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Fulton Boiler Works, Inc. v. AM. Motorists Ins. Co.

March 25, 2010

FULTON BOILER WORKS, INC., PLAINTIFF,
v.
AM. MOTORISTS INS. CO.; AM MFR. MUT. INS. CO; ONEBEACON INS. CO.; EMPLOYERS INS. CO. OF WAUSAU; TRAVELERS CAS. & SUR. CO.; AND NATIONWIDE MUT. INS. CO., DEFENDANTS,
AM. MOTORISTS INS. CO.; AND AM. MFR. MUT. INS. CO., THIRD-PARTY PLAINTIFFS,
v.
EMPLOYERS INS. CO. OF WAUSAU; TRAVELERS; AND NATIONWIDE MUT. INS. CO., THIRD-PARTY DEFENDANTS.
ONEBEACON INS. CO., AS SUCCESSOR TO COMMERCIAL UNION INS. CO. THIRD-PARTY PLAINTIFF,
v.
EMPLOYERS INS. CO. OF WAUSAU; NATIONWIDE MUT. INS. CO.; AND THE TRAVELERS CAS. AND SUR. CO., F/K/A THE AETNA CAS. AND SUR. CO., THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Hon. Glenn T. Suddaby, United States District Court Judge

DECISION and ORDER

This insurance contract action was filed by Fulton Boiler Works, Inc., ("Plaintiff") against American Motorists Insurance Company, American Manufacturers Mutual Insurance Company (collectively "Kemper"), and OneBeacon Insurance Company ("OneBeacon"), as successor to Commercial Union Insurance Company. Subsequently, Kemper filed a Third Party Complaint against Employers Insurance Company of Wausau ("Wausau), Nationwide Mutual Insurance Company ("Nationwide"), and The St. Paul Travelers, a company that later identified The Travelers Companies, Inc., as a Corporate Parent.*fn1

Currently before the Court are the following four motions: (1) Plaintiff's motion for partial summary judgment (Dkt. No. 105); (2) Defendant Travelers Casualty & Surety Company's Cross-Motion for Declaratory Judgment (Dkt. No. 111); (3) Defendant Wausau and Defendant Nationwide's motion for Declaratory Judgment (Dkt. No. 113); and (4) Defendant OneBeacon's cross-motion for summary judgment (Dkt. No. 115). For the reasons set forth below, Plaintiff's motion is granted in part and denied in part, and Defendants' cross-motions are denied.

I. BACKGROUND

A. Procedural History

On April 25, 2006, Plaintiff filed a Complaint against Kemper and OneBeacon, as successor to Commercial Union Insurance Company. (Dkt. No. 1, Attach. 1.) On September 18, 2006, this action was removed to federal court by Defendant OneBeacon. (Dkt. No. 1.) On October 30, 2006, Defendant Kemper filed a cross-claim against Defendant OneBeacon. (Dkt. No. 7.) On November 9, 2006, Defendant Kemper filed a Third Party Complaint against Wausau, Nationwide, and The St. Paul Travelers. (Dkt. No. 8.) On May 24, 2007, The St. Paul Travelers identified The Travelers Companies, Inc., as a Corporate Parent (collectively "Travelers"). (Dkt. No. 32.) On July 23, 2007, Defendant OneBeacon filed a Third Party Complaint against Wausau, Nationwide, and The St. Paul Travelers. (Dkt. No. 33.) On October 31, 2007, Defendant Kemper filed an Amended Answer to the Complaint, a counterclaim against Plaintiff, and a cross-claim against OneBeacon. (Dkt. No. 37.)

On December 19, 2008, Plaintiff filed an Amended Complaint against OneBeacon, Wausau, Nationwide, The St. Paul Travelers, and Kemper (collectively "Defendants"). (Dkt. No. 93.) On January 9, 2009, Defendant OneBeacon filed a cross-claim against Wausau, Nationwide, Kemper, The St. Paul Travelers, and Travelers Casualty & Surety Company, and a counterclaim against Plaintiff. (Dkt. No. 95.) On February 3, 2009, Travelers Casualty & Surety Company filed a cross-claim against Kemper and OneBeacon (as successor to Commercial Union Insurance Company), and a counterclaim against Plaintiff. (Dkt. No. 101.)

