HARTFORD CASUALTY INSURANCE COMPANY v. PEERLESS INSURANCE COMPANY et al
Filing
265
OPINION. Signed by Judge Kevin McNulty on 9/30/19. (jc, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
HARTFORD CASUALTY INSURANCE
COMPANY,
Civ. No. 10-6235 (1KM) (JBC)
OPINION
Plaintiff,
V.
PEERLESS INSURANCE COMPANY et
a!.,
Defendants.
KEVIN MCNULTY, U.S.D.J.:
This case requires the Court to review the defense and settlement on
behalf of Carquest Corporation in a 2007 action presided over by District Judge
Wigenton and Magistrate Judge (later District Judge) Salas1 in this Court.
Mechin a Carquest Corp., 07-cv-5824 (D.N.J.) (the “Mechin action”). In the
Mechin action, a young man sued Voltec Industries, LLC (“Voltec”),
TMC/Tasco, and three interrelated Carquest entities—Carquest Corporation,
Carquest Products, Inc. (“CPI”), and BWP Distributors, Inc. (“BWP”)—for
injuries resulting from a garage accident involving a Carquest Trouble Light.
Hartford defended Voltec, TMC/Tasco, Carquest Corporation, CR and BWP,
taking on the Carquest entities as additional insureds on its Voltec Policy.
Eventually, the Mechin case settled. Voltec agreed to pay $900,000;
TMC/Tasco, $1,750,000; and the Carquest entities, collectively, $2,050,000.
The dispute here is whether responsibility for that $2,050,000 should be
allocated evenly among the three Carquest entities, or some other way. Why
would these related corporations care? Actually, they apparently don’t, and, to
the chagrin of Peerless, that indifference seems to be reflected in the
Judge Salas became a district judge in 2011.
1
evidentiaiy record of the Mechin action. The problem here is that the three
Carquest entities have separate insurance carriers, to whom the allocation
makes a great deal of difference. Hence this action, in which the parties are
insurance carriers.
While the Mechin Action was still pending, Hartford (which assumed the
defense of all three Carquest entities) filed this action seeking a declaratory
judgment against Carquest Corporation’s primary insurer, Peerless Insurance
Company (“Peerless”), as well as the insurers of BWP and CPI. BWP’s and CPI’s
insurers have settled, but the dispute between Hartford and Peerless remains.
Peerless (along with other insurers) has filed a counterclaim against Hartford
for breach of fiduciary duty, negligence, and breach of contract.
An additional recurring issue in this litigation relates to indemnification.
In the Mechin action, before Hartford undertook the defense of the Carquest
entities, Carquest Corporation and CPI individually filed claims for contribution
and indemnification against Voltec. Later in the case, they moved for summary
judgment, arguing that Voltec and TMC/Tasco must indemnify them under the
provisions of a contract between Voltec and CPI. Voltec cross-moved for
summary judgment with respect to the Carquest entities’ indemnification
claim. Judge Wigenton, finding the language of the indemnification agreement
to be insufficiently clear, granted Voltec summary judgment and dismissed the
indemnification claim. In this action, Peerless has attempted to relitigate that
issue.
I have gleaned the following claims from the complaints (DE 1, 27),
Judge Wigenton’s docket, and the joint pretrial order (DE 219). To summarize,
the claims now before me are:
•
Hartford’s claim for one-third of the defense costs and one-third of the
indemnity cost paid on behalf of the Carquest entities in settling the
Mechin action. Peerless, in response, asserts estoppel. Hartford, it says,
unfairly pursued a defense strate’ that neglected (a) the indemnity
2
claim of its insured, Carquest Corporation, against Voltec,2 and (b)
arguments that Carquest Corporation bore no responsibility for the
injury. Peerless further asserts that, even if contribution is appropriate, a
one-third allocation is not reasonable.
•
Peerless’s claim against Hartford for breach of its fiduciary duty to
Carquest Corporation (and, by extension, Peerless).
•
Peerless’s claim against Hartford for breach of its insurance contract for
failing to appoint independent counsel for Carquest Corporation.
•
Peerless’s claim that Hartford was negligent in its control and
management of the defense of the claims against Carquest Corporation.
Between the dates of December 3, 2018 and December 11, 2018, I held a
bench trial on all outstanding factual issues.3 The court heard testimony, both
from live witnesses and via read-ins from depositions.4 Each party was afforded
Peerless also seeks a ruling as to whether Hartford assumed the defense based
on the contractual indemnification provision deemed ineffective by Judge Wigenton.
3
The pages of the five volumes of the trial are numbered sequentially, and so are
For ease of reference, the volumes of the transcript are as
cited merely as “Tr.
follows:
2
.“
Vol. 1 (pp. 1—248)
[DE 244]
Vol. 2 (pp. 249—529)
Vol. 3 (pp.530—799)
[DE 245]
Vol. 4 (pp. 800—1086)
Vol. 5 (pp. 1087—13 16)
IDE 247]
[DE 246]
[DE 248]
At the bench trial, the court heard testimony from the following witnesses:
Hartford:
John Maucher, Esq. (Tr. 44—528)
Donna Jones, Ohio Cas. (Tr. 532—798)
Thomas Mulcahy, Esq. (Tr. 803—1024)
Jon C. Connor, Zurich Insurance (dep. read-in) (Tr. 1025—3 1)
Dan DeMerchant, Hartford Casualty (dep. read-in) (Tr. 1031—47)
Margaret Gagner, Ohio Cas. (dep. read-in) (Tr. 1047—68)
Len Herman. Esq. (dep. read-in) (Tr. 1068—71)
3
the right to cross-examine as appropriate. Exhibits were introduced in
evidence. The parties
were
given the additional opportunity to designate and
submit deposition excerpts from this action and the underlying Mechin action.
FINDINGS OF FACT
I.
1. The Mechin Action
1.
Jean Mechin, an auto mechanic, suffered burn injuries when a gas
tank toppled onto a “Professional Duty Carquest Trouble Light,” igniting gas
that had spilled on Mechin’s clothing. P1. Exs. 374, 117, 108; see also
Stipulated Pacts
¶
55 As a result of the accident, Mechin was in a coma for
four weeks and was left with permanent scarring on his neck, upper
extremities, torso, and hands. P1. Ex. 374, 117, 108. Aside from permanent
disfigurement, he also suffered psychological injuries. 4T 841:17-849:13; P1.
Exs. 117, 259.
Mary Jane Jeter, Hartford Gas. (dep. read-in) (Tr. 107 1—84)
Frederick Kotcher, consultant (dep. read-in) (Tr. 1089—1106)
Robert Wicker, Esq. (dep. read-in) (Tr. 1106—1113)
Peerless:
Margaret Gagner, Ohio Gas. (dep. read-in) (Tr. 1127—42)
John Gianizzo. Hartford Gas. (dep. read-in) (Tr. 1142—66)
Jacques Georges, Hartford Gas. (dep. read-in) (Tr. 1167—77)
Patrick Scherer, Hartford Gas. (dep. read-in) (Tr. 1177—90)
Daniel DeMerchant, Hartford Gas. (dep. read-in) (Tr. 1190—1209)
Mary Jane Jeter, Hartford Gas. (dep. read-in) (Tr. 1209—29)
Daniel Lewis, GPI/Garquest Gorp. (dep. read-in) (Tr. 1229—1237)
Robert Wicker (dep. read-in) (Tr. 1237—45)
Len Herman (dep. read-in) (Tr. 1245—62)
Frederic Kotcher (dep. read-in) (Tr. 1262—1307)
5
“Stipulated Pacts”
=
Stipulated Facts from Joint Pretrial Order [DE 2191
Ethibits submitted by the parties are cited as “P1. Ex.” and “DeL Ex.”
4
In December 2007, Mechin sued Carquest Corporation, alleging his
2.
injuries were the result of “the the Carquest Trouble Light being defectively
designed, manufactured, distributed, sold,” and asserting breach of express
warranty. P1. Lx. 99; see also Stipulated Facts
6. Mechin sought recovery’
under the New Jersey Product Liability Act, N.J. Stat. Ann.
§
2A:58C-1, et seq.
Under the NJPLA, liability can attach to those who manufacture, sell or market
defective products. Lx. 398; Stipulated Facts
¶
8.
In April 2008, Mechin amended his Complaint to name CPI, Tasco,
3.
Voltec, and BWP Industries, Inc. (“BWP”). P1. Lx. 99; Stipulated Facts
¶
7.
When they first entered appearances in the Underlying Action,
4.
Carquest Corporation, CPI, BWP, and Voltec each had separate counsel,
appointed by their respective insurers. Stipulated Facts
¶
9.
At the outset of the action, the defendants’ insurance coverage was
5.
as follows:
•
Voltec had business liability insurance with a primary coverage
(limited to $2 million per occurrence) and an umbrella coverage
(also limited to $2 million per occurrence) from Hartford. (Hartford
also issued insurance to TMC.)
•
Carquest Corporation held commercial general liability insurance
from, collectively, Peerless.6
•
CPI held both a commercial general liability insurance and
umbrella coverage from Universal Underwriters Insurance
Company (“UWC”).
•
BWP held commercial general liability insurance from Zurich
American Insurance Company (“Zurich”).
Stipulated Facts
¶
10.
Carquest Corporation held primary coverage from the Netherlands Insurance
Company (a member of Ohio Casualty) and umbrella insurance coverage from The
Indiana Insurance Company (also a member of Ohio Casualty). Mi are under the
umbrella of Peerless, defendant here.
6
3
2. Peerless initially controls Carquest Corporation’s defense
6.
On August 4, 2008, Carquest Corporation asserted a cross-claim
against Voltec for contractual indemnification. Def. Ex. 26; 4T.991:18-992:2.
7.
Carquest Corporation also asserted a cross-claim against BWP.
DeL Ex. 26; 4T.991:18-992:20.
8.
When Peerless controlled the defense of the Mechin Action (from its
outset to April 2009), Peerless did not seek dismissal or move for summary
judgment on behalf of Carquest Corporation. ST.l093:7-15; Kotcher Dep. at
31:21-32:23; 38:5-13; Gagner Dep. at 66:4-8.
3. Contract between Voltec and CPI, and the Carquest entities’
tender to Hartford
9.
In early 2008, Carquest Corporation, CPI and BWP (the “Carquest
entities”) sought coverage from Hartford, referencing the supply contract
between Voltec and CPI and the indemnification provision therein. DeL Ex. 19.
The Hartford policy provided coverage for “vendors” as additional insureds by
contract. Policy, Business Liability Coverage Form, Sec. C(6)(a), P1. Ex. 400.
The contract also included Section 2.4, titled “Indemnification,” which stated:
(a) The Supplier shall indemnify and hold harmless the Company,
CARQUEST Corp. and each Member against any and all liabilities,
losses, damages, costs, and expenses, including court costs and
reasonable attorney’s fees, that the Company, CARQUEST Corp. or
any Member may incur or sustain by reason of any claim, demand,
legal actions or judgment based upon or arising out of (i) any alleged
or actual misappropriation or infringement by the Supplier of the
trade secrets, patent rights, trademarks, copyrights or other
industrial property rights of others in connection with the Supplier’s
manufacture and/or sale of the Products; or (ii) any alleged or actual
defects of any kind in the design, manufacture, preparation, or
handling of the Products; provided that the Supplier shall not be
liable for the gross negligence or willful misconduct of the Company,
CARQUEST Corp. or any Member. The Supplier agrees to defend any
claim, demand, action, suit, or proceeding brought against the
Company, CARQUEST Corp. or any Member insofar as such claim,
demand, action, suit, or proceeding is based upon or arises out of
the matters referred to in this Agreement; provided that, upon the
Suppliers assumption of such defense, the Supplier shall not be
liable for any attorney’s fees of the Company, CARQUEST Corp. or
6
any Member. The Company, CARQUEST Corp. or any Member
claiming indemnification hereunder shall provide prompt notice to
the Supplier of any claim, demand or legal action in respect of which
indemnification may be claimed; provided that the failure to provide
such notice shall not release the Supplier for any liability except and
solely to the extent that the Supplier is materially prejudiced by such
failure. The Supplier shall not be liable for any settlement without
its prior written consent.
Def. Lx. 7.
10.
On January 31, 2008, Hartford denied the Carquest entities’
tender. Def. Lx. 19.
4. Hartford assumes the Carquest entities’ defense
11.
In April 2009, Hartford accepted the tender of the Carquest
Entities and assigned Thomas Mulcahy, Voltec’s counsel, to also represent
Carquest Corporation, CPI and BWP. Stipulated Facts
¶ 11; 4T.1036: 5-1037:
1; DeMerchant Dep. at 38: 3-39: 4. Hartford did not offer the Carquest entities,
separately or collectively, the option of separate counsel. ST. 1164:9-25, 1199:41200: 1.
