2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 3-27-2008 

# H e nk el C orp v . H ar tford Acc ide nt P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 06-4856

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2008 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion
" H e nke l C orp v

. H ar tfor d Ac c ide nt " (2008). 2008 D e cisio n s . P ape r 1379. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2008/1379NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N o. 06- 4856
HE NKE L CO RP OR AT I ON, I NDI VI DUAL L Y AND A S SUCCESSOR B Y M ERG ER TO HEN KEL LO CTI TE CO RP OR AT I ON f

o r me r l yk n o wn a s L OC T I T E CO RP OR AT I ON, A ppel l ant

v. HAR T F OR D AC CI DE NT & I NDE M NI T Y C OM P ANY; L I BE RT Y M UT UAL I NS UR ANC E CO M P ANY APP EAL F ROM THE UNI TE D ST ATE S DI S TRI CT C OURT F O R T H E E A S T E R N D IS T R IC T O F P E N N S Y L V A N IA

( D . C . C i vi l N o. 05- cv- 01266) D i s t r i ctJ udge: T he H onor abl e Eduar do C . R obr eno Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

M ar ch 3, 2008
B efor e: B A R R Y , J O R D A N and H A R D I M A N , C i r cui tJ udges

( O pi ni on Fi l ed: M ar ch 27, 2008)

OP I NI ON
B A R R Y , C i r cui tJ udge A ppel l ant , H enkel C orpor at i on ( “H enkel ”) , s oughtm onet arydamages andT h e D is tr ic t C o u rt e x e rc is e d s u b je c t m a tte r j u ri s d ic tio n p u rs u a n t to 2 8 U .S .C . § 1 3 3 2 . 1 W e h a v e a p p e lla te ju ri s d ic tio n p u rs u a n t to 2 8 U .S .C . § 1 2 9 1 . 2 declar at oryrel i ef ag ai nstH art ford A cci den tand Indem nityC om pan y(“H art ford”) as a
re su lt o f H a rtf o rd ’s r e f u sa l to p ro v id e d e f

e n se a n d in d e m n ityc o v e ra g e p u rsu a n t to i ns ur ance pol i ci es i s s ued t o H enkel ’ s pr edec es s or - i n- i nt er es t , L oct i t e C orpor at i on ( “ Loc t i t e ” ) . The D i s t r i c tCour tdi s mi s s e d the c ompl a i ntpu r s ua ntt o Fe d. R. Ci v. P. 1 2 ( b ) ( 6 ) f

o rf a i l u r e t o s t a t e a c l a i m u p o n wh i c h r e l i e f c a n b e g r a n t e d . W e wi l l a f f i r m. 1 I. H enkel ’ s compl ai nts et s for t h the fol l ow i ng fac t s . L oct i t e ac qui r ed Perm at ex C om pan y , Inc. (“Perm at ex C om pan y ”) i n 1 97 2. Ini t i al l y , P erm at ex C om pan yw as a s ubs i di aryof Loct i t e, buti n 1978 i tm er ged i nt o L oct i t e. B etw een 1976 a nd 1985, H ar t for d i s s ued t o L oct i t e pol i ci es of compre hens i ve gene r al l i abi l i t yi ns ur ance and p o li cies o f c o m p let ed o p era ti o n s an d p rod u cts l iabili tyinsu ran ce (th e “ H artfo rd P o licie s” ). H e n k e l p u rc h a se d L o c tit e in 1 9 9 7 a n d th e c o m p a n ies m e rg e d in 2 0 0 4 , w ith H enkel bei ng t he s ur vi vi ng corpor at i on. H enkel i s L oct i t e’ s s ucce s s or - i n- i nt er es tt o t he H art ford P oli ci es. Pur s uantt o t he H ar t for d Pol i ci es , H art for d agr eed t o pr ovi de def ens e and i nd em nitycov erage for L octi t e as foll ow s: Th e c o mp a n y[ Ha r t f

o r d ] wi l l p a yo n b e h a l f

o f th e i n s u r e d [ Lo c t i t e ] a l l s u ms w hich the insur ed shall beco m e l egall yob l i gated t o p ayas dam ages be cause of3

C over age A – bodi l yi nj ur yor C over age B – prope r t ydamage t o w hi ch thi s i ns ur ance appl i es , caus ed byan occ urr ence , and the company s hal l have the r i ghtand dutyt o defe nd anys ui tagai ns tthe i ns ur ed s eeki ng damages on acc ountof s uch bodi l yi nj uryorpr oper t ydamage, even i f any of the al l egat i ons of the s ui tar e gr oundl es s , fal s e orfr audul ent , and may ma k e s u c h i n v e s t i g a t i o n a n d s e t t l e me n to f a n yc l a i m o rs u i ta s i td e e ms e x p e d ie n t . . . . ( C om pl ai nt¶ 25, A pp. at21a) . B odi l yi nj ur i es caus ed byhaza r dous pr oduct s s ol d,
m anu factured, or di stri bu t ed b yL octi t e are w i t hin the scop e of the po l i ci es. L a w su its h a v e b e e n f

