Court Opinion

ID: 4437432
Source: CourtListenerOpinion
Date Created: 2019-09-11 20:03:28.185291+00
Date Added: 2024-06-11T15:00:01.516637
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

NATIONAL UNION FIRE INSURANCE                         )
COMPANY OF PITTSBURGH, PA., et al.,                   )
                                                      )
                       Plaintiffs,                    )
                                                      )
               v.                                     )   C.A. No. N19C-04-089 EMD CCLD
                                                      )
AXIALL CORPORTATION and                               )
WESTLAKE CHEMICAL CORPORATION,                        )
                                                      )
                       Defendants.                    )

                                     Submitted: September 3, 2019
                                     Decided: September 11, 2019

         ORDER DENYING PLAINTIFFS’ MOTION FOR CERTIFICATION OF
           INTERLOCUTORY APPEAL OF THE COURT’S AUGUST 1, 2019
                   RULING AND AUGUST 12, 2019 ORDER

       This 11th day of September, 2019, upon consideration of Plaintiffs’ Motion for

Certification of Interlocutory Appeal (the “Motion”) filed by Plaintiffs National Union Fire

Insurance Company of Pittsburgh, Pa., Allianz Global Risks US Insurance Company, ACE

American Insurance Company, Zurich American Insurance Company, Great Lakes Insurance

SE, XL Insurance America , Inc., General Security Indemnity Company of Arizona, Aspen

Insurance UK Limited, Navigators Management Company, Inc., Ironshore Specialty Insurance

Company, Validus Specialty Underwriting Services, Inc., and HDI-Gerling America Insurance

Company (collectively, the “Insurers”) on August 22, 2019; Defendants’ Opposition to

Plaintiffs’ Motion for Certification of Interlocutory Appeal (the “Response”) filed by Defendants

Axiall Corporation (“Axiall”) and Westlake Chemical Corporation (“Westlake” and collectively,

the “Insureds”) on September 3, 2019; the Court’s decision rendered at the August 1, 2019

hearing and Order dated August 12, 2019 (collectively, the “Opinion”); Supreme Court Rule 42

(“Rule 42”); and this civil action’s entire record:
                                               BACKGROUND

         1.       In 1943 a chemical manufacturing facility (the “Natrium Plant”), was constructed

in Marshall County, West Virginia, along the banks of the Ohio River.1 The Natrium Plant has

approximately 425 employees and manufactures a number of chemicals, including chlorine. 2

Before September 2016, Axiall owned the Natrium Plant.3 On or about September 1, 2016,

Westlake acquired Axiall and the Natrium Plant.4

         2.       Axiall is a corporation organized and existing under the laws of the State of

Delaware with its principal place of business in Texas.5 Westlake is a corporation organized and

existing under the laws of the State of Delaware with its principal place of business in Texas.6

         3.       The Insurers, as a subscribing quota share Market, issued 13 separate policies of

commercial property insurance to Axiall insuring its various properties, including the Natrium

Plant.7 The Insurers maintained policies (each, a “Policy,” and jointly, the “Insurance Policies”)

with the following companies: National Union Fire Insurance Company of Pittsburgh, Pa.;8

Allianz Global Risks US Insurance Company;9 ACE American Insurance Company;10 Zurich

American Insurance Company;11 Great Lakes Insurance SE;12 XL Insurance America, Inc.;13

1
  Compl. ¶ 26-27.
2
  Stay Motion at 6.
3
  Compl. ¶ 15.
4
  Id.
5
  “At the time the Policy was issued, as well as at the time of the involved chlorine release incident, Axiall’s
principal place of business was in Georgia. After Westlake’s purchase, the principal place of business was moved to
Texas.” Compl. n. 2.
6
  Compl. ¶ 15.
7
  Compl. ¶ 20.
8
  Pennsylvania business with its principal place of business in New York. Compl. ¶ 2.
9
  Illinois business with its principal place of business in Illinois. Compl. ¶ 3.
10
   Pennsylvania business with its principal place of business in Pennsylvania. Compl. ¶ 4.
11
   New York business with its principal place of business in Illinois. Compl. ¶ 5.
12
   A foreign business entity organized and existing under the laws of Germany with its principal place of business in
Munich. Compl. ¶ 6.
13
   Delaware business with its principal place of business in Connecticut. Compl. ¶ 7.

