Henkel Corp. v. Hartford Acc. & Indem. Co.

399 F.Supp.2d 607

HENKEL CORPORATION, Plaintiff, v. The HARTFORD ACCIDENT & INDEMNITY COMPANY, et al., Defendants.

No. CIV.A. 05-1266.

United States District Court, E.D. Pennsylvania.

November 1, 2005.

COPYRIGHT MATERIAL OMITTED

John N. Ellison, Claudine Q. Homolash, Anderson Kill & Olick, PC, Philadelphia, PA, William John Brennan, Butera, Beausang, Cohen & Brennan, King of Prussia, PA, for Plaintiff.

Michael S. Komar, Menz, Bonner & Komar, LLP, New York City, David Newmann, Hogan & Hartson L.L.P., Philadelphia, PA, for Defendants.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

I. BACKGROUND

Plaintiff Henkel Corporation ("plaintiff' or "Henkel") initiated the instant action on behalf of Loctite Corporation ("Loctite") as Loctite's successor. Henkel seeks insurance coverage from defendant Hartford Accident and Indemnity Company ("defendant Hartford") and defendant Liberty Mutual Insurance Company ("defendant Liberty") for the defense and indemnity costs that have incurred, and that will continue to incur, in connection with asbestos personal injury lawsuits filed by claimants who have allegedly been exposed to Permatex-brand, asbestos-containing products ("the underlying actions"). (Compl.¶ 1.)

According to the complaint, Loctite acquired Permatex Company, Inc. (not to be confused with Permatex, Inc. or Permatex Industrial Company) by a subsidiary merger in 1972. Id. ¶¶ 2,15. Six years later, in 1978, Permatex Company, Inc. merged into Loctite. Id. ¶¶ 2,16. From 1976 to 1985, defendants Hartford and Liberty issued Comprehensive General Liability and/or Completed Operations and Products Hazards policies ("the policies") to Loctite obligating defendants to defend any suit against Loctite and to pay damages incurred by Loctite for bodily injury or property damage. Id. ¶¶ 21-37 .

The underlying actions were filed in the Superior Court of New Jersey (Middlesex County), Court of Common Pleas (Philadelphia County), and Supreme Court of the State of New York (New York County), respectively, against Permatex Industrial Corporation¹ and/or Permatex, Inc.,² among others, as the parties-defendants responsible for the damages plaintiffs allegedly suffered as the result of exposure to Permatex-brand, asbestos-containing products. Id. ¶¶ 38-46. The underlying actions did not name Loctite or Permatex Company, Inc., the company that merged into Loctite, as defendants, nor were the lawsuits filed against Permatex, Inc. or Permatex Industrial Corporation as successors-in-interest to Loctite or any of its predecessors. Id. ¶¶ 43-46.

Henkel, as successor to Loctite, provided notice to defendants of the claims in the underlying actions. Defendants refused to assume the duty to defend. Accordingly, Henkel defended and continues to defend claims of injuries for exposure to Permatex-brand, asbestos-containing products without any participation by defendants. Henkel asserts that it is entitled to defense and indemnity coverage from defendants in connection with the past, pending, and future asbestos products liability cases arising from Permatex-brand, asbestos-containing products. Id.

Henkel contends that the plaintiffs in the underlying actions have erroneously named Permatex, Inc. and/or Permatex Industrial Corporation, instead of Loctite or Permatex Company, Inc., as the parties potentially responsible for the alleged injuries caused by exposure to Permatexbrand products. Id. ¶¶ 44-46. Henkel asserts that neither Permatex, Inc. nor Permatex Industrial Corporation ever manufactured, sold, or distributed any asbestos-containing products or assumed any liabilities for Permatex-brand products that contained asbestos. Id, Instead, Henkel asserts that Loctite, as a result of its acquisition of and merger with Permatex Company, Inc., is the party potentially responsible (if any party is found responsible at all) for injuries caused by Permatex-brand products that contained asbestos. Id.

In the instant suit, Henkel seeks: a) monetary damages for defense and indemnity costs already expended in the defense of past and pending actions, b) declaratory relief to require defendants to honor their present and future coverage obligations to Henkel, and c) punitive damages and attorneys' fees due to defendants' intentional and bad-faith conduct.

Defendants, however, disagree with plaintiff and continue to deny that they have a contractual duty to defend Henkel (or its predecessor Loctite). Defendant Hartford filed the motion to dismiss now before the Court. Defendant Hartford asserts that plaintiff's complaint should be dismissed under Federal Rules of Civil Procedure 12(b)(1), (6), and (7), for lack of subject matter jurisdiction, failure to state a claim, and failure to join necessary and indispensable parties, respectively. For the reasons set forth below, the motion will be granted.

