First State Ins. Co. v. Am. Home Assurance Co.

463 F.Supp.3d 298

FIRST STATE INS. CO., New England Reinsurance Corp., Plaintiffs,

v.AMERICAN HOME ASSURANCE CO., et al., Defendants.

No. 3:16-cv-1822 (VAB)

United States District Court, D. Connecticut.

Signed May 29, 2020

Mark Kean Ostrowski, Shipman & Goodwin LLP, Hartford, CT, Miranda H. Turner, Pro Hac Vice, James P. Ruggeri, Pro Hac Vice, Edward B. Parks, II, Shipman & Goodwin, LLP, Washington, DC, for Plaintiff First State Insurance Company.

Mark Kean Ostrowski, Shipman & Goodwin LLP, Hartford, CT, Miranda H. Turner, Shipman & Goodwin, LLP, Washington, DC, for Plaintiff New England Reinsurance Corp.

Kara A. Loridas, Rubin & Rudman LLP, Kevin J. O'Connor, Michael S. Batson, Hermes, Netburn, O'Connor & Spearing, P.C., Boston, MA, for Defendants American Home Assurance Company, Granite State Insurance Company, Insurance Company of the State of Pennsylvania.

Catherine B. Altier, Pro Hac Vice, John A. Mattoon, Pro Hac Vice, Ford Marrin Esposito Witmeyer & Gleser, LLP, New York, NY, Kevin J. O'Connor, Hermes, Netburn, O'Connor & Spearing, P.C., Boston, MA, Stan R. Dombroski, Dombroski Hillis, LLC, New Haven, CT, for Defendants Columbia Casualty Company, Continental Insurance Company.

Nico Piscopo, Laura Pascale Zaino, Halloran & Sage LLP, Hartford, CT, Brian G. Fox, Cohn Baughman & Serlin, Mt. Laurel, NJ, for Defendants Federal Insurance Company, Central National Insurance Company of Omaha, Century Indemnity Co.

Lawrence A. Levy, Michael Kotula, Rivkin Radler, LLP, Uniondale, NY, Louis B. Blumenfeld, Cooney, Scully & Dowling, Hartford, CT, for Defendant Fireman's Fund Insurance Company.

Arthur J. McColgan, II, Walker Wilcox Matousek LLP, Chicago, IL, Kaitlin M. Calov, Walker Wilcox Matousek LLP, for Defendant Swiss Reinsurance America Company.

George G. Mowad, II, Eric M. Grant, Melissa A. Scozzafava, Yamin & Grant, Waterbury, CT, Jeffrey L. Schulman, Pro Hac Vice, Pasich LLP, New York, NY, for Defendant Ferguson Enterprises, Inc.

RULING AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

VICTOR A. BOLDEN, UNITED STATES DISTRICT JUDGE

Defendants Century Indemnity Co. ("Century Indemnity"), Federal Insurance Company ("Federal"), Fireman's Fund Insurance Company ("Fireman"), Columbia Casualty Company ("Columbia Casualty"), and Central National Insurance Company ("Central" or "Central National") have all moved for summary judgment. See Partial Mot. for Summ. J. on Duty to Defend and Reimburse Defense Costs by Century Indemnity and Federal, ECF No. 299 (Sept. 6, 2019) ("Century Indemnity and Federal Mot."); Partial Mot. for Summ. J. by Fireman, ECF No. 306 (Sept. 6, 2019) ("Fireman Mot."); Partial Mot. for Summ. J. on Aggregate Limits by Central National, ECF No. 312 (Sept. 6, 2019) ("Central Mot. Aggregate Limits"); Partial Mot. for Summ. J. on Prior Insurance and Non-Cumulation of Liability Provisions by Central National, ECF No. 317 (Sept. 6, 2019) ("Central Mot. Liability").

For the following reasons, the motions for summary judgment are GRANTED .

