In Re: Federal-Mogul Global Inc. et al, No. 1:2011cv00813 - Document 11 (D. Del. 2015)
Court Description: OPINION & ORDER re 1 Bankruptcy Appeal, filed by PepsiAmericas Inc.; IT IS ORDERED that the decision of the Bankruptcy Court is hereby AFFIRMED. Signed by Judge Joseph H. Rodriguez on 2/5/15. (bkb)
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In Re: Federal-Mogul Global Inc. et al Doc. 11 U N ITED S TATES D ISTRICT COU RT D ISTRICT OF D ELAW ARE In re: Federal-Mogul Global, Inc. : Hon. J oseph H. Rodriguez PepsiAm ericas, Inc., n / k/ a Pepsi-Cola Metropolitan, Bottling Com pany, Inc., : Civil Action Nos. 10 -cv-986 & 11-cv-8 13 Appellant, v. : : OPIN ION & ORD ER : Federal-Mogul Global Inc., et al., Debtor-Appellee. : : This m atter com es before the Court on appeal from the Bankruptcy Court’s October 27, 20 10 grant of sum m ary judgm ent in favor of Debtor-Appellee. The Court heard oral argum ent on October 17, 20 13. For reasons stated that day, as well as reasons discussed below, the decision by the Bankruptcy Court is affirm ed. Before the Bankruptcy Court was a m otion for sum m ary judgm ent on the am ended proof of claim of PepsiAm ericas, Inc. (“Appellant”), filed in the bankruptcy of Federal-Mogul Global, Inc. (“Appellee”), against two of Appellee’s subsidiaries, FederalMogul Corporation (“FMC”) and Federal-Mogul Products, Inc. (“FMP”). Appellant had alleged that Appellee im properly billed shared insurance policies, giving rise to claim s based on tort, conversion, and breach of the im plied covenant good faith and fair dealing. The Appellee argued that no factual basis existed to substantiate the validity of Appellant’s claim s. The Bankruptcy Court agreed and granted sum m ary judgm ent in favor of Appellee. Backgro u n d This dispute derives from both parties’ relationship with the form er Abex Corporation, a producer of brakes an d other friction products that spawned countless cases of asbestos exposure. See In Re Federal-Mogul Global, Inc., 438 B.R. 787, 8 0 0 (Bankr. D. Del. 20 10 ). The assets and liabilities of Abex Corporation were divided and sold through several m ergers and acquisitions resulting Appellant and Appellee, am ong others, owning a portion. See In Re Federal-Mogul Global Inc., 438 B.R. at 793. That is, 1 Dockets.Justia.com along with owning assets from Abex Corporation, both parties owned liabilities from asbestos-related litigation filed against Abex. Id. Both Appellant and Appellee collected proceeds from Com prehensive Gen eral Liability Insurance Policies which insured against those asbestos claim s. However, Abex Corporation was not the only source of Appellee’s asbestos-related liability, as it owned six other stream s of such asbestos liability. See In Re Federal-Mogul Global Inc., 20 0 7 WL 4180 545, at *13-15 (Bankr. D. Del. Nov. 16, 20 0 7). Appellant has argued that Appellee im properly collected insuran ce proceeds from the shared Com prehensive Gen eral Liability plans to com pensate for cases deriving from its six non-Abex stream s of liability, and as a result benefited from the insurance policies without indem nifying Appellant for litigation costs and expenses. The history of the corporate relationship between the two parties is long, m uddled, an d thoroughly docum ented. This Court approves and affirm s the corporate histories explain ed in detail in past opinions. See In Re Federal-Mogul Global Inc., 438 B.R. at 792-94; In re Federal-Mogul Global, Inc., 411 B.R. 148, 160 -162 and Appen dix A (Bankr. D. Del. 20 0 8); In re Federal-Mogul Global Inc., 20 0 7 WL 4180 545, *13-15. The relevant corporate history is repeated here. In 1968 , Abex Corporation was acquired by IC Industries, Inc., predecessor to Whitm an Corporation and ultim ately PepsiAm ericas, Inc. (“Appellant”). See In Re Federal-Mogul Global, Inc., 438 B.R. at 792-93. In 1984, IC Industries also acquired Pneum o Corporation, which it renam ed Pneum o Abex Corporation (“PAC 1”) in 1985. Id. at 793. In 1988, IC Industries sold Abex Corporation and PAC 1 stock to PA Holdings Corporation, which was owned by Henley Investm ent Inc., a subsidiary of The Henley Group, pursuant to the 1988 Stock Purchase Agreem ent (“1988 SPA”) in the record. Id. 1 The 198 8 SPA between IC Industries and PA Holdings Corporation was am ended on August 29, 1988. In 1990 , the assets and liabilities of Abex Corporation and PAC 1 were consolidated into their parent, PA Holdings. Id. By the tim e the second am endm ent to 1 The 198 8 SPA contains a provision explicitly barring third party ben eficiaries. See 198 8 SPA at ¶ 15 (“this Agreem ent is for the sole benefit of the parties hereto and nothing herein expressed or im plied shall give or be construed to give to any person or entity, other than the parties hereto, any legal or equitable rights hereunder.”). 