
Daniel F. Wolcott, Jr., Esquire, Todd L. Goodman, Esquire, and James M. Kron, Esquire, POTTER ANDERSON & CORROON LLP, Wilmington, DE, Attorneys for the Plaintiffs.
Jeffrey B. Bove, Jr., Esquire, James J. Woods, Jr., Esquire, and Max. B. Walton, Esquire, CONNOLLY BOVE LODGE & HUTZ LLP, Wilmington, DE, Attorneys for the Defendant, James Julian, Inc.
Kevin J. Connors, Esquire, MARSHALL, DENNEHEY, WARNER, COLEMAN & GOGGIN, Wilmington Delaware 19899, Michael L. Gioia, Esquire, LANDMAN CORSI BALLAINE & FORD P.C., New York, NY and Robert Kasuba, Esquire, LANDMAN CORSI BALLAINE & FORD, Newark, NJ, Attorneys for the Defendant, Pacific Insurance Company.
Richard W. Pell, Esquire, TYBOUT REDFEARN & PELL, Wilmington, Delaware, Attorney for the Defendant, Liberty Mutual Insurance Company.
For Summary Judgment and Declaratory Relief
Before the Court are two motions filed by the parties arising out of the costs of defending and ultimately settling the claims of the plaintiffs in the Flowers1 and Fydenkevez2 wrongful death actions against Consolidated Rail Corporation ("Conrail") and James Julian, Inc. ("Julian"). The matter having been briefed and argued, that which follows is the Court's resolution of the issues so presented.3
The first of the two motions centers around the cross motions for partial summary judgment between Pacific and Conrail concerning the extent of Pacific's duty, if any, to defend Conrail for the costs incurred in participating in the Flowers and Fydenkevez litigation. In its April 30 opinion, the Court granted Conrail's motion and denied Pacific's motion for partial summary judgment, holding that Pacific had a duty to defend Conrail unless and/or until any claims being pursued were determined to be beyond the coverage of the policy.
Shortly before the Court issued its April 30 opinion, Conrail filed a supplemental brief based upon "additional discovery" provided by Pacific subsequent to the completion of the initial briefing on the Pacific/Conrail cross motions. At the time the April 30 opinion was issued, Pacific had not been afforded the opportunity to respond to Conrail's then most recent submission, nor had they received the additional discovery which Conrail promised to tender. The Court subsequently granted re-argument as to the April 30 opinion in its entirety.4 Conrail subsequently provided the discovery in question and Pacific filed its supplemental response to the pending motion.
The second motion before the Court was filed by Julian on February 22, 2002 and seeks a determination as to the extent of Liberty's obligation to provide coverage for all of Julian's losses since litigation has begun. The Court's April 30 decision did not address Julian's motion. The Court instead wrote to the parties and asked whether, in light of the Court's decisions on the other motions and the factual circumstances surrounding this aspect of the litigation, Julian's motion against Liberty was moot. On May 24, 2004, Julian filed its response answering the Court's quaere in the negative. Liberty agreed as well that the motion was not moot. In the interim, both Julian and Liberty advanced further arguments in support of their respective positions.
The law governing the resolution of the instant controversies is not in substantial dispute and was cited in the Court's April 30 opinion. And, like the relevant facts underlying referred to in that opinion, the authority and discussion relied upon there is incorporated herein by reference. The Court will therefore focus, unless otherwise noted, on the two motions referenced above.
In the supplemental briefing regarding Pacific's duty to defend, Conrail advances two arguments not significantly different than those set out in the initial briefing. Nor has Pacific's response chartered any radically new courses in defense of its denial of coverage. Both are based in substantial part on the last exchange of discovery that was provided given the Court's April 30 pronouncement.