12.
Hartford asserts that it accepted the tender under the “vendors”
provision. In its acceptance, Hartford noted that all of the Carquest entities had
sought coverage as “additional insured” and stated that its coverage would be
subject to all policy terms. Peerless states that Hartford accepted tender in a
different letter, dated April 3, 2009. Def. Lx. 33. In that letter, Giarrizzo writes:
The Hartford will agree to indemnify and defend Carquest against
any and all claims of the plaintiff, Jean Michael Mechin, and will
assume Carquest’s defenses and dismiss all cross-claims against
said entities subject to a full reservation of rights which would
allow The Hartford to disclaim its coverage obligation to Carquest
in the event discovery reveals that the subject product at issue in
this litigation is proven not to be a product imported and
distributed by any of the The Hartford’s named insured’s entities.
7
Def. Ex. 337
13.
Mechin, the plaintiff, was represented by David Mazie, Esq. P1. Ex.
14.
Mulcahy described Mazie as “a very capable opponent. He’s a
398.
formidable plaintiff’s lawyer.” 4T.814:5—6. John Maucher, Mulcahy’s successor
as the Carquest entities’ lawyer, described Mazie as “very professional
H]
he
knew what he was doing.” 1T.56:19—20.
15.
Peerless asserts that Hartford employees responsible for overseeing
the defense of the Carquest entities were “confused” about the respective roles
of the companies in the marketing and sale of the Trouble Light. iT. 169:16-24;
P1. Ex. 80; 4T.1073:11-20, 1076:13-18, 1077:16-24, 1079:1-5; 5T.1222:21223:3. Peerless also notes that, at the outset of the Mechin action, a Hartford
representative had a conversation with Frederick Kotcher (see
¶
18, infra) in
which Kotcher stated that Carquest Corporation was wrongly named as a
defendant and had not participated in the chain of distribution. ST. 1304:51307: 19.
5. Innocent seller defense
16.
Voltec, Carquest, CPI, and BWP assured Hartford that none of
them had been materially involved in the marketing, labeling, warnings, design
or manufacture of the Trouble Light. DeMerchant read-in, 4T.1037:4-12;
DeMerchantDep. at 42: 21-43: 6; Herman Dep. at 5-50: 13; 118:23-120:7;
Kotcher Testimony, ST. 1094:3-11; Kotcher Dep. at 90:8-94:23.
17.
Thus, the Carquest entities, through Mulcahy and, later, John
Maucher, pursued an “innocent seller” defense. 4T.811:18-812:14; P1. Exs.
Hartford cites to Def. Ex. 19 (described as Giarrizzo letter, 4/17/09), which I
have been unable to locate in the record.
7
8
117, 127,8 492.° Gagner, who monitored the file at Peerless, P1. Ex. 65, 66,
understood that Mulcahy was pursuing a joint “innocent seller” defense.
Gagner Dep. at 108:18-109:25. She did not raise an issue of conflict with
Mulcahy pursuing the joint defense. 4T.1049:19-1050:16; Gagner Dep. at
88:23-89:25.
6. Overlapping principals of the Carquest entities
18.
Frederick Kotcher served as the principal for Carquest Corp. and
CPI. 5T1091:7-23, Kotcher Dep. at 24:10-22; Wicker Dep. at 26:6-17. Kotcher
was Vice President of Corporate Administration for General Parts of Raleigh,
NC. Kotcher Dep. at 19:18-20:24. During the Mechin Action, Kotcher served as
an outside consultant to General Parts, Carquest Corporation and CPI.
ST.1089: 23-1091:4, Kotcher is not a lawyer. ST.1089: 18-20; Kotcher Dep. at
13:7-24:1.
19.
Robert Wicker was the General Counsel for General Parts
International (“GPI”). GPI’s subsidiary is General Parts, Inc., which along with
BWP and other subsidiaries, were the shareholders of Carquest Corporation.
Wicker’s role was to advise Frederick Kotcher. ST. 1106:21-1107:1; Wicker Dep.
at 19: 12-24:12; 26:6-17.
20.
Len Herman, an independent lawyer, was officially the principal for
BWP throughout the Mechin action. 4T.1068:14-21, Herman Dep. at 11:1812:2 1.
21.
When Mulcahy represented the defendants, and at the beginning of
Maucher’s representation, Herman acted as the primary contact for the three
Carquest entities: Carquest Corp., BWP, and CPI. 4T.816:20-817:14; 1T.63:2464:8; 1T.68:19-69:7; 4T.l031:25-1032:16; see also Exs 311, 312, 116. Herman
P1. Ex. 127 is Defendants’ Statement of Material Facts to the Mechin
Summary Judgment Motion, admitted without objection.
P1. Ex. 492 is the confidential settlement conference memo of Carquest
Corporation, CPI, and BWP. Because the settlement process and the reasonableness of
the settlement are the very substance of this action, it is admissible.
9
9
attended most depositions in the case and every deposition for the Carquest,
BWP, and C witnesses. 4T.8 17:15-818:12.
Kotcher consulted with both Wicker and Herman regarding the
22.
Mechin action. 5T.1092:13-1093:2. Kotcher Dep. at 27:7-28:1; 24:23-25:1;
260:4-261: 16.
Kotcher testified that Carquest Corp. and CPI coordinated their
23.
defense with BWP throughout the Mechin action. ST. 1092:2-9, Kotcher Dep. at
25:12-20.
7. Thomas Mulcahy, Esq.
24.
Defense Counsel Thomas Mulcahy has handled over 500 civil
bodily injury cases for Hartford and other insurers. 4T.806: 11-25. He has never
been brought before the Committee on Professional Responsibility. 4T.807:2224.
25.
Mulcahv testified that, during his time representing the Carquest
entities, there was no discord among those entities regarding his defense
strategy. 4T.873:4-14.
26.
At one point, Voltec and the Carquest entities were in
disagreement over whether to file a third-party complaint against Firestone,
Mechin’s employer. P1. Exs. 311, 111; 4T.816-5-820:23. However, by March 2,
2010, Mulcahy reported that Voltec and Carquest agreed that there was
insufficient evidence to sue Firestone. P1. Ex. 117, at 6.10
27.
At the beginning of Mr. Mulcahy’s representation, Herman ‘was
concerned about the fact that one law firm was representing all of the Carquest
entities and Voltec. P1. Ex. 117. That issue became heightened when it was
disclosed that TMC/Tasco, which has the same owner as Voltec, had a close
relationship with the importing company. P1. Ex. 117. See Miller Dep. at 8-30.
However, once the litigation went into discovery, Herman was “on board” with
TMC/Tasco would bring a third-party complaint against Firestone, which was
denied. P1. Ex. 205.
10
the defense strategy that all three Carquest entities should press an “innocent
seller” defense. 4T.873.12-19.
8. Deposition testimony during Mulcahy’s representation
regarding the roles of the Carquest entities
28.
During discovery, Mulcahy prepared the witnesses to be detailed
and explicit as to what the respective roles of the corporations were. 4T.959:312. However, as described infra, those very witnesses created confusion as to
each Carquest entities’ role in the marketing and chain of distribution for the
Trouble Light. Generally, the witnesses did not clearly distinguish between the
Carquest entities and often times mixed up their names. See infra
29.
¶
27—33.
Peerless has submitted significant evidence to demonstrate that
Carquest Corporation did not participate in marketing or the chain of
distribution. Nevertheless, evidence existed in the record of the Mechin action
that would tend to implicate Carquest Corporation.
30.
Dan Lewis, the CPI Market Director and corporate designee (Lewis
Dep. at 5), created uncertainty as to:
(a) the specific role each Carquest entity played in marketing and labeling
the Trouble Light, id. at 57:16-58:5, 89:9-25; 90:3-6, 109:4-9;
(b) the relationships among the Carquest entities, id. at 6:1-8, 13:1-14:24,
25:12-19, 32:1-17, 47:13-48:25; and
(c) Carquest Corporation’s role in the chain of distribution. Id. 60:13-61:22,
90:7- 16.
31.
The witnesses from BWP marketing added to the confusion
regarding Carquest’s Corporation’s role in marketing the product. Manno Dep.
at 7-8, 11; Pallai Dep. at 24-25, 26:21-25.
(a) Gaic Manno, the Carquest Marketing Manager at BWP, testified that, to
advertise the 81829 Trouble Light, he took and paraphrased language
from the Carquest service line catalog and included it in a flyer, Manno
Dep. at 11; at another point, Manno had testified that Carquest
corporation puts out the Carquest catalogs and commercial advertising.
Id. at 7.
11
(b) Richard Pallai, Vice President of Marketing at BWP, testified that BWP,
another Carquest member, or an independent Carquest store could have
made a flyer regarding the 81829 Trouble Light. Pallai Dep. at 24-25.
32.
The witnesses from Voltec also created confusion by using
“Carquest” as a catchall term for all three entities, or for CPI. Miller Dep. at 5658, 81:17-21, 98-99, 101:19-102:8;WrayDep. at 33:16-21.
(a) Thomas Miller, the founder and owner of TMC/Tasco and Voltec, see
Miller Dep. at 8-30, stated that Voltec sold the trouble light to
“Carquest.” Id. at 56-58. Miller stated that he was not aware of any
instances in which TMC/Tasco or Voltec sold their products to CPI. Id.
Miller also testified that, as he understood it, “Carquest” sold the trouble
light to Firestone. Id. at 98-99. Further, Miller testified that “Carquest”
created the actual packaging on the box for Trouble Light. Id. at 81:1721.
(b) John Wray, Vice President of Sales for the Automotive Division of Voltec,
testified that Voltec sells to Carquest Products Incorporation (CPI). Wray
Dep. at 33:16-2 1. Wray testified that “Carquest” designed the packaging,
then specified that Carquest Products “designed it and provided the
designs back to us.” Id. at 53:6-54:14. At points in his answers, Wray
would use the name “Carquest,” as opposed to CPI or Carquest Products.
See e.g., id. Further, Wray testified that he did not know who owned
“Carquest, CPI, or BWP;” he then stated CPI is owned by Carquest and,
by common knowledge in the marketplace, BWP is an independently
owned Carquest distributor. Id. 34:1-22.
33.
During this bench trial, Mulcahy stated that he did not ask
questions after Mazie concluded his examination. In his view, doing so would
have been a classic young lawyer’s mistake; it would only confuse the client
and dig “a deeper hole.” 4T.915:16-916:13.
9. Mulcahy’s reports
12
34.
Mulcahy sent two reports to Hartford providing updates on the
state of the case. P1. Exs. 117; 107.
35.
Margaret Gagner, the Peerless adjuster, was copied on both of
Mulcahy’s letter reports, and both were re-sent to her on March 30, 2010. P1.
Lx. 67. Mulcahy testified that he never received criticism from Gagner.
4T,873.9-1 1. At no time did Gagner request that separate counsel be retained
to defend Carquest Corporation. 4T.105l:25-1052:4.
i. March 2, 2010 report
36.
On March 2, 2010. Mulcahy reported to Hartford on the state of
the case. P1. Ex. 117. Mulcahy wrote:
In my opinion, our Carquest clients are somewhat vulnerable in this
litigation arising from the degree to which they claimed to know
nothing about the testing which may or may not have been
performed
.Those lights were marketed under the Carquest brand,
but the Carquest entities have done essentially no testing on the
product relative to their safety.
.
.
P1. Lx. 117 p. 20.
1. Mazie’s strategy
37.
Mulcahy reported that one of Mazie’s theories was that “as an
entity that markets its products under the Carquest brand” to service station
customers, the Carquest-related companies had a duty to sell products that
could be safely used in that work environment. P1. Lx. 117, p. 3. Mulcahy also
reported that Mazie was attempting to prove that the Carquest companies were
not mere distributors, but rather were “branding” the product, indicating that
they should be held to the same standard as companies that designed or
manufactured the lights. Id. p. 5.
38.
Mulcahy reported that the there was no real challenge “to the fact
that [the Trouble Lightj was a Carquest product,” and that the Trouble Light
“came through the Carquest distribution chain of Carquest Corp., CPI and
BWP
.
.
.“
39.
P1. Ex. 117 at 10.
Mulcahy also reported on the anticipated strategy of the plaintiff to
extend liability to all three Carquest entities:
13
It became fairly clear throughout these depositions that plaintiffs
counsel, David A. Mazie, is going to come after those entities which
were responsible for the Carquest brand because of the extent of the
Carquest brand business.
Mr. Mazie will attempt to use the extent
of the Carquest empire to justify the argument that if you are going
to put your name on a product, you should at least have some
knowledge of the testing associated with the product and the
arguable dangers associated with its use under certain
circumstances. I am of the opinion that this is not a bad argument
on plaintiffs behalf.
