York International Corporation v. Liberty Mutual Insurance Company
Filing
116
MEMORANDUM re dft's objs to pltfs' disclosures 100 (Order to follow as separate docket entry)Signed by Honorable Sylvia H. Rambo on 2/29/16. (ma) (Main Document 116 replaced on 2/29/2016) (ma).
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
:
:
:
:
Plaintiff
:
:
v.
:
LIBERTY MUTUAL INSURANCE :
:
COMPANY,
:
:
Defendant
YORK INTERNATIONAL
CORPORATION,
Civ. No. 1:10-CV-0692
Judge Sylvia H. Rambo
MEMORANDUM
Presently before the court are Defendant’s objections to Plaintiff’s requests
for payment of defense and indemnification costs pursuant to insurance contracts
between the parties.
For the reasons stated herein, the court will overrule
Defendant’s objections and order Defendant to pay the defense and
indemnification costs.
I.
Background
The parties are familiar with the background of this litigation, and detailed
accounts of the factual and procedural history have been set forth at length in the
court’s previous memoranda. See generally York Int’l Corp. v. Liberty Mut. Ins.
Co., 10-cv-0692, 2015 WL 4162981 (M.D. Pa. July 9, 2015); York Int’l Corp. v.
Liberty Mut. Ins. Co., Civ. No. 10-cv-0692, 2011 WL 2111989 (M.D. Pa. May 26,
2011). Accordingly, the court will not repeat those facts herein, and will discuss
only the relevant procedural history leading to the instant dispute.
A.
Relevant Procedural History
On May 26, 2011, the court ordered Defendant, the insurer of Plaintiff’s
predecessor corporate entity, York Corporation, to defend and indemnify Plaintiff
against asbestos-related actions filed throughout the United States that name either
Plaintiff or York Corporation as a defendant and allege an injury caused by a York
Corporation product during the coverage period provided by four consecutive oneyear insurance policies between the parties (the “York Policies”), which ranged
from October 1, 1952 through October 1, 1956. (See Doc. 52.) On October 28,
2014, after continued disagreement between the parties as to which underlying
asbestos complaints triggered Defendant’s duties of defense and indemnification,
the court ordered the parties to submit a stipulation as to the list of cases for which
Plaintiff sought either defense or indemnification, and ordered Plaintiff to disclose
its costs in those cases as well as documents sufficient to support a finding that
Defendant had a duty to defend or indemnify in each case. (See Doc. 75.)
The parties subsequently filed cross-motions for partial summary judgment
as to whether New York or Pennsylvania law applied to the interpretation of the
York Policies (Docs. 82 & 83), and Defendant filed objections to Plaintiff’s
requests for defense and indemnification costs (Doc. 98). In its July 9, 2015
2
memorandum, the court found that Pennsylvania law applied to the York Policies.
(See Doc. 106.) Defendant then filed a motion for reconsideration as to the choice
of law, which the court denied on October 13, 2015. (Docs. 112 & 113.) With the
choice of law now finally decided, Defendant’s objections to Plaintiff’s requests
for costs are ready for the court’s consideration.
II.
Discussion
Defendant propounds several general objections to Plaintiff’s requests for
defense and indemnification, as well as specific objections to many of the
underlying complaints. Defendant’s general objections are as follows: (1) Plaintiff
has not met its burden of providing sufficient documentation to show that the
underlying complaints involve injury covered by the York Policies; (2)
Defendant’s liability should be reduced as to cases that include exposure to
asbestos-containing products sold by Plaintiff’s corporate predecessors other than
York Corporation; (3) Defendant is liable only for a percentage of the costs
incurred by Plaintiff in the underlying cases, pursuant to New York law; (4)
Plaintiff cannot seek full reimbursement for underlying cases in which defense
invoices reflect a cost sharing agreement between Plaintiff and its co-defendants or
other insurers; and (5) Defendant is not liable for defense or indemnification costs
incurred prior to receiving notice of the underlying cases or for ten of the
underlying cases for which it received untimely notice by Plaintiff. (See Doc. 98,
3
pp. 3-5.) Defendant’s specific objections to many of the underlying cases rely on
its general objections, and therefore the court will resolve Defendant’s general
objections first.
