Lead Opinion
Plaintiff-Appellant Ferro Corporation (“Ferro”) appeals the decision of the district court to grant summary judgment to Defendants-Appellees Cookson Group, pic; Cookson America, Inc.; and Cookson Investments, Inc. (Cookson Group, pic; Cookson America, Inc.; and Cookson Investments, Inc., will be referred to collectively as “Cookson”) and dismiss all of Plaintiff-Appellant’s claims. For the reasons set forth below, we AFFIRM the judgment of the district court.
I. BACKGROUND
A. Synpro Asset Purchase and Agreement
Ferro competеs in the manufacture and sale of plastic additives. It has produced and sold plastic additives since at least 1990 to the present. Prior to October 1995, a Cookson affiliate, Synthetic Products Corporation (“Synpro”), also competed in the plastic additives market. In October 1995, Ferro purchased certain assets of Synpro, including its plastic additives business. After the sale, Cookson and what was left of Synpro (now named SPC Divestitures) were and continue to be part of the sаme corporate family.
Under the Asset Purchase Agreement (“APA”), Synpro retained all liabilities not expressly assumed by Ferro (the “Retained Liabilities”), including any liability it might have had for actual or alleged preclosing antitrust violations. Cookson also agreed to defend and indemnify Ferro “from and against any loss, claim, cause of action or liability, cost, or expense ... that arise out of ... [a]U Retained Liabilities of [Synpro] not expressly assumed by Ferro.” (Record on Appeаl (“ROA”) Vol. I, p. 29.) No provision of the APA stated that Cook-son or Synpro would defend or indemnify Ferro for Ferro’s own conduct.
B. The Antitrust Cases
In early 2003, Ferro and various other competitors in the plastics additives industry received grand jury subpoenas in furtherance of a Department of Justice investigation into alleged antitrust violations. In March 2003, Ferro was named as a defendant in numerous civil lawsuits alleging that various named and unnamed competitors in the plastics additives industry had violated state and fedеral antitrust laws from January, 1990 through January, 2003. Those cases were eventually consolidated into four cases: the Indirect Purchasers Litigation, the Direct Purchasers Litigation, the PolyOne Litigation, and the California Litigation (altogether the “Antitrust Cases”). Synpro competed in the plastic additives industry during the alleged conspiracy period until October, 1995. Synpro, however, was not specifically named in the complaints in the Antitrust Cases. There were also not any allegations in the complaints against Ferro of successor liability on behalf of Synpro. The complaints in the Antitrust Cases have been amended as recently as March 1, 2006. None of the amended complaints mentions Synpro or Cookson.
Ferro asserts that around September, 2006, during discovery in the Antitrust Cases, it became apparent that the plaintiffs had sued Ferro, at least in part, because the Antitrust plaintiffs believed that Ferro was liable for Synpro’s alleged anti-competitive conduct. The APA required that notice be given to Cookson within 30 days of learning of facts or circumstances that give rise to a claim under the APA.
In September 2006, Ferro sought defense and indemnification from Cookson pursuant to the APA. On October 16, 2006, Cookson refused to defend and indemnify
Ferro eventually settled both the Direct Purchasers Litigation and the PolyOne Litigation. The PolyOne litigation settled for $750,000. That settlement does not refer to either Synpro or Cookson. The Direct Purchasers Litigation settled for $5,500,000, and released Ferro and Syn-pro. The claims against Ferro in the Indirect Purchasers Litigation and the California Litigation remain pending.
Following discovery, Ferro and Cookson filed cross-motions for summary judgment. On April 11, 2008, the district court granted Cookson’s motion, denied Ferro’s motion, and dismissed all of Ferro’s claims. Fеrro appeals.
II. JURISDICTION
The district court had diversity jurisdiction pursuant to 28 U.S.C. §§ 1332.
III. STANDARD OF REVIEW
We review de novo a district court’s grant of summary judgment. Miller v. Admin. Office of the Courts,
The standаrd of review for cross-motions of summary judgment does not differ from the standard applied when a motion is filed by only one party to the litigation. Taft Broad. Co. v. U.S.,
The fact that both parties have moved for summary judgment does not mean that the court must grant judgment as a matter of law for one side or the other;summary judgment in favor of either party is not proper if disputes remain as to material facts ... Rather, the court must evaluate each party’s motion on its own merits....
