Danaher Corp. v. Travelers Indem. Co.

• Decision Date: 10 October 2019
• Docket Number: 10-CV-121 (JPO)
• Parties: DANAHER CORPORATION, Plaintiff, v. The TRAVELERS INDEMNITY COMPANY, et al., Defendants. The Travelers Indemnity Company and Travelers Casualty and Surety Company, Third-Party Plaintiffs, v. Atlas Copco North America, Inc. (as successor to Chicago Pneumatic Tool Company), et al., Third-Party Defendants.
• Court: U.S. District Court — Southern District of New York

414 F.Supp.3d 436

DANAHER CORPORATION, Plaintiff,

v.The TRAVELERS INDEMNITY COMPANY, et al., Defendants.

The Travelers Indemnity Company and Travelers Casualty and Surety Company, Third-Party Plaintiffs,

v.Atlas Copco North America, Inc. (as successor to Chicago Pneumatic Tool Company), et al., Third-Party Defendants.

10-CV-121 (JPO)

United States District Court, S.D. New York.

Signed October 10, 2019

Filed October 31, 2019

Brian Jonathan Osias, Gita F. Rothschild, Adam Joseph Budesheim, McCarter & English, LLP, Newark, NJ, for Plaintiff.

Robert W. Mauriello, Jr., Jennifer Leigh Schoenberg, Gimigliano Mauriello & Maloney, P.A., Morristown, NJ, Alexander John Mueller, Gerard Craig Morici, Glenn Padell Greenberg, Mendes & Mount, LLP, John Albert Mattoon, Ford Marrin Esposito Witmeyer & Gleser LLP, Andrew I. Mandelbaum, Kelly and Curtis, Ellen Gayle Margolis, Mound Cotton Wollan & Greengrass, New York, NY, Robert Michael Flannery, Mendes & Mount, LLP, John T. Wolak, Gibbons, Del Deo, Dolan, Griffinger & Vecchione, Newark, NJ, Robert Dwyer Sullivan, Jr., Sheilagh Mary Depeter, Wilson Elser,Moskowitz Edelman & Dicker LLP, White Plains, NY, Barbara Hopkinson Kelly, Pro Hac Vice, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Florham Park, NJ, Charles F. Harms, Jr., David J. Lawrence, Frankini & Harms, Angelo Capalbo, Law Office of Charles F. Harms Jr., Garden City, NY, Claude N. Grammatico, Epstein, Frankini & Grammatico, Woodbury, NY, Anthony Gambardella, Rivkin, Radler & Kremer, Jay Kenigsberg, Michael Buckley, Rivkin Radler, LLP, Uniondale, NY, for Defendants.

Paul E. Breene, Anthony Crawford, Reed Smith LLP, Eric J. Voigt, Mound Cotton Wollan & Greengrass, Karen M. Asner, White & Case LLP, Adam Mason Smith, Coughlin Duffy, LLP, New York, NY, Brian G. Fox, Siegal & Park, Mt. Laurel, NJ, James F. Martin, Cohn Baughman & Martin, Chicago, IL, for Third-Party Defendants.

OPINION AND ORDER (REDACTED)

