November 25, 2013
Millennium Holdings LLC & THE NORTHERN ASSURANCE COMPANY OF AMERICA, Plaintiffs, and CERTAIN UNDERWRITERS AT LLOYD'S, LONDON & CERTAIN LONDON MARKET INSURANCE COMPANIES, Intervenor Plaintiffs,
The Glidden Company, n/k/a AKZO NOBEL PAINTS LLC, Defendant.
Tannenbaum Helpern Syracuse & Hirschtritt LLP, for the Resolute Plaintiffs.
Debevoise & Plimpton LLP, for defendants.
Shirley Werner Kornreich, J.
Motion sequence numbers 008 and 009 are consolidated for disposition.
Plaintiff Northern Assurance Company of America (Northern) and intervener plaintiffs, Certain Underwriters at Lloyd's, London and Certain London Market Insurance Companies (the London Insurers), through their third-party claims administrator, Resolute Management, Inc. (collectively, the Resolute Plaintiffs), move for partial summary judgment on liability pursuant to CPLR 3212. Seq. 008. Defendant, The Glidden Company, n/k/a, Akzo Nobel Paints LLC (ANP), also moves for summary judgment. Seq. 009. For the reasons that follow, the court rules in favor of the Resolute Plaintiffs on their interpretation of the subject indemnification provision. Nonetheless, the court grants summary judgment to ANP on the antisubrogation issue and dismisses the action.
Procedural History & Factual Background
This action concerns insurance coverage for claims arising out of lead paint litigation. The material facts are not in dispute. However, the case cannot be understood without explaining the complex corporate history and prior related litigation.
Glidden's Corporate History
In 1917, The Glidden Company (Glidden I) was incorporated in Ohio. In the 1920s, Glidden I used a vertical-integration strategy to build a "paint empire". That is, the company owned and controlled all essential components required for manufacturing paint, which at the time included lead. As part of this strategy, Glidden I acquired the Euston Lead Company, the owner of a plant that made dry lead pigment for use in paint and other lead-related paint products. Glidden I considered this pigment to be "one of the most important basic materials in the manufacture of paints." In 1958, Glidden I sold the Euston plant and stopped manufacturing this pigment, but continued to manufacture and sell paint containing lead. In 1967, the SCM Corporation (SCM) purchased Glidden I and placed all of its assets in a division called the Glidden-Durkee Division. The London Insurers issued primary and excess policies in favor of SCM and its Glidden-Durkee Division for the period of 1962 to 1970. Northern's predecessor (Employer's Surplus Lines) also issued an excess policy to SCM but for the period June 27, 1968 to January 1, 1970. The policies covered liability for property damage caused during these years (i.e. they are relevant to claims made more recently, which arose out of lead paint exposure during that time). The Resolute Plaintiffs have paid litigation costs and funded settlements under these polices.
The policies issued between 1965 and 1968 contain an express subrogation clause.  In addition, all of the policies issued between 1962 and 1970 contain an "other insurance" clause, which provides that if other coverage exists for a claim, the subject polices shall be treated as excess. 
The Breakup of Glidden's Businesses
In 1985, Hanson Trust PLC (Hanson) attempted a hostile takeover of SCM. Before Hanson managed to acquire SCM, SCM transferred the assets of its "crown jewel" pigments business to a new subsidiary, called ABC Chemicals Inc. (ABC). In 1986, Hanson successfully acquired SCM in a hostile takeover. Shorty thereafter, Hanson caused SCM to adopt a liquidation plan, under which SCM transferred the assets and liabilities of its various businesses to 20 "fan companies", named HSCM-1 though HSCM-20. SCM transferred the assets and liabilities of the Glidden paints and coatings business to HSCM-6 pursuant to a Memorandum of Distribution in Liquidation dated August 12, 1986. This memorandum stated that HSCM-6 received:
all right title and interest of SCM in all of the property, rights and assets relating to the business (the "Business") of developing, manufacturing, marketing, selling and distributing paints, industrial coatings, resins and adhesives in the U.S. including "Glidden" and "Macco" products.
