Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00678/USCOURTS-azd-2_12-cv-00678-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Nucor Corporation,

Plaintiff,

v.

Employers Insurance Company of

Wausau,

Defendant. 

Employers Insurance Company of

Wausau,

Counter-claimant,

v.

Nucor Corporation, Hartford Accident &

Indemnity Company, and Travelers

Casualty & Surety Company,

Counter-defendants.

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No. CV-12-678-PHX-SMM

MEMORANDUM OF DECISION AND

ORDER

Before the Court are several related motions: 

(1) Counter-defendant Travelers Casualty and Surety Company’s Motion for

Summary Judgment Re: Equitable Contribution (Doc. 80); 

(2) Defendant/Counter-claimant Employers Insurance Company of Wausau’s Motion

for Partial Summary Judgment (Doc. 83); 

(3) Counter-defendant Hartford Accident and Indemnity Company’s Motion for

Case 2:12-cv-00678-SMM Document 141 Filed 09/27/13 Page 1 of 16
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1

 The parties’ request for oral argument is denied because the parties have had an

adequate opportunity to present their written arguments, and oral argument will not aid the

Court’s decision. See Lake at Las Vegas Investors Grp., Inc. v. Pac. Malibu Dev., 933 F.2d

724, 729 (9th Cir. 1991).

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Summary Judgment Re: Equitable Contribution (Doc. 85);

(4) Plaintiff/Counter-defendant Nucor Corporation’s Cross Motion for Partial

Summary Judgment (Doc. 124); and

(5) Defendant/Counter-claimant Employers Insurance Company of Wausau’s Motion

to Strike (Doc. 125).

The motions are fully briefed. (Docs. 115, 118, 120, 127, 129, 132, 135, 136.) After

considering the parties’ briefing, and having determined that oral argument is unnecessary,1

the Court issues the following ruling.

BACKGROUND

This insurance coverage dispute arose from a federal environmental liability lawsuit

filed against Plaintiff/Counter-defendant Nucor Corporation (“Nucor”). In 2010, the

Roosevelt Irrigation District (“RID”) filed suit against Nucor alleging that Nucor and dozens

of other potentially responsible parties (“PRPs”) are responsible for releasing pollutants into

Phoenix groundwater from the 1960s to the 1980s, resulting in contamination to wells owned

and operated by RID. The underlying suit (hereafter referred to as the “RID action” or “RID

suit”) seeks recovery of the costs associated with remediation of the groundwater

contamination and damage to RID’s real property.

A. Previous related litigation against Nucor.

For slightly over four years in the 1960s, Nucor owned and operated a manufacturing

facility located on West Osborn Road in Phoenix, Arizona (hereafter “the Site” or “the WOR

facility”), where it manufactured electronic components. (Doc. 1-1 at 2-3.) As part of its

manufacturing process, Nucor used a solvent called trichloroethylene (“TCE”) to clean and

degrease parts, tools, and machines. (Id. at 3.) During the 1980s, TCE was discovered in the

groundwater in the west-central area of Phoenix. (Id.) As a result, Nucor has been sued in

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four separate lawsuits, including most recently the RID action. (Id.) The four lawsuits are:

(1) An enforcement action brought by the Arizona Department of Environmental Quality (“ADEQ”); (2) the Baker v. Motorola, et al., class action lawsuit (hereafter

“Baker”) alleging property damage and medical surveillance claims;

(3) the consolidated lawsuit Lofgren v. Motorola, et al. (hereafter

“Lofgren”), which consisted of individuals alleging personal injury; and (4) the RID action. 

(Id.) Nucor retained the law firm of Fennemore Craig to defend it in connection with all four

lawsuits. (Id. ¶ 16.)

Defendant Employers Insurance Company of Wausau (hereafter “Wausau”) issued

four primary liability insurance policies to Nucor for the period from January 1, 1968 to

January 1, 1972. (Doc. 84 ¶ 1.) Each of the Wausau policies at issue in this case included

the following provision:

[T]he company [Wausau] shall have the right and duty to defend

any suit against the insured seeking damages on account of such

bodily injury or property damage, even if any of the allegations

of the suit are groundless, false or fraudulent, and may make

such investigation and settlement of any claim or suit as it

deems expedient, but the company shall not be obligated to pay

any claim or judgment or to defend any suit after the applicable

limit of the company’s liability has been exhausted by payment

of judgments or settlements.

