Wysong and Miles Co. v. Employers of Wausau
| Decision Date | 03 April 1998 |
| Docket Number | No. 2:95CV00816.,2:95CV00816. |
| Citation | 4 F.Supp.2d 421 |
| Court | U.S. District Court — Middle District of North Carolina |
| Parties | WYSONG AND MILES COMPANY, Plaintiff, v. EMPLOYERS OF WAUSAU, Allstate Insurance Company, American Automobile Insurance Company, Associated Indemnity Corporation, Hartford Casualty Insurance Company, Hartford Insurance Company, Hartford Accident and Indemnity Company, North Brook Excess and Surplus Company, The Travelers Indemnity Company, Fireman's Fund Insurance Company, Insurance Services Office, and North Carolina Fire Insurance Rating Bureau, Defendants. |
John T. Weigel, Jr., Greensboro, NC, William L. Osteen, Jr., Greensboro, NC, for Plaintiff.
James R. Fox, Winston-Salem, NC, Walter E. Brock, Jr., Raleigh, NC, William K. Davis, Raleigh, NC, John Turner Williamson, Raleigh, NC, Frederick K. Sharpless, Greensboro, NC, Paul C. Lawrence, Charlotte, NC, Lindsay R. Davis, Jr., Greensboro, NC, Richard T. Rice, Winston-Salem, NC, for Defendants.
This matter is before the Court on a number of different motions. The first is a motion to dismiss [Doc. # 1] filed by the North Carolina Rate Bureau ("NCRB") on behalf of Defendant North Carolina Fire Insurance Rating Bureau ("NCFIRB").1 In response to this motion, Plaintiff Wysong and Miles Company ("Wysong") filed Plaintiff's Response to Defendant Insurance Service Office's Notice of Removal and Defendant North Carolina Fire Insurance Rating Bureau's Motion to Dismiss [Doc. # 23]. Because the proper response to a notice of removal is a motion for remand and Wysong's filing requests a remand of the case to state court, this filing will be treated as a motion for remand as well as a response to the NCRB's motion to dismiss. Finally, the Court has before it motions to dismiss filed on behalf of the following Defendants: Hartford Casualty Company, Hartford Insurance Company, Hartford Insurance Company of the Southeast, and Hartford Accident and Indemnity Company (collectively, "Hartford") [Doc. # 15]; Insurance Services Office, Inc. ("ISO") [Doc. # 17]; Fireman's Fund Insurance Company, Associated Indemnity Corporation, and American Automobile Insurance Company (collectively, "Fireman's") [Doc. # 19], and; the Travelers Indemnity Company ("Travelers") [Doc. # 21]. (Hartford, Fireman's, and Travelers will be referred to collectively as the "Insurer Defendants.") For the reasons set forth below, Wysong's motion to remand is DENIED. All of the motions to dismiss named above are GRANTED.
Wysong, a North Carolina corporation, is a manufacturer of machine tools with its principal place of business in Guilford County, North Carolina. From 1965 until 1978, Wysong disposed of various industrial fluids, including 1.1 trichloroethane (TCA), in a disposal basin at its manufacturing facility designed for this purpose. In October of 1987, Wysong detected and reported a loss of TCA from an above-ground storage tank. Further investigation revealed that the ground-water near the facility had been contaminated by this release as well as by releases from the disposal basin. The North Carolina Department of Environment and Natural Resources is holding Wysong responsible for the costs of cleaning up this contamination. To date, Wysong has spent at least $1,200,000 cleaning up the contamination and expects to spend $980,000 over the next thirty years to complete the process.
From 1965 to 1987, Wysong purchased Comprehensive General Liability (CGL) insurance policies from one or more of the Insurer Defendants.2 All of the Defendants are incorporated and have their principal places of business outside North Carolina. With the exception of the policies issued by Wausau and by Travelers, all of the policies contained a standard form exclusion clause barring recovery for damages caused by pollutants unless the release of those pollutants was "sudden and accidental." Travelers' policy allowed recovery only when the release of pollutants was neither "expected [n]or intended." The language of Wausau's pollution exclusion is currently unknown, but it is not at issue here because Wausau has not filed a motion to dismiss.
