First State Insurance Co. v. Ferguson Enterprises, Inc.

          RULING AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

          Victor A. Bolden United States District Judge

         On November 4, 2016, First State Insurance Company filed a Complaint seeking a declaratory judgment that various insurance companies refused to pay their fair share of costs under insurance policies held by Ferguson Enterprises, Inc. (“Ferguson”), the successor of Familian Corporation (“Familian”). Complaint, dated Nov. 4, 2016 (“Compl.”), ECF No. 1; see also Amended Complaint, dated Jan. 11, 2017 (“Am. Compl.”), ECF No. 55. On July 24, 2017, First State Insurance Company filed a Second Amended Complaint, joining an additional plaintiff, New England Reinsurance Corporation (together, both entities are hereafter referred to as “First State, ” following the language of the Second Amended Complaint). Second Amended Complaint, dated July 24, 2017 (“Second Am. Compl.”), ECF No. 147.

         A number of the parties have moved for summary judgment:

         On January 8, 2018, First State moved for partial summary judgment on the number of aggregate limits provided by a policy issued by Swiss Reinsurance America Corporation as successor-in-interest to Forum Insurance Company (“Swiss Re”). First State's Motion for Summary Judgment on the Number of Aggregate Limits, dated Jan. 8, 2018 (“First State Mot.”), ECF No. 161. That same day, Ferguson also moved for partial summary judgment on the Swiss Re policy's liability limits. Ferguson's Motion for Partial Summary Judgment on the Swiss Re Policy's Limits of Liability, dated Jan. 8, 2018 (“Ferguson Mot. on Swiss Re”), ECF No. 162.

         On March 1, 2018, Swiss Re moved for partial summary judgment on the aggregate limits of its policy. Swiss Re's Motion for Partial Summary Judgment, dated Mar. 1, 2018 (“Swiss Re Mot.”), ECF No. 179.

         On April 30, 2018, American Home Assurance Company (“American Home”) moved for partial summary judgment and claimed that First State's claims are barred by the statute of limitations. American Home's Motion for Partial Summary Judgment (Statute of Limitations), dated Apr. 30, 2018 (“Am. Home Mot. on SOL”), ECF No. 191. That same day, American Home also moved for partial summary judgment on the aggregate limits under the policy it issued to Familian. American Home's Motion for Partial Summary Judgment (Aggregate Limits), dated Apr. 30, 2018 (“Am. Home Mot. on Agg. Limits”), ECF No. 192.

         On June 4, 2018, Columbia Casualty Company and The Continental Insurance Company (together, “CNA”) moved for partial summary judgment, arguing that certain claims against them are barred by the statute of limitations, and for partial joinder of American Home's motion for partial summary judgment on the statute of limitations, to the extent that it asks the Court to impose a limitations period on First State's claims with respect to past settlements. CNA's Motion for Partial Summary Judgment (Statute of Limitations), dated June 4, 2018 (“CNA Mot.”), ECF No. 197.

         Also, on June 4, 2018, Ferguson moved for partial summary judgment on the limits of liability of American Home's policy. Ferguson's Motion for Partial Summary Judgment on American Home Policy's Limits of Liability, dated June 4, 2018 (“Ferguson Mot. on Am. Home”), ECF No. 204.

         For the following reasons, First State's motion for partial summary judgment against Swiss Re, ECF No. 161, is DENIED. Ferguson's motion for partial summary judgment against Swiss Re, ECF No. 162, is DENIED. Swiss Re's motion for summary judgment on the aggregate limits of its policy, ECF No. 179, is GRANTED.

         American Home's motion for summary judgment on aggregate limits, ECF No. 192, is GRANTED. Ferguson's motion for summary judgment against American Home, ECF No. 204, is DENIED.