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises from the sale of products allegedly containing asbestos. SMF, ECF No. 307-2 ¶ 1 (Sept. 6, 2019) ("CNA SMF"); First State Statement of Facts in Opp'n, ECF No. 334-1 ¶ 1 (Oct. 18, 2019) ("Opp'n CNA SMF"). Ferguson Enterprises, Inc. ("Ferguson") "is the alleged corporate successor to Familian[,]" the distributor of the supplier of the allegedly asbestos tainted products, id. ¶¶ 1–2, "including industrial pipe, valves and fittings, heating and cooling equipment, waterworks products, and gaskets." Mem. in Supp. of Summ. J., ECF No. 306-3 (Sept. 6, 2019) ("Fireman Mem.").

Underlying lawsuits for related claims began in 1997 and exhausted Familian's primary policies in approximately 2002. CNA SMF ¶¶ 3–4. The underlying lawsuits pertain to bodily injuries allegedly caused by the products containing asbestos sold by Familian. Fireman SMF, ECF No. 306-2 ¶ 4 (Sept. 6, 2019) ("Fireman SMF") (citing Am. Compl. ¶ 43). In this case, "First state seeks declarations regarding the insurers’ respective obligations with respect to the Underlying Lawsuits." CNA SMF ¶ 6; Opp'n CNA SMF ¶ 6. "Ferguson has asserted cross-claims against the excess insurers that also seek declarations regarding the insureds’ respective obligations with respect to the [u]nderlying [l]awsuits." Fireman SMF ¶ 7.

A. Factual Background¹

1. Century/Federal

"Federal Insurance Company issued an excess liability policy to Familian Corporation for the period from April 1, 1981 to April 1, 1982." Century/Fed. SMF, ECF No. 300 ¶ 1(Sept. 6, 2019) ("Century/Fed. SMF"); First State Statement of Material Facts in Opp'n and Additional Material Facts, ECF No. 332-1 ¶ 1 (Oct. 18, 2019) ("Opp'n Century/Fed. SMF"); Ferguson Statement of Material Facts in Opp'n and Additional Material Facts, ECF No. 327-1 ¶ 1 (Oct. 18, 2019) ("Ferguson Opp'n Century/Fed. SMF"). The policy establishes a limit of "$10 million per occurrence or annual aggregate excess of $10 million each occurrence and annual aggregate excess of primary." Id. The policy language, defining loss and underlying insurance, determines Federal's obligations depending on "the facts and circumstances of each claim." Id. ¶¶ 2–3; Opp'n Century/Fed. SMF. ¶¶ 2–3; Ferguson Opp'n Century/Fed. SMF ¶¶ 2–3. Paragraph 7 delineates "Federal's obligations with respect to the defense of underlying claims ...." Id. ¶ 4. Parties dispute whether "Federal's obligation to reimburse costs and interest cannot be determined until Ferguson asks for Federal's consent to incur those costs." Ferguson Opp'n Century/Fed. SMF at 4 ¶ 2; Century and Federal's Opp'n to Ferguson's Additional Material Facts, ECF No. 354 ¶ 2 (Dec. 17, 2019) ("Century/Fed. Opp'n").

"Century Indemnity Company is a successor-in-interest to CCI Insurance Company, which is a successor-in-interest to Insurance Company of North America ("Century")." Id. ¶ 5. "Century issued an excess liability policy to Familian Corporation for the period from December 18, 1984 to April 1, 1985." Id. ¶ 6. The policy has a "$20 million combined single limit each occurrence and in the aggregate of primary insurance." Id. Paragraph C delineates "Century's obligations with respect to the defense of underlying claims ...." Id. ¶ 7; Opp'n to Century/Fed. SMF ¶ 7 (admitting that Century accurately quotes the policy language); Ferguson Opp'n to Century/Fed. SMF ¶ 7 (admitting the policy contains the quoted language). Parties dispute whether "Century's obligation to reimburse court costs [can] be determined until Ferguson asks for Century's consent to incur those costs." Ferguson Opp'n to Century/Fed. SMF at 4 ¶ 4; Century/Fed. Opp'n ¶ 4.

