Arch Chemicals, Inc. v. Raditor Specialty Company

Filing 386

OPINION AND ORDER: Defendant's Motion Regarding Lexington's Participation at Trial 279 is granted. Plaintiffs' Motion in Limine Precluding Any Reference to Lexington Insurance Company or of Arch's Insurance at Trial 281 is denied. Signed on 12/10/10 by Magistrate Judge Dennis J. Hubel. (see formal opinion) (kb)

Arch Chemicals, Inc. v. Radiator Specialty Company

Doc. 386

1 2 3 4 5 6 7 8 9 10 11 12 13 v. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 William G. Earle Paul R. Xochihua M. Robert Smith Joseph Rohner IV Dennis N. Freed Ryan J. McClellan Smith Freed & Eberhard 111 S.W. Third Avenue, Suite 4300 Portland, Oregon 97204 Thomas D. Allen Amber E. Tuggle Shawn D. Scott Earl W. Gunn Mark R. Johnson Laura Voght Weinberg, Wheeler, Hudgins, Gunn & Dial 50 East Paces Ferry Road, Suite 3000 Atlanta, Georgia 30326 Attorneys for plaintiffs RADIATOR SPECIALTY COMPANY, a North Carolina corporation, Defendant. OPINION AND ORDER IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON PORTLAND DIVISION ARCH CHEMICALS, INC., a Virginia corporation, and LEXINGTON INSURANCE CO., No. 07-1339-HU Plaintiffs

Dockets.Justia.com

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Jonathan Henderson Davis Rothwell Earle & Xochihua 1300 S.W. Fifth Avenue, Suite 1900 Portland, Oregon 97201 Daniel F. Mullin John A. McHugh Mullin Law Group 101 Yesler Way, Suite 400 Seattle, Washington 98104 Attorneys for defendant HUBEL, Magistrate Judge:

8 This is an action by Arch Chemicals, Inc. (Arch)and Lexington 9 Insurance Company (Lexington) against Radiator Specialty Company 10 (RSC), asserting a claim for contribution and Lexington also 11 alleges an unjust enrichment claim. 12 recovery of funds paid in settlement of a lawsuit against Arch 13 brought by members of the Davidson family. 14 RSC's Motion Regarding Lexington's Participation at Trial [doc. # 15 279] and Arch/Lexington's Motion in Limine Precluding Any Reference 16 to Lexington Insurance Company or of Arch's Insurance at Trial 17 [doc. # 281]. 18 FACTS 19 This case arises out of the wrongful death and bodily injury 20 claims brought by the Davidson family against Arch Chemicals. 21 events leading up the injuries are summarized in other opinions and 22 will not be repeated here. 23 On April 20, 2004, the Davidson family brought a lawsuit 24 against Arch in Oregon Circuit Court alleging civil claims related 25 to the fire. 26 settlement on December 7, 2006, which was jointly funded by Arch 27 and Lexington. 28 2 - OPINION AND ORDER The litigation was resolved by a confidential The Before the court are Arch and Lexington seek

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On September 7, 2007, Arch brought the instant lawsuit against RSC, seeking contribution for RSC's role in causing the fire. On

June 30, 2009, on RSC's motion for joinder, the court granted joinder of Arch's insurer, Lexington, as a real party in interest. On May 6, 2010, the parties filed the motions presently before the court, essentially asking the court to determine whether and how Lexington will participate in the trial. DISCUSSION RSC asks that Lexington be treated at trial just as any other plaintiff would be treated in any trial. Arch and Lexington, on

the other hand, ask that RSC be precluded from ever mentioning the existence of Lexington at trial, thus concealing Lexington's

involvement from the jury. I begin by noting that in their briefing and at oral argument, neither party was able to cite a case where an insurance company who was a party to a case remained anonymous at trial. court aware of such a case. Nor is this

On the contrary, the cases that Arch

and Lexington cite in support of their bid for anonymity generally pertain to the question of whether insurers are real parties in interest that should be joined, or to general comments about the concerns regarding jury prejudice toward insurers. In my Opinion and Order, [doc. # 166], dated June 30, 2009, I ordered that Lexington be joined as a party in this case. The

question then, is whether an insurance company who is a real party in interest should remain anonymous at trial. The leading case relating to this topic in the Ninth Circuit is Wyller v. Fairchild Hiller Corp., 503 F.2d 506, 511 (9th Cir. 1974). The litigation in Wyller arose from a helicopter crash.