A.
General Objections
1.
Objection One: Plaintiff’s documentary support is
insufficient
Defendant’s first general objection is that Plaintiff has not provided
sufficient support for its requests for defense and indemnification. Defendant
argues that Plaintiff provided only the complaint and defense invoices for sixtyfour of the seventy underlying cases.
(Doc. 98, p. 3 of 24.)
Additionally,
Defendant argues that those defense invoices include time spent on discovery, and
that some of them indicate that the underlying plaintiff’s injuries fall outside of the
York Policies’ coverage. (Id. at pp. 3-4 of 24.) Plaintiff argues in response that it
is only seeking reimbursement of defense costs, which requires nothing more than
the underlying complaint alleging an injury potentially covered by the York
Policies and the amount incurred by Plaintiff to defend the action. (Doc. 100, p. 7
of 53.) Plaintiff states it submitted the amount paid, a check number, and a check
date along with each defense invoice to support its claims for defense costs. (Id.)
Under Pennsylvania law, an insurer’s duty to defend is determined
exclusively by consideration of the allegations set forth in the underlying
complaint. Kvaerner Metal Div. of Kvaerner U.S., Inc. v. Commercial Union Ins.
4
Co., 908 A.2d 888, 896 (Pa. 2006). In fact, “no extrinsic evidence is permitted.”
Westport Ins. Corp. v. Black, Davis & Shue Agency, Inc., 513 F. Supp. 2d 157, 163
(M.D. Pa. 2007). An insurer’s duty to defend is triggered “whenever the complaint
filed by the injured party may potentially come within the policy’s coverage,”
Allstate Ins. Co. v. Drumheller, 185 F. App’x 152, 154 n.2 (3d Cir. 2006) (citing
Pac. Indem. Co. v. Linn, 766 F.2d 754, 760 (3d Cir. 1985)), and continues “until
there is no possibility that the underlying plaintiff could recover on a covered
claim.” Frog, Switch & Mfg. Co., Inc. v. The Travelers Ins. Co., 193 F.3d 742, 746
(3d Cir. 1999).
Here, the court previously held that Defendant had a duty to defend all
complaints that named either Plaintiff or York Corporation as a defendant and
alleged an injury attributable to a York Corporation product during the time period
from October 1, 1952, through October 1, 1956. (See Doc. 52.) Defendant does
not dispute that the underlying complaints meet the criteria in the court’s prior
order. Likewise, Defendant does not dispute that Plaintiff provided the underlying
complaint, defense invoices, total amounts paid, check numbers, and check dates
for each request for reimbursement. Rather, Defendant argues that some of the
defense invoices include time spent on discovery and demonstrate that the liability
at issue was outside of the York Policies’ coverage.
(Doc. 98, p. 3 of 24.)
However, discovery is a necessary part of most litigation and is therefore included
5
in Defendant’s duty to defend, once triggered. Moreover, Defendant must defend
all claims that potentially fall within the York Policies’ coverage until there is no
possibility of a covered claim. Frog, Switch, 193 F.3d at 746. Although the
defense invoices may demonstrate that liability for the underlying injury fell
outside the scope of the York Policies, the complaints themselves indisputably
establish the possibility of a covered claim for purposes of Defendant’s duty to
defend. Accordingly, Defendant’s first general objection will be overruled.1
2.
