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North River Insurance Co. v. Mine Safety Appliances Co.

Supreme Court of Delaware

November 6, 2014

THE NORTH RIVER INSURANCE COMPANY, Plaintiff Below, Appellant,
v.
MINE SAFETY APPLIANCES COMPANY, Defendant Below, Appellee

Submitted: September 17, 2014.

Page 370

Motion for Reargument Filed 11/21/14; Denied 11/25/14. Case Closed November 25, 2014.

Court Below: Court of Chancery of the State of Delaware. C.A. No. 8456-VCG.

Peter B. Ladig, Esquire, Jason C. Jowers, Esquire, David J. Soldo, Esquire, Morris James LLP, Wilmington, Delaware for Appellant.

Of Alan S. Miller, Esquire (argued), Bridget M. Gillespie, Esquire, Picadio Sneath Miller & Norton, P.C., Pittsburgh, Pennsylvania.

Brian C. Ralston, Esquire, Jennifer C. Wasson, Esquire, Michael B. Rush, Esquire, Potter Anderson & Corroon LLP, Wilmington, Delaware for Appellee.

Of Mark A. Packman, Esquire (argued), Gabriel Le Chevallier, Esquire, Jenna A. Hudson, Esquire, Katrina F. Johnson, Esquire, Gilbert LLP, Washington, D.C.

Before STRINE, Chief Justice, HOLLAND, RIDGELY, and VALIHURA, Justices and DAVIS, Judge[*] constituting the Court en Banc.

OPINION

Page 371

VALIHURA, Justice:

In this appeal, appellant North River Insurance Company (" North River" ) challenges the Court of Chancery's denial of its request for permanent injunctive relief. This multi-forum litigation concerns policies issued by North River to a safety products company, Mine Safety Appliances Company (" MSA" ). North River issued thirteen policies to MSA covering periods from August 28, 1972 through April 1, 1986.[1] MSA is defending against thousands of personal injury claims allegedly caused by defects in its mine safety equipment. MSA seeks coverage under North River's policies as well as from several other insurers. The critical question of whether North River's coverage under these policies is " triggered" -- a matter of Pennsylvania law -- is being litigated, along with its claims against other insurers, in federal and state courts in Pennsylvania, the Delaware Superior Court and in certain later-filed cases in West Virginia.

North River requested that the Court of Chancery permanently enjoin MSA from prosecuting the later-filed claims in West Virginia and from assigning to any tort claimants the right to recover under any insurance policy issued by North River to MSA. During the course of this appeal, North River narrowed its focus to the assignment issue. For the reasons stated herein, we AFFIRM.

FACTUAL AND PROCEDURAL BACKGROUND

North River is a liability insurer incorporated in New Jersey. MSA, a Pennsylvania corporation, manufactures a variety of safety products including air-purifying respirators worn in various industrial environments. MSA and North River have been battling over the applicability of certain North River excess insurance policies in a number of jurisdictions including first in Pennsylvania, then in Delaware, and most recently in West Virginia. A summary of the litigations is helpful to our resolution of this appeal.

Page 372

A. The Pennsylvania Actions

i. The Pennsylvania Federal Action

On March 20, 2009, MSA sued North River for breach of contract in the United States District Court for the Western District of Pennsylvania (the " Pennsylvania Federal Action" ).[2] MSA sought a judgment that in accordance with Policy No. JU 1225, North River has a duty to both defend and indemnify MSA for thousands of asbestosis, silicosis and coal workers' pneumoconiosis (" CWP" ) claims filed against MSA.[3] Subsequently, North River filed a counterclaim seeking declaratory relief regarding the parties' rights and responsibilities under that policy.

ii. The Pennsylvania State Actions

On April 9, 2010, North River filed an action for declaratory relief against MSA and other insurers in the Court of Common Pleas of Allegheny County (the " Pennsylvania State Action," [4] and collectively with the Pennsylvania Federal Action, the " Pennsylvania Actions" ). In the Pennsylvania State Action, North River seeks a declaration of the parties' rights under three excess insurance policies -- namely, JU0830, JU0988, and JU1123 -- including whether the claims of MSA customers relate to injuries that were caused during the applicable effective dates of the policies. MSA filed an answer, counterclaim and cross-claims asserting that North River failed to honor the contract and acted in bad faith.