B. Plaintiff's Claims

Generally, in its Amended Complaint, Plaintiff alleges that, "[b]eginning in or about the early 1990s, [Plaintiff] has been named as a defendant in thousands of lawsuits in New York and elsewhere, alleging bodily injury, wrongful death or other damages related to or arising out of boilers that Plaintiff manufactured (the "Asbestos Claims"). (Dkt. No. 93.) As a result, Plaintiff alleges that it has made insurance claims regarding these Asbestos Claims to Defendant OneBeacon and Defendant Kemper, and that these insurance claims were initially accepted (whereupon Defendants paid for Plaintiff's defense in the lawsuits, settling many of them instead of going to trial). (Id.) However, Plaintiff alleges that, in 2005, Defendant Kemper and Defendant OneBeacon demanded more money or they would revoke coverage. (Id.)

Based on these allegations, Plaintiff asserts the following three claims: (1) a claim for equitable estoppel/waiver; (2) a claim for a declaratory judgment confirming Defendants' collective obligation to defend and indemnify Plaintiff in connection with its asbestos liabilities; and (3) a claim for damages for breach of insurance contract. (Id.) As relief, Plaintiff "seeks a judgment confirming the insurers' collective obligation to defend and indemnify as well as damages for breach of contract." (Id.)

Familiarity with the remaining factual allegations supporting these claims in Plaintiff's Amended Complaint is assumed in this Decision and Order, which is intended primarily for review by the parties. (Id.)

C. Defendant OneBeacon's Claims Asserted in Its Third Party Complaint

Generally, in its Third Party Complaint, Defendant OneBeacon alleges that, although Plaintiff commenced the current action against only OneBeacon and Kemper, "an 'insurance archaeologist' [has] identified potential policies in addition to OneBeacon and Kemper's, including [policies issued by] Wausau and Travelers." (Dkt. No. 33, at ¶¶ 8-15.) In addition, OneBeacon alleges that "the second third party defendants (i.e., Travelers, Nationwide and Wausau) ha[ve] been put on notice of the Asbestos Claims[, and] have neither disclaimed nor acknowledged fully their obligations under their policies for the Asbestos Claims." (Id. at ¶¶ 16, 17.) As a result, OneBeacon seeks a declaratory judgment declaring (1) that "the third party defendants are obligated to reimburse OneBeacon for each of their pro-rata shares of the costs of defense and indemnity incurred as a result of the Asbestos Claims, in an amount to be determined, but in excess of the jurisdictional minimum of this Court," and (2) "that the third party defendants are obligated to afford coverage for the defense and indemnity pertaining to the Asbestos Claims in all aspects for their pro-rata shares of the costs of the defense and indemnity, in an amount to be determined, but in excess of the jurisdictional minimum of this Court." (Id. at ¶¶ 26, 28.)

D. The Counterclaims Asserted By Defendants OneBeacon, Kemper, and Travelers

Defendants OneBeacon, Kemper, and Travelers each filed separate counterclaims against Plaintiff. (Dkt Nos. 95, 98, 101.) However, generally, each counterclaim asserts the same claim and seeks the same relief. More specifically, each counterclaim asserts a claim for a declaratory judgment confirming that Plaintiff is obligated to pay its pro-rata share of the costs of defense and indemnity incurred as a result of the Asbestos Claims. (Dkt Nos. 95, 98, 101.) In addition, Defendant OneBeacon's counterclaim asserts the following two claims: (1) a claim for declaratory judgment confirming that Plaintiff is obligated to participate and contribute to the ongoing costs of defense and indemnity incurred as a result of the Asbestos Claims; and (2) a claim for declaratory judgment confirming that OneBeacon does not owe additional monies toward any short-fall in payments for defense of Asbestos Claims. (Dkt. No. 95.)

E. Undisputed Material Facts

Generally, the undisputed material facts of this case are as follows.*fn2 Asbestos cases typically share certain characteristics. For example, an underlying asbestos plaintiff generally sues dozens of parties that, he or she alleges, manufactured asbestos containing products to which he or she was exposed. The underlying complaints, however, usually ...


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