HSCM-6 also "assume[d] all of the obligations and liabilities relating to the Business, including all claims attributable to all periods prior to [August 12, 1986]. HSCM-20 owned all of the stock of HSCM-6. HSCM-20 also owned ABC. As a result, HSCM-20 separately owned both SCM's paint business (HSCM-6) and SCM's pigment business (ABC).
Shortly after the "fan company" distributions were made, HSCM-20 sold HSCM-6 to ICI American Holdings, Inc. (ICIAH), a subsidiary of Imperial Chemical Industries PLC (ICI), for $560 million. The sale was memorialized in a purchase agreement dated August 14, 1986 (the Agreement). In conjunction with the execution of the Agreement, Hanson entered into a Side Letter Agreement with ICI (the Side Letter), whereby Hanson agreed to provide ICI with the benefit of its insurance coverage (supposedly, the above-mentioned policies that applied to HSCM-6, which was being sold to ICIAH). The sale closed on October 31, 1986.
The Indemnity Provisions
The Agreement contains complicated indemnity provisions. ICIAH's Assistant General Counsel testified that these indemnity provisions, discussed in detail below, were agreed to because:
there was a coatings business that was formerly owned by either Glidden or SCM [a]nd that company was now defunct and I was concerned that through some principles of successor liability that the coatings liability might be visited upon [the new Glidden entity, which, as discussed below, later became ANP].
Kelly Dep. at 191. The indemnity provisions cover claims that predate the closing date of October 31, 1986. For the first 8 years after the closing (through October 31, 1994), ICIAH receives indemnity from HSCM-20. The amount of the indemnity decreases gradually, until it expires in 1994.  Then, from 1994 onward, the indemnity "flips over", such that ICIAH indemnifies HSCM-20. However, the language of both "sides" of the indemnity provisions is not exactly the same. The scope of the relevant portion of HSCM-20's indemnity obligations is set forth in Section 9.1(c) of the Agreement, which states that HSCM-20 would indemnify ICIAH for claims arising from:
product safety or liability, health or welfare conditions or matters arising from or relating to acts, omissions, events or conditions of or relating to the Business, the Predecessor Business or the Former Business occurring or existing prior to the Closing or otherwise arising out of or relating to the conduct of the Business, the Predecessor Business or the Former Business prior to the Closing.
The "Business", the "Predecessor Business", and the "Former Business" are defined in the Agreement as follows:
Business: "all assets relating to the business previously conducted by SCM of developing, manufacturing, marketing, selling, licensing and distributing paints, industrial coatings, resins, caulkings and adhesives including without limitation, Glidden' products." [Agreement at 2-3].
Predecessor Business: "the Business, including, without limitation, the paints, coatings, resins, adhesives, caulkings or related businesses owned or held by any predecessor entity." [Agreement § 9.1(b)].
Former Business: "the Business, including, without limitation, the paints, coatings, resins, adhesives, caulkings or related businesses formerly owned by [HSCM-20], HSCM-6 or any predecessor of any of the forgoing." [Agreement § 9.1(b)].
The flip side of the indemnity, which governs the scope of ICIAH's obligations, is set forth in Section 9.3:
[ICIAH] agrees to indemnify [HSCM-20] from, against, and in respect of any Claims relating to the Business arising from or relating to the acts, omissions, events or conditions of or relating to the Business, the Predecessor Business or the Former Business occurring or existing prior to, on or after the Closing or otherwise arising out of or relating to the conduct of the Business, the Predecessor Business or the Former Business prior to, on or after the Closing arising against Indemnitees for matters referred to in Section 9.1(b), 9.1(c) or 9.1(e) to the extent that [ICIAH] would not be entitled to indemnity under Sections 9.1 and 9.2.
ANP maintains that the scope of the indemnity in Section 9.1(c) differs from the scope of the indemnity in Section 9.3. It claims that Section 9.3 excludes indemnification for liability related to lead pigments (as opposed to the paint business). As mentioned above, the pigment business was owned by ABC; HSCM-20 owned ABC; and, HSCM-20 did not sell ABC to ICIAH. ANP argues that ICIAH would not have agreed to indemnify HSCM-20 for a business that was not part of the subject transaction. ANP contends that, at the time of the sale, HSCM-20 retained the pigment business (ABC) and all liability related to that business The court addresses this argument in Part II.