2 the 198 8 SPA was executed on Septem ber 23, 1991, IC Industries had changed its n am e to Whitm an Corporation. Id. Additionally, PA Holdings had undergone a nam e change to becom e another Pneum o Abex Corporation (“PAC 2”). As such, the Pneum o Abex Corporation that signed the Second Am endm ent to the 1988 Stock Purchase Agreem ent, PAC 2 form erly PA Holdings, was not the entity acquired by IC Industries in 1984. Id. The original 1988 SPA and its two am en dm en ts are referred to collectively as “the Whitm an Agreem ents.” Id. at 790 . In 1992, Henley Investm ents Inc., which owned PAC 2, changed its nam e to Abex Inc. Id. at 793. That sam e year, The Henley Group distributed Abex Inc. stock to its com m on stockholders, and transferred certain of its own assets an d liabilities to PAC 2. Id. at 793 an d Appendix A. In 1994, PAC 2 sold certain assets of Abex Corporation to Wagner Electric Corporation, predecessor to FMP, pursuant to the 1994 Asset Purchase Agreem ent (“1994 APA”) in the record. Id. Under that agreem ent, Wagner agreed to indem nify PAC 2 with respect to certain liabilities. 2 A Mutual Guaranty Agreem ent between Abex Inc., parent of PAC 2, and Cooper Industries, Inc., Wagner’s parent, was executed on Decem ber 30 , 1994, with respect to the 1994 APA. See id. In the Mutual Guaranty, Abex Inc. and Cooper guaranteed, as direct obligors and not as sureties, to each other an d to each other’s subsidiaries (the parties to the 1994 APA) “absolutely and unconditionally . . . the full and prom pt paym ent when and as due of all am ounts payable under the [APA] by such Guarantor’s subsidiary which is a party to the [APA] and the full and prom pt perform ance by such Guarantor’s subsidiary which is a party to the [APA] of all its undertakings and obligations under the [APA].” Section 1. There was also an insurance agreem ent 2 Under Section 2.3 of the 1994 APA, Wagner agreed that it would “assum e and becom e liable for, and shall pay, perform and discharge as and when due all of the Assum ed Liabilities.” Section 2.3 defines Assum ed Liabilities, excluding “Retained Liabilities” which are defined in Section 2.4. That section defines Retain ed Liabilities to include “all liabilities and obligations of Seller to Whitm an under the Whitm an Agreem ents.” Section 2.4(g). Thus, Debtor FMP, successor to Wagner, agreed to indem nify PAC 2 only for the Assum ed Liabilities. The Retained Liabilities stayed with what is now PAC 2. Section 13.3 of the 1994 APA provides that there is to be no third party beneficiary. 3 executed between PAC 2 and Wagner on Decem ber 30 , 1994 in connection with the 1994 APA. Id. at 791. In 1996, Wagner m erged into Moog Autom otive, Inc., another subsidiary of Cooper Industries, Inc. Id. at 794. Under a Purchase an d Sale Agreem ent between Cooper an d FMC, dated August 17, 1998 (“1998 P & SA”), Cooper sold its autom otive products business, which included Moog, to FMC. Pursuant to the 1998 P & SA, FMC assum ed Cooper’s m utual guaranty obligations related to the 1994 APA for “the operation of and products m anufactured or sold by the Wagner industrial brake business in cluding” those liabilities related to asbestos in the brakes. Id. See also 1998 P & SA at Section 5.12(b), referring to Section 5.12(a)(x). Following the 1998 P & SA, Moog changed its nam e to Federal Mogul Products, Inc. (“FMP”). Id. at 792. FMP, therefore, was the successor to Wagner’s indem nity obligation under the 1994 APA. Id. Appendix B. Thus, an asbestos-related claim arising out of the Moog friction products division received by PAC 2, a distinct entity, would have been subject to the assum ed liabilities under the 1994 APA and indem nified by FMP. Id. That is, FMP undertook Wagner’s obligations and FMC guaranteed FMP’s perform ance. Id. at 794. Beside these facts, this Court adopts the Bankruptcy Court’s factual determ ination that Abex Corporation (not Abex Inc.), IC Industries, Whitm an, Pneum o Corporation, and PAC 1 were, at one tim e or another, in the Appellant’s