iled in N e w Je rse y , N e w Y o rk , an d P e n n sy lv a n ia s tate c o u rts
a lleg in g th a t th e p lain tiff s h a v e su f

f e re d in ju rie s a s a re su lt o f

e x p o su re to p ro d u c ts cont ai ni ng as bes t os , i ncl udi ng Per m at ex- br and pr oduct s ( t he “U nder l y i ng Sui t s ”) . N one o f th e U n d e rl y in g S u its n a m e d H e n k e l, L o c tite , o r P e rm a te x C o m p a n ya s a d e f e n d a n t. T he N ew J er s eys ui t s m i s t akenl ynamed Per m at ex I ndus t r i al C orpor at i on ( “Perm at ex I ndus t r i al ”) , a w hol l yow ned s ubs i di aryof H enkel , as a def endant . T he N ew Y or k and P e n n sy lv a n ia s u its e rro n e o u slyn a m e d P e rm a tex , In c ., a n e n tityc o m p lete lyu n re late d to H enkel , as a def

endant . N ei t herPer m at ex I ndus t r i al norPer m at ex, I nc. have e vers ol d,
m anufa ctur ed, di s t r i but ed, orot herw i s e as s um ed l i abi l i t yforanyPer m at ex- br and pr oduct s cont ai ni ng as bes t os . H enkel al l eges thati ti s the onl ypart ypot ent i al l yl i abl e for i njur i es caused b yP erm at ex-brand asbe st os-cont ai ning prod ucts . Forr eas ons notdi s cus s ed i n t he compl ai nt , H enkel , and Loct i t e pr evi ous l y , have i ncurr ed cos t s defe ndi ng, and s et t l i ng s om e of, the U nder l y i ng Sui t s even though i ti s notIncl ud ed w i t hin the ap pen dix i s a three- pag e bri ef i n sup po rtof a m oti on t o d i sm i ss 2 fi l ed b yP erm at ex Indu stri al i n o ne o f t he U nd erl y i ng S uit s. T he b ri ef si m plyst at es: “Pl ai nt i ff ha s appar ent l yconfus ed Perm at ex I ndus t r i al C orpor at i on w i t h another P erm at ex en t i t y . A ccordi ng l y , P erm at ex Indu stri al C orporat i on shou l d b e dropp ed as a defe ndanti n t hi s s ui tas an i m pr oper l ynamed par t y . N . J . R ul e C i v. P. 4: 30. ” ( A pp. at 232a. ) I ti s uncl earw hyH enkel di d notdi r ecti t s s ubs i di ary , Per m at ex I ndus t r i al , t o t ake t hi s s eemi ngl ys i m pl e s t ep i n al l of the ca s es and w ai tt o be s ubs t i tut ed as a def endant befor e begi nni ng t o defe nd and/ ors et t l e thes e ac t i ons i n i t s ow n name. 4 n a m e d a s a d e f

e n d a n t. It p ro v id e d p ro p e r a n d tim e lyn o tice o f th e U n d e rly in g S u its to 2 H ar t for d butH ar t for d r efus ed t o pr ovi de def ens e and i ndemni t ycover age unde rthe H ar t for d Pol i ci es . T he compl ai nts eeks damages fr om H art for d forbr eac h of contr actand b ad fa ith ref

u sal t o h o n o r i ts de fe n se a n d ind em n ityo b li g ati o n s u n d er the H artfo rd Pol i ci es , and al s o r eques t s a dec l ar at i on thatH art for d i s obl i gat ed t o defe nd and in d e m n if yH e n k e l in a ll p e n d in g a n d f u tu re c a se s a lleg in g in

ju rya s a re su lt o f

e x p o su re to P erm at ex-brand asbe st os-cont ai ning prod ucts . T he D i s t r i ctC our tdi s m i s s ed the compl ai ntforfai l ur e t o s t at e a c l ai m upon w hi ch
r el i ef c an be gr ant ed, hol di ng t hatH art for d has no dutyt o defe nd H enkel i n t he U nder l y i ng Sui t s beca us e i thad onl yagr eed t o defe nd and i ndemni fyL oct i t e i n cas es w her e Loct i t e ( ora pr edec es s orors ucce s s or - i n- i nt er es t ) i s named as a def endanti n t he
u n d e rly in g a c tio n . T h e D istric t C o u rt e x p re ss lyd e c lin e d to d e c id e w h e th e r P e n n sy lv a n ia
orC onnect i cutl aw contr ol l ed, r eas oni ng thatthe r es ul tw oul d be the s ame underei t her st at e’s l aw s.5 II. W e e x e rc is e p le n a ry re v ie w o f a d is m is s a l p u rs u a n t to F e d . R . C iv . P . 1 2 (b )( 6 ). AT& T Cor

