Matter of Federal Press Co., Inc.
| Decision Date | 17 August 1989 |
| Docket Number | Bankruptcy No. 85-30932-RKR,Adv. Proc. No. 85-3159. |
| Citation | 104 BR 56 |
| Parties | In the Matter of FEDERAL PRESS COMPANY, INC., Debtor. COLUMBIA CASUALTY COMPANY, Plaintiff, v. FEDERAL PRESS COMPANY, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Indiana |
William A. Thorne, and James R. Byron, Elkhart, Ind., for debtor.
Carol Proctor, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago, Ill., and Kathleen Maicher, Spangler, Jennings, Spangler & Dougherty, Merrillville, Ind., for Columbia Cas. Co.
Joseph M. Forte, South Bend, Ind., for Centaur Ins. Co.
John J. Lorber, South Bend, Ind., for Forum Ins. Co.
William Nye, Elkhart, Ind., for Creditors Committee.
On November 8, 1985, Columbia Casualty Company ("Columbia") filed its Complaint for Declaratory Judgment requesting the court to determine the rights and liabilities of the parties with respect to certain insurance policies issued by Columbia to Federal Press Company, Inc. ("Federal Press"), the debtor herein. On March 25, 1986, and again on April 10, 1989, Columbia amended its complaint adding other insurers of Federal Press and various individuals as defendants. On November 27, 1987, Federal Press, Columbia, Centaur Insurance Company ("Centaur"), and Forum Insurance Company ("Forum"), filed a Settlement Agreement and Stipulations of Issues to be Submitted to the Court ("Settlement Agreement"). In the Settlement Agreement the parties agreed, among other things, to have the court determine the matter without a hearing. The court approved the Settlement Agreement on December 15, 1987. Thereafter, on August 22, 1988, Columbia filed its motion to require Federal Press to assume or reject executory contracts in the main case. Federal Press filed its response and objection to Columbia's motion on September 26, 1988. The court held a hearing on the motion and objection thereto on September 29, 1988, and took the matter under advisement on October 11, 1988. At the September 29, 1988, hearing the court agreed to consider the motion to assume or reject executory contracts in conjunction with its decision on the complaint for declaratory judgment. On January 6, 1989, following the time allowed for submitting briefs, the court took the complaint for declaratory judgment under advisement.
Federal Press filed its petition under Chapter 11 of the Bankruptcy Code on September 3, 1985. At the time of the filing of the petition several persons who had been injured while operating machinery manufactured by Federal Press held claims against Federal Press. Additional tort claimants have filed claims against Federal Press since the filing of the petition. The insurance companies which are parties to this action issued liability insurance policies to Federal Press during the periods in which the various claimants suffered their injuries. The disputes herein involve the question of the rights and obligations of Federal Press, Columbia, Centaur and Forum with respect to the insurance policies issued and the question of the executory nature of the insurance contracts. The stipulated facts are fully set forth in the Settlement Agreement submitted on November 27, 1987, and approved by the court on December 15, 1987. The court will review the general provisions of the insurance policies which Columbia, Centaur and Forum issued to Federal Press as well as the portions of the Settlement Agreement and other necessary facts which apply directly to the issues before the court.
Columbia, Centaur and Forum issued insurance policies to Federal Press between January 1, 1983, and May 21, 1985. The court summarizes below the type of insurance policies issued by the companies, the insurance periods, and the basic provisions of the policies.
Columbia issued to Federal Press three excess liability insurance policies which were in effect for the periods from January 1, 1983, to January 1, 1984; January 1, 1984, to January 1, 1985; and January 1, 1985, to May 21, 1985, respectively. The Columbia policies provide that Columbia will indemnify Federal Press for its net losses for each policy period in excess of a limit of $300,000, to be retained and paid by Federal Press as self-insurance, to a maximum of $800,000. The Columbia policies cover personal injury, property damage, and ultimate net losses "arising out of the products hazard or the completed operations hazard." Settlement Agreement, Exhibits A, B, and C at 1.