corporate chain. Id. at 78 9. Sim ilarly, Wagner Electric Corporation and Moog Autom otive, Inc., were in the FMC/ FMP corporate chain. Id. PA Holdings, The Henley Group, Abex Inc. an d PAC 2 are entirely distinct entities from the corporate chains of Appellant and Appellee. Id. Appellant has offered two groups of insurance policies that covered against Abex asbestos litigation. First, Appellant is the purchaser an d first nam ed insured for Com prehen sive General Liability insurance policies purchased during the period of 1971-198 5 to provide liability insurance coverage for Appellant and m ost of its then existing subsidiaries (“Appellant Policies”). Second, Appellant also has contractual rights to the proceeds paid from CGL insurance policies purchased by Abex Corporation prior to 1971 (herein “Pre-1971 Policies”). Appellee has never been nam ed insured under the Appellant Policies or Pre-1971 Policies. Under the term s of the 1994 Asset Purchase Agreem ent, FMP claim ed proceeds from the Appellant Policies and Pre-1971 4 Policies to com pensate asbestos claim s again st portions of the “friction products” business of Abex Corporation. Those policies contained aggregate lim its to certain categories of claim s, and once those lim its were reached, ben efits would no longer be paid. 3 Essentially, Appellant alleged that Appellee inequitably allocated expenses to the Appellant Policies and the Pre-1971 Policies, and received proceeds from those policies to which it was not equitably or lawfully entitled. Appellant’s Am ended Claim cited four exam ples of such alleged overbilling, which account for $ 1,40 0 ,0 0 0 in benefits from the Pre-1971 Policies and Appellant Policies. Upon seeing the bills sent to the Appellant Policies and Pre-1971 Policies, Appellant requested inform ation from Pneum o Abex to justify the expen ditures. Outside counsel for Appellant also m ade requests to outside counsel for Appellee. No inform ation was provided. An indepen dent investigation revealed that, in at least one of the cases, the nam ed plaintiff did not work with Abex products. Despite this, Appellee allegedly received benefits from the shared insuran ce plans designed to cover Abex claim s. Appellant argues these four instances are proof of a larger schem e to bill the Pre-1971 Policies and Appellant Policies for claim s not covered under the Policies. In addition to the Pre-1971 Policies, the Appellant Policies, the 1988 SPA, and the 1994 APA, Appellant provided the Court with three separate in surance settlem ent contracts signed by both Appellant and Appellee. Appellant claim s that these contracts establish privity between it and Appellee, and that Appellee breached the im plied covenant of good faith and fair dealing in these contracts by billing the Policies for nonAbex claim s. The settlem ent contracts provided by Appellant are described as follows. The Decem ber 28, 20 0 6 Settlem ent Agreem ent between the co-claim ants and Equitas Escrow Account lists as claim ants Appellant, Appellee, two other entities, an d 3 The Bankruptcy Court noted three other insurance agreem ents not m entioned in the pleadings which Appellant filed under seal with leave of court. The three agreem ents under seal are (1) May 20 0 0 Confidential Settlem ent Agreem ent between Pneum o Abex Corporation and Whitm an Corporation, (2) Decem ber 20 0 2 Final Settlem ent Agreem ent Between Pneum o Abex Corporation and Maryland Casualty Com pany, an d (3) Decem ber 20 0 6 Confidential Settlem ent Agreem ent and Release between Pneum o Abex LLC, Cooper Industries, Appellant, FMP, FMC and Certain Underwriters at Lloyd’s. 5 all entities that have a present ownership interest in those entities, as well as predecessors, successors, or assigns. It was m eant to settle two insurance coverage actions, Certain Underwriters at Lloyds, Lon don, et al. v. Pneum o Abex Corporation, et al. and Whitm an Insurance Corporation, Ltd. v. Travelers Indem nity Com pany, et al. The policies in question, known as the “London Policies,” are defined by the contract. Also included in the contract is a statistical breakdown of the percen tages of the settlem ent to which each entity was entitled. Appellant was entitled to 14.24% of the settlem ent and Appellee was entitled to 3.31% of the settlem ent. The May 17, 20 0 1 Settlem ent Agreem ent between Pneum o Abex Corporation and All State Insurance Com pany was signed by