Posts in Business Insurance

District Court Denies Motion to Dismiss For Failure to Join Indispensable Party

Alcoa Inc. v. Alcan Inc., 2007 WL 2083813 (D.Del. July 17, 2007)

In this action for declaratory judgment, Plaintiff sought a ruling that it was not liable to various Defendants for the clean-up costs associated with environmental contamination on a property Plaintiff formerly owned. Plaintiff sold the contaminated property to Defendant 1 pursuant to an acquisition agreement that provided for a 12 year indemnification for certain environmental liabilities. Defendant 1 then sold the property to Defendant 2 with a separate indemnification agreement. Defendant 3 later acquired Defendant 2 and its subsidiary. When Defendant 3 sought to sell the contaminated property to the city in which the property was located, the city first required, both as part of the purchase agreement and through a letter to Plaintiff, that the contamination be sufficiently remedied. Defendant 3 sought indemnification from Defendant 1, which then sought indemnification from Plaintiff. Plaintiff responded to the city’s letter that Defendant 3 was responsible for the clean up, and rejected Defendant 1’s indemnification demand under the argument that it was outside the scope of the acquisition agreement. Plaintiff sought declaratory judgment that it was not liable to any of the Defendants. Defendant 1 moved to dismiss under F.R.C.P. Rule 12(b)(7) for failure to join an indispensable party, arguing that Plaintiff should have joined the city. More ›

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Superior Court Orders Insurers to Pay Defense Costs to Sun-Times Media Group, Denies Insurers' Motion to Dismiss or Stay

Sun-Times Media Group, Inc. v. Royal & SunAlliance Ins. Co., C.A. No. 06C-11-108 RRC, 2007 WL 1811265 (Del. Super. Ct. June 20, 2007).

Sun-Times Media Group, Inc. v. Royal & SunAlliance Ins. Co., C.A. No. 06C-11-108 RRC, 2007 WL 1811266 (Del. Super. Ct. June 20, 2007).

This insurance coverage action is an offshoot of the highly publicized, allegedly fraudulent scheme devised by Lord Conrad Black and other inside directors of Plaintiff Sun-Times Media Group (formerly “Hollinger International”) to deceive the corporation and misappropriate hundreds of millions of dollars.

The plaintiffs claim to have incurred over $20 million in defense costs—and allege that they will incur nearly $20 million more—to defend themselves and their agents in multiple lawsuits resulting from this conduct, including a securities class action filed in Illinois (“Illinois Class Action”). Specifically, Plaintiff Sun-Times Media brought this action, seeking a declaration of coverage under its excess D&O insurance policies issued by the defendants. The plaintiffs argued that the defendants were obligated to pay those defense costs and had wrongfully refused to do so.

To this end, early in the litigation, Plaintiff Sun-Times Media moved for partial summary judgment, seeking a declaratory judgment that certain insurer defendants had a duty under applicable policies to pay past and future defense costs incurred in the Illinois Class Action. The defendants countered by moving to dismiss or stay the plaintiffs’ entire complaint, citing McWane and forum non conveniens. The court ruled on both motions, issuing separate opinions. More ›

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Superior Court Declines to Perform Post-Settlement Allocation of Class Claims and Holds Insurer Responsible for Negotiated Settlement and for Insured's Attorneys' Fees

Premier Parks, Inc. v. TIG Insurance Co., C.A. No. 02C-04-126-PLA, 2006 WL 2709235 (Del. Super. Ct. Sept. 21, 2006). The parties filed cross-motions for summary judgment on counterclaims in an ongoing declaratory judgment action. The plaintiff, TIG Insurance Company ("TIG"), sought a declaration that it was only liable to pay an allocated share of a global settlement that its insured, Six Flags, Inc. ("Six Flags") negotiated in a class action civil rights lawsuit that alleged that Six Flags had engaged in discriminatory practices at one of its amusement parks. TIG also sought a declaration that it was not responsible for covering the attorneys' fees that Six Flags incurred in defending the class action and negotiating the settlement. More › Share

