Travelers Prop. Cas. Co. of Am. v. Cont'l Cas. Co.

• Decision Date: 04 January 2017
• Docket Number: CIVIL ACTION NO. 1:14–CV–2207–WCO
• Citation: 226 F.Supp.3d 1359
• Parties: TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Plaintiff, v. CONTINENTAL CASUALTY COMPANY and C.K.S. Packaging, Inc., Defendants.
• Court: U.S. District Court — Northern District of Georgia

226 F.Supp.3d 1359

TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Plaintiff,

v.CONTINENTAL CASUALTY COMPANY and C.K.S. Packaging, Inc., Defendants.

CIVIL ACTION NO. 1:14–CV–2207–WCO

United States District Court, N.D. Georgia, Atlanta Division.

Signed January 4, 2017

Ariel Ephraim Shapiro, David Marlow Atkinson, Swift, Currie, McGhee & Hiers, LLP, Henry E. Scrudder, Jr., Scrudder Bass Quillian Horlock Taylor & Lazarus, Atlanta, GA, for Plaintiff.

Daniel Pickett, James T. Byrnes, Kristin V. Gallagher, Carroll McNulty & Kull, LLC, Basking Ridge, NJ, Joshua C. Weisberg, Carroll McNulty & Kull, LLC, New York, NY, David Cole Rhodes, Henry E. Scrudder, Jr., Scrudder, Bass, Quillian, Horlock, Taylor & Lazarus LLP, J. Robert Persons, Smith, Moore, Leatherwood, LLP, Atlanta, GA, for Defendants.

ORDER

WILLIAM C. O'KELLEY, Senior United States District Judge

The captioned case is before the court for consideration of defendant Continental Casualty Company's motion for summary judgment [84]; plaintiff Travelers Property Casualty Company of America's motion for summary judgment [85]; and defendant C.K.S. Packaging, Inc.'s motion to strike [96].

I. Factual Background¹

Defendant C.K.S. Packaging, Inc. ("CKS") is a manufacturer and supplier of plastic containers, headquartered in Atlanta, Georgia. (Second Am. Compl. ¶ 6.) CKS has been named as a defendant or third-party defendant in personal injury lawsuits, filed in several states, alleging that a type of plastic bottle it manufactured caused or contributed to personal injuries ("Underlying Cases"). (Id. at ¶ 7.) Each of the Underlying Cases involves a bottle manufactured by CKS that was filled with gel fuel by another company, labeled, and sold. (Pl.'s Facts ¶ 3.) Each of the claimants in the Underlying Cases sought to recover for burn injuries allegedly caused when gel fuel from a CKS bottle was used in connection with a firepot. (Id. at ¶ 7.) CKS has requested coverage from Travelers Property Casualty Company of America ("Travelers") and Continental Casualty Company ("Continental") for the Underlying Cases. (Id. at ¶ 5.)

Travelers issued five primary one year general liability insurance policies to CKS, with respective limits of $950,000 per occurrence and $5,000,000 in the general aggregate, covering the policy periods of December 27, 2009 to December 27, 2010, December 27, 2010 to December 27, 2011, December 27, 2011 to December 27, 2012, December 27, 2012 to December 27, 2013, and December 27, 2013 to December 27, 2014 (the "Travelers Policies"). (Def.'s Facts ¶ 81.) The 2009–2010, 2010–2011, 2011–2012, and 2012–2013 Travelers Policies are individually subject to a $50,000 self-insured retention per occurrence. The 2013–2014 Travelers Policy is subject to a $100,000 self-insured retention per occurrence. (Id. at ¶ 82.)

The Travelers Policies contain, in pertinent part, the following:

SECTION I—COVERAGES

COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will indemnify the insured for those sums in excess of the "retained limit" that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies.

* * * *

(1) The amount we will indemnify the insured for damages is limited as described in LIMITS OF INSURANCE (SECTION III);

* * * *

b. This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory," and

(2) The "bodily injury" or "property damage" occurs during the policy period.

* * * *

COVERAGE B. PERSONAL AND ADVERTISING INJURY LIABILITY

1. Insuring Agreement

a. We will indemnify the insured for those sums in excess of the "retained limit" that the insured becomes legally obligated to pay as damages because of "personal injury" or "advertising injury" to which this coverage part applies.

* * * *

SECTION III—LIMITS OF INSURANCE

THE LIMITS OF INSURANCE PROVIDED BY THIS COVERAGE PART APPLY ONLY TO AMOUNTS IN EXCESS OF THE APPLICABLE "RETAINED LIMITS."

1. The Limits of Insurance shown in the Declarations and the rules below fix the most we will indemnify the insured for in excess of the "retained limit" regardless of the number of:

a. Insureds

b. Claims made or "suits" brought; or

c. Persons or organizations making claims or bringing "suits."