Conrail first states Pacific provided Conrail with a defense in other cases where the claims were "far more ambiguous" than the claims asserted in the Flowers and Fydenkevez cases.5 It is argued that if a defense was provided in those cases, Liberty should have provided a defense for Conrail in the present litigation. Second, Conrail contends that its employees, including the "flagmen", that worked on the Route 15 Project were included under the coverage provided by the Force Account Work Policy.6 Reduced to its essence, Conrail's argument appears to be that since the policy's premium was based in part on the total payroll for all employees who worked on the project, and the work of the flagmen are alleged to be one of the proximate causes of both accidents, the Flowers and Fydenkevez complaints present claims which are covered under the policy in question.
Pacific's supplemental brief again argues the allegations in the complaint are not connected to the force account work in this case. It then attempts to differentiate those cases cited by Conrail where coverage was provided by insisting the allegations in the complaints in those cases specifically alleged force account work where as the Flowers and Fydenkevez claims did not. The balance of Pacific's response supports the arguments previously submitted.
Having considered the supplemental arguments made by the parties, the Court must follow its initial inclination. As noted in footnote 44 of the April 30 opinion, the arguments raised in Conrail's supplemental brief filed on April 2, 2004 had no bearing on the Court's decision to grant partial summary judgment for Conrail.7 The Court noted that while it was interesting that Pacific provided a defense for Conrail in other railroad litigation, the decision to provide a defense must be made on a case by case basis.8 In this case the facts and circumstances present, coupled with the language of the policy at the center of the controversy militate in favor of coverage.9 The arguments advanced by Pacific simply do not persuade the Court to reach a different conclusion. The holding initially expressed in the April 30 opinion in this regard, is therefore reaffirmed.
It is now apparent from the pleadings and arguments conducted in this matter that Liberty does not dispute that it had, and still has, an obligation to defend and indemnify Julian concerning the claims for contribution and/or indemnification by Conrail based upon the tortious conduct alleged to have brought about the deaths referenced in the Flowers and Fydenkevez litigation.10 The major contention which remains is the extent that Julian is entitled to a defense and possible indemnification of the breach of contract claims raised by Conrail against Julian based upon the failure to procure Railroad Protective Public Liability Insurance ("RPPLI"). Julian contends that once there was a duty to defend and a claim had been established, Liberty had a duty to defend any claim that might be arguably covered under the policy. Since the tort claims were obviously covered, Liberty should have defended Julian as to all claims advanced and must pay for all of the costs of defense incurred thus far. Liberty feels that its duty was limited to the tort claims and it does not owe Julian for the costs of defense outside of that obligation.
As noted in the April 30 opinion, Conrail had advanced a claim against Liberty contending that Conrail was an "additional insured" under the terms of the policy that Julian purchased from Liberty.11 The basis of the Conrail claim was that since Julian had failed to purchase RPPLI as required by Julian's contract with DelDOT for the Route 15 Project, Conrail was entitled to a defense and coverage under Julian's policy with Liberty for the tort claims arising out of the Flowers and Fydenkevez litigation.12 Liberty declined coverage and advanced two grounds for its action.
More specifically, Liberty primarily argued that Conrail was not an "additional insured" as that term was defined under the policy and that the basis for Conrail's claim against Liberty did not lie in tort, which was arguably covered. Rather, Conrail's claim was based upon Julian's breach of its contract with DelDOT, which was not covered. Liberty also argued that since the claims against Conrail arose out of the activities of Conrail employees and not the acts of Julian employees, those claims did not constitute an insured "occurrence" as defined under the policy.
The Court addressed those contentions ruling first that Conrail was not an "additional insured" for purposes of the Liberty insurance policy with Julian. It went on to hold that even if Conrail did fall within the aforementioned category, the accidents in question could not be considered an "occurrence" under that same policy because of how and/or where they took place.13 Conrail was not, as a result, entitled to any protection from Liberty in this litigation. Those conclusions are critical to the resolution of the instant controversy.
The Court previously reviewed the scope of the duties to defend and to indemnify and insured under a policy of insurance in contracts construed under the laws of Pennsylvania.14 The law in Delaware is no different. Simply put, while the duty to defend and the duty to indemnify obviously bear some...
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