.
.
Pl.Ex. 117 at24.
2. Deposition reports
Mulcahy also reported that, by the time of Lewis’s deposition, “it
40.
had become clear that Carquest had at least some input into the marketing
materials and packaging for the drop light at issue.” P1. Ex. 117 at 19.
Pallai, Mulcahy reported, made a decision to include the Trouble
41.
Light in the Carquest product flyers that are distributed throughout the nation.
Id. p. 22. Mulcahy further recounted Pallai’s deposition testimony that BWP
was responsible for preparing the flyers, but that Carquest Corporation was
responsible for the creation of the brochures which had been previously
marked. Id.
On March 29, 2010, Mulcahy reported to Hartford that the UL
42.
Certification for the Trouble Light was incorrect. P1. Ex. 107, at 3. Further,
Mulcahy reported, the Carquest witnesses testified that they had relied on
Voltec and TMC/Tasco’s representations that the Trouble Light was suitable for
the automotive service environment, id., but the product had only been tested
for “general use.” Id. at 2-3, 9 (citing John Herschbach, a UL expert, who
posited that the Trouble Light was not appropriate for the automotive service
station environment).
10.
43.
Mulcahy’s testimony in this action
By the end of March 2010, although discovery was not finished,
Mulcahy believed that it was extremely unlikely that he could obtain summary
judgment for any of the individual Carquest entities, because there was enough
evidence relating to each of the three to create a triable issue. 4T.909:22-4l0:6.
14
Mulcahy also found Lewis’s deposition to be inconsistent. Id. 907:1-9. In
Mulcahy’s experience, “it doesn’t take much for a summary judgment to be
denied by a Court if there’s any level of inconsistency in the factual testimony.”
Id. 907:7-9.
44.
Mulcahy believed that Mazie’s goal was “definitely attacking [the
Carquest entities] as an enterprise.” 4T.861:8-12. Illustrating the point, he
testified as follows:
As we dealt with individual representatives at depositions, he would
ask that particular person who came from one or the other of the
Carquest entities you know, specifically what that entity did in
connection with the product just to give himself some background.
But I mean, [Mazie], as is the case with most plaintiff attorneys,
didnt really care where the responsible specific mistake may have
because
been made within the entities. It was in his interest
such a well-known brand, as being responsible for the
Carquest was
It was pretty apparent that he was
marketing of this product.
expert who was going to say that this particular
going to have an
light was inappropriate for this particular application.
.
.
.
.
.
.
4T.86 1:8-826:3. See also 4T.959:24-960:5.
45.
Mulcahy was concerned that Mazie’s deposition questioning
signaled an attack on choices to market the Trouble Light to garages and to
place the “Carquest” label on the Trouble Light without testing or having
knowledge of testing. 4T. 867:16-868; 868:19-869:6; 4T.883:2-2 1; 4T.884:24885:23; see also 4T. 869:3-6.
11.
46.
Decision to split off the Voltec file
In early April 2010, Hartford adjuster Daniel DeMerchant
determined that there was a potential conflict between the Carquest entities
and Voltec. The conflict arose from past disagreements about suing Firestone,
DeMerchant Dep. at 47:7-48:23, and the discovery that the Carquest entities
had some role in marketing the trouble light, including the placing of the
“Professional-Duty” label on the box. 45:8-46:17. Thus, he decided to split the
file and retain separate counsel as between the Carquest entities and Voltec.
15
Id. at 47:7-48:23. Hartford allowed the Carquest entities to choose their
counsel. P1.. Ex. 44; 4T.1040:20-1041:2, 1041:15-1043.
Len Herman disagreed with the decision to split the defense. Id.
47.
Maucher’s representation of the Carquest entities
12.
48.
As their new, separate counsel, the Carquest entities chose John
Maucher of Mintzer Sarowitz, the firm which had defended BWP during the
first year of the case. P1. Ex. 119, 294. Hartford paid Mintzer Sarowitz
$159,230.07 in total for the defense of the Carquest entities. P1. Exs. 3, 16—27.
49.
John Maucher has practiced as a civil defense lawyer in New
Jersey since 1995, and during that time he has tried ten cases before a jury.
Maucher specializes in bodily injury cases. 1T.44:5-46: 12. Maucher has never
been sued for malpractice, sanctioned, or brought before the Committee of
Professional Responsibility. Id.
50.
At the beginning of his representation, Maucher’s client contact
was Herman; he reported to Herman with the understanding that Herman
spoke for all three Carquest entities. IT.63: 10-64:8. Later, Maucher reported to
Herman, Kotcher, and Wicker jointly. 1T.69:4- 1.
51.
As for the insurance carriers, Maucher reported to Scherer and
Jeter at Hartford, and to Margaret Gagner and her successor, Donna Jones, at
Peerless. 1T.53:5-23, 85:5-86:16, P1. Ex. 68 (Maucher reaching out to Gagner
to discuss the transfer of the case).
Maucher found that Jeter and Scherer paid attention to the file,
52.
and that Jeter would send follow-up e-mails whenever he sent a report.
lT. 176:7-15. That being said, many times, Maucher communicated with his
clients and other insurers without copying Hartford. P1. Exs. 76, 83, 84, 124,
143, 145, 155, 181, 220, 221, 222.
13.
53.
Maucher’s relationship with the Carquest entities
The Carquest entities never requested separate counsel, nor did
they advise Maucher that he had a conflict of interest. 1T:49:6-25, 50:7-12,
132:5-9; Herman Dep. at 142:6-144:15, 184:8-10, 313:5-315:4; 5T.l108.4-11.
16
Maucher testified that none of the Carquest principals expressed a
54.
disagreement over his defense strategy. 1T.49:22-50:6, 189:16-20. See also,
5T. 1092:2-9. Further, he testified, none of the entities’ principals ever proposed
that they assert cross-claims against each other. 1T:50:13-16. Nor did they
ever request that Maucher cease using “Carquest” as a short-hand designation
for all three entities. 1T.192:13-193:3. From Maucher’s perspective, the
Carquest entities “were pretty much a team.” iT. 189:14-15.
55.
Although paid by Hartford, Maucher acted as independent defense
counsel for the Carquest entities. 2T.254: 11-255:16; P1. Ex. 8; 1T.54:8-55: 10.
14.
56.
Maucher’s June 26, 2010 status report
On June 26, 2010, Maucher submitted a status report to Hartford.
P1. Ex. 74. Maucher reported that the plaintiffs case would focus on the fact
that the drop lights “should not be marketed for use by service or repair
facilities, such as Firestone.” Id. Maucher noted that Carquest depositions
revealed that the drop light was marketed to the service and repair industry
through “flyers, in store brochures and pamphlets, etc.” Id. Discussing
manufacturing and the chain of distribution, Maucher reported that “[a]fter
TMC/Tasco brings the product into the country Voltec distributes it to
numerous other companies, including Carquest, CPI and BWP.” P1. Ex. 74 at
1587.
57.
Maucher estimated likely jury verdicts as follows; if the plaintiff
prevailed on most or all issues, $2,000,000 or more; if the defense prevailed on
most or all issues, $750,000 maximum; and if an average outcome,
$1,300,000. Id. at 1590. In his verdict comments, Maucher warned:
Although this case does not appear to be strong for the plaintiff in
regard to liability, the jury will be sympathetic since the plaintiff was
a 20 year old young man who will share no blame for his accident.
Whether or not the jury finds that the defendants were negligent
and/or breached the New Jersey Products Liability Act, they will
surely feel sorT for the plaintiff. Therefore, the jury may fit the facts
to reach the outcome which they believe is just; which will be a
verdict on behalf of the plaintiff to help him cope with the lifelong
burden of being disfigured.
17
P1. Ex. 74 p. 1590.
Throughout the case, Mazie continued to push the argument that
58.
the Trouble Light “was not suitable for the application it was marketed and
sold to.” 1T.92:19-93:6. Mazie continued to press the point that the Carquest
entities were not aware of the product testing in the way that they should have
been. lT.73:8-74:1.
July e-mails between Maucher and Gagner
15.
On July 9, 2010, Maucher reported that Voltec’s counsel sought
59.
depositions of the Carquest entities employees. That request “baffie[dj”
Maucher; he believed such discovery “would make plaintiffs case and
potentially uncover acts of negligence by a co-defendant covered by the same
insurance.” P1. Ex. 70 at 1786.
In reply to Maucher’s e-mail, Gagner wrote that, when the matter
60.
first started, Kotcher explained that Carquest did not sell any products and its
role “was simply to license the brand and/or trademark and sell to their
distributors.” Id. at 1785. During the bench trial before this Court, Maucher
testified that, whether that was true or not, depositions had created a factual
issue as to whether Carquest’s role was strictly one of licensing. 1T.107:2-22.
Maucher commented, “[a]ll it took was for a witness to say othenvise; because
it didn’t matter what I thought, it’s what the witnesses believed, would testify
to.” Id.
16.
61.
Maucher’s July 21, 2010 report
On July 21, 2010, Maucher sent a second report to Hartford,
copying Herman and Jeter, among others. P1. Ex. 71. Maucher reported that
the Trouble Light was not tested for use in commercial settings, id.
¶
1.
Maucher also attached photographs of Mechin’s injuries, some of which he
described as “rather shocking.” Id.
62.
¶
2.
Maucher reported that, after performing a jury verdict search, the
program he used predicted a $12 million settlement value or a $15 million jury
verdict. Id.
18
63.
Maucher reported that he previously believed that a fair settlement
in this case would be a net of $2 million ($3.5 million including liens, lost
wages, and attorney’s fees), but Herman disagreed, saying he believed that the
value of the case was significantly higher. Id.
In his report, Maucher also noted that he had demanded Voltec’s
64.
catalogs, and raised the issue before Judge Salas, but expected “a fight” from
Voltec. P1. Ex. 71
4.
Judge Salas’s August 2010 rulings
17.
65.
¶
On August 5, 2010, Judge Salas, then a magistrate judge in this
District, heard argument and denied pending motions to add TMC China, the
Chinese manufacturer of the Trouble Light, and Firestone as defendants. P1.
Ex. 205. Judge Salas scheduled a settlement conference. Id. The plaintiff made
a demand for S9 million. Id.
18.
66.
Summer 2010 depositions
Over the summer of 2010, Maucher defended depositions on behalf
of the Carquest entities. 1T.74: 15-75:8. Herman participated in the preparation
of the deposed witnesses. Id. Maucher testified before me that he was
concerned for the interests of all three Carquest entities. Id. Maucher testified
that, upon reviewing the deposition transcripts, he was concerned to find
testimony about the relationships among the Carquest entities “that was
muddled, interrelated, even witnesses that weren’t sure who they worked for at
a certain period of time.” 1T.71:13-72:1.
67.
After reviewing Pallai’s testimony indicating that the members of
the Carquest Corporation group also owned CPI, Maucher became concerned
that it would be “hard to get a party out and say that they did nothing at all
wrong [when] they’re part owner of another defendant.” 1T.75:22-76:8.
68.
On August 17, 2010, Scott Ginsburg, Carquest Corporation’s then-
Director of Advertising, was deposed. iT. 126:19-127:19. Kotcher, Herman, and
Maucher prepared Ginsburg in person. Id. Ginsburg testified at his deposition
that Carquest Corporation had a director of advertising before 2006, prepared
19
flyers advertising the Trouble Light, and did catalogs. Ginsburg Dep. at 10:324, 11:3-25; 12:1-25, 13:1-2, 14:1-8, 14:12-17, 15:3-12. Ginsburg also
testified that no one else besides him at Carquest Corporation was involved in
the marketing of the Trouble Light. Id. at 15:3-12.
Maucher’s August 19, 2010 status report
19.
69.
On August 19, 2010, Maucher reported on the recent depositions.
P1. Lx. 212. Maucher reported that fact discovery would end in mid-September
and that, while the case could be won, there was the potential for ajuiy verdict
in excess of $10 million. P1. Lx. 212 at 4. Maucher wrote that he thought it
would take $5 million to settle the case as to all defendants. Id.
Plaintiffs expert reports
20.
70.
In November 2010, Mechin served two expert reports. P1. Exs. 78, 79.
71.
Plaintiffs liability expert, John M. Tobias, P.E., stated:
Carquest literature specifically targets the work light to commercial
automotive repair facilities. This is reinforced by testimony of
numerous persons affiliated with Carquest, as tabulated in the next
section. In fact, the defendants list the Carquest Trouble Light to be
“professional duty”, which they intend to mean that the light is more
appropriate for use in a commercial automobile repair facility than
their other trouble lights.
