Tyco Fire Products LP v. AIU Insurance Company et al

Filing 196

ORDER re: Partial AIG Insurers' motion for reconsideration or, in the alternative, motion to certify an interlocutory appeal (Dkt. Nos. 154, 194). Defendant Affiliated FM Insurance Company joins the Partial AIG Insurers&# 039; motion. (Dkt. Nos. 157, 195). Defendants American Guarantee and Liability Insurance Company (AGLIC), Zurich American Insurance Company (ZAIC) and American Zurich Insurance Company (AZIC) (collectively Zurich) join the Partial AIG Insurers motion . (Dkt. No. 173). Defendants' various motions for reconsideration are DENIED (Dkt. Nos. 154 , 157 , 173 ). AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 12/18/23.(cper, ) Modified docket text on 12/18/2023 (sshe, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Tyco Fire Products LP,

)
)
Plaintiff,
)
)
v.
)
)
AIU Insurance Company, et al.,
)
)
Defendants.
)
__________________________________________)

C/A. No. 2:23-2384-RMG

ORDER

Before the Court is the Partial AIG Insurers’ motion for reconsideration or, in the
alternative, motion to certify an interlocutory appeal (Dkt. Nos. 154, 194). Defendant Affiliated
FM Insurance Company joins the Partial AIG Insurers’ motion. (Dkt. Nos. 157, 195). Defendants
American Guarantee and Liability Insurance Company (“AGLIC”), Zurich American Insurance
Company (“ZAIC”) and American Zurich Insurance Company (“AZIC”) (collectively “Zurich”)
join the Partial AIG Insurers’ motion. (Dkt. No. 173). Plaintiff filed a response in opposition.
(Dkt. No. 193).
Rule 54(b) provides the following:
When an action presents more than one claim for relief—whether as a claim,
counterclaim, crossclaim, or third-party claim—or when multiple parties are
involved, the court may direct entry of a final judgment as to one or more, but fewer
than all, claims or parties only if the court expressly determines that there is no just
reason for delay. Otherwise, any order or other decision, however designated, that
adjudicates fewer than all the claims or the rights and liabilities of fewer than all
the parties does not end the action as to any of the claims or parties and may be
revised at any time before the entry of a judgment adjudicating all the claims and
all the parties' rights and liabilities.

Id. Under Rule 54(b), the “district court retains the power to reconsider and modify its interlocutory
judgments ... at any time prior to final judgment when such is warranted.” Am. Canoe Ass'n v.
Murphy Farms, Inc., 326 F.3d 505, 514-15 (4th Cir. 2003); see also Moses H. Cone Mem. Hosp.
v. Mercury Constr. Corp., 460 U.S. 1, 12 (1983) (noting that “every order short of a final decree
is subject to reopening at the discretion of the district judge”).
The Fourth Circuit has offered little guidance on the standard for evaluating a Rule 54(b)
motion, but has held motions under Rule 54(b) are “not subject to the strict standards applicable
to motions for reconsideration of a final judgment.” Am. Canoe Ass'n, 326 F.3d at 514; see also
Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1472 (4th Cir. 1991) (the Court
found it “unnecessary to thoroughly express our views on the interplay of Rules 60, 59, and Rule
54”). In this regard, district courts in the Fourth Circuit, in analyzing the merits of a Rule 54
motion, look to the standards of motions under Rule 59 for guidance. See U.S. Home Corp. v.
Settlers Crossing, LLC, C/A No. DKC 08-1863, 2012 WL 5193835, at *2 (D. Md. Oct. 18, 2012);
R.E. Goodson Constr. Co., Inc. v. Int'l Paper Co., C/A No. 4:02-4184-RBH, 2006 WL 1677136,
at *1 (D.S.C. June 14, 2006); Akeva L.L.C. v. Adidas Am., Inc., 385 F. Supp. 2d 559, 565–66
(M.D.N.C. 2005). Therefore, reconsideration under Rule 54 is appropriate on the following
grounds: (1) to follow an intervening change in controlling law; (2) on account of new evidence;
or (3) to correct a clear error of law or prevent manifest injustice. Beyond Sys., Inc. v. Kraft Foods,
Inc., C/A No. PJM-08-409, 2010 WL 3059344, at *2 (D. Md. Aug. 4, 2010) (“This three-part test
shares the same three elements as the Fourth Circuit's test for amending an earlier judgment under
Rule 59(e), but the elements are not applied with the same force when analyzing an[ ] interlocutory
order.”) (citing Am. Canoe Ass'n, 326 F.3d at 514).

