Viking Pump, Inc. v. Century Indem. Co.

• Decision Date: 28 February 2014
• Docket Number: C.A. No.: 10C-06-141 FSS CCLD
• Parties: VIKING PUMP, INC. and WARREN PUMPS, LLC, Plaintiffs, v. CENTURY INDEMNITY COMPANY, et al. Defendants,
• Court: Delaware Superior Court

VIKING PUMP, INC. and WARREN PUMPS, LLC, Plaintiffs, v. CENTURY INDEMNITY COMPANY, et al. Defendants,

C.A. No.: 10C-06-141 FSS CCLD

SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY

Submitted: November 15, 2013

Decided: February 28, 2014

FILED BY UNDER SEAL

Upon Warren's Motion for Supplementation of the October 31,2013 Opinion and

Certain Excess Insurers Motion to Clarify the Court's Horizontal Exhaustion

Holding

Lisa A. Schmidt, Esquire and Travis Hunter, Esquire, Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, Delaware, 19801 and Michael P. Foradas, Esquire, Lisa G. Esayian, Esquire, and William T. Pruitt, Esquire, Kirkland & Ellis LLP, 300 North LaSalle, Chicago, Illinois, 60654, pro hac vice. Attorneys for Plaintiff Viking Pump, Inc.

John E. James, Esquire, Jennifer C. Wasson, Esquire, and Michael B. Rush, Esquire, Potter Anderson & Corroon LLP, 1313 North Market Street, 6^th Floor, Wilmington, Delaware, 19801 and Robin L. Cohen, Esquire and Keith McKenna, Esquire, Kasowitz, Benson, Torres & Friedman LLP, 1633 Broadway, New York, New York, 10019, pro hac vice. Attorneys for Plaintiff Warren Pumps LLC.

John D. Balaguer, Esquire, White and Williams LLP, 824 North Market Street, Suite 902, P.O. Box 709, Wilmington, Delaware 19899-0709 and Tancred Schiavoni, Esquire, Gary Svirsky, Esquire, Elizabeth Kim, Esquire, Stephen Kress, Esquire, and Karen Koniuszy, Esquire, O'Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, New York, 10036, pro hac vice, and Brian G. Fox, Esquire and Lawrence A. Nathanson, Esquire, Siegal & Park, 533 Fellowship Road,Suite 120, Mount Laurel, New Jersey, 08054, pro hac vice. Attorneys for Defendants TIG Insurance Company (f/k/a International Insurance Company), Westchester Fire Insurance Company, ACE Property & Casualty Insurance Company (f/k/a CIGNA Property & Casualty Insurance Company) as successor-in-interest to Central National Insurance Company of Omaha, Pacific Coast, Century Indemnity Company, as successor to CCI Insurance Company, as successor to Insurance Company of North America, and as successor to CIGNA Specialty Insurance Company (f/k/a California Union Insurance Company),

James W. Semple, Esquire and David J. Soldo, Esquire, Morris James LLP, 500 Delaware Avenue, Suite 1500, P.O. Box 2306, Wilmington, Delaware, 19899 and Karl S. Vasiloff, Esquire and Kristin Suga Heres, Esquire, Zelle Hofmann Voelbel & Mason LLP, 950 Winter Street, Suite 1300, Waltham, Massachusetts, 02451, pro hac vice. Attorneys for Defendant Westport Insurance Corporation.

Thaddeus J. Weaver, Esquire, Dilworth Paxson LLP, One Customs House, 704 King Street, Suite 500, P.O. Box 1031, Wilmington, Delaware, 19801 and Laura S. McKay, Esquire, Hinkhouse Williams Walsh LLP, 180 North Stetson Street, Suite 3400, Chicago, Illinois, 60601, pro hac vice. Attorneys for Defendants One Beacon America Insurance Company as successor to Commercial Union Insurance Company, XL Insurance America, Inc., as successor to Vanguard Insurance Company, and Republic Insurance Company, n/k/a Starr Indemnity & Liability Company.

Paul Cottrell, Esquire, Tighe & Cottrell, P.A., 704 North King Street, Suite 500, P.O. Box 1031, Wilmington, Delaware, 19899 and Laura S. McKay, Esquire, Hinkhouse Williams Walsh LLP, 180 North Stetson Street, Suite 3400, Chicago, Illinois, 60601, pro hac vice. Attorneys for Defendants Granite State Insurance Company, Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, Pa., Certain Underwriters at Lloyd's London and Certain London Market Insurance Companies,

Robert M. Greenberg, Esquire, Tybout Redfearn & Pell, 750 Shipyard Drive, Suite 400, P.O. Box 2092, Wilmington, Delaware, 19801 and Amy R. Paulus, Esquire, Mark D. Paulson, Esquire, and Don R. Sampen, Esquire, Clausen Miller P.C., 10 South LaSalle Street, Chicago, Illinois, 60603, pro hac vice. Attorneys for Defendant Old Republic Insurance Company.

Paul Cottrell, Esquire, Tighe & Cottrell, P.A„ 704 North King Street, Suite 500, P.O. Box 1031, Wilmington, Delaware, 19899 and Marc S, Lauerman, Esquire and Lynn H. Murray, Esquire, Grippo & Elden LLC, 111 S. Wacker Drive, Suite 5100, Chicago, Illinois, 60606 and Laura S. McKay, Esquire, Hinkhouse Williams Walsh LLP, 180 North Stetson Street, Suite 3400, Chicago, Illinois, 60601, pro hac vice, Attorneys for Defendant The Continental Insurance Company as successor by merger to Fidelity & Casualty Company of New York.

