Court Finds in Favor of Manufacturer in Insurance Case

May 17, 2012

The Orange County Superior Court found in favor of Murchison & Cumming’s client, an appliance manufacturer, in an insurance litigation case. Friedrich W. Seitz and Todd A. Chamberlain represented the defendant. The client was sued by an insurance company for declaratory relief and breach of contract.

In 2007, the insurance company and the manufacturer entered into a settlement and release agreement resolving a series of bad faith lawsuits against the insurer for its failure to defend the manufacturer in multiple toxic tort cases in Pennsylvania. The settlement agreement expressly applied to the manufacturer and all current subsidiaries and contained an indemnity provision in favor of the insurer. When a former subsidiary of the manufacturer was later sued in an Orange County toxic tort case, the insurer contended that the agreement had released that claim and that the manufacturer was obligated to indemnify the insurer for the costs it incurred in defending the former subsidiary under the indemnity provision. The defendant filed a cross-complaint against the insurer for declaratory relief and breach of contract.

The court found the plaintiff’s reading of the agreement tortured and convoluted and that the defendant’s interpretation of the agreement was supported by common sense, consistent with the mutual intent of the parties. The court also awarded the defendant $367,000 in damages and costs against the insurer.