P1. Lx. 78, at 3. Tobias noted that Ginsburg had “explained that they produced
an adverting flier which was directed to professional users and contained the
Carquest Trouble Light.” Id. at 4 (citing Ginsburg Dep. at 11:5-25, 25:12-15,
26:16-27:16). Tobias also noted that CN and BWP admitted that they marketed
the Trouble Light to commercial garages like the Firestone where the accident
occurred. Id.
72.
Plaintiffs warning expert, Sam Glucksberg, Ph.D., stated in a
heading that “[t]he marketing of the Carquest Trouble Light, via the Carquest
products catalog/fliers and the label on the cord reel housing, invited the
inference that the product was intended for use in the commercial auto repair
industry.” PT. Ex. 79 at 6. Further, Glucksberg opined, “[tjhe listing in the
catalog for the Carquest Trouble Light appears along with various commercial
20
automotive products, and defendants’ representatives testified that the product
was specifically marketed and sold to commercial automotive repair facilities.”
Id. Muacher summarized Dr. Glucksberg’s opinion in a report. P1. Ex. 208.
Maucher shared the Plaintiff’s expert reports with Kotcher, Herman
73.
and Wicker. None of them stated that the report was incorrect in accusing
Carquest Corporation or the other Carquest entities of being involved in the
advertising and marketing of the Trouble Light. iT. 154:11-1g.
December 2010 Settlement Conference
21.
In November 2010, Maucher submitted a settlement memorandum
74.
to Magistrate Judge Salas in advance of a December 3, 2010 settlement
conference. P1. Ex. 390. In that memorandum, Maucher referred to Carquest
Corporation, CPI, and BWP as “the Carquest defendants” or “Carquest.” Id. On
November 24, 2010, Maucher e-mailed a copy of the memorandum to the
principals for the Carquest entities, Hartford, Peerless, and the other insurers.
P1. Ex. 390. Neither Peerless nor Kotcher protested or asked Maucher to tease
out the role of Carquest Corporation individually. 1T.157:4-7.
On November 23, 2010, Maucher wrote to Zurich, recommending
75.
that the case be settled prior to trial. P1. Ex. 217 P. 4. Maucher opined that,
while there was a chance that the defendants could win at trial, “we believe
that a juiy will find liability and will seek to award plaintiff a significant
amount of money.” Id.
22.
76.
Maucher’s November 27, 2010 report to Hartford regarding
settlement conference
On November 27, 2010, Maucher submitted a case report to
Hartford in preparation for the settlement conference. P1. Ex. 397. Maucher
also sent a copy to the Carquest principals, Peerless, and the other insurers.
P1. Ex. 83,
77.
In the report, Maucher restated the possibility of a $15 million jury
verdict, noting that the case research generating the 515 million estimate did
not include the factor of the plaintiffs youth. P1. Ex. 397, at 3. Maucher
21
explained that he meant to imply that the jury verdict could be even higher,
considering Mechin’s youth and life expectancy. 1T.158:15-159:5.
78.
Maucher also reported his estimate that plaintiffs counsel would
expect between a minimum of $4 million and as much as $5 million to settle
the case. P1. Lx. 397 at 3.
79.
In the evaluation section of the report, Maucher opined that a “jury
will find liability and will seek to award plaintiff a significant amount of
money.” P1. Lx. 397 at 5. He summarized:
There is a chance in a case like this that a jury would simply look at
three different groups of defendants and split liability equally among
them.
[U]nder the worse possible case scenario, a $15,000,000
verdict with no comparative negligence, and 33 1/3 percent liability
against the Carquest defendants would mean a verdict of
$5,000,000 against the three Carquest defendants. Further dividing
that in 1/3 would result in a $1,667,000 judgment against BWP,
CPI, and Carquest Corp. The best case scenario, would be a finding
of zero liability against BWP/Carquest since they were a seller who
was uninvolved in either the design, manufacturer, or warnings, and
the packaging and labeling of the product did not lead to liability.
However, it would be hard for a jury to separate what the
Carquest defendants did or did not do in regard to selling an
unsafe product, and given the overlap of ownership by Tom Miller
with Tasco/TMC and Voltec, I believe a jury would simply decide
to split liability among all defendants instead of taking the time
and effort to allocate liability based upon the defendants’ conduct
and responsibility.
.
.
.
P1. Lx. 397, p. 5 (bold text added).
80.
Maucher testified that his advice that the jury would not try to
figure out what each Carquest entity did was based in part on the deposition
testimony as to their status and roles, which had been “muddled and unclear.”
1T.160:18-16 1:17.
81.
In his report, Maucher painted a picture: At the Mechin trial, he
said, Mazie would make an “impassioned closing argument” and perform
arithmetic on a white board totaling Mechin’s pain and suffering to urge a jury
verdict in excess of $29 million. P1. Lx. 397 at 5.
22
82.
In his report, Maucher anticipated that Voltec would move for
summary judgment, arguing that it had never physically possessed the Trouble
Light and merely acted as a facilitator. P1. Lx. 397 at 4. Maucher opined that
this would be a losing argument because of the “common ownership” of Voltec
and TMC/Tasco. Id.
83.
In the report, Maucher also predicted that, depending on the
evidence that was considered, the Carquest entities had either a 50% or a 1020% chance of winning summary judgment. Id. p. 7. Maucher’s report
concluded that, “since emotion will be the controlling aspect of the case, please
believe that a huge verdict is possible against all defendants.” P1. Lx. 397 at 8.
23.
84.
Post-report exchange between Jeter and Maucher
Two days after Maucher submitted the November 27, 2010 report,
Jeter, the Hartford adjuster, e-mailed Maucher: “It appears, from the complaint
and the expert reports you have sent, that Carquest vi1l be the
primary target
in this matter.” P1. Lx. 80 at 3. Jeter also asked why liability should be equally
allocated to TMC Tasco, Voltec, and “Carquest” (apparently meaning, in this
instance, the three Carquest entities), if “Carquest” was the prime target. Id.
Maucher replied, affirming his view that the jury would split liability equally,
but conceding that the expert reports, justifiably or not, mentioned “Carquest”
more than any other party. P1. Lx. 80 at 1—2, See also 1T.168:ll-169:15
(Maucher’s testimony at trial reaffirming his reasoning in his report).
85.
Further, Jeter expressed confusion as to Maucher’s references to
Carquest, Carquest Corporation, and Carquest Products Incorporated. P1. Lx.
80 at 3. She sought clarification on the entities and their roles with respect to
the Trouble Light and the Mechin action. Id. Maucher replied that testimony
revealed that functions such as catalog product and advertising moved from
“CPI to Carquest or vice versa” and that employees were transferred between
those companies. Id. at 2. Further, Maucher said: “It seems like these
corporations were interconnected and interchangeable in many respects. A jury
will view all three of my clients as one entity’ I believe.” Id. Maucher added that
23
“Carquest ran their own ads and promotions separate from the Carquest or CPI
corporate ads and promotions.” Id.
Maucher’s e-mail also stated that it was “undisputed that
86.
‘Professional-Duty’
was
coined by a Carquest person
-
but unknown who,
when, why that phrase was first coined.” Id. See also, Kotcher Dep. at 308:14309:21 (stating that “Carquest” had introduced the term “professional duty”).
At this trial, Maucher testified that, given those issues with the term
“professional-duty,” there was a question of material fact that would cause a
judge to deny summary judgnient. 1T.173:1l-22.
Maucher forwarded the exchange to the other insurers, including
87.
Peerless. P1. Ex. 80 at 1,
24.
88.
Additional reports post-settlement conference
On December 4, 2010, Maucher submitted a report on the
settlement conference. P1. Ex. 259. Maucher relayed that all defendants made a
collective offer of $750,000, which Voltec, TMC/Tasco, and the Carquest
entities providing $250,000. Id. at 3. In response, Maucher reported, Judge
Salas was “perturbed and stated she had no leverage to even work on the
plaintiff with such a low’ initial offer.” Id.
89.
Maucher also relayed Judge Salas’s comment that “Carquest has a
problem because the light wasn’t approved for sale to commercial auto service
clients with a zone of hazard and admittedly that was our market.” Id. p. 2-3.
90.
Maucher also noted, after meeting Mechin in person, that “for the
4-5 weeks of trial the jury will see Mr. Mechin from the right side,” which was
the side of his body with damage. Id.
91.
Maucher opined that the case could settle for $4.5 million. Id.
Maucher and Jeter engaged in an e-mail exchange regarding his report, leaving
Kotcher, Wicker, Herman, Gagner, and others copied. Ex. 259; 1T.177:12-21.
92.
At this trial, Maucher testified that his clients, the Carquest
entities, knew that they were discussed as a collective for purposes of
24
settlement allocations, and that none of them at this time asked him to
differentiate one from another. lT. 177:22-178:13.
93.
On December 8, 2010, Hartford asked Maucher for (1) a summary
of the strengths and weaknesses of the case for “Tasco, Voltec, and Carquest”
and (2) his opinion as to whether liability should be split in thirds among them.
P1. Lx. 259 at 1.
94.
On December 13, 2010, Maucher provided Hartford with his
responses. Maucher wrote:
The reference to 33 1/3% I have mentioned numerous times related
to my belief that for settlement purposes each of the 3 defendants
should be prepared equally to see the case settle and it reflects the
reality that all 3 defendants played a role in getting this product to
Firestone, and that there is the possibility that a jury will lump the
three defendants together w/o considering liability arguments and
take the easy approach and split liability equally.
Anyone who can figure out what the jury will do is guessing at this
point. However, all defendants have exposure and this is a case that
should settle w/o leaving ft to the jury who will place an enormous
value on the case.
P1. Lx. 7.
95.
On December 8, 2010, the Carquest principals, Maucher, and the
non-Hartford insurers discussed Maucher’s report. P1. Ex. 85. The Carquest
principals took issue with the one-third allocation the Carquest entities and
any posturing to Plaintiffs attorney that the case was a “split liability
situation.” Id. Wicker expressed his hope that any settlement agreement could
be structured in a way that the Carquest entities’ portion could be contested
for indemnification by Hartford, Voltec and TMC/Tasco. Id. During this
exchange, the Carquest principals did not express that their respective entities
should be distinguished in settlement or otherwise. P1. Lx. 85.
96.
Because settlement was unsuccessful, Judge Salas had scheduled
a mediation before Judge Dan Mecca for January 5, 2011. P1. Lx. 259.
25.
Mediation
25
97.
Discussing the upcoming mediation, the Carquest principals did
not assert that their respective entities should be distinguished from each
other in settlement or otherwise. P1. Ex. 123; iT. 17-188:22.
98.
The Carquest principals complained that Hartford was too
optimistic about the case and that the case should be settled before it reached
the “courthouse steps.” P1. Ex. 123.
99.
In advance of mediation, Maucher submitted a confidential
mediation memorandum to former Judge Mecca, in which he again referred to
the Carquest entities as a collective. P1. Ex. 246. In this trial, Maucher testified
that it would be his practice to copy the Carquest principals on such a
document. 1T.203:5-25.
100. On January 5, 2011, a mediation session was held before former
Judge Mecca. P1. Ex. 246.
101. After the mediation, Maucher reported to Hartford that the Plaintiff
“would not take a penny less than $5 million” and that Mazie characterized this
amount as a “gift” and a “discount.” P1. Ex. 145 at 2. Maucher also reported
Mazie’s comment that if plaintiff received favorable rulings on summary
judgment, his demands would increase. Id. Maucher further reported that
Mazie claimed to have done a focus group that returned a Sl5 million verdict,
which Maucher did not find outlandish. Id.
102. Maucher forwarded the Hartford report to the Carquest principals
and other insurers and, in the same e-mail, provided them with additional
commentary. P1. Ex. 145 at 1. Maucher noted that he had the sense the
Hartford believed the case could be settled in the “$3+million range,” which he
disagreed with. Id. He considered how Hartford could raise the amount to $4.5
million. Id. He noted that, while $4.5 million is “a lot of money, if The Hartford
is so sure of their position on indemnification and which policy is priman’, they
should lock in a settlement at their best number now before spending more
money for three attorneys and before potential unfavorable rulings on
1/28/11.” Id. Maucher also noted, “I certainly have not pulled any punches
26
with Hartford as to how I can see the potential for a huge jury verdict if we
allow this case to get to trial.” Id.
26.
103.
January 28, 2011 ruling on comparative negligence
On January 28, 2011, Judge Wigenton dismissed the defenses that
were based on comparative negligence. P1’s Lx. 411. In this trial, Maucher
testified that the ruling could have had some impact on his ability to put
wrongdoing on Firestone. 1T.2 17:16-219:13.