Under the terms of the policies after Federal Press exhausts the amount of its self-insured retention by paying judgments, settlements and defense costs, Columbia is obligated to reimburse Federal Press for defense costs incurred up to the limit of Columbia's liability. The policies give Columbia the right at its own expense to associate itself with Federal Press in controlling, negotiating, investigating, and defending any claim or proceeding which might be covered by the policies. Federal Press agrees in the policies not to settle a claim for an amount in excess of its self-insured retention without the prior written consent of Columbia. In the event of an occurrence reasonably likely to involve Columbia, Federal Press is to notify Columbia in writing of the incident and forward to Columbia every demand, notice, summons or other process received by it or its representative. The policies further provide that Federal Press is to cooperate with Columbia and upon its request, assist in making settlements, in conducting lawsuits, and in enforcing any right of contribution or indemnity against any person or organization who might be liable to Federal Press.
The policies also provide that Columbia will not be liable with respect to an occurrence unless, as a condition precedent thereto, Federal Press fully complies with all the terms of the policies and until the amount of Federal Press' ultimate net loss is finally determined either by judgment or by written agreement of Federal Press, the claimant and Columbia. The policies state that the bankruptcy or insolvency of Federal Press will not relieve Columbia of any of its obligations under the policies.
Centaur in turn issued to Federal Press two commercial liability umbrella policies for the periods from January 1, 1983, to January 1, 1984, and January 1, 1984, to January 1, 1985, respectively. Centaur's policies were in effect during the same periods of time for which Columbia issued its first two liability policies. Centaur's policies provide excess insurance over and above the underlying insurance issued by Columbia up to a limit of $10,000,000. Generally, under the terms of the policies, Centaur is not liable for any judgments or defense costs until the underlying insurance and retained limits have been paid and exhausted.
Forum issued to Federal Press a commercial comprehensive catastrophe liability policy for the period from January 1, 1985, to May 21, 1985. Forum's policy was in effect during the same period of time for which Columbia issued its last excess liability policy to Federal Press. Like the policies issued by Centaur, Forum's policy provides excess insurance over and above the underlying coverage issued by Columbia. The limit of Forum's insurance coverage, however, is $1,800,000. Generally, under the terms of the policy, Forum is not liable for any judgments or defense costs until the underlying insurance and retained limits have been paid and exhausted.
To summarize, in the year 1983, Federal Press had a self-retained limit of $300,000 under the Columbia policy, and Columbia and Centaur provided the following levels of insurance:
NAME AMOUNT
Federal Press Company
under its retained limit -0- to $300,000
Columbia under Policy No
SXP 358 40 71 $300,001-$800,000
Centaur under Policy No
CU-00545 $800,001-$10,000,000
In the year 1984, Federal Press had a retained limit of $300,000, and Columbia and Centaur provided the following levels of insurance:
NAME AMOUNT
Federal Press Company
under its retained limit -0- to $300,000
Columbia under Policy No
SXP 358 40 86 $300,001-$800,000
Centaur under Policy No
CU-00774 $800,001-$10,000,000
For the period beginning January 1, 1985, and ending May 21, 1985, Federal Press had a retained limit of $300,000 under the Columbia policy, and Columbia and Forum provided the following levels of insurance:
NAME AMOUNT
Federal Press Company
under its retained limit -0- to $300,000
Columbia under Policy No
SXP 358 41 02 $300,001-$800,000
Forum under Policy No.
UB-100093 $800,001-$1,800,000
On November 27, 1987, Federal Press, Columbia, Centaur, and Forum filed their Settlement Agreement setting forth the relevant facts, summarizing the insurance policies in controversy and conditions thereto, setting forth certain stipulations, and listing the issues to be decided by the court. The parties requested that the court permit the Settlement Agreement to serve as the pre-trial order in this matter and indicated that they agreed to submit this matter to the court for decision without a hearing following the submission of memoranda in support of their positions. The court approved the Settlement Agreement on December 15, 1987.
In the Settlement Agreement Federal Press, Columbia, Centaur and Forum agree that:
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