Additional Corporate History
On August 22, 1986, ICIAH renamed HSCM-6 "the Glidden Company" (Glidden II). On December 30, 1986, Glidden II was liquidated, and its assets were distributed to two companies, called Atkemix Seven and Atkemix Eight, the latter of which was renamed "the Glidden Company" (Glidden III). Glidden III was eventually renamed ANP, the defendant in this action. HSCM-20, through various corporate transactions, became plaintiff Millennium Holdings LLC (Millennium). Thus, Millennium is the successor to HSCM-20 (the owner of the pigment business, ABC, at the time of the sale), and ANP is the successor to HSCM-6 (the paint business). Pursuant to a Novation Agreement dated December 13, 2000 (the Novation), ANP assumed ICIAH's indemnity obligations under Section 9.3 of the Agreement.  As discussed below, in this action, Millennium originally sought to enforce the Section 9.3 indemnity provision against ANP.
The Lead Cases & Related Coverage Disputes
In 1987, lawsuits were commenced across the country which alleged various injuries suffered from exposure to lead paint, personal injury, property damages, and public nuisance (the Lead Cases). Between 1987 and October 1994, ANP's predecessor sought and received indemnity from ICIAH for the Lead Cases under the indemnity obligations set forth in Section 9.1(c). After October 31, 1994, when ICIAH's indemnity obligations expired, ICIAH ceased making indemnity payments to ANP's predecessor. However, ANP's predecessor refused to indemnify ICIAH, claiming that it had no such obligation under the Agreement.
The parties' predecessors commenced separate actions against each other, one in this court (HM Holdings, Inc. v ICI American Holdings, Inc., Index No. 110533/1994) and one in Ohio state court (The Glidden Co. v HM Holdings, Inc., Case No. 26918 (Cuyahoga County)) (collectively, the 1994 Litigation). In 2000, the parties settled the 1994 Litigation. The Settlement Agreement, dated December 13, 2000, incorporated the Novation, whereby ANP acquired ICIAH's indemnity oblations under Section 9.3 of the Agreement. However, the Settlement Agreement explicitly left open the parties' indemnification obligations for the Lead Cases.
Between 1995 and 2000, during the pendency of the 1994 Litigation, the Resolute Plaintiffs entered into an interim funding agreement with the parties, whereby the Resolute Plaintiffs agreed to pay for the defense costs of both Millennium and ANP. In 2000, the London Insurers terminated the interim funding agreement and commenced an action in Ohio state court seeking a declaration that ANP was not entitled to coverage under the subject policies. In 2006, that action reached the Ohio Supreme Court, which ruled that ANP was not covered under the subject policies "either by operation of law or by contract." Glidden Co. v Lumbermens Mut. Cas. Co., 112 Ohio St 3d 470 (2006). Consequently, the London Insurers stopped paying ANP's defense costs. The London Insurers and Millennium then entered into a new defense funding agreement.
The Instant Action & Related Proceedings
Millennium commenced the instant action on March 25, 2008, seeking indemnification from ANP under Section 9.3 of the Agreement. On January 6, 2009, Millennium filed for bankruptcy. See In re Lyondell Chemical Co., Case No. 09-10023 (Bankr SDNY). In an order dated June 24, 2009, this court dismissed Millennium's claim for common law indemnification and its declaratory judgment actions for potential future claims. However, the motion was denied on the issue of whether Section 9.3 requires indemnification for "pigment claims" because it was premature to resolve the paint/pigment issue (discussed in detail in Part II.A).
Millennium filed an Amended Complaint on August 7, 2009. In a stipulation so ordered by the bankruptcy court on April 26, 2010, Millennium and ANP agreed to lift the automatic stay to allow ANP to assert counterclaims in this action, which it did on June 12, 2010. Millennium filed a Note of Issue on January 14, 2011.
Two weeks later, on January 28, 2011, the London Insurers filed a motion to intervene in this action. On February 25, 2011, the bankruptcy court approved Millennium's settlement of a California Lead Case, called the Santa Clara Action. The London Insurers and Northern collectively paid approximately $3.2 million to Millennium as part of that settlement. On March 16, 2011, Millennium and ANP entered into a settlement agreement to resolve their claims in this action, which did not impact the subrogation rights of the involved insurance companies. That settlement agreement was approved by the bankruptcy court on April 21, 2011. Millennium and ANP filed a stipulation of discontinuance of their claims against each other on May 16, 2011.