Id. (citations omitted).
IV. LAW & ANALYSIS
Ferro filed the current actiоn seeking damages as a result of Cookson’s alleged breach of its duty to defend and indemnify, and a declaratory judgment that Cookson is obligated to defend and indemnify Ferro for any loss or liability that arises out of the Antitrust Cases resulting from conduct of Synpro, its employees, or its agents that may have occurred before October, 1995.
The APA that is the source of Ferro’s claims is a contract. Construction of a contract is a question of law. In re All Kelley & Ferraro Asbestos Cases,
The APA required Cookson to defend and indemnify Ferro “from and against any loss, claim, cause of action or liability, cost, or expense ... that arise out of ... [a]ll Retained Liabilities of [Synpro] not expressly assumed by Ferro.” (ROA Vol. I, p. 29.) Under the plain language of the APA, the defense and indemnification provision was triggered only by the assertion of claims against Ferro based upon Syn-pro’s “Retained Liabilities,” which included any antitrust violations Synpro may have committed pre-closing.
A. Duty to Defend
In the complaints and amended complaints in the Antitrust Cases, Synpro is not named as a defendant, successor liability is not asserted against Ferrо based upon its acquisition of Synpro assets, and there are no factual allegations implicating Synpro or its employees in the alleged wrongdoing. Only Ferro was sued for antitrust violations by the Antitrust plaintiffs in the Antitrust Cases.
Ferro, however, contends that the Antitrust plaintiffs, instead of suing Syn-pro or Cookson, treated Ferro as including pre-APA Synpro, and sought to hold Ferro liable for antitrust violations committed by Synpro.
The duty to defend need not arise solely from the allegations in the complaint, but may arise at a point subsequent to the filing of the complaint. City of Willoughby Hills v. Cincinnati Ins. Co.,
In Motorists Mutual Insurance Co. v. National Dairy Herd Improvement Ass’n, Inc.,
In this case, neither Cookson nor Syn-pro was named as a defendant, or even mentioned, in any of the complaints or amended complaints. There are no allegations made against Ferro in the complaints or amended complaints based on the principles of successor liability. The Antitrust plaintiffs alleged that each corporate defendant acted through its own employees or agents.
Courts “need not stretch the allegations beyond reason to impose a duty on the insurer.” Motorists Mutual,
Therefore, though a duty to defеnd can arise from extraneous matter outside the complaint, the complaint must still trigger the duty to defend before a court looks to extraneous matter. It is unfair to impose a duty on an insurer where the pleadings failed to notify, even arguably, that the insured is being sued on a claim covered by the policy. To adopt Ferro’s interpretation
Furthermore, the fact that Synpro was released in the settlement of the Direct Purchasers Litigation does not establish that claims had been asserted against Ferro based on Synpro’s conduct. The content of a release is not necessarily evidence that, in fact, such claims were asserted, especially in light of the background surrounding the release.
As written, the text of the settlement agreement probably would not release the Cookson group. I believe that some minor, unobtrusive modifications to the definition of “Releasees” could protect Cookson without raising an alarm on the plaintiffs’ side. I am, however, reluctant to promote those modifications before we have a firm indication from you that Cookson is going to contribute in a substantial way to the resolution of this matter.
(ROA APX Vol. VI p. 2387.) Gorgone responded:
Thank you for the documents. We will review them in due course. Note however that by entering into these agreements without Cookson being released to our satisfaction, we would have no incentive to make any meaningful settlement offer (assuming that we believe any participation by Cookson is prudent).
(Id.). Bays replied:
Understood. If we were to settle without an agreement with you, we would simply have to pursue our claim against Cook-son via the case in Judge Lioi’s court.
(Id.)
