Court Opinion

ID: 9382965
Source: CourtListenerOpinion
Date Created: 2023-03-29 14:14:10.42787+00
Date Added: 2024-06-11T17:17:42.684681
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

 ZURICH AMERICAN INSURANCE                   )
 COMPANY, AMERICAN                           )
 GUARANTEE and LIABILITY                     )
 INSURANCE COMPANY                           )
                                             )
        Plaintiffs,                          )
                                             ) C.A. No. N19C-05-108 MMJ CCLD
        v.                                   )
                                             )
 SYNGENTA CROP PROTECTION                    )
 LLC,                                        )
                                             )
        Defendant.                           )

                           Submitted: January 27, 2023
                            Decided: March 28, 2023

                            POST-TRIAL OPINION

John D. Balaguer, Esq., Timothy S. Martin, Esq., White and Williams LLP,
Wilmington, DE, Michael M. Marick, Esq. (pro hac vice), Karen M. Dixon, Esq.
(pro hac vice), Skarzynski Marick & Black LLP, Chicago, IL, Alexis J. Rogoski,
Esq. (pro hac vice), Andrew Gerow, Esq. (pro hac vice), Skarzynski Marick &
Black LLP, New York, NY, Attorneys for Plaintiffs

Stephen E. Jenkins, Esq., Catherine A. Gaul, Esq., Ashby & Geddes P.A.,
Wilmington, DE, Dorothea W. Regal, Esq. (pro hac vice), Joshua L. Blosveren,
Esq. (pro hac vice), John P. Curley, Esq. (pro hac vice), Miriam J. Manber, Esq.,
(pro hac vice), Wendy Tsang, Esq. (pro hac vice), Hoguet Newman Regal &
Kenney, LLP, New York, NY, Attorneys for Defendant

JOHNSTON, J.
                                PROCEDURAL POSTURE
         This is an insurance coverage action between Plaintiffs Zurich American

Insurance Company, American Guarantee and Liability Insurance Company

(collectively, “Plaintiff Insurers”), and Syngenta Crop Protection, LLC.

Syngenta’s Swiss parent company is Syngenta Crop Protections AG (“SCPAG”).

Syngenta Crop Protection, LLC and SCPAG will be referred to collectively as

“Syngenta.” Zurich Insurance Company, Ltd. (“ZIC”) is Plaintiff Insurers’ Swiss

affiliate. ZIC is the entity that was involved in the insurance underwriting for the

policies at issue in this case.

         The underlying litigation for which Syngenta sought insurance coverage

concerns multiple actions alleging bodily injuries, sickness, or disease resulting

from exposure to Paraquat (the “Paraquat Actions”).

         Plaintiff Insurers requested: (1) declaratory judgment that there is no

insurance coverage for the underlying Paraquat-related claims (Count I); (2)

declaratory judgment that the alleged misrepresentations, omissions, concealment

of facts, and incorrect statements in Syngenta’s insurance applications prevent

recovery for the Paraquat-related claims (Count II); (3) recoupment of the defense

costs advanced by Plaintiff Insurers for the Paraquat-related claims (Count III); and

(4) restitution (Count IV).1

1
    See generally, Am. Compl.
                                            2
       Syngenta filed counterclaims seeking: (1) damages for breach of contract

(Counterclaim I); (2) declaratory relief regarding the duty to defend (Counterclaim

II); (3) declaratory relief regarding the duty to indemnify (Counterclaim III); and

(4) damages associated with an alleged breach of the implied obligations of good

faith and fair dealing (Counterclaim IV).2

       After Summary Judgment, Counts II, III, and IV of Plaintiff Insurers’

Amended Complaint remain. Count II requests declaratory judgment that the

alleged misrepresentations, omissions, concealment of facts, and incorrect

statements in Syngenta’s insurance applications prevent recovery for the Paraquat-

related claims.3 Counts III and IV seek reimbursement for all defense costs paid to

Syngenta under the Zurich Policies for the Paraquat Actions.

