Owens Corning v. National Union Fire Insurance Co.

257 F.3d 484 (6th Cir. 2001)

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Nature of the Case

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Facts

D issued a directors and officers (“D & O”) insurance policy to P. Part of the policy insured P for expenses incurred when P indemnified its directors and officers against certain liabilities. It states: This policy shall reimburse the Company for Loss from any claim or claims which are first made against the Directors or Officers and reported to the Insurer during the Policy Period for any alleged Wrongful Act in their respective capacities as Directors or Officers but only when and to the extent that the Company has indemnified the Directors or Officers for such Loss pursuant to law, common or statutory, or contract, or the Charter or By-laws of the Company. P and six of its directors and officers were named as defendants in a class-action lawsuit by several shareholders. The complaint alleged that P's 1988 to 1991 filings with the SEC had misrepresented the company's future financial exposure to asbestos claims, that the defendants had failed to disclose the danger that P's products liability insurance coverage would eventually be exhausted, and that the defendants had misled investors concerning the impact that asbestos claims would have on the company's future financial condition and prospects. P filed for bankruptcy while this action was pending before us. P settled the class-action suit in 1995 for $9,975,000; D was kept fully apprised of the ongoing negotiations but did not participate in the defense or settlement of the action. After indemnifying its directors and officers for their defense and settlement costs, P requested reimbursement from D. D denied coverage. P sued D for breach of the Policy. P filed a motion for partial summary judgment. D also moved for summary judgment. The district court denied P's motion and granted summary judgment to D. The appeals court reversed the district court and entered partial summary judgment for P. On remand, the district court granted summary judgment to P and D filed a motion to amend its answer to add a new defense based on a breach by its insured of the duty of good faith and fair dealing, and a new defense and counterclaim in which it sought to reform the contract to reflect the intent of the parties. The district court rejected these amendments as untimely and prejudicial. D objected to entry of final judgment, claiming that the original settlement was unreasonable and that D should not be responsible for it. The court rejected this argument, and judgment was entered for P for the cost of the settlement, substantial attorney's fees incurred during the settlement, and pre-judgment interest. D appeals the grants of summary judgment, the entry of final judgment, and the refusal to allow it to amend its pleadings.