2. Fireman

Fireman "issued a third-layer excess policy to Familian ... with $10 million in limits effective 4/1/82-4/1/82 ...." Fireman SMF ¶ 8; Ferguson SMF and Additional Material Facts in Opp'n to Fireman, ECF No. 327-1 (Oct. 18, 2019) ¶ 8 (admitting that Fireman "sold Familian an excess liability policy with a policy period of September 16, 1982, to March 1, 1983"). The Fireman Policy "is excess over $20.6 million in underlying insurance, which is comprised of an exhausted primary policy issued by Royal Globe Insurance Company, a first layer excess umbrella policy issued by First State with limits of $10 million (the "First State Policy") ..., and a second-excess layer policy issued by Comstock with limits of $10 million." Id. ¶ 9. Parties agree on the relevant policy language in both the First State Policy and the Fireman Policy. Id. ¶¶ 10–14; Ferguson SMF in Opp'n to Fireman ¶¶ 10–14; First State SMF in Opp'n to Fireman, ECF No. 335-1 ¶¶ 10–14 (Oct. 18, 2019) ("Opp'n to Fireman SMF"); see also Ferguson Opp'n to Fireman at 7–9, ¶¶ 1–5; Fireman's Response to Ferguson's Additional Material Facts, ECF No. 346 ¶¶ 1–5 (Dec. 17, 2019).

The Fireman, Comstock, and First State Policies were issued to Familian in California. Ferguson SMF in Opp'n ¶ 15 (disputing that "all other policies in this action were issued to Familian in California" as lacking support). Comstock and its parent company became insolvent in June 2003. Fireman SMF ¶¶ 16–17. "[T]he California Insurance Commissioner obtained the Conservation Order over Freemont and Comstock." Id. ¶ 17. The Conservation Order, in relevant part, enjoins prosecuting any lawsuit against Comstock. Id. ¶ 18. "Comstock is not a party to this action." Id. ¶ 19.

Fireman "requested that plaintiffs and Ferguson stipulate ‘that the 82-83 [FFIC] excess policy does not drop down to provide coverage in place of the Comstock policy and that Ferguson bears the risk and responsibility for all sums and costs otherwise payable under the Comstock policy up to its limits.’ " Id. ¶ 20 (alteration in the original) (citation omitted); Opp'n to Fireman SMF ¶ 20 (admitting the fact); Ferguson Opp'n to Fireman SMF ¶ 20 (denying the statement is material to the decision of the motion). Plaintiffs did not respond and Ferguson "declined to enter into the proposed Stipulation." Id. ¶ 21; Opp'n to Fireman SMF ¶ 21 (admitting); Ferguson Opp'n to Fireman SMF ¶ 20 (denying the statement is material to the decision of the motion).

3. Central National

Central National issued an umbrella liability policy to Familian "for a one-year period from March 5, 1979 to March 5, 1980" (the "Umbrella Policy"). SMF, ECF No. 312-1 ¶ 1 (Sept. 6, 2019) ("Central Aggregate SMF"). The Umbrella Policy's aggregate limit "is $5 million excess $500,000 combined single limit each annual aggregate period of insurance." Id. ¶ 2. Parties agree on the relevant Umbrella Policy language. Id. ¶ 3; First State SMF in Opp'n to Central. Mot. Aggregate Limits, ECF No. 330-1 ¶ 3 (Oct. 18, 2019) ("Opp'n SMF to Central Aggregate"); Ferguson SMF in Opp'n to Central Mot. Aggregate Limits, ECF No. 323-1 ¶ 3 (Oct. 18, 2019) ("Ferguson Opp'n SMF to Central Aggregate"). In the Umbrella Policy, "annual Period" is defined as "each consecutive period of one year commencing from the effective date of this policy." Id. ¶ 4; Ferguson...