Superior Court Grants Defendant Insurers' Motion to Dismiss Because Employees who Served as Directors and Officers Suffered No Loss to which D&O Insurance Coverage Applies

AT&T Corp. v. Clarendon America Insurance, C.A. No. 04C-11-167, 2006 WL 2685081 (Del. Super. Ct. Sept. 18, 2006). This case is part of a larger insurance coverage dispute involving Directors and Officers and Company Liability ("D&O") coverage purchased from certain of the defendants by plaintiff AT&T Corp. ("AT&T") and the company of which AT&T was the majority stockholder, the now-bankrupt At Home Corporation ("At Home"). AT&T sought D&O coverage in connection with several underlying shareholder suits brought against it and certain directors and officers of AT & T and At Home. The court previously decided the potential coverage liability under the AT&T D&O policies but not the At Home policies. See AT & T Corp. v. Clarendon America Ins. Co., C.A. No. 04C-11-167 (JRJ), 2006 WL 1382268 (Del. Super. Ct. Apr. 13, 2006, amended Apr. 25, 2006). At issue in this case are the D&O policies issued by the five defendant insurers to At Home, including the primary insurer and the four excess insurers (collectively, the "At Home Insurers"). The At Home Insurers moved to dismiss AT&T's complaint. More › Share

DuPont awarded partial summary judgment in insurance-civerage litigation relating to polybutylene piping

E.I. du Pont de Nemours & Company v. Allstate Insurance, Co., C.A. No. 99C-12-253 JTV, 2006 WL 2338045 (Del. Super. Ct. July 31, 2006). DuPont sued its excess insurance carriers for declaratory relief and damages in connection with a number of class-action lawsuits over the past 20 relating to polybutylene ("PB") piping. DuPont claimed that the defendant carriers were obligated under the terms of their respective policies to indemnify DuPont for liabilities arising from the sale of a product produced by DuPont and used by several other companies to make acetal fittings for polybutylene piping. As of this opinion, those liabilities totaled more than $235 million. Following discovery, the court granted DuPont's motion for summary judgment on several issues. More › Share

Superior Court Grants AT&T Corp. Leave to Appeal Interlocutory Order Granting Summary Judgment

AT&T Corp. v. Clarendon America Ins. Co., C.A. No. 04C-11-167(JRJ), 2006 WL 1360934 (Del. Super. Ct. May 18, 2006). On April 25, 2006, the Superior Court granted summary judgment in favor of multiple defendants. The plaintiff, AT&T, moved to certify an appeal pursuant to Rule 42, and the Superior Court granted AT&T leave to file and interlocutory appeal. On May 31, 2006, the Delaware Supreme Court accepted the interlocutory appeal as well. More › Share

Superior Court Finds that Settlement Agreement Did Not Require Insurance Companies to Reimburse Insureds for Money Paid to Cover Shortfalls in Payments to The Center for Claims Resolution by Defaulting Members

I.U. North America, Inc. v. A.I.U. Ins. Co., 896 A.2d 880 (Del. Super. Ct. 2006). This case involved claims for breach of contract and for declaratory judgment and ancillary relief to determine the responsibility for payment of liabilities incurred as a result of numerous claims and actions seeking to recover damages allegedly due to exposure to asbestos resulting from the conduct of the plaintiffs. The plaintiffs, the insureds, argued that a settlement agreement to resolve coverage issues arising out of asbestos claims required insurer to indemnify insureds for payments on behalf of defaulting parties to settlements. The plaintiffs moved for summary judgment, and the Superior Court found that the settlement agreement did not require insurer to reimburse insureds for payments on behalf of defaulting parties. More › Share

Superior Court Grants Summary Judgment to Insurers, Finding that Certain of AT & T's D & O Policies Do Not Cover Claims in Underlying Litigation

AT&T Corp. v. Clarendon America Ins. Co., C.A. No. 04C-11-167 (JRJ), 2006 WL 1382268 (Del. Super. Ct. April 25, 2006). This was an insurance coverage case involving Directors and Officers and Company ("D & O") liability policies purchased by plaintiff AT & T Corp. ("AT & T") and At Home Corp. ("At Home") from various primary and excess insurers. AT & T sought coverage, including indemnity, payment of defense fees, costs, and settlements or judgments, relating to several underlying shareholders suits brought against AT & T and certain officers and directors of AT & T and At Home. The defendants brought motions for partial summary judgment, alleging that AT & T's clams fell outside the scope of coverage under the D & O policies. Ultimately, the court granted the defendants' motions. More ›