                                                          2
General Security Indemnity Company of Arizona;14 Aspen Insurance UK Limited;15 Navigators

Management Company, Inc.;16 Ironshore Specialty Insurance Company;17 Validus Specialty

Underwriting Services, Inc. (f/k/a Talbot Underwriting Services (US) Ltd.);18 and HDI-Gerling

America Insurance Company.19 Axiall and Westlake are the named Insured in all of these

policies.20 Axiall and Insurers contractually agreed in the Policy that “[a]ny dispute concerning

or related to this insurance will be determined in accordance with the laws of the State of

Georgia. Any disputes between the Assured and [Insurers] over the terms of this Policy shall be

subject to the United States of America jurisdiction.”21

         4.       On August 27, 2016, a fully-loaded tank car22 at the Natrium Plant experienced a

42-inch long crack in its tank shell.23 The crack resulted in the release of approximately 178,400

pounds (approximately 90 tons) of liquefied chlorine and a cloud of vaporized chlorine that

traveled downwind through the Natrium Plant (the “Loss”).24 The chlorine cloud damaged

14
   Arizona business with its principal place of business in New York. Compl. ¶ 8.
15
   A foreign business entity organized and existing under the laws of England and Wales with its principal place of
business in London. Compl. ¶ 9.
16
   An underwriting management company designated to underwrite policies on behalf of Certain Underwriters at
Lloyd’s, London. Navigators is considered to be the service company coverholder under the Certificate of Insurance
evidencing placement of insurance with Lloyd’s Syndicates 1221, 1897, and 4000 subscribing to Policy No.
15NMNY1422-01. Navigators is a domestic business entity organized and existing under the laws of the State of
New York with its principal place of business in Connecticut. Compl. ¶ 10.
17
   Arizona business with its principal place of business in Massachusetts. Compl. ¶ 11.
18
   A Managing General Agent designated to underwrite policies on behalf of Certain Underwriters at Lloyd’s,
London. Validus is considered to be the service company coverholder under the Certificate of Insurance evidencing
placement of insurance with Lloyd’s Syndicate 1183, subscribing to Policy No. AJC096910G15. Validus is a
domestic business entity organized and existing under the laws of the State of Delaware with its principal place of
business in New York. Compl. ¶ 12.
19
   Illinois business with its principal place of business in Illinois. Compl. ¶ 13.
20
   The policy applies automatically to “the interests of any parent, trust, corporation, owner, entity or individual in
the Named Assured which either has existed, exists now or may exist in the future.” Compl. Ex. A. at p. 1 of 65
(National Union Policy No. 020786808).
21
   Compl. Ex. A. at p. 31 of 65 (National Union Policy No. 020786808).
22
   Third-party contractors had previously taken the tank car, which cracked and caused the Loss, out of service for
corrosion repairs and other maintenance work in early-to-mid 2016. Compl. ¶ 30.
23
   Compl. ¶ 29.
24
   Compl. ¶¶ 29, 31; Stay Motion at 6.