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First, the Partial AIG Insurers object that the Court failed to properly apply the South
Carolina Door Closing Statute. (Dkt. No. 154 at 13).
In the Court’s order denying the Partial AIG Insurers’ motion to dismiss, the Court held
that the Door Closing Statute did not bar the Court from hearing this action. (Dkt. No. 103 at 1314). The Court held that (1) a strong countervailing federal interest existed in “consolidating
actions in multi-district litigation, and this coverage dispute relates to and advances the potential
resolution of that litigation” and (2) this action, in part, arises out of at least 80 cases pending in
the AFFF MDL which identified South Carolina as a home venue or which were removed from
state court in South Carolina. (Id. at 14) (citing Flexi-Van Leasing, Inc. v. Travelers Indem. Co.,
No. 2:15-cv-1787-DCN, 2017 WL 11707321 (D.S.C. Dec. 7, 2017)).
The Partial AIG Insurers argue the fact 80 cases against Tyco arise from South Carolina is
“irrelevant.” (Dkt. No. 154 at 13). The Partial AIG Insurers argue Flexi-Van is “riddled with
mistakes” and that reliance on it was “error.” (Id. at 14). The Partial AIG Insurers also argue that
“countervailing federal considerations” are limited to instances in which “the plaintiff does not
have an alternative forum to assert his claims.” (Id. at 15) (citing Boisvert v. Techtronic Indus. N.
Am., Inc., 56 F. Supp. 3d 750, 752 (D.S.C. 2014)).
The Court denies the Partial AIG Insurers’ motion on this point. The fact 80 cases have
been filed in South Carolina is, despite the Partial AIG Insurers’ conclusory statement to the
contrary, relevant to finding that the insurance coverage issues in Plaintiff’s complaint arise, in
part, out of South Carolina based claims, rendering the Door Closing Statute inapplicable. See
Flexi-Van, 2017 WL 11707321, at *4. Further, while certain district courts cases interpret Fourth
Circuit case law as standing for the proposition that Szantay balancing is limited “to situations in
which a plaintiff has no other available forum in which to bring its action,” see California Buffalo

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v. Glennon-Bittan Grp., Inc., 910 F. Supp. 255, 257 (D.S.C. 1996), the Partial AIG Insurers cite
no Fourth Circuit case itself holding as much. Accordingly, the Partial AIG Insurers’ motion is
denied on this point. See Commissioners of Pub. Works of City of Charleston v. Costco Wholesale
Corp., No. 2:21-CV-42-RMG, 2021 WL 5908758, at *10 (D.S.C. Dec. 13, 2021) (countervailing
federal interest existed in consolidating “flushable wipes actions”).
Second, the Partial AIG Insurers argue that the Court erred by finding that exercising
specific jurisdiction over them in South Carolina was constitutionally reasonable. (Dkt. No. 154 at
16). The Partial AIG Insurers argue the Court ignored whether defending the instant action in
South Carolina was reasonable as to Defendants and instead addressed only Plaintiff’s interests in
having the instant matter litigated in this court.
The Court denies the Partial AIG Insurers’ motion on this point. The Partial AIG Insurers
misrepresent the Court’s analysis, which tracked Supreme Court precedent:
Finally, Plaintiff has demonstrated that the exercise of personal jurisdiction over
the Defendants is constitutionally reasonable. Plaintiff has a strong interest in
obtaining a convenient, timely, and effective forum to adjudicate its coverage
claims since it faces an August 23, 2024 day certain trial in a bellwether case in the
AFFF MDL which could potentially produce devastating financial consequences to
the company. See (C.A. No. 2:18-2873, Dkt. No. 3665 at 7). Defendants, as insurers
which provided nationwide insurance coverage to Tyco, are not unduly burdened
by litigating the coverage issues in the District of South Carolina since they
routinely litigate complex coverage and other matters in courts in state and federal
courts across the nation. Moreover, the federal judicial system has a strong interest
in promoting the resolution of the voluminous pending cases against Tyco in the
MDL arising out of its manufacture and sale of AFFF. If pretrial resolution of the
claims pending against Plaintiff is not accomplished, the over 4,000 pending cases
against Plaintiff in the AFFF MDL will flow back to the individual district courts
in all 93 federal judicial districts and could potentially result in hundreds of
complex, time-consuming jury trials. A timely resolution, one way or the other, of
the insurance coverage disputes between Plaintiff and its insurers, could assist in
facilitating meaningful and potentially successful settlement discussions in cases
pending against Plaintiff in the AFFF MDL.