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Delaware Supreme Court Grants Summary Judgment in Favor of Insurer Where Decedent's Worker's Compensation Carrier Could Not be Identified and Thus Could Not be Deemed an "Insolvent Insurer"

Delaware Insurance Guaranty Association v. Pickering, C.A. No. 04C-09-240 (MMJ), 2006 WL 1067317 (Del. Supr. April 10, 2006). Prior to death, decedent Logan sought worker's compensation benefits arising from injury caused by occupational exposure to asbestos while employed by H. C. Moore. When the employer's worker's compensation carrier could not be identified, the Delaware Industrial Accident Board (the "Board") ordered Delaware Insurance Guaranty Association ("DIGA") to appear and defend Logan's claim. DIGA moved for Summary Judgment. The Court entered judgment in favor of DIGA on the grounds that 18 Del. C. § 4204 authorized only the payment of valid covered claims existing prior to (or shortly after) an order of liquidation of an insolvent insurer.

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Court of Chancery Interprets Indemnification Provisions as Not Permitting Indemnification by Re-Organized Company While Permitting Indemnification by Pre-Organized Company

Levy v. Hayes Lemmerz International Inc., C.A. No. 1395-N, 2006 WL 985361 (Del. Ch. Apr. 5, 2006). The plaintiffs in this case sought indemnification for a settlement of claims against them for $27.5 million, paying $7.2 million out of their own pockets. The plaintiffs were former outside directors of a public company engaged in the automobile supply trade who were sued by both stockholders and bondholders of that company for various statutory violations and breaches of fiduciary duty when the company was forced to reveal that some of its financial statements contained materially misleading information. The corporation that the plaintiffs served ("Old Hayes") entered Chapter 11 bankruptcy and emerged as the operating subsidiary of a new entity ("New Hayes"). When the plaintiffs sought indemnification for the settlement under the old corporation's bylaws, their individual indemnification plans, and the bankruptcy reorganization plan, both Old Hayes and New Hayes refused. The Court of Chancery dismissed the plaintiffs' claims as to New Hayes, which the court found as a matter of law had no obligation to indemnify its predecessors' former directors and officers; however, the court denied the motion to dismiss as to the old company because the directors had a right to proceed with their claim for indemnification against Old Hayes. More ›

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District Court Enjoins Plaintiff from Initiating Third-Party Proceedings Against Defendants and from Pursuing Global Settlement Strategy in Pending Asbestos Cases

Flowserve Corp. v. Burns Int'l Servs. Corp., C.A. No. 04-1294-JJF, 2006 WL 739886 (D. Del. Mar. 22, 2006). Plaintiff filed a complaint seeking a declaratory judgment of its right to indemnification in asbestos litigation under the terms of a stock purchase agreement executed by its predecessor-in-interest, which had acquired a subsidiary of Borg-Warner Corp. ("BWC"). Defendant Burns International Services Corp. ("Burns"), which had purchased BWC's insurance assets at a liquidation sale, filed a counterclaim alleging that its indemnification obligations to plaintiff only arose out of a later letter agreement, and that once BWC's insurance was exhausted, plaintiff had to pay the costs of defending and resolving the asbestos claims. During the pendency of the instant case, plaintiff informed Burns that (i) it had terminated the counsel chosen by Burns to defend the asbestos claims; (ii) it was choosing its own counsel; and (iii) it was directing its new counsel to file third-party complaints against defendants and to pursue global settlements in the underlying asbestos cases (together, the "threatened actions"). Burns then sought a temporary restraining order and preliminary injunction to enjoin plaintiffs from taking the threatened actions. More ›

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Superior Court Finds that Insurers Are Not Yet Obligated to Reimburse AT&T for Funds Used for Shareholder Settlement and Grants Insurers' Motions to Dismiss Claims For Reimbursement of Settlement

