Sid Harvey Indus., Inc. v Commerce & Indus. Ins. Co.
Annotate this CaseDecided on August 10, 2006
Supreme Court, New York County
Sid Harvey Industries, Inc., Plaintiff,
against
Commerce & Industry Insurance Company; AIG DOMESTIC CLAIMS, INC.; FIREMAN'S FUND INSURANCE COMPANY; TRAVELERS CASUALTY AND SURETY COMPANY; PACIFIC EMPLOYERS INSURANCE COMPANY CONTINENTAL CASUALTY INSURANCE COMPANY; CENTURY INDEMNITY COMPANY (as successor to CCI INSURANCE COMPANY, as successor to INSURANCE COMPANY OF NORTH AMERICA); INSURANCE COMPANY OF NORTH AMERICA; FIRST STATE INSURANCE COMPANY; WESTPORT INSURANCE CORPORATION; OLD REPUBLIC INSURANCE COMPANY; AND TWIN CITY INSURANCE COMPANY, Defendants.
600969/06
Charles Edward Ramos, J.
In motion sequence 001 and 002, plaintiff Sid Harvey Industries, Inc ("Sid Harvey") moves for a preliminary injunction requiring all defendants to provide legal defense, indemnification, and settlement determination services to Sid Harvey on a joint and several basis for all bodily injury actions filed against it that allege exposure to asbestos or asbestos containing products which may have occurred at any time prior to April 1, 1986 (the "Asbestos Actions").[FN1]
More specifically plaintiff asks this Court for an order enjoining defendants: (1) Commerce & Industry Insurance Company ("C&I")[FN2] from terminating plaintiff's legal defense in all bodily injury actions filed against it alleging exposure to asbestos containing products at any time between January 1, 1977 through December 31, 1986; (2) Fireman's Fund Insurance company ("Fireman"); Travelers Casualty and Surety Company ("Travelers"); Pacific Employers Insurance Company ("PEIC"); Continental Casualty Insurance Company ("CCC"); Century Indemnity Company ("Century"); Insurance Company of North America; First State Insurance Company; Westport Insurance Corporation; Old Republic Insurance Company; and Twin City Insurance Company (collectively the "additional defendants" or "additional insurers") from providing legal defense and indemnification to plaintiff in the Asbestos Actions, jointly and severally with each other and with C&I, until the rights and obligations of each defendant are determined in this action; (3) C&I and AIG Domestic Claims, Inc. ("AIG") from refusing to [*2]make settlement determinations in Asbestos Actions in the ordinary course and within the customary time periods; and (4) all additional defendants to make settlement determinations in the Asbestos Actions, jointly and severally with each other and with C&I and AIG within the time periods as C&I and AIG have observed.
Defendants oppose plaintiff's motion for preliminary injunction, and in the alternative, request a declaration that such defense and indemnity costs for periods covered by the policy be shared among all primary carriers on a pro rata basis. Further, C&I and AIG, the original defendants, request that plaintiff post an undertaking and fix a bond in the amount of $1,200,000.00, the alleged estimated value of plaintiff's future defense pursuant to CPLR 6312(b).[FN3]
Background
Sid Harvey is a New York corporation engaged in the distribution and sale of refrigeration, air conditioning, heating parts and related equipment across the nation.
C&I and AIG (collectively the "original defendants"), issued Sid Harvey five policies of coverage for plaintiff from 4/1/77 until 4/1/86.[FN4] Each of the policies was a "Special Multi-Peril Policy," which provided primary commercial liability coverage to plaintiff.
Subsequent to the commencement of thousands of bodily injury actions against Sid Harvey in which the underlying plaintiffs allege liability for bodily injuries sustained through asbestos exposure, Sid Harvey tendered notice to C&I and requested defense and indemnification for all claims that occurred at any time prior to April 1, 1986. Sid Harvey denied liability in the underlying actions.
By letter dated March 16, 2006, C&I informed Sid Harvey that it had exhausted its coverage under the policies. C&I further stated that it would pay settlements which had been previously authorized, but would cease Sid Harvey's defense and further settlement determinations in the Asbestos Actions.
This action was commenced on or about March 22, 2006 seeking a declaration that these defendants had to continue to provide legal defense, indemnification, and settlement determinations in the Asbestos Actions.
Sid Harvey sought and obtained a temporary restraining order dated March 22, 2006, restraining the original defendants from terminating their services pending the hearing on a motion for preliminary injunction.
Pursuant to this Court's order, Sid Harvey amended its complaint to add the following primary/umbrella insurance carriers as defendants for the following periods: (1) CCC for the period covering April 1, 1974 through April 1, 1977; (2) Fireman from September 29, 1960 through September 29, 1963, and again from January 1, 1965 through January 1, 1967; (3) Travelers from January 1, 1967 through March 31, 1971; and (4) PEIC from April 1, 1971 through April 1, 1974.