104. After Judge Wigenton’s ruling, Maucher reported to Hartford that
all defense counsel agreed that barring the comparative negligence claim would
have no impact on the case. P1. Lx. 181. Maucher further reported that, while
Judge Wigenton’s ruling did not change the value of the case, “it certainly
didn’t lower the value of the case.” Id. Forwarding the report to the Carquest
principals, Maucher commented that “[t]this ruling makes me question the
Judge’s grasp of the case and her review of the motions.” P1. Lx. 181.
105,
In his deposition for this trial, Kotcher commented that Judge
Wigenton did not understand the difference between the Carquest entities or
that they were not interchangeable. Kotcher Dep. at 159:5-160:6. Kotcher
expressed that he understood that it was not in Mazie’s interest to distinguish
them, and he estimated that Judge Wigenton’s understanding could be the
result of the deposition testimony. Id.
106.
In February 2011, Maucher, sent an e-mail copying Len Herman.
P1. Lx. 224. In the e-mail, Maucher noted that “there is great confusion among
the witnesses and parties as to the Carquest/BWP relationship. Even some of
the Carquest/CPI witnesses had a tough time explaining who they worked for
and some worked for both entities.” Id. Regardless of the confusion, Maucher
noted that his motion on behalf of all three Carquest entities would be the
same, in that they were all shielded by an innocent seller defense. Id.
107. Also in February 2011, Mulcahy reported on the performance of
Voltec’s warning expert in depositions. In Maucher’s estimation, the expert
“seemed to wilt under the pressure”; he wondered how she would handle a
27
trial; and he opined that she lacked the necessary expertise to testify that
Firestone lacked safe work practices. P1. Ex. 182.
Internal settlement discussions after Judge Wigenton’s
decision
27.
108.
During February 2011, Maucher forwarded information to Peerless
and the other Carquest insurers regarding Hartford’s intention to file a joint
offer of judgment for $3.1 million (allocating 25% of liability to Voltec, 35% to
TMC/Tasco, and 40% to the Carquest entitities). P1. Ex. 182. Sec also P1. Ex.
229.
109. Also during February 2011, Maucher and defense counsel
discussed the allocation of the settlement. P1. Ex. 124. Maucher disagreed with
the 40% allocation. Id. Maucher emphasized that the Carquest entities
“encourage all reasonable efforts by The Hartford to get this matter settled
without resorting to trial as we believe ajun’ will give JM a BIG number based
upon his injuries.” Id. Maucher forwarded the e-mail exchange to the Carquest
principals. Id.
110. During these settlement discussions, Hartford defended the 40%
allocation as reasonable, citing the following reasons:
•
“For the Offer of Judgment to have any effect, we have to tell the plaintiff
what the allocation is. The idea is to put pressure on the plaintiff to get
the case settled” P1. Ex. 140.
•
Maucher had recommended “a 1/3 split among the defendants” P1. Ex.
140.
•
The 40% figure was only “slightly higher” than Maucher’s evaluation. P1.
Ex. 272.
•
The “state of the record, review of the record, and the likely allocation of
fault by a jury were the case to proceed to verdict, as well as the fact that
plaintiff is critical of Carquest’s marketing of this product,” P1. Ex. 272.
•
Maucher’s agreement that “Carquest” was “the target defendant in the
case” P1. Ex. 209.
28
•
Maucher’s statements that Carquest Corporation and CPI “have been
used ‘interchangeably’ and interconnectedly, and a jury would likely see
all three of these companies as ‘one entity” P1. Ex. 209.
111. Hartford also stated in its correspondence that Hartford had been
the only insurer defending and indemnifying the claim and that Hartford
allowed the Carquest entities to have their own choice of counsel. P1. Exs. 140,
209, 272.
112.
on what
Bob Wicker protested that the one-third allocation was only based
ajunr
might do, but did not account for what could happen on appeal,
the fact that Voltec did not advise that UL had not approved the light for
commercial use, or the Carquest entities’ own assessment that they owed zero
liability. P1. Ex. 272. Kotcher protested as well. Id.
113. Hartford sought clarification on the roles of each of the Carquest
entities with respect to marketing and distribution of the product. P1. Ex. 272,
Kotcher and Wicker did not remember responding to that query. 2T.264.23265:12; Wicker Dep. at 152: 17-23; Kotcher Dep. at 328:2-336:24, 337:12338: 18.
114. In depositions, Kotcher testified that he did not “ever remember
asking for individual allocation among the three Carquest entities. I don’t think
that was ever part of our discussion.” Id. at 165:11-24.
115.
During this trial, Maucher testified that his clients did not
complain or protest about the fact that Hartford did not break out the offer
among the Carquest entities. 1T.225:22-226:7.
116.
On February 16, 2011, in an e-mail to the Carquest principals,
Maucher answered, in response in Hartford’s position, that he had “told
Hartford and anyone else involved in this case that I do believe a jury at the
end of a 5-6 week trial will have trouble differentiating among the roles of
Carquest Corporation, CPI, and BWP.” P1. Ex. 209. In that email, Maucher also
stated that mutual finger-pointing at trial would likely result in an even
allocation among the Carquest entities:
29
did express the possibility that a jury would assess
liability equally most likely, especially if (when) the
gloves come off and the finger-pointing begins among
the defendants, In a complex case where all 3 defendant
groups believe they did nothing wrong, an equal sharing
of liability is not unlikely.
P1. Ex. 209.
117.
During depositions in this case, Kotcher testified that the 40%
allocation to the Carquest entities “seemed absolutely ludicrous to us, because
we had [already] objected strenuously to the one-third, one-third, one-third.”
Kotcher Dep. at 164:12-165:9.
118. Maucher relayed the protests of the other insurers to Hartford. P1.
Ex. 147.
119.
On February 22, 2011, Maucher wrote to the Carquest entities and
the other insureds seeking consent and authority to sign the Offer of
Judgment. P1. Ex. 126. Maucher noted that, because the Carquest entities had
formalized their objection to the liability split, he did not believe that the
Carquest entities or their carriers would be committed to the 40% allocation.
Id. That same day, Peerless gave Maucher permission to sign the Offer of
Judgment. P1. Ex. 148. Peerless did not ask Maucher to seek a separate suballocation or percentage for Carquest Corporation alone. 1T.244:3-16;
ST.632:1l-14. On March 7,2011, counsel for Zurich and UUIC, the insurers
for CPI and BWP, wrote to demand separate allocation for CPI and BWP. P1. Ex.
268. Maucher forwarded the demand letter to the Carquest principals, adding
“I naturally have questions as to who is controlling settlement negotiations in
this matter. At the end of the day I represent your companies and will be
guided by what you instruct me to do.” Id. During this trial, Maucher testified
that the Carquest entities did not agree with Zurich and UUIC’s demand to
further break out the offer ofjudgment. 1T.247:5-9.
120. Kotcher wrote to the UUIC adjuster that, “[s]ince UUIC has not
joined in CPJ’s defense and since Hartford continues to defend and indemnify
CPI, we do not believe UUIC can assert that Mr. Maucher must have UUIC’s
30
‘authority’ to agree to a reasonable settlement that Hartford has committed to
fund.” P1. Ex. 271.
121.
On March 11, Maucher, at Wicker’s request, sent the Carquest
entities his analysis of their exposure under the New Jersey Product Liability
Act. P1. Ex. 225. Maucher’s analysis did not distinguish between the entities.
Id. At this trial, Maucher testified that, after Wicker received the analysis,
Wicker never requested that Maucher discuss the specific roles. 2T.267: 11-18.
28.
122.
The Carquest entities’ motion for summary judgment
On March 16, 2011, Maucher filed a motion for summary
judgment on the Carquest entities’ behalf, arguing that: (1) the Carquest
entities were innocent sellers; (2) the Trouble Light was not defective; (3)
plaintiff could not prove proximate cause; (4) the Carquest entities did not
participate in the design of the Trouble Light; (5) the Carquest entities did not
have a role in creating or placing the warnings on the Trouble light; and (6) at
minimum, BWP and CPI should be dismissed. P1. Ex. 127.
123.
In this trial, Maucher testified that there is a good chance he sent
a draft of the summary judgment motion to the counsel for the Carquest
entities, but he could not recall. 2T.272:5-16.
124. On March 16, 2011, Mechin also moved for summary judgment,
arguing summary judgment should be granted in Mechin’s favor on the issues
of defective design, the warning defect, and proximate cause. P1. Ex. 413. In his
brief in support of summary judgment, Mechin cited to Ginsburg’s testimony,
stating that Carquest’s Director of Advertising explained “that they produced
an advertising flier which was directed to professional users and contained the
Carquest Trouble Light.” Id. at 10. Mechin also cited to testimony from the
employees of the Carquest entities, stating that the Trouble Light was intended
for and represented as being appropriate for use in commercial garages. Id. at
10—11.
125. When the case did finally settle on May 24, 2011, both sides’
summary judgment motions were pending. 2T.346:23-347:6.
31
March 2010 e-mafls between Maucher and Jones
29.
126. On March 16, 2011, Donna Jones, an adjuster for Peerless, e
mailed Maucher without copying Hartford. P1. Ex. 151. Jones noted that the
summary judgment motion sought separate dismissal for CPI and BWP
because they were without fault and there was no evidence of negligence. Id.
Jones objected that, by implication, Maucher’s motion was suggesting that
Carquest Corporation was negligent. Id. Jones asked why Maucher had not
sought such dismissal for Carquest Corporation. Id.
127.
Maucher responded to Jones, essentially asserting that he had
asserted Carquest Corporation’s strongest defense, i.e., the innocent seller
argument:
“no
way
Carquest Corp. gets out unless my first argument that we
are innocent sellers carries the day. I can make a thin argument that CPI was a
warehouse-type defendant and BWP truly just a retail store, but no such
argument can be made as to Carquest Corp. It is a faliback argument in the
hope that the Court will at least let out some defendants.” Id.
128. Jones also asked Maucher to provide the basis for his view “that
there is no way to extricate Carquest Corporation.
.
.
.
My understanding is
that Carquest Corp. did nothing more than license the Carquest name to CPI.”
Id. Maucher responded that, whether or not that was true, he
was
stuck with
the testimony of the witnesses who had referred to “Carquest” as the
“manufacturer (yes, believe it or not), advertising, marketing, etc. Plus, some
witnesses worked interchangeably for Carquest Corp. and CPI and used those
companies interchangeably.” Id. Maucher reiterated his strategic position that
the best argument was that all three were innocent sellers. Id.
30.
Jones speaks to Kotcher about new counsel
129. At some point after reading Maucher’s summary judgment brief,
Jones suggested to Kotcher that they obtain new counsel. 3T. Jones testified
that she “was tired of all the entities being lumped together, and [she] felt like
[Maucherl was not making the proper arguments for Carquest Corporation.”
32
130. Jones testified that Kotcher responded to her suggestion by stating
that he would “roundtable it.” Jones also testified that Kotcher did not like the
summary judgment motion either, but he got back to her and said that “they”
had determined to keep Maucher.
131. Jones did not tell Hartford about her request to replace Maucher
as counsel. 3T.686.6-14.
31.
132.
Q&A after Mechin’s counsel asserts Fed. R. Civ. P. 11
On March 18, 2011, Mazie sent Maucher an e-mail, flagging it as
high importance. P1. Ex. 415, 416. Maucher forwarded the e-mail to the
Carquest entities and their insurers, informing them that Mazie had invoked
Fed. R. Civ. P. 11, asserting that the innocent seller argument was frivolous. P1.
Ex. 415. Maucher fonvarded the e-mail to the Carquest principals and
Hartford. Id.
133. Jeter, on behalf of Hartford, responded with several follow-up
questions. Id. In answering those questions, Maucher opined as follows:
•
The chance of getting all of the Carquest entities out of the suit on
summary judgment was at “almost zero” because Mazie raised the issue
that the actual Chinese manufacturer was not in the case;
•
The chances of winning partial dismissal as to the design,
manufacturing, testing and warning claims removed was “Average to
Good ‘IF’ the Judge takes the time and energy to address specific
secondary requests for SJ”; and
•
The chance of winning dismissal as to BWP and CPI was 0-5% “because
there are simply too many issues of material fact in dispute. Mazie’s SJ
brief lays out what CPI allegedly did or did not do, and throws enough at
BWP to keep every defendant in the case.”
P1. Ex. 415.