(Id.)

Defendant Travelers Casualty & Surety Company (hereafter “Travelers”) issued five

primary liability insurance policies to Nucor for the period from January 1, 1961 to January

1, 1966, and ten primary liability insurance policies for the period from January 1, 1975 to

January 1, 1985. (Id. ¶ 2.) Defendant Hartford Accident and Indemnity Company (hereafter

“Hartford”) issued three primary liability insurance policies to Nucor for the period from

January 1, 1972 to January 1, 1975. (Id. ¶ 3.)

In 1997, Nucor filed a coverage action in Maricopa County Superior Court against

insurers who provided liability insurance to Nucor in the 1960s to 1980s (hereafter referred

to as “Nucor I”). (Doc. 84 ¶ 25.) In Nucor I, which was litigated over the course of 13 years,

Nucor argued that the environmental claims arising out of the alleged contamination at the

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WOR facility involved a continuous trigger of coverage and thus involved their insurers from

1961 to 1984. (Id.) The state court issued final judgments in Nucor I in 2010; the judgments

were subsequently appealed to the Arizona Court of Appeals, which issued a published

opinion and an unpublished memorandum decision on November 23, 2010. (Id.) Nucor filed

a petition for review with the Arizona Supreme Court as to two rulings of the appellate court,

but neither of the issues Nucor appealed are relevant to the issues presented by the motions

currently before this Court. (Id.)

One of the central issues of dispute in Nucor I was the extent of Nucor’s primary

insurers’ obligation to contribute to the payment of Nucor’s defense costs in the various

environmental actions that had been brought against Nucor. (Id. ¶ 26.) In 2005, During the

pendency of Nucor I, but prior to the entry of judgment, Nucor entered into settlement

agreements with both Travelers and Hartford. (Id.) The settlement between Nucor and

Travelers provided that Travelers’ payment to Nucor would “exhaust all coverage potentially

available to Nucor under the Policies for Environmental Contamination Claims Arising out

of the [WOR] Site.” (Doc. 81 ¶ 11.) 

The settlement between Nucor and Hartford provided that in exchange for the

payment by Hartford, Nucor “fully and forever releases and discharges Hartford from Claims

. . . that Nucor has or may have against Hartford with respect to . . . the Nucor Policies. . . .

Furthermore, by virtue of the foregoing releases, Hartford shall have no duty to defend or

indemnify Nucor with respect to any Claim.” (Doc. 87 ¶ 9.) The Hartford settlement also

stated that “[t]he Parties agree that the Settlement Sum will exhaust any and all potentially

applicable limits of all Hartford Accident and Indemnity Company primary policies issued

to Nucor.” (Id. ¶ 10.)

B. The RID Action

On September 11, 2009, Nucor notified Wausau that it had received a demand letter

and a draft complaint from RID alleging that Nucor was a PRP for groundwater pollution that

impacted wells owned and operated by RID. (Id. ¶ 5.) On November 2, 2009, Wausau sent

a reservation of rights letter to Nucor, reserving its rights to assert possible coverage defenses

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as to whether the RID suit constituted a claim for “damages” for “property damages” and

whether there was an “occurrence” as defined by the policies. (Id. ¶ 7.) In the letter, Wausau

also wrote that if Nucor were served with a lawsuit, it should notify Wausau “so that if

appropriate [Wausau] may appoint counsel to defend Nucor’s interests.” (Id.) 

RID filed its complaint in the underlying action against Nucor and other defendants

in February 2010, and thereafter filed and served a First Amended Complaint in July 2010.

(Id. ¶¶ 8-9.) RID’s complaint describes the nature of the action as follows:

“This is a civil action brought against the Defendants under the

Comprehensive Environmental Response, Compensation, and

Liability Act of 1980, as amended, 42 U.S.C. §§ 9601, et seq. (“CERCLA”), for the recovery of costs incurred by RID in

responding to the Defendants’ release or threatened release of

hazardous substances into groundwater that impacts or threatens

to impact wells owned and operated by RID, as well as for

damages to property owned by RID.”