Sid Harvey and the additional insurers assert that C&I possess all information related to the Asbestos claims and have failed to provide the other parties with it, despite several requests made by Sid Harvey regarding the claimed impairment and upcoming exhaustion as well as CCC's repeated demands for a summary of information such as total losses incurred, alleged limit [*3]impairments, or claim volume.
On May 17, 2006, this Court ordered C&I to produce the documents which CCC and Sid Harvey had requested. In response, C&I provided additional insurers with documentation on payments which, according to Sid Harvey and additional insurers, is insufficient to enable defense, indemnity, or settlement determinations.
Sid Harvey argues that all defendants, original as well as additional defendants, are jointly and severally liable for its legal defense, indemnification, and settlement determinations for the Asbestos claims on an ongoing basis, and request injunctive relief pending the trial of this action to assure that the Asbestos Actions are defended, and that settlements are conducted appropriately.
Sid Harvey argues that it is likely to succeed on the merits of its claim on the ground that C&I's policies have not been exhausted. Sid Harvey asserts that while each policy has a separate $500,000 limit of liability per individual Asbestos Action which triggers the 1980-1984 policies, the renewal of these policies qualifies as an amendment to the policies, with no aggregate limit of liability.
The original defendants argue that there is no ongoing duty to defend Sid Harvey because the insurance policies that C&I had written for it have been exhausted. C&I, as well as AIG, claim that (1) monetary damages sought by Sid Harvey can fully compensate any loss caused by C&I's alleged breach of its coverage and thus Sid Harvey cannot show "irreparable harm;" (2) other primary insurance is readily available to Sid Harvey to address its Asbestos claims even if the original defendant withdraws; and (3) that equities weigh in defendants' favor because Sid Harvey did not pursue alternatives despite C&I's March 16 letter warning Sid Harvey as to its benefits exhaustion.CCC alleges that from 1996 through 1997, Sid Harvey gave notice that there were a large number of Asbestos claims against Sid Harvey, and that C&I had been defending Sid Harvey since the 1980s. CCC became involved in this matter in 1998. CCC claims that notwithstanding these coverage issues, it made extensive efforts with other primary carriers (the additional defendants) to negotiate a cost sharing agreement.
The additional defendants, PEIC, Century, Travelers and CCC argue that C&I and AIG should, in equity, bear the interim consequences, as they did not allow other additional defendant to participate in the defense and indemnity of Sid Harvey's Asbestos Actions. Similar to Sid Harvey's position, the additional insurers allege that the original defendants announced ipse dixit that plaintiff has exhausted its policy.
Travelers adds that, in its case, no primary insurance policy allegedly issued by it has been located. Thus, it cannot be required to defend and/or indemnify Sid Harvey. Fireman further adopts Traveler's position that Sid Harvey has failed to produce copies of the policies. Therefore, Fireman argues that Sid Harvey cannot establish the nature and scope of coverage under the policy issued by Fireman. However, Fireman remains willing to provide its share of defense and indemnity to Sid Harvey under policy CL 750528, subject to receipt of information and documentation confirming the nature and scope of coverage under the policy.
Discussion
In order to prevail upon a motion for a preliminary injunction, the moving party has the burden of demonstrating, by clear and convincing evidence, that (1) the movant will succeed on the merits of the action, (2) the movant will suffer irreparable injury absent the issuance of a preliminary injunction, and (3) the balance of equities is in favor of the movant. Price Paper and Twine Company et al. v Robert J. Miller, 182 AD2d 748 (2nd Dep't, 1992).
Original Insurers
Because C&I has not provided this Court or the parties with evidence to support its claim that the policies are exhausted, other than summary tables, it has rendered it impossible to determine whether Sid Harvey will ultimately succeed on the merits of this case. The summary tables do not shed light as to whether the total of all claims asserted against Sid Harvey reach the alleged $500,000 limit. This withholding of information by C&I, together with all of the other circumstances in this case, compel this Court to conclude that the information withheld by C&I [*4]would support a finding of plaintiff's likelihood of success.
Sid Harvey has provided this Court with enough evidence to show that C&I's withdrawal will compromise or impact plaintiff's defense of the Asbestos claims. C&I defended and indemnified all Asbestos Actions thus far; hence, it possesses the relevant documentation for Sid Harvey's adequate defense. As confirmed by additional insurers, the record shows that C&I has not cooperated with them and has prevented them from getting involved in the defense and indemnification of Sid Harvey's asbestos claims in a prompt and efficient manner.[FN5] As a result of the impossibility of an immediate smooth transition between insurers, an order denying a preliminary injunction or altering the present temporary restraining order will result in Sid Harvey losing settlement opportunities, or in the alternative, be more costly to Sid Harvey should C&I cease coverage.