In an order dated September 27, 2011, this court granted the London Insurers' motion to intervene. The London Insurers officially joined this action upon the filing of the Second Amended Complaint on November 18, 2011. Pursuant to an order dated June 7, 2012, Northern joined this case when its own indemnification action against ANP (Index No. 650795/2012, then pending before Justice Sherwood) was consolidated with this action, leading to the caption that appears at the top of this decision. The original Note of Issue was then vacated, and further discovery was conducted.
A new Note of Issue was filed on December 31, 2012. The instant summary judgment motions were filed on April 23, 2013. The motions were fully briefed on June 28, 2013. However, before oral arguments, in an order dated August 8, 2013, an Ohio state trial court ruled in a parallel action that the Resolute Plaintiffs' settlement payment in the Santa Clara Action was not required under the subject policies, holding it to be a "voluntary payment." See Millennium Holdings LLC v Lumbermens Mut. Cas. Co., Case No. 00-CV-411388, at *8-11 (Cuyahoga County Aug. 8, 2013). As a result, ANP contends, the Resolute Plaintiffs are not entitled to a subrogation callback from ANP for that payment. The parties submitted letter-briefs on this issue (NYSCEF Doc. Nos. 181 & 182), which the court deems part of the record on the instant motions. Oral arguments were held on September 12, 2013.
Summary judgment may be granted only when it is clear that no triable issue of fact exists. Alvarez v Prospect Hosp., 68 N.Y.2d 320, 325 (1986). The burden is upon the moving party to make a prima facie showing of entitlement to judgment as a matter of law. Zuckerman v City of New York, 49 N.Y.2d 557, 562 (1980); Friends of Animals, Inc. v Associated Fur Mfrs., Inc., 46 N.Y.2d 1065, 1067 (1979). A failure to make such a prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. Ayotte v Gervasio, 81 N.Y.2d 1062, 1063 (1993). If a prima facie showing has been made, the burden shifts to the opposing party to produce evidence sufficient to establish the existence of material issues of fact. Alvarez, 68 N.Y.2d at 324; Zuckerman, 49 N.Y.2d at 562. The papers submitted in support of and in opposition to a summary judgment motion are examined in the light most favorable to the party opposing the motion. Martin v Briggs, 235 A.D.2d 192, 196 (1st Dept 1997). Mere conclusions, unsubstantiated allegations, or expressions of hope are insufficient to defeat a summary judgment motion. Zuckerman, 49 N.Y.2d at 562. Upon the completion of the court's examination of all the documents submitted in connection with a summary judgment motion, the motion must be denied if there is any doubt as to the existence of a triable issue of fact. Rotuba Extruders, Inc. v Ceppos, 46 N.Y.2d 223, 231 (1978).
Indemnity Under Section 9.3 of the Agreement
It is well established that contracts "are construed in accord with the parties' intent." Greenfield v Philles Records, Inc., 98 N.Y.2d 562, 569 (2002). "The best evidence of what parties to a written agreement intend is what they say in their writing. Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms." Id. (citations omitted). Moreover, "provisions in a contract are not ambiguous merely because the parties interpret them differently." Mount Vernon Fire Ins. Co. v Creative Housing Ltd., 88 N.Y.2d 347, 362 (1996). "The ultimate aim is to realize the parties' reasonable expectations' through a practical interpretation of the contract language." Gessin Elec. Contrs., Inc. v 95 Wall Assocs., LLC, 74 A.D.3d 516, 518 (1st Dept 2010), quoting Sutton v E. River Savings Bank, 55 N.Y.2d 550, 555 (1982).
There is no question that the paint at issue in Lead Cases contained lead, some or all of which came from pigment containing lead. It does not matter if the lead came from SCM/Glidden's own pigment divisions, or if the pigment was purchased from a third-party vendor (which may have been formerly owned by Glidden I). The bottom line is that the paint contained lead, and it was the lead that caused personal injuries, property damage, and public nuisances, not the "paint" or the "pigment."