Objection Two: the York Policies do not cover Plaintiff’s
corporate predecessors other than York Corporation
Defendant’ s second general objection is that it should not be responsible for
the full costs of defense and indemnity as to twelve settled underlying cases
because they include Plaintiff’s corporate predecessors other than York
Corporation, and in several of those cases the underlying plaintiff may have been
exposed to asbestos-containing products sold by entities other than York
Corporation. (Doc. 98, p. 4 of 24.) This objection fails, however, for the same
reasons as discussed above with regard to Defendant’s first general objection. The
inclusion of claims that would not be covered under the York Policies, along with
claims that, if true, would be covered, does not relieve Defendant of its duty to
1
Defendant objects to Plaintiff’s requests for costs in the Steffens, Sherman, Leary, Dykeman,
Douglass, and Dahl actions on the basis that Plaintiff did not produce the discovery in the
underlying actions which was the basis of the costs. As stated herein, Plaintiff has no duty to
produce such documents in seeking its defense costs, and these objections will be overruled.
6
defend because “‘[u]nder Pennsylvania law, when an insured tenders multiple
claims to an insurer for defense, the insurer is obligated to undertake defense of the
entire suit as long as at least one claim is potentially covered by the policy.’” Post
v. St. Paul Travelers Ins. Co., 691 F.3d 500, 517-18 (3d Cir. 2012) (quoting
Caplan v. Fellheimer Eichen Braverman & Kaskey, 68 F.3d 828, 831 n.1 (3d Cir.
1995)).
Unlike the duty to defend, an insurer is only obligated to indemnify its
insured for damages actually covered by the policy. See Fed. Ins. Co. v. Dentsply
Int’l Inc., Civ. No. 06-cv-0991, 2007 WL 4150664, *1 n.3 (M.D. Pa. Nov. 19,
2007) (citing Caplan, 68 F.3d at 831 n.1). While “there is no blanket rule giving
rise to a duty to indemnify where the insured settles the underlying action[,]” Am.
W. Home Ins. Co. v. Donnelly Distribution, Inc., 523 F. App’x 871, 874 (3d Cir.
2013) (citing Regis Ins. Co. v. All Am. Rathskeller, Inc., 976 A.2d 1157, 1161 n.8
(Pa. Super. Ct. 2009)), where an insurer does not seek a declaration as to whether
the underlying injury is a covered claim under the relevant insurance policy, the
insurer must indemnify its insured for the cost of settlement as long as “the
settlement is reasonable and negotiated in good faith.” Mega Constr. Corp. v.
Quincy Mut. Fire Ins. Co., 42 F. Supp. 3d 645, 660 (E.D. Pa. 2012) (citing Alfiero
v. Berks Mut. Leasing Co., 500 A.2d 169, 172 (Pa. Super. Ct. 1985)). Although an
insurer’s duty to indemnify is narrower than the duty to defend, here Defendant’s
7
duty to indemnify is undisturbed regarding the settled underlying cases. Defendant
has not argued that the settled cases were outside the possibility of coverage or
sought a declaration to that effect, and Defendant also does not argue that the
settlements were unreasonable. Rather, Defendant contends that, because noncovered claims were included in the settlement, its liability for indemnification
should be reduced.
However, there is no basis for such a reduction under
Pennsylvania law and, indeed, Defendant offers no support for its position.
Therefore, Defendant’s second general objection will be overruled.
3.
Objection Three: Defendant is liable only for a percentage
of the costs for covered claims
Defendant’s third general objection to Plaintiff’s requests for costs is that,
under New York law, Defendant is only liable for its pro rata share of the costs
paid for covered claims based on the amount of time Defendant was on the risk.
(Doc. 98, p. 4 of 24.) However, the court rejected this argument when it denied
Defendant’s motion for partial summary judgment as to choice of law, explaining
that, under Pennsylvania law, “once the liability of a given insurer is triggered, it is
irrelevant that additional exposure or injury occurred at times other than when the
insurer was on the risk. The insurer in question must bear potential liability for the
entire claim.” York Int’l Corp., 2015 WL 4162981, at *12 (quoting J.H. France
Refractories Co. v. Allstate Ins. Co., 626 A.2d 502, 508 (Pa. 1993)). Accordingly,
8
Defendant’s third general objection will be overruled as to all of the underlying
cases.
4.