AT&T Wireless Services, Inc. v. Federal Ins. Co., 03C-12-232 WCC, 2006 WL 267135 (Del. Super. Ct. Jan. 31, 2006). In 2002 AT & T Wireless Services, Inc. ("AWS") merged with TeleCorp PSC, Inc. Following the merger the TeleCorp shareholders filed a derivative action alleging that the TeleCorp directors had breached their fiduciary duties. The Court of Chancery approved a settlement of $47.5 million. AWS filed an action in Superior Court seeking reimbursement from TeleCorp's insurance carries and its own primary insurer, Faraday Capital Limited ("Faraday"), and its excess insurer, National Union Fire Insurance Company ("National Union"). AWS voluntarily dismissed Faraday. Subsequently, pursuant to Rule 12(b)(6), the insurers moved to dismiss, and the court granted their motions to dismiss the claims relating to reimbursement for the settlement. However, the court denied TeleCorp's primary insurer's motion to dismiss the claim for defense costs. More › Share

Delaware Supreme Court Reverses Superior Court and Finds that Defendant Became an "Insured" for Purposes of 18 Del. C. § 4211(2)(a) by Operation of Law after Named Insured Merged Into Defendant

Delaware Ins. Guar. Ass'n v. Christiana Care Health Services, Inc., No. 244, 2005, 2006 WL 196382 (Del. Jan. 24, 2006). The Delaware Insurance Guaranty Association ("DIGA") sought reimbursement from Christiana Care Health Services ("CCHS") pursuant to one of the Delaware Insurance Guaranty Association Act's provisions for claims paid on behalf of an insolvent insurer. In this case the insolvent insurer had insured a corporation that merged into CCHS. The Superior Court granted CCHS's motion for summary judgment, finding that CCHS was not an "insured" under the insurance policy. Reversing the lower court, the Delaware Supreme Court found that a court must consider the purpose and intent of 18 Del. C. § 4211 when determining if a company is an "insured." A court may not rely on terms in an insurance policy that are inconsistent with the purpose and intent of Section 4211. The Supreme Court found that CCHS became an insured after the named insured merged into the defendant, and CCHS is obligated to reimburse DIGA pursuant to Section 4211. More › Share

Choice of Law Analysis: Delaware's "Continuous Trigger" Theory vs. Alabama's Reliance on the "Exposure Trigger" Theory

Shook & Fletcher Asbestos Settlement Trust v. Safety National Casualty Corp., 04C-02-087 MMJ, 2005 WL 2436193 (Del. Super. Ct. Sept. 29, 2005). Plaintiff Shook & Fletcher Asbestos Settlement Trust, as Successor to Certain Assets and Liabilities of Shook & Fletcher Insulation Company ("Shook & Fletcher"), brought an action to establish coverage for asbestos bodily injury claims under three excess liability policies issued by Safety National Casualty Company, successor to Safety Mutual Casualty Corporation ("Safety"), for policy years 1983 through 1985. The parties moved for summary judgment on various issues, including the choice of law and what act "triggered" the insurance coverage. The court found that Alabama law governed the insurance policies. The Court also determined that a conflict between Delaware and Alabama law exists because Delaware has adopted the "continuous trigger" standard. Because the choice of law analysis favored Alabama, that state's "exposure trigger" standard governed. More › Share

Superior Court Prevents AT&T From Voluntarily Dismissing the Majority of Defendants

AT&T Wireless Services, Inc. v. Federal Ins. Co., 2005 WL 2155695 (Del. Super. Ct. Aug. 18, 2005). The Plaintiff filed a notice of partial dismissal in an attempt to dismiss certain defendants. The defendants who were purportedly dismissed moved to quash the notice of dismissal. The court found that one defendant insurer could be dismissed because the entire action was being voluntarily dismissed. However, the court granted the motion to quash as to the other defendant because the dismissal only eliminated certain claims as opposed to the entire action. Plaintiff also sought leave of the court to dismiss a second group of defendants pursuant to Rule 41(a)(2). The court denied this motion. More › Share