Opinion ID: 2621550
Heading Depth: 1
Heading Rank: 2

Heading: Background of This Litigation

Text: In 1989, current and former Lockheed employees filed suit against Henkel and Amchem Products, Inc., without distinguishing between Amchem No. 1 (in 1989 a Rhone Poulenc subsidiary) and Amchem No. 2 (which by 1989 had merged into Henkel). The suit alleged injuries arising from exposure to metallic chemicals during the period between 1959 and 1976. Henkel tendered its defense to defendant insurers, whose policies had insured Amchem No. 1 during portions of this period, and to Henkel's own insurers. All refused coverage. In 1992, the Lockheed plaintiffs served their complaint on Rhone Poulenc, named as Amchem Products, Inc. Rhone Poulenc moved to quash service. The Lockheed plaintiffs stipulated to the trial court's granting Rhone Poulenc's motion to quash. The stipulation states that the Lockheed plaintiffs have been presented with documents establishing that Henkel Corporation is answerable for the liabilities of Amchem Products, Inc. alleged in the Lockheed Consolidated Cases. Accordingly, plaintiffs have no interest in asserting their claims against [Rhone Poulenc]. In 1995, Henkel settled its suit with the Lockheed plaintiffs for $7.65 million. Defendants [3] refused to contribute to the settlement. Henkel then filed this action for declaratory relief against defendants and Henkel's own insurers. Defendants had Rhone Poulenc added as a necessary party. In 1998, plaintiff Henkel, defendants, and Rhone Poulenc each filed motions for summary judgment. Because defendants had issued their insurance policies to Amchem No. 1which no longer existed as an independent entitythe trial court's first concern was to decide which party represented Amchem No. 1. The trial court ruled that Rhone Poulenc, not Henkel, was the corporate successor of Amchem No. 1 and was therefore the entity entitled to the protection of the liability policies defendant insurers had issued to Amchem No. 1. Amchem No. 2 had assumed all the liabilities of Amchem No. 1 relating to the metallic chemical product line. Plaintiff Henkel then purchased all the stock of Amchem No. 2, which made Henkel responsible for all Amchem No. 2's liabilities, including those inherited from Amchem No. 1. Henkel therefore argued in the trial court that even though it was not the corporate successor to Amchem No. 1, because it was responsible for Amchem No. l's liabilities relating to metallic chemicals as a matter of law, it should be entitled to the benefits of Amchem No. l's liability insurance. The trial court rejected Henkel's argument. It found Henkel responsible for Amchem No. l's torts, not as a matter of law, but because Henkel had voluntarily assumed that liability. The trial court also rejected Henkel's contention that the 1979 contract, under which Amchem No. 2 acquired the assets and liabilities of Amchem No. l's metallic chemical business, assigned to Amchem No. 2 the benefits of insurance coverage for those liabilities. Moreover, the court ruled that any such assignment would be void without defendant insurers' consent. The trial court therefore entered summary judgment against Henkel. The Court of Appeal reversed. Quoting Northern Ins. Co. of New York v. Allied Mut. Ins. (9th Cir.1992) 955 F.2d 1353, 1357 ( Northern Insurance ), it held: The `right to indemnity followed the liability rather than the policy itself. As a result, even though the parties did not assign [the predecessor's insurance] policy in the agreement, the right to indemnity under the policy transferred to [the successor corporation] by operation of law.' (Italics omitted.) We granted petitions for review by Rhone Poulenc and defendants.