(Id. ¶ 9.) On November 11, 2011, Wausau withdrew its right to deny coverage to the extent

Nucor’s liability arose from intentional acts or it expected or intended any property damage.

(Id. ¶ 10.) 

As stated above, Nucor retained Fennemore Craig to handle its defense in the RID

action. (Id. ¶ 13.) Fennemore Craig was simultaneously retained by three other defendants

to represent them in the RID action – Kinder Morgan G.P., Inc., BP West Coast Products,

LLC, and BNSF Railway Company. (Id. ¶ 14.) Wausau expressed to Nucor its concerns

with Fennemore Craig’s representation of multiple defendants in the RID action. (Id. ¶ 15.)

For the period from the hiring of Fennemore Craig for the RID action through June

2011, Nucor sought from Wausau reimbursement of defense costs totaling $601,462, which

included “Nucor only” attorneys’ fees of $461,326, and additional fees of $140,136

representing Nucor’‘s 25% share of additional amounts billed by Fennemore Craig for work

the firm performed jointly on behalf of Nucor and the three other RID action defendants. (Id.

¶ 17.) Wausau has to-date paid for a portion of the defense bills submitted by Nucor, but has

not paid amounts it deems excessive or unreasonable, nor paid amounts for Nucor’s share of

fees billed by Fennemore Craig for work performed jointly on behalf of Nucor and the three

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other RID defendants. (Id. ¶ 18.)

On November 11, 2011, Wausau informed Nucor that it wished to exercise its right

under the policies to appoint defense counsel for Nucor in the RID action, and informed

Nucor that it had retained attorney Kevin Neal of the firm Jones, Skelton & Hochuli, P.L.C.

to handle Nucor’s defense. (Id. ¶ 19.) Wausau informed Nucor that it would pay the

necessary and reasonable fees of the Fennemore Craig firm through November 30, 2011, and

also informed Nucor that Wausau would not object if it wished to continue to retain

Fennemore Craig as associate defense counsel in the RID action at Nucor’s own expense.

(Id. 19.) Nucor objected to Wausau’s attempt to appoint defense counsel. (Id. ¶ 20.)

Wausau also requested that Nucor tender the defense of the RID suit to its other

insurers, including Hartford and Travelers. (Id. ¶ 21.) On March 17, 2010, Nucor notified

Wausau that it had not tendered the RID suit to any other insurers and that it refused to do

so in light of settlement agreements Nucor had entered into with Hartford and Travelers.

(Id.) Subsequently, Wausau notified Hartford and Travelers about the RID action and

requested that they pay a share of Nucor’s defense costs. (Id.) Hartford and Travelers have

refused to pay any of Nucor’s defense costs in the RID action, on the grounds that they have

no obligation to contribute to Nucor’s defense costs based upon the settlement agreements

they reached with Nucor in connection with previous environmental claims. (Id. ¶ 22.)

Nucor brought this case against Wausau asserting claims for declaratory relief, breach

of contract, and breach of the covenant of good faith and fair dealing. (Doc. 1-1 at 20-26.)

For its claim of declaratory relief, Nucor seeks declaration that, inter alia: Wausau has a duty

to defend Nucor in the RID suit; Wausau is obligated to provide Nucor with a complete

defense to every claim in the RID suit; Nucor has the right to designate counsel of its

choosing to defend the RID suit; and Wausau must reimburse Nucor for all reasonable and

necessary defense costs. (Id. at 22-23.)

Wausau answered Nucor’s complaint, and asserted four counterclaims: (1) for

declaratory relief against Nucor regarding Wausau’s right to appoint defense counsel in the

RID suit; (2) for declaratory judgment that Nucor breached the cooperation provision of the

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insurance policies issued by Wausau; (3) for equitable contribution against Hartford and

Travelers; and (4) for declaratory relief against Nucor, Hartford, and Travelers regarding the

rights and responsibilities of Hartford, Travelers, and Nucor to pay for defense costs incurred

in the RID action. (Doc. 5 at 15-17.) 