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(Dkt. No. 103 at 12-13); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)
(In determining whether the exercise of personal jurisdiction over an out of state defendant is
constitutionally reasonable, courts should consider the burden on the defendant, the forum state’s
interest in adjudicating the dispute, the plaintiff’s interest in obtaining convenient and effective
relief, the interstate judicial system’s interest in obtaining the most efficient resolution of
controversies, and the interest of the states in furthering fundamental social policies.).
Third, the Partial AIG Insurers argue the Court abused its discretion by declining to
abstain. (Dkt. No. 154 at 18). While the Court finds this is not so, for the sake of clarity, the Court
further articulates under Colorado River why it is within its discretion to decline to abstain.
The basic notion underlying the Colorado River doctrine is that in certain circumstances it
may be appropriate for a federal court to refrain from exercising its jurisdiction to avoid duplicative
litigation. See Colorado River Conservation Dist. v. United States, 424 U.S. 800, 817–19 (1975);
Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 15–16 (1983). However, such
abstention is the exception rather than the rule. See Colorado River, 424 U.S. at 817–18; Gordon
v. Luksch, 887 F.2d 496, 497 (4th Cir.1989). The threshold question in deciding whether Colorado
River abstention is appropriate is whether there are parallel suits. See Romine v. Compuserve
Corp., 160 F.3d 337, 339 (6th Cir.1998); New Beckley Mining Corp. v. International Union,
UMWA, 946 F.2d 1072, 1073 (4th Cir.1991). If parallel suits exist, then a district court must
carefully balance several factors, “with the balance heavily weighted in favor of the exercise of
jurisdiction.” Moses H. Cone Mem. Hosp., 460 U.S. at 16. Although the prescribed analysis is not
a “hard-and-fast” one in which application of a “checklist” dictates the outcome, six factors have
been identified to guide the analysis for Colorado River abstention: (1) whether the subject matter
of the litigation involves property where the first court may assume jurisdiction to the exclusion

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of others;1 (2) whether the federal forum is an inconvenient one; (3) the desirability of avoiding
piecemeal litigation; (4) the relevant order in which the courts obtained jurisdiction and the
progress achieved in each action; (5) whether state law or federal law provides the rule of decision
on the merits; and (6) the adequacy of the state proceeding to protect the parties' rights. Moses H.
Cone, 460 U.S. at 15, 19–27; Colorado River, 424 U.S. at 818–19; McLaughlin, 955 F.2d at 934–
35. The above factors are not exclusive. See McLaughlin v. United Virginia Bank, 955 F.2d 930,
934 (4th Cir. 1992); AMEX Assur. Co. v. Giordano, 925 F. Supp. 2d 733, 738 (D. Md. 2013) (“If
parallel suits exist, courts then balance six non-exclusive factors to determine whether exceptional
circumstances compel abstention.”). At bottom, abstention should be the exception, not the rule,
and it may be granted only when “the parallel state-court litigation will be an adequate vehicle for
the complete and prompt resolution of the issues between the parties.” Moses H. Cone, 460 U.S.
at 28. As there are parallel proceedings, the Court proceeds to consider the above noted factors,
“with the balance heavily weighted in favor of the exercise of jurisdiction.” Moses H. Cone Mem.
Hosp., 460 U.S. at 16.
The Court declines to abstain in this matter. While the Wisconsin Action was commenced
slightly earlier than the instant one, as noted above, it is not inconvenient for Defendants,
sophisticated insurer carriers, to litigate in federal court. While the source of law is state law, both
lawsuits are at nearly the same stage and the instant action will proceed at a slightly quicker pace
than the Wisconsin Action. As to the threat of piecemeal litigation, the overlap between this action
and the Wisconsin Action is not any more problematic than it would be in any other matter
involving concurrent litigation. See Gannett Co. v. Clark Const. Grp., Inc., 286 F.3d 737, 744 (4th
Cir. 2002) (“The threat of inconsistent results and the judicial inefficiency inherent in parallel