The complexity of ascertaining the lead's source  made it difficult to attribute liability to particular defendants in the Lead Cases. It appears that plaintiffs in the Lead Cases (who are not part of this action) eventually made the decision  to only maintain their cases against pigment companies, not paint companies.  Therefore, Millennium, a pigment company, was faced with liability and had to expend substantial sums of money to settle Lead Cases, like the Santa Clara Action.
While the paint/pigment issue eventually mattered in the Lead Cases, this issue was not contemplated by the parties when the Agreement was negotiated and executed in 1986. The issue only arose afterward, in the Lead Cases, with unexpected implications. Nonetheless, ANP asks the court to assume that the indemnity provisions predicted the liability implications of the paint/pigment issue. In reality, the opposite was true, since the indemnity provisions were agreed to precisely because the parties had no idea how these liability issues would play out. See Kelly Dep., supra.
Ultimately, the court's role is to determine the parties' intent. See Greenfield, supra. If the parties intended for "paint" claims to be paid for by the "paint" company (then HSCM-6, now ANP) and for "pigment" claims to be paid for by the "pigment" company (then ABC, now Millennium), the Agreement could have just said so. Moreover, if, as ICIAH's attorney testified, there was great uncertainly about successor liability and the indemnity provisions were agreed to to make the parties' obligations predictable and certain, such certainty could have been achieved by allocating liability in other ways. Instead, no doubt through negotiation by the sophisticated parties and their attorneys, the Agreement divides liability by requiring HSCM-20 to pay for claims during the first 8 years  and ICIAH to pay all claims thereafter.
The indemnity provisions were inserted in 1986 when no one knew which entity might be liable for injuries caused by lead paint. Such confusion existed precisely because there is lead both in the pigment and the paint. The primary intent of the indemnity provisions was to create certainty.
ANP, however, contends that the differing language of Sections 9.1(c) and 9.3 demonstrates that the parties intended for HSCM-20 to pay for both paint and pigment cases, but limit ICIAH's liability to paint cases. This is not supported by the actual text of these sections. ANP gives much weight to the use of the term "the Business", which of course, is a defined term whose meaning must be consistently read throughout the Agreement and used to glean parties' intent. Compare the analogous text of the Sections 9.1(c) and 9.3, which set forth what the indemnification liability "relates" to:
Section 9.1(c) (the scope of Millennium/the pigment company's indemnity obligations): relating to the Business, the Predecessor Business or the Former Business occurring or existing prior to the Closing or otherwise arising out of or relating to the conduct of the Business, the Predecessor Business or the Former Business prior to the Closing.
Section 9.3 (the scope of ANP/the paint company's indemnity obligations): relating to the Business arising from or relating to the acts, omissions, events or conditions of or relating to the Business, the Predecessor Business or the Former Business occurring or existing prior to, on or after the Closing or otherwise arising out of or relating to the conduct of the Business, the Predecessor Business or the Former Business
The gravamen of ANP's argument is that Section 9.3 has an added "relating to the Business" expression, which prefaces the corresponding language from Section 9.1(c), thereby supposedly limiting its obligation to indemnify liability arising from "the Business". ANP interprets "the Business" to mean only the paint business, not the pigment business. The court disagrees, especially in light of the corporate history of Glidden and SCM, which demonstrates that such businesses were always intertwined. The definition of "the Business" seems to track this understanding:
"all assets relating to the business previously conducted by SCM of developing, manufacturing, marketing, selling, licensing and distributing paints, industrial coatings, resins, caulkings and adhesives including without limitation, Glidden' products."
Even if "the Business" only means the paint business purchased by ICIAH, the scope of ICIAH's indemnity is liability "relating to the Business arising from [the language of Section 9.1(c)]" (i.e. the same scope of HSCM-20's indemnity obligation; in other words, its "flip side"). Additionally, the quoted portion concludes with the apparent catchall "or relating to the conduct of the Business, the Predecessor Business or the Former Business", which pretty much means everything SCM/Glidden used to do, including pigment production. At most, the agreement is wordy and does not live up to the aspiration of "making every word count."
