Court Opinion

ID: 4575817
Source: CourtListenerOpinion
Date Created: 2020-10-12 12:02:24.458838+00
Date Added: 2024-06-11T13:32:02.094529
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF DELAWARE

  BEAZLEY INSURANCE                         §
  COMPANY, INC.,                            § No. 313, 2020
                                            §
        Defendant Below,                    § Court Below: Superior Court
        Appellant,                          § of the State of Delaware
                                            §
        v.                                  § C.A. No. N19C-05-275 MMJ
                                            § [CCLD]
  FERRELLGAS PARTNERS L.P.,                 §
  FERRELLGAS, L.P., BRIDGER                 §
  LOGISTICS, LLC, BRIDGER                   §
  ADMINISTRATIVE SERVICES II,               §
  LLC, BRIDGER LAKE, LLC,                   §
  BRIDGER LEASING, LLC,                     §
  BRIDGER MARINE, LLC,                      §
  BRIDGER RAIL SHIPPING, LLC,               §
  BRIDGER REAL PROPERTY, LLC,               §
  BRIDGER STORAGE, LLC,                     §
  BRIDGER TERMINALS, LLC,                   §
  BRIDGER TRANSPORTATION,                   §
  LLC, BRIDGER SWAN RANCH,                  §
  LLC, BRIDGER ENERGY, LLC, J.J.            §
  ADDISON PARTNERS, LLC, J.J.               §
  LIBERTY, LLC.                             §

        Plaintiffs Below, Appellees.

                           Submitted: September 18, 2020
                           Decided: October 9, 2020

Before SEITZ, Chief Justice; VALIHURA and VAUGHN, Justices.

                                    ORDER

      After consideration of the notice and supplemental notice of appeal from an

interlocutory order and the documents attached thereto, it appears to the Court that:
       (1)     The appellant, Beazley Insurance Company, Inc. (“Beazley”), has

petitioned this Court, pursuant to Supreme Court Rule 42, to accept an appeal from

the Superior Court’s opinion dated August 20, 2020, which granted the motion of

the appellees (collectively, “FG”) for an order requiring Beazley to pay past and

ongoing defense costs incurred in the defense of two of their former officers and

directors (“Rios and Gamboa”) in litigation that is pending in the United States

District Court for the Eastern District of Pennsylvania (the “Eddystone Litigation”).

       (2)     On May 29, 2019, FG filed a complaint alleging that Beazley and

another insurer1 breached certain director and officer liability insurance policies by

denying coverage for claims asserted in the Eddystone Litigation. The complaint

sought damages and declaratory relief against Beazley.

       (3)     On July 11, 2019, FG filed a motion for partial summary judgment

seeking a declaration that Beazley was required to advance defense costs incurred in

the defense of Rios and Gamboa in the Eddystone Litigation. On September 18,

2019, Beazley cross-moved for summary judgment, arguing that the claims for

which FG sought reimbursement were excluded from coverage. On January 21,

2020, the Superior Court denied Beazley’s motion for summary judgment and

granted FG’s motion for summary judgment with respect to its claim for

1
  The other insurer is not a party to this interlocutory appeal, and this order therefore does not
further address its role or posture in the litigation.
                                                2
advancement and reimbursement.2                Beazley applied for certification of an

interlocutory appeal from the January 21, 2020 order, which the Superior Court

denied. Beazley did not file a notice of interlocutory appeal from the January 21,

2020 order.

       (4)     On June 26, 2020, FG moved for entry of an order requiring Beazley to

pay past and ongoing defense costs incurred in the defense of Rios and Gamboa in

the Eddystone Litigation. FG asserted that, after the Superior Court’s January 21,

2020 order, FG had submitted invoices for reimbursement, but Beazley had refused

to make any payment. Beazley argued that the Superior Court’s January 21, 2020

order did not constitute a money judgment in FG’s favor and that Beazley would not

make any payments unless and until the court issued a final and nonappealable order

requiring it to do so. On August 20, 2020, the Superior Court issued an opinion

granting FG’s motion, awarding FG its attorneys’ fees for the preparation and

prosecution of the motion, and establishing a Fitracks-style3 protocol for the

submission of invoices and the resolution of disputes with respect to the invoices.4

