Cooper Indus., LLC v. Precision Castparts Corp.
| Decision Date | 14 September 2016 |
| Docket Number | CIVIL ACTION NO. H-15-0576 |
| Parties | COOPER INDUSTRIES, LLC, Plaintiff, v. PRECISION CASTPARTS CORP. and WYMAN-GORDON COMPANY, Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Plaintiff Cooper Industries, LLC ("Cooper") brought this action against defendants Precision Castparts Corp. ("Precision") and Wyman-Gordon Company ("Wyman") (together, "Defendants") seeking a declaratory judgment that Defendants must indemnify Cooper for and defend certain personal-injury asbestos liabilities and lawsuits pursuant to the terms of a stock purchase agreement between Cooper and Wyman and pursuant to the doctrine of collateral estoppel.1 Pending before the court are Plaintiff Cooper Industries, LLC's Motion for Summary Judgment ("Plaintiff's Motion") (Docket Entry No. 27) and Defendants' Motion for Summary Judgment ("Defendants' Motion") (Docket Entry No. 29).
This action arises out of asbestos personal-injury claims stemming from the operations of Cameron Iron Works at its Katy Roadfacility.2 Cooper acquired Cameron Iron Works in 1989.3 From 1989 to 1994 Cameron Iron Works operated primarily in two business units at the Katy Road facility: the Oil Tools Division ("Oil Tools") and Forged Products.4 In January of 1994 Wyman purchased the Forged Products business from Cooper pursuant to the Amended and Restated Stock Purchase Agreement (the "SPA") at issue in this action.5 In January of 1995 Cooper transferred the Oil Tools division to Cameron International Corporation ("Cameron") pursuant to an Asset Transfer Agreement (the "ATA").6
Cameron Iron Works and Cooper were later named as defendants in lawsuits alleging liability for asbestos exposure at Cameron Iron Works' former Katy Road facility.7 Following the SPA, Wyman and Cooper allegedly agreed to split defense and indemnity costs for such suits when it was not clear whether the plaintiffs in such cases worked in Oil Tools or Forged Products.8 If it could be determined at which division the employee worked, Wyman (and later, Precision) paid all of the claim and defense costs for Forged Products employees and Cooper was responsible for claims and defense costs for Oil Tools employees.9 (Precision acquired Wyman in 2000.)10 After the closing of the ATA, Cameron began sharing costs with Wyman.11 The cost-sharing practice continued afterPrecision acquired Wyman, and between 1994 and 2006 Defendants paid over $1.2 million on more than 100 claims.12
The cost sharing continued until 2006, when Precision informed Cameron that it would no longer contribute to defending and settling asbestos claims.13 That year a case involving asbestos-exposure injuries settled for $2.2 million (the "Sutterfield case").14 Emi Donas, Precision's associate general counsel, attended the mediation that led to the Sutterfield settlement, and soon thereafter she informed Cameron that Wyman would not pay any portion of the Sutterfield settlement or future asbestos-injury claims.15
On January 25, 2007, Cameron sued Wyman and Precision in Texas state court asserting that Defendants' refusal to pay their portion of the Sutterfield settlement constituted a breach of Defendants' agreement to share costs with Cameron.16 Precision and Wyman deniedliability for the claims and argued that the cost sharing arrangement did not override the SPA's express terms.17 Wyman and Cameron entered a Rule 11 agreement on January 22, 2009, agreeing to stay the state court action in order to initiate arbitration with Cooper.18 Cameron and Wyman exchanged drafts of a demand letter and the arbitration demand.19 Wyman sent a letter to Cooper declaring a dispute under the SPA, and Cameron filed an arbitration demand against Cooper.20 Cameron had a contractual right to initiate arbitration with Cooper under the ATA, but Wyman did not have the ability to compel Cooper to arbitrate.21 Thus, Wymanasserts, the Rule 11 agreement was dependent upon Cooper's agreeing to allow Wyman to participate in the arbitration.22
Cameron requested in February and March of 2009 that Cooper agree to include Wyman and Precision in a trilateral arbitration.23 Cooper allegedly ignored Cameron's requests, and the arbitration did not move forward.24 Cameron subsequently renewed its state-court action against Precision and Wyman, but on March 15, 2010, Cameron voluntarily dismissed the action.25 Wyman alleges that from the 2010 dismissal until March 25, 2015, Wyman and Precision did not receive demands for contribution for asbestos liabilities from Cameron or Cooper and had no involvement in or awareness of their arbitration.26
