MONSANTO CO. v. AETNA CAS. AND SUR. CO. Civ. A. No. 88C-JA-118.
565 A.2d 268 (1989)
MONSANTO COMPANY, a Corporation of the State of Delaware, Plaintiff, v. AETNA CASUALTY AND SURETY COMPANY, et al., Defendants.
Superior Court of Delaware, New Castle County.
Decided: May 22, 1989.
Richard E. Poole, Richard L. Horwitz, and Kathleen T. Furey, of Potter, Anderson & Corroon, and Jerold Oshinsky, and Patricia A. Van Dyke, of Anderson, Baker, Kill & Olick, Washington, D.C., for plaintiff Monsanto Co.
Richard K. Herrmann, of Handelman & Murdoch and Peter I. Sheft, and Marjorie H. Mintzer, of Sheft, Wright & Sweeney, New York City, for defendant American Centennial Ins. Co.
Henry E. Gallagher, Jr., of Connolly, Bove, Lodge & Hutz and James Lewis Griffith, and James W. Christie, of Griffith & Burr, P.C., Philadelphia, Pa., for defendant C.E. Heath Compensation and Liability Ins. Co.
James W. Semple, of Morris, James, Hitchens & Williams, and James K.
O'Brien, and Elizabeth A. Downey, of Denenberg, Tuffley, Bocan, Jamieson, Black, Hopkins & Ewald, P.C., Southfield, Mich., for defendant Intern. Ins. Co.
Elizabeth B. Sandza, of LeBoeuf, Lamb, Leiby & Macrae, Washington, D.C., for defendants Nat. Ins. Co. and Hudson Ins. Co.
Robert L. Ciociola, and Irene A. Sullivan, of Skadden, Arps, Slate, Meagher & Flom, New York City, for defendant North Star Reinsurance Corp.
This is the Court's decision on defendants' motions to dismiss on various jurisdictional grounds. For the reasons that follow, these motions are denied.
On January 20, 1988 Monsanto Company ("Monsanto") filed this comprehensive action seeking a declaratory judgment to determine its rights and the obligations of 38 insurance companies under primary and excess environmental liability insurance policies sold to Monsanto, in connection with environmental actions against Monsanto throughout the Country.
Monsanto is a Delaware corporation organized in 1933. Monsanto, an industrial company, manufactures chemical and agricultural products, pharmaceuticals, industrial process controls and consumer products at sites located throughout the United States.
The 38 insurance companies sold Monsanto liability insurance from the late 1930's through April 1, 1986. The insurance companies have separate policies with Monsanto, and each has its own defense to Monsanto's hazardous waste site claims made pursuant to those policies.
Monsanto purchased the insurance policies to protect its business activities. Monsanto's insurance program consists of a primary policy and numerous layers of excess policies to cover liability and defense costs expended after the primary coverage is exhausted. Monsanto's first layer excess policy, which provides broad coverage, is known as the umbrella policy.
The United States Environmental Protection Agency, state regulatory authorities and private third parties claim that certain materials used and/or generated by Monsanto have contaminated certain locations throughout the United States ("the Sites"). These parties have commenced actions against Monsanto relating to alleged ground water, surface water and soil contamination at the Sites, ("the Environmental Actions"). Currently, these claims pending against Monsanto involve 44 sites.
According to Monsanto, its liability policies require the defendant insurance companies to investigate, defend and indemnify Monsanto against a broad range of liability which includes the liability incurred in connection with the Environmental Actions.
Allegedly, Monsanto sought defense and indemnification for these claims by giving notice of such claims to some of the defendants. Some of the defendants have provided or paid for a defense of Monsanto, however they have done so under reservations of rights.
Allegedly, some insurance companies have refused to honor in full their obligations to defend and indemnify Monsanto in the Environmental Actions. Monsanto claims the insurance companies have breached their contracts by refusing to honor their obligations. Therefore, Monsanto filed this action seeking damages for breach of contract and a declaration of the rights of the parties under Monsanto's insurance policies.