                                                          3
mechanical and electrical equipment and machinery and other property at the Natrium Plant.25

In addition, neighboring property owners in West Virginia and across the river in Ohio have

asserted that the chlorine damaged their property.26 Following the Loss, the Natrium Plant shut

down for 30 days while the National Transportation Safety Board took control of the scene and

investigated the cause of the Loss.27 After the 30 days, the Natrium Plant re-opened and

currently remains in operation.28

        5.       On August 30, 2016, the Insureds notified the Insurers of the Loss.29 An

investigation ensued. On January 18, 2018, the Insurers, through their appointed adjuster, issued

a reservation of rights letter to the Insureds.30 The Insurers continued to investigate the claims

and ask for additional information. On April 8, 2019, in a letter to the Insureds, the Insurers

stated that they “deny coverage under the Policy for the claims presented” and informed the

Insureds that they “have initiated declaratory judgement proceedings in the Delaware Superior

Court.”31

        6.       On April 9, 2019, the Insurers filed the Complaint for Declaratory Judgement (the

“Complaint”) in the Court. On April 10, 2019, the Insureds filed a Complaint against the

Insurers in the Circuit Court of Marshall County, West Virginia (the “West Virginia Action”).32

        7.       On May 17, 2019, the Insureds filed the Opening Brief in Support of Defendants’

Motion to Dismiss or Stay for Forum Non Conveniens (the “Stay Motion”). On June 21, 2019,

the Insurers filed Plaintiffs’ Answering Brief in Opposition to Defendants’ Motion to Dismiss or

25
   Stay Motion at 6.
26
   Westlake has paid some of those claims, while others are in litigation pending in Marshall County, West Virginia.
Stay Motion at 6.
27
   Compl. ¶ 32.
28
   Id.
29
   Compl. ¶ 33.
30
   Compl. ¶ 36.
31
   Opposition to Stay Motion, Ex. I.
32
   See Stay Motion Ex. C.

                                                         4
Stay for Forum Non Conveniens. Finally, on July 12, 2019, the Insureds filed a Reply Brief in

Support of Defendants’ Motion to Dismiss or Stay for Forum Non Conveniens. The Court held a

hearing on the Stay Motion on August 1, 2019 (the “Hearing”).

         8.        At the conclusion of the Hearing, the Court took a recess and then came back and

rendered, on the record, its decision on the Stay Motion.33 The Court entered an Order on

August 12, 2019. The August 12, 2019 Order incorporates the Court’s August 1, 2019 ruling.

                                        PARTIES CONTENTIONS

         9.        As set forth in the Opinion, the Court applied the Delaware forum non conveniens

test and found that the facts supported a stay of this civil action in favor of the West Virginia

Action.34 The Insurers seek interlocutory appeal on two issues: (i) the Opinion determines a

substantial issue of material importance; and (ii) the Court’s Opinion grants the stay without “the

requisite showing of overwhelming hardship” in conflict with prior decisions in BP Oil Supply

Co. v. ConocoPhillips Co.35 and In re Citigroup Shareholder Derivative Litig.36 The Insurers,

essentially, assert that the Motion meets the criteria set forth only in Rule 42(b)(i) and

42(b)(iii)(B).37

         10.       The Insureds opposed interlocutory appeal of the Opinion. In the Response, the

Insureds argue that the Opinion does not decide issues of first impression or is in conflict with

the decisions of other Delaware trial courts.

33
   A copy of the Court’s August 1, 2019 ruling is attached to the Motion as Exhibit B.
34
   Motion, Ex. B at 74-95.
35
   2010 WL 702382, at *2-3 (Del. Super. Feb. 25, 2010).
36
   964 A.2d 106, 116-19 (Del. Ch. 2009).
37
   Id.

                                                          5
                                          APPLICABLE STANDARD

         11.       Rule 42(b) dictates the standard for certifying an interlocutory appeal. “No

interlocutory appeal will be certified by the trial court or accepted by this Court unless the order

of the trial court decides a substantial issue of material importance that merits appellate review

before a final judgment.”38 In deciding whether to certify an interlocutory appeal, the trial court

must consider: (1) the eight factors listed in Rule 42(b)(iii);39 (2) the most efficient and just

schedule to resolve the case; and (3) whether and why the likely benefits of interlocutory review

outweigh the probable costs, such that interlocutory review is in the interests of justice.40 “If the

balance [of these considerations] is uncertain, the trial court should refuse to certify the

interlocutory appeal.”41

                                                     DISCUSSON

         12.       The Court agrees with the arguments made in the Response. Moreover, the Court

does not agree with the Insurers’ characterization of the holding in the Opinion.