       This Court held a bench trial on October 3, 4, 5, 6, 7, and 18, 2022. Post-

trial briefs were filed. Under 18 Del. C. § 2711, Plaintiff Insurers “must show a

false representation by the insured, the materiality of that representation to the

insured risk, and . . . reliance on the representation made.”4

2
  See generally, Am. Counterclaims.
3
  Zurich Am. Ins. Co. v. Syngenta Crop Prot. LLC, 2022 WL 4091260, at *8–9 (Del. Super.).
4
  Old Republic Ins. Co. v. Rexene Corp., 1990 WL 176791, at *6 (Del. Ch.).
                                              3
             FINDINGS OF FACT AND CONCLUSIONS OF LAW

                                   The Tillery Letter

      On January 18, 2016, Stephen Tillery (“Tillery”) sent a letter to Syngenta

(the “Tillery Letter”) alleging his firm had “been retained by numerous victims of

Parkinson’s disease.” The Tillery Letter alleged a connection between Paraquat—

an herbicide manufactured and sold by Syngenta—and Parkinson’s disease. The

Tillery Letter mentioned various studies allegedly supporting such a connection.

Syngenta was familiar with all studies that were cited.5 The Tillery Letter

suggested pursuing a few “bellwether” cases instead of incurring the expense of

pursuing cases in numerous jurisdictions. The Tillery Letter also stated that Tillery

believed his clients and Syngenta could execute a tolling agreement while waiting

for a few “bellwether cases” to be litigated.

      By Opinion dated August 3, 2020, this Court held that the Tillery Letter did

not constitute a “Claim for Damages.”6

             The Court finds that the January 18, 2016 Tillery Letter
             constituted a threat of future litigation. The Tillery Letter's
             mere reference to personal injury is insufficient to
             constitute a claim. Taken as a whole, the Tillery Letter is
             reasonably interpreted at most as requesting damages, and
             proposing a future method by which to resolve any future
             claims. The Tillery Letter's lack of specificity regarding

5
 Oct. 3 Tr. [Breutel] 107:14–108:6.
6
 Zurich American Ins. Co. v. Syngenta Crop Protection, LLC, 2020 WL 5237318, at *9–11
(Del. Super.); see also Zurich Am. Ins. Co., 2022 WL 4091260, at *2.
                                            4
                 potential claimants or plaintiffs prevents this Court from
                 finding that the Tillery Letter is a “Claim for Damages.”7

                                      Kirkland Fees

          After receiving the Tillery Letter, Syngenta engaged Kirkland & Ellis LLP

(“Kirkland”) to investigate the substance of the Tillery Letter and to follow up with

Tillery. On February 10, 2016, Kirkland met with Tillery. The purpose of the

meeting was: (1) to respond to Tillery’s request for a conversation regarding the

contents of the proposal from the Tillery Letter; and (2) to get more information

from Tillery about his clients or other matters that could be useful for evaluation.

          In the meeting, Tillery did not disclose specific information concerning the

identity of his clients, nor did he provide the information Kirkland requested to

substantiate his claims. After the meeting, Kirkland continued: to conduct an

analysis of the scientific literature related to the allegation that Paraquat might be

connected to Parkinson’s disease; and to provide a litigation risk assessment.

Kirkland billed Syngenta approximately $2 million for its work regarding Tillery

and the related Paraquat research (the “Kirkland Fees”).

          After the meeting, Tillery did not provide to Kirkland any of the requested

information to substantiate his claims. The last communication between Tillery

and Kirkland before the filing of the Hoffmann Action—the first of the Paraquat

7
    Id. at *9.
                                             5
Actions—was on April 25, 2016. The April 25, 2016 communication was an email

where a litigation partner from Kirkland continued to ask for medical records for

the six unidentified “bellwether plaintiffs.” This email also asked for copies of

documents allegedly confirming Syngenta knew of a potential connection between

Paraquat and Parkinson’s Disease. Tillery filed the Hoffmann Action more than a

year later, in October 2017.

                      Renewal Application for 2017 Coverage

      The case centers around Syngenta’s responses to Questions 19, 20, and 21 of

the 2016 renewal application for 2017 to 2018 insurance coverage (the “Renewal

Application”).

      Question 19 asked Syngenta to “[a]ttach a summary of ground up aggregate

losses, insured and uninsured, including all defense costs for the past 5 years . . . .”

      Question 20 asked whether there were “any individual occurrences or claims

during the past 10 years . . . which have cost or are reasonably expected to cost

(including both indemnity and defense costs) more than $2 million . . . .”

      Question 21 asked whether there were “any integrated or batch occurrences

or claims, whether or not reported to an insurance carrier as an integrated or batch

occurrence, during the past 10 years . . . which have cost or are reasonably

expected to cost more than $2 million . . . .”

                                           6
       Beginning with the 2017 to 2018 year (the “2017 Policies”), the policies

changed from occurrence-reported policies to claims-made policies.8 The Renewal

Application—a Bermuda Form Application—did not contain definitions for

“defense costs,” “claim,” or “occurrence.” Syngenta did not provide information

about the Kirkland Fees related to Tillery, or the Tillery Letter, in response to

Questions 19, 20, or 21.