Numerous defendants now move to dismiss the claims against them on various jurisdictional grounds. Defendants North Star Reinsurance Company, American Centennial Insurance Company and Hudson Insurance Company move to dismiss for lack of justiciability.
The Court will address these justiciability motions in the following order: I. failure to join indispensable parties; II. failure to state a claim/more definite statement; and III. lack of justiciability.
I. Failure to Join Indispensable Parties
Defendant, C.E. Heath argues that since Monsanto has been designated as a responding party in various administrative actions in which it is alleged that Monsanto is or may be responsible for environmental hazards allegedly existing at various sites throughout the U.S., there are a number of individuals and administrative agency claimants in these underlying actions whose interests will be affected by any decision this Court makes concerning the existence or non-existence of insurance coverage for these claims.
C.E. Heath's claim is based on 10 Del.C. § 6511 which states;
C.E. Heath argues that Courts have been extremely sensitive to this requirement, realizing that a declaratory judgment in any case may well affect the interests of persons who are not parties to the action without affording these people an opportunity to be heard.
In Vale Chemical Co. v. Hartford Accident and Indemnity Company, 512 Pa. 290, 516 A.2d 684 (1986) the Pennsylvania Supreme Court addressed the question of joinder of an underlying claimant in a declaratory judgment action brought by an insured to determine whether its insurers had a duty to defend and indemnify it in connection with an underlying products liability action. The insured, a chemical company, had been sued by the plaintiff in the underlying action who claimed that she suffered from cancer as a result of her mother's use of a drug, DES, which was manufactured by Vale, during the time she was pregnant with plaintiff. Vale then brought a declaratory judgment action to determine whether the insurance policies issued by Hartford and others provided coverage for the underlying action. The Pennslyvania Supreme Court dismissed the case, holding that the failure to join the plaintiff in the underlying action was fatal error.
The Court in Vale based its ruling on its interpretation of 42 Pa.C.S. § 7540(a), which is similar to 10 Del.C. § 6511. 42 Pa.C.S. § 7540(a) states;
The Court in Vale held that the plaintiff in the underlying case had a clear interest in seeing that the insurance companies pay any judgment against its insured.
Thus, the argument follows that to allow this action to proceed without joinder of the claimants in the underlying matters would not only be in direct contravention of 10 Del.C. § 6511, but would be fundamentally unfair to those non-joined parties whose interests will be affected by this Court's rulings.
However, Monsanto argues that C.E. Heath's motion lacks merit because the underlying
However, in Delaware, established law allows an action to continue if an absent party's alleged interest is fully represented in the law suit.
After consideration of the applicable Delaware case law, this Court finds that although the underlying claimants have some interest in the outcome of this litigation, it is not feasible to join them. The underlying claimants' interests are adequately represented by the parties in this law suit and Delaware law does not require joinder where a party's interests are represented. Therefore, this case should not be dismissed for failure to join indispensable parties.
When a claimant seeks declaratory judgment 10 Del.C. § 6511 requires joinder of all parties who have or claim any interest which would be affected by the declaration sought.
Superior Court Rule 19 sets forth the requirements for joinder of a party;
"Under either of these circumstances, the person must be joined under 19(a), if feasible."
"If it is determined through the evaluation of these four factors that the action should not proceed, the person is thus deemed indispensable and the action will be dismissed."
This Court must first determine whether the underlying claimants are parties to be joined if feasible, under Rule 19(a). Neither Monsanto nor the excess carriers argue whether this suit can result in complete relief for the parties in the absence of the underlying claimants. This is an insurance coverage action where the plaintiff seeks a declaration of the rights and obligations of the contracting parties under the insurance contracts involved in this case. All of the parties to the insurance contracts are represented in this suit. This Court can render a complete resolution of the issues involved in this suit because all of the parties to the insurance contracts are represented. Thus, the lack of the claimants involvement in this suit would not render judgment impossible. Therefore, this Court can render complete relief, as far as the claims asserted in this matter, without joining the underlying claimants.