Objection Four: Plaintiff had cost sharing agreements
Defendant’s fourth general objection is that Plaintiff’s defense invoices
identify cost sharing agreements between Plaintiff and insurers for other corporate
entities associated with Plaintiff, and that Defendant should only be liable for
Plaintiff’s percentage share of the cost, rather than the full amounts requested by
Plaintiff.
(Doc. 98, pp. 4-5 of 24.)
Plaintiff contends that the cost sharing
agreements are irrelevant because they are associated with a wholly unrelated case
in an Illinois county court, and that it only submitted to Defendant the amounts that
it actually paid in defending the underlying covered claims. (Doc. 100, pp. 13-15
of 53.)
The court agrees that the cost share agreements are irrelevant to Plaintiff’s
contractual right to have Defendant reimburse it for costs it actually incurred on
covered claims.
The fact that other defendants or insurers may have paid
additional amounts does not affect Defendant’s duties of defense and
indemnification owed to Plaintiff. Thus, Defendant’s fourth general objection will
be overruled.
9
5.
Objection Five: Untimely Notice
Defendant’s fifth and final general objection is that Plaintiff did not provide
notice for ten of the underlying claims until November 6, 2014, and that Defendant
should not be liable for defense or indemnity costs incurred prior to receipt of
notice, or claims for which timely notice was not provided. (Doc. 98, p. 5 of 24.)
Plaintiff argues in response that, while it provided courtesy copies of those ten
underlying complaints on November 6, 2014, it had given Defendant access to
them in an electronically accessible database known as the “eRoom” within
nineteen days of each underlying complaint being filed. (Doc. 100, pp. 15-16 of
53.) Plaintiff further argues that, even if notice of those ten claims was late,
Defendant would need to show that it was prejudiced by such late notice in order to
avoid its defense and indemnification obligations. (Id. at p. 16 of 53.)
As noted by Plaintiff, Pennsylvania law requires a showing of prejudice for
an insurer to avoid its obligations due to late notice. See Brakeman v. Potomac
Ins. Co., 371 A.2d 193, 196-98 (Pa. 1977). The Third Circuit has “recognized that
‘the Brakeman rule applies even to policies between sophisticated parties’” in the
primary insurance context, because “Brakeman rested above all on the court's
unwillingness to permit a forfeiture of insurance protection ‘unless a sound reason
exists for doing so.’” Pac. Emp’rs Ins. Co. v. Global Reinsurance Corp. of Am.,
693 F.3d 417, 435 (3d Cir. 2012) (quoting Trs. of the Univ. of Pa. v. Lexington Ins.
10
Co., 815 F.2d 890, 897 (3d Cir. 1987)) (quoting Brakeman, 371 A.2d at 197).
Here, Defendant has not alleged that it suffered any prejudice due to Plaintiff’s
allegedly late notice. Accordingly, Defendant’s fifth general objection will be
overruled.
The court will now turn to Defendant’s specific objections.
A.
Specific Objections2
In addition to its general objections, Defendant makes specific objections as
to several individual underlying cases. As noted above, many of these so-called
specific objections actually rely on one or more of Defendant’s general objections.
1.
DiGrande, Nishimura, Simons, and Saathoff
Defendant argues with regard to these underlying actions that it should only
be responsible for a small portion of Plaintiff’s actual defense and indemnification
costs based on its second and third general objections, namely that Defendant can
reduce its liability where another entity is named as a co-defendant in the
underlying case, and that it should only be responsible for a pro rata amount of
Plaintiff’s costs based on New York law. As discussed above, the court will
overrule General Objection Two because there is no basis to sustain it, and the
court will overrule General Objection Three because it is Pennsylvania, rather than
2
In its specific objections, Defendant references the individual underlying claims by the last
name of the plaintiff in each matter. For convenience and continuity, the court will use
Defendant’s designations.
11
New York, law that applies to the York Policies. Accordingly, the court will
overrule Defendant’s objections to Plaintiff’s costs in the DiGrande, Nishimura,
Simons, and Saathoff actions.
