PepsiAmericas, Inc. v. Federal-Mogul Global Inc. (In re Federal-Mogul Global Inc.)
526 B.R. 567
D. Del.2015Background
- Appellant PepsiAmericas challenged the bankruptcy court’s grant of summary judgment for Debtor-Appellee on over-billing of shared CGL policies.
- The dispute traces to asbestos-related liabilities from Abex, with Appellee receiving insurance proceeds for multiple streams of liability.
- The corporate histories connect Abex, IC Industries/Whitman, PA Holdings, Pneumo Abex/PAC entities, and Wagner/Moog (FMP); FMC/FMP are successors related to those indemnities.
- Appellant claimed overbilling under Appellant Policies and Pre-1971 Policies, seeking recovery for funds from shared insurance pools.
- Appellee argued there is no privity or contract-based duty linking Debtors to Appellant, and the alleged overbilling lacks an adequate contractual basis.
- The district court affirmed the bankruptcy court, applying standard de novo review for law and clearly erroneous review for facts; summary judgment standards were applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability of Debtors for over-billing shared policies | PepsiAmericas argues privity via the Whitman agreements and related settlements | Debtors were not parties to the agreements and there is no privity | Affirmed: no liability against Debtors based on undisputed facts |
| Contract adoption and equitable estoppel | Appellant seeks adoption or estoppel to bind Debtors to 1988 SPA and related contracts | No explicit or implicit adoption; 1988 SPA disclaims third-party rights | Affirmed: no adoption or estoppel established |
| Implied covenant of good faith and fair dealing | Covenant bars overbilling and ensures benefit of bargain across agreements | Covenant cannot create rights beyond the contract; no privity | Affirmed: covenant does not create rights against Debtors under these contracts |
| Tort claims arising from contract | Overbilling supports tort theories (conversion/misuse of assets) | Tort claims must arise from independent duty; claims were contractual | Affirmed: tort claims dismissed; no independent duty established. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (Supreme Court 1986) (summary judgment standard; burden shifting to show genuine issue of material fact)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Supreme Court 1986) (genuine issue of material fact requires jury could return verdict for non-movant)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (Supreme Court 1986) (facts viewed in light most favorable to nonmoving party; inferences drawn for trial)
- Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434 (Del. 2005) (implied covenant limits and purpose; not a catch-all)
- Nemec v. Shrader, 991 A.2d 1120 (Del. 2010) (implied covenant boundaries; cautious enterprise)
- Winshall v. Viacom Int’l, Inc., 76 A.3d 808 (Del. 2013) (implied covenant cannot extend beyond bargain)
- Thomson-CSF, S.A. v. American Arbitration Ass’n, 64 F.3d 773 (2d Cir. 1995) (direct vs indirect benefit for estoppel; contract interpretation)
- American Legacy Foundation v. Lorillard Tobacco Co., 831 A.2d 335 (Del.Ch. 2003) (adoption of contract by third party; explicit/implicit adoption)
- In re Hechinger, 298 F.3d 219 (3d Cir. 2002) (bankruptcy appellate de novo review guidance)
- In re Telegroup, 281 F.3d 133 (3d Cir. 2002) (bankruptcy appellate de novo review guidance)