The Court must now decide whether the underlying claimants have an interest in this suit in which non-joinder would either impede an ability to protect that interest or, subject present parties to a substantial risk of double, multiple or otherwise inconsistent obligations by reason of the claimed interest. The excess carriers claim that the underlying claimants have an interest in this suit because they will benefit from any recovery Monsanto receives. If the Court allowed this suit to go forward without joining the claimants it would deprive these claimants of being heard. They could not pursue their interests. Alternatively, the claimants could subject the insurance carriers to other law suits where another Court might rule inconsistently with this Court.
Monsanto argues that the underlying claimants have no cognizable interest. This argument is ambiguous. Clearly the claimants have some interest in the outcome of this litigation. If recovery is denied Monsanto would be responsible for all of its liability. Monsanto could declare bankruptcy and the claimants would have no relief. Non-joinder would either fail to protect the claimants' interest or subject the insurance carriers to more litigation.
However, due to the enormity of this case, joining all underlying claimants is not feasible. The toxic waste damages at the forty four (44) sites across the Country, and the numerous claims filed, necessarily involves a large number of underlying claimants. Surely to join all of these parties would be obstructive and probably defeat the ends of justice. Although the next step would be to consider Rule 19(b), Delaware case law recognizes an exception to joinder in a case such as this. See, Moran v. Household, supra, at 1073-1074; Bay Newfoundland Co. v. Wilson & Co., Del. Ch., 11 A.2d 278, 281 (1940).
In the alternative, Monsanto argues that, even if the claimants have an interest, the parties in this case will adequately represent those interests. The magnitude of this case, including allegedly extensive damages and high valued claims, have all parties aggressively litigating this suit. As past pleadings have shown, no stone is being left unturned. Any interests that the claimants might have whether for or
II. Failure to State a Claim/More Definite Statement
Defendant International Insurance Company, (IIC), moves for dismissal of Monsanto's claim for failure to state a claim upon which relief can be granted or for a more definite statement of Monsanto's cause of action. IIC argues that a more definite statement of Monsanto's allegations is necessary for IIC to respond fully without proposing costly and unnecessary discovery from Monsanto to determine the basic elements of its claims.
Monsanto counters that the purpose of the complaint is to give notice. Monsanto alleges that it has satisfied the minimum notice pleading standard, i.e., fairly notifying the opposing party of the nature of the claim. See, United States v. Board of Harbor Commissioners, 73 F.R.D. 460, 462 (D.Del.1977). The information that IIC seeks is not required in a complaint.
Monsanto points out that the trend is toward narrowing the requirements for a more definite statement and to require a party to look to discovery as the means for crystallizing the intentions of the pleader rather than to require pleading precision. See, Hendix v. McGraw-Edison Co., Del. Super., C.A. No. 80C-JL-8, Taylor, Judge (Sept. 22, 1981) slip op. at 1.
However, the Court need not decide this issue because it is moot due to the scheduling order entered in this case on January 31, 1989. The scheduling order required Monsanto to provide for the defendants by March 31, 1989 a more detailed description of each actual, threatened or potential liability claim of which coverage is or may be sought in this action, including: a. the identity of claimant, the amount of the claim, and the identity and location of the waste site or other site, facility, or property involved; b. a brief description of the nature of the alleged bodily injury, property damage, clean-up costs, or other loss, damage, or injury alleged; and c. the identity of each insurer Monsanto notified of the claim, and the date and manner of notice.
III. Lack of Justiciability
The Court turns now to the Excess Carriers
10 Del.C. § 6501. Power of Courts; form and effect of declaration.
The current version of the act was adopted from the Uniform Declaratory Judgment Act. It was enacted not to change the substantive law of declaratory judgment, but to give the Courts of this state the benefit of the case law of the majority of jurisdictions which have also adopted the Uniform Declaratory Judgment Act.