         American Home's motion for summary judgment on the statute of limitations, ECF No. 191, is GRANTED. CNA's motion for summary judgment and partial joinder, ECF No. 197, is GRANTED.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. Factual Allegations

         1. The Relevant Insurance Policies

         First State alleges that, through a series of corporate transactions, Ferguson is the successor in interest to Familian. Second Am. Compl. ¶¶ 1-2. Familian allegedly “is a pipe and supply distributor for the plumbing and contractor industries, ” and from the 1950's until the 1970's “supplied certain products that allegedly contained asbestos.” Id. ¶ 40. Since at least 1997, Ferguson has been named as a defendant in hundreds of lawsuits related to “bodily injuries allegedly caused by products sold by Familian that allegedly contained asbestos, in particular vent and flue pipe.” Id. ¶¶ 42-43. Ferguson claims entitlement to insurance coverage for the underlying lawsuits under insurance policies issued by First State and the Defendant Insurers. Id. ¶ 4.

         Ferguson allegedly “tendered the Underlying Lawsuits to its primary insurers until approximately 2002, when its primary insurers asserted that they no longer had any coverage obligations to Ferguson or its predecessors for the Underlying Lawsuits under their primary policies because their primary policies had been exhausted.” Id. ¶ 44.

         On October 11, 2002, Ferguson allegedly sought coverage from First State. Id. ¶ 45. First State agreed to contribute “subject to a full reservation of rights, including the right to seek reimbursement or contribution from Ferguson and any other insurer[.]” Id. First State has allegedly “paid and continues to pay a share of Ferguson's defense and indemnity costs incurred in connection with the Underlying Lawsuits under the First State Policies.” Id. ¶ 46.

         First State alleges that the Defendant Insurers or Doe Insurers issued umbrella or excess liability insurance policies “to Familian or its alleged predecessors or successors that Ferguson alleges provide coverage to Ferguson for the Underlying Lawsuits.” Id. ¶ 25. First State alleges that the Defendant Insurers provided umbrella or excess policies to Familian over the following time periods:

• American Home, from March 5, 1974 to March 15, 1977, id. ¶ 26;

• Central National Insurance Company of Omaha (“Central National”), from March 5, 1979 to April 1, 1980, and from April 1, 1980 to April 1, 1981, id ¶ 27;

• Century Indemnity Company (“Century”), from April 1, 1984 to December 18, 1984, id. ¶ 28;

• Columbia Casualty Company (“Columbia”), from March 15, 1978 to March 15, 1979, id.¶ 29;

• Federal Insurance Company (“Federal”), from April 1, 1981 to April 1, 1982, id ¶ 30;

• Fireman's Fund Insurance Company (“Fireman's Fund”), from April 1, 1982 to April 1, 1983, and from April 1, 1983 to April 1, 1984, id. ¶ 31;

• Swiss Re, from December 18, 1984 to April 1, 1986, id. ¶ 32;

• Granite State Insurance Company, from April 1, 1985 to April 1, 1986, id. ¶ 33;

• Harbor Insurance Company, from March 15, 1978 to March 15, 1979, id ¶ 34; and

• Insurance Company of the State of Pennsylvania, from March 15, 1977 to March 15, 1978, id. ¶ 35.

         First State alleged that Doe Insurers also “may have issued policies to Familian that may provide coverage for the Underlying Lawsuits, ” and stated that “[w]hen the true names and capacities of the Doe Insurers have been ascertained, First State will seek to amend this Amended Complaint to include such true names and capacities.” Id. ¶ 36.

         First State alleges that First State Insurance Company issued “the following umbrella and/or excess policies to Familian that Ferguson alleges provide coverage to Ferguson for the Underlying Lawsuits: Policy No. 924478 (Policy Period March 23, 1977 to March 15, 1978), Policy No. 909537 (Policy Period March 15, 1978 to March 15, 1979), Policy No. 951240 (Policy Period April 1, 1982 to April 1, 1983), Policy No. 953803 (Policy Period April 1, 1983 to April 1, 1984), Policy No. 955231 (Policy Period April 1, 1984 to December 18, 1984), and Policy No. EU 002664 (Policy Period April 1, 1985 to April 1, 1986).” Id. ¶ 37. First State further alleges that New England Reinsurance Corporation issued the following umbrella or excess policies to Familian that Ferguson alleges provides coverage: Policy No. 686792 (Policy Period April 1, 1981 to April 1, 1982). Id. ¶ 38.