Appellant and Appellee. The various relevant policies issued by All State Insurance Com pany are nam ed and identified. No percentage breakdown is provided. A Decem ber 6, 20 0 5 Settlem ent Agreem ent between Stonewall Insurance Com pany and m ultiple claim ants including Appellant and Appellee identifies two policies that released funds pursuant to the agreem ent. The settlem ent agreem ent did not address the allocation of any of the funds provided by Stonewall. In short, the Bankruptcy Court found that, because of the severance of the corporate relationships, Appellant’s rem edies, if any, are not again st the Debtors in this case. 438 B.R. at 796. Under Section 8 .3 PAC 2 agreed to retain certain liabilities under the Whitm an Agreem ents “forever.” . . . PAC 2 has the right either to perform rem edial actions it is liable for under the agreem ent or to have Wagner (FMP) perform the work in which case PAC 2 will reim burse FMP, but Whitm an ([Appellant]) nonetheless retained the right to control the details of the work or to perform the rem ediation. See Section 8.4(c) at 8 4. Section 8 .5 recites lim itations on PAC 2’s environm ental indem nification obligation. Wagner (FMP) agreed not to take any action it knew would result in [PAC 2] violating the Whitm an Agreem ents in any way. Section 8 .5(d). Even if Wagner (FMP) did so, it is PAC 2, not [Appellant], that would have recourse against Wagner. If there is a breach, [Appellant]’s rem edies are with respect to PAC 2 to the exclusion of Wagner (FMP). 438 B.R. at 796-97 (citing 1994 APA). 6 Ap p e al o f Ban kru p tcy Co u rt D e cis io n This Court has jurisdiction to hear an appeal from the bankruptcy court pursuant to 28 U.S.C. § 158(a). In undertaking a review of the issues on appeal, a district court reviews conclusions of law de novo, findings of fact on a clearly erroneous standard, an d exercises of discretion for abuse thereof. See Official Com m . Of Unsecured Creditors v. Am . Classic Voyages Co., 40 5 F.3d 127, 130 (3d Cir. 20 0 5). With m ixed questions of law and fact, the court m ust accept the bankruptcy court’s “finding of historical or narrative facts unless clearly erroneous, but exercise[s] ‘plenary review of the [bankruptcy] court’s choice an d interpretation of legal precepts an d its application of those precepts to the historical facts.’” Mellon Bank, N.A. v. Metro Com m unications, Inc., 945 F.2d 635, 642 (3d Cir. 1991). The district court’s appellate responsibilities are further inform ed by the directive of the United States Court of Appeals for the Third Circuit, which effectively reviews on a de novo basis bankruptcy court opinions. In re Hechin ger, 298 F.3d 219, 224 (3d Cir. 20 0 2); In re Telegroup, 281 F.3d 133, 136 (3d Cir. 20 0 2). Su m m ary Ju d gm e n t Stan d ard A court will grant a m otion for sum m ary judgm ent if there is no gen uine issue of m aterial fact and if, viewing the facts in the light m ost favorable to the non-m oving party, the m oving party is entitled to judgm ent as a m atter of law. Pearson v. Com ponent Tech. Corp., 247 F.3d 471, 482 n.1 (3d Cir. 20 0 1) (citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986)); accord Fed. R. Civ. P. 56 (c). Thus, this Court will enter sum m ary judgm ent only when “the pleadings, depositions, answers to interrogatories, and adm issions on file, together with the affidavits, if any, show that there is no genuine issue as to any m aterial fact and that the m oving party is entitled to judgm ent as a m atter of law.” Fed. R. Civ. P. 56 (c). An issue is “genuine” if supported by evidence such that a reasonable jury could return a verdict in the nonm oving party’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). A fact is “m aterial” if, under the governing substantive law, a dispute about the fact m ight affect the outcom e of the suit. Id. In determ ining whether a genuine issue of m aterial fact exists, the court m ust view the facts and all reasonable inferences drawn from those facts in the light m ost favorable to the nonm oving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 7 Initially, the m oving party has the burden of dem onstrating the absence of a genuine issue of m aterial fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 10 6 S. Ct. 2548 , 91 L.Ed.2d 265 (1986). Once the m oving party has m et this burden, the nonm oving party m ust identify, by affidavits or otherwise, specific facts showing that there is a genuine issue for trial. Id.; Maidenbaum v. Bally’s Park Place, Inc., 8 70 F. Supp. 1254, 1258 (D.N.J . 