                                Bermuda Form Application

         Plaintiff Insurers argue the Bermuda Form Application shares a symbiotic

relationship with a Bermuda Form Policy. Plaintiff Insurers argue the 2016–17

Liability Master Policy (the “2016 ZIC Excess Policy”) is a Bermuda Form Policy.

Thus, Plaintiff Insurers argue the 2016 ZIC Excess Policy definitions should apply

when interpreting the Renewal Application.

       Syngenta argues Syngenta’s responses to Questions 19, 20, and 21 were

accurate and consistent with the course of dealing of the parties. Syngenta also

argues any ambiguities should be interpreted in its favor.

       The Court finds the 2016 ZIC Excess Policy definitions are inapplicable to

the Renewal Application. The Bermuda Form Application contains no definitions

and makes no reference to any other document containing definitions.

8
  An occurrence-reported policy’s coverage is triggered when notice of an incident is given to the
insurer, whereas a claims-made policy’s coverage is triggered when a claim is made against the
insured.
                                                7
Additionally, the 2017 Policies being applied for were not Bermuda Form Policies

because they were claims-made policies.9 While the previous year’s 2016 ZIC

Excess Policy was an occurrence-reported policy—like a Bermuda Form Policy—

the 2016 ZIC Excess Policy contained various differences when compared to a

traditional Bermuda Form Policy. Principal of these differences was that the 2016

ZIC Excess Policy’s applicable law was Swiss law, rather than the standard

Bermuda Form Policy’s amended version applying New York law or English

law.10 Therefore, the 2016 ZIC Excess Policy definitions are not incorporated into

the Renewal Application.

                                   Contract Interpretation

       The definitions of the terms in the Renewal Application are subject to

insurance contract interpretation principles.11 In Ferrellgas Partners L.P. v. Zurich

American Insurance Company,12 this Court outlined the principles of insurance

contract interpretation:

               Interpretation of contracts is a question of law. The Court
               must give effect to the parties’ mutual intent at the time of
               contracting. The Court should interpret contract language
               as it “would be understood by any objective, reasonable
               third party.” Absent ambiguity, contract terms should be

9
  Oct. 10 Tr. [Scorey] 85:2–23 (stating that a claims-made policy is not a Bermuda Form Policy).
10
   Oct. 10 Tr. [Scorey] 76:15–78:6.
11
   See Novellino v. Life Ins. Co. of N. Am., 216 A.2d 420, 422 (Del. 1966) (noting that an offer is
contained in an application for insurance); Mut. of Omaha Ins. Co. v. Driskell, 293 So. 3d 261,
264 (Miss. 2020) (“[A]n application for insurance is not a contract but rather an offer to
contract.”).
12
   2020 WL 363677 (Del. Super.), appeal denied, 2020 WL 764155 (Del. Super.).
                                                8
              accorded their plain, ordinary meaning. Ambiguity exists
              when the disputed term “is fairly or reasonably susceptible
              to more than one meaning.”

              Insurance policies are also adhesion contracts, not
              generally the result of arms-length negotiation. Thus, the
              rules of construction “differ from those applied to most
              other contracts.” Where policy language is ambiguous,
              the doctrine of contra proferentem requires the Court to
              interpret the policy in favor of the insured because the
              insurer drafted the policy. The Court, pursuant to this
              doctrine, looks to “the reasonable expectations of the
              insured at the time when he entered the contract[.]” The
              Court will only apply this doctrine where the policy is
              ambiguous. When the policy language is “clear and
              unambiguous[,] a Delaware court will not destroy or twist
              the words under the guise of construing them” and each
              party “will be bound by its plain meaning.”13

       If contract language is ambiguous, then the Court may consider extrinsic

evidence.14 The most persuasive form of extrinsic evidence is the course of

dealing between the parties.15

       The Court finds the doctrine of contra preferentem is inapplicable in the

instant case because the Plaintiff Insurers did not draft the Renewal Application.

13
   Id. at *4 (internal citations omitted).
14
   GMG Cap. Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 783 (Del. 2012)
(“[W]here reasonable minds could differ as to the contract’s meaning, a factual dispute results
and the fact-finder must consider admissible extrinsic evidence.”).
15
   In re Mobilactive Media, LLC, 2013 WL 297950, at *16 (Del. Ch.) (“[C]ourts should consider
the parties’ course of performance as the ‘most persuasive evidence of the [meaning of the]
parties’ agreement.’” (quoting Pers. Decisions, Inc. v. Bus. Plan. Sys., Inc., 2008 WL 1932404,
at *5 (Del. Ch.), aff’d, 970 A.2d 256 (Del. 2009))); see also Restatement of Contracts (Second) §
202 cmt. g (2008).