32. Jones sends Maucher an internal memorandum regarding his
argument to separately dismiss BWP and CPI
134. On March 25, 2011, Jones sent Maucher an “internal
memorandum” regarding Maucher’s alternative argument to separately dismiss
33
BWP and CPI. P1. Ex. 153. There, Jones asserted that by moving on behalf of
the other two entities, Maucher’s motion was implying that Carquest
Corporation was most culpable. Id. Jones asserted that the BWP/CPI
alternative argument was prejudicial to Carquest Corporation and unsupported
by the record. Id. In support, Jones cited the deposition testimony of Dan
Lewis, Richard Egan, Jay King, Scott Ginsburg, Richard Pallai, and Gaic
Manno. Id. Jones asserted that Carquest Corporation was not the
manufacturer nor in the chain of distribution; rather, it granted CPI a license
to use the “Carquest” name. Id. Jones further contended that, even if Carquest
Corporation were a seller under the definition in the New Jersey Liability Act,
its role was minor when compared to that of BWP and CPI. Id. Jones
summarized that “[ut appears that, in a creative but legal manner, Carquest
Corporation has attempted to insulate itself from liability on product liability
claims. Unless Ohio Casualty is missing something, it would seem that you
should be taking full advantage of Carquest Corporation’s efforts and
aggressively seeking to extricate the company from the Mechin action.” Id. p. 5.
135. Jones also questioned why the manufacturer, TMC-China, had not
been joined in the action. P1. Ex. 153. Jones then made several objections to
facts asserted in Mechin’s summary judgment motion. Id.
136. Concluding the memo, Jones asked Maucher for “a detailed
analysis of the evidence that tends to inculpate Carquest Corporation.” Id. p. 6.
If no such evidence was “forthcoming,” Jones asserted that Maucher should, at
minimum, include a “corrective statement” in his summary judgment reply
submission and act aggressively to force Mechin to “articulate a viable theonr of
liability against Carquest Corporation.” Id. Jones did not share the
memorandum with Hartford. 3T.677:3-24; Jeter Dep. at 135:10-136:3.
137.
In this trial, Maucher testified that he did not agree that his
alternative argument to dismiss CPI/BWP was prejudicial to Carquest
Corporation. 2T.292:3-8. Further, Maucher testified, he did not submit a
“correction” statement because he thought that Ohio Casualty’s (i.e., Jones’s)
34
position was not supported by all facts in the record. 2T.293:24-294:24. In
reaction to the deposition testimony that Jones used to support her position,
Maucher commented, “it’s easy: to cherry-pick certain lines out of the
deposition to support a position.” 2T5001750Pl2 The motion, however, was
to be decided on a summary judgment standard.
33.
138.
Voltec’s settlement
On April 18, 2011, Voltec settled for $900,000, paid from the
Hartford Voltec policy. P1. Ex. 141.
139. That day, Maucher e-mailed the Carquest principals and insurers
to inform them that he had reached out to Mazie regarding settlement. P1. Ex.
237. Maucher reported that Mazie was demanding a total of $5 million (leaving
a balance of $4.1 million after Voltec’s settlement), and that Mazie did not care
who the money came from. Id. Maucher also reported that Mazie mentioned
settling with TMC/Tasco and then taking the Carquest entities to trial because
he thought “that would be an easy case with a potentially huge upside.”
Maucher expressed some skepticism, believing that such a strategy might
expose Mazie to too much risk. Id.
140. In response to Maucher’s e-mail, Jeter advised that Mazie had
approached Voltec’s defense counsel regarding settlement. P1. Ex. 237. Jeter
also noted that despite the settlement, Voltec was not entirely out of the
picture, “because we still have the cross-claim against Voltec for
indemnification.” Id. Jeter doubted that the indemnification clause would
require Voltec to “indemnify Carquest for Carquest’s marketing practices,” but
asked Maucher for his opinion on the viability of the indemnification claim. Id.
The indemnification clause, Jeter noted, states that Voltec, for certain
liabilities, would indemnify not only Carquest Corporation, but also each
member. Id. Seeking information on the term “each member,” Jeter noted, “[ijn
the past, I’ve asked about how the Carquest entities related to each other, and I
am still in the dark.” Id.
35
141. Jeter advised that Hartford, after paying the $900,000 to settle on
behalf of Voltec, would still have $1. 1 million remaining on Voltec’s primary
policy. Id. Jeter also advised that Hartford’s excess policy would not be
triggered until after the Carquest defendants had exhausted their primary
policy. This statement dovetailed with Hartford’s position that Voltec did not
agree to “indemnify Carquest for Carquest’s independent negligence; e.g., their
marketing practices.” Id.
142. On April 20, 2011, Maucher advised the Carquest principals and
some Carquest insurers, not including Hartford, on the status of the case. P1.
Ex. 155. Maucher predicted that Voltec would not be present at trial,
“guarantee[ingj that plaintiff will minimize any arguments against Voltec and
focus on the Carquest defendants and TMC.” Id. Maucher also reported that
Mazie believed he had an easy case against the Carquest defendants based on
marketing and the expert opinions. Id.
143. On April 21, 2011, Len Herman sent all Carquest insurers but
Hartford an e-mail with a document titled “MECHIN V CARQUEST settlement
framework.” P1. Ex. 128. Plaintiffs Exhibit 128 does not include the document
attached to the e-mail. Id.
144. On April 27, 2011, Kotcher e-mailed Zurich and Ohio Casualty
(Peerless) seeking consent for the Carquest entities to make a settlement offer
of $2.1 million, and an agreement that both Zurich and Ohio Casualty would
each commit up to $362,177 on behalf of Carquest Corporation and CPI. P1.
Ex. 189. Kotcher explained that he assumed that the remaining $4.1 milhon
would be split so that the Carquest entities would pay 53.3% of the settlement
and TMC/Tasco would pay 46.67% of the settlement. Id. Kotcher also
presumed that Hartford would provide the Carquest entities with the remaining
$1.1 million from the Voltec policy. BWP, Kotcher noted, was making a similar
demand of its carrier. Id.
145. Jones, of Peerless, agreed to provide an equal share of the
settlement. ST.69 1:4-7.
36
Final settlement conference on May 24, 2011
34.
146.
On May 24, 2011, the parties met for a settlement conference. P1.
Ex. 492; 2T.346:10-20. Maucher submitted a settlement memorandum, which
did not distinguish among the Carquest entities. P1. Lx. 492. Prior to the
conference, Hartford agreed to “front its full remaining policy limit of $1.1M in
an effort to resolve this case for the Carquest entities.” P1. Lx. 161.
147. During this trial, Jones testified that, at the start of the settlement
conference, Mazie belabored his point about the marketing of the Trouble Light.
3T.698: 15-699:18.
148. The case settled on May 24, 2011. P1. Lx. 162, 394. Hartford
contributed $1.1 million; the insurers for the Carquest entities each paid
$316,666.67; and TMC/Tasco paid $1.75 million. P1. Ex. 162, 394; 3T.697:8698:7.
149. Kotcher and Wicker both suggested to Maucher that one person,
Neil Stockel, could sign for all three Carquest entities. P1. Lx. 191. Herman
decided against it, noting that “no one ever believes that we are separate
companies
Id.
35.
Remaining indemnification claim
150. One month before the Mechin settlement. Maucher advised his
clients that a motion for indemnification should wait until after trial or
settlement because “the need to indemnify does not arise until there is a
finding of liability on a party.” P1. Ex. 155.
151. On June 13, 2011, Jones wrote to Jeter, copying Maucher. P1. Lx.
192. Jones asserted that if Maucher were unprepared to make arguments
favoring Carquest Corporation on summary judgment, then Jones would
request separate counsel. Id. Jones attached her March 25, 2011
memorandum. Id.
152. In response, Jeter declined the invitation to fire Maucher. P1. Lx.
164. Jeter stated:
As was noted in March, the allocation among the Carquest entities
belongs in the declaratory judgment action; and, although
37
Hartford has committed to and is paying for the defense of the
Carquest entities on the claims of the plaintiff and the cross-claims
of the other defendants, we see no reason why we should replace the
defense lawyer who has handled the case thus far merely because
you think it may reduce Ohio Casualty’s coverage exposure.
Obviously it was not necessary for the relative fault and/or exposure
of the Carquest entities to be decided before settlement or trial.
Neither Mr. Maucher nor the Carquest entities’ principals ever
[W]ell before the settlement, Hartford
suggested that it be done.
repeatedly requested input on the issue of relative responsibility
from the Carquest entities. No reply was received. Hartford did not
insist on an answer because it was our belief (and we assume the
view was shared by the Carquest principals and Mr. Maucher) that
litigating that issue during the case would have, at best, confused
the case and, at worst, effectively placed the Carquest defendants in
a “circular firing squad” much to the delight of plaintiffs counsel.
Had jMaucher} been as sure as you seem to be that Carquest
Corp. had little or no exposure or was entitled to summary
judgment, he could have recommended a smaller share for Carquest
Corp., or requested permission to file a motion seeking dismissal of
all claims against Carquest Corp.
.
.
.
-
153. In a follow-up e-mail, Jeter also stated that “[tjo fire Mr. Maucher
now and retain new, separate counsel would risk confusing and infuriating the
court and could seriously prejudice all of the Carquest defendants.” P1. Ex.
165. Kotcher also disagreed with Jones and decided to “keep a unified front”
with respect to the upcoming motion for summary judgment. P1’s Lx. 166.
Kotcher Dep. at 244:19-246:141; 3T.724:15-726:16, 725:24-726:3,
154. Kotcher requested that Maucher share with Jones and the Peerless
coverage counsel, John Coyne, all drafts for comments and suggestions. P1. Lx.
166.
155. Jones and Coyne provided Maucher with detailed suggestions and
criticisms of his draft brief on the indemnity claim. P1’s Exs. 233, 169, 234,
396, 342.
156. Coyne suggested that Maucher should argue that the joint
representation of the Carquest entities had prejudiced them. P1. Lx. 337.
Maucher inserted the point into his draft brief, which Hartford disagreed with.
P1. Exs. 36, 171. Hartford asserted that if Maucher argued that his joint
38
representation would be prejudicial, then should need to resign. P1. Ex. 36.
Maucher removed the point from his draft, and asserted that he did not believe
that he had “done anything less than my best efforts to defend all of my
clients.” P1. Lx. 291. At this trial, Maucher testified that at no point in the
Mechin action did he believe that he was prejudicing his clients. 2T.397:6- 11.
157. It was Maucher’s opinion that additional parol evidence regarding
the Voltec contract would not be helpful to the defense. iT. 139:4-7.
158.
On February 28, 2012, Judge Wigenton denied the Carquest
entities’ motion for summary judgment, holding that the language in
“Carquest’s” contract with Voltec was ambiguous and unenforceable. P1. Lx.
431. Voltec had moved to dismiss Carquest’s claims, which Judge Wigenton
granted. Id.
159. That same day, Maucher reported to Hartford: “I would not
recommend an appeal on this claim
.
.
.
as the likelihood of the decision being
overturned are minimal.” P1. Ex. 293.
160.
Hartford notified all parties that it was withdrawing its defense for
the Carquest entities. P1. Lx. 8.
36.
Indemnification
While both parties have submitted a number of facts related to
indemnification, I find the following to be material and essential:
161. Regarding tender and indemnification, Maucher testified that the
issue “didn’t matter to me, but I was under the impression the acceptance was
already a done deal, that was already decided by the time it came to my office.”
1T.97:20-98:3. Further, he testified that whether Hartford paid his bills
because of contractual indemnity or vendor endorsement as an additional
insured did not matter to the
way
he handled the case. 1T.98:3-19.
162. In the summer and fall of 2010, Hartford began searching for the
policies of the defendants’ other insurers. iT. 118:11-24; P1. Lx. 73, 81, 87.
163.
In November 2010, Hartford obtained the other insurers’ policies. P1. Exs.
81, 87. After reviewing the policies, Hartford concluded that its Voltec policy
was excess, and notified Gagner at Peerless. P1. Exs. 87—89.
39
164. On November 22, 2010, the Hartford Voltec adjustor, Jacques
Georges, wrote to Peerless:
As a preliminary matter, please note that Hartford is not “reneging”
or withdrawing from the defense of the CARQUEST entities. Further.
Hartford has no intention to assert or otherwise limit Hartford’s
indemnity obligations to the CARQUEST entities they remain the
same, subject to the terms, conditions, and limitations set forth
within the Hartford policy. Hartford has and will continue to defend
the CARQUEST entities in the utmost good faith. Any insinuation
that Hartford has not been or is not acting in good faith with respect
to its defense of the CARQUEST entities is entirely groundless.
P1. Ex. 81. Jones, the Peerless claims adjuster, understood that Hartford did
not demand that Peerless or any other insurer undertake the remainder of the
Carquest entities’ defense. 3T.59 1:10-12, 593:1-8, 601:23-602:1.
165. On December 2, 2010, Hartford filed the declaratory judgment
action now before me on a docket separate from the underlying Mechin case.
