In re Viking Pump, Inc.
| Decision Date | 12 September 2016 |
| Docket Number | No. 523, 2014,No. 525, 2014,No. 518, 2014,No. 528, 2014,518, 2014,523, 2014,525, 2014,528, 2014 |
| Citation | 148 A.3d 633 |
| Parties | In re Viking Pump, Inc. and Warren Pumps, LLC Insurance Appeals |
| Court | Supreme Court of Delaware |
David J. Baldwin, Esquire, Jennifer C. Wasson, Esquire, Michael B. Rush, Esquire, Potter Anderson & Corroon LLP, Wilmington, Delaware. Of Counsel: Robin L. Cohen, Esquire (Argued), Keith McKenna, Esquire, McKool Smith, New York, New York, for Appellant Warren Pumps LLC.
Paul Cottrell, Esquire, Tighe & Cottrell, P.A., Wilmington, Delaware. Of Counsel: Laura S. McKay, Esquire, Hinkhouse
Williams Walsh LLP, Chicago, Illinois; and Anthony G. Flynn, Esquire, Timothy Jay Houseal, Esquire, Jennifer M. Kinkus, Esquire, Young Conaway Stargatt & Taylor LLP, Wilmington, Delaware. Of Counsel: Lynn H. Murray, Esquire (Argued), Shook, Hardy & Bacon LLP, Attorneys for The Continental Insurance Company as successor by merger to Fidelity & Casualty Company of New York.
Lisa A. Schmidt, Esquire, Travis S. Hunter, Esquire, Richards, Layton & Finger, P.A., Wilmington, Delaware. Of Counsel: Michael P. Foradas, Esquire (Argued), Lisa G. Esayian, Esquire, William T. Pruitt, Esquire, Kirkland & Ellis LLP, Chicago, Illinois, for Appellant Viking Pump, Inc.
Kenneth J. Nachbar, Esquire (Argued), Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware and Garrett B. Moritz, Esquire and Nicholas D. Mozal, Esquire, Ross Aronstam & Moritz LLP, Wilmington, Delaware. Of Counsel: Tancred Schiavoni, Esquire and Gary Svirsky, Esquire, O'Melveny & Myers LLP, New York, New York; and John D. Balaguer, Esquire, White and Williams LLP, Wilmington, Delaware. Of Counsel: Brian G. Fox, Esquire and Lawrence A. Nathanson, Esquire, Siegal & Park, Mount Laurel, New Jersey, Attorneys for Defendants TIG Insurance Company, f/k/a International Insurance Company, with respect to policies numbered 5220113076 and 5220282357, and Westchester Fire Insurance Company, with respect to policy numbered 5220489339, by operation of novation; ACE Property & Casualty Insurance Company (f/k/a CIGNA Property & Casualty Insurance Company), as successor-in-interest to Central National Insurance Company of Omaha, but only as respects policies issued through Cravens, Dargan & Company, Pacific Coast (improperly named as The Central National Insurance Company of Omaha); and Century Indemnity Company, as successor to CCI Insurance Company, as successor to Insurance Company of North America and Century Indemnity Company as successor to CIGNA Specialty Insurance Company (f/k/a California Union Insurance Company).
Paul Cottrell, Esquire, Tighe & Cottrell, P.A., Wilmington, Delaware. Of Counsel: Laura S. McKay, Esquire, Hinkhouse Williams Walsh LLP, Chicago, Illinois; and Anthony G. Flynn, Esquire, Timothy Jay Houseal, Esquire, Jennifer M. Kinkus, Esquire, Young Conaway Stargatt & Taylor LLP, Wilmington, Delaware, Attorneys for Certain Underwriters at Lloyd's, London and certain London Market Insurance Companies, Granite State Insurance Company, Lexington Insurance Company And National Union Fire Insurance Company of Pittsburgh, PA.
Robert J. Katzenstein, Esquire, Smith Katzenstein & Jenkins LLP, Wilmington, Delaware. Of Counsel: Christopher R. Carroll, Esquire, Heather E. Simpson, Esquire, Carroll McNulty & Kull LLC, Basking Ridge, New Jersey, Attorneys for TIG Insurance Company, as successor by merger to International Insurance Company, as successor by merger to International Surplus Lines Insurance Company (Policy No. XSI 5217 only).
Thaddeus J. Weaver, Esquire, Dilworth Paxson LLP, Wilmington, Delaware. Of Counsel: Laura S. McKay, Esquire, Douglas M. DeWitt, Esquire, Hinkhouse Williams Walsh LLP, Chicago, Illinois; and Anthony G. Flynn, Esquire, Timothy Jay Houseal, Esquire, Jennifer M. Kinkus, Esquire, Young Conaway Stargatt & Taylor LLP, Wilmington, Delaware, Attorneys for OneBeacon America Insurance Company as successor to Commercial Union Insurance Company, XL Insurance America, Inc., as successor to Vanguard Insurance Company, and Republic Insurance Company, n/k/a Starr Indemnity & Liability Company.
James W. Semple, Esquire, Cooch & Taylor P.A., Wilmington, Delaware. Of Counsel: Kristin Suga Heres, Esquire, Zelle LLP, Framingham, Massachusetts, Attorneys for Defendant Westport Insurance Corporation.
