Fortive Corporation v. The Travelers Indemnity Company

Background

The opinion addressed motions left pending after the court’s October 10, 2019 Opinion and Order resolving the parties’ cross-motions for summary judgment. That earlier ruling held Danaher Corporation and Atlas Copco North America LLC responsible for contributing to certain costs that Travelers Indemnity Company and Travelers Casualty and Surety Company incurred defending Chicago Pneumatic Tool Company against asbestos- and silica-related bodily injury claims. The earlier ruling assigned responsibility for years when Chicago Pneumatic was uninsured or its insurers had become insolvent. It also held North River Insurance Company responsible for a share of Travelers’ defense costs, with the precise amount to be determined later.

Danaher and Atlas Copco’s request to appeal

Danaher and Atlas Copco sought permission for an immediate, before-final-judgment appeal under 28 U.S.C. § 1292(b). They argued that the earlier ruling conflicted with New York law because they stood in Chicago Pneumatic’s position and, they contended, an insured has no obligation to contribute to its own defense costs for long-term claims.

The court denied permission to appeal. It explained that an immediate appeal requires more than disagreement and generally requires conflicting authority or an especially difficult issue of first impression. The court concluded that Danaher and Atlas Copco had not identified authority undermining the earlier analysis or shown a substantial basis for disagreement. The court also rejected their reading of the cited New York decisions. It stated that New York law leaves open the possibility that insurers may obtain contributions from insureds for defense costs attributable to uninsured periods, particularly when those costs can be fairly allocated.

North River’s motions

North River moved for reconsideration, permission for an immediate appeal, and clarification. North River argued that its excess insurance policy did not impose a duty to defend the underlying claims.

The court denied reconsideration. It held that North River had read the earlier Opinion and Order too narrowly. The court had considered both the policy’s defense provision and its “Exhaustion of Aggregate Endorsement.” That endorsement provided that, when the primary insurance was exhausted, North River’s excess insurance would apply as underlying insurance. The court held that, read together, those provisions required North River to defend suits seeking damages for personal injuries, including the underlying claims.

The court also denied permission to appeal because North River had not shown a substantial basis for disagreement with the ruling. It denied clarification as unnecessary because the earlier order already stated that a later allocation proceeding would reconsider defense and indemnification costs Travelers had paid or would pay. The court further stated that contributions from Danaher, Atlas Copco, and Chicago Pneumatic’s excess insurers would not require adjusting Travelers’ limits for certain already-exhausted policies.

Substitution of Fortive for Danaher

Danaher moved under Rule 25(c) of the Federal Rules of Civil Procedure to substitute Fortive Corporation as the successor in interest for purposes of the rights and obligations at issue. The court found sufficient evidence that Fortive held those rights and obligations.

The court examined a 2016 separation agreement between Danaher and Fortive. The agreement identified rights concerning Chicago Pneumatic as Fortive assets and identified certain obligations involving Chicago Pneumatic, including asbestos-related personal injury matters, as Fortive liabilities. The agreement also required Fortive to protect Danaher from certain liabilities under agreements connected to the sale of Chicago Pneumatic.

The court acknowledged that portions of the agreement were unclear. In particular, the agreement expressly addressed asbestos-related claims but was silent about silica-related bodily injury claims, and it contemplated that Danaher might retain some obligations under the sale agreement. The court nevertheless relied on an affidavit from a person with firsthand knowledge of the agreement. The affidavit stated that Fortive had received all of Danaher’s rights and liabilities concerning Chicago Pneumatic, the underlying asbestos and silica claims, and the sale agreement; that Fortive accepted responsibility for Danaher’s former rights and obligations; and that Fortive consented to substitution.

The court also found that substitution would not frustrate other parties’ efforts to obtain relief or delay or complicate the litigation. It therefore granted Danaher’s motion to substitute Fortive and ordered that the caption be amended.

Disposition

The court denied Danaher and Atlas Copco’s motion for leave to appeal. It denied North River’s motions for reconsideration, leave to appeal, and clarification. It granted Danaher’s motion to substitute party, replaced Danaher Corporation with Fortive Corporation, directed Fortive’s counsel to appear, and ordered the parties to address further proceedings.