                                               9
Rather, the parties used a Bermuda Form Application, which is a broker-driven

application form. Thus, neither party is entitled to benefit, as a matter of law, from

any ambiguity in the Renewal Application. Where terms are ambiguous, the Court

will analyze any applicable extrinsic evidence.

                                        Question 19

       Question 19 on the Renewal Application states: “Attach a summary of

ground up aggregate losses, insured and uninsured, including all defense costs for

the past 5 years . . . .”

       Without a definition of “defense costs” in the application, the Court finds the

term “defense costs” is ambiguous. The core dispute is whether research costs are

defense costs. Without a definition to consult, the Court finds the definition of

“defense costs” is ambiguous in the context of Question 19 of the Renewal

Application.

       The Court finds the course of dealing between ZIC and Syngenta is the most

pertinent evidence controlling whether Syngenta was required to submit the

Kirkland Fees in response to Question 19.16 Since at least 2009, Syngenta has

responded to Question 19 in annual renewal applications by submitting a loss run,

16
   In re Mobilactive Media, LLC, 2013 WL 297950, at *16 (Del. Ch.) (“[C]ourts should consider
the parties’ course of performance as the ‘most persuasive evidence of the [meaning of the]
parties’ agreement.’” (quoting Pers. Decisions, Inc. v. Bus. Plan. Sys., Inc., 2008 WL 1932404,
at *5 (Del. Ch.), aff’d, 970 A.2d 256 (Del. 2009))); see also Restatement of Contracts (Second)
§ 202 cmt. g (2008).
                                              10
and stating: “Please refer to claims information.”17 The attached loss run only

included data on claims and occurrences of which Syngenta’s insurers had been

formally notified.18 Each cost on the loss run was associated with a specific

notified claim or occurrence. Any costs incurred that were not associated with a

notified matter were not on the loss run.19 ZIC’s underwriter was aware of and

understood that Syngenta’s loss run only contained notified claims and

occurrences.20 Therefore, Syngenta’s response to Question 19 made it clear that

Syngenta was only submitting notified matters.

       The Court finds the course of dealing since 2009 between the parties

demonstrates that it was acceptable for Syngenta to submit a loss run in response to

Question 19. Because the parties’ course of dealing established a pattern whereby

it was acceptable for Syngenta to submit a loss run only detailing costs associated

with a notified claim or occurrence, it was not a false representation for Syngenta

to do the same in the Renewal Application. Therefore, the fact that Syngenta did

not disclose the Kirkland Fees in its Renewal Application was neither an omission

nor misrepresentation for purposes of 18 Del. C. § 2711.

17
   Oct. 3 Tr. [Breutel] 129:10–19, 135:3–136:12; Oct. 6 Tr. [Terp] 20:9–18.
18
   See Oct. 6 Tr. [Terp] 14:20–15:20 (explaining the contents of the columns in the loss run);
TX032; TX162; TX188.
19
   See Oct. 6 Tr. [Terp] 18:17–19:7 (“The system will only capture information once there is a
notified insurance claim.”); Oct. 4 Tr. [Oram] 198:8–199:8 (confirming the loss run only
included matters that had been notified to Syngenta insurers).
20
   Oct. 4 Tr. [Oram] 198:2–199:8.
                                               11
      Plaintiff Insurers have admitted that “submitting loss runs is a standard and

potentially acceptable means of responding” to Question 19.21 The parties

submitted evidence regarding insurance industry customs and practices on this

issue. Having ruled on the basis of the parties’ course of dealing, the Court need

not address industry customs and practices.

                                 Questions 20 and 21

      Question 20 asked whether there were “any individual occurrences or claims

during the past 10 years . . . which have cost or are reasonably expected to cost

(including both indemnity and defense costs) more than $2 million . . . .” Question

21 asked whether there were “any integrated or batch occurrences or claims,

whether or not reported to an insurance carrier as an integrated or batch

occurrence, during the past 10 years . . . which have cost or are reasonably

expected to cost more than $2 million . . . .”