2. The General Aggregate Limit is the most we will indemnify the insured for the sum of:

a. Damages under Coverage A, except damages because of "bodily injury" or "property damage" included in the "products-completed operations hazard"; and

b. Damages under Coverage B;

3. The Products–Completed Operations Aggregate Limit is the most we will indemnify the insured for in the excess of the "retained limit" under Coverage A for damages because of "bodily injury" and "property damage" included in the "products-completed operations hazard."

4. Subject to 2. above, the Personal and Advertising Injury Limit is the most we will indemnify the insured for in excess of the "retained limit" under Coverage B for the sum of all damages because of all "personal injury" and all "advertising injury" sustained by any one person or organization.

5. Subject to 2. or 3. above, whichever applies, the Each Occurrence Limit is the most we will indemnify the insured for in excess of the "retained limit" for damages under Coverage A because of all "bodily injury" and "property damage" arising out of any one "occurrence."

6. Subject to 5. above, the fire Damage Limit is the most we will indemnify the insured for in excess of the "retained limit" under Coverage A for damages because of "property damage" to premises while rented to you or temporarily occupied by you with permission of the owner, arising out of any one fire.

With respect to 2. and 3. above, each indemnity payment we make for damages under this Coverage Part reduces by the amount of the indemnity payment, the applicable aggregate limit of insurance. This reduced limit will then be the amount of insurance available for further indemnity payments for damages under the applicable aggregated Limit of Insurance.

Our obligations under Coverage A and B of this Coverage Part end when the applicable amount of insurance available in excess of the "retained limit" has been used up. If we pay any amounts for damages in excess of that amount of insurance, you agree to reimburse us for such amounts.

The Limits of Insurance of this Coverage Part apply separately to each consecutive annual period and to any remaining period of less than 12 months, starting with the beginning of the policy period shown in the Declarations, unless the policy period is extended after issuance for an additional period of less than twelve months. In that case, the additional period will be deemed part of the last preceding period for purposes of determining the Limits of Insurance.

* * * *

SECTION V—DEFINITIONS

13. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

* * * *

15. a. "Products-completed operations hazard" includes all "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except:

(1) Products that are still in your physical possession; or

(2) Work that has not yet been completed or abandoned.

(Compl. Ex. A2.)

The 2011–2012, 2012–2013, and 2013–2014 Travelers Policies contain the following amended definition of "occurrence," also known as a "batch clause":

AMENDMENT DEFINITION OF OCCURRENCE—BATCH

1. The definition of "occurrence" in Section V—Definitions is amended to include the following:

All actual or alleged damages arising out of "bodily injury" or "property damage" to which this insurance applies, and which arises out of the same:

a. Lot or lots of "your product" manufactured, handled, sold, acquired or in any way distributed or disposed of by or for any insured; or

b. Supervision, recommendations, warnings, instructions or advice provided or which should have been provided in connection with "your product";

shall be considered as arising out of the same "occurrence."

(Def.'s Facts ¶ 86.) When issued, the 2009–2010 and 2010–2011 Travelers Policies did not contain a batch clause. (Pl.'s Additional Facts ¶¶ 4–5.) After this lawsuit was filed, these policies were reformed to include the batch clause. (Id. at ¶ 8.)

The Travelers Policies also contain the following non-cumulation clause:

AMENDMENT—NON–CUMULATION LIMIT OF EACH OCCURRENCE LIMIT OF LIABILITY AND NON–CUMULATION OF PERSONAL AND ADVERTISING INJURY LIMIT OF LIABILITY

1. Paragraph 5. of Section III—Limits of Insurance, is amended to include the following:

Non-cumulation of Each Occurrence Limit—If one "occurrence" causes "bodily injury" and/or "property damage" during the policy period and during the policy period of one or more prior and/or future policies that include a Self–Insured Excess Commercial General Liability Coverage Form for the insured issued by us or any affiliated insurance company, the amount we will indemnify the insured for in excess of the "retained limit" is limited. This policy's Each Occurrence Limit will be reduced by the amount of each payment made by us and any affiliated insurance company under the other policies because of such "occurrence."

(Id. at ¶ 87.)

Continental issued five commercial umbrella policies to CKS, under policy number 4017854512, in effect from December 27, 2009 to December 27, 2010, December 27, 2010 to December 27, 2011, December 27, 2011 to December 27, 2012, December 27, 2012 to December 27, 2013, and December 27, 2013 to December 27, 2014 (the "Continental Policies"). (Id. at ¶ 95.) The Continental Policies have limits of $25,000,000 each incident and $25,000,000 in the aggregate and are specifically underwritten to provide coverage in excess of the Travelers Policies. (Id. at ¶ 96.)

The Continental Policies contain the following condition:

SECTION IV—CONDITIONS

Maintenance of "Scheduled

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