(DE 1).
166. Peerless has put forth evidence that the Carquest entities and their
defense counsel had understood that Hartford had conceded the applicability of
the indemnity clause. T4.938:9-939:9; 2T.464:12-l8. Peerless also points to
internal communications at Hartford that indicates that some Hartford
employees understood that Hartford took on the defense subject to Voltec’s
indemnification agreement. Def’s Exs. 44 (E-mail from Giarrizzo of Hartford,
dated Sept. 1, 2009, stating “The Hartford has taken over the defense of co
defendants Carquest & BPW [sic] based on Voltec’s contractual obligations to
them.”), 98 (Jeter to DeMerchant e-mail, dated July 26, 2010, “Don’t forget that
Voltec has the duty to indemnify.”); 77 (Apr. 28, 2010, Large Loss Report
prepared by Scherer of Hartford, “Carquest Products, Inc./BWP Distributors,
Inc. had previously demanded contractual defense and indemnification from
Voltech [sic] Industries. That tender was accepted and Carquest Products, Inc.
/BWP Distributors, Inc. is currently being defended under the Voltech [sic]
Industries policy.”).
40
II.
CONCLUSIONS OF LAW
I start with the following general comments on testimony, propositions
and principles.
First, I found Maucher’s testimony, which was corroborated by
contemporaneous documents, to be highly credible in general, and in the
following respects in particular: (a) his belief that a jury might well regard the
Voltec entities as an integrated whole with respect to the product; (b) his belief
that a jury verdict might well have totaled two or three times the settlement
amount; (c) his good faith strategic judgment that a united front was the best
approach; (d) his primary loyalty’ to the overall good of his clients. In my
judgment, Maucher did not shade the truth or attempt to deflect criticism of
his representation. I accept that the Carquest entities themselves, despite
inquiries, failed to clarify the distinctions among themselves that one insurance
carrier now urges upon the court. Faced by contradictory testimony, Maucher
made a reasonable decision that summary judgment for Carquest was not in
the cards, and that the risk of going to trial to preserve that issue was too
great.
The testimony of Donna Jones is emblematic of the evidence to which I
gave less weight. I do not mean to imply that Ms. Jones failed to testify to the
truth as she saw it. Still, I believe that her judgments about the conduct of the
lawsuit were infected by hindsight, even at the time. Her testimony did not, in
my view, sufficiently take into account the strategic choices that faced counsel
in real time, the uncertainty of the result, and the risk that testing certain
contentions in court might result in a large judgment that would have
disadvantaged all of the Carquest entities and their carriers. Her belated
intervention and insistence on a separate summary judgment motion for
Carquest Corporation, in my view, had little potential to change the result, and
would not have been a reasonable basis to forgo an advantageous settlement.
Her demand that Maucher be replaced was overruled.
Second, I have largely passed over in silence the many objections lodged
to various pieces of testimony or evidence. Objections based on relevance are
41
obviously rejected as to evidence that is cited; I cited it because I found it
relevant. Certain of the objections (that one statement or another contained
opinion, for example), would be more relevant if this were a jury trial; the
Court, however, is capable of sorting out opinion from fact. Moreover, many
matters of “opinion” are independently relevant as contemporaneous strategic
considerations of counsel in connection with the conduct of the defense of the
Mechin case.
In these conclusions of law, 1 start with Peerless’s estoppel arguments.
Next, I consider Peerless’s contentions that Hartford’s claims must be
dismissed because Hartford failed to call an expert witness. I then consider
whether Hartford secured a reasonable, good faith settlement, and whether
Carquest Corporation was reasonably allocated a one-third share of the
responsibility for it. Finally, I consider Peerless’s remaining claims against
Hartford for breach of contract, breach of fiducian’ duty, and (possibly)
negligence.
1. Estoppel
Peerless makes two main arguments for estoppel: one based on
Hartford’s handling of Carquest Corporation’s indemnification claim, and the
other under the Eggleston rule, based on Hartford’s having taken on
responsibility to conduct the defense. (DE 264). While I have already dispensed
with these estoppel arguments on summary judgment, (DE 200 at 11—14), I did
not bar the parties from introducing evidence relevant to them (which would
have been difficult to segregate in any event). With the benefit of a trial record, I
briefly revisit Peerless’s Eggleston argument that control of the defense may
give rise to an obligation to pay the judgment. See Merchants Indem. Coip. u.
Eggleston, 37 N.J. 114, 127—29 (1992) (DE 264 at 54). Essentially, Peerless
argues that because Hartford was the first insurer to grab the check, it must
now pay the whole tab. (DE 264 at 50—54). For what it is worth, the Carquest
entities themselves (as opposed to their carriers) supported the joint defense
strater and actively participated in it. To avoid doubt, with the benefit of a full
42
trial record I again reject Peerless’s Eggleston argument, and incorporate here
the legal discussion from my summary judgment opinion. (DE
200)11
i. Estoppel based on handling of indemnification claim
Peerless argues that Hartford is estopped from recovering contribution
because Hartford initially assigned Voltec and the Carquest entities to the
same defense counsel, Mulcahy. Peerless also faults Mulcahy for failing to
pursue parol evidence regarding the interpretation of the indemnity provision.
This is in essence an attempt by Peerless to relitigate Carquest
Corporation’s indemnification claim against Voltec, which was rejected on
summary judgment in the Mechin action. Under the doctrine of res judicata, “a
subsequent suit based on the same cause of action as a prior suit that involved
the same parties or their privies is barred where there has been a final
judgment on the merits in the prior suit.” Labelle Processing Co. v.
SWWTOW,
72
F.3d 308, 313 (3d Cir. 1995) (internal citations omitted). Courts have
previously held that an insurer is privity with its insured, and therefore may
not relitigate claims lost in a prior action between its insured and the
defendant. See e.g., Hartford Ins. Co. of the Midwest v. Caver, No. A-5747-14T3,
2016 WL 6502683, at *2*3 (N.J. Super. Ct. App. Div. Nov. 3, 2016). Here,
Peerless’s insured, Carquest Corporation, fully and fairly litigated the
indemnification issue in the Mechin action. Judge Wigenton found the
indemnification provision ambiguous, and therefore ineffective as a matter of
law, on summary judgment. (See Judge Wigenton’s February 2012 Opinion, P1.
Ex. 431).
For avoidance of doubt, however, I will state plainly that I here
incorporate Judge Wigenton’s analysis. The Voltec indemnification agreement
is, on its face, ambiguous and therefore unenforceable. (DE 200 at 14—15 n. 13
(citing Englert v. Home Depot, 389 N.J. Super 44, 58 (App. Div. 2006) (“Under
prevailing law, an ambiguous contractual indemnification provision must be
The remainder of Peerless’s arguments regarding the joint defense strategy will
be applied to Peerless’s argument that Hartford did not meet its defense obligation.
II
43
construed against the indemnitee.”); Henthoine v. Legacy Healthcare, ma, 764
N.E.2d 751, 758 (Md. Ct. App. 200) (“Such clauses indemnifying the
indemnitee for the indemnitees own negligence are strictly construed and will
not be held to provide indemnification unless stated in clear and unequivocal
terms..
.
.
The indemnity clause here did not unambiguously express that
[indemnitorl would defend and indemnify [indemniteel for [indemnitee]’s own
negligence. Without such an explicit provision, jindemnitor] is not responsible
for costs and defenses and indemnification resulting from [indemnitee]’s own
negligence.”) (internal citations omitted)); P1. Ex. 431). On summary judgment, I
adopted the judgment of Judge Wigenton:
Peerless’s argument suffers from an intractable problem: as a matter
of law, the indemnity provision of the Voltec Agreement is invalid
because it fails to state in “clear and unequivocal” terms that Voltec
must indemnify the Carquest Entities for their own negligence. See,
e.g., Norkus v. Gen. Motors Coip., 218 F. Supp. 398, 399 (S.D. Md.
1963); Mantilla v. NC Mall Assocs., 167 N.J. 262, 269-273 (2001).
Simply’ put, any “implied concession” concerning the Voltec
Agreement is irrelevant because Carquest could not (and cannot)
enforce the indemnity provision against Voltec.
(DE 200 p.
l4).12
Thus, it makes little if any difference that Voltec and the
Carquest entities were assigned the same defense counsel for the first year of
the case, before representation was split.
13
Peerless argues in the alternative that, even if the indemnity clause
would have been enforceable, estoppel is still proper. Here, Peerless relies
Moreover, I consider that “[am insurer’s duties are defined by what it contracted
to do, not by what the insured contracted to do.” Jeffrey M. Brown Assocs., Inc. v.
Interstate Fire & Cas. Co., 414 N.J. Super. 160, 172, 997 A.2d 1072, 1079 (App. Div.
2010) (emphasis in original) (citing 2 Allan D. Windt, Insurance Claims & Disputes:
Interpretation of Important Policy Provisions § 11.30 at 11—469 (5th ed. 2007)). Here,
Voltec, not Hartford, was a party to the alleged indemnity agreement at issue.
12
The Carquest entities were given their own counsel in April 2010, well before
fact discovery ended in September 2010. Mechin v. Carquest Corp., 07-cv-5824, DE
219. If at that point, or even after, the Carquest entities and their counsel wished to
pursue discovery regarding the indemnification claim, they could have done so without
the impediment, if any, of Voltec’s interests. The Carquest entities were then
represented by counsel who answered to them as clients.
13
44
primarily on Arch Ins. Co. u. Nationwide Property & Casualty Ins. Co., Index No.
6542835/2014, (N.Y. Supr. Ct., N.Y. Cty., Dec. 12, 2012), an unpublished
opinion of the Supreme Court, New York County. That court ruled that because
an insurer defended and indemnified two tendering defendants as if they were
additional insureds, those tendering defendants were entitled to rely on the full
coverage available to them as additional insureds. (Transcript at 5:18-26, Arch
Ins. Co. v. Nationwide Property & Casualty Ins. Co., supra.) There are two
dispositive distinctions between Arch Insurance and this case. First, in Arch
Insurance, the underlying indemnification provision had not been previously
ruled unenforceable. Second, in Arch Insurance, the additional insured
coverage provided for both primary and excess insurance; here, however, only
the excess policy provided coverage to the Carquest entities as additional
insureds, weakening any claim of reliance. Thus, I am not persuaded that Arch
Insurance, even if it were binding, would change the result here.
2. Peerless’s motion to dismiss Hartford’s claims for failure to
provide an expert
Peerless moves to dismiss Hartford’s claims because Hartford failed to
provide expert testimony as to the reasonableness of the underlying settlement
for $2,050,000 and its one-third allocation to Carquest Corporation. (DE 264,
pp. 41-44); T5.l114:l9-1123:5.
For the proposition that expert testimony was required, Peerless relies on
two state court cases. (DE 264 at 41 (citing Kapuscenski v. Hess Corp., No. A
2202-12T3, 2014 WL 1125055, at *6 (N.J. Super. Ct. App. Div. Mar. 24, 2014)
(“We noted that an expert in the settlement of claims, such as an experienced
torts attorney or claims adjuster, was necessary to explain the various factors
that are taken into consideration when a case is settled.”); Pasha v. Rosemount
Mcml Park, Inc., 781 A.2d 1119 (App. Div. 2001)). In both Kapuscenski and
Pasha, the state appellate court noted that an expert was necessary to
determine the reasonableness of a settlement because “the many factors that
go into a settlement are not within the knowledge of the average juror.”
45
Kapuscenski, 2014 WL 1125055 at *6 (N.J. Super. Ct. App. Div. Mar. 24, 2014)
(citing Kelly a Berlin, 692 A.2d 552, 558 (App. Div. 1997); Pasha, 781 A.2d at
1124 (citing Kelly, 692 A.2d at 558)).
The reasoning of those cases has far less force here. This was not a jury
trial, but a bench trial. Unlike ajuxy, I am not presumed to lack knowledge of
the governing substantive and procedural law or the factors that go into a
reasonable settlement. I am able to consider and evaluate the parties’
arguments as to the reasonableness of the decision to settle this claim, which
was litigated in this very district before a judge of coordinate jurisdiction. While
perhaps an expert might have been helpful, the absence of an expert does not
doom the claims as a matter of law, as Peerless would have it.
3. Reasonable and good faith settlement
When an insurer wrongfully refuses coverage and defense to its insured,
“so that the insured is obliged to defend himself in an action later held to be
covered by the policy, the insurer is liable for the amount of the judgment
obtained against the insured or of the settlement made by him.
“
Griggs a
Bertram, 88 N.J. 347, 364 (1982). That liability extends to situations in which
an insurer declines to provide coverage or defense to its insured, leaving it to
some other insurer to provide coverage and defense. Hanford Cas. Ins. Co. v.
