Admiral Insurance Company v. Niagara Transformer Corporation

57 F.4th 85 (2nd Cir. 2023)

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Nature of the Case

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Facts

D is a manufacturer of electrical transformers and is insured by P. Throughout the 1960s and 1970s, D purchased PCBs from nonparty Monsanto for use in its transformers. PCBs are highly toxic and largely banned under federal statutes. Monsanto's sales of PCBs to D were made pursuant to a 'Special Undertaking' agreement, which provided that D would 'defend, indemnify, and hold harmless Monsanto . . . from and against any and all liabilities, claims, damages, [etc.] arising out of . . . the . . . use, sale[,] or disposition of such PCB[]s by, through[,] or under [D].' Monsanto also required D to maintain 'adequate insurance protection.' D purchased a general liability policy from P that ran from 1976 to 1977. Beginning in 2009, all kinds of people commenced actions against Monsanto in state and federal courts across the country, asserting claims for personal injuries, environmental clean-up costs, property damage, and other harms allegedly caused by exposure to or contamination by PCBs originally manufactured by Monsanto. Beginning in 2009, all kinds of people commenced actions against Monsanto in state and federal courts across the country, asserting claims for personal injuries, environmental clean-up costs, property damage, and other harms allegedly caused by exposure to or contamination by PCBs originally manufactured by Monsanto. In August 2016, after losing an eight-figure judgment in one such case (and while countless other such cases were in active litigation or settlement negotiations, with still more being filed anew), Monsanto sent D a letter, through counsel, 'demanding' that Da 'defend, indemnify[,]and hold harmless' Monsanto 'in connection with all current and future PCB-related litigation wherein . . . Monsanto is, or will be, named as a defendant, and for the amount of any resulting judgments (if any) and settlements, to the full extent required by the Special Undertaking.' Appended to this letter was a chart enumerating forty-six relevant cases pending against Monsanto. In early 2020, D learned that another company in the same situation D was in was able to obtain coverage from its historical insurance carrier. D then contacted P for coverage. D gave P notice and tendered its own 'demand' that P 'defend and indemnify D . . . in connection with any and all claims made by Monsanto.' P denied coverage and then filed a complaint seeking a declaration that it has no obligation to defend or indemnify D. The district court concluded that there was no 'case or controversy' under the DJA because there was no 'practical likelihood' that 'D will incur liability . . . to Monsanto in connection with the PCB-related litigation.' Monsanto had filed no lawsuit against D' and 'never explicitly threatened to sue D,' and (2) 'questions over the validity, scope, and enforceability of the Special Undertaking' remain. P appealed.