Westfield Ins. Co. v. Sistersville Tank Works, Inc.

• Decision Date: 04 September 2020
• Docket Number: Case No.: 5:18-cv-00100-JPB
• Court: U.S. District Court — Northern District of West Virginia
• Parties: WESTFIELD INSURANCE COMPANY, Plaintiff, v. SISTERSVILLE TANK WORKS, INC., ROBERT N. EDWARDS, DEBORAH S. EDWARDS, E. JANE PRICE, Individually and as Executrix of the Estate of Robert G. Price, deceased, GARY THOMAS SANDY, PEGGY P. SANDY, DOUGLAS L. STEELE, and CAROL STEELE, Defendants, SISTERSVILLE TANK WORKS, INC., Defendant, Counterclaim Plaintiff, and Third-Party Plaintiff, v. REAGLE & PADDEN, INC., and DAVID C. PADDEN, Third-Party Defendants.

WESTFIELD INSURANCE COMPANY, Plaintiff, v. SISTERSVILLE TANK WORKS, INC.,ROBERT N. EDWARDS, DEBORAH S. EDWARDS, E. JANE PRICE,Individually and as Executrix of the Estate of Robert G. Price, deceased,GARY THOMAS SANDY, PEGGY P. SANDY, DOUGLAS L. STEELE, and CAROL STEELE, Defendants,SISTERSVILLE TANK WORKS, INC., Defendant, Counterclaim Plaintiff, and Third-Party Plaintiff, v. REAGLE & PADDEN, INC., and DAVID C. PADDEN, Third-Party Defendants.

Case No.: 5:18-cv-00100-JPB

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA WHEELING DIVISION

September 4, 2020

MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT ON BEHALF OF DEFENDANT/THIRD-PARTY PLAINTIFF SISTERSVILLE TANK WORKS, INC.

Defendant/Third-Party Plaintiff Sistersville Tank Works, Inc. (hereinafter "STW") has moved the Court for complete summary judgment in its favor pursuant to Rule 56 of the Federal Rules of Civil Procedure on Plaintiff Westfield Insurance Company's (hereinafter "Westfield) Complaint for Declaratory Relief [Doc. 1]. Discovery is complete and the record is sufficiently developed to establish that there are no genuine issues of material fact in controversy and that without further delay, STW is entitled to judgment as a matter of law.

I. INTRODUCTION

This is an action for declaratory judgment brought by Westfield against STW. Westfield is asking that the Court declare that Westfield is not required to defend and indemnify STW in several actions pending in state court in which STW is accused of negligence causing cancer to the underlying plaintiffs. For the reasons set forth hereinbelow, the Court should grant STW summary judgment against Westfield and declare that Westfield owes STW a continuing duty to defend under the terms of certain CGL and umbrella liability policies issued from January 1, 1985 to April 15, 1989.

II. STATEMENT OF FACTS

A. STW's Corporate History

STW is a family-owned and operated West Virginia corporation located in Sistersville, West Virginia. STW manufactures, repairs, and installs industrial storage tanks for the chemical, petroleum, energy, and pharmaceutical industries—both domestic and international. The current STW was organized from the former version of Sistersville Tank Works by Janet Wells and her daughter Darlene Morgan. Wells and Morgan, life-long residents of Pleasants County, West Virginia, were the bookkeeper and sales agent, respectively, for the prior Sistersville Tank Works which was a division of Varlen Corporation. In 1984, Wells and Morgan formed Tyler County Tank Works, Inc., to purchase Sistersville Tank Works' assets and name, but not its liabilities, from Varlen.¹ Exhibit 1, Janet Wells Depo., pp. 13-16. Upon completion of its purchase of theSTW assets from Varlen in October of 1984, Tyler County Tank Works, Inc., was renamed Sistersville Tank Works, Inc. Exhibit 1, Janet Wells Depo., pp. 15-16.²

B. The Underlying Litigation

When this action commenced, STW was named as a defendant in four actions in West Virginia circuit courts—Edwards, Price, Steele, and Sandy.³ Three of those cases—Edwards, Price, and Steele⁴—are pending in the Circuit Court of Marshall County. In each of those cases, the plaintiff claims to have been exposed to harmful chemicals as a result of STW's negligent manufacture, installation, repair and/or maintenance of storage tanks at the industrial sites where they were employed. See Steele, Price, and Edwards Complaints [Doc. 176-1]. The Sandy action is an asbestos case pending in Kanawha County, West Virginia.⁵ STW was dismissed from the Sandy action without prejudice on June 14, 2019. Exhibit 3.⁶

The Edwards, Price, and Steele claimants were diagnosed with cancer in 2014, 2015, and 2016, respectively.⁷ Each claimant alleges that his cancer was caused by his exposure to harmful substances at his worksite from the 1960s to the early 2000s.⁸ [Doc. 176-1]. Each claimant alleges that harmful exposures were caused by STW's negligent manufacture, installation, inspection, repair and/or maintenance of chemical tanks and vessels at the Bayer or PPG worksites. [Doc. 176-1].