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Here, this factor is irrelevant and the Court does not consider it.
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breach of contract litigation, however, are not enough to warrant abstention.”); Villa Marina Yacht
Sales, Inc. v. Hatteras Yachts, 915 F.2d 7, 16 (1st Cir.1990) (“[Colorado River abstention] is not
warranted simply because related issues otherwise would be decided by different courts, or even
because two courts otherwise would be deciding the same issues. As noted above, something more
than a concern for judicial efficiency must animate a federal court's decision to give up
jurisdiction.”). An additional federal interest, however, which the Court discussed in its prior order
tips the balance heavily in favor of this Court honoring its “virtually unflagging obligation” to
exercise jurisdiction:
The circumstances confronted by the Court in this litigation bear little similarity to
the factual background of the typical abstention case. The Court has on its docket
over 6,000 cases as the transferee court in the AFFF MDL, with the daunting
responsibility to address pretrial issues and advance, if possible, settlement
discussions among the parties. Tyco is a defendant in a majority of the pending
cases in the MDL. Other major defendants, which had no reported coverage
disputes with their insurance carriers, have reached a proposed settlement that may
exceed $13 billion in claims asserted by public water districts. The absence of a
resolution of the major coverage issues between Tyco and its liability carriers has
impaired the negotiations between Tyco and the plaintiffs in the MDL.
Plaintiff faces an August 2024 bellwether trial in the AFFF MDL that could
potentially produce a devastating financial verdict against it. A timely resolution of
those coverage issues, either by finding coverage or the absence of coverage, could
provide the negotiating parties in the MDL critical information needed to reach a
negotiated settlement.
(Dkt. No. 103 at 16). Here, denying a federal forum does not “clearly serve an important
countervailing interest.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996). Accordingly,
reconsideration is denied on this point.
Fourth, the Partial AIG Insurers argue that the scheduling order issued by the Court is
designed to “harm” them and would deny them of their “due process rights.” (Dkt. No. 154 at 21).
The Partial AIG Insurers neither cite nor discuss case law supporting that contention. Nor do the

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Partial AIG Insurers provide specific examples of how the scheduling order must be amended to
provide them “sufficient time” to prepare the instant case. The Partial AIG Insurers also argue
that the Court stated or implied in its prior order that, by the end of dispositive briefing, it would
definitively rule on whether there was a duty to indemnify Plaintiff in the upcoming Telomer
Bellwether trial and other AFFF litigation. (Dkt. No. 154 at 22). When this matter reaches
dispositive briefing, the Court will address those matters which the parties present it and which are
ripe for adjudication. To imply otherwise as the Partial AIG Insurers do in their motion is to
misrepresent the Court’s prior order.
Last, the Partial AIG Insurers ask for a stay of this litigation and that the Court certify its
order for interlocutory review pursuant to 28 U.S.C. § 1292(b).
Interlocutory appeal is disfavored because it promotes piecemeal litigation. Myles v.
Laffitte, 881 F.2d 125, 127 (4th Cir. 1989) (noting interlocutory appeal should be “be used
sparingly and ... its requirements must be strictly construed”). A district court, in its discretion,
may certify a question for interlocutory review where (1) there is a controlling question of law; (2)
“there is substantial ground for difference of opinion” on the issue; and (3) an immediate appeal
“may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b). In the
unusual circumstance where interlocutory review is appropriate, it normally involves “a pure
question of law” that can be decided “quickly and cleanly” and does not involve issues of fact
requiring the appellate court to “delve beyond the surface of the record in order to determine the
facts.” United States v. Agape Senior Community, Inc., 848 F.3d 330, 340-41 (4th Cir. 2017).
The Court has carefully considered the Partial AIG Insurers’ request for interlocutory
review and denies their motion on this final point. As explained at length in the prior order and the
instant one, the Partial AIG Insurers do not present controlling questions of law for which there is

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substantial ground for difference of opinion. This Court has personal jurisdiction over Defendants
and the Court is within its discretion to decline to abstain under Colorado River.
For the reasons set forth above, Defendants’ various motions for reconsideration are
DENIED (Dkt. Nos. 154, 157, 173).
AND IT IS SO ORDERED.
s/ Richard Mark Gergel
Richard Mark Gergel
United States District Judge
December 18, 2023
Charleston, South Carolina

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