Arbitration proceeded between Cooper and Cameron. Cooper asserts that "Cameron essentially adopted and litigated Wyman's position that Wyman was not liable for Forged Products asbestos claims."27 The arbitration panel held that "[i]t is clear from the SPA that Cooper transferred all liabilities to [Wyman] in the SPA."28 The arbitration panel granted summary judgment on some claims, the parties settled the remaining claims, and a Texas state court confirmed the arbitration award in January of 2015.29
Following confirmation, Cooper determined that a pending claim naming Cameron Iron Works as defendant allegedly involved a Forged Products employee: Gatlin v. Cameron Iron Works U.S.A., Inc., Cause No. 2012-73370, Harris County Multidistrict Litigation, Texas, originally filed as Cause No. A193-233 (58th District Court, Jefferson County, Texas).30 On December 21, 2012, Cooper firsttendered the Gatlin complaint to Cameron, claiming that Cameron assumed that liability under the ATA and was "solely responsible" for that claim, but Cameron rejected the tender.31 Precision and Wyman were allegedly unaware of the Gatlin action for over two years, until on March 3, 2015, when Cooper tendered the action to Precision and Wyman.32 Cooper received no response from Defendants to its original tender or its follow up letter.33
Cooper then brought this action, asserting two claims: (1) a declaratory judgment interpreting the SPA and confirming that Defendants assumed personal-injury asbestos liabilities related to the Forged Products division and are required to indemnify and defend for such liabilities pursuant to the SPA; and (2) a declaratory judgment that the arbitration panel's decision in the Cooper-Cameron arbitration has collateral estoppel or res judicata effect in this action.34 Following the completion of fact discovery, both parties moved for summary judgment. Cooper seeks summary judgment that Wyman is liable for asbestos personal-injury claims under the SPA as a matter of law, and Defendants seek summary judgment in their favor on both of Cooper's claims.35
Summary judgment is appropriate if the movant establishes that there is no genuine dispute about any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Disputes about material facts are genuine "if the evidence is suchthat a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2510 (1986). The moving party is entitled to judgment as a matter of law if "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2552 (1986).
A party moving for summary judgment "must 'demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant's case." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam) (quoting Celotex, 106 S. Ct. at 2553). "If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response." Id. If, however, the moving party meets this burden, "the nonmovant must go beyond the pleadings" and produce evidence that specific facts exist over which there is a genuine issue for trial. Id. (citing Celotex, 106 S. Ct. at 2553-54). The nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 106 S. Ct. 1348, 1356 (1986).
"In order to avoid summary judgment, the nonmovant must identify specific facts within the record that demonstrate the existence of a genuine issue of material fact." CO, Inc. v. TXU Mining Co., L.P., 565 F.3d 268, 273 (5th Cir. 2009). "The partymust also articulate the precise manner in which the submitted or identified evidence supports his or her claim." Id. (internal quotation marks and citation omitted). "When evidence exists in the summary judgment record but the nonmovant fails even to refer to it in the response to the motion for summary judgment, that evidence is not properly before the district court." Id. (same).
In reviewing the evidence "the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Products, Inc., 120 S. Ct. 2097, 2110 (2000). The court resolves factual controversies in favor of the nonmovant, "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little, 37 F.3d at 1075. In a contract interpretation dispute, summary judgment is appropriate where the language of the contract is unambiguous. See Hanssen v. Qantas Airways Ltd., 904 F.2d 267, 269 n.3 (5th Cir. 1990) (citation omitted).
Cooper's motion presents four issues:
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...unambiguous. See Nowak v. Ironworkers Local 6 PensionFund, 81 F.3d 1182, 1192 (2d Cir. 1996); Cooper Indus., LLC v. Precision Castparts Corp., 2016 WL 4939565, at *6 (S.D. Tex. Sept. 14, 2016). A court views the facts and evidence in the light most favorable to the non-moving party at all t......