C. Pertinent Proceedings

Westfield instituted this declaratory judgment action seeking a declaration that it owes STW no duty to defend or indemnify in each of the underlying cases. [Doc. 1].⁹ Westfield claims to have only insured STW from April 15, 1989 to April 15, 2010, under Policy No. 3471223 and Policy No. 3471224. [Doc. 1, Doc. 39-1, Doc. 39-2, Doc. 39-3, and Doc. 39-4]. Policy No. 3471223 is a commercial general liability policy with a policy period from April 15, 1989 to April 15, 2010 (hereinafter the "1989-2010 CGL Policy"). The 1989-2010 CGL Policy specifically excludes coverage for claims arising from "products" and "completed operations". [Doc. 1, ¶¶51-66]. Policy No. 3471224 is a "claims made" policy issued by Westfield from April 15, 1989 to April 15, 2001, which provided STW with "products/completed operations" coverage. [Doc. 1,¶¶48-49].¹⁰ Inasmuch as each of the underlying claims was brought after the policy period had ended under this "claims made" policy, the parties agree that Policy No. 3471224 does not provide STW coverage against such claims.

As noted above, Westfield asks the Court to interpret the 1989-2010 CGL Policy and find that it owes no duty to defend or indemnify STW in each of the underlying cases. [Doc. 1]. Significantly, discovery has revealed that Westfield also insured STW under a series of CGL and umbrella policies from January 1, 1985 to April 15, 1989, under which it owes STW a continuing duty to defend. See discussion infra.¹¹ On July 5, 2018, STW answered Westfield's Complaint and asserted various counterclaims against Westfield.¹² [Doc. 7].¹³ On October 9, 2018 [Doc. 42], and November 29, 2018 [Doc. 53], the Court ordered the bifurcation for trial of the coverage claims from STW's Counterclaim and Third-Party Complaint. The Court further ordered that discovery proceed on all issues in a unitary manner. [Doc. 42 and Doc. 53].

Following STW's discovery of additional CGL and umbrella policies issued to STW prior to April 15, 1989, STW moved for leave to file its Amended Counterclaim to bring before the Court additional Westfield policies. [Doc. 120]. These additional Westfield policies were not identified in Westfield's Complaint and contain none of the exclusions relied upon by Westfieldunder the 1989-2010 CGL Policy. See discussion infra. On April 29, 2019, the Court granted STW leave to file its Amended Counterclaim, which STW did on April 30, 2019. [Doc. 120 and Doc. 123]. However, on July 15, 2019, the Court dismissed STW's Amended Counterclaim without prejudice on ripeness grounds, leaving the question of coverage and STW's Third-Party Complaint remaining. [Doc. 249].

All discovery on Westfield's Complaint has been completed and STW's motion for summary judgment is ripe for the Court's consideration.

III. STANDARD OF REVIEW & JURISDICTION

A. Summary Judgment Standard

The Court may grant a party summary judgment as to all or part of a claim or defense if the movant can demonstrate that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Dunigan v. Purkey, 2018 U.S. Dist. LEXIS 143565 *20 (N.D.W. Va. July 25, 2018). A "dispute" is considered "genuine" if a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding a Rule 56(a) motion, the Court must view all evidence in the light most favorable to the nonmoving party. Dunigan, at *20.

B. The Federal Declaratory Judgment Act

Federal courts with diversity jurisdiction must apply state substantive law but federal procedural law. Liberty Corp. Capital Ltd. v. Peacemaker Nat'l Training Ctr., LLC, 348 F. Supp. 3d 585, 590 (N.D.W. Va. 2018). The Declaratory Judgment Act, 28 U.S.C. § 2201, is a purely procedural statute which grants district courts the discretionary power to entertain declaratory judgment actions. State Farm Fire & Cas. Co. v. Kirby, 919 F. Supp. 939 (N.D.W. Va. 1996);Herbalife Int'l, Inc. v. St. Paul Fire & Marine Ins. Co., 2006 U.S. Dist. LEXIS 19180 *8-9 (N.D.W. Va. Mar. 30, 2006).¹⁴

To obtain declaratory relief under 28 U.S.C. §2201(a):

[t]he controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests. It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical set of facts. The relief is available only for a concrete case admitting of an immediate and definite determination of the legal rights of the parties.

Young v. Blatt, 2013 U.S. Dist. LEXIS 158967 *10 (N.D.W. Va. Nov. 6, 2013) (citation omitted).

A declaration of parties' rights under an insurance contract is an appropriate use of the declaratory judgment mechanism. United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 494 (4th Cir. 1998). Indeed, "[t]he declaratory judgment action is designed to allay exactly the sort of uncertainty that flows from the threat that ambiguous contractual rights may be asserted. Id.

C. Choice of Law

The Court should find that West Virginia's substantive law applies to the interpretation of the policies in this action. The provisions of an insurance policy "will ordinarily be construed according to the laws of the state where the policy was issued and the risk insured was principally located, unless another state has a more significant relationship to the transaction and the parties." Syl. Pt. 2, Lee v. Saliga, 179 W. Va. 762, 373 S.E.2d 345 (1988).

Beginning in 1985 the policies in question were issued on behalf of Westfield by its broker Reagle & Padden, Inc., a West Virginia insurance agency, to STW, a West Virginia corporationwith its...