         13.       Initially, the Court must determine whether the Opinion “decides a substantial

issue of material importance that merits appellate review before a final judgment.”42 The

38
   Del. Supr. Ct. R. 42(b)(i).
39
   Delaware Supreme Court Rule 42(b)(iii) provides that the trial court should consider whether;
          (A) The interlocutory order involves a question of law resolved for the first time in this State;
          (B) The decisions of the trial courts are conflicting upon the question of law;
          (C) The question of law relates to the constitutionality, construction, or application of a statute of this State,
          which has not been, but should be, settled by this Court in advance of an appeal from a final order;
          (D) The interlocutory order has sustained the controverted jurisdiction of the trial court;
          (E) The interlocutory order has reversed or set aside a prior decision of the trial court, a jury, or an
          administrative agency from which an appeal was taken to the trial court which had decided a significant
          issue and a review of the interlocutory order may terminate the litigation, substantially reduce further
          litigation, or otherwise serve considerations of justice;
          (F) The interlocutory order has vacated or opened a judgment of the trial court;
          (G) Review of the interlocutory order may terminate the litigation; or
          (H) Review of the interlocutory order may serve considerations of justice. See Del. Supr. Ct. R. 42(b)(iii).
40
   Id.
41
   Id.
42
   Id. 42(b)(i).

                                                             6
“substantial issue of material importance” prong of Rule 42 requires that the matter decided goes

to the merits of the case.43 As set forth in the Motion, the Supreme Court has previously engaged

in interlocutory review of a trial court’s ruling on forum disputes.44 In the absence of

“exceptional circumstances,” however, the Supreme Court has refused to accept interlocutory

appeals from decisions on such motions to stay.45

         14.      The Insurers have not identified any exceptional circumstances present in this

case. The Insurers argue that a stay is “tantamount to dismissal” because the West Virginia

Action will be asked to decide the same issues raised in this civil action. However, the Insurers

have not obtained a stay in the West Virginia Action. Accordingly, the West Virginia Action is

proceeding in the ordinary course and, if the West Virginia court determined any issue before

this Court, then preclusion could apply. But, that is true in any situation where two identical

actions are pending in different courts. If the Court had not stayed or dismissed this civil action,

then the parties would be “racing” issues for determination in either West Virginia or Delaware.

The Court does not see how this presents exceptional circumstances. It is not as if the West

Virginia court would be applying Delaware law or some other highly unusual situation. Instead,

the two cases involve the same Policy and that Policy is governed by Georgia law and will

43
   Id.
44
   See, e.g., McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng’g Co., 263 A.2d 281 (Del. 1970); General
Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681 (Del. 1964).
45
    See, e.g., Sprint Nextel Corp. v. iPCS, Inc., 2008 WL 2861717, at *2 (Del. Ch. July 22, 2008)(denying
interlocutory appeal on decision relating to forum non conveniens where party failed to demonstrate “exceptional
circumstances”); see also Derdiger v. Tallman, 2000 WL 1589929, at *1 (Del. Aug. 29, 2000) (TABLE) (refusing
appeal of Court of Chancery decision staying a Delaware action under the first-filed doctrine in favor of an earlier
action in California); Fleming & Hall, Ltd. v. Clarendon Nat’l Ins. Co., 1998 WL 985342, at *1 (Del. Nov. 16,
1998) (TABLE) (refusing appeal of Superior Court decision granting motion to stay pending outcome of a related
arbitration proceeding in New York); Berman Real Estate Dev., Inc. v. Berdel, Inc., 1995 WL 788597, at *1 (Del.
Dec. 6, 1995) (TABLE) (refusing appeal of Court of Chancery decision denying motion to stay a Delaware action
pending the outcome of another action in Pennsylvania on forum non conveniens grounds); Transamerica Corp. v.
Reliance Ins. Co. of Ill., 1995 WL 6224452, at *1 (Del. Oct. 5, 1995) (TABLE) (refusing appeal of Superior Court
decision staying a Delaware proceeding in favor of a first-filed California action).