p. v . J M C Tel e c om, LLC , 470 F. 3d 525, 530 ( 3d C i r . 2006) . “W hen
cons i der i ng a R ul e 12( b) ( 6) m ot i on, w e ar e r equi r ed t o acc eptas true al l of the al l egat i ons i n t he compl ai ntand al l r eas onabl e i nfer ence s thatcan be dr aw n t her efr om , and vi ew t hem i n t he l i ghtm os tfavor abl e t o the pl ai nt i ff. ” Mo rs e v . L o w e r Me rio n Sc h . D ist. , 132 F . 3 d 9 0 2 , 9 0 6 (3d C ir . 1 9 9 7 ). III . H enkel ar gues t hatt he D i s t r i ctC our terr ed i n di s m i s s i ng i t s compl ai ntby : ( 1) concl udi ng t hatt he ca s e di d notpr es entan ac tual confl i ctbetw een Penns y l vani a and C onnect i cutl aw ; ( 2) fai l i ng t o t r eatH enkel ’ s fac tual al l egat i ons as true and not
co n stru ing the c o m p lai n t i n the ligh t m o st fav o rab le t o H en k el; (3) c o n clud ing that there
w as no pos s i bi l i t yt hatH ar t for d ow ed a dutyt o defe nd and i ndemni fyH enkel ; ( 4) fai l i ng to c o n sid e r e x trin sic e v id e n c e su g g e stin g th a t H a rtf o rd h a d a c tu a l k n o w led g e o f its d u ty t o defe nd and i ndemni fyH enkel ; and ( 5) fi ndi ng no ambi gui t yi n t he t extof the s ect i on of t he H ar t for d Pol i ci es defi ni ng t he s cope of H art for d’ s dutyt o defe nd and i ndemni fy H enkel . T hes e ar gum ent s ar e w hol l yunavai l i ng. W e agr ee w i t h t he D i s t r i ctC our tthatthi s cas e does notpr es entan ac tual confl i ct betw een Penns y l vani a and Connect i cutl aw . B oth j ur i s di ct i ons gi ve ef fec tt o cl earand
u n a m b ig u o u s la n g u a g e in a n in su ra n c e c o n tra c t u n les s d o in g so w o u ld b e c o n tra rytoH e n k e l’s a rg u m e n t th a t th is c o n stru c tio n o f th e p o licyw o u ld “ e f

f e c tiv e lye v isc e ra te 3 co v era g e f

o r all m an u fa cture rs w ith b ran d ed p rod u cts” is w ith o u t m erit . (R ep lyB r. at 1.) Sophi s t i cat ed bus i nes s es ar e fr ee t o acqui r e the i ns ur ance theydeem appr opr i at e, and, h a v in g d o n e s o , th e ya re b o u n d to d e a l w ith th e c o n s e q u e n c e s o f th o s e d e c is io n s . I n i t s r epl ybr i ef, H enkel ar gues forthe fi r s tt i m e that , i n t he al t ernat i ve, i ts houl d be 4 g ra n te d le a v e to a m e n d its c o m p la in t. T h a t a rg u m e n t, to o , is u n a v a ilin g . S e e , e .g ., N e w a rk Mo r n in gL e d

g e rC o . v . U

n ite d S ta te s , 5 3 9 F . 2 d 9 2 9 , 9 3 2 ( 3 d C i r . 1 9 7 6 ) ( “ We g e n e ra llyre f

u se to c o n sid e r iss u e s th a t ar e ra ise d f o r th e f irst tim e o n a p p e a l.”); U ni t ed S ta tes v . P e lu llo , 3 9 9 F . 3 d 1 9 7 , 2 2 2 (3d C ir . 2 0 0 5 ) (“Itis w ell sett led th at an ap p ell an t’ s fai l ur e t o i dent i fyorar gue an i s s ue i n hi s openi ng br i ef c ons t i tut es w ai verof thati s s ue on ap p ea l. ”). 6 p u b l i c p o l i c y, H

ar t f or d A cci dent

& I ndem
. C o. v. A ce Am
. R ei ns ur ance Co. , 936 A . 2d 224, 231 ( C onn. 2007) ; KvaernerMetal s D i v. of KvaernerU
. S. , I

nc. v. C om m er ci al U ni on I ns . C o. , 9 3 8 A .2 d 8 8 8 , 9 0 7 (P a . 2 0 0 6 ). T h e c o n tra c tu a l p ro v isio n a t issu e in th is
case cou l d n ot be m ore cl ear. Indeed , the o nlyreas on able const ruct i on of the ph ras e “[H ar t for d] s hal l have the r i ghtand dutyt o defe nd anys ui tagai ns tthe i ns ur ed, ” i s thatan i ns ur ed ent i t y( Per m at ex C om pany , L oct i t e, orH enkel ) m us tbe named as a def endanti n a s ui tbefor e H ar t for d’ s dut yt o defe nd and i ndemni fyi s tr i gger ed. E ven vi ew i ng al l of the 3 f a c tu a l alle g a tio n s in th e lig h t m o st f a v o ra b le to H e n k e l, w e a re lef t w ith th e in e sc a p a b le concl us i on t hatH ar t for d has no dut yt o defe nd becaus e an i ns ur ed ent i t yhas notbeen named as a def

endanti n anyof the U nder l y i ng Sui t s . N o amount of extr i ns i c evi dence
w ill c h a n g e th is. W e w ill , the re f o re , af f irm th e ju d g m e n t o f

th e D istric t C o u rt. 4