Firstenergy Generation, LLC v. Valley Forge Ins. Co., Case No. 5:19-CV-2413

• Decision Date: 16 September 2020
• Docket Number: Case No. 5:19-CV-2413
• Citation: 487 F.Supp.3d 630
• Parties: FIRSTENERGY GENERATION, LLC, et al., Plaintiffs, v. VALLEY FORGE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Ohio

487 F.Supp.3d 630

FIRSTENERGY GENERATION, LLC, et al., Plaintiffs,

v.VALLEY FORGE INSURANCE COMPANY, Defendant.

Case No. 5:19-CV-2413

United States District Court, N.D. Ohio, Eastern Division.

Signed September 16, 2020

Kyle A. Shelton, Lucas M. Blower, Amanda M. Leffler, Brouse McDowell, Akron, OH, for Plaintiffs FirstEnergy Generation, LLC, FirstEnergy Generation Mansfield Unit 1 Corp.

Amanda M. Leffler, Brouse McDowell, Akron, OH, Mark J. Andreini, Jones Day, Cleveland, OH, Matthew R. Divelbiss, Pro Hac Vice, Jones Day, Pittsburgh, PA, for Plaintiff FirstEnergy Corp.

Lindsay M. Johnson, Freund, Freeze & Arnold, Dayton, OH, Marian S. Hertz, CNA Coverage Litigation Group, New York, NY, for Defendant.

ORDER [Resolving ECF Nos. 33 and 35 ]

Benita Y. Pearson, United States District Judge

Pending are the parties’ Motions for Summary Judgment. ECF Nos. 33 and 35. The Motions have been fully briefed, and a hearing was held on August 3, 2020. For the reasons explained below, Plaintiffs’ Motion is granted and Defendant's Motion is denied.

I. Introduction

Various FirstEnergy subsidiaries ("Plaintiffs") own and operate the Bruce Mansfield Plant ("the Plant"), a coal-fired power plant in Shippingport, Pennsylvania. ECF No. 29 at PageID #: 387. Plaintiffs entered into a Service Contract with Enerfab, Inc. ("Enerfab"), in which Enerfab agreed to provide services to Plaintiffs at the Plant. Id. ; see also ECF No. 32. Four Enerfab employees were exposed to toxic hydrogen sulfide gas while working at the Plant on August 30, 2017; two of them died and two were injured. ECF No. 33-1 at PageID #: 1125. These employees and their families sued Plaintiffs in four different lawsuits related to the August 30, 2017 incident (the "underlying lawsuits"). ECF Nos. 29-3, 29-4, 29-5, and 29-6. The plaintiffs in the underlying lawsuits (the "underlying plaintiffs") could not sue Enerfab in the underlying lawsuits because of Pennsylvania's workers’ compensation laws. ECF No. 33-1 at PageID #: 1130.

Enerfab had purchased an insurance policy ("the Policy") from Valley Forge Insurance Company ("Defendant"). ECF No. 29 at PageID #: 386; see also ECF No. 29-1. The Policy covers not only the "Named Insured," i.e. , Enerfab, but also certain "Additional Insured" parties. ECF No. 29-1 at PageID #: 467. The Policy provides that it is "amended to add as an Insured any person or organization whom the Named Insured is required by written contract to add as an additional insured on this coverage part." Id. Plaintiffs’ Service Contract with Enerfab requires Enerfab to cover Plaintiffs as additional insured parties. ECF No. 32 at PageID #: 1014; see also ECF No. 29-10 at PageID #: 662. Under the Policy, Defendant agreed to provide insurance to Plaintiffs, as "Additional Insured" parties, for "liability for ... bodily injury or property damage caused in whole or in part by the acts or omissions by or on behalf of" Enerfab. ECF No. 29-1 at PageID #: 467.

Plaintiffs "tendered a demand to Enerfab for defense and indemnification with respect to the Underlying Lawsuits" and Defendant, on behalf of Enerfab, denied coverage. ECF No. 29 at PageID #: 388; see also ECF No. 29-10. In the letter denying coverage, Defendant indicated that the Policy did not cover defense and indemnification for the underlying lawsuits because Plaintiffs are "being sued for [their] sole or independent negligence and not due to the negligence of Enerfab." ECF No. 29-10 at PageID #: 662. Plaintiffs and Defendant "have been unable to resolve the dispute relating to coverage under the Policy" (ECF No. 29 at PageID #: 388 ); hence, the instant case was filed. Plaintiffs’ Motion asks the Court to "enter partial summary judgment in their favor and declare that Defendant ... is required to defend [Plaintiffs]" in the underlying lawsuits. ECF No. 33 at PageID #: 1118. Defendant's Cross-Motion asks the Court to do the opposite. ECF No. 35.