      The question is whether the Tillery Letter constitutes an occurrence,

integrated occurrence, or claim for purposes of Questions 20 and 21. The Court

previously has held that the Tillery Letter did not constitute a “Claim for

Damages.”22 Therefore, the only remaining issue is whether the Tillery Letter

constitutes an “occurrence” or “integrated occurrence” that Syngenta was required

21
  Plaintiff Insurers’ Reply Br. at 5–6.
22
  Zurich American Ins. Co. v. Syngenta Crop Protection, LLC, 2020 WL 5237318, at *9–11
(Del. Super.); see also Zurich Am. Ins. Co., 2022 WL 4091260, at *2.
                                           12
to provide in response to Questions 20 and 21. An “integrated occurrence” is a

subset of “occurrence.” In other words, to have an “integrated occurrence,” one

must first have an “occurrence.” Therefore, the Court will focus on the definition

of “occurrence,” and only address “integrated occurrence” if necessary.

          Two expert witnesses opined as to two different definitions of “occurrence”

that could be applicable. One expert claimed “occurrence” meant “an allegation of

fact that somebody in the real world has been injured . . . .”23 The other expert

narrowed the definition, claiming an “occurrence” meant there had to be an

individual claimant who was identifiable.24

          The course of dealing between Syngenta and ZIC demonstrates that

Questions 20 and 21 were satisfied by Syngenta’s identification of the subsets of

the notified claims and occurrences on the loss run. Syngenta did not include the

Tillery Letter in the response to Questions 20 and 21 because it was not in the loss

run as a notified claim or occurrence. The Tillery Letter and subsequent meetings

with Tillery did not yield specifics regarding alleged claimants until more than one

year after uploading its Renewal Application—when the Hoffmann Action was

filed.

23
     Oct. 10 Tr. [Scorey] 50:4–23.
24
     Oct. 7 Tr. [Baker] 44:19–45:1.
                                           13
       The Tillery Letter and subsequent information from Tillery provided only

generalized and speculative information about the dollar value of potential future

litigation. Any cost estimates were of necessity amorphous and uncertain.

       Nevertheless, Tillery previously had litigated against Syngenta in the

Atrazine Community Water Actions and the Atrazine Doe Action.25 The Atrazine

Community Water Actions led to a $105 million settlement and $80 million in

defense costs.26 In 2016, the Atrazine Doe Action was still pending.27 By May

2015, the Atrazine Doe Action had incurred over $9 million in defense costs.28

       If “occurrence” is defined as a circumstance reasonably expected to give rise

to a claim, costs may include funds paid to investigate and assess the risks of

anticipated litigation. Based on Syngenta’s prior knowledge of and experience

with litigation initiated by Tillery, it would have been reasonable to anticipate that

indemnity and defense costs could exceed $2 million for future Paraquat actions.

Additionally, Syngenta could not reasonably pass off any possibility of future

litigation involving Tillery as a purely frivolous threat.

       In 2019, the conduct of Plaintiff Insurers and ZIC demonstrates how they

interpreted the definition of “occurrence.” Syngenta attempted to give notice of

25
   Oct. 18 Tr. [Nadel] 17:9–18:19.
26
   Id. at 17:9–18:6, 56:16–57:16.
27
   Id. at 18:20–22.
28
   TX016-0004 (“The Captive has reimbursed the insured for its defense costs incurred till May
2015 in the amount of USD 9,241,148 less USD 1,000,000 deductible.”).
                                              14
circumstance regarding Glyphosate losses against Monsanto in 2018. Syngenta

also sold products containing Glyphosate. Plaintiff Insurers rejected the notice in

2019 because Syngenta did not identify the names and addresses of any injured

persons. Plaintiff Insurers claim they were less concerned about the Glyphosate

losses because they were tied to Monsanto, not Syngenta. In response to

Syngenta’s notice, ZIC’s underwriter asked Syngenta “to explain in detail which

concrete facts make it appear likely that a specific, determinable claim by an

individualized claimant will be brought against Syngenta and when and how the

risk management department of the policyholder first became aware of these

facts.”29 A letter from Plaintiff Insurers to Syngenta, dated February 7, 2019, again

states that for an occurrence to have taken place, Syngenta must “provide, at a

minimum, . . . (1) How, when and where the “occurrence” or offense took place;

(2) The names and addresses of any injured persons and witnesses; and (3) The

nature and location of any injury or damage arising out of the ‘occurrence’ or

offense.”30

         While these events took place in a policy year after the Renewal

Application, the Court finds Plaintiff Insurers’ interpretation of “occurrence”

persuasive as to how Plaintiff Insurers likely interpreted the meaning of

29
     TX094-0001.
30
     TX128-0004.
                                           15
“occurrence” on the Renewal Application. Syngenta’s expert provided a definition

of “occurrence” that also aligns with Plaintiff Insurers’ description of the meaning

of “occurrence” in their correspondence with Syngenta. Therefore, for a matter to

constitute an “occurrence,” or “integrated occurrence,” an identifiable claimant

must exist. The Tillery Letter alleged that claimants existed, but Tillery declined

upon request to share any identifiable information about his alleged clients with

Syngenta before Syngenta submitted the Renewal Application. Thus, no

identifiable claimant existed at the time of the Renewal Application.