This exchange of emails shows that Ferro аnd Synpro believed that a settlement agreement releasing Ferro would not operate to release Cookson for any Synpro liability. Ferro also believed it could ask the Antitrust plaintiffs to modify the settlement to include Synpro without “raising an alarm on the plaintiffs’ side.” In other words, Ferro believed it could secure a release for Synpro without triggering the Antitrust plaintiffs’ suspicions that Synpro could be liable for any alleged wrongdoing. This suggests that Ferro did not believe the Antitrust plaintiffs werе aware at the time of the Direct Purchasers Litigation settlement that Synpro could be liable. Bays’s email does not state that the Antitrust plaintiffs inquired about Synpro or gave any indication they were seeking to hold Synpro liable.
We need not address the other grounds set forth by the district court to support its determination that Cookson had no duty to defend Ferro in the Antitrust Cases. Accordingly, we affirm the district court’s decision to grant summary judgment in favor of Cookson on the issue of defense.
B. Duty to Indemnify
Under Ohio law, the “duty to defend is broader than and distinct from [the] duty to indemnify.” Harrison,
V. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s grant of summary judgment to Cookson.
Notes
. Ferro is an Ohio corporation with its principal place of business in Cleveland Ohio. Cook-son Group, pic, is a public limited company incorporated under the laws of England with its principal place of business in London, England. Cookson America, Inc., is a Delaware corporation with its principal place of business in Providenсe, Rhode Island. Cook-son Investments, Inc., is a Delaware corporation with its principal place of business in Wilmington, Delaware. Ferro is seeking damages in excess of $9,000,000 from Cook-son.
. Ferro's position appears to belie common sense. If the Antitrust plaintiffs had asserted claims against Ferro based upon Synpro's actions, Ferro had a valid and simple defense to such claims: it did not assume Synpro's Retained Liabilities, either under the express terms of the APA or under Ohio lаw. Under Ohio law, a buyer corporation is not liable for the seller corporation's tortious conduct unless either: (1) the buyer agrees to assume such liability; (2) the transaction is a de facto consolidation or merger; (3) the buyer is merely a continuation of the seller; or (4) the transaction is entered into fraudulently for the purpose of escaping liability. Flaugher v. Cone Automatic Mach. Co.,
Thus, had such claims been asserted against Synpro, Ferro could have disclosed the APA to the Antitrust plaintiffs, who in turn could have sued Cookson. Ferro also could have stated as a defense in its answers to the complaints that per the APA, it did not assume Synpro’s Retained Liabilities; Ferro, however, never presented this defense.
. Although these cases involve insurers rather than indemnitors, under Ohio law, "[a]n indemnitor’s duty to defend under an indemnity contract is subject to the same standard as an insurer's duty to defend under an insurance contract.” Westlake Vinyls, Inc. v. Goodrich Corp.,
. Ferro is completely unable to distinguish Motorists Mutual. Ferro asserts that it conflicts with the Ohio Supreme Court’s ruling in Willoughby Hills. We disagree. We have already favorably cited Motorists Mutual in Holloway. In Holloway, we recognized that Motorists Mutual was a correct interpretation of Willoughby Hills. See
. Ferro argues that even if the complaints failed to set forth allegations to trigger the duty to defend, "the district court was still obligated to examine matters well outside the four corners of the pleadings, to determine whether the allegations do state a claim which is potentially or arguably within policy coverage.” (Brief of PlaintifFAppellant Ferro Corporation ("Ferro Brief”) p. 23) (internal citations and quotаtion omitted).
. In the statement of facts in Ferro’s Brief, Ferro includes information about Rule 408 settlement discussions that is supported only by a reference to an affidavit of M. Neil Rains ("Rains”). (Ferro Brief p. 10.) Rains's affidavit, which is dated May 8, 2008 (almost one month after the district court filed its Memorandum Opinion and Order granting summary judgment for Cookson on April 11, 2008), is not part of the summary judgment record in this case.
Concurrence Opinion
concurring.