LEGAL STANDARD

I. Motions for Partial Summary Judgment

Upon motion at any time, a party defending against a claim may move for “partial

summary judgment,” that is, “summary judgment in the party’s favor as to . . . any part

thereof.” Fed. R. Civ. P. 56(b). A court must grant summary judgment if the pleadings and

supporting documents, viewed in the light most favorable to the nonmoving party, “show that

there is no genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S.

317, 322-23 (1986); Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.

1994). Substantive law determines which facts are material. See Anderson v. Liberty

Lobby, 477 U.S. 242, 248 (1986); see also Jesinger, 24 F.3d at 1130. “Only disputes over

facts that might affect the outcome of the suit under the governing law will properly preclude

the entry of summary judgment.” Anderson, 477 U.S. at 248. The dispute must also be

genuine, that is, the evidence must be “such that a reasonable jury could return a verdict for

the nonmoving party.” Id.; see Jesinger, 24 F.3d at 1130.

A principal purpose of summary judgment is “to isolate and dispose of factually

unsupported claims.” Celotex, 477 U.S. at 323-24. Summary judgment is appropriate

against a party who “fails to make a showing sufficient to establish the existence of an

element essential to that party's case, and on which that party will bear the burden of proof

at trial.” Id. at 322; see also Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir.

1994). The moving party need not disprove matters on which the opponent has the burden

of proof at trial. See Celotex, 477 U.S. at 317. The party opposing summary judgment “may

not rest upon the mere allegations or denials of [the party's] pleadings, but . . . must set forth

specific facts showing that there is a genuine issue for trial.” FED. R. CIV. P. 56(e); see

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Matsushita Elec. Indus. Co. v.Zenith Radio, 475 U.S. 574, 585-88 (1986); Brinson v. Linda

Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995).

II. Equitable Contribution

A federal court sitting in diversity applies state substantive law. See Hambleton Bros.

Lumber Co. v. Balkin Enterprises, Inc., 397 F.3d 1217, 1227 (9th Cir. 2005). Thus, this

Court applies Arizona law to the interpretation of the insurance contracts at issue. See

Benevides v. Arizona Prop. & Cas. Ins. Guar. Fund, 184 Ariz. 610, 613, 911 P.2d 616, 619

(App. 1995).

Under Arizona law, an insurer has a duty to “defend the insured against any claim

‘potentially covered by the policy.’” Pueblo Santa Fe Townhomes Owners’ Ass’n v.

Transcon. Ins. Co., 218 Ariz. 13, 19, 178 P.3d 485, 491 (App. 2008). The language of the

insurance policy controls the scope and extent of the insurer’s duty to defend. Cal. Cas. Ins.

Co. v. State Farm Mut. Auto. Ins. Co., 185 Ariz. 165, 168, 913 P.2d 505, 508 (App. 1996).

The duty to defend arises “at the earliest stages of the litigation and generally exists

regardless of whether the insured is ultimately found liable.” Regal Homes, Inc. v. CNA Ins.,

217 Ariz. 159, 164, 171 P.3d 610, 615 (App. 2007). The duty to defend focuses on the facts

alleged rather than the legal characterization of the causes of actions alleged in the complaint

against the insured. Kepner v. Western Fire Ins. Co., 109 Ariz. 329, 331, 509 P.2d 222, 224

(1973).

Generally, an insurer must contribute to the defense costs borne by another insurer in

defending their mutual insured. Nat’l Indem. Co. v. St. Paul Ins. Co., 150 Ariz. 458, 459,

724 P.2d 544, 545 (1986). To determine whether an insurer will be required to contribute

to another insurer’s payment of costs on behalf of an insured, Arizona courts apply a fourpart test: “the policies must cover (1) the same parties, (2) in the same interest, (3) in the

same property, [and] (4) against the same casualty.” Granite State Ins. Co. v. Emp’rs Mut.

Ins. Co., 125 Ariz. 275, 278, 609 P.2d 90, 93 (App. 1980).