2.
Lentfer, Troglia, Richardson, Pesce, McIndoe, Lenhard, and
Bernardo
Defendant again relies on its general objections, rather than any specific
objections, in arguing that it should only be responsible for a small percentage of
Plaintiff’s incurred defense and indemnity costs with regard to these underlying
actions. Here, Defendant relies on General Objection Three, i.e., that it is only
responsible for its pro rata share of costs under New York law, and General
Objection Four, i.e., that the cost share agreements Plaintiff had with other
defendants in the underlying cases should reduce Defendant’s liability. (Doc. 98,
pp. 6-7 of 24.) As stated above, the court will overrule those general objections,
and, likewise, Defendant’s objections to the Lentfer, Troglia, Richardson, Pesce,
McIndoe, Lenhard, and Bernardo claims.
3.
Robbins
Defendant objects to paying the costs associated with Robbins because the
underlying plaintiff’s date of first exposure to asbestos-containing products
occurred after the period covered by the York Policies. (Doc. 98, pp. 7-8 of 24.)
Plaintiff contends that the underlying complaint names York Corporation, and an
exhibit to the complaint states that the underlying plaintiff’s date of first exposure
12
was prior to the expiration of the York Policies, thereby triggering Defendant’s
duty to defend. (Doc. 100, p. 23 of 53.) Plaintiff further argues that there are
additional facts supporting coverage within the underlying discovery record
showing that the underlying plaintiff was exposed to asbestos-containing insulation
on York Corporation air conditioning units in the 1950s. (Id. at p. 24 of 53.) Thus,
Plaintiff argues that the settlement of the Robbins action included a claim that
could have been covered by the York Policies, and for which Defendant owes
indemnification. (Id.)
The court will overrule Defendant’s objection as to the Robbins defense
costs, because the complaint meets the requirements outlined in this court’s prior
order.3 (See Doc. 75.) Likewise, the court will overrule Defendant’s objection as
to indemnity because there was never a determination that the underlying
plaintiff’s injury could not possibly have been covered by the York Policies, and
Defendant has not argued that the settlement was unreasonable or not negotiated in
good faith. See Am. W. Home Ins. Co., 523 F. App’x at 874 (citing Regis Ins. Co.,
976 A.2d at 1161 n.8); see also Mega Constr. Corp., 42 F. Supp. 3d at 660 (citing
Alfiero, 500 A.2d at 172).
3
The same is true with regard to Defendant’s objections to the payment of defense costs in the
Jones and Kuhn actions. In each underlying case, Plaintiff has provided a complaint alleging a
potentially covered claim, along with proof of the actual amounts it spent defending the case.
Accordingly, the court will overrule Defendant’s objections to these actions for the same reason
it is overruling Defendant’s objections to the payment of defense costs in Robbins.
13
4.
Barley
Defendant relies on its first and fourth general objections in arguing that it
owes no defense costs for the Barley action. (Doc. 98, p. 10 of 24.) In opposing
Defendant’s objections, Plaintiff contends that the Barley complaint triggers
Defendant’s duty to defend and that Defendant is improperly relying on extrinsic
evidence to avoid its duty. (Doc. 100, p. 27 of 53.) The court agrees with Plaintiff.
The duty to defend is determined solely upon the four corners of the complaint.
Kvaerner, 908 A.2d at 896. Defendant cites to defense invoices and discovery
items to show that the plaintiff in Barley had a date of first exposure to asbestoscontaining products outside the York Policies’ period of coverage. However,
Plaintiff has not sought indemnification from Defendant, and instead only seeks
reimbursement of defense costs. Because the underlying complaint alleged an
injury potentially covered by the York Policies, Defendant had a duty to defend
and is therefore obligated to pay those costs.4 Further, the court has already
overruled Defendant’s fourth general objection, that cost share agreements should
4
Defendant objects to the Clemmer, Goss, Wahner, Whinery, Cantley, Fanelli, and Loewen
defense requests for the same reasons, and those objections will likewise be overruled. As
previously stated herein, Defendant’s duty to defend, once triggered by a complaint alleging
injury potentially covered by the York Policies, continues until there is no possibility of a
covered claim.
