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Maremont Corporation v. Ace Property & Casualty Insurance Co.

United States District Court, D. Delaware

May 29, 2015

MAREMONT CORPORATION, Plaintiff,
v.
ACE PROPERTY & CASUALTY INSURANCE COMPANY; AIU INSURANCE COMPANY; FEDERAL INSURANCE COMPANY; GREAT NORTHERN INSURANCE COMPANY; ST. PAUL MERCURY INSURANCE COMPANY; AND ZURICH INSURANCE COMPANY, Defendants.

Jennifer C. Wasson, Esq., Michael B. Rush, Esq., Potter Anderson & Corroon LLP, Wilmington, DE; Jason D. Wallach, Esq. (argued), John E. Heintz, Esq., Edward Tessler, Esq., James S. Carter, Esq., Dickstein Shapiro LLP, Washington, D.C., attorneys for Plaintiff.

Bruce W. McCullough, Esq., Bodell Bove, LLC, Wilmington, DE; Antonia B. Ianniello, Esq. (argued), John L. Jacobus, Esq., John R. Casciano, Esq., Steptoe & Johnson, LLP, Washington, D.C., attorneys for Defendant Zurich Insurance Company Ltd.

Jennifer Marie Kinkus, Esq., Timothy Jay Houseal, Esq., Young, Conaway, Stargatt & Taylor LLP, Wilmington, DE, attorneys for Defendant AIU Insurance Company.

MEMORANDUM OPINION

RICHARD G. ANDREWS, District Judge.

Maremont Corporation brought this declaratory judgment action pursuant to Del. Code Ann. tit. 10, ยง 6501 against Ace Property & Casualty Insurance Company, AIU Insurance Company, Federal Insurance Company, Great Northern Insurance Company, St. Paul Mercury Insurance Company, and Zurich Insurance Company in Superior Court on October 5, 2012. (D.I. 1, Ex. A). Defendants removed the case to this Court on October 31, 2012. (D.I. 1). On November 26, 2013, the parties stipulated to dismiss Defendants Federal Insurance Company, Great Northern Insurance Company, and St. Paul Mercury Insurance Company. (D.I. 59). On March 26, 2014, the parties stipulated to dismiss Ace Property & Casualty Insurance Company. (D.I. 104).

Presently before the Court are motions for summary judgment. (D.I. 163, 168). Maremont seeks a declaratory judgment that Zurich Insurance Company Ltd. ("ZIC") and AIU Insurance Company are required to defend and indemnify Maremont for asbestos-related claims. (D.I. 1, Ex. A). There are three time periods at issue.[1] Both sides have moved for summary judgment as to the period from July 1, 1985 to July 1, 1986. (D.I. 163, 168). ZIC has moved for summary judgment as to the period from September 1, 1981 to December 31, 1982 and the period from January 1, 1984 to December 31, 1984. (D.I. 163). AIU Insurance Company joined ZIC's motion.[2] (D.I. 166). The matter has been fully briefed. (D.I. 164, 169, 190, 192, 220, 227). The Court heard oral argument on March 20, 2015. (D.I. 286 [hereinafter, "Tr."]).

For the reasons set forth below, Defendants' motion is GRANTED IN PART. Summary judgment is GRANTED to ZIC and AIU Insurance Company with respect to the period from January 1, 1984 to December 31, 1984 and the period from July 1, 1985 to July 1, 1986. I withhold judgment on the period from September 1, 1981 to December 31, 1982. Plaintiff's motion for partial summary judgment is DENIED.

BACKGROUND

ZIC sold an insurance policy, SRI 0007 ("the Swiss Policy"), to Schweizerische Aluminium AG ("Alusuisse") that provided coverage for Alusuisse and its subsidiaries, including Maremont. (D.I. 164 at p. 1). The agreement is governed by Swiss law. (D.I. 171-1 at 20). The Swiss Policy is a high level excess policy which provides coverage excess to U.S. primary and umbrella policies. (D.I. 164 at p. 1). There are two underlying umbrella policies relevant to this suit. For the period from January 1, 1984 to December 31, 1984, Maremont was covered by a U.S. umbrella issued by Transit Casualty Insurance Company. ( Id. at p. 23). For the period from July 1, 1985 to July 1, 1986, Maremont was covered by a U.S. umbrella issued by Zurich American. ( Id. ).

LEGAL STANDARD

A. Summary Judgment

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The moving party has the initial burden of proving the absence of a genuinely disputed material fact relative to the claims in question. Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). Material facts are those "that could affect the outcome" of the proceeding, and "a dispute about a material fact is genuine' if the evidence is sufficient to permit a reasonable jury to return a verdict for the nonmoving party." Lamont v. New Jersey, 637 F.3d 177, 181 (3d Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The burden on the moving party may be discharged by pointing out to the district court that there is an absence of evidence supporting the non-moving party's case. Celotex, 477 U.S. at 323.

The burden then shifts to the non-movant to demonstrate the existence of a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Williams v. Borough of West Chester, Pa., 891 F.2d 458, 460-61 (3d Cir. 1989). A non-moving party asserting that a fact is genuinely disputed must support such an assertion by: "(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations..., admissions, interrogatory answers, or other materials; or (B) showing that the materials cited [by the opposing party] do not establish the absence... of a genuine dispute...." Fed.R.Civ.P. 56(c)(1).

When determining whether a genuine issue of material fact exists, the court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Scott v. Harris, 550 U.S. 372, 380 (2007); Wishkin v. Potter, 476 F.3d 180, 184 (3d Cir. 2007). A dispute is "genuine" only if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson, All U.S. at 247-49. If the non-moving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to judgment as a matter of law. See Celotex Corp., 477 U.S. at 322.

B. Applicable Swiss Law

Contract interpretation under Swiss law requires a two-step inquiry. (D.I. 164 at p. 9; D.I. 192 at p. 21). First, the factfinder must attempt to discern the mutual, subjective intent of the parties. (D.I. 171-2 at 12; D.I. 199 at 7). To make this determination, the factfinder considers all factual evidence offered by the parties. (D.I. 171-2 at 11; D.I. 199 at 6). Mutually agreed-upon intent is a question of fact. (D.I. 171-2 at 13; D.I. 199 at 7). Second, if the subjective intent cannot be determined, the court looks to the objective intent of the parties. (D.I. 171-2 at 13; D.I. 199 at 8). Objective intent is a question of law. (D.I. 171-2 at 14; D.I. 199 at 9).

A court determines objective intent according to the "principle of legitimate expectation, " also known as the "principle of trust." (D.I. 171-2 at 13; D.I. 199 at 8). According to that principle, the objective contractual intent is what rational and fair parties would have meant by their behavior, considered in light of all the circumstances. (D.I. 171-2 at 16; D.I. 199 at 8). As the Swiss Federal Court explained,

The principle of trust enables us to attribute to a party the objective meaning of its statements or behavior, even if that does not correspond to its private intention.... The apparently clear meaning of a law is not necessarily decisive, and thus a purely literal interpretation is prohibited. Even if the wording of a contractual clause appears perfectly clear at first sight, it may be deducible from other conditions of the contract, from the purpose of the parties or from other circumstances that the wording of the clause does not exactly reflect the meaning of the agreement.... There are however, no grounds for departing from the literal meaning of the wording adopted by the interested parties where there is no serious reason to think that it does not correspond to their intentions.

(D.I. 171-2 at ...


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