Opinion ID: 4527833
Heading Depth: 2
Heading Rank: 1

Heading: the term “related” encompasses both

Text: CAUSAL AND LOGICAL CONNECTIONS The issue here is whether the Marshall Action alleges wrongful acts that are “related” to those alleged in the Grabek Action. If they are related, then the Marshall claims trigger the 2016 Tower’s prior-notice exclusion and the 2006 Tower’s relation-back clause, shifting the duty to defend that action to Axis under its 2006 excess policy. If they are unrelated, then the duty to defend remains with National Union under its 2016 primary policy. Our analysis hinges on the term “related.” Because we must interpret the policies to decide the term’s scope, we look to state law. Ruhlin v. N.Y. Life Ins. Co., 304 U.S. 202, 205 (1938). As we explain below, the relevant states construe that term broadly, embracing both causal and logical relationships. A. California and Virginia law govern this dispute At the outset, we determine which states’ laws apply. To do that, we apply the choiceof-law rules of Delaware, the forum state. See, e.g., Auto-Owners Ins. Co. v. Stevens & Ricci Inc., 835 F.3d 388, 403 (3d Cir. 2016). In insurance-policy disputes, Delaware applies the “most significant relationship” test. Certain Underwriters at Lloyds, London v. Chemtura Corp., 160 A.3d 457, 464 (Del. 2017) (citing Restatement (Second) of Conflict of Laws (Am. Law. Inst. 1971)). When multijurisdictional policies like Northrop’s are at issue, the state in which the insured is headquartered weighs heavily in determining which state has the most significant relationship to the dispute. See id. at 460 (applying New York law “in particular as the headquarters of the insured” was there). 12 Because Northrop’s headquarters moved during the period at issue, California law governs the 2006 Tower and Virginia law governs the 2016 Tower. Thus, California law governs the relation-back clause while Virginia law governs the prior-notice exclusion. Fortunately, we need not parse finely the application of either state’s laws. The parties agree that California and Virginia law do not conflict materially on the relevant issues. When there is no “true conflict,” we “may refer interchangeably to the laws of the states whose laws potentially apply.” Huber v. Taylor, 469 F.3d 67, 74 (3d Cir. 2006). So we will apply California and Virginia law interchangeably to both towers. B. Both states construe the term “related” broadly When construing insurance policies, both the Golden State and Old Dominion interpret the text based on its plain meaning. See, e.g., Waller v. Truck Ins. Exch., Inc., 900 P.2d 619, 627 (Cal. 1995); TravCo Ins. Co. v. Ward, 736 S.E.2d 321, 325 (Va. 2012). The ordinary meaning of “related” is unambiguously broad in scope. See, e.g., Related, Black’s Law Dictionary (11th ed. 2019) (“[c]onnected in some way”); Related, Oxford English Dictionary (3d ed. 2009) (“Connected or having relation to something else.”); accord Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383 (1992). Both states have adopted that expansive reading. Under California law, “the term ‘related’ as it is commonly understood and used encompasses both logical and causal connections.” Bay Cities Paving & Grading, Inc. v. Lawyers’ Mut. Ins. Co., 855 P.2d 1263, 1274 (Cal. 1993); see id. (“ ‘[R]elated’ is not ambiguous and is not limited only to causally related acts.”). Still, California law recognizes that the term does not “encompass every conceivable logical relationship.” Id. at 1275. “At some point, a relationship between two 13 claims, though perhaps ‘logical,’ might be so attenuated or unusual that an objectively reasonable insured could not have expected they would be treated as a single claim under the policy.” Id. Likewise, Virginia law recognizes that the term related is “very broad in its coverage,” embracing diverse connections. Brush Arbor Home Constr., LLC v. Alexander, 823 S.E.2d 249, 251 (Va. 2019) (internal quotation marks omitted). And while Virginia courts have yet to hold specifically that the term “related” includes both causal and logical ties, Axis and National Union each conceded at oral argument that Virginia’s approach does not conflict with California’s. Plus, our sister circuits have adopted this causal-and-logical approach too (though under other states’ laws). See Cont’l Cas. Co. v. Wendt, 205 F.3d 1258, 1262–63 (11th Cir. 2000) (per curiam); Gregory v. Home Ins. Co., 876 F.2d 602, 606 (7th Cir. 1989). We will do the same here. Thus, to determine whether the wrongful acts alleged in Marshall relate to those alleged in Grabek, we review the record for a causal or a logical relationship.