I concur in the affirmance. Although Ferro takes issue with the district court’s application of Ohio case lаw, faulting the court for its seeming conclusion that the question whether Cookson had a duty to defend “must be answered solely as of the date the complaints in the Antitrust Cases were filed and solely from the language in the complaint” [Pl.’s Br. 19], Ferro has not successfully refuted the district court’s core conclusion that each underlying Antitrust complaint must be examined to determine if it can reasonably be understood as asserting a claim covered by the indemnity agreement. To be sure, Ferro is cоrrect in pressing the point that this determination must be made in light of post-complaint developments in the litigation, including the discovery upon which Ferro relies. But even in this light, only the Direct Purchaser complaint can even arguably be read to allege successor liability. And nothing that occurred in the course of litigation changes that fact or makes the other complaints reasonably susceptible of another interpretation.
The Consolidated Amended Complaint in thе Direct Purchaser Antitrust class action states in paragraph 1, under the heading Nature of the Case: “This lawsuit is brought as a class action on behalf of all individuals and entities who purchased eertain Plastic Additives, ... directly from defendants or any predecessors, parents, subsidiaries, or affiliates thereof (collectively referred to as “Defendants”) from at least as early as January 1, 1990 to January 31, 2003 (the ‘Class Period’).” [Emphasis added.] Antitrust plaintiffs later echoed this language in discovery requests and answers. The complaint, however, describes Ferro without reference to Synpro: “Defendant Ferro Corporation (“Ferro”) is an Ohio corporation with its principal place of business at 1000 Lakeside Avenue, Cleveland, Ohio. Ferro manufactured, marketed and/or sold heat stabilizers and impact modifiers in the United State [sic] during the Class Period.”
When read as a whole, the Direct Purchaser complaint, although ambiguous, can reasonably be read to include allegations of liability based on the conduct of Ferro’s “predecessor” Synpro, given the preamble’s assertion that “defendants” includes “predecessors.” However, I can find nothing in the record or the briefs indicating that Ferro at any time cited or relied on this language.
The complaints in the Antitrust Cases allege (1) the existence of an antitrust conspiracy that started in 1990 and lasted until 2003 and (2) that both named and unnamed co-conspirators engaged in that conspiracy. Those allegations, when viewed in context with the discovery requests, discovery responses, deposition testimony, and Robert Kaplan’s statement that “Ferro would have been potentially liable for any anticompetitive conduct engaged in by Synpro prior to the time Ferro acquired Synpro’s Plastics Additives business,” [citation to record omitted] demonstrate quite clearly that the underlying complaints state claims that are arguably or potentially within the scope of Cоokson’s duty to defend.
The problem with this argument is that without any allegations in the underlying complaints that can arguably be read as asserting, on any ground, Ferro’s liability for Synpro’s pre-acquisition conduct, or any court action in the underlying proceedings that can be understood as recognizing such a claim, the discovery requests and responses, deposition testimony, and even counsel’s affidavit do not create a covered claim where none was even arguably madе. And, like the district court, I do not find the two allegations cited by Ferro — (1) the existence of an antitrust conspiracy that started in 1990 and lasted until 2003 and (2) that both named and unnamed co-conspirators engaged in that conspiracy — to allege Ferro’s liability for Synpro’s actions, even when viewed in the light of the later discovery materials. I thus concur.
. Under the circumstance that this language, found in the "Nature of the Case” preamble in one of the four complaints, has never been referred to (as far as I have been able to discover in the record) by either party or the court, I am not prepared to urge reversal on this basis. While this may provide fodder for the argument that the district court and this court place too much reliance on the underlying Antitrust complaints, the cases are clear, as is the rationale — the asserted right to indemnity and a defense must be grounded in the plaintiffs’ claims in the underlying suits. Those claims may be fleshed out or elucidated through discovery, but the claims must be at least potentially part of the underlying lawsuits. No court would permit the Antitrust plaintiffs to proceed on a successor liability theory based on the PolyOne, Indirect Purchaser or California complaints, or the Direct Purchaser complaint without the Nature of the Case language, notwithstanding any developments in discovery. Further litigation would not be required to eliminate these potential claims, but rather to add them. Thus, the plaintiffs’ recovery in those cases cannot even arguably be based on Ferro’s asserted liability for Synpro's conduct.
. City of Willoughby Hills v. Cincinnati Ins. Co., 9 Ohio St.3d 177,