The Cnty. Comm'n of Fayette Cnty. v. Nat'l Grid NE Holdings 2, LLC

• Decision Date: 01 August 2022
• Docket Number: Civil Action 2:21-cv-00307
• Parties: THE COUNTY COMMISSION OF FAYETTE COUNTY, WEST VIRGINIA, et al., Plaintiffs, v. NATIONAL GRID NE HOLDINGS 2 LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of West Virginia

THE COUNTY COMMISSION OF FAYETTE COUNTY, WEST VIRGINIA, et al., Plaintiffs,
v.
NATIONAL GRID NE HOLDINGS 2 LLC, et al., Defendants.

Civil Action No. 2:21-cv-00307

United States District Court, S.D. West Virginia, Charleston Division

August 1, 2022

MEMORANDUM OPINION AND ORDER

Pending before the Court is National Grid NE Holdings 2 LLC's (“National Grid”) Motion to Substitute as Defendant in Lieu of Defendants Hanover Insurance Company and Travelers Casualty and Surety Company. (ECF No. 18.) For the reasons discussed herein, National Grid's motion is DENIED.

I. BACKGROUND

The County Commission of Fayette County, West Virginia (the “County”) initiated this action On May 18, 2021. (ECF No. 1.) The County then properly filed an Amended Complaint on July 16, 2021. (ECF No. 31.) The Amended Complaint alleges violations of the Resource Conservation and Recovery Act, West Virginia common law, and a county-level nuisance ordinance. (See id.) The County seeks to compel current and former landowners-including National Grid, Eastern Associated Coal LLC (“EAC”), Pardee and Curtain Realty, and Quercus

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West Virginia-to fund a remediation study and abatement costs related to allegedly contaminated land in the Johnson Fork-Loop Creek Watershed. (See id.)

The Amended Complaint also asserts “direct action” claims against three insurance companies, including Hanover Insurance Company (“Hanover”) and Travelers Casualty and Surety Company (“Travelers”) (collectively, the “Insurers”).^[1] (Id. at 149-51). These direct action claims are based on alleged insurance policies issued to Eastern Associated Coal Corporation (“EACC”), a predecessor of EAC, which is now a defunct subsidiary of Eastern Gas.^[2] (Id.)

Although the Amended Complaint asserts that all defendants are jointly and severally liable, (see, e.g., id. at 10, ¶ 6), it also explicitly states that the Insurers are being sued “solely to the extent of remaining proceeds available” pursuant to certain insurance policies “providing coverage to [EACC] for its liability . . . for all property damages alleged herein[.]” (Id. at 2-3.)

National Grid filed the pending motion to substitute on June 25, 2021. (ECF No. 18.) The County filed a Memorandum in Opposition, (ECF No. 34), National Grid filed a Reply, (ECF No. 36), and the County filed a Surreply, (ECF No. 261). As such, this motion is fully briefed and ripe for adjudication.

II. ANALYSIS

A. National Grid's Motion

The pending motion to substitute is based on National Grid's alleged obligation to defend and indemnify the Insurers against the direct action claims alleged in this case. (ECF No. 19 at 15.) According to National Grid, the Insurers each executed a separate “Confidential Settlement

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Agreement and Release” in February 2008 (the “2008 Agreements”) with National Grid. (Id. At 13.) The 2008 Agreements purportedly “resolved a 15-year old insurance coverage action in which [National Grid] had sought a defense and indemnification from the Insurers against underlying environmental claims resulting from [its] operation of a former coal tar processing facility in Everett, Massachusetts.” (Id. at 5-6.) National Grid states as follows:

Pursuant to the two settlement agreements, the Insurers made substantial payments to [National Grid], and obtained a release from [National Grid] from any past, present and future claims and obligations arising out of or relating to the Hanover and Travelers policies issued to [National Grid] (the “Policies”). [National Grid] also agreed to defend, indemnify and hold the Insurers harmless against any and all claims asserted by third parties under or relating to the released Policies, and to request to substitute itself for the Insurers as the proper defendant in the event an indemnifiable claim was asserted against them

(Id. at 6.)

National Grid reports that it has acknowledged that the County's claims against them are “Indemnifiable Claims” under the 2008 Agreements and agreed to defend the Insurers in this action. (Id. at 15.) Thus, allowing National Grid to substitute for the Insurers is necessary to properly discharge National Grid's obligations under the 2008 Agreements. (Id. at 18.)

Additionally, National Grid urges that it, as the party bearing financial responsibility for the County's claims against the Insurers, should be permitted to control their defense. (Id. at 16.) According to National Grid, the proposed substitution is “the sensible and efficient course of action, as it will align the defense of the County's claims against those Insurers with the party that bears sole responsibility for any financial obligations that may be imposed on them under whatever

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coverage (if any) remains available under the Policies.” (Id. at 18.) Further, National Grid avers that “there is no conceivable prejudice” to the County in allowing substitution.^[3] (Id. at 19.)

B. The County's Memorandum in Opposition

The County offers three arguments on why National Grid's motion should be denied. (ECF No. 34 at 3.) First, the County asserts that the Insurers are properly named defendants pursuant to a County Ordinance.^[4] (Id.) Thus, the County argues that any...