At the end of the day, it is not the court's job to tell sophisticated commercial parties how to allocate their liability risk. In hindsight, ANP may regret its decision to be on the hook for all the Lead Cases filed after 1994, since, it appears, more cases were filed after such time than before. Regardless, ANP must live with the contract it bargained for. Particularly, where as here, the other party to the agreement has already performed. The degree to which a contract is simple or convoluted, fair or unfair — or easy on the eyes and the brain — is a matter to be addressed before the contract's execution. It is not something to complain about in subsequent litigation.
Although ANP is contractually obligated to indemnify Millenium for its liability in the Lead Cases, the antisubrogation rule defeats the Resolute Plaintiffs' claims.
"Subrogation is an equitable doctrine that entitles an insurer to stand in the shoes' of its insured to seek indemnification from third parties whose wrongdoing has caused a loss for which the insurer is bound to reimburse.'" ELRAC, Inc. v Ward, 96 N.Y.2d 58, 75 (2001), quoting N. Star Reins. Corp. v Continental Ins. Co., 82 N.Y.2d 281, 294 (1993). "There is, however, an exception to the right of subrogation, termed the antisubrogation rule [under which] an insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered even where the insured has expressly agreed to indemnify the party from whom the insurer's rights are derived.'" Id. at 76, quoting Penn. Gen. Ins. Co. v Austin Powder Co., 68 N.Y.2d 465, 468 (1986). "In other words, an insurer may not step into the shoes of its insured to sue a third-party tortfeasor — if that third party also qualifies as an insured under the same policy — for damages arising from the same risk covered by the policy." Id. "The purpose of this rule is to prevent an insurer from using the right of subrogation to avoid paying coverage that is due under the policy." Id., citing Penn. Gen., 68 N.Y.2d at 471. "Additionally, the antisubrogation rule limits the instances in which an insurer and its insured have adverse interests, which might undercut an insurer's incentive to provide a vigorous defense to its insured." Id., citing Penn. Gen., 68 N.Y.2d at 472.
As recounted earlier, between 1962 and 1970, the Resolute Plaintiffs issued the subject polices to SCM and its Glidden-Durkee Division, which collectively made both lead paint and lead pigment. These polices covered SCM for, inter alia, property damage liability arising from the lead in its paint and its pigment. Consequently, the Resolute Plaintiffs were insuring risk related to SCM's lead paint and lead pigment. Again, had a claim been made, for instance, in the 1970s, the Resolute Plaintiffs would not have had a third-party, such as ANP, to turn to for subrogation, because the scope of the coverage inured to only the single, original insured: SCM.
However, this changed in 1985, when the paint and pigment companies were placed into separate corporate entities (the paint company remained part of SCM, in its Glidden-Durkee Division; the pigment complaint was placed into a new corporate subsidiary, ABC). Both companies were still owned by the same parent, SCM. However, the following year, in 1986, as a result of Hanson's hostile takeover of SCM, the paint company was sold. As a result, the paint and pigment companies were owned by unrelated corporate parents. Hanson dealt with this issue by causing the paint company to maintain coverage under the subject policies in the Side Letter.  However, the Ohio Supreme Court ruled in Glidden that the Side Letter did not cause the paint company (and thus, ANP) to maintain coverage under the subject polices.  Given the identity of parties (or their successors in interest, who are equally bound) and the identity of issues in this case, the ruling in Glidden is res judicata and binding on this court. See Landau v LaRossa, Mitchell & Ross, 11 N.Y.3d 8, 13 (2008); Parker v Blauvelt Volunteer Fire Co., 93 N.Y.2d 343, 347 (1999).  Ergo, the court is bound by the ruling that, as a result of the 1986 sale of HSCM-6 to ICIAH, ABC/Millennium, the pigment company, maintained coverage under the subject polices while HSCM-6/ANP, the paint company, did not.