The prerequisites necessary for a controversy to warrant declaratory relief are set forth in Playtex, supra, at 273-74, quoting Marshall v. Hill, Del.Super., 93 A.2d 524, 525 (1952): (1) It must be a controversy involving the rights or other legal relations of the party seeking declaratory relief; (2) it must be a controversy in which the claim of right or other legal interest is asserted against one who has an interest in contesting the claims; (3) the controversy must be between parties where interests are real and adverse; (4) the issue involved in the controversy must be ripe for judicial declaration.
The Excess Carriers assert that the prerequisite of ripeness is not met by Monsanto. When deciding whether an issue is ripe for adjudication the Court must do a balancing test. The Court must use its judicial discretion based on the factors of each case to weigh the interests of an early resolution of the controversy, judicial economy and legal stability which, when taken together, may in some cases require dismissal of the declaratory judgment action.
The Excess Carriers argue that the present action is an attempt by Monsanto to have this Court determine legal obligations which may never mature. Some courts who have had similar situations have dismissed the claims against the excess carriers. See, Borg-Warner Corporation v. Liberty Mutual Insurance Co., et al., (Supreme Court New York, Index Number 88-539, RSI Number 88-0389); Schick, Inc. v. ACTWU, supra, (where case was dismissed because it did not involve a present controversy); Ackerman v. Stemerman, Del.Supr., 201 A.2d 173 (1964).
The Excess Carriers allege that they are under no present obligation to pay benefits under the policies to Monsanto. Monsanto must first exhaust its underlying insurance policies before the excess policies are triggered. In some cases excess policies will not trigger until the underlying policies have paid $58 million. Monsanto has not offered proof that the underlying policies will be exhausted in any given year triggering the high level excess policies. Also the argument proceeds, Monsanto will not suffer any harm from dismissing the excess carriers because Monsanto has not made expenditures beyond the underlying insurance coverage. Furthermore, the Excess Carriers argue that if there is a potential to trigger the excess level policies, it is so remote that the Court should exercise its discretionary power and refuse to decide this action.
However, Monsanto points out that in insurance coverage cases present obligation is not necessary for a declaratory judgment action.
However, the Court must be sure that it does not construct hypothetical factual situations on which it makes a finding, putting forth an advisory opinion. The matter would clearly not be ripe for adjudication in that situation. See, Rollins International, Inc. v. International Hydronics Corp., Del.Supr., 303 A.2d 660 (1973); 10 Del.C. § 6506.
Monsanto argues that a Declaratory Judgment action against an excess carrier is ripe where the policy holder's liability for the underlying claims potentially exceeds its primary coverage in any given year.
The Court notes that after the motion sub justice was filed Monsanto provided to the Court a description of the 44 sites involved in this lawsuit. Monsanto also provided a description of the alleged injuries at each site and the approximate amount of damages for each claim brought.
Although absolute proof that the Excess Carriers policies will be triggered is by no means required by this Court before jurisdiction under the Declaratory Judgment Act exists,
The cases that the Excess Carriers cite would clearly deny a motion to dismiss given the facts of this case. In those cases, a dismissal was granted only where the allegations did not show that the claim asserted against the defendant could mature or where the claims were highly unlikely to mature.
However, in this case, Monsanto's allegations and the numerous high valued claims that this lawsuit encompasses will probably trigger the Excess Carriers policies. Therefore, the Court finds a case in controversy that is ripe for adjudication under the Declaratory Judgment Act.
Pursuant to this Court's analysis, the underlying claimants are dispensable, Monsanto has provided enough information to clarify its pleading and, this case is ripe for adjudication. Therefore, Defendants' motions to dismiss on justiciability grounds are denied.
IT IS SO ORDERED.
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