Ferrellgas Partners v. Zurich Am. Ins. Co.

319 A.3d 849

FERRELLGAS PARTNERS L.P., Ferrellgas, L.P., Bridger Logistics, LLC, Bridger Administrative Services II, LLC, Bridger Lake, LLC, Bridger Leasing, LLC, Bridger Marine, LLC, Bridger Rail Shipping, LLC, Bridger Real Property, LLC, Bridger Storage, LLC, Bridger Terminals, LLC, Bridger Transportation, LLC, Bridger Swan Ranch, LLC, Bridger Energy, LLC, J.J. Addison Partners, LLC, and J.J. Liberty, LLC, Plaintiffs-Below, Appellants,

v.ZURICH AMERICAN INSURANCE COMPANY, Defendant-Below, Appellee.

No. 183, 2023

Supreme Court of Delaware.

Submitted: March 27, 2024

Decided: June 10, 2024

Court Below: Superior Court of the State of Delaware, C.A. No. N19C-05-275

Upon appeal from the Superior Court. AFFIRMED.

David J. Baldwin, Esquire, Peter McGivney, Esquire, Berger Harris LLP, Wilmington, Delaware. Of Counsel: Brent W. Vincent, Esquire (argued), Bryan Cave Leighton Paisner LLP, Chicago, Illinois for Plaintiffs-Below, Appellants.

Bruce W. McCullough, Esquire, Bodell Bove, LLC, Wilmington, Delaware. Of Counsel: Louis A. Bove, Esquire (argued), Bodell Bove, LLC, Philadelphia, Pennsylvania for Defendant-Below, Appellee.

Before SEITZ, Chief Justice; VALIHURA, and GRIFFITHS, Justices.

VALIHURA, Justice:

INTRODUCTION

This is an appeal of a January 21, 2020 Opinion of the Superior Court (the "2020 Opinion") which denied a Motion for Summary Judgment brought by Appellants, Ferrellgas Partners L.P. and Ferrellgas, L.P. (collectively "Ferrellgas") et al.,¹ which sought declaratory relief obligating Appellee, Zurich American Insurance Company ("Zurich") to advance defense costs for underlying litigation pursuant to an insurance policy it issued to Ferrellgas.

Ferrellgas appeals the 2020 Opinion arguing that the Superior Court erred by holding that Zurich has no duty to advance defense costs for Ferrellgas’ underlying litigation because the First Amended Complaint of Eddystone Rail Company, LLC ("Eddystone," the plaintiff in the underlying litigation) did not allege loss which falls within the scope of coverage of the claims-made insurance policy that Zurich issued to nonparty Bridger, LLC. The overall gravamen of Ferrellgas’ argument is that the Eddystone Litigation is a claim for wrongful acts occurring before June 24, 2015, a date contained in a key coverage exclusion which provides that Zurich has no duty advance defense costs for claims arising from wrongful acts occurring after June 24, 2015.

Analysis of the issue of whether Zurich must advance defense costs can be summarized into two steps: first, the meaning of the pertinent provisions in Zurich’s insurance policy (the "Zurich Policy") must be ascertained to define the scope of the policy’s coverage. Second, the nature of the claims in the underlying litigation must be analyzed with reference to the Zurich Policy.

The first step, the plain meaning of the Zurich Policy itself, finds support in case-law construing similar policy language and indicates that the Zurich Policy obligates Zurich to advance defense costs only for claims arising from wrongful acts which took place before June 24, 2015. With respect to the second step, Eddystone’s First Amended Complaint, which underpins the Eddystone Litigation, and when read as a whole, states a claim for relief from a wrongful act — a breach of contract — occurring after June 24, 2015, consequently absolving Zurich from any obligation to advance. Accordingly, we AFFIRM the decision of the Superior Court.

Zurich also brings a cross-appeal, arguing that Ferrellgas’ appeal of the 2020 Opinion is untimely. Zurich contends that the 2020 Opinion, and its declaration of no coverage dispositively defined the rights between Ferrellgas and Zurich, and left nothing to be resolved as to them. Zurich further contends that the Superior Court’s approval of a Joint Stipulation of dismissal between Ferrellgas and Beazley Insurance Company Inc. ("Beazley") then resulted in all claims being resolved as to all parties. Ferrellgas’ position is that the final judgment in this matter is the order by the Superior Court dated May 10, 2023,² which states explicitly that it is a final judgment. Delaware law requires timely appeal within thirty days of the entry of final judgment, and because Zurich maintains that final judgment occurred no later than November 10, 2021, it argues that Ferrellgas’ May 25, 2023 appeal is untimely. For the reasons explained below, we conclude that Ferrellgas’ appeal is timely.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Eddystone Litigation

On February 2, 2017, Eddystone filed a complaint in the United States District Court for the Eastern District of Pennsylvania against Appellants Ferrellgas, Bridger Logistics, LLC, and nonparties Julio Rios and Jeremy Gamboa.³ In a sub- sequent amended complaint filed on September 7, 2018, (the "Eddystone FAC") a number of current and former direct or indirect subsidiaries were named as additional defendants, including Bridger Administrative Services II, LLC; Bridger Lake, LLC; Bridger Leasing, LLC; Bridger Marine, LLC; Bridger Rail Shipping, LLC; Bridger Real Property, LLC; Bridger Storage, LLC; Bridger Terminals, LLC; Bridger Transportation, LLC; Bridger Swan Ranch, LLC; Bridger Energy, LLC; J.J. Addison Partners, LLC; and J.J. Liberty, LLC.⁴ The allegations contained in the Eddystone Litigation are critical in resolving the coverage issue.

