The Cont'l Ins. Co. v. Neles-Jamesbury, Inc.
| Decision Date | 28 March 2023 |
| Docket Number | Civil Action 21-11767-TSH |
| Parties | THE CONTINENTAL INSURANCE COMPANY, Plaintiff, v. NELES-JAMESBURY, INC., Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Plaintiff the Continental Insurance Company (“Plaintiff” or “Continental”) filed suit against Defendant Neles-Jamesbury, Inc. (“Defendant” or “Neles-Jamesbury”) to obtain declaratory relief regarding their duty to defend Neles-Jamesbury for underlying asbestos-related bodily injury claims (“Underlying Claims”). Neles-Jamesbury counterclaimed for declaratory relief related to Continental's obligations under a 2007 settlement agreement (“2007 Cost Sharing Agreement” or “Agreement”) and for damages for Continental's alleged use of deceptive practices which breach the covenant of good faith and fair dealing. Neles-Jamesbury has moved for partial judgment on the pleadings under Fed. R. Civ. Pro. 12(c) asking that the Court reject Continental's contention that it no longer needs to pay a share of defense costs to Neles-Jamesbury and to affirm that the 2007 Cost Sharing Agreement was a final resolution of Continental's duties with respect to the asbestos claims. For the following reasons Neles-Jamesbury's motion is granted.
Continental is an insurance company organized under the law of Pennsylvania with a principal place of business in Chicago, Illinois. Neles-Jamesbury is a corporation organized in 2009 under the laws of the State of Delaware, with a principal place of business in Shrewsbury, Massachusetts and is the successor by merger to the liabilities of Jamesbury Corp. and Neles, Inc. In January of 1990, Neles, Inc. merged into Jamesbury Corp. after Neles, Inc. acquired Jamesbury Corp; thereafter, Jamesbury Corp. changed its name to Neles-Jamesbury, Inc. At the time that Neles, Inc. acquired Jamesbury Corp., Neles, Inc. and Jamesbury Corp. were both in the business of manufacturing and selling valves. In December of 2009, Neles-Jamesbury, Inc., a Massachusetts corporation, merged into its present iteration of Neles-Jamesbury, Inc., a Delaware corporation.
In 1987, Continental issued two primary comprehensive general liability insurance policies to Neles, Inc., for the policy periods of April 24, 1986 to April 24, 1987, and April 24, 1987 to April 24, 1988, respectively (hereinafter, “the Policies”). Since that time, Neles-Jamesbury has been involved in numerous lawsuits that allege bodily injury resulting from asbestos exposure. Due to the continuing question of whether these policies created duties for Continental, the parties' entered into the 2007 Cost Sharing Agreement, which served to clarify and define their respective obligations and coverage in the lawsuits.
In its Complaint and Answer, Continental admits that for the last 15 years, it has been obligated to contribute a negotiated share of Neles-Jamesbury's defense costs for the Asbestos Claims under the terms of the Agreement. Continental does not dispute that the Agreement is in effect and enforceable. Continental admits that, subject to the terms of the Agreement, it is obligated to contribute an agreed-upon share of reasonable and necessary defense costs until the Agreement is terminated and the limits of the Policies have not been exhausted.
Continental contends it no longer has the obligation to defend Neles-Jamesbury because it never insured Neles-Jamesbury or Jamesbury Corporation. Continental asserts that it only insured Neles, Inc which it alleges is an “NJI predecessor company” unrelated to Jamesbury Corp. Continental also argues that it may in fact terminate the Agreement because it reserved that right in the Agreement itself. Neles-Jamesbury asserts that the 2007 Cost Sharing Agreement is a binding and enforceable agreement between Continental and Neles-Jamesbury, that it governs Continental's obligations for defense costs for the Asbestos Claims and that Continental has improperly attempted to terminate the Agreement.
