Employers Insurance of Wausau v. McGraw Edison Company
699 F. App'x 488
| 6th Cir. | 2017Background
- McGraw-Edison operated two adjacent battery factories on a Bloomfield, NJ property: a Primary Battery plant and a Storage Battery plant; McGraw sold the Storage plant in 1960 and later transferred the Primary plant to Battery Products, Inc.
- In the 1980s Cooper (which had acquired McGraw) faced state investigations into contamination at the Primary plant and related sites and sought coverage from its insurers; insurers sued for a declaratory judgment in Michigan federal court.
- In 1989 Cooper and the insurers settled; the settlement released insurers from future claims relating to "[t]he McGraw-Edison Battery Products Plant facility located in Bloomfield, New Jersey and anything released, escaping, or migrating ... from the site including contamination of the groundwaters ... as described in [Count III of] the Counterclaim."
- The settlement incorporated the Counterclaim by reference, specified Michigan law, and included a forum-selection clause requiring disputes be filed in the Western District of Michigan; the district court incorporated the settlement into its dismissal order.
- In 2014 EPA identified the entire Bloomfield property (both plants) as possibly contributing to contamination; Cooper sued insurers in New Jersey seeking coverage, and insurers sought a Michigan declaration that the 1989 release barred Cooper’s claims.
- The district court held the release covered the entire Bloomfield property (including the Storage plant); the Sixth Circuit majority reversed, concluding the phrase unambiguously referred only to the plant operated by Battery Products, Inc.; Judge Moore dissented, finding the agreement ambiguous and calling for an evidentiary hearing.
Issues
| Issue | Plaintiff's Argument (Cooper) | Defendant's Argument (Insurers) | Held |
|---|---|---|---|
| Whether the Michigan federal court should abstain in favor of pending New Jersey litigation | Forum-selection clause notwithstanding, the New Jersey action addresses the same state-law issues and should be decided there | Settlement contains mandatory forum-selection clause requiring disputes be litigated in Western District of Michigan | Court declined to abstain; enforced forum-selection clause and retained jurisdiction (affirmed) |
| Whether the term "McGraw-Edison Battery Products Plant facility" (and incorporated Counterclaim) unambiguously refers only to the Primary Battery plant (Battery Products, Inc.) or to the entire Bloomfield site including the Storage plant | Phrase refers to the Primary plant operated by Battery Products, Inc.; exhibit naming conventions and Counterclaim usage show the parties named sites by operating entity | Phrase refers to the Bloomfield facility as a whole; capitalization and historical remediation context show the parties intended to release the entire site | Majority: unambiguous — refers only to the Battery Products, Inc. plant; release does not bar claims for contamination originating at the Storage plant; reversed district court. Dissent: contract ambiguous and remand for evidentiary hearing. |
Key Cases Cited
- Scottsdale Ins. Co. v. Flowers, 513 F.3d 546 (6th Cir. 2008) (abstention standards for declaratory-judgment actions)
- Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491 (U.S. 1942) (principles limiting federal declaratory relief where state actions are pending)
- Smith v. Aegon Cos. Pension Plan, 769 F.3d 922 (6th Cir. 2014) (enforcement of forum-selection clauses)
- City of Grosse Pointe Park v. Mich. Mun. Liab. & Prop. Pool, 473 Mich. 188 (Mich. 2005) (Michigan contract interpretation and starting-point textual analysis)
- Solo v. United Parcel Serv. Co., 819 F.3d 788 (6th Cir. 2016) (de novo review of contract interpretation)
- NILAC Int’l Mktg. Grp. v. Ameritech Servs., Inc., 362 F.3d 354 (6th Cir. 2004) (requirements to incorporate external documents into contracts)
- Forge v. Smith, 458 Mich. 198 (Mich. 1998) (Michigan law on incorporation and contract interpretation)
- RE/MAX Int’l, Inc. v. Realty One, Inc., 271 F.3d 633 (6th Cir. 2001) (need for evidentiary hearing when contract ambiguous)
- In re B.A.D., 264 Mich.App. 66 (Mich. Ct. App. 2004) (capitalization as indicator of a proper noun)