J. PAUL OETKEN, District Judge:

This action was initiated by Plaintiff Danaher Corporation ("Danaher") to resolve disputes concerning insurance coverage for silica- and asbestos-related claims brought against one of Danaher's former subsidiaries, Chicago Pneumatic Tool Company ("Chicago Pneumatic"). Danaher brings state-law contract and declaratory judgment claims against Defendants the Travelers Indemnity Company and the Travelers Casualty and Surety Company (together, "Travelers"). (Dkt. No. 22 ¶¶ 3–5, 34–48.) Danaher's claims against Travelers stem from Travelers' alleged refusal to comply with the terms of a number of primary and excess insurance policies that Travelers had issued to Chicago Pneumatic in the years prior to Danaher's 1987 sale of Chicago Pneumatic to Third-Party Defendant Atlas Copco North America, Inc. ("Atlas Copco") (Dkt. No. 22 ¶¶ 16, 20, 33; see also Dkt. No. 619 ¶ 1; Dkt. No. 564-2). Danaher also brings breach of contract and declaratory judgment claims against one of Chicago Pneumatic's excess insurers from this period, Defendant North River Insurance Company ("NR"). (Dkt. No. 22 ¶¶ 6, 21, 34–43; Dkt. No. 604 ¶ 1; see also Dkt. Nos. 578-1, 578-2.) Finally, Danaher seeks a declaratory judgment adjudicating the obligations of nine other of Chicago Pneumatic's excess insurers from the period prior to Danaher's sale of Chicago Pneumatic to Atlas Copco (together with NR, the "Excess Insurers"). (Dkt. No. 22 ¶¶ 34–40.)¹

In addition to answering Danaher's allegations and asserting counterclaims and crossclaims against all parties in this action (see Dkt. No. 13), Travelers has impleaded as Third-Party Defendants in this action Atlas Copco, the current owner of Chicago Pneumatic, as well as the issuers of various of Atlas Copco's primary and excess liability insurance policies in the years following Atlas Copco's acquisition of Chicago Pneumatic (collectively, the "Post-Acquisition Insurers")² (Dkt. No. 455). Travelers seeks a declaratory judgment adjudicating the scope of its obligations to Atlas Copco with respect to indemnifying and defending against the underlying asbestos and silica claims brought against Chicago Pneumatic. (Dkt. No. 455 ¶¶ 40–49.) In addition, Travelers seeks an allocation as between itself and the Third-Party Defendants of the costs of defending the underlying claims, as well as an order mandating that the Third-Party Defendants pay contribution to Travelers for any indemnification payments Travelers might make on behalf of Chicago Pneumatic. (Dkt. No. 455 ¶¶ 50–62.)

Before the Court now are the parties' cross-motions for summary judgment. (See Dkt. Nos. 483–656.) Specifically, the following motions are now pending before the Court: Plaintiff Danaher and Third-Party Defendant Atlas Copco's motion for partial summary judgment (Dkt. No. 519); Defendant and Third-Party Plaintiff Travelers' motion for partial summary judgment (Dkt. No. 510); the Excess Insurers' motions for summary judgment (Dkt. Nos. 483, 488, 492, 496, 498, 503, 515, 520, 531); and the Post-Acquisition Insurers' motions for summary judgment (Dkt. Nos. 504, 517, 529, 551). For the reasons that follow, Danaher and Atlas Copco's motion is granted in part and denied in part, Travelers' motion is granted in part and denied in part, the Excess Insurers' motions are denied, and the Post-Acquisition Insurers' motions are granted.

I. Background

Familiarity with this case's long history is presumed based on this Court's prior opinions in this action. See, e.g., Danaher Corp. v. Travelers Indem. Co. , No. 10 Civ. 121, 2013 WL 150027 (S.D.N.Y. Jan. 10, 2013) (Francis, Mag. J.); Danaher Corp. v. Travelers Indem. Co. , No. 10 Civ. 121, 2014 WL 1133472 (S.D.N.Y. Mar. 21, 2014) ; Danaher Corp. v. Travelers Indem. Co. , No. 10 Civ. 121, 2014 WL 7008938 (S.D.N.Y. Dec. 12, 2014) ; Danaher Corp. v. Travelers Indem. Co. , No. 10 Civ. 121, 2016 WL 1255739 (S.D.N.Y. Mar. 30, 2016). The Court provides below a summary of the facts and procedural history most relevant to the resolution of the present motions. The following facts are drawn primarily from the parties' Local Rule 56.1 statements and attached exhibits and, unless otherwise noted, are not subject to genuine dispute.