To understand the nature of the Eddystone Litigation more fully, we explain the relationship among the parties involved. Julio Rios & Jeremey Gamboa ("Rios" and "Gamboa" respectively) are former directors of a exude oil trading and logistics business.⁵ This business involves many "nominally different" entities created by Rios and Gamboa with the name "Bridger," with each entity responsible for different attributes of the process of transporting crude oil from wellheads to end markets in North America. The entities include Bridger, LLC; Bridger Marketing, LLC; Bridger Logistics, LLC and its subsidiaries (these three entities and the following are hereinafter referred to collectively as the "Bridger Group") Bridget Administrative Services II, LLC; Bridger Marine, LLC; Bridger Rail Shipping, LLC; Bridger Real Property, LLC; Bridger Storage, LLC; Bridger Swan Ranch, LLC; Bridger Terminals, LLC; Bridger Transportation, LLC; Bridger Energy, LLC; Bridger Leasing, LLC; Bridger Lake, LLC; Bridger Administration; Bridger Management; J.J. Liberty, LLC; J.J. Addison Partners, LLC; and Bridger Transfer Services.⁶ The members of the Bridger Group operated in concert and without intercompany contracts defining their relationship. They were "all headed by the very same people[,] and shared employees."⁷

The companies within the Bridger Group that are most relevant to the Eddystone Litigation are Bridger Logistics, LLC ("Bridger Logistics"), Bridger Transfer Services, LLC ("BTS"), and Bridger Marketing. Bridger Logistics provided entities which transported crude oil, known as "shippers," with the necessary arrangements to do so. BTS handled the specific process of "transloading," that is, transferring cargo from one mode of transportation to another.⁸ Bridger Marketing handled the facilitation of agreements between outside clients and the Bridger Group.⁹ In its complaint, Eddystone pointed out that, as the sole member of an LLC like BTS, Bridger Logistics "owned all of BTS’[s] equity and controlled all of BTS’[s] decision-making."¹⁰

In 2013, the price of crude oil from North Dakota wellheads was substantially lower than the "Brent benchmark."¹¹ Under these circumstances, crude oil logistics firms could profit on transporting and selling North Dakota crude notwithstanding its transport cost.¹² The Bridger Group knew that it could capitalize on this development by providing the means to transport crude oil to refineries along the Delaware river.¹³ To do this, Bridger Logistics would need access to a transloading facility.¹⁴ Consequently, Bridger Logistics requisitioned BTS to enter into a contract with Eddystone, which the parties entitled the "Eddystone Rail Facilities Services Agreement" ("RSA").

Under the RSA, Eddystone spent over $170 million constructing a transloading facility which transferred crude oil from railcars to river barges, and the facility was for the exclusive use of BTS.¹⁵ For its part, BTS promised to bring a total of 118,168,750 barrels of crude oil to the Eddystone transloading facility — a minimum of 64,750 barrels of crude oil per day — from the date of the facility’s completion on April 17, 2014, to June of 2019.¹⁶ Each transloaded barrel would cost BTS $2.25, and if BTS could not meet the quota, it was required to make a deficiency payment to Eddystone of $1.75 for however many barrels that were below the minimum.

"Touting" Bridger Logistics’ newfound exclusive transloading ability through the agreement between BTS and Eddystone, Bridger Marketing was able to secure a deal with Monroe Energy, LLC ("Monroe"), an owner/operator of an oil refinery located in Trainer, Pennsylvania in July of 2014.¹⁷ This agreement, the Crude Oil Supply Agreement or "COSA," obligated Monroe to make an undifferentiated payment to both Bridger Marketing and Bridger Logistics for the acquisition of 1.95 million barrels of crude oil per month from July of 2014 to June of 2019.¹⁸ On the other side of the deal, Bridger Marketing was to acquire the crude oil to be sold to Monroe, then Bridger Logistics and its subsidiaries were responsible for transporting the oil to Monroe.¹⁹

BTS and the RSA with Eddystone constituted a critical step in this arrangement. Indeed, transloading was essential to fulfill the COSA with Monroe, yet BTS’s ability to uphold the RSA depended on Bridger Logistics. As discussed, BTS was obligated to make certain payments to Eddystone under the RSA.²⁰ To meet this, Bridger Logistics and its affiliates credited BTS a portion of the funds from Monroe and the COSA — just enough to pay Eddystone.²¹

Without this source of revenue, BTS would have...