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Flintkote Co. v. Indemnity Marine Assurance Co. Ltd.

United States District Court, Third Circuit

September 30, 2013

THE FLINTKOTE COMPANY, Plaintiff,
v.
INDEMNITY MARINE ASSURANCE COMPANY LTD., Defendant. THE FLINTKOTE COMPANY, Plaintiff,
v.
AVIVA PLC, formerly known as COMMERCIAL UNION ASSURANCE COMPANY LTD., Defendant.

Michael P. Kelly, Katharine L. Mayer, McCARTER & ENGLISH, LLP, Wilmington, DE Gita F. Rothschild, Louis A. Chiafullo, McCARTER & ENGLISH, LLP, Newark, N.J. Attorneys for The Flintkote Company.

Thaddeus J. Weaver, DILWORTH PAXSON LLP, Wilmington, DE Fred L. Alvarez, Arthur J. McColgan, II, WALKER WILCOX MATOUSEK LLP, Chicago, IL

Attorneys for Indemnity Marine Assurance Company Limited and Aviva PLC, formerly known as Commercial Union Assurance Company Limited.

MEMORANDUM OPINION

STARK, U.S. District Judge

Pending before the Court are Plaintiff The Flintkote Company's ("Plaintiff or "Flintkote") Motions to Compel Arbitration in two related cases. (D.I. 5, C.A. No. 13-935; D.I. 9, C.A. No. 13-103) Also pending before the Court is Defendant Indemnity Assurance Company Ltd.'s ("Indemnity Marine") Motion for Summary Judgment (D.I. 11, C.A. No. 13-935) and Defendant Aviva PLC, formerly known as Commercial Union Assurance Company Ltd.'s ("Aviva") Motion to Dismiss or, in the Ahemative, Transfer (D.I. 13, C.A. No. 13-103).

I. BACKGROUND

The pending motions involve several agreements, including a general liability insurance Policy No. 547/620242RM (the "Policy") (D.I. 6 Ex. A, C.A. No. 13-935 (showing subscription chart)), the Agreement Concerning Asbestos-Related Claims (the "Wellington Agreement") (id. Ex. B), and a 1989 agreement between Flintkote and Aviva (the "1989 Agreement") (D.I. 11 Ex. B, C.A. No. 13-103). Genstar Corporation, Flintkote's parent, entered into the Policy on March 15, 1981, for a four-year period. (D.I. 12 Ex. 2 at ¶ 5, C.A. No. 13-935) The Policy lists Aviva, Indemnity Marine's corporate parent, as holding a 2.0780% and 2.597% share of the Policy. (D.I. 6 Ex. A, C.A. No. 13-935) Indemnity Marine was not licensed to provide insurance in Canada, and therefore entered into a separate agreement with Aviva to provide the 2.597% share of the Policy. (D.I. 12 Ex. 2 at ¶¶ 3-4, 6, C.A. No. 13-935) Thus, Indemnity Marine was to reimburse Aviva for the 2.597% share. (Id. at ¶ 6)

On June 19, 1985, Flintkote and several of its insurers[1] entered into the Wellington Agreement, which requires that disputes over coverage be resolved through a three-step ahemative dispute resolution ("ADR") process. (D.I. 6 Ex. B at 28, C.A. No. 13-935) The Wellington Agreement contains a provision mandating that "Subscribing Producers and Subscribing Insurers shall resolve through alternative dispute resolution . . . any disputed issues within the scope of the Agreement and the Appendices hereto." (Id. at 5 VIII.6) Appendix C of the Wellington Agreement sets forth the ADR process, and Schedule D identifies the insurance policies within the scope of the Wellington Agreement, including the Policy. Aviva is not a signatory to the Wellington Agreement, but Indemnity Marine is.

Aviva and Flintkote subsequently entered into the 1989 Agreement, which calls for dispute resolution through litigation. (D.I. 11 Ex. B, C.A. No. 13-103) The 1989 Agreement provides that "Flintkote and [Aviva] shall resolve through litigation any disputed issues to this Agreement, and nothing contained in any provision of this Agreement or in any provision of the Wellington Agreement, as applied to this Agreement, shall require [Aviva] and Flintkote to resolve any disputes that may arise between them relating to this Agreement through ADR under the Wellington Agreement." (Id. at 13)

For the past six years, the parties have been engaged in mediation. (D.I. 11 at ¶¶ 10-11, C.A. No. 13-103) The Mediation Agreement provides that the parties' conduct and statements made in the course of mediation are confidential. In 2012, Aviva and Flintkote determined that they had reached an impasse. (D.I. 15-2 at ¶ 7, C.A. No. 13-103) The parties exchanged draft arbitration agreements, but ultimately failed to execute a final arbitration agreement. (Id at ¶ 8; D.I. 11 Exs. F, G, C.A. No. 13-103)

In December 2012, Aviva sought to exercise its right under the 1989 Agreement to resolve its dispute in Court. (D.I. 15-2 at ¶ 9, C.A. No. 13-103) On December 24, 2012, Aviva moved in the United States Bankruptcy Court for the District of Delaware to lift the automatic stay imposed on Flintkote as a bankrupt debtor pursuant to 11 U.S.C. § 362(d), intending to file suit in the Northern District of California. (D.I. 14 Ex. E, C.A. No. 13-103) On February 4, 2013, the Bankruptcy Court lifted the stay, effective on February 19, 2013. (Id. Ex. G)

In the meantime, on January 17, 2013, before the stay was lifted, Flintkote filed the instant suit against Aviva here in the District of Delaware. (D.I. 1, C.A. No. 13-103) On February 18, 2013, Flintkote moved to compel arbitration pursuant to Section 4 of the Federal Arbitration Act, 9 U.S.C. § 1, etseq. ("FAA"), to determine Aviva's responsibility to provide insurance for asbestos claims. (D.I. 9, C.A. No. 13-103) On February 19, 2013, as soon as it could do so after the bankruptcy stay was lifted, Aviva filed suit in the Northern District of California. (D.I. 1, C.A. No. 13-711-SI) On March 1, 2013, Aviva moved to dismiss the Delaware case, or in the alternative, transfer it to the Northern District of California. (D.I. 13, C.A. No. 13-103) On May 14, 2013, the Honorable Susan Illston stayed the Northern District of California case pending this Court's ruling on the motion to dismiss. (D.I. 31, C.A. No. 13-711-SI)

On May 3, 2013, Indemnity Marine informed Flintkote that it would no longer participate in the ADR proceedings, arguing that it was not subject to the Policy and, thus, the Wellington Agreement. (D.I. 6 Ex. 1 at ¶ 12, C.A. No. 13-935) Two weeks later. Indemnity Marine confirmed its belief that it was not subject to the Policy. (Id. Ex. F) On May 24, 2013, Flintkote filed suit against Indemnity Marine here in the District of Delaware (D.I. 1, C.A. No. 13-935) and, on June 10, 2013, moved to compel arbitration pursuant to Section 4 of the FAA, 9 U.S.C. § 1, etseq. to determine Indemnity Marine's responsibility to provide insurance for asbestos claims (D.I. 5, C.A. No. 13-935). On June 21, 2013, Indemnity Marine moved for summary judgment. (D.I. 11, C.A. No. 13-935)

On July 31, 2013, the Court heard oral argument on all pending motions in both related actions. (Se ...


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