Duke Energy Carolinas, LLC v. AG Insurance SA/NV

2021 NCBC 11

DUKE ENERGY CAROLINAS, LLC and DUKE ENERGY PROGRESS, LLC, Plaintiffs, v. AG INSURANCE SA/NV (f/k/a L'Etoile S.A. Belge d'Assurances); et al., Defendants.

No. 17 CVS 5594

Superior Court of North Carolina, Mecklenburg

February 15, 2021

Pillsbury Winthrop Shaw Pittman LLP, by Mark J. Plumer, Aaron D. Coombs, Matthew G. Jeweler, Barry Fleishman, W. Kirk Gandy, and Jeffrey W. Mikoni, and Hunton & Williams LLP by A. Todd Brown and Ryan G. Rich, for Plaintiffs Duke Energy Carolinas, LLC and Duke Energy Progress, LLC.

Freeborn & Peters LLP, by Bruce M. Engel, Patrick Frye and Ryan G. Rudich, and Bradley Arant Boult Cummings LLP, by Matthew S. DeAntonio and Corby C. Anderson, for Defendant Arrowood Indemnity Company.

Rivkin Radler LLP, by Alan S. Rutkin, George D. Kappus, and Greg E. Mann, and Goldberg Segalla, by David L. Brown, for Defendants Associated Electric and Gas Insurance Services Ltd., Berkshire Hathaway Direct Insurance Company, and TIG Insurance Company.

Law Offices of John F. Baughman, PLLC, by John Baughman, and White and Williams, LLP, by Shane Heskin, for Defendants Century Indemnity Company, Federal Insurance Company, and Pacific Employers Insurance Company.

Karbal Cohen Economou Silk Dunne LLC, by Gerald Ziebell, for Defendants First State Insurance Company and Twin City Fire Insurance Company.

Mintz Levin Cohn Ferris Glovsky & Popeo, P.C., by Paul Kalish, and Squire Patton Boggs (US) LLP, by G. David Godwin, for Defendants Allianz Global Risks U.S. Insurance Company, Allianz Underwriters Insurance Company, and Fireman's Fund Insurance Company.

Saiber LLC, by Michael J. Balch, for Defendant General Reinsurance Corporation.

Clausen Miller P.C., by Ilene Korey, and Fox Rothschild LLP, by Jeffrey P. MacHarg, for Defendant Old Republic Insurance Company.

CMK LLP, by John D. LaBarbera, and James, McElroy & Diehl, P.A., by Adam L. Ross, for Defendant United States Fire Insurance Company.

Hinkhouse Williams Walsh LLP, by William C. Joern, for Defendant Continental Insurance Company.

Jackson & Campbell PC, by Erin N. McGonagle, for Defendants AIG Property Casualty Company, American Home Assurance Company, and Lexington Insurance Company.

Windels Marx Lane & Mittendorf LLP, by Eric J. Konecke, for Defendant Allstate Insurance Company.

Hogan Lovells U.S. LLP, by Alexander B. Bowerman, for Defendant Assurances Générales de France.

ORDER AND OPINION ON ARROWOOD INDEMNITY COMPANY'S MOTION FOR SUMMARY JUDGMENT ON THE STATUTE OF LIMITATIONS AND DUKE ENERGY CAROLINAS, LLC'S MOTION TO STRIKE INADMISSIBLE SETTLEMENT COMMUNICATIONS

Louis A. Bledsoe, III Chief Business Court Judge

1. THIS MATTER is before the Court on Defendant Arrowood Indemnity Company's^[1] Motion for Summary Judgment on the Statute of Limitations filed on July 10, 2020 (the "Motion"), (ECF No. 770), and Plaintiff Duke Energy Carolinas, LLC's ("DEC") (formerly Duke Power Company)^[2] Motion to Strike Inadmissible Settlement Communications (the "Motion to Strike"), (ECF No. 785).

2. This action focuses on whether Defendants-all insurers who issued excess level insurance policies to DEC and DEP-are obligated to compensate those entities for alleged liabilities linked to coal combustion residuals ("CCRs"), i.e., coal ash, at fifteen power plants DEC or DEP owns in North and South Carolina.

3. Arrowood's Motion puts at issue whether certain letters Duke and Arrowood exchanged between 1997 and 2001 triggered the applicable three-year statute of limitations for Duke's claims against Arrowood and thus whether this action, filed against Arrowood in 2017, is time-barred. Having considered the Motion, the materials submitted in support of and in opposition to the Motion, the arguments of counsel at the hearing on the Motion, and other appropriate matters of record, the Court hereby DENIES Arrowood's Motion and GRANTS Duke's Motion to Strike.

I. FACTUAL AND PROCEDURAL BACKGROUND

4. The Court does not make findings of fact on motions for summary judgment but rather summarizes material facts it considers to be uncontested.