*7 (D.N.J.
Peerless Ins. Co., No. 10-6235 (KM)(MAH), 2016 WL 5723659, at
Sept. 30, 2016). The only limitation on the insurer’s required contribution is
that the settlement must be both reasonable and in good faith. Origgs, 88 N.J.
at 364. The insured, or, in this case, the defending insurer, bears “the initial
burden of producing ‘the basic facts relating to the settlement’ which
demonstrate the operative evidential facts as to its reasonableness and good
Burlington Ins. Co. v. Northland Ins. Co., 766 F. Supp. 2d 515, 528
faith
.
.
.“
(D.N.J. 2011) (citing Griggs, 88 N.J. at 367). That means that “[tjhe insured
must show that the settlement is ‘by the initial production of proof to be prima
facie reasonable in amount and untainted by bad faith
...‘“
Id. (citing
Griggs, 88 N.J. at 367). “iRleasonableness and good faith require that the
46
insured expend efforts to determine whether the claims are valid and whether
the amount proposed is reflective of the injuries claimed.” Excelsior Ins. Co. a
Pennsbunj Pain Cu-., 975 F. Supp. 342, 357 (D.N.J. 1996). “The Griggs
standard does not call for 100% accuracy, but only that in light of all of the
relevant facts and upon a reasonable inquiry, the insured agreed to a
settlement amount that was reasonable and entered into in good faith.” Id.
Once the insured or its insurer has made its prima facie case, the
burden shifts to (in this case) the other insurer, who is “required to sustain the
ultimate and major burden of demonstrating, by a preponderance of the
evidence, that it is not liable because the settlement is neither reasonable nor
reached in good faith.” Griggs, 88 N.J. at 367. That burden is a heavy one.
Burlington, 766 F. Supp. 2d at 530.
Hartford argues that the $2,050,000 settlement figure paid by the
Carquest entities to settle the Mechin action was arrived at in good faith. I
agree. No evidence presented to me demonstrates that Maucher negotiated for
this settlement with anything in mind other than his clients’ best interests. He
pushed against not only Mechin’s counsel but also against Hartford to lower
the settlement amount for the insureds. Maucher settled at a price and an
allocation amount based on the united-front strategy he had pursued in
consultation with the Carquest entities. Further, Maucher testified that he put
his clients’joint interests before Hartford’s, and I found that testimony credible
and persuasive. Even for the period before Voltec obtained separate counsel, 1
see no particular indication that Hartford’s control of the defense of Voltec
made any difference to Maucher. Maucher routinely communicated separately
with his clients and the other insureds, and, at one point, even pursued the
Voltec indemnification claim.
Hartford next argues that the settlement was reasonable. An overall
$2,050,000 settlement on behalf of all three Carquest entities certainly appears
reasonable under these circumstances. Consider the situation of the Carquest
entities: (1) Estimates of a jury verdict exceeded $15 million; (2) the plaintiff
47
was a young man, seriously injured and left with permanent scarring; (3)
depositions left evidence (conflicting, to be sure) that all three entities were
potentially liable; (4) the court had eliminated the Carquest entities’ primary,
innocent seller defense; (5) the defendants’ expert was not predicted to testify
well; and (6) plaintiffs experts placed significant blame on the Carquest
entities.
Under those circumstances,
cannot fault the reasonableness of the
S2,050,000 settlement.
Peerless has a more focused argument, however. It argues that, even if
the overall amount was reasonable, Carquest Corporation in particular should
not have had to contribute, because it did not participate in the marketing or
advertising of the trouble light. The reasonableness of the settlement and its
allocation, however, is not based solely on whether Carquest Corporation might
ultimately have succeeded in shifting liability to its sister corporations. Rather,
it is a question of whether Maucher made a reasonable judgment that Carquest
Corporation was at a significant risk to lose.
To test Carquest Corporation’s position in court, the price of admission
was exposure to a much larger total damages award. In the Mechin action, the
plaintiff pursued a strategy that assumed a jury might not much care what role
Carquest Corporation actually played in the marketing and distribution of the
Trouble Light. Maucher considered Mechin’s strategy to be a viable one.
Maucher believed that the jury would see Carquest Corporation as the head of
a unitary enterprise, consisting conglomerate of interrelated companies, that
placed its name on a product without adequately checking the product’s safety.
Carquest Corporation had permitted the light to be marketed by the other two
entities under the Carquest name. The ownership of the three entities was
intermingled.
I find Maucher’s assessment to be reasonable, particularly given the
contradictory record created during depositions in the summer of 2010.
Witnesses, from both within and outside of the Carquest entities, placed
Carquest Corporation into the process of marketing and distributing the
48
Trouble Light. Further, the depositions suggested that the distinctions between
the entities were unclear and unimportant even to their own employees. For
that additional reason, it was reasonable for Maucher to determine that a jury
would find these entities indistinguishable.
I have reviewed that muddled record. I conclude as a matter of law that,
at the point of settlement, Carquest Corporation had little chance of avoiding
trial on this issue via summary judgment.
If the case went to trial, the Carquest entities would face a jury,
emotionally potent facts, and a plaintiffs’ counsel who was intent on holding all
three Carquest entities liable. Maucher, quite reasonably, predicted that there
was a strong possibility of a high dollar award.
Nor did Maucher keep his opinion to himself. He repeatedly reported to
the Carquest entities and their insurers that Carquest Corporation was going
to take on the brunt of Mechin’s ease. No one expressed any timely
disagreement.
I also note that, when Peerless itself controlled Carquest Corporation’s
defense, it did not make any effort of its own to extricate its insured from the
case. Eventually, Peerless handed off the defense to Hartford. Peerless did not
mention Carquest Corporation’s “iron clad” defense until the infighting started.
I find that Maucher made a reasonable judgment that the settlement, and
Carquest’s acceptance of a one-third share of it, was worth it because it averted
the danger of something far worse.
For all of those reasons, I do not find that Peerless has demonstrated
that Hartford’s settlement, viewed from the perspective of the time it occurred,
was
anything but a good faith and reasonable one.
Peerless argues in the alternative that, assuming Carquest Corporation is
allocated a share of the liability, that share should be less than one-third.
Examining the one-third allocation, I find it reasonable considering the
underlying record. Carquest Corporation, innocent or not, had become
Mechin’s primary target. Its liability was potentially greater than that of BWP or
CPI. Thus, equal responsibility for the settlement was in no way inequitable.
49
4. Peerless’s claim against Hartford for breach of its fiduciary
duty to Carquest Corporation and Peerless
In its Complaint, Peerless bought a claim against Hartford for breach of
its insurance contract, breach of its fiduciary duty, and negligent control and
management of the defense. Peerless makes the broad argument that “Hartford
should not benefit from the muddled record that it created.” (DE 264 p. 50). By
consolidating the defense of the Carquest entities, Hartford allegedly permitted
the lines between the entities to be blurred. Had Hartford properly done its job,
Peerless argues, it would have separately assigned Carquest Corporation
counsel and argued that Carquest Corporation, unlike CPI and BWP, was not
involved in the marketing, labeling, or distribution of the Trouble Light. N
Here, Peerless relies on Wolpaw v. Gen. Acc. Ins. Co., 639 A.2d 338, 339
(N.J. Sup. Ct. App. Div. 1994). In Wolpaw, a plaintiff brought suit against his
eleven-year-old neighbor for shooting him in the eye with a rifle. RI. Also named
as defendants were the child’s mother and aunt. Id. All three defendants were
insured under the same homeowner policy. Id. The insurer assigned the
defense of all three to the same law firm. Id. The law firm successfully moved to
have the mother dismissed from the action. Id. at 340. The boy and his aunt
then split their share of the judgment, which exceeded the policy limits by
$450,000. Id. Reviewing the conduct of the defense, the court held that the
mother, the aunt, and the boy had conflicting interests. Id. For example, it was
in the mother’s interest to be dismissed from the action, but it was in the
aunt’s interest that the mother remain and split the judgment. Id. Or it was in
the aunt’s interest to argue that she had safely secured the rifle, while it was in
the nephew’s interest to assert that she had negligently failed to do so. Id. And
so on. The court held that “[wjhere conflicting interests impose on a liability
insurer the duty to provide multiple insureds with separate counsel, it may be
14
As discussed supra, I have already disposed of Peerless’s estoppel arguments.
50
that in a particular case the separate attorneys would manage the case the
same way as one attorney representing all insureds.” WQIpaW, 639 A.2d at 340.
I find that the situation at hand differs from WO1paW in several respects.
First, I am not convinced that Hartford was presented with a situation in
which the Carquest entities had conflicting interests and therefore required
separate counsel. Hindsight of course is 20/20, but at the outset, all three
entities asserted the primary defense that they were all innocent sellers of a
product manufactured by another. Hartford, operating on that basis, assigned
all three entities to the same counsel, who pursued to that primary, innocentseller defense. Any conflict of interest was contingent at best.
Second, I note that the defendants and the insurers involved in this
matter were all sophisticated parties. After being assigned to Mulcahy (and
then Maucher), all three Carquest entities participated in that joint defense
without objection. Client contacts such as Kotcher and Herman certainly
seemed to be speaking for multiple Carquest entities, without objection.
Herman participated in preparing every Carquest entity witness for deposition,
and the dissemination of information about the progress of the case seems to
have been adequate.
In the summer of 2010, it became apparent that at least some of the
Carquest entities were involved in the marketing and distribution of the light.
Peerless asserts that it “painstakingly” combed through the Mechin record to
demonstrate that Carquest Corporation in particular did not participate in
marketing or distributing the Trouble Light. It may be that there was ample
evidence that Carquest Corporation did not participate in the marketing and
distribution of the Trouble Light. There was also, however, plenty of evidence,
much of it from the mouths of Carquest-entity witnesses, that it did.
Perhaps, during the course of the summer 2010 depositions, a potential
conflict began to brew—if any of the entities were not innocent sellers, the
argument runs, then perhaps they should have begun to point fingers at each
other. A reasonable lawyer (including in-house counsel for the entities) could
have concluded, however, that this would not benefit any of the entities,
El
particularly Carquest Corporation. Had the defense strategy been further split,
then the proverbial circular firing squad
would
begin—and this was explicitly
recognized at the time. Carquest Corporation, the namesake of the Carquest
Trouble light—and, confusingly, the party to which virtually every witness
seemed to be referring when using the term “Carquest”—would be up for a
hard fight before a jury. As Maucher would realistically conclude, Carquest
Corporation was going to be the plaintiffs main target and, possibly, the focus
of the jury’s disdain. A jury trial, in his estimation, was likely to lead to a far
higher award, perhaps in the $15 million range. Such a verdict would have
engulfed any advantage that one Carquest entity (or its carrier) might have
gained vis-à-vis the others.
When Maucher moved for summary judgment, he made the innocent
seller argument. In the alternative, he moved to dismiss CPI and BWP, but not
Carquest Corporation. That arguably, if contingently, placed Carquest
Corporation’s interests in conflict with those of CPI and BWP. Nevertheless,
when Peerless sought to have Maucher fired, Kotcher, who had supported the
joint defense all along, reported that the powers-that-be at Carquest
Corporation had decided to keep Maucher on the case. Thus Maucher’s clients
went along with the joint defense.
Peerless may argue that, whether Carquest Corporation agreed or not,
Hartford still breached a duty to Peerless by not splitting the defense at the
point of summary judgment or perhaps even earlier. Peerless, however, is no
less sophisticated than Hartford. Not until March 2010 did Peerless speak up
on Carquest Corporation’s behalf. If Peerless had been so confident in this
position all along, it could have asserted it. Peerless, although it monitored the
entire case, including Maucher’s status reports, briefs, and settlement memos,
was veiy tardy in taking issue with the Carquest entities’ being represented
and referred to in the collective. Nothing stood in the way of Peerless
representing its own insured and managing its own defense throughout the
entire action. Instead, Peerless—perhaps placing too much reliance on the
52
flimsy indemnification agreement—decided to relinquish its primary insured’s
defense.
In sum, I am not persuaded that Hartford acted negligently or in breach
of any
duty
to Carquest Corporation or Peerless. Thus, Peerless’s remaining
counterclaims against Hartford are dismissed.
HE
CONCLUSION
Based upon the findings of fact and conclusions of law set forth above,
as well as prior decisions of the Court, this Court finds that Peerless must
provide Hartford with the one-third of the defense costs and one-third of the
settlement owed from the Mechin action. Peerless’s claim for contribution is
dismissed.
An appropriate order follows. The parties shall confer and, within seven
days, submit any final form of order and judgment necessary to dispose of the
case.
Dated: September 30, 2019
/c
Kevin McNulty
United States District Judge
53
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