Koppers Co., Inc. v. Aetna Cas. and Sur. Co.

• Decision Date: 22 July 1998
• Docket Number: No. 97-3432,97-3432
• Citation: 158 F.3d 170
• Parties: KOPPERS COMPANY, INC., Appellant v. THE AETNA CASUALTY AND SURETY COMPANY; Zurich Insurance Company; The Travelers Indemnity Co.; The American Home Assurance Company; Commercial Union Insurance Company; The Home Insurance Company; Underwriters at Lloyd's of London
• Court: U.S. Court of Appeals — Third Circuit

Page 170

158 F.3d 170

41 Fed.R.Serv.3d 1328

KOPPERS COMPANY, INC., Appellant v. THE AETNA CASUALTY AND SURETY COMPANY; Zurich Insurance Company; The Travelers Indemnity Co.; The American Home Assurance Company; Commercial Union Insurance Company; The Home Insurance Company; Underwriters at Lloyd's of London

No. 97-3432.

United States Court of Appeals, Third Circuit.

Argued April 27, 1998.

Decided July 22, 1998.

Joseph W. Montgomery, III (Argued), Jones, Day, Reavis & Pogue, Pittsburgh, PA, for Appellant.

Hershel J. Richman, Jennifer R. Clarke, Fred H. Nemeth, Dechert, Price & Rhoads, Philadelphia, PA; Peter M. Page, Kathleen A. McQueeny, Brian D. Bossert, Blatt, Hammesfahr & Eaton, Chicago, IL; Martin R. Baach, Bruce R. Grace (Argued), Duane K. Thompson, Baach, Robinson & Lewis, Washington, DC, for Appellee, Underwriters at Lloyd's of London.

BEFORE: ALITO, RENDELL and GARTH, Circuit Judges

GARTH, Circuit Judge.

The issue we must decide in this appeal is whether an excess insurer (here, INA) was an indispensable party under Rule 19(b) of the Federal Rules of Civil Procedure so as to cause the dismissal of certain of the Appellant's claims when INA was not joined in this action against various other excess insurers. We hold that INA was not an indispensable party and accordingly that the claims should not have been dismissed. We therefore reverse.

I.

Appellant Koppers Company, Inc. ("Koppers") appeals the district court's dismissal of its claims against Appellees, certain underwriters from Lloyd's of London and certain London market insurance companies (hereinafter, "the London Insurers"), pertaining to seven (7) insurance policies that the London Insurers issued to Koppers to provide coverage for various environmental property damages that occurred from 1960-65 (hereinafter, "the 1960-65 policies"). The district court dismissed the claims relating to these policies because Koppers failed to join two other insurers--Indemnity Insurance of North America and Insurance Company of North America (collectively, "INA")--as indispensable parties pursuant to Rule 19(b) of the Federal Rules of Civil Procedure.

II.

As we have set forth the facts of the underlying dispute in an earlier opinion, see Koppers Co., Inc. v. Aetna Cas. & Sur. Co., 98 F.3d 1440, 1444 (3d Cir.1996), we recite only the facts pertinent to the issues before us here.

Koppers is a large manufacturing company based in Pittsburgh, Pennsylvania. In the 1980s, federal and state agencies brought claims against Koppers based on environmental contamination at approximately 150 plant and disposal sites. Although Koppers had purchased insurance from several insurance companies, all of the insurers initially denied coverage for these claims when Koppers sought indemnification. Accordingly, in 1985, Koppers sued its two (2) primary comprehensive insurers for breach of contract in federal court, based upon diversity of citizenship.

In 1988, Koppers amended its complaint to sue other primary insurers and several excess insurers. Excess insurers--such as the London Insurers in this case--are insurers who contract to provide coverage only when the amount of the claim is beyond that of a primary insurer. In amending its complaint, however, Koppers decided not to sue INA (an excess insurer) because INA is a Pennsylvania company and joining it to the instant action would have defeated complete diversity. Thus, instead of suing INA in a federal forum, Koppers initiated suit in Pennsylvania state court over the same insurance claims. ¹

In July 1994, the London Insurers filed a Motion to Dismiss claims pertaining to the 1960-65 policies because Koppers failed to join INA pursuant to Rule 19 of the Federal Rules of Civil Procedure. The London Insurers claimed that the relationship between the coverage that they provided and the coverage that INA provided concerning the 1960-65 policies made INA an indispensable party to the federal suit.