5. It is undisputed that Arrowood issued an excess liability insurance policy to Duke (Policy No. EC103320) for the period October 31, 1984 to October 31, 1985 (the "Arrowood Policy" or the "Policy"). (Arrowood's Mot. Summ. J. Statute Limitations Ex. 1 [hereinafter "Arrowood Policy"], ECF No. 776.1;^[3] Arrowood's Mot. Summ. J. Statute Limitations Ex. 5 [hereinafter "Duke's Version of Arrowood Policy"], ECF No. 776.5.) Although Duke and Arrowood dispute whether the Policy contains a specific endorsement concerning its underlying first-layer insurance policy, ^[4] the parties agree that the Policy follows form to the Ranger Policy.^[5] (DEC's Redacted Opp'n Arrowood's Mot. Summ. J. Statute Limitations 5 [hereinafter "Duke's Opp'n Br."], ECF No. 825.)^[6]The parties also agree that the Arrowood Policy attaches at $52 million for each occurrence. (Arrowood Policy at Item 4; Ranger Policy at Item No. 6, Underlying Limits Schedule No. 1; Arrowood's Redacted Mem. Supp. Mot. Summ. J. Statute Limitations 4 [hereinafter "Arrowood's Mem. Supp."], ECF No. 775;^[7] Duke's Opp'n Br. 1, 4.)

6. Under the Policy, Arrowood (the "Company" under the Policy) is required to indemnify Duke (the "Insured" under the Policy) "only [for] loss in excess of such underlying limits[, ]" and the Policy "shall attach . . . only after the underlying insurers have paid or have been held to pay the full amount of their respective loss liability as described in the underlying limits[.]" (Arrowood Policy at Insuring Agreements 1-2.)

7. The Policy contains a "Notice of Occurrence" Condition, which states:

Whenever the Insured has information from which they may reasonably conclude that an occurrence covered hereunder involves injuries or damage which, in [the] event that the Insured shall be held liable, is likely to involve this policy, notice shall be sent to the Company as soon as practicable, provided however, that failure to give notice of any occurrence which at the time of its happening did not appear to involve this policy, but which, at a later date, would appear to give rise to claims hereunder, shall not prejudice such claims[.]

(Arrowood Policy at Condition 2.)

8. The Policy also contains an "Action Against Company" Condition:

No action shall lie against the Company unless, as a condition precedent thereto, the Insured shall have fully complied with all the terms of this policy, nor until the amount of the Insured's obligation to pay shall have been finally determined either by judgment against the Insured after actual trial or by written agreement of the Insured, the claimant and the Company.

(Arrowood Policy at Condition 8.)

9. The Ranger Policy defines "occurrence," in relevant part, as "an accident, event or continuous or repeated exposure to conditions which result in . . . PROPERTY DAMAGE, subject to the following clarifications[, ]" which include "all injury, damage or loss of use and all claims for injury, damage or loss of use arising out of the same accident, the same event or exposure to substantially the same general conditions shall be considered as arising out of and comprising a single OCCURRENCE[.]" (Ranger Policy at §§ III(i), III(i)(1).)

10. The current dispute between Duke and Arrowood centers on the interpretation of certain letters, identified below, the companies sent to each other between 1997 and 2001, as well as in 2016 and 2017, regarding the Arrowood Policy.

A. Duke's 1997 Notice

11. On February 13, 1997, Duke's Associate General Counsel sent a letter to Arrowood's Asbestos Manager with the subject line:

Insured: [Duke]

Sites/Claims: Asbestos-Related Bodily Injury and Various Property Damage (See Attachment)

(Arrowood's Mot. Summ. J. Statute Limitations Ex. 2 at 1 [hereinafter "1997 Notice"], ECF No. 776.2.) The letter begins:

[Duke] is writing to provide you with notice of certain claims and/or circumstances that may give rise to certain claims for coverage. Our records reflect that you issued Duke at least policy no. EC 103320 (10/31/84 - 10/31/85).

(1997 Notice.)

12. Following a one-paragraph section titled "Asbestos-Related Bodily Injury Claims[, ]" the letter contains a six-page section titled "Environmental Property Damage Claims." (1997 Notice §§ I, II.) Part B of this second section concerns "Coal-Fired Power Plants" and identifies eight Duke-owned power plants in North and South Carolina. The letter states that at five of the eight plants listed, groundwater testing has shown "the presence of contaminants above applicable state cleanup criteria." (See 1997 Notice § II.B.1-2, 5-6, 8 (Allen ("Ground water sampling at this site show the presence of contaminants above the applicable state cleanup criteria."); Belews Creek ("Testing from these wells show the presence of contaminants in the ground water above the applicable state cleanup criteria."); Dan River ("Sampling of ground water at the site demonstrates the presence of contaminants above the applicable state cleanup criteria."); Marshall ("Sampling of ground water at this site demonstrates the presence of contaminants above the applicable state cleanup criteria."); and Lee ("Sampling of ground water at this site demonstrates the presence of contaminants above the applicable state cleanup criteria.")).) The letter further states that "[n]o investigation has been conducted at [either Cliffside or Riverbend] to date" and that "[n]o investigations or cleanup have been conducted at [Buck] to date." (1997 Notice § II.B.3-4, 7.)

13. The final sentence of the letter provides: "Please let us know as soon as possible if you believe that the policy(ies) sold by you to Duke do not provide defense and/or indemnity for the claims identified...