II. DISCUSSION

A. Choice of Law.

Defendant Hartford suggests that Connecticut law applies to this case. To the contrary, plaintiff relies upon Pennsylvania law.

Where federal jurisdiction is based on diversity of citizenship, such as in the instant case, the Court must apply the choice-of-law rules of the state in which it sits. St. Paul Fire & Marine Ins. Co. v. Lewis, 935 F.2d 1428, 1431 n. 3 (3d Cir. 1991) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). Plaintiff filed this action in the Eastern District of Pennsylvania. Thus, Pennsylvania choice-of-law rules apply.

Under Pennsylvania choice-of-law rules, "the first question to be answered in addressing a potential conflict of laws dispute is whether the parties explicitly or implicitly have chosen the relevant law." City of Philadelphia v. One Reading Ctr. Assoc., 143 F.Supp.2d 508, 512 (E.D.Pa. 2001) (quoting Assicurazioni Generali, S.P.A. v. Clover, 195 F.3d 161, 164 (3d Cir.1999)). If the parties have agreed to the applicable law, that agreed-upon law shall generally be given effect. Id. In this case, neither party suggests that the policies included a relevant choice-of-law provision.

Where there is no choice-of-law provision agreed upon by the parties, "before a choice of law question arises, there must actually be a conflict between the potentially applicable bodies of law." On Air Entm't Corp. v. Nat'l Indem. Co., 210 F.3d 146, 149 (3d Cir.2000); see also Zucker Mfg. v. Home Ins. Co., 23 F.3d 808, 813 (3d Cir.1994). Where the relevant laws of the jurisdictions are the same, "there is no conflict of law, and the court should avoid the conflict of law question" as the outcome is the same under the substantive law of either jurisdiction. On Air Entm't, 210 F.3d at 149; see also Lucker Mfg., 23 F.3d at 813.³

Thus, this Court must determine whether an actual conflict exists between the pertinent laws of Pennsylvania and Connecticut. There is one issue before the Court: Whether an insurer has a duty to defend a claim which falls within the scope of the coverage under the policy, but which by mistake of the claimant, the insured is not named as a defendant in the underlying action? As discussed below, because the legal treatment of this issue is the same under both Pennsylvania and Connecticut law, there is no actual conflict in this case and the Court may rely on the law of either or both jurisdictions.

B. Dismissal under Rule 12(b)(6) for Failure to State a Claim upon Which Relief Can Be Granted.

1. Arguments by the parties.

Defendant Hartford argues that the underlying actions were filed against Permatex, Inc. and Permatex Industrial Corporation, as opposed to the insured, Loctite (or the entity that merged into Loctite, Permatex Company, Inc.). Accordingly, because defendant Hartford insured neither Permatex, Inc. nor Permatex Industrial Corporation, defendant Hartford is not responsible for defending the underlying actions.

As support for its argument, defendant Hartford points to the coverage language of the policy, which states:

The company [Hartford] will pay on behalf of the insured [Loctite] all sums which the insured shall become legally obligated to pay as damages because of

Coverage A—bodily injury or

Coverage B—property damage

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient.

(Compl.¶ 25) (emphasis added). Defendant's argument is refreshingly simple-the insured is Loctite, not the entities named in the underlying complaints, Permatex, Inc. and Permatex Industrial Corporation, and the underlying actions do not involve a "suit against the insured." And since the underlying actions do not involve an action against Loctite (or the acquired entity, Permatex Company, Inc.), there is no duty to defend.

Plaintiff, in contrast, argues that the claimants in the underlying actions "mistakenly" named Permatex Industrial Corporation and Permatex, Inc. as the parties responsible for the alleged injuries from exposure to Permatex-brand products. Plaintiff asserts that Permatex Industrial Corporation and Permatex, Inc. never manufactured, sold, or distributed any asbestos-containing products, and never assumed or otherwise succeeded to any liabilities for any Permatex-brand, asbestos personal injury actions. Rather, as a result of Loctite's acquisition of and merger with Permatex Company, Inc., Loctite is the party responsible (if any party is) for injuries resulting from Permatex-brand, asbestos-containing products. Thus, despite not being named a defendant, Loctite is potentially liable in the underlying actions. Under these circumstances, plaintiff argues, defendants are obligated to provide Henkel, Loctite's successor, insurance coverage.

2. Motion to dismiss standard.

A motion to dismiss for...