14
reduce its portion of liability. Therefore, Defendant’s objections to the Barley
costs will be overruled.5
5.
Cressy
Defendant objects to Plaintiff’s request for defense costs in Cressy because
discovery revealed that the underlying plaintiff was exposed to asbestos in
products not manufactured or sold by York Corporation. (Doc. 98, p. 11 of 24.)
Plaintiff argues in response that Defendant is merely relying on its general
objections and that the underlying complaint triggered Defendant’s duty to defend.
(Doc. 100, pp. 29-30 of 53.)
While it appears, from documents from the underlying case cited by
Defendant, that the parties in the underlying action discussed, at some point in
discovery, that no York Corporation products had been identified as a cause of the
underlying plaintiff’s injury, (see Doc. 100, p. 11 of 24), such a discussion between
the parties in the underlying action did not foreclose all “possibility that the
underlying plaintiff could recover on a covered claim.” Frog, Switch, 193 F.3d at
746. As stated above, an insurer’s duty to defend is triggered whenever a claim
5
Defendant similarly objects, on the bases of its first general objection – that Plaintiff did not
provide sufficient documentary support for its claimed costs – and its fourth general objection –
that its liability should be reduced according to Plaintiff’s cost share agreements – to Plaintiff’s
requests for costs in the following actions: Wichman, Toomey, Talbot, Saathoff, Romine, Phillips,
Moore, Marcelja, Lovett, Loewen, Lee, Kuhn, Jones, Holbrook, Hale, Groves, Gisler, Fisher,
Fanelli, Drivon, DeKraai, De La Rosa, Datis, Cantley, and Brasher. Because the court has
overruled Defendant’s first and fourth general objections, the objections to these individual
underlying cases will also be overruled.
15
may potentially be covered. See Am. & Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc.,
2 A.3d 526, 541 (Pa. 2010) (“[I]t is the potential, rather than the certainty, of a
claim falling within the insurance policy that triggers the insurer’s duty to
defend.”) (citation and internal quotation marks omitted). In order to eliminate any
uncertainty as to the duty to defend, an insurer may bring a declaratory judgment
action to resolve the question of coverage. Id. at 542. Even if the insurer is
successful in the declaratory judgment action, however, that victory for the insurer
does not “retroactively eliminate the insurer’s duty to defend the insured during the
period of uncertainty.” Id. (citing Liberty Mut. Ins. Co. v. FAG Bearings Corp.,
153 F.3d 919, 924 (8th Cir. 1998)). Where an insurer elects to neither bring a
declaratory judgment action nor defend its insured, “the insurance company’s
refusal to defend at the outset of the controversy is a decision it makes at its own
peril.” Id. (citing Casper v. Am. Guar. & Liab. Ins. Co., 184 A.2d 247, 248 (Pa.
1962)) (quoting Cadwallader v. New Amsterdam Cas. Co., 152 A.2d 484, 488 (Pa.
1959)). Here, Defendant did just that. By not defending Plaintiff or seeking
declaratory judgment in the underlying case as to the duty to defend, Defendant
took the risk that there might be a covered claim. That potential for a covered
claim triggered Defendant’s duty to defend, which would not be terminated until
there was no possibility of a covered claim, or, in other words, until there was a
judicial determination that no covered claim existed.
16
See Erie Ins. Exch. v.