Shortly before this matter was removed to this Court, the NCRB filed a motion to dismiss [Doc. # 1] on behalf of the NCFIRB, asserting that the NCFIRB no longer exists and that the NCRB is not a successor-in-interest to the former agency. The NCRB had learned of the suit when Wysong served an NCRB official with notice of the suit against the NCFIRB. As noted above, Wysong filed a combined Response to Defendant Insurance Service Office's Notice of Removal and Defendant North Carolina Fire Insurance Rating Bureau's Motion to Dismiss [Doc. # 23], which the Court is construing as a motion for remand. ISO filed a reply to Wysong's motion in which it also asserts that the NCFIRB does not exist. These two motions must necessarily be treated before the others, as the NCFIRB's continued presence as a defendant in the case would prevent the Court from exercising diversity jurisdiction. Because the NCFIRB no longer exists, the Court grants the motion to dismiss the NCFIRB and denies Wysong's motion for remand.
A motion to dismiss should be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); accord Martin Marietta Corp. v. International Telecommunications Satellite Org., 991 F.2d 94, 97 (4th Cir.1992). In considering a motion to dismiss, all claims are construed in the light most favorable to the non-moving party and its allegations are taken as true. Martin Marietta, 991 F.2d at 97.
Because this case was removed under the Court's diversity jurisdiction, the law of the forum state applies. In North Carolina, a civil suit cannot usually proceed against a legal entity that does not exist at the time of suit. See Rollins v. Junior Miller Roofing Co., 55 N.C.App. 158, 163, 284 S.E.2d 697, 701 (1981). Suits against a regulatory board or agency may be brought after the agency's abolition, but such suits must be brought within one year after the abolition of the agency. See N.C.G.S. § 143-270. The NCFIRB was an unincorporated association created by statute in 1945. See 1945 N.C. Sess. Laws 380. The legislation which created the NCFIRB was repealed in 1977, see 1977 N.C. Sess. Laws 828, thus abolishing the NCFIRB, see State of N.C. ex rel. Commissioner of Ins. v. N.C. Automobile Rate Administrative Office, 293 N.C. 365, 380, 239 S.E.2d 48, 58 (1977). The NCFIRB was therefore not an existing entity when Wysong filed this action in 1995 nor had it been within one year prior to Wysong's filing. Thus, the NCFIRB is not a proper defendant in this action.
Wysong's Response to the NCRB's motion contains two requests that are almost contradictory — first, to strike the NCRB's motion as one not filed by a real party in interest, and second, to allow Wysong time to conduct discovery to determine if the NCRB is a successor-in-interest to the NCFIRB. The Court denies both requests.
Wysong's first request runs counter to its own treatment of the NCRB since this case began. As noted above, Wysong initially served a NCRB official in lieu of someone from the NCFIRB. In the very same document which contains its request to strike the NCRB's motion, Wysong also suggests that the NCRB is a successor-in-interest to the NCFIRB and, by extension, is liable for millions of dollars in damages. Wysong's apparent intent to implicate the NCRB in this fashion gives the NCRB a real interest in this case by giving it a powerful incentive to avoid becoming a part of the case.
Wysong's request for time to conduct discovery regarding the NCRB is now moot. Since filing its complaint, Wysong has had over two years in which to discover any relationship between the NCFIRB and the NCRB and has produced nothing to document such a relationship. If grounds existed for treating the NCRB as the successor-in-interest to the NCFIRB for the purposes of this case, Wysong should have unearthed them by now.
In summary, the NCRB's Motion to Dismiss this case against the NCFIRB is granted because the NCFIRB did not exist when Wysong's complaint was filed. Wysong's motion for remand is denied because there is no basis for a remand.
Given that the NCFIRB is no longer a party to this action, complete diversity exists and jurisdiction lies with this Court pursuant to 28 U.S.C. Section 1332. According to North Carolina's choice of law rules, contracts of insurance are usually interpreted in accordance with the laws of the state where the contract was made and delivered. See Johns v. Automobile Club Ins. Co., 118 N.C.App. 424, 426, 455 S.E.2d 466, 468 (1995). Tort claims are governed by the law of the state in which the injuries were sustained. See Boudreau v. Baughman, 322 N.C. 331, 335-36, 368 S.E.2d 849, 854 (1988); see also Lloyd v. Carnation Co., 61 N.C.App. 381, 388, 301 S.E.2d 414, 418 (1983) (). Because all of the contracts at issue in this case were made and delivered in North Carolina and all of the alleged injuries were sustained in North Carolina North Carolina law governs this dispute.
Wysong asserts its claims through four causes of action: (1) regulatory fraud; (2) lack of notice; (3) estoppel; and (4) unfair practice in trade or business. Each Defendant makes several different arguments as to why each cause of action should be dismissed. Some of these arguments are common to multiple Defendants and some are made only by one of the Defendants. For the purposes of economy, the Court will address only as many arguments as are necessary to dispose of each claim with respect to each Defendant. Because Wysong's...
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