Continental Insurance Company, The v. Daikin Applied Americas Inc.
- Hildy Bowbeer
- 0:17-cv-00552
- U.S. District Court · District of Minnesota
- 11
In Continental Insurance v. Daikin Applied, Judge Bowbeer granted claim deletions but denied adding a reimbursement-contract claim.
The Continental Insurance Company and Daikin Applied Americas, Inc.; the ruling permits deletion of certain claims but prevents Continental from adding its proposed reimbursement-contract claim at this stage.
What happened
The Continental Insurance Company sued Daikin Applied Americas, Inc. over insurance coverage for asbestos-related lawsuits. After an earlier ruling limited Continental’s duty to defend, Continental sought to delete some claims and add a claim for reimbursement under an alleged implied contract.
Continental argued that the reimbursement claim arose from the earlier coverage ruling and Daikin’s refusal to repay defense costs. The court found that the claim could have been pleaded earlier, because it was contingent on the coverage dispute but was not too early to bring. Continental therefore had to show good cause for missing the scheduling deadline, and the court found that it had not done so.
Judge Bowbeer granted the motion as to the claims Continental sought to delete and denied it as to the new breach-of-contract claim. The ruling did not decide whether Continental was ultimately entitled to reimbursement.
The detailed version
- Continental Insurance Company, The v. Daikin Applied Americas Inc. · No. 0:17-cv-00552
- Hildy Bowbeer
- Dec. 17, 2019
Background
The Continental Insurance Company sold general liability policies to McQuay-Perfex, Inc. McQuay-Perfex later merged with other entities and changed its name, most recently to Daikin Applied Americas, Inc. Daikin was named in lawsuits involving products containing asbestos and tendered the defense of those suits to Continental. Continental defended under a reservation of rights, including the right to deny coverage.
In an earlier ruling, Judge Donovan W. Frank held that Continental did not have to defend Daikin in asbestos-related suits except those specifically alleging liability arising from McQuay-Perfex or naming Daikin as McQuay-Perfex’s successor. After that ruling, Continental withdrew from defending suits that did not name McQuay-Perfex and demanded repayment of defense costs. The insurance contract did not expressly require repayment, but Continental relied on a 2015 reservation-of-rights letter that reserved the right to recover defense costs if Continental had no duty to incur them.
Motion to Amend
Continental asked for permission to amend or supplement its complaint. It sought to delete certain claims, which Daikin did not oppose, and to add a claim for breach of an implied contract based on Daikin’s refusal to reimburse defense costs from the non-covered asbestos suits. Because the deadline for motions to amend or supplement pleadings was January 16, 2018, Continental had to satisfy the more demanding requirement of showing good cause under Federal Rule of Civil Procedure 16(b)(4).
Court’s Analysis
The court distinguished a contingent claim from an unripe claim. Continental’s reimbursement claim depended on the result of the coverage dispute, but the court concluded that this dependency did not make the claim too premature to plead. The relevant policies and reservation-of-rights letter were already in the record, and the court found a practical likelihood that Daikin would refuse reimbursement. Continental therefore could have included the reimbursement claim in its earlier complaint, although it was not required to do so at that time.
Because Continental could have asserted the claim before the scheduling deadline, the court found that Continental had not acted diligently and had not shown good cause to modify the Scheduling Order. The court also found that adding the claim would prejudice Daikin by requiring additional discovery and likely additional motion practice, delaying final judgment and Daikin’s ability to seek review of the coverage ruling.
Disposition
The court granted Continental’s Motion for Leave to Amend Complaint as to the claims it sought to delete. It denied the motion as to the new breach-of-contract claim. The court did not decide the merits of whether Continental was entitled to recover the defense costs.
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.