Transamerica Ins. Co., 533 A.2d 1363, 1368 (Pa. 1987) (“[I]t is the duty of the
insurer to defend until such time as the claim is confined to a recovery that the
policy does not cover.”); see also Stein v. N. Assurance Co. of Am., 617 F. App’x
28, 30-31 (2d Cir. 2015) (citing Avondale Indus., Inc. v. Travelers Indem. Co., 774
F. Supp. 1416, 1425 (S.D.N.Y. 1991)) (The “duty to defend continues until judicial
determination, either in [the] underlying action or in [the] coverage action, of [the]
issue relevant to coverage.”) (citation omitted) (alterations in original). Here, there
was no such judicial determination and, therefore, the court will not relieve
Defendant of its duty to defend based on a discussion occurring between the parties
during discovery. Accordingly, Defendant’s objection will be overruled as to the
defense costs incurred in the Cressy action.6
6.
Fisher
Defendant objects to Plaintiff’s request for reimbursement of defense costs
in the Fisher action based on its first and second general objections, and because
the underlying plaintiff’s direct exposure to asbestos-containing products occurred
after the York Policies’ coverage period. (Doc. 98, p. 17 of 24.) Plaintiff contends
that the underlying complaint alleges a potentially covered claim and obligates
6
Defendant objects to Plaintiff’s requests for defense costs in Brasher and Romine for the same
reasons, but with even less certainty regarding the impossibility of a covered claim. Thus, for
reasons similar to those stated with regard to Cressy, Defendant’s objections to Plaintiff’s
requests for defense costs in Brasher and Romine will likewise be overruled.
17
Defendant to reimburse Plaintiff for its costs in defending the case. (Doc. 100, pp.
38-39 of 53.)
Because the court has already overruled Defendant’s general objections, it
will therefore reject them here as bases for Defendant to avoid its duty to defend.
Plaintiff has provided an underlying complaint alleging a potentially covered
claim, along with proof of the actual amounts it incurred in defending the case.
Defendant has not shown that the possibility of a covered claim was extinguished
at any time in the underlying litigation and therefore Defendant remains obligated
to pay for the defense of the case. Thus, Defendant’s objections to the payment of
defense costs for the Fisher action will be overruled.7
B.
Miscellaneous Objections
In addition to its general and specific objections, Defendant also objects to
the payment of defense costs for twelve unresolved cases in the state of Utah,8 as
well as four other cases for which no defense costs have been incurred. (Doc. 98,
pp. 23-24 of 24.) As to the Utah cases, Defendant objects that the defense invoices
provided do not reflect meaningful legal work. As stated above, however, if
Defendant wished to be involved in the defense of the underlying cases and
oversee counsel providing that defense, including auditing or objecting to defense
7
Defendant advances the same objections to the payment of defense costs in the Leary and
Talbot actions, and those objections will likewise be overruled.
8
The named Utah actions are as follows: Allred, Bell, Bird, Green, Johnson, Kohles, Olsen,
Peterson, Ryser, Spainhower, Taylor, and Van Leeuwen.
18
invoices, it had the opportunity to do so when presented with notice of the claim,
and it refused. See Jerry’s Sport Ctr., 2 A.3d at 545 (stating that where an insurer
chooses to defend an action against its insured, it allows the insurer “to monitor
and review defense fees, compare them to [the insurer]’s preferred billing
guidelines, and refer the invoices to a third-party auditor for scrutiny.”). Because
Defendant chose not to defend the underlying cases, it lost the opportunity to
object to the reasonableness of the defense invoices. Accordingly, Defendant’s
objections to the Utah actions will be overruled.
Finally, with regard to the four cases for which no costs have been incurred,
Plaintiff contends that it has merely placed Defendant on notice that those
underlying cases involve potentially covered claims and is reserving the right to
submit costs in the future. (Doc. 100, p. 53 of 53.) Defendant has not made any
objection on the basis that these cases do not involve potentially covered claims,
and, therefore, Defendant’s objection to these cases will be overruled.
III.
Conclusion
For the reasons stated herein, the court will overrule all of Defendant’s
objections to Plaintiff’s requests for payment of defense and indemnification costs
in the underlying asbestos actions, and finds Defendant liable for the payment of
19
those costs.
An appropriate order will issue.
s/Sylvia H. Rambo
SYLVIA H. RAMBO
United States District Judge
Dated: February 29, 2016
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