1994). Thus, to withstand a properly supported m otion for sum m ary judgm ent, the nonm oving party m ust identify specific facts and affirm ative eviden ce that contradict those offered by the m oving party. See Anderson, 477 U.S. at 256-57. Indeed, the plain language of Fed. R. Civ. P. 56(c) m andates the entry of sum m ary judgm ent, after adequate tim e for discovery and upon m otion, against a party who fails to m ake a showing sufficient to establish the existence of an elem ent essential to that party’s case, and on which that party will bear the burden of proof at trial. See Celotex, 477 U.S. at 322. Appellant argues against the traditional sum m ary judgm ent standard of review, in favor of a lighter burden for the non-m oving party. Appellant con trasts the instant case from Celotex by arguing that the lack of discovery warrants this lighter burden. (See Appellant Reply Br., p. 6.) As the Appellant notes, the Court in Celotex held that the non-m oving party’s interests were protected because there was discovery prior to the sum m ary judgm ent m otion, alleviating any concerns that the non-m ovants were being “railroaded” by sum m ary judgm ent. See Celotex, 477 U.S. at 526. Pointing to the lack of any discovery in the underlying case, Appellant claim s that Appellee filed “essentially a Rule 12(b)(6) m otion” with the Bankruptcy Court, that Appellee should be required to establish “com plete legal insufficiency of PepsiAm ericas claim s” while conceding the truth of Appellant’s factual assertions. See Appellant Reply Br., p. 6-7. In short, Appellant requests that the underlying m otion for sum m ary judgm ent be reviewed as a m otion to dism iss and adjudged by a Fed. R. Civ. P. 12(b)(6) standard. See Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twom bly, 550 U.S. 544, 570 (20 0 7). In Celotex, however, the Court instructs that any fear of being “railroaded” can be alleviated through Fed. R. Civ. P. 56(f), which “allows the m otion for sum m ary judgm ent to be denied, or the hearing on the m otion to be continued, if the non-m oving party has not had an opportunity to m ake full discovery.” See Celotex, 477 U.S. at 326 (citing Fed. R. Civ. P. 56(f)). Appellant did not request relief under 56(f). 8 An alys is This Court affirm s the Bankruptcy Court’s decision that the undisputed facts alleged by Appellant do not give rise to any liability on the part of Appellant. As the Bankruptcy Court noted, “there is a difference between what the facts are and what they m ean and [Appellant’s] challenge is to the m eaning of undisputed facts.” 438 B.R. at 78 9. Although Appellant claim ed “[t]ort, conversion, and breach of good faith and fair dealing regarding insurance policies,” the Bankruptcy Court found that “the claim s do not even identify the alleged tort (except conversion), do not explain how the policies were (allegedly) converted, or set forth the basis for any supposed duty of good faith or fair dealing owed by the Debtors to [Appellant].” 438 B.R. at 788. Indeed, Appellant agrees that FMP was n ot a party to the 1988 SPA, but asserts “com m on law obligations.” Id. at 78 9. Appellant also agrees that neither it nor any of its predecessors was a party to the 1994 APA or 1998 P & SA. Id. Nonetheless, Appellant re-argues that Debtors are liable for “over-billing” shared insurance policies that it purchased to cover asbestosrelated liabilities created by Abex Corporation, because Debtors’ claim s actually were not covered by the Abex policies but arose from six other “stream s” of asbestos-related liability. In doing so, Appellant contends that the Bankruptcy Court failed to consider alternative avenues of privity between the Appellant and Appellee, n am ely through the doctrines of contract adoption, equitable estoppel with regard to the 1988 SPA, equitable estoppel of the shared insurance policies, and direct privity through the insurance settlem ent agreem ents that both Appellant and Appellee signed. Debtors were not parties to the 1988 APA, the Pre-1971 Insurance Policies, or the Appellant Insurance Policies, but Appellant argues that Appellee is bound by those docum ents through the doctrine of contract adoption. Third parties to a contract becom e parties who are bound by the contract’s term s by either explicitly or im plicitly