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DISCUSSION

I. Wausau’s Motion to Strike Nucor’s Cross-Motion

On May 25, 2013, Nucor filed its “Opposition to Employers Insurance Company of

Wausau’s Motion for Partial Summary Judgment Concerning Right to Select Independent

Counsel and Cross-motion for Partial Summary Judgment.” (Doc. 124.) On April 8, 2013,

Wausau filed its Reply in support of its motion for partial summary judgment, and its motion

to strike Nucor’s cross-motion. (Doc. 125.) Wausau moves to strike Nucor’s cross-motion

on grounds that it violates the Court’s case management order that all motions for summary

judgment on defense-related issues and Wausau’s right to equitable contribution be filed no

later than February 25, 2013. (Id. at 6.)

Although Rule 16(f), FED.R.CIV.P., authorizes sanction against a party for failure to

obey a scheduling order, the Court will deny Wausau’s motion to strike. Nucor’s crossmotion, filed simultaneously with its Response to Wausau’s motion for partial summary

judgment, concerns the same issue as that raised in Wausau’s motion – whether Wausau has

the right to appoint Nucor’s defense counsel in the RID action. Wausau has responded to

Nucor’s cross-motion, the parties rely on the same factual evidence in support of their

respective motions, and Wausau has alleged no injury to any substantial right. (See Rule 61,

FED.R.CIV.P.) Thus, there is no prejudice to Wausau in allowing the issue to be fully briefed

before the Court, and Nucor’s technical delay in filing the cross-motion was harmless. Thus,

the motion to strike will be denied.

II. Wausau and Nucor’s Cross-motions for Partial Summary Judgment Re: Wausau’s Right to Select Defense Counsel

Wausau moves for partial summary judgment in its favor on the issue of whether

Wausau has the right to appoint its own counsel to defend Nucor in the RID action. (Doc.

83 at 7.) Nucor moves for partial summary judgment in its favor on the same issue. (Doc.

124.) 

Wausau argues that summary judgment in its favor on this issue is appropriate on the

grounds that Arizona law confers upon an insurer the right to appoint defense counsel for the

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insured, even where the insurer is defending under a reservation of rights. (Doc. 83 at 12-

15.) Nucor argues that summary judgment should be entered in its favor, on three

independent grounds: (1) that Arizona law provides no such absolute right to an insurer; (2)

that even if such a right existed, Wausau has waived that right by its use and reliance upon

Fennemore Craig in the RID action for an extended period of time and by its lengthy delay

in seeking to compel Nucor’s use of different counsel; and (3) that Wausau is estopped from

belatedly attempting to exercise a right to appoint counsel because of the prejudice to Nucor

that would result. (Doc. 124 at 7-17.)

Typically, when a defense is provided by a liability insurer, “as part of the insurer’s

obligation to provide for the insured’s defense, the policy grants the insurer the right to

control that defense – which includes the power to select the lawyer that will defend the

claim.” Paradigm Ins. Co. v. The Langerman Law Offices, P.A., 200 Ariz. 146, 149, 24 P.3d

593, 596 (2001) (citations omitted). However, where an insurer accepts the duty to defend

under a reservation of rights, it “relinquishes to the insured control of the litigation.” United

Services Auto. Ass’n v. Morris, 154 Ariz. 113, 119, 741 P.2d 246, 252 (1987). “An insured

that is notified of its insurer’s reservation of rights is on notice of the conflict of interest and

is free, upon proper notice to the insurer, to act to protect its rights in the litigation with the

claimant.” Pueblo Santa Fe Townhomes Owners’ Ass’n v. Transcontinental Ins. Co., 218

Ariz. 13, 19, 178 P.3d 485, 491 (App. 2008). 

The Court agrees with Wausau that there is no support in Arizona case for the blanket

proposition that an insurer defending under a reservation of rights loses its right to appoint

defense counsel for its insured. Although the courts in Morris and Pueblo Sante Fe indicated

that an insurer defending under a reservation of rights loses some of its contractual rights to

control the defense of an insured, neither of those opinions, nor any other Arizona case that

the Court has found, addressed the specific issue of whether an insurer loses its right to

appoint defense counsel.

Thus, in the absence of any authority in support of Nucor’s claim that it has a right to

appoint its own defense counsel, the Court finds that Wausau has a contractual right under

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the insurance policies to appoint defense counsel in the underlying RID action. 