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Id. at 507.

The sole survivor of the crash, Wyller, sued the Id. at 508. with his Prior to trial, Wyller former employer and co-

helicopter manufacturer. entered into an

agreement

plaintiff, Livingston, who owned the crashed helicopter.

Id. at

511. Under the agreement, Wyller released any claims he might have had against Livingston in exchange for a loan that would be used for attorneys fees and costs in the action against the helicopter manufacturer. Id. Under the agreement, if Wyller prevailed in Id. In addition, Livingston's

court, the loan was to be repaid with interest. Wyller agreed Id. not to settle his claims

without

consent.

The Ninth Circuit noted,

The instant agreement bears a marked similarity to the `loan receipt' device by which indemnity and liability insurers sometimes settle losses by advancing to the insured the amount of his loss in the form of a loan, repayable only in the event and to the extent that the insured obtains a recovery for the loss from a third party. Such agreements insulate the insurer from the necessity of seeking to recoup its loss in its own name and from the judicially recognized prejudice of juries against insurance companies; they also enable injured plaintiffs to avoid the acceptance of unjust settlements out of necessity. Id. On appeal, the helicopter manufacturer argued that in reality Id. It

19 the loan money had come from Livingston's insurer. 20 assigned error to the trial court's decision not to allow the 21 manufacturer's 22 alternatively 23 plaintiffs were suing on behalf of Livingston's insurer, an alleged 24 real party in interest. 25 Circuit 26 evidence in the record to show that the insurer actually supplied 27 the money and was, therefore, a real party in interest. 28 4 - OPINION AND ORDER Id. at expressed no opinion because there was insufficient Id. at 511-12. On this issue, the Ninth to amend the pleadings to indicate that the motion to add the insurer as a plaintiff or

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512.

The court noted, "Absent some substantial showing that this

particular insurer was in fact involved in [paying the settlement], the district court would have exceeded its discretion in requiring the insurer's joinder as a real party in interest." While the

mechanism of the loan receipt may have also kept that insurer unnamed as a plaintiff, the lack of a record it funded the settlement made that question unnecessary to reach. In contrast, here, there is no question that Lexington jointly funded the settlement, and is, therefore, a properly joined real party in interest. To the extent Lexington seeks to avoid the

consequences of being a plaintiff in this case, as a sophisticated business it could have, at the time of settlement, utilized the loan receipt mechanism discussed by the Ninth Circuit. Such a

business decision would have eliminated Lexington's presence in this lawsuit and the jury's knowledge of its existence. Lexington, however, opted to take a different route. That route was discussed in the court's June 30, 2009 opinion. As a real party in interest, I find no persuasive precedent that Lexington's identity and role in this case should be kept from the jury. On the contrary, having failed to utilize a valid

mechanism to achieve its goal of keeping Lexington's identity out of the case, plaintiffs now want the court to rescue them from the consequences of their decision to use the ratification approach. For the reasons stated in my opinion of June 30, 2009, and September 25, 2009, ratification was not available on the facts of this case and a loan receipt was not properly utilized. The

consequence is Lexington is in the case as a plaintiff and will be treated as any other party during trial. 5 - OPINION AND ORDER

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If the prejudice was so great as to justify the relief plaintiffs seek, there would be ample cases allowing this relief over the years. /// CONCLUSION Defendant's Motion Regarding Lexington's Participation at Trial [doc. # 279] is granted. Plaintiffs' Motion in Limine Precluding Any Reference to Lexington Insurance Company or of Arch's Insurance at Trial [doc. # 281] is denied. IT IS SO ORDERED, There are none.

Dated this 10th day of December , 2010. /s/ Dennis J. Hubel Dennis James Hubel United States Magistrate Judge

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