In November 2010, a federal judge authorized the use of a special discovery master to coordinate discovery in the Pennsylvania Actions. MSA conducted extensive discovery in the Pennsylvania Actions and filed cross-claims for summary judgment. At issue was the appropriate " trigger" for coverage. Oral argument was held on the motions on March 12, 2013.

B. The Delaware Superior Court Action

On June 26, 2010, while the Pennsylvania Actions remained pending, MSA sued multiple insurers, including North River, in the Delaware Superior Court (the " Delaware Action" ) seeking a declaration that those insurers must defend and indemnify MSA in accordance with various insurance policies -- some of which are at issue in the Pennsylvania Actions.[5] The policies at issue include Policy No. JU 1319, which is also at issue in the West Virginia litigation.[6]

On January 24, 2011, the Delaware Superior Court granted North River's motion to stay the proceedings as to all parties in favor of the pending Pennsylvania Actions.[7]

Page 373

Thereafter, several motions to lift the stay were filed.[8] Following a hearing held on March 22, 2013, the Delaware Superior Court lifted the stay as to those North River policies that were not implicated by the Pennsylvania Actions, including Policy JU 1319, in order to allow North River to participate in depositions.[9] On November 26, 2013, MSA again moved to lift the stay as to North River. On February 25, 2014, the Delaware Superior Court approved a stipulated order lifting the stay as to North River with certain conditions, including prohibiting the parties from filing summary judgment motions on issues joined in the summary judgment motions in the Pennsylvania Actions. Argument was held on the parties' cross motions for summary judgment in the Pennsylvania Actions on March 12, 2013.

C. The West Virginia Actions

Various actions have been filed by plaintiffs who reside in West Virginia (the " West Virginia Actions" ). North River contends that these lawsuits were " engineered" by MSA as a result of MSA's disenchantment with certain of the Delaware Superior Court's rulings.[10] The West Virginia plaintiffs have availed themselves of West Virginia's Uniform Declaratory Judgments Act, which allows a personal injury plaintiff to bring a declaratory action against the tort defendant's insurer.[11] This statute permits such an action without the plaintiff first obtaining a judgment or assignment from the tort defendant where that defendant has denied coverage.[12] Several actions were filed pursuant to this statute.

Page 374

i. The Moore Action

The first such action was filed on March 8, 2010, by Norman and Lisa Moore. The Moores sued MSA in the Circuit Court of Wyoming County, West Virginia (the " Circuit Court" ), alleging that Norman Moore had developed CWP because of allegedly hidden defects and inadequate warnings provided with certain MSA respirators.[13] The Moores and MSA agreed to a confidential settlement in May 2012, which included an assignment of North River Policy JU 1319 and a release of MSA from liability. That settlement involved a combination of cash and an insurance assignment. On May 24, 2012, the Moores filed an amended and supplemental complaint seeking a declaration that North River must provide coverage under Policy JU 1319 and an order enforcing the settlement and requiring North River to pay plaintiffs the amount of proceeds assigned to them by MSA. Thereafter, on May 31, 2012, MSA asserted cross-claims against North River seeking a declaration that JU 1319 covers the Moores' claims. MSA also sought compensatory damages for the amounts it incurred in the settlement and in defending the Moores' claims. After North River's motion to stay the action in favor of the Pennsylvania Actions was denied, North River settled with the Moores. The Circuit Court also denied North River's motion to dismiss or stay MSA's cross-claims. The parties subsequently agreed to stay the case.[14]

ii. The Lambert Action

On April 19, 2010, Plaintiff Jill A. Lambert, individually and as administrator of the estate of her deceased husband, Carlos G. Lambert, filed a tort action against MSA and others in the Circuit Court.[15] She alleged that her husband developed CWP and died because the respirator manufactured and sold by MSA leaked substantial amounts of harmful coal dust and failed to protect him. Mr. Lambert worked as a coal miner in West Virginia from 1969 ...


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