Nucor argues, however, that even if Wausau does have this right, it has waived the

right by failing to attempt to select independent counsel in a timely manner. (Doc. 124 at

13.) In support of this argument Nucor notes the following undisputed facts. Nucor first

tendered the RID claim to Wausau in September 2009, after receiving a demand letter and

draft complaint. (Doc. 84 ¶ 5.) On July 16, 2010, Fennemore Craig provided Wausau with

an update on recent developments in the RID litigation. (Doc. 124-1 at 23.) Wausau

responded to this communication from Fennemore Craig by requesting “an outline as to

defense strategy,” and stating that it should “include identification of the defense team and

corresponding responsibilities, as well as a budget. We’d like to get a handle on the direction

and projected costs of this litigation.” (Id.)

The RID complaint was filed against Nucor on July 29, 2010; On August 13, 2010,

Fennemore Craig provided to Wausau some of the information requested in the July 16

communication, gave further update on the RID suit, and tendered the official RID

complaint. (Id.) On October 19, 2010, Wausau thanked Fennemore Craig for the August 13

letter, noted that Fennemore Craig had “significant background and knowledge of the [WOR]

site, particularly with regards to the Nucor plume,” and requested additional information

from Fennemore. (Id. at 24.) Fennemore Craig provided to Wausau the requested additional

information on December 6, 2010. (Id.) It was not until November 11, 2011, that Wausau

informed Nucor that it had decided to exercise its right under the policies to appoint defense

counsel for Nucor in the RID action. (Doc. 84 ¶ 19.) 

Waiver is the voluntary relinquishment of a known right or conduct warranting an

inference that such a right has been relinquished. Services Holding Co., Inc. v. Transamerica

Occidental Life Ins. Co., 180 Ariz. 198, 207, 883 P.2d 435, 444 (App. 1994). “Waiver of

right requires a clear showing of an intent to waive that right. Intent to waive, however, may

be inferred from conduct.” Id. at 206, 883 P.2d at 444 (internal citations omitted). Waiver

is a question of fact to be determined by the trier of fact. Chaney Bldg. Co., Inc. v.

Sunnyside School Dist. No. 12, 147 Ariz. 270, 273, 709 P.2d 904, 907 (App. 1985).

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Wausau argues that the facts do not establish that it waived its right to appoint defense

counsel for Nucor in the RID action. (Doc. 125 at 11.) However, Wausau neglects to

address the settled legal reality that whether Nucor could infer waiver from Wausau’s

conduct is a question of fact for the trier of fact. The Court finds that Nucor has raised

sufficient evidence to establish a genuine dispute of material fact by which waiver could be

found. It is undisputed that Wausau had multiple communications with Fennemore Craig

concerning Nucor’s defense in the RID action, spanning a time period of over a year. It is

further undisputed that Nucor did not attempt to assert its right to appoint counsel at any time

prior to November 11, 2011, nearly two years after Wausau first received notice of the RID

demand letter and draft complaint against Nucor. These facts, viewed in the light most

favorable to the nonmoving party, are sufficient to raise a genuine dispute, and thus summary

judgment against Nucor’s claim of waiver is inappropriate. 

The Court also finds, however, that summary judgment in Nucor’s favor is similarly

inappropriate, because Wausau disputes Nucor’s inferences from the facts, and raises facts

by which a reasonable trier of fact could find that it did not waive its right to appoint counsel.

As Wausau notes, after it received notice of the potential RID suit in September 2009, it sent

a reservation of rights letter to Nucor on November 2, 2009 confirming that if Nucor were

served with a lawsuit, it should notify Wausau “so that if appropriate, we may appoint

counsel to defend Nucor’s interest.” (Doc. 84 ¶ 7.) Further, Wausau notes that the RID

action was not officially filed or tendered to Wausau until July, 2010, and that up to the

present very little litigation has been conducted in the RID action. (Doc. 84¶ 9; Doc. 125 at

9.) Thus, Wausau argues, Nucor could not reasonably have inferred that the delay between

tender of the RID suit and Wausau’s attempt to appoint counsel amounts to a showing of

intentional waiver.