adopting the agreem ent. See Am erican Legacy Foundation v. Lorillard Tobacco Co., 8 31 A.2d 335, 343 (Del. Ch. 20 0 3). The contract itself, however, m ust contem plate that third parties m ight adopt it. Id. at 344. Whether the contract itself contem plates adoption is a question of contract interpretation. Id. Courts look to the language of the 9 contract to determ ine whether the origin al signatories inten ded adoption. See id. at 344-45. There are no m agic words to explicitly adopt a contract. Id. at 348. Statem ents m ade by a non -signatory confirm ing that it is bound by a contract can establish that it has adopted the contract. Id. at 349. Express adoption occurs in a variety of contexts. Id. Express adoption occurs when a successor adopts a contract of a predecessor as its own. Id. It also occurs when an agent acts on behalf of the principal and the principal agrees to be bound by the agent. Id. Any statem ent m ade by a third party confirm ing that it is bound by a contract is sufficient to adopt the agreem ent. Id. Third parties can also im plicitly adopt a contract through their conduct, rather than explicitly through their words. Im plicit adoption occurs when a party accepts benefits intended for third party beneficiary. Id. Courts will often find im plicit adoption when a party who has received benefits of a contract then tries to avoid burdens im posed by the sam e contract. Id. Appellant has not identified any provisions or contractual language in the 198 8 SPA to indicate that the original drafters of the 1988 SPA contem plated adoption by third parties. While not specifically addressing contract adoption, however, the 198 8 SPA contains a provision that explicitly rejects third party beneficiaries. In relevant part, the SPA states “this Agreem ent is for the sole benefit of the parties hereto and nothing herein expressed or im plied shall give or be construed to give any person or entity, other than the parties hereto, any legal or equitable rights hereunder.” 1988 SPA, p. 70 . That provision sheds light on the inten t of the drafters, unequivocally stating that the agreem ent is for the “sole benefit of the parties hereto,” not a third party. Accordingly, Appellant failed to create a genuine issue of m aterial fact with regard to Appellee’s potential contract adoption of the 1988 SPA. Moreover, the Court cannot find that Appellant established an intent of the drafters of the Pre-1971 Policies and the Appellant Policies to allow for third party adoption without these contracts. Next, Appellant argued that Debtors were privy to the 1988 SPA and shared insurance contracts through the doctrine of equitable estoppel. When a party enjoys the benefits of a contract, it can becom e bound by the contract’s term s and obligations. See E.I. DuPont de Nem ours and Co. v. Rhone Poulenc Fiber and Resin Interm ediates, 269 F.3d 18 7, 199 (3d Cir. 20 0 1). This prevents parties from em bracing certain portions of 10 the contract, while turning their backs on m ore distasteful clauses in the agreem ent. Id. at 20 0 . As the Fourth Circuit explained, a party m ay be estopped from asserting that his lack of signature on a written contract precludes enforcem ent a contractual provision when he had consistently m aintained that other provisions of the contract should be enforced to benefit him . See id. (citing Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 20 6 F.3d. 411, 418 (4th Cir. 20 0 0 )). Courts refer to a non-signatory’s behavior during the life of the contract to determ ine if the third party em braced a contract until the prospect of litigation caused the sam e party to repudiate the agreem ent. Id. In order to invoke estoppel, the non-signatory m ust have em braced a direct benefit of the contract, rather than an indirect benefit. Id.; See also Thom ason CSF, S.A. v. Am erican Arbitration Ass’n, 64 F.3d 773, 779 (2d Cir. 1995) (denying invocation of estoppel against a party who only indirectly benefited from the agreem ent). A direct benefit is a benefit that derives from the party asserting a term of the contract, rather than a ben efit a third party will receive when another party acts in accordance with the contract. See Thom ason-CSF, S.A., 64 F.3d at 779. Appellant argues that because Debtors requested and accepted m onies produced by the 198 8 SPA, Pre-1971 Policies, and Appellant Policies, they are equitably estopped from avoiding liability