       The Court finds the definition of “occurrence” is ambiguous in the context

of Questions 20 and 21 of the Renewal Application. The Court finds the course of

dealing between the parties controls whether Syngenta was required to disclose the

Tillery Letter in response to Questions 20 and 21.31 The course of dealing between

the parties demonstrated that for a matter to warrant disclosure as an “occurrence,”

or “integrated occurrence” in response to Questions 20 and 21, an identifiable

claimant must exist. The Tillery Letter did not contain identifiable claimants, nor

was Syngenta able to obtain identification in its follow up with Tillery.32 Thus, for

31
   In re Mobilactive Media, LLC, 2013 WL 297950, at *16 (Del. Ch.) (“[C]ourts should consider
the parties’ course of performance as the ‘most persuasive evidence of the [meaning of the]
parties’ agreement.’” (quoting Pers. Decisions, Inc. v. Bus. Plan. Sys., Inc., 2008 WL 1932404,
at *5 (Del. Ch.), aff’d, 970 A.2d 256 (Del. 2009))); see also Restatement of Contracts (Second) §
202 cmt. g (2008).
32
   The Court considered testimony that Syngenta would have been incentivized to disclose the
Tillery Letter under its 2016 insurance policies because the 2016 insurance policies were
                                               16
the Renewal Application, an “occurrence” required more than non-specific

circumstances reasonably expected to give rise to a claim.

       Therefore, the Tillery Letter did not constitute an “occurrence” or

“integrated occurrence” for purposes of Questions 20 and 21. The Court finds that

Syngenta’s failure to disclose the Tillery Letter in its response to Questions 20 and

21 of the Renewal Application was neither an omission nor misrepresentation for

purposes of 18 Del. C. § 2711.

                                          Materiality

                                    Applicable Standard

       To prevent recovery under 18 Del. C. § 2711, an omission or

misrepresentation must be:

                       (1) Fraudulent; or
                       (2) Material either to the acceptance of the risk or to
               the hazard assumed by the insurer; or
                       (3) The insurer in good faith would either not have
               issued the policy or contract, or would not have issued it
               at the same premium rate or would not have issued a policy
               or contract in as large an amount or would not have
               provided coverage with respect to the hazard resulting in
               the loss if the true facts had been made known to the
               insurer as required either by the application for the policy
               or contract or otherwise.

occurrence-reported policies. Reporting the Tillery Letter at that time would have preserved
coverage under the 2016 insurance policies. While relevant, this testimony is not dispositive.

                                               17
       Plaintiff Insurers contend that subpart 2 contains an objective standard. This

would mean an omission is material if it “would be likely to induce a reasonable

person to manifest assent, or if the maker knows that it would be likely to induce

the recipient to do so.”33 Syngenta contends that if subpart 2 is an objective

standard, then an omission is material if it “would be likely to induce a [reasonable

insurer in this insurer’s position] to manifest assent, or if the maker knows that it

would be likely to induce the recipient to do so.”34 While Smith v. Keyston,35

Windsor-Mount Joy Mutual Insurance Company v. Jones,36 and United Westlabs,

Inc. v. Greenwich Insurance Company37 all reference the “reasonable person”

objective standard of materiality articulated in the Restatement (Second) of

Contracts, the Court has yet to make a definitive ruling on the objective standard’s

applicability to 18 Del. C. § 2711(2).

       The parties agree that subpart 3 is a subjective standard, meaning an

omission is material if Plaintiff Insurers would “not have issued the policy . . . or

would not have issued it at the same premium rate or would not have issued a

33
   Smith v. Keystone, 2005 WL 791387, at *3 (Del. Super.); Windsor-Mount Joy Mut. Ins. Co. v.
Jones, 2009 WL 3069695, at *3 (Del. Super.); United Westlabs, Inc. v. Greenwich Ins. Co., 2011
WL 2623932, at *12 (Del. Super.), aff’d, 38 A.3d 1255 (Del. 2012); see also Restatement
(Second) of Contracts § 164(2).
34
   Restatement (Second) of Contracts § 164(2); Restatement of the Law of Liability Insurance §
8 (2019) (“[T]he materiality analysis focuses on a ‘reasonable insurer in this insurer’s
position . . . .’”).
35
   2005 WL 791387 (Del. Super.).
36
   2009 WL 3069695 (Del. Super.).
37
   2011 WL 2623932 (Del. Super.).
                                             18
policy . . . in as large an amount or would not have provided coverage” if Plaintiff