Kevin F. Brady, Esquire, Eckert Seamans Cherin & Mellott LLC, 300 Delaware Avenue, Suite 1210, Wilmington, Delaware, 19801 and Christopher R. Carroll, Esquire and Heather E. Simpson, Esquire, Carroll McNulty & Kull LLC, 120 Mountain View Boulevard, P.O. Box 650, Basking Ridge, New Jersey, 07920, pro hac vice. Attorneys for Defendant TIG Insurance Company, as successor by merger to International Insurance Company, as successor by merger to International Surplus Lines Insurance Company.

Neal J. Levitsky, Esquire, and Seth A. Niederman, Esquire, Fox Rothschild LLP, 919 North Market Street, P.O. Box 2323, Wilmington, Delaware, 19899-2323 and Kathleen D. Mones, Esquire and Joseph K. Scully, Esquire, Day Pitney LLP, 242 Trumbull Street, Hartford, Connecticut, 06103, pro hac vice. Attorneys for Defendant Travelers Casualty and Surety Company.

SILVERMAN, J.

Plaintiffs, Viking Pump, Inc., and Warren Pump, LLC, seekindemnification and defense costs from Defendants, Plaintiffs' common excess insurers, for thousands of asbestos claims. Through a comprehensive general liability insurance plan originally bought by a common parent company, Houdaille Industries, there is approximately in excess insurance at stake.

After eight years of litigation, including a three-week trial, on October 31, 2013, this court decided the parties' post-trial motions, two follow-up motions, and responses. Following the post-trial decisions, Warren filed a Rule 59(e) motion for supplementation of the opinion to address specific policies not discussed in the opinion, and International responded. Separately, Certain Excess Insurers filed a Rule 59(e) motion to clarify the court's horizontal exhaustion holding, to which Warren responded.

I.

The history leading to this complicated litigation has been written.¹ Houdaille Industries, a large industrial conglomerate, briefly owned Plaintiffs, two industrial pump manufacturers of asbestos-containing products.² Each year from1972 through 1985, Houdaille bought commercial comprehensive general liability insurance ("CGL") in a seamless, layered plan consisting of occurrence-based primary and umbrella insurance from Liberty Mutual and layers of excess insurance above the Liberty policies, In total, Houdaille purchased 35 excess policies through 20 different carriers. Houdaille's 14-year, insurance towers offered $17.5 million in primary coverage, $42 million in umbrella coverage, and million in excess coverage.

In 1985, Houdaille divested itself, leaving Viking and Warren independent entities. On October 28, 1987, Warren submitted its first asbestos claim to Liberty. Thus far, approximately asbestos claims have been filed against Warren, Viking follows closely with claims.

Fearing that Warren was draining its shared insurance, Viking initially filed suit in the Court of Chancery against Liberty, the primary and umbrella carrier, seeking injunctive relief, and Warren intervened. Liberty, Warren, and Viking settled and Liberty was dismissed. At that point, with the primary and umbrella carrier having settled, the excess insurers joined the litigation.

On October 14, 2009, then-Chancellor Strine decided cross-summary judgment motions in Plaintiffs' favor.³ Viking II first held that Viking and Warren are entitled to exercise the rights of an insured under the excess policies. Then,Viking II held "all sums" as the proper allocation method, explaining that the alternative "pro-rata" method is inconsistent with the excess policies' language: specifically, the "non-cumulation" and "prior insurance" clauses.⁴ Lastly, Viking II held that New York's injury-in-fact trigger applies. Together, these rulings mean that for each asbestos claim, all policies within the period triggered by injury are potentially liable for damages associated with that claim.

With no equitable remedy remaining, the Court of Chancery lost jurisdiction and the case was transferred here. In the process, Chancellor Strine lamented the parties' behavior and delay tactics, and observed that the parties had "discovered th[e] case to death."⁵ The Chancellor also laid-in a scheduling order meant to clear the way for this court.

This court attempted to resolve the matter through summary judgment. Ultimately, the parties submitted over 50 briefs, letters, and other supplemental materials regarding the summary judgment motions. The court then declared that "it seem[ed] desirable to inquire thoroughly into [the facts] in order to clarify the application of law to the circumstances."⁶ After more motions, and so forth, the case was finally presented to a jury under the untested, yet expedient, presumption that the policies are ambiguous.

The evidence can be categorized into four major topics: exhaustion, defense obligations, trigger, and non-cumulation/prior insurance clauses. Substantially, the jury returned a plaintiffs' verdict. The court acknowledged, however, that "reading each policy closely and without extrinsic evidence, the verdict must be refined to conform to the policies' unambiguous meaning."⁷

Both sides filed post-trial briefs. In deciding the post-trial motions, the court upheld the verdict as to the injury-in-fact trigger, i.e. injury occurs through significant exposure to asbestos fibers even before manifesting itself as diagnosable illness. As discussed more thoroughly below, the court clarified the verdict as to specific Defendants' defense obligations. The opinion also addressed the new legal issue concerning horizontal vs. vertical...