under the im plied covenant of good faith and fair dealing. The im plied warranty of good faith and fair dealin g exists in every contract. See Dunlap v. State Farm Fire & Cas. Co., 8 78 A.2d 434, 440 (Del. 20 0 5). The term , “good faith,” however, has no set m eaning, and instead prevents a wide range of form s of bad faith. Id. The im plied covenant of good faith and fair dealing requires a party in a contractual relationship to refrain from arbitrary or unreasonable conduct, which could preclude the other party from enjoying the benefit of the original bargain. Id. The im plied coven ant of good faith and fair dealing has its lim itations. Id. The covenant cannot be used to circum vent the parties’ original bargain or create “a free floating duty . . . unattached to the underlying legal docum ent.” See id. at 441. Only when it is clear from the contract that the parties would have agreed to proscribe the act later com plained of, had they thought to negotiate it, m ay a party invoke the protections of the covenant. Id. at 442. The covenant is not a catch-all to prevent any injustice, and Delaware courts have described invoking the covenant as a “cautious enterprise.” See Nem ec v. Shrader, 991 A.2d 1120 , 1123 (Del. 20 10 ). The im plied covenant of good faith 11 and fair dealing can not be applied to provide contractual protections that were not secured at the bargaining table. See Windshall v. Viacom Intern., Inc., 76 A.3d 80 8 , 8 16 (Del. 20 13). Appellant’s claim s for breach of the im plied covenant of good faith and fair dealing cannot be sustained. Regarding the 1988 SPA, there is no privity of contract and the equitable estoppel argum ent in attem pt to forge privity between the parties through the shared insurance policies lacks specific proof in the record. Regarding the settlem ent contracts provided in conjunction with four instances of alleged overbilling and a general allegation that there were m ore occurrences, Appellant has not attached its claim of breach to an actual contract; in no instance of the shared settlem ent contracts has Appellan t shown inappropriate billing by Debtors. Rather, Appellant cited four instances of alleged overbilling as exam ples of a larger course of conduct, and asked the court to assum e this course of conduct im plicated one of the settlem ent contracts that had capacity for privity. Again, the covenant of good faith and fair dealing is not a catch-all that can be used to prevent any injustice. See Nem ec, 991 A.2d at 1123. Rather, the covenant of good faith and fair dealing ensures that arbitrary conduct does not deprive the parties of the original benefit of their bargain. See Dunlap, 8 78 A.2d at 440 . Appellant has not established that, as to a particular settlem ent contract, it was precluded from enjoying the original ben efit of its bargain. Next, the Bankruptcy Court dism issed Appellant’s claim for “tort” because of the lack of specificity in the claim . See In Re Federal-Mogul Global, Inc., 438 B.R. at 788. On appeal, Appellant is m ore specific, allegin g that it has a claim against FMP for the tort of conversion or waste, for m isusing assets of an im plied trust, or for destruction of a shared asset. However, this specificity is nowhere to be found in Appellant’s am ended claim s. The Bankruptcy Court appropriately dism issed the generalized tort claim , and Appellant is foreclosed from bringing claim s here that were not originally pled. Further, when a claim in tort arises out of the sam e facts that am ount to a breach of contract, the claim m ust be brought in contract, rather than in tort. Kuroda v. SPJ J Holdings, 971 A.2d 8 72, 8 90 (Del. Ch. 20 0 9) (citing Data Managem ent Int’l, Inc. v. Saraga, No. 0 5C0 5-10 8 , 20 0 7 WL 2142848 (Sup. Ct. Del. J ul. 25, 20 0 7)). To bring a tort claim along with a contract claim , the tortfeasor m ust have violated an independent legal duty apart from that im posed by contract. Id. Appellant has not m ade such a showing here. 12 Co n clu s io n In conclusion, this Court affirm s the decision of the Bankruptcy Court that Appellant failed to establish a right to pursue any claim against Debtors FMP/ FMC. Sum m ary judgm ent was granted appropriately. IT IS ORDERED that the decision of the Bankruptcy Court is hereby AFFIRMED. Dated: February 5, 20 15 / s/ J oseph H. Rodriguez J OSEPH H. RODRIGUEZ U.S.D.J . 13
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