         Since at least 2003, First State alleges that, “First State and certain of the Defendant Insurers have been participating in the defense and indemnification of Ferguson in connection with the Underlying Lawsuits, ” but “certain of the participating Defendant Insurers have refused to pay their fair share of past costs in connection with the Underlying Lawsuits, ” or have refused to participate in defending or indemnifying Ferguson at all. Id. ¶ 5.

         First State alleges that “American Home, [Insurance Company of the State of Pennsylvania], Central National, and Swiss Re also have participated in the defense and settlement of the Underlying Lawsuits under some or all of their respective policies, but on information and belief have paid less than their respective allocable shares.” Id. ¶ 47. American Home allegedly “participated in the defense and indemnification of Familian under a cost-share percentage that it negotiated with the participating insurers on the basis that it had provided coverage to Familian under a policy in effect from March 5, 1976 through March 15, 1977, ” but First State alleges that the American Home policy “was actually in effect from March 5, 1974 through March 15, 1977.” Id. ¶ 48. First State alleges that it “paid more than its appropriate share of defense and indemnity costs and the other participating insurers paid less than their appropriate shares.” Id. ¶ 50.

         First State also alleges that it “is currently paying more than its appropriate share of defense and indemnity costs because, on information and belief, Columbia issued an excess insurance policy to Familian but Columbia has refused to participate in the defense and/or indemnification of Ferguson in connection with the Underlying Lawsuits, even though the primary and umbrella policies underlying its policy are exhausted.” Id. ¶ 51.

         B. Procedural History

         On November 4, 2016, First State Insurance Company filed a Complaint for Declaratory Judgment against ACE Property & Casualty Insurance Company, American Home Assurance Company, Columbia Casualty Company, Continental Insurance Company (successor-in-interest to Harbor Insurance Company), Federal Insurance Company, Fireman's Fund Insurance Company, Granite State Insurance Company, Insurance Company of the State of Pennsylvania, Swiss Reinsurance America Company (successor-in-interest to Forum Insurance Company) (together, “Defendant Insurers”), and Ferguson Enterprises, Inc. See Compl.

         On January 11, 2017, First State Insurance Company filed an Amended Complaint for Declaratory Relief against American Home Assurance Company, Central National Insurance Company of Omaha, but only as to policies issued by Cravens, Dargan & Company, Pacific Coast, and its subsidiaries, Century Indemnity Company, formerly known as CCI Insurance Company, formerly known as Insurance Company of North America, Columbia Casualty Company, The Continental Insurance Company (successor-in-interest to Harbor Insurance Company), Federal Insurance Company, Fireman's Fund Insurance Company, Granite State Insurance Company, Insurance Company of the State of Pennsylvania, Swiss Reinsurance America Company (successor-in-interest to Forum Insurance Company) (together, “Defendant Insurers”), and Ferguson Enterprises, Inc. See Am. Compl.

         On July 24, 2017, First State and New England Reinsurance Corporation (together, “First State”) filed a Second Amended Complaint on consent against American Home Assurance Company, Central National Insurance Company of Omaha, but only as to policies issued by Cravens, Dargan & Company, Pacific Coast, and its subsidiaries, Century Indemnity Company, formerly known as CCI Insurance Company, formerly known as Insurance Company of North America, Columbia Casualty Company, The Continental Insurance Company (successor-in-interest to Harbor Insurance Company), Federal Insurance Company, Firemen's Fund insurance Company, Granite State Insurance Company, Insurance Company of the State of Pennsylvania, Swiss Reinsurance America Company (successor-in-interest to Forum Insurance Company) (together, “Defendant Insurers”), and Ferguson Enterprises, Inc. See Second Am. Compl.