Nonetheless, ANP argues that its technical lack of coverage under the subject policy does not change the antisubrogation inquiry. ANP contends that the antisubrogation rule prohibits the Resolute Plaintiffs' claim since it seeks to recover for the very risk it insured when it originally issued the polices to SCM. The Resolute Plaintiffs disagree and maintain that the antisubrogation rule does not bar recovery against ANP, since ANP is neither its insured, an additional insured, an effective insured under a related policy, or an intended beneficiary of the policy (e.g. the insured's employee), all of which would preclude subrogation. See Med. Liab. Mut. Ins. Co. v Schurig, 211 A.D.2d 518 (1st Dept 1995), accord Fireman's Ins. Co. of Newark, N.J. v Wheeler, 165 A.D.2d 141, 144 (3d Dept 1991) ("A person not named in an insurance policy is considered an insured for purposes of preventing subrogation when, under the circumstances, the insurer seeking subrogation is attempting, in effect, to recover from the insured on the risk the insurer had agreed to take upon payment of the premium"), quoting 6A Appleman, Ins. Law and Prac. § 4055, at 77 (1990 supp); see also Nat'l Cas. Co. v Beth Abraham Hosp., 1999 WL 710780, at *5 (SDNY 1999) (same).
Though there are myriad circumstances in which certain claims have categorically been held to fall under the antisubrogation rule, such as those mentioned above, fundamentally, the purpose of this rule is to prevent an insurance company from recovering for "the very claim for which the insured was covered." Jefferson Ins. Co. of NY v Travelers Indem. Co., 92 N.Y.2d 363, 373 (1998). Indeed, in Jefferson, the Court of Appeals held that an automobile insurance company could not maintain a subrogation claim against a non-covered permissive user of an automobile, because, despite the lack of coverage, liability arising from a permissive user's conduct was precisely the risk the insurer was covering. Here, as in Jefferson, ANP's lack of coverage is irrelevant since the subject polices covered the very risk it seeks indemnification for. In other words, ANP's liability arose between 1962 and 1970, when the lead in SCM's products caused property damage. That liability was expressly covered by the subject polices and is the exact liability that the Resolute Plaintiffs do not want to pay for. Under the principles of antisubrogation, the Resolute Plaintiffs cannot evade their coverage obligation and "should not be surprised to pay claims that it covered." Id. at 375. In reality, the Resolute Plaintiffs seek to step into Millennium's shoes to assert its indemnification rights under Section 9.3 of the Agreement, while ignoring the actual context of the very insurance obligations that allows the Resolute Plaintiffs to do so in the first place. When Millennium originally commenced this action against ANP, it sought indemnification under Section 9.3, subject, of course, to its insurance coverage from the Resolute Plaintiffs. Such coverage's other insurance provisions require Millennium to first obtain coverage from other insurance sources, if any, and to treat coverage from the Resolute Plaintiffs as excess to its other insurance. When the Resolute Plaintiffs argue that ANP must indemnify Millennium before the Resolute Plaintiffs are on the hook, they treat Section 9.3 as Millennium's "other insurance." This is wrong. See Consol. Edison Co. of NY, Inc. v Liberty Mut., 193 Misc.2d 399, 401 (Sup Ct, NY County 2002) ("other insurance" only refers to another actual insurance policy, not something akin to insurance, such as self-insurance or indemnification); see also Am. Cas. of Reading, PA v St. Charles Hosp. & Rehab. Ctr., 21 A.D.3d 914, 915-16 (2d Dept 2005) (same). However, even if the indemnity qualified as other insurance, the Resolute Plaintiffs only seek to enforce it as Millennium's subrogee. Therefore, such claim is subject to the antisubrogation rule, which precludes the Resolute Plaintiffs' claim.
In sum, although Section 9.3 provides Millennium with the right to seek indemnification from ANP for the Lead Cases, now that Millennium has settled with ANP, the Resolute Plaintiffs, the insurers, cannot assert a subrogation claim against ANP. The parties' corporate history demonstrates that the Resolute Plaintiffs insured the very risk at issue in the Lead Cases. Accordingly, it is
ORDERED that summary judgment is granted to defendant, The Glidden Company n/k/a Akzo Nobel Paints LLC, on its antisubrogation affirmative defense against the claims of plaintiff Northern Assurance Company of America and intervener plaintiffs, Certain Underwriters at Lloyd's, London and Certain London Market Insurance Companies, and the Clerk is directed to enter judgment dismissing such claims with prejudice.