Additional Insurers
Sid Harvey fails to show that it will likely benefit from all additional insurers's coverage. New York Courts have been split as to whether "joint and several" liability is favored over a pro rata allocation approach with respect to insurance coverage for continuous indivisible losses such as the Asbestos Actions at issue. Consolidate Edison Co. Of NY., Inc. v Allstate Ins. Co.,98 NY2d 208, 221 (2002)(Finding that joint and several liability is inconsistent with the language of insurance). However, the New York Court of Appeals has been clear that an insurer has the duty to defend its insured, provided the injury is covered by the policy. Continental Casualty Co. v Rapid-American Corp., 177 AD2d 61, 65 (1st Dep't, 1992). Whether the insurer's duty turns on "joint and several liability" or "pro-rata" liability will depend on the language of the policy.Continental Casualty Co. v Rapid-American Corp., supra.
The record is bereft of any evidence set forth by Sid Harvey supporting its request that all insurers defend and indemnify the Asbestos Actions. Thus, Sid Harvey can not be said to be likely to succeed on its claim against the additional insurers.
Further, plaintiff has not established that it will suffer irreparable harm should the preliminary injunction against the additional insurers not be granted. Sid Harvey is fully protected by the temporary retraining order of this Court dated March 22, 2006, directing AIG to provide interim coverage. Sid Harvey has failed to show that this protection is insufficient, resulting in irreparable harm.
At this point, the balance of equities also weighs in favor of the additional insurers. As mentioned above, Sid Harvey and the additional insurers' only have incomplete and defective records due to the absence of exhaustion or impairment information in C&I's possession. This issue cannot be resolved without more extensive and appropriate discovery.
As for Travelers and Fireman, Sid Harvey further fails to establish that it is entitled to coverage under their respective policies. As a threshold matter, Sid Harvey bears the burden of demonstrating that it is entitled to coverage for the claims at issue under policies allegedly issued by Travelers as well as Fireman. Chase Manhattan Bank v Travelers Group, Inc., 269 Ad2d 107 (1st Dep't, 2000)(affirming decision granting summary judgment to insurer due to the insured's failure to prove that the loss was covered under the policy). Both insurers claim that the policies at issue could not be found. Sid Harvey does not dispute such allegations. Henceforth, Sid Harvey has failed to demonstrate that it is entitled to coverage under these policies.Accordingly, the motion is denied as to Travelers and Fireman.
[*5]Order
Accordingly, it is
ORDERED the motion for a preliminary injunction is granted to the extent of the restraints set forth in the temporary restraining order dated March 22, 2006; and it is further
ORDERED that Sid Harvey post an undertaking pursuant to CPLR 6312(b), the amount of which is to be established upon further evidence by C&I, to be provided to this Court by September 20, 2006. This undertaking is for the benefit of C&I and AIG to provide the necessary security for potential payments which it may be required to make as a result of future determinations; and it is further
ORDERED that Sid Harvey's motion for a preliminary injunction against additional insurers, Pacific Employers Insurance Company Continental Casualty Insurance Company; Century Indemnity Company; Insurance Company of North America; First State Insurance Company; Westport Insurance Corporation; Old Republic Insurance Company; and Twin City Insurance Company is denied.
Dated: August 10, 2006
_________________________
J.S.C.
Footnotes
Footnote 1: Primary coverage beyond April 1,1986 contains "Asbestos Exclusions" which expressly precludes Sid Harvey from any coverage for the claims at issue for that period.
Footnote 2: AIG, a C&I affiliated insurance carrier, was an authorized representative for C&I with regards to settlement determinations.
Footnote 3: Defendants evaluate this amount based on the alleged current monthly costs for Sid Harvey's defense amounting to approximately $100,000, combined with the Standards & Goals Guidelines which suggest that the resolution of the instant declaratory judgment will take about a year.
Footnote 4: As mentioned above, the last policy, Policy No. MP 9169980, which was effective from 4/1/85 until 4/1/86 has an asbestos exclusion and thus does not provide coverage for the claims at issue in this motion.
Footnote 5: This has resulted in varied responses from additional insurance carriers. While most carriers are willing to defend and/or indemnify Sid Harvey provided they receive adequate documentation of the Asbestos Actions proceedings, other carriers, such as Old Republic Insurance Company, which sold an insurance policy to Sid Harvey for excess coverage for the 1981-1982 policy year concluded that no aggregate limit for Asbestos Actions exist and thus C&I should conclude plaintiff's defense.
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