       (5)     Beazley asked the Superior Court to certify an interlocutory appeal. It

argued that the August 20 order determined a substantial issue of material

2
  Ferrellgas Partners L.P. v. Zurich Am. Ins. Co., 2020 WL 363677 (Del. Super. Ct. Jan. 21, 2020).
3
  See Danenberg v. Fitracks, Inc., 58 A.3d 991, 1003-04 (Del. Ch. 2012) (establishing process for
making and resolving periodic advancement demands).
4
  Ferrellgas Partners L.P. v. Zurich Am. Ins. Co., 2020 WL 4908048 (Del. Super. Ct. Aug. 20,
2020).
                                                3
importance5 “because it compels Beazley to pay millions of dollars in legal and

defense costs to Plaintiffs without a final judgment and without a further order of the

Court” and because it “directed the payment of fees-on-fees, notwithstanding that

there is no applicable statute authorizing a prevailing party to receive fees.” Beazley

argued that the August 20 order decided for the first time in Delaware6 that a court

may award fees-on-fees in connection with advancement of defense costs under an

insurance policy. It contended that the order decided that 10 Del. C. § 6508

permitted the court to direct the advancement of defense costs absent a final

judgment, a question of law not previously addressed by this Court.7 It also argued

that interlocutory review would serve considerations of justice.8 Beazley argued that

the benefits of interlocutory review would outweigh the costs9 because no scheduling

order has been issued in the Superior Court and the underlying litigation for which

FG seeks reimbursement from Beazley is ongoing.

       (6)    The Superior Court denied the application for certification.10 The court

determined that the August 20 order did not decide a substantial issue of material

importance because it reiterated two prior rulings of the court that found that FG was

5
  DEL. SUPR. CT. R. 42(b)(i).
6
Id. R. 42(b)(iii)(A).
7
 Id. R. 42(b)(iii)(C).
8
Id. R. 42(b)(iii)(H).
9
 Id. R. 42(b).
10
   Ferrellgas Partners L.P. v. Zurich Am. Ins. Co., 2020 WL 5579335 (Del. Super. Ct. Sept. 17,
2020).
                                              4
entitled to advancement under the Beazley policy, “directed the parties to follow a

long-established Fitracks-style protocol in connection with that advancement,” and

“awarded fees-on-fees consistent with Delaware law and public policy in the context

of advancement (and other areas).” The court also concluded that the matter did not

satisfy the criteria of Rule 42(b)(iii) because the August 20 order did not involve a

question of law resolved for the first time in Delaware; the order “did not turn on

operation of the Declaratory Judgment Act” but enforced the court’s prior rulings

“by insisting upon compliance, establishing a going-forward protocol, and making

Plaintiffs whole with an award of fees-on-fees;” and would not serve considerations

of justice but instead disrupt the normal process of litigation, waste party and judicial

resources, and deprive FG (and possibly Rios and Gamboa) of the advancement to

which the court had determined it was entitled under the insurance policy. The court

also determined that the likely benefits of interlocutory review did not outweigh the

probable costs.

          (7)    We agree that interlocutory review is not warranted in this case.

Applications for interlocutory review are addressed to the sound discretion of this

Court.11 In the exercise of its discretion and giving great weight to the trial court’s

view, this Court has concluded that the application for interlocutory review does not

meet the strict standards for certification under Supreme Court Rule 42(b).

11
     DEL. SUPR. CT. R. 42(d)(v).
                                           5
Exceptional circumstances that would merit interlocutory review of the Superior

Court’s decision do not exist in this case,12 and the potential benefits of interlocutory

review do not outweigh the inefficiency, disruption, and probable costs caused by

an interlocutory appeal.13 The Superior Court decided that Beazley was obligated to

advance costs in its January 21 order, from which Beazley did not seek an

interlocutory appeal. Beazley refused to make advancement payments, forced

additional litigation, and now seeks to further delay advancement that the Superior

Court has determined it is obligated to provide. Its approach risks denying FG the

benefits of the advancement to which the Superior Court has determined FG is

entitled and does not serve considerations of justice. Moreover, any error in the

Superior Court’s determination that FG is entitled to coverage or to fees-on-fees may

be remedied in an appeal from a final order.

          NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is

REFUSED.

                                         BY THE COURT:

                                         /s/ Karen L. Valihura
                                         Justice

12
Id. R. 42(b)(ii).
13
Id. R. 42(b)(iii).
                                           6