                                                          7
involve facts that all occurred outside of Delaware. Nothing here is exceptional. Accordingly,

the Court finds that the Insurers have not satisfied Rule 42(b)(i).

         15.      Even if Rule 42(b)(i) were satisfied, the Court is not convinced that the Insurers

can satisfy any factors listed in Rule 42(b)(iii), including Rule 42(b)(iii)(B). The Court does not

find that the issues decided in the Opinion present a situation where the Delaware trial courts

have issued conflicting decisions on the same issue of law. The forum non conveniens law in

Delaware is quite settled. What the Insurers are really contending is the Court just got it wrong

in applying the forum non conveniens standard to this case.

         16.      “When actions are contemporaneously filed, the standard of proof for a dismissal

is ‘overwhelming hardship,’ and on a motion to stay, the standard is a ‘balancing test’ of the

Cryo–Maid factors.”46 However, “where a stay will likely have substantially the same effect as a

dismissal, the defendant must show that one or more of the factors, either separately or together,

would subject the defendant to sufficient hardship to warrant staying the proceedings.”47 The

Delaware Supreme Court has noted that while the Cryo-Maid factors are applied under the

“overwhelming hardship” standard, this “standard is not intended to be preclusive.”48

         17.      The Court determined that, based on its analysis of the forum non conveniens

factors set forth in Cryo-Maid, the Insureds did not show they would be subjected to

“overwhelming hardship” by litigating this case in Delaware such as to warrant dismissal. But,

the Court also determined that ALL of the Cryo-Maid factors were either neutral or tilt in favor of

West Virginia. Given the similarities to the decision in National Union Fire Insurance Co. of

46
   See Royal Indem. Co. v. Gen. Motors Corp., 2005 WL 1952933, at *6 (Del. Super. July 26, 2005).
47
   In re Citigroup Inc. S'holder Derivative Litig., 964 A.2d 111, 117 (Del. Ch. 2009); see BP Oil Supply Co. v.
ConocoPhillips Co., 2010 WL 702382, at *2.
48
   Martinez v. E.I. DuPont de Nemours & Co., 86 A.3d 1102, 1105 (Del. 2014).

                                                          8
Pittsburgh, PA., et. al. v. Crosstex Energy Services, L.P.49 and the fact that the forum non

conveniens factors favor the West Virginia Action, the Court found that the Insureds would be

subjected to sufficient a hardship that a stay of this case was warranted.

           18.     Other important factors weigh against certification. For example, the promotion

of judicial efficiencies. The Court does not find that an interlocutory appeal will terminate the

litigation. Whatever the result of the interlocutory appeal, the West Virginia Action will proceed

and that means two parallel actions will go forward with duplicate filings and potential

inconsistent rulings or verdicts with predictable arguments regarding the potential preclusive

effects of those decisions. The Court, therefore, does not believe certification would promote the

most efficient and just method to resolve this case.

           19.     Accordingly, the likely benefits of interlocutory review do not outweigh the

probably costs, such that interlocutory review is in the interests of justice. The Court finds,

therefore, that Insurers have not met Rule 42’s strict standards for certification.

                                               CONCLUSION

           IT IS HEREBY ORDERED that certification to the Supreme Court of the State of

Delaware for disposition in accordance with Supreme Court Rule 42 is DENIED.

Dated: September 11, 2019
Wilmington, Delaware

                                                                /s/ Eric M. Davis
                                                                Eric M. Davis, Judge

cc:        File&ServeXpress

49
     2013 WL 6598736, *1 (Del. Super. Dec. 13, 2013).

                                                        9