Opinion ID: 1922414
Heading Depth: 1
Heading Rank: 1

Heading: Procedural History and Underlying Facts

Text: There are pending in other fora numerous individual and class action product liability claims for bodily injury of various users of the fen-phen drug combination against Eon Labs Manufacturing, Inc. (Eon), the appellant in this appeal, and other drug manufacturers. Eon produced, promoted and sold the generic drug phentermine. The other manufacturers defending the fen-phen suits produced the diet drug fenfluramine or dexfenfluramine with which phentermine was sometimes combined, promoted and sold. Thus, the name fen-phen. Individuals and putative classes in the fen-phen suits allege injury as a result of ingesting either phentermine produced by Eon alone or in combination with the diet drugs fenfluramine or dexfenfluramine. The fen-phen combination was allegedly touted by the various manufacturers as producing an extremely effective diet drug. The fen-phen suits also contain claims based on warranty, misrepresentation, failure to warn, fraud, conspiracy and concerted action. Eon placed in the Superior Court record six of these third party complaints, which were examined by the Superior Court and on which its decision was predicated. Procedurally this case arose in the context of a declaratory judgment action initiated by Steadfast Insurance Company (Steadfast) and another insurer against Eon, other drug manufacturers and other insurance companies, including Reliance Insurance Company (Reliance), the principal prevailing party in the Superior Court and the Appellee here. The sole issue before us is the Superior Court's decision that Reliance does not have a duty to defend Eon in the fen-phen suits. We need not detail the various motions in the Superior Court that have led to this appeal. We need not set forth in detail the factual context of the Superior Court's decision because those facts and procedural steps are set forth in the excellent central opinion of that Court dated June 1, 1999, [1] and the Court's subsequent letter opinion on reargument dated August 18, 1999. [2] Reference is made to those opinions for the details and the Superior Court's analysis. The Superior Court's June 1, 1999 memorandum opinion denied Eon's motion for summary judgment in which Eon sought an order that Reliance is obligated to defend the fen-phen suits. In denying Eon's motion for summary judgment, the Court held that Reliance has no duty to defend. [3] Thereafter, Eon sought certification by the Superior Court and this Court of an interlocutory appeal in this Court (which was subsequently refused by both Courts). Meanwhile, Reliance moved for summary judgment in its favor, essentially based on the same June 1, 1999 memorandum opinion and order that denied summary judgment to Eon. In denying Eon's request for certification of the interlocutory appeal, the Superior Court had said discovery would be permitted before deciding Reliance's motion for summary judgment. [4] Reliance moved for reargument of that procedural determination. The trial court granted Reliance's motion for reargument and granted Reliance's motion for summary judgment on the basis of the June 1, 1999 memorandum opinion, denying discovery and entering a final order under Superior Court Rule 54(b) on this aspect of the case. [5] Eon claims that Reliance (along with other insurers including Steadfast) must defend it in the fen-phen suits under the various general liability insurance policies. The parties agree that Reliance would have had to defend Eon if the suits had been based solely on products of others. Also, it is apparent that Steadfast must cover Eon's defense to the fen-phen claims, but the record indicates that its policy limits are being devoted in large part to defense costs. This leaves in question the ultimate availability of funds should Eon eventually be held liable to the third parties in the fen-phen cases. [6] Thus, Eon seeks to hold Reliance also liable for defense costs and liability coverage. [7] The Steadfast and Reliance policy coverages appear to be complementary, not duplicative. The Reliance policy, one for comprehensive general liability, excludes coverage that is specifically included in the Steadfast policy  i.e., liability arising out of Eon's products, in this case phentermine. [8] As noted in the Superior Court's memorandum opinion, the operative term in the Reliance policy [9] is the products hazard exclusion from coverage. That exclusion is set forth in an endorsement stating that [t]his insurance does not apply to bodily injury or property damage included within the products-completed operations hazard. [10] The definition of this exclusion in the Reliance policy [11] encompasses all bodily injury ... arising out of your product, which is defined as any ... products ... manufactured or sold ... by[ ] you including warranties or representations... with respect to fitness ... or use of your product, and ... failure to provide warnings. [12]