The Court agrees that a reasonable jury could find that waiver cannot be inferred from

Wausau’s conduct. Accordingly, this remains a factual question for the trier of fact, and may

not be disposed of on summary judgment.

Nucor argues next, however, that summary judgment is appropriate because Wausau

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is estopped from exercising its right to appoint counsel. (Doc. 124 at 15.) According to

Nucor, Wausau is estopped because it previously consented to Nucor’s retention of

Fennemore Craig in previous suits brought against Nucor for pollution at the WOR site, and

by the same conduct Nucor points to above in support of its argument that Wausau has

waived its right to appoint counsel. (Id.)

Estoppel occurs when one party, by its conduct, induces another to believe and have

confidence in certain material facts, which inducement results in justifiable reliance thereon,

resulting in injury to the person thus relying. Pueblo Santa Fe, 218 Ariz. at 21, 178 P.3d at

493. Nucor asserts that it relied on Wausau’s conduct in approving the retention of

Fennemore Craig, and will be prejudiced if Nucor is now allowed to substitute new,

inexperienced counsel in place of Fennemore Craig, which has been defending Nucor in suits

concerning its operation of the WOR facility for more than 20 years. Wausau argues that it

is not estopped from appointing counsel because the undisputed facts do not support a

showing of prejudice – according to Wausau, Nucor cannot demonstrate that it will suffer

any prejudice if Jones Skelton is appointed to handle the RID action because there is no

reason to assume that Jones Skelton will be unable to assimilate and use the information and

work product Nucor and Fennemore Craig have developed to assist in the defense of the RID

action. (Doc. 125 at 13.)

The Court finds that the undisputed facts, viewed in the light most favorable to the

non-moving party (which in the case of cross-motions for summary judgment, as here, is both

parties), could reasonably support a finding in either party’s favor. The question of whether

Nucor will be prejudiced by Wausau’s attempt to substitute counsel at this stage in the RID

action is a question for the jury, and the undisputed facts can reasonably be interpreted either

way. Thus, a genuine issue of material fact exists for the trier of fact.

For these reasons, the Court will deny both the cross-motions for partial summary

judgment on the issue of whether Wausau maintains the right to appoint Nucor’s defense

counsel in the RID action. Although the Court agrees with Wausau that it has a contractual

right to appoint defense counsel for Nucor, the Court finds that Nucor has raised sufficient

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facts by which a reasonable trier of fact could conclude that Nucor has waived that right or

is estopped from asserting that right. 

III. Wausau and Counter-Defendants’ Cross-motions for Summary Judgment Re: Equitable Contribution

Wausau moves for partial summary judgment in favor of its counterclaim for

equitable contribution from Travelers and Hartford for Wausau’s defense of Nucor in the

RID action. (Doc. 83 at 16.) Travelers and Hartford simultaneously move for summary

judgment against Wausau’s counterclaim. (Docs. 80, 85.) 

Travelers and Hartford both argue that summary judgment in their favor is appropriate

because Wausau’s claim for equitable contribution from them fails as a matter of law.

According to Travelers and Hartford, the settlement agreements they each entered into with

Nucor in Nucor I fully exhausted any liability they may have had under the insurance policies

for any future claims against Nucor arising from environmental contamination at the WOR

facility. Thus, they argue that they have no obligation, real or potential, to defend Nucor in

the RID suit, and thus that Wausau has no claim for equitable contribution.

Wausau argues next that the settlement agreements do not operate to preclude

equitable contribution from Hartford and Travelers for Nucor’s defense in the RID action

because even where an insurer tenders its full policy limits to the insured, its obligation to

contribute to the defense of the insured is not extinguished. (Doc. 83 at 18.) In support of

this claim, Wausau cites to California Cas. Ins. Co. v. St. Farm Mut. Auto. Ins. Co., 185 Ariz.

165, 913 P.2d 505 (App. 1996.) 

Wausau’s reliance on this case is misplaced, however; there, the Arizona Court of

Appeals was considering whether the insurer was immune from a claim for equitable

contribution after the insurer had made a full payment under its insured’s liability policy. Id.

