Onebeacon America Insurance v. American Motorists Insurance
679 F.3d 456
6th Cir.2012Background
- OneBeacon and AMICO insured the Goodrich Calvert City plant and were liable for environmental cleanup costs.
- AMICO settled with Goodrich; OneBeacon refused to settle and went to trial.
- State court jury awarded Goodrich $42 million in compensatory damages, $12 million in attorneys’ fees, and set off $20 million for OneBeacon as excess insurer; bad-faith finding against OneBeacon for 12% of fees.
- Trial court denied settlement credits, holding the universe of AMICO settlements was not coextensive with OneBeacon's liability and, alternatively, bad faith precluded credits.
- OneBeacon sought equitable contribution from AMICO; district court removed to federal court and held settlement exhausted AMICO’s policy, barring contribution.
- The Sixth Circuit AFFIRMS, holding that under Ohio law a settled policy is exhausted and precludes non-settling insurers from seeking contribution from settling insurers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ohio law permits non-settling insurers to seek contribution from settling insurers | OneBeacon argues Goodyear/Penn General permit inter-insurer contribution. | AMICO argues settlement exhausts policies and favors finality of settlements. | Settlement exhausts; no contribution from AMICO. |
| Whether exhaustion of a settling insurer's policy precludes contribution even with bad-faith findings | OneBeacon contends bad faith allows further relief from AMICO. | AMICO argues exhausted policy and public policy favoring settlements bar relief. | Exhaustion precludes equitable contribution. |
| Whether Ohio law would allow or disallow interclass contribution or rely on bad-faith findings to bar relief, requiring addressing those questions | OneBeacon seeks an answer on interclass contribution and impact of bad faith. | AMICO asserts settlement exhaustion governs; other questions unnecessary to decision. | Court does not decide those questions; settlement exhaustion controls. |
Key Cases Cited
- Goodyear Tire & Rubber Co. v. Aetna Casualty & Surety Co., 95 Ohio St.3d 512 (Ohio 2002) (adopts all-sums approach to permit contribution among insurers when advancing settlements)
- Penn Gen. Ins. Co. v. Park-Ohio Indus., Inc. (Park-Ohio I), 902 N.E.2d 53 (Ohio App. 2008) (liberal application of contribution; settlement implications discussed)
- Penn. Gen. Ins. Co. v. Park-Ohio Indus., 126 Ohio St.3d 98, 930 N.E.2d 800, 930 N.E.2d 800 (Ohio 2010) (Ohio Supreme Court affirmed that notification failure did not prejudice nonsettling insurers)
- GenCorp, Inc. v. AIU Insurance Co., 138 Fed. Appx. 732 (6th Cir. 2005) (district court/federal appellate handling of exhaustion and settlement impact)
- Koppers Co., Inc. v. Aetna Casualty & Surety Co., 98 F.3d 1440 (3d Cir. 1996) (applies apportionment/set-off considerations to avoid double recovery)
- W.R. Grace & Co. v. Maryland Casualty Co., 218 F.3d 204 (2d Cir. 2000) (settlement releases and contribution principles; not endorsing blanket insulation from contribution)
- Krischbaum v. Dillon, 567 N.E.2d 1291 (Ohio 1991) (policy favoring settlement and avoidance of litigious fragmentation)