Continental Cas. Co. v. Armstrong World Industries

• Decision Date: 30 October 1991
• Docket Number: No. 86 C 6119.,86 C 6119.
• Citation: 776 F. Supp. 1296
• Court: U.S. District Court — Northern District of Illinois
• Parties: CONTINENTAL CASUALTY COMPANY, Plaintiff, v. ARMSTRONG WORLD INDUSTRIES, INC.; ACandS, Inc.; Aetna Casualty & Surety Company; and Travelers Indemnity Company, Defendants.

776 F. Supp. 1296

CONTINENTAL CASUALTY COMPANY, Plaintiff, v. ARMSTRONG WORLD INDUSTRIES, INC.; ACandS, Inc.; Aetna Casualty & Surety Company; and Travelers Indemnity Company, Defendants.

No. 86 C 6119.

United States District Court, N.D. Illinois, E.D.

October 30, 1991.

Marsha K. Ross, Haskell & Perrin, Chicago, Ill., for Continental Cas. Co.

Joan M. Hall, Jenner & Block, Suzanne S. Greene, Jones, Day, Reavis & Pogue, Chicago, Ill., William P. Skinner, Covington & Burling, Washington, D.C., for Armstrong World Industries Inc.

Stephen Novack, Patrick A. Fleming, Novack & Macey, Chicago, Ill., Frank H. Griffin, III, Gollatz, Griffin, Ewing & McCarthy, Philadelphia, Pa., for ACandS, Inc.

Robert E. Baranowski, M.C. Purmal & Associates, Chicago, Ill., for Employers Liability Assur. Co./Commercial Union and Great American Ins. Co.

Philip C. Stahl, Katherine E. Rakowsky, Grippo & Elden, Chicago, Ill., for Fireman's Fund Ins. Co.

James Thomas Ferrini, Lisa Marco Kouba, Clausen, Miller, Gorman, Caffrey & Witous, P.C., Chicago, Ill., for INA Employers Ins. Co.

Robert Marc Chemers, Pretzel & Stouffer, Chtd., Chicago, Ill., for American Home Assur. Co.

Warren S. Radler, Matthew W. Cockrell, Rivkin, Radler, Bayh, Hart and Kremer, Chicago, Ill., for Aetna Cas. & Sur. Co.

Alan H. Silberman, Katharine Bancroft Devoid, William T. Barker, Sonnenschein, Nath & Rosenthal, Chicago, Ill., for Travelers Indem. Co.

James J. O'Hagan, Victor J. Piekarski, Brian Joseph Clarke, Querrey & Harrow, Ltd., Chicago, Ill., for Fidelity & Cas. Co.

ORDER

NORGLE, District Judge.

Before the court is the motion of defendant ACandS, Inc. ("ACandS"), for summary judgment on Count II of plaintiff's amended complaint.¹ For the following reasons, the motion is denied.

FACTS

This declaratory judgment action involves a pair of umbrella excess liability insurance policies obtained by ACandS from plaintiff Continental Casualty Company ("CNA") and the applicability of those policies to the thousands of asbestos-related personal injury claims which have been brought against ACandS around the nation. Between 1958 and 1980, ACandS was covered by 24 primary liability policies and several excess policies, including the two CNA policies at issue.

CNA policy RDU9977990 covered both ACandS and ACandS's then-parent, Armstrong Cork Company (since renamed Armstrong World Industries), from January 1, 1966 to April 1, 1969. ACandS alone was covered by CNA policy RDU8042787 between April 1, 1969 and April 1, 1972. Each CNA policy had a $5 million limit, both per occurrence and in the aggregate, and an attached list of underlying primary policies, the coverage from which first had to be exhausted before the excess CNA coverage took effect. The CNA policies also had "Other Insurance" provisions (condition 11 on RDU9977990, condition 10 on RDU8042787). The RDU9977990 provision states that:

If other collectible insurance with any other insurer is available to the Insured covering a loss also covered hereunder, this insurance shall be in excess of, and shall not contribute with such other insurance. Excess insurance over the limits of liability expressed in this policy is permitted without prejudice to this insurance and the existence of such insurance shall not reduce any liability under this policy.

The RDU8042787 provision states that:

If, with respect to loss and ultimate net loss covered hereunder, the insured has other insurance, whether on a primary, excess or contingent basis, there shall be no insurance afforded hereunder as respects loss and ultimate net loss: provided that if the limit of liability of this policy is greater than the limit of liability provided by the other insurance, this policy shall afford excess insurance over and above such other insurance in an amount sufficient to give the insured, as respects the layer of coverage afforded by this policy, a total limit of liability equal to the limit of liability afforded by this policy.