Chicago Pneumatic was the manufacturer of various products that have been and continue to be the subject of asbestos-related bodily injury claims (the "Asbestos Claims") and silica-related bodily injury claims (the "Silica Claims," and together with the Asbestos Claims, the "Underlying Claims"). (Dkt. No. 607 ¶ 1.) As of the briefing of these motions, Danaher and Atlas Copco, on behalf of Chicago Pneumatic, had incurred more than $8.7 million in fees and costs defending the Underlying Claims,³ and more than $2 million in settling those claims. (Dkt. No. 607 ¶ 57; Dkt. No. 619 ¶ 5; Dkt. No. 612 ¶¶ 11, 13, 15.) In addition, Travelers has incurred over $7.1 million in costs and fees in the defense of the Underlying Claims, and Travelers continues to incur defense costs defending live claims. (Dkt. No. 607 ¶ 56; Dkt. No. 565 ¶¶ 10–11.) No new Silica Claims have been filed against Chicago Pneumatic since 2006. (Dkt. No. 612 ¶ 14; see also Dkt. Nos. 485-9 at 1–2, 485-10 at 12–13, 485-11 at 12–13 (demonstrating stagnation in number of Silica Claims against Chicago Pneumatic).) However, new Asbestos Claims continue to be filed against Chicago Pneumatic, and current trends indicate that new Asbestos Claims may well be filed at a similar rate for the foreseeable future. (Dkt. Nos. 485-9 at 3–9, 485-10 at 2–11, 485-11 at 2–11, 485-12; Dkt. No. 484 at 12 (noting that an average of 70 new Asbestos Claims per year have been filed in each of the last three years); Dkt. No. 611 ¶ 6.)

Danaher acquired Chicago Pneumatic in 1986. (Dkt. No. 607 ¶ 5.) On April 22, 1987, Danaher sold Chicago Pneumatic to Atlas Copco pursuant to a Stock Purchase Agreement ("SPA"), and Danaher no longer maintains any ownership interest in Chicago Pneumatic. (Dkt. No. 607 ¶¶ 6–7; see also Dkt. No. 564-2.) Section 11(a) of the SPA, the "Indemnification Clause," provides that:

[Danaher] shall defend, indemnify and hold harmless, [Atlas Copco], its successors, assigns and affiliates against and in respect of: ...

(iv) any and all losses, damages, deficiencies or liabilities in excess of applicable reserves of [Chicago Pneumatic] ... resulting from any claims against [Chicago Pneumatic] or any Subsidiary arising in connection with death, personal injury, other injury to persons, property damage, losses or deprivation of rights (whether based on statute, negligence, breach of warranty, strict liability or any other theory) caused by or resulting from, directly or indirectly, any defect or claimed defect in or with respect to any products manufactured or services performed for customers on or before the Closing Date with respect to the businesses of [Chicago Pneumatic] or any of its Subsidiaries or any violation of applicable law or regulation before the Closing Date, provided, however, that any such amount will be net of any amounts received pursuant to Section 11(h) hereof....

(Dkt. No. 564-2 at 11, 13 (emphasis omitted).) Section 11(h) of the SPA provides that:

[Atlas Copco] will cause [Chicago Pneumatic] to indemnify and hold [Danaher] harmless from and against all damages covered by the insurance policies owned by the [Chicago Pneumatic] Group prior to the Closing Date, arising from the business and operations of the [Chicago Pneumatic] Group and [Danaher] and its affiliates prior to the Closing Date but only to the extent of any amounts received, after the Closing Date, pursuant to and in accordance with the terms of, the insurance policies covering such damages.

(Dkt. No. 564-2 at 24.) In the years following Danaher's sale of Chicago Pneumatic to Atlas Copco, Danaher tried unsuccessfully to enlist the aid of Chicago Pneumatic's pre-acquisition insurers in the defense and indemnification of losses stemming from the Underlying Claims, and Danaher initiated this action in order to compel Travelers and the Excess...