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CNH America LLC v. American Casualty Co. of Reading

Superior Court of Delaware, New Castle

January 6, 2014

CNH AMERICA, LLC, a Delaware limited liability company f/k/a Case Corporation Plaintiff,
v.
AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, a Pennsylvania corporation, et al Defendants. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, a Pennsylvania corporation; and The CONTINENTAL INSURANCE COMPANY, a Pennsylvania corporation, Third-Party Plaintiffs,
v.
EPEC EQUIPMENT CORPORATION, a Delaware corporation, Third-Party Defendant.

Submitted: September 6, 2013

Upon Consideration of Plaintiff's Motion for Partial Summary Judgment Regarding the Duty to Defend Granted

John C. Cordrey, Esq., Reed Smith, LLP, Wilmington, Delaware. Attorney for Plaintiff.

Carmella P. Keener, Esq., Rosenthal, Monhait & Goddess, Wilmington, Delaware. Attorney for American Casualty, Continental Insurance, and Centre Insurance.

Seth A. Niederman, Esq., Fox Rothschild, LLP., Wilmington, Delaware. Attorney for Travelers Indemnity Company.

OPINION

James T. Vaughn, President Judge

On July 11, 2012, Plaintiff CNH America, LLC ("CNH") filed this action for declaratory relief and breach of contract against a number of insurance companies. The complaint alleges that the defendants have failed to honor defense and coverage obligations arising from asbestos-related lawsuits filed against CNH.

CNH has filed a Motion for Partial Summary Judgment Regarding the Duty to Defend which is directed against three of the defendants. Those three defendants are: The Continental Insurance Company and Centre Insurance Company, as successors-in-interest to some or all of the relevant insurance obligations of London Guarantee and Accident Company, Ltd.; and American Casualty Company of Reading, Pennsylvania (collectively, the "CNA Defendants"). The motion seeks a ruling that the CNA Defendants are obligated to defend CNH in the asbestos related lawsuits under three insurance policies.

This opinion addresses only the issue of the CNA Defendants' duty to defend in connection with the three policies. It does not address and is without prejudice to the rights or liabilities of any other party or any other policies.

FACTUAL BACKGROUND

In 1842, J.I. Case Company was established.[1] It manufactured agricultural and construction equipment. In 1970 J.I. Case Company merged into 700 State Corporation;[2] 700 State Corporation merged into Newcase Corporation, [3] and Newcase Corporation was renamed J.I. Case Company.[4] Thus, the surviving corporation took the original J.I. Case Company name.

Also in 1970, J.I. Case Company became a subsidiary of Tenneco, Inc ("Tenneco"). In 1990, J.I. Case Company changed its name to Case Corporation.[5]At all times, Case Corporation and its predecessors continued to manufacture agricultural and construction equipment.

In 1994, Tenneco underwent a reorganization involving itself and its subsidiaries, including Case Corporation, and a new company called Case Equipment Corporation, sometimes referred to as "Newco." The purpose of the reorganization was to transfer the farm and construction equipment businesses then owned by Tenneco and its subsidiaries, including Case Corporation, to Case Equipment Corporation. The documents that effectuated the reorganization were the 1994 reorganization agreement[6] (the "1994 Agreement") and a general conveyance agreement[7] (the "Conveyance Agreement"). Under the 1994 Agreement, the assets transferred to Case Equipment Corporation were referred to as the "Case Assets." Case Equipment Corporation assumed certain liabilities of Tenneco and its subsidiaries, which were referred to as the "Case Liabilities." Tenneco and its subsidiaries retained certain assets, known as "Retained Assets, " and certain liabilities, known as "Retained Liabilities." In addition, Case Corporation changed its name to Tenneco Equipment Corporation ("Tenneco Equipment").[8]

The 1994 Agreement defined Case Assets as:

[A]ll of the assets of Tenneco and its subsidiaries used or held for use in the Case Business and the assets previously held for use in the Case Business that are not used in any other business of Tenneco, including without limitation the permits, licenses and authorizations relating to the use of any such assets.[9]

The term Case Liabilities was defined as follows:

[A]ll of the Liabilities arising out of or in connection with the ownership or operation by Tenneco and its subsidiaries of the Case Business, as heretofore, currently or hereafter conducted, including without limitation (I) all Liabilities of Tenneco and its subsidiaries relating to, arising out of or in connection with, any businesses, assets or operations owned, managed or operated by, or operationally related to, the Case Business which have been sold or otherwise disposed of or discontinued prior to the Reorganization Date and (ii) those Liabilities listed on Schedule 1.01.[10]

The 1994 Agreement defined Retained Assets as:

(I) the United States retail receivables held by Tenneco Credit Corporation that arose from the retail sale of farm and construction equipment or otherwise relating to the Case Business (other than receivables arising from the sale ...

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