This condition does not apply with respect to the underlying insurance or excess insurance purchased specifically to be in excess of this policy.

The present lawsuit is part of a litigation series involving ACandS's asbestos liability coverage. ACandS first sued its two primary carriers, Aetna Casualty & Surety Company and Travelers Indemnity Company, in 1980 in Pennsylvania federal court. See ACandS, Inc. v. Aetna Casualty and Sur. Co., 764 F.2d 968 (3d Cir.1985). CNA was not a party to the Pennsylvania case. Also in 1980, ACandS's former parent, Armstrong World Industries, sued all of its primary and excess carriers, including CNA, in California state court. That case was consolidated with several similar actions in 1982.

The consolidated California case involved at least two CNA policies: ACandS's excess RDU9977990 and a primary policy issued to Fibreboard Corporation. The CNA/Fibreboard policy apparently lacked an aggregate limit, creating the possibility that CNA could be forced to pay an indefinite amount under that policy while Fibreboard's excess insurers for the same policy period would be left unscathed. CNA sought to avoid that result by urging the California court to take an equitable approach: trigger the excess coverage when the underlying primary insurers for the same policy periods have paid the underlying amounts anticipated in the excess policies. In other words, if an excess policy was intended to cover losses over $1 million, the excess insurer should begin paying after the underlying primary insurer has paid $1 million, even if the primary insurer's liability is not fully exhausted. That, in a greatly simplified form, was CNA's argument, and it apparently achieved some success.² The California court, in a tentative decision, set forth a liability allocation plan that accepted CNA's argument in part. In re Asbestos Ins. Coverage Cases, Judicial Council Coordination Proceeding No. 1072 (Calif.Super.Ct., San Francisco, Aug. 29, 1988) (tentative decision concerning phase IV issues). At the time of briefing on the present motion, no final judgment had been entered in the California litigation.

CNA filed this case in the Circuit Court of Cook County, Illinois, and it was removed by the defendants to this court on August 18, 1986. Count II of the amended complaint seeks a judgment declaring that CNA's liability under excess policies RDU9977990 and RDU8042787 is not triggered until all of ACandS's available primary insurance is exhausted, not just the underlying primary policies listed on the CNA excess policies. ACandS's summary judgment motion on Count II seeks either a dismissal of that count or a declaration that only the listed underlying policies need be exhausted before the excess CNA coverage begins.

DISCUSSION

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith 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 the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). A dispute about a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A plaintiff cannot rest on mere allegations of a claim without any significant probative evidence which supports his complaint. Id.; see First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968). "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses...." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Accordingly, the non-moving party is required to go beyond the pleadings, affidavits, depositions, answers to interrogatories and admissions on file to designate specific facts showing a genuine issue for trial. Id. at 324, 106 S.Ct. at 2553. Nevertheless, in determining the existence of any genuine issues of material fact, the court must draw all reasonable inferences in the light most favorable to the non-movant. Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir.1991).

ACandS makes three arguments for judgment on Count II in its favor: (1) judicial estoppel should bar the relief requested by CNA because it took an opposite position in the California litigation, (2) issue preclusion (collateral estoppel) should have the same effect because the issue was decided adversely to CNA in California, and (3) the insurance policies should be interpreted adversely to CNA's position either based on their plain meaning or, if deemed ambiguous, based on the rule that ambiguity is construed against the contract's drafter.

Regarding judicial estoppel, the court initially finds, as the parties apparently agree, that there is no conflict-of-law issue. The doctrine of judicial estoppel is essentially the same under federal case law and that of Illinois, where CNA is based, and Pennsylvania, where ACandS is based. Judicial estoppel, in all these jurisdictions, bars a party who successfully asserts a position in one case from adopting an inconsistent position in a later case. Astor Chauffeured Limousine Co. v. Runnfeldt Inv. Corp., 910 F.2d 1540, 1547-48 (7th Cir.1990); Cashmore v. Builders Square, Inc., 211 Ill.App.3d 13, 18, 155 Ill.Dec. 742, 745, 569 N.E.2d 1353, 1356 (2d Dist.1991); Ballestrino v. Ballestrino, 400 Pa.Super. 237, 583 A.2d 474, 478 (1990); see also Harbor Ins. Co. v. Continental Bank Corp., 922 F.2d 357, 364 (7th Cir.1990) (comparing judicial estoppel to its "cousin," the "mend the hold" doctrine). Although the scope of judicial estoppel may vary somewhat among these jurisdictions, a five-element Illinois test has general applicability: (1) the same party must have taken the inconsistent positions,...