II. Standard of Review

Summary judgment is appropriately granted when the pleadings, the discovery and disclosure materials on file, and any affidavits show "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Johnson v. Karnes , 398 F.3d 868, 873 (6th Cir. 2005). The moving party is not required to file affidavits or other similar materials negating a claim on which its opponent bears the burden of proof, so long as the movant relies upon the absence of the essential element in the pleadings, depositions, answers to interrogatories, and admissions on file. Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party must "show that the non-moving party has failed to establish an essential element of his case upon which he would bear the ultimate burden of proof at trial." Guarino v. Brookfield Twp. Trs. , 980 F.2d 399, 403 (6th Cir. 1992).

The instant Motions do not present a dispute regarding the facts. Rather, the parties’ Motions require an analysis of which "movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Napier v. Ickes , 140 N.E.3d 137, 145 (Ohio Ct. App. 2019) (providing that the interpretation of an insurance policy "is a question of law for the court to decide").

III. Discussion

As explained below, resolution of the pending Motions requires a choice of law analysis, the first step of which is to assess whether Pennsylvania and Ohio law conflict with respect to the instant issue. The Court finds that there is no conflict because Plaintiffs’ Motion must be granted under either Pennsylvania or Ohio law. The Court therefore need not decide which state's law applies.

A. Choice of Law Analysis

The insurance policy at issue does not contain a choice of law clause, and there is some dispute regarding whether the law of Ohio or Pennsylvania should control the Court's interpretation of the insurance policy language. See, e.g. , ECF No. 41 at PageID #: 1299. A federal court sitting in diversity jurisdiction applies the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Electric Mfg. Co. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941) ; Premium Freight Mgmt., LLC v. Engineered Sols., Inc. , 906 F.3d 403, 406 (6th Cir. 2018). This means the Court should apply Ohio's choice of law rules to determine which state's law applies to the substantive dispute presented by the parties’ Motions. Ohio "has adopted the two-step approach set forth in the Restatement (Second) of Conflict of Laws." Premium Freight Mgmt. , 906 F.3d at 406 ; see also Ohayon v. Safeco Ins. Co. of Ill. , 91 Ohio St.3d 474, 747 N.E.2d 206 (2001). "The first step is to determine if there is an actual conflict between the substantive laws of the states involved.... Only if they conflict must we proceed to the second step to choose between them." Premium Freight Mgmt. , 906 F.3d at 406-07 (citation omitted); see also Glidden Co. v. Lumbermens Mut. Cas. Co. , 112 Ohio St.3d 470, 861 N.E.2d 109, 115 (2006).

Defendant argues that "[b]ecause Ohio and Pennsylvania have different approaches when interpreting additional insured coverage, there is a conflict between their laws." ECF No. 41 at PageID #: 1302. The two states may have generally different "approaches," but Ohio courts analyze the existence of conflicts between the laws of different states at a more granular level. Glidden Co. , 861 N.E. 2d at 115-16. For example, in Glidden Co. , in deciding between New York and Ohio law, the Ohio Supreme Court found that because there were "no cases directly on point as to whether New York would require insurance coverage to follow by operation of law in the instant circumstances," but an Ohio case was "directly on point ... and without conflict under New York law," there was "no conflict between Ohio and New York law." Id.

The specific insurance policy language at issue in this case has already been interpreted under Pennsylvania law. Ramara, Inc. v. Westfield Ins. Co. , 814 F.3d 660, 676 (3d Cir. 2016) (holding that, under Pennsylvania law, insurer owed a duty to defend an "additional insured" who had been sued in underlying litigation for "factual allegations that potentially would support a conclusion that [the underlying plaintiffs’] injuries were ‘caused, in whole or in part,’ by [named insured's] acts or omissions"). There is, therefore, only a conflict between Ohio and Pennsylvania law if Ohio courts have interpreted the specific policy language at issue in this case differently. That means that the first step in the choice of law analysis is to analyze this case under Ohio insurance law.

As explained below, the Court finds that Defendant owes Plaintiffs a duty to defend under Ohio law. Because Defendant would also owe Plaintiffs a duty to defend under Pennsylvania law,¹ there is no conflict between Ohio and Pennsylvania law. Given the absence of a conflict, the Court need not proceed to the second step of the choice of law analysis. Plaintiffs’ Motion must be granted under either Pennsylvania or Ohio law, so choosing between the two is unnecessary.

B. Interpretation under Ohio Law

Ohio courts have not yet provided an interpretation of the specific policy language at issue here, which requires Defendant to insure Plaintiffs for liability "caused in whole or in part by the acts or omissions by or on behalf of" Enerfab, the named insured under the policy. ECF No. 29-1 at PageID #: 467. Ohio law does supply helpful general guidance related to whether an insurer owes an insured a duty to defend in an underlying suit against the insured. The Ohio Supreme Court has provided that "[a]n insurer's duty to defend is broader than and distinct from its duty to indemnify." Sharonville v. American Emps. Ins. Co. , 109 Ohio St.3d 186, 846 N.E.2d 833, 837 (2006). The Ohio Supreme Court has also held that when the allegations in the underlying complaint "state a claim which is potentially or arguably within the policy coverage, or...