This Court reviews motions for judgment on the pleadings under a standard that is essentially the same as that for a motion to dismiss under Fed.R.Civ.P. 12(b)(6), except that “[a] Rule 12(c) motion, unlike a Rule 12(b)(6) motion, implicates the pleadings as a whole.” Aponte-Torres v. Univ. of P.R., 445 F.3d 50, 54-55 (1st Cir. 2006). Thus, the court views “the facts contained in the pleadings in the light most favorable to the party opposing the motion... and draw[s] all reasonable inferences in [that party's] favor.” Curran v. Cousins, 509 F.3d 36, 43 (1st Cir. 2007). Dismissal is only appropriate if the pleadings, viewed in the light most favorable to the non-moving party, fail to support a “plausible entitlement to relief.” Kimmel & Silverman, P.C. v. Porro, 969 F.Supp.2d 46, 49-50 (D.Mass. 2013) (citing Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95 (1st Cir. 2007)).
To survive a motion for judgment on the pleadings, a complaint must state a claim that is plausible on its face. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). For a claim to be plausible, the “[f]actual allegations must be enough to raise a right to relief above the speculative level....” Id. at 555 (internal citations omitted). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556). It is proper for a court to make a judgment on the pleadings when the complaint fails to show a plausible right to relief. See Villeneuve v. Avon Prods., Inc., 919 F.3d 40, 49 (1st Cir. 2019).
A motion for judgement on the pleadings can be filed “[a]fter the pleadings are closed- but early enough not to delay trial.” Fed.R.Civ.P. 12(c). A judge should only grant this motion if material facts are not disputed and clearly establish that the movant is entitled to a favorable judgement. Zipperer v. Raytheon Co., 493 F.3d 50, 53 (1st Cir. 2007); Britt v. Colvin, 125 F.Supp.3d 349, 357 (D.Mass. 2015). In analyzing such facts, the court “must accept all of the nonmoving party's well-pleaded factual averments as true and draw all reasonable inferences in [its] favor.” Feliciano v. State of Rhode Island, 160 F.3d 780, 788 (1st Cir. 1998).
There is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. In such a case, “[i]t is axiomatic that state substantive law must be applied by a federal court sitting in diversity jurisdiction.” Reicher v. Berkshire Life Ins. Co. of Am., 360 F.3d 1, 4 (1st Cir. 2004). There is no choice of law clause in the Agreement, but a choice of law analysis is not necessary in this case. Forum law is applicable where there is no conflict between the substantive laws of the interested jurisdictions. Id. Continental contends that New York substantive law should apply but cites to no conflict of law issue. The contract principles relevant here are generally uniform across jurisdictions, and thus no conflict of law issue is presented for purposes of this motion. See Reicher v. Berkshire Life Ins. Co. of Am., 360 F.3d 1, 4 (1st Cir. 2004) (); Steinke v. Sungard Financial Sys., Inc., 121 F.3d 763, 775 (1st Cir., 1997) () (quoting Lambert v. Kysar, 983 F.2d 1110, 1114 (1st Cir., 1993)). Celanese Corp. v. OneBeacon Am. Ins. Co., 2008 WL 5784444, at *6 (Mass. Super. Ct. Dec. 29, 2008) ().
In evaluating a Rule 12(c) motion, a court can “consider ‘documents the authenticity of which are not disputed by the parties; . . . documents central to plaintiffs' claim; [and] documents sufficiently referred to in the complaint.'” Curran v. Cousins, 509 F.3d 36, 44 (1st Cir. 2007) () (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)).
Continental cites Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co. in support of its argument that a document outside the pleadings can only be considered when “a complaint's factual allegations are expressly linked to -- and admittedly dependent upon - [the] document.” 267 F.3d 30, 34 (1st Cir. 2001) (quoting Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 17 (1st Cir. 1998)). In that case, the appellants argued that a 1998 settlement agreement was improperly considered with respect to a Rule 12(b)(6) motion. Id. at 33. The court rejected that argument because, inter alia, “liability under the complaint depends directly upon [the terms of] the 1998 Settlement Agreement,” and there was no dispute as to the authenticity of the agreement. Id. at 34. The court went on to hold that those conditions being met allows them to review the disputed documents. Id. (emphasis added). The court's use of the permissive language of “allows” in Alternative Energy supports consideration of the Agreement here. (Docket No. 42, at 8.). Where declaratory relief cannot be decided without analyzing the Agreement, the Court will consider the Agreement for purposes of this motion. Curran, 509 F.3d at 43.
Under Massachusetts law, “[a] settlement agreement is a contract and its...
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