Delaware Superior Court denies prejudgment interest in 13-year-old asbestos coverage dispute

By Kyla Asbury | Jun 11, 2018

WILMINGTON, Del. (Legal Newsline) – A Delaware Superior Court judge denied a motion that set judgment amounts in a lawsuit against Century Indemnity Co. and other defendants.

WILMINGTON, Del. (Legal Newsline) – A Delaware Superior Court judge denied a motion that set judgment amounts in a lawsuit against Century Indemnity Co. and other defendants.

Judge Paul R. Wallace filed his memorandum opinion and order on May 23.

The lawsuit was filed by Viking Pump Inc. and Warren Pumps LLC in the Delaware Court of Chancery seeking coverage under insurance policies for asbestos-related personal injury claims, but was later transferred to the Delaware Superior Court after a motion to dismiss for lack of jurisdiction was granted.

The lawsuit was initially filed in 2005 by Viking against Liberty Mutual. Warren later joined the lawsuit. The two companies used to be owned by Houdaille Industries until Houdaille divested itself in 1985 and the companies became separate.

The opinion states that Liberty Mutual informed Warren that its last Warren-only asbestos liability claims policy was exhausted in 2005. Viking wanted to make sure Warren could not also drain their shared liability insurance, so it filed the suit against Liberty for injunctive relief.

The Court of Chancery found that Houdaille's policies covered Viking and Warren. Liberty then settled the outstanding claims it had with Warren and Viking and Liberty was then dismissed from the case.

The case was later transferred to the Delaware Superior Court in 2010 after it was decided that Viking and Warren were covered under excess policies.

The Delaware Superior Court was tasked with deciding whether or not Liberty's policies were exhausted, which would mean that the insurers for the excess policies would then step up. A trial was held in 2013 and a jury found in favor of Warren and Viking for the most part.

After the court decided that horizontal exhaustion would apply in the case, the excess insurers filed a request for clarification of how the horizontal exhaustion would be obtained.

The case was later appealed to the Delaware Supreme Court, wherein two questions were certified and asked to the New York Court of Appeals, including the proper method of allocation to be used and whether vertical or horizontal exhaustion applied.

The New York court answered the questions that "all sums allocation" was appropriate and that the excess policies were "triggered by vertical exhaustion of the underlying available coverage within the same policy period," the opinion states.

Warren allocated its non-reimbursed costs to six excess insurers in 2016, totaling $85 million, according to the opinion. Warren requested payment and four of the six paid out their claims by April 2017.

Warren then filed the motion to set judgment and for prejudgment interest, which the excess insurers argue is not proper because prejudgment interest is only warranted with breach of contract and Warren did not allege a breach of contract in the case.

The Delaware Superior Court agreed with the excess insurers.

"Case law does not support, nor can the court divine from its plain language, Warren's peculiar interpretation of Section 5001," Wallace wrote in the opinion. "Warren's motion for prejudgment interest is denied."

Wallace wrote that Warren's complaint was for declaratory relief and not for breach of contract.

Delaware Superior Court case number N10C-06-141 PRW CCLD

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Delaware Superior Court Liberty Mutual Warren Pumps Division of Houdaille

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