Insurers had known of the omission or misrepresentation.38

       The Court finds the applicable materiality standard under 18 Del. C. §

2711(2) is whether a reasonable insurer in Plaintiff Insurers’ position would have

found the failure to disclose the Kirkland Fees and Tillery Letter material.39

                         Plaintiff Insurers Failed to Demonstrate
                           the Kirkland Fees and Tillery Letter
                        Were Material Under 18 Del. C. § 2711(3)

       Plaintiff Insurers and ZIC claim that if they had known about the Kirkland

Fees and Tillery Letter, they either would not have continued to insure Syngenta,

or would have issued a policy with a Paraquat exclusion. This assertion is based

primarily on the retrospective testimony of ZIC’s underwriter.40 In this context of

determining materiality, the Court does not generally give the retrospective

testimony of an underwriter much weight, without other corroborating evidence.41

38
   18 Del. C. § 2711(3).
39
   Restatement of the Law of Liability Insurance § 8 (2019).
40
   See Plaintiff Insurers’ Opening Br. at 46–55.
41
   Oglesby v. Penn Mut. Life Ins. Co., 877 F. Supp. 872, 889 (D. Del. 1994) (noting in the
context of a disability policy dispute that an underwriter’s statement claiming he would have
excluded a risk from the policy can generally “be rightly dismissed as merely post hoc”);
Restatement of the Law of Liability Insurance § 9 (2019) (“Standing alone, post-loss testimony
by the underwriter about what the underwriter would have done differently has not carried much
weight with courts.”); 45 C.J.S. Insurance § 877 (“[T]he trier of facts is not required to believe
‘postmortem’ testimony of the company’s agents that the insurance policy would have been
refused if the true facts had been made known.”).
                                                19
         Plaintiff Insurers increased the amount of risk in Syngenta’s self-insured

retention layer from 2016 to 2019. The retained risk that Plaintiff Insurers

accepted went from 0% in 2016 to 15% in 2019. Plaintiff Insurers maintained the

15% level of retained risk in Syngenta’s self-insured retention layer until 2022.

         Plaintiff Insurers also demonstrated they were willing to continue to insure

against Paraquat-related suits after learning of pending litigation. Plaintiff Insurers

did not exclude Paraquat from Syngenta’s policies immediately after the filing of

the Hoffmann Action in October 2017. Rather, Plaintiff Insurers waited until 2022

to exclude Paraquat from coverage. Plaintiff Insurers contend they did not

materially increase their Paraquat-related risk exposure by continuing to insure

against Paraquat claims because of a claims-series provision that “makes sure . . .

any future claims would be attached to the first one.”42 However, by failing to

exclude Paraquat completely, Plaintiff Insurers were still susceptible to other types

of Paraquat-related claims—such as bodily injury claims resulting from ingesting

Paraquat. This evidences Plaintiff Insurers’ willingness to accept risk related to

Paraquat, even after litigation had been initiated. Plaintiff Insurers could have

completely excluded Paraquat from coverage under the policies after learning of

the Hoffmann Action in October 2017, but they chose not to do so.

42
     Oct. 4 Tr. [Oram] 119:13–19.
                                           20
       The Court finds that Plaintiff Insurers failed to demonstrate by a

preponderance of the evidence that they would have made a material change to the

renewed policy under 18 Del. C. § 2711(3) if they would have known about the

Kirkland Fees and Tillery Letter.43 Therefore, failure to disclose the Kirkland Fees

and Tillery Letter in the Renewal Application was not material under 18 Del. C. §

2711(3).