         The Second Amended Complaint asserts six claims for relief: (1) declaration of coverage of whether and to what extent the Defendant Insurers “are obligated under their respective policies to defend Ferguson or to reimburse it for defense costs incurred in connection with the Underlying Lawsuits”; (2) declaration of coverage of whether and to what extent the Defendant Insurers are obligated to indemnify Ferguson or reimburse it for indemnity costs incurred in connection with the Underlying Lawsuits; (3) declaration of the Defendant Insurers' “respective allocable shares, if any, of the past and/or future defense costs incurred in the Underlying Lawsuits”; (4) declaration of the Defendant Insurers' “respective allocable shares, if any, of the past and/or future indemnity costs incurred in the Underlying Lawsuits”; (5) if First State is found to have paid more than its share of the defense or indemnity costs, declaration that First State is entitled to reimbursement for the appropriate share of their defense and indemnity payments; and (6) declaration that First State is “equitably subrogated to Ferguson's rights against certain of the defendant insurers and/or the Doe Insurers to recover the above-described defense and indemnity amounts owed by certain Defendant Insurers and/or Doe Insurers.” Second Am. Compl. ¶¶ 52-71.

         On January 8, 2018, First State moved for partial summary judgment on the number of aggregate limits provided by a policy issued by Swiss Re, based on umbrella or excess policies issued to Familian covering the period between December 18, 1984 and April 1, 1986 (“Swiss Re Umbrella Policy”). First State Mot. That same day, Ferguson moved for partial summary judgment on the number of aggregate limits in Swiss Re's insurance policy. Ferguson Mot. on Swiss Re. Both First State and Ferguson argue that the Court should construe the 15.5-month policy as containing two aggregate limits of $5 million each, resulting in total liability for Swiss Re of $10 million. See Memorandum of Law in Support of First State Mot., dated Jan. 8, 2018 (“First State Mem.”), annexed to First State Mot., ECF No. 161-1; Memorandum of Law in Support of Ferguson Mot. on Swiss Re., dated Jan. 8, 2018 (“Ferguson Mem. on Swiss Re”), annexed to Ferguson Mot. on Swiss Re., ECF No. 162-7.

         On March 1, 2018, Swiss Re filed a motion for partial summary judgment on the aggregate limits in its insurance policy, arguing that the policy “has a single $5 million aggregate limit, and there is no dispute that [Swiss Re] has paid the full $5 million to or on behalf of Familian.” Memorandum of Law in Support of Swiss Re Mot., dated Jan. 8, 2018 (“Swiss Re Mem.”), annexed to Swiss Re Mot., ECF No. 179-1, at 1.

         On April 30, 2018, American Home Assurance Company (“American Home”) moved for partial summary judgment, arguing that First State's claims are barred by the statute of limitations. Memorandum of Law in Support of Am. Home Mot. on SOL, dated Apr. 30, 2018 (“Am. Home Mem. on SOL”), annexed to Am. Home Mot. on SOL, ECF No. 191-1. That same day, American Home also moved for partial summary judgment on separate grounds, arguing that the aggregate limits under the policy it issued to Familian remained $30 million despite a brief ten-day extension of that policy. Memorandum of Law in Support of American Home Mot. on Agg. Limits, dated Apr. 30, 2018 (“Am. Home Mem. on Agg. Limits”), annexed to Am. Home Mot. on Agg. Limits, ECF No. 192-1.

         On June 4, 2018, Columbia Casualty Company and The Continental Insurance Company (together, “CNA”) moved for partial summary judgment on the application of the statute of limitations, arguing that a significant portion of First State's claims against CNA are barred by the statute of limitations. Memorandum of Law in Support of CNA Mot., dated June 4, 2018 (“CNA Mem.”), ECF No. 197-1, at 2.

         Also on June 4, 2018, Ferguson moved for partial summary judgment on the limits of liability of American Home's policy, arguing that American Home's policy has a total of $40 million in aggregate limits over four annual periods. Memorandum of Law in Support of Ferguson Mot. on American ...