The insurer in that case did not, however, obtain a settlement agreement with its insured

discharging its duty to defend. Id. Indeed, in finding that the insurer was still exposed to

potential claims for equitable contribution from other insurers of their mutual insured, the

court noted that “most decisions from other jurisdictions that have construed language similar

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to that on which [the insurer] relies have held that a liability insurer’s payment of its full

policy limits discharges its duty to defend a claim against the insured only if made pursuant

to a settlement or in full or partial satisfaction of a judgment entered on the claim against the

insured.” Id. at 168, 913 P.2d at 508 (emphasis in original); see also Anderson v. United

States Fidelity & Guar. Co., 177 Ga.App. 520, 339 S.E.2d 660, 661 (1986) (term “exhaust”

does not mean paying policy limits into court without insured’s consent, but rather paying

settlement or judgment that entirely depletes policy limits); Samply v. Integrity Ins. Co., 476

So.2d 79, 83-84 (Ala. 1985) (insurer could not avoid duty to defend by tendering payment

of policy limits without settlement or insured’s consent).

The Court agrees with Travelers and Hartford that the settlement agreements they

entered into with Nucor in 2005 extinguished their duty to defend or indemnify Nucor for

any and all claims relating to groundwater contamination at the WOR facility. This is not

a case where Travelers and Hartford seek to avoid their duty to contribute to Nucor’s defense

by unilaterally paying policy limits to the insured and then disavowing the duty to defend.

Rather, this is a case where after years of litigation over Travelers’ and Hartford’s coverage

obligations to Nucor, those parties entered into a settlement agreement whereby those

insurers made settlement payments to Nucor in exchange for Nucor’s agreement to discharge

those insurers from any and all further liability or defense obligation toward Nucor in relation

to environmental contamination claims in connection with Nucor’s operation of the WOR

facility.

The plain language of the specific settlement between Nucor and Travelers provided

that the agreement would “exhaust all coverage potentially available to Nucor under the

Policies for Environmental Contamination Claims Arising out of the [WOR] Site.” (Doc. 81

¶ 11.) The agreement between Nucor and Hartford, as well, provided that Nucor “fully and

forever releases and discharges Hartford from Claims . . . that Nucor has or may have against

Hartford with respect to . . . the Nucor Policies. . . . Furthermore, by virtue of the foregoing

releases, Hartford shall have no duty to defend or indemnify Nucor with respect to any

Claim.” (Doc. 87 ¶ 9.) The Hartford settlement also stated that “[t]he Parties agree that the

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Settlement Sum will exhaust any and all potentially applicable limits of all Hartford Accident

and Indemnity Company primary policies issued to Nucor.” (Id. ¶ 10.)

As such, these two insurers have no liability to Nucor under the policies in connection

with the RID action, which did not arise until 2009, and was not filed until 2010.

Accordingly, Nucor has no right to a defense from Travelers or Hartford in the RID action,

and Wausau, in turn, has no right to equitable contribution from Hartford or Travelers for

Wausau’s costs defending Nucor in the RID action. 

The Court thus finds that this issue is appropriate for summary judgment: the Court

will deny Wausau’s motion for partial summary judgment of its counterclaims against

Travelers’ and Hartford for equitable contribution, and the Court will grant Travelers’ and

Hartford’s cross-motions for summary judgment against Wausau’s counterclaims.

CONCLUSION

Accordingly, for the foregoing reasons,

IT IS HEREBY ORDERED denying Wausau’s Motion for Partial Summary

Judgment. (Doc. 83.)

IT IS FURTHER ORDERED denying Wausau’s Motion to Strike. (Doc. 125.)

IT IS FURTHER ORDERED denying Nucor’s Cross-Motion for Partial Summary

Judgment. (Doc. 124.)

IT IS FURTHER ORDERED granting Travelers’ Motion for Summary Judgment

Re: Equitable Contribution. (Doc. 80.) 

IT IS FURTHER ORDERED granting Hartford’s Motion for Summary Judgment

Re: Equitable Contribution. (Doc. 85.)

IT IS FURTHER ORDERED pursuant to the Court’s case management order of

November 19, 2012 (Doc. 78), that the deadline for completing fact discovery shall be 180

days from the date of entry of this Order. 

DATED this 27th day of September, 2013.

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