On October 20, 1994, without comment, the district court granted the London Insurers' Motion to Dismiss. Koppers filed a Motion for Reconsideration, but the district court denied that motion on March 24, 1995. As a result, Koppers brought suit against the London Insurers relating to the 1960-65 policies by adding them as defendants in the state court action against INA.

After the initial dismissal of Koppers' claims against the London Insurers pertaining to the 1960-65 policies, all of the defendant insurers except for the London Insurers settled with Koppers before trial. Thus, following the dismissal and settlement, the only remaining claims in the case were those against the London Insurers for the period from the 1940s to 1959 and 1966 to the 1970s. See Koppers, 98 F.3d at 1444.

In April-May 1995, the district court conducted a trial over Koppers' claims against the remaining defendants (the London Insurers) but the court limited the scope of that trial to policies that provided coverage from late 1953 until January 1960. The district court further limited the scope of the trial to only eighteen of the contaminated sites. Following a three week trial, the jury awarded Koppers $70 million. See id.

On July 20, 1995, pursuant to Rule 54(b), the district court certified as final for interlocutory appeal the part of its judgment relating to the claims litigated at the jury trial, noted above. Although Koppers cross-appealed, it did not challenge the district court's decision to dismiss the 1960-65 policy claims against the London Insurers.

On appeal, in reversing the district court's method of apportioning liability, we commented that

the district court would not need to determine whether the non-settling pre-1971 policies were triggered because the London Insurers concede--against their interests--that all of Koppers' policies up to 1971 (the date from which pollution exclusion clauses have appeared in all the policies) were triggered.

Id. at 1456. In addition, in a footnote, we suggested that INA was not a necessary party for a proper adjudication of the claims involved in this dispute:

We recognize that some of Koppers' insurers are not part of this action because they are non-diverse with the plaintiff. Under [Gould Inc. v. Continental Cas. Co., 401 Pa.Super. 219, 585 A.2d 16 (1991) ], however, these insurers need not participate in the case in order for the district court to determine their apportioned shares of liability for purposes of reducing the judgment against the London Insurers. See 585 A.2d at 19 (stating that court need only look at policies' terms and limits). Of course, any determination that these policies were triggered would not be binding or preclusive against the absent insurers in future litigation because they are not parties here. We note also that the London Insurers' interests are aligned with those of the absent insurers: each would like to prove that the absent insurers' policies were not triggered. For the London Insurers, such a determination would increase the settling insurers' shares (thereby decreasing the London Insurers' liability), and the absent insurers would naturally like to avoid a determination of liability in the first place.

Id. n. 21.

Prompted by our intimation that INA was not an indispensable party, Koppers moved to reinstate the dismissed claims pertaining to the 1960-65 policies. Essentially, then, Koppers requested the district court to reconsider its earlier decision which had dismissed the claims pertaining to the 1960-65 policies on the grounds that INA was an indispensable party. On June 10, 1997, the district court denied this motion from the bench, ruling:

I think that's the law of the case[.] It could have been appealed at the time the rest of this case went up and therefore, I'm going to deny the motion to reinstate any claims. I'm not going to listen to any arguments, I'm just going to just deny it.

Tr. June 10, 1997, at 2.

Thereafter, Koppers moved for certification under Rule 54(b). Complying with the requirements set forth in Allis-Chalmers Corp. v. Philadelphia Elec. Co., 521 F.2d 360 (3d Cir.1975), the district court granted that motion on July 15, 1997, and at the same time formally denied Koppers' Motion to Reinstate the claims that had been dismissed.

III.

As a threshold matter, we must address a motion by the London Insurers urging this Court to dismiss the instant appeal for lack of appellate jurisdiction.

The London Insurers contend that the dismissal of the 1960-65 claims ("the dismissal order") became final and appealable when the district court entered a final judgment over the litigated claims on July 20, 1995. The London Insurers claim that the dismissal order merged with the final judgment at that time. Thus, they argue that Koppers should have appealed the dismissal order then, and by failing to do so, Koppers waived its right to appeal that dismissal at the present time.

Koppers counters that this Court does have appellate jurisdiction as there was no appealable order concerning the dismissal of the 1960-65 policies until the district court certified this issue under Rule 54(b). Koppers points out that the appeal of the July 20, 1995 judgment concerned different policies than those at issue here as the present appeal specifically addresses the dismissed claims. Furthermore, Koppers argues that as there is still no final judgment over all of the claims in the instant case, the "merger rule" does not apply. ² We agree.

Rule 54(b) provides:

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of...