Millennium Holdings LLC v. Glidden Co.
146 A.D.3d 539
| N.Y. App. Div. | 2017Background
- Old Glidden (later part of SCM) manufactured lead-based paint; insurance policies (1962–1970) covering property damage were issued to Glidden/SCM. Primary policies from 1965–1968 contained an express subrogation clause.
- In 1986 SCM’s assets were distributed to "fan" companies; the paints business went to HSCM-6 (later sold and now ANP) while insurance policies and pigment assets ended up with HSCM-20 (later Millennium).
- An asset purchase agreement (1986) and later an amended purchase/Lead Litigation Agreement allocated indemnification obligations between the paint company (ANP/ICI) and the pigment company (Millennium/HSCM-20), with indemnities that shift before and after an eight-year period and side‑letter provisions re: insurance benefits.
- From 1987 onward lead-paint litigation named both companies; insurers funded Millennium’s defense for a time, then ceased and later paid $3.2M toward a Santa Clara settlement under reservation of rights. Ohio courts held ANP was not an insured under the policies.
- Millennium sued ANP for indemnity; insurers intervened and sought subrogation to Millennium’s indemnity rights. The motion court granted ANP summary judgment based on the antisubrogation rule; the Appellate Division affirmed; the Court of Appeals reversed and remitted for further fact/law determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can insurers use equitable subrogation against ANP? | Insurers: paid Millennium’s losses and thus can equitably subrogate to Millennium’s indemnity rights. | ANP: equitable subrogation cannot be used against a party whose liability is purely contractual. | No — insurers may not proceed by equitable subrogation against ANP (liability here is contractual). |
| Can insurers recover via contractual (express) subrogation? | Insurers: policies (1965–1968) contain express subrogation clauses permitting contractual subrogation to Millennium’s rights under the indemnity agreements. | ANP: indemnity scope does not cover "pigment"-based lead claims; indemnity ambiguous; antisubrogation bars recovery. | Not resolved as a matter of law; remanded to construe indemnity and determine if contractual subrogation applies to policies with express clauses. |
| Is the $3.2M Santa Clara payment recoverable (or was it a voluntary payment)? | Insurers: payment made under reservation of rights; seek reimbursement by subrogation. | ANP: payment was voluntary or outside coverage so not recoverable. | Payment held voluntary and unrecoverable because Ohio court determined the Santa Clara claim was outside policy coverage. |
| Should summary judgment be entered for insurers on defense costs? | Insurers: entitled to defense-cost recovery from ANP if contractual subrogation applies. | ANP: antisubrogation and contract limits preclude recovery. | Court remanded limited issues (contract interpretation re indemnity; contractual subrogation for 1965–1968 policies) — insurers not entitled to equitable subrogation; Santa Clara payment denied. |
Key Cases Cited
- Fasso v. Doerr, 12 N.Y.3d 80 (recognizes insurer’s equitable subrogation when insurer pays insured’s loss caused by a wrongdoer)
- Winkelmann v. Excelsior Ins. Co., 85 N.Y.2d 577 (equitable subrogation principles explained)
- Federal Ins. Co. v. Arthur Andersen & Co., 75 N.Y.2d 366 (discussion limiting equitable subrogation where third‑party liability is contractual)
- National Union Fire Ins. Co. v. Ranger Ins. Co., 190 A.D.2d 395 (denying equitable subrogation against a non‑negligent third party whose liability is contractual)
- Broadway Houston Mack Dev., LLC v. Kohl, 71 A.D.3d 937 (payments not contractually compelled defeat subrogation where payer is a volunteer)
- Glidden Co. v. Lumbermens Mut. Cas. Co., 112 Ohio St.3d 470 (Ohio Supreme Court: ANP not insured under the policies; side‑letter did not transfer insurance coverage)
- Hooper Assoc. v. AGS Computers, 74 N.Y.2d 487 (contractual indemnity strictly construed)
- Commander Oil Corp. v. Advance Food Serv. Equip., 991 F.2d 49 (contract must show clear and unmistakable intent to indemnify)