                         Plaintiff Insurers Failed to Demonstrate
                           the Kirkland Fees and Tillery Letter
                        Were Material Under 18 Del. C. § 2711(2)

       Little in the record denotes what an insurance carrier other than Plaintiff

Insurers and ZIC would have done with the disclosure of the Kirkland Fees and the

Tillery Letter under similar circumstances. However, at the time of the Renewal

Application in 2016, the insurance market was a “soft market.”44 This meant

insurance carriers held more negotiating power than normal due to market

conditions.45 The ZIC underwriter also considered Syngenta a large account.46 It

is not disputed that Syngenta would not have continued to purchase coverage at the

same premium level if a Paraquat exclusion were added to the policy.47 In its 2015

43
   The Court notes that the parties did not contend that the disclosure of the Kirkland Fees and
the Tillery Letter would have led to an increased premium. Rather, the parties focused on the
potential that disclosure of the Kirkland Fees and Tillery Letter would lead to either a Paraquat
exclusion, or lead to not issuing the insurance policies at all.
44
   Oct. 5 AM Tr. [Oram] 83:2–4.
45
   Id. at 82:10–16.
46
   Oct. 4 Tr. [Oram] 128:16–18.
47
   Oct. 5 AM Tr. [Oram] 89:22–92:4; TX024-0001.
                                                21
underwriting decision narrative, ZIC admitted it was the “only insurer who

intended to exclude [Paraquat].”48

       The Court finds Plaintiff Insurers failed to demonstrate by a preponderance

of the evidence that a reasonable insurer, in Plaintiff Insurers’ position, would have

found the failure to disclose the Kirkland Fees and Tillery Letter material under 18

Del. C. § 2711(2). The combination of market conditions and the lack of evidence

concerning other insurers’ interest in Paraquat requires the Court to reach this

conclusion under the objective standard.

                                            Reliance

       To recover under 18 Del. C. §2711, Plaintiff Insurers must demonstrate by a

preponderance of the evidence that they relied upon the alleged material

misrepresentation or omission.49 Syngenta contends that no employee or agent of

Plaintiff Insurers reviewed or relied upon the Renewal application because ZIC,

not Plaintiff Insurers, underwrote the policies at issue. Plaintiff Insurers contend

ZIC was acting as their agent. Plaintiff Insurers argue they relied on the Renewal

Application through their agent.

48
  TX075-0008.
49
  Old Republic Ins. Co. v. Rexene Corp., 1990 WL 176791, at *6 (Del. Ch.) (“[T]the insurer
seeking to void the policy must show a false representation by the insured, the materiality of that
representation to the insured risk, and the insurer’s reliance on the representation made.”); see
also Dickson-Witmer v. Union Bankers Ins. Co., 1994 WL 164554, at *5 n.4 (Del. Super.) (“The
plaintiff urges the Court to read 18 Del.C. § 2711 to require a showing of all three factors (fraud,
materiality and reliance) to warrant rescission of an insurance contract.”).
                                                22
      The Court has determined that no omission or misrepresentation occurred in

Syngenta’s response to Questions 19, 20, or 21. The Court also has determined

that if Syngenta’s response to Questions 19, 20, or 21 were considered a

misrepresentation or omission, it was not material. Therefore, the Court finds that

the issue of reliance is moot.

                                  CONCLUSION

      The Court finds the 2016 ZIC Excess Policy definitions are inapplicable to

the Renewal Application.

      The Court finds the doctrine of contra preferentem is inapplicable in the

instant case because Plaintiff Insurers did not draft the Renewal Application.

      The Court finds that the course of dealing since 2009 between the parties

demonstrates that it was acceptable for Syngenta to submit a loss run in response to

Question 19. Thus, the fact that Syngenta did not disclose the Kirkland Fees in its

Renewal Application was neither an omission nor misrepresentation pursuant to 18

Del. C. § 2711.

      The Court finds the Tillery Letter did not constitute an “occurrence” or

“integrated occurrence” for purposes of Questions 20 and 21. Thus, Syngenta’s

failure to disclose the Tillery Letter in its response to Questions 20 and 21 of the

Renewal Application was neither an omission nor misrepresentation for purposes

of 18 Del. C. § 2711.

                                          23
          The Court finds the applicable materiality standard under 18 Del. C. §

2711(2) is whether a reasonable insurer in Plaintiff Insurers’ position would have

found the failure to disclose the Kirkland Fees and Tillery Letter material.50

          The Court finds that failure to disclose the Kirkland Fees and Tillery Letter

in the Renewal Application was not material under 18 Del. C. § 2711(2)–(3).

          The Court finds that the issue of reliance is moot.

          Therefore, on Count II, the Court hereby DENIES Plaintiff Insurers’ request

for declaratory judgment that the alleged misrepresentations or omissions prevent

recovery for the Paraquat-related claims. On Counts III and IV, the Court hereby

DENIES Plaintiff Insurers’ request for recoupment and restitution.

          IT IS SO ORDERED.

                                                            /s/ Mary M. Johnston
                                                      Judge Mary M. Johnston

50
     Restatement of the Law of Liability Insurance § 8 (2019).
                                                 24