Robert M. Greenberg, Esquire, Tybout Redfearn & Pell, Wilmington, Delaware. Of Counsel: Amy R. Paulus, Esquire, Mark D. Paulson, Esquire and Don R. Sampen, Esquire, Clausen Miller P.C., Chicago, Illinois, Attorneys for Old Republic Insurance Company.
Neal J. Levitsky, Esquire, Seth A. Niederman, Esquire, Fox Rothschild LLP, Wilmington, Delaware. Of Counsel: Kathleen D. Monnes, Esquire, Joseph K. Scully, Esquire and John W. Cerreta, Esquire, Day Pitney LLP, Hartford, Connecticut, Attorneys for Defendant, Travelers Casualty and Surety Company f/k/a The Aetna Casualty and Surety Company.
Before HOLLAND, VALIHURA, and V AUGHN, Justices ; WALLS and RYAN, Judges,* constituting the Court en Banc.
This is a consolidated appeal in an insurance-coverage dispute from separate judgments by the Court of Chancery and the Superior Court. Viking Pump, Inc. ("Viking") and Warren Pumps, LLC ("Warren") seek to recover under insurance policies issued to a third company, Houdaille Industries, Inc. ("Houdaille"). In the 1980's, Viking and Warren acquired pump manufacturing businesses from Houdaille. As a result, Viking and Warren have been confronted with potential liability flowing from personal injury claims made by plaintiffs alleging damages in connection with asbestos exposure claims dating back to when the pump manufacturing businesses were owned by Houdaille (the "Houdaille-Era Claims"). Each year from 1972 through 1985, Houdaille purchased occurrence-based primary and umbrella insurance from Liberty Mutual Insurance Company ("Liberty"). Above the Liberty umbrella layer, Houdaille purchased layers of excess insurance. In total, Houdaille purchased 35 excess policies through 20 different carriers (the "Excess Policies"). Houdaille's 14-year insurance tower offered $17.5 million in primary coverage, $42 million in umbrella coverage, and $427.5 million in excess coverage.
Viking and Warren now seek to fund the liabilities arising from the Houdaille-Era Claims using the comprehensive insurance program originally purchased by Houdaille. The insurance companies that issued the Excess Policies (the "Excess Insurers") contend that Viking and Warren are not entitled to use the Excess Policies to respond to the Houdaille-Era Claims. The Excess Insurers also dispute the extent of any coverage available, particularly with respect to defense costs.
A more detailed history of this litigation can be gleaned from several other significant opinions.1
This litigation first arose in 2005, when Viking brought suit in the Court of Chancery claiming that it was the successor to insurance policies that Liberty had issued to Houdaille or, in the alternative, seeking partition of the Liberty policy limits. Liberty, Viking, and Warren settled that dispute.
Viking and Warren then filed new complaints in the Court of Chancery against more than twenty other insurers that had issued excess policies to Houdaille. The parties cross-moved for summary judgment on how to allocate the losses where the underlying asbestos injuries potentially trigger coverage against multiple policy periods.2
With regard to allocation, the Court of Chancery considered the "pro rata " and "all sums" approaches and observed that New York law, which governs interpretation of the policies, did not impose either approach on all insurance contracts. Rather, New York precedent required that the court "apply traditional principles of insurance contract interpretation to the policies at issue and then apply the approach that results from that interpretative exercise."3 Thus, under New York law, the method of allocation depended upon the language of the policy,4 and the Court of Chancery held that the Houdaille policies "unambiguously provide for all sums allocation."5 In so holding, the Court of Chancery distinguished a leading New York case on the issue, Consolidated Edison Company of New York, Inc. v. Allstate Insurance Company ,6 on the ground that the policies in this dispute contain additional provisions—namely, the "Non-Cumulation" and "Prior Insurance" provisions—that the court viewed as inconsistent with pro rata allocation.7
Following the Court of Chancery proceedings, the case was transferred to the Superior Court on June 11, 2010 to hear and determine several other issues, one of which was whether the Excess Policies were subject to vertical or horizontal exhaustion. The Superior Court held a three week trial in October and November 2012. The jury verdict was predominately in Warren and Viking's favor.8 Warren and Viking sought a judgment incorporating the verdict, and the defendants sought a judgment notwithstanding the verdict.
In a post-trial Opinion dated October 31, 2013, on Plaintiffs' Motion for Final Judgment and Defendants' Renewed Motion for Judgment as a Matter of Law, the Superior Court held that, as a matter of New York law, Viking and Warren were obligated to horizontally exhaust all triggered "primary and umbrella insurance layers before tapping" into any of Houdaille's excess coverage.9 In a subsequent Opinion dated February 28, 2014, the Superior Court clarified that this horizontal-exhaustion requirement was limited to the primary and umbrella coverage layers and not the excess coverage.10
On June 9, 2014, the Superior Court entered a Final Judgment Order After Trial.11 Warren moved to clarify and amend the judgment, which motion the Superior Court denied on August 20, 2014. All parties appealed, and this Court heard oral arguments. Following oral argument, because resolution of this appeal depended upon...
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