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Cont'l Cas. Co. v. Indian Head Indus.

United States Court of Appeals for the Sixth Circuit

December 16, 2016, Filed

File Name: 16a0680n.06

Case No. 15-2217

Opinion

 [*458]  COLE, Chief Judge. This case involves both contract interpretation and a determination of the proper method, under Michigan law, of cost allocation among insureds and insurers. Defendant, Indian Head Industries, Inc. ("Indian Head"), appeals the district court's summary judgment orders in favor of one of the plaintiffs, Continental Casualty Company ("Continental"). In separate orders, the district court found that Indian Head's insurance policies with Continental did not cover liabilities assumed by contract, that Continental had to provide only a pro rata share of indemnification damages and defense costs, and that Indian [**2]  Head should reimburse Continental for payments made in excess of its obligations. Indian Head challenges these orders, arguing that its liabilities assumed by contract qualify for coverage under the insurance policy terms, that the district court failed to properly apply state law requiring a joint and several liability allocation of damages and costs, and that reimbursement is improper where the terms of the policies do not provide for it. We find no reversible error and affirm the district court's judgments with respect to pro rata allocation and reimbursement, but remand for consideration of Continental's liabilities from those injuries that preexisted insurance coverage but were ongoing during the policy period.

I. BACKGROUND

A. Factual Background

In March 1984, Indian Head entered into a written agreement ("1984 Agreement") to acquire a gasket manufacturing division of Thyssen-Bornemisza, Inc., Detroit Gasket & Manufacturing Co. ("Detroit Gasket"). In the agreement, Indian Head purchased Detroit Gasket's assets and product names. The 1984 Agreement also provided that Indian Head would assume all liabilities and obligations, including products liability, arising out of or relating [**3]  to the business and operations of the acquisitions.

Indian Head then purchased three consecutive liability insurance policies from Continental from April 1984 until April 1987. These insurance policies included bodily injury coverage which provided in relevant part:

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666 Fed. Appx. 456 *; 2016 U.S. App. LEXIS 22431 **; 2016 FED App. 0680N (6th Cir.); 2016 WL 7321362

CONTINENTAL CASUALTY COMPANY; COLUMBIA CASUALTY COMPANY, Plaintiffs-Appellees, v. INDIAN HEAD INDUSTRIES, INCORPORATED, Defendant-Appellant.

Notice: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION. SIXTH CIRCUIT RULE 28 LIMITS CITATION TO SPECIFIC SITUATIONS. PLEASE SEE RULE 28 BEFORE CITING IN A PROCEEDING IN A COURT IN THE SIXTH CIRCUIT. IF CITED, A COPY MUST BE SERVED ON OTHER PARTIES AND THE COURT. THIS NOTICE IS TO BE PROMINENTLY DISPLAYED IF THIS DECISION IS REPRODUCED.

Prior History:  [**1] ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN.

Cont'l Cas. Co. v. Indian Head Indus., 2012 U.S. Dist. LEXIS 51555 ( E.D. Mich., Apr. 12, 2012)Cont'l Cas. Co. v. Indian Head Indus., 2015 U.S. Dist. LEXIS 133421 ( E.D. Mich., Sept. 30, 2015)Cont'l Cas. Co. v. Indian Head Indus., 2010 U.S. Dist. LEXIS 3170 ( E.D. Mich., Jan. 15, 2010)

CORE TERMS

coverage, insurer, policies, injuries, district court, pro rata, incidental, damages, policy period, reimbursement, defense costs, method of allocation, summary judgment, bodily injury, costs, parties, Gasket, insurance policy, ambiguous, terms, injuries occurring, implied contract, prorated, orders, assumption of liability, policy language, triggered, Appeals, courts, rights

Civil Procedure, Appeals, Standards of Review, De Novo Review, Contracts Law, Contract Interpretation, Summary Judgment Review, Standards of Review, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Burdens of Proof, Movant Persuasion & Proof, Genuine Disputes, Preliminary Considerations, Federal & State Interrelationships, Choice of Law, Erie Doctrine, Insurance Law, Policy Interpretation, Ambiguous Terms, Coverage Favored, Claim, Contract & Practice Issues, Ordinary & Usual Meanings, Entire Contract, Appealability, Reviewability of Lower Court Decisions, Preservation for Review, Exclusions, Contract Interpretation, Parol Evidence, Course of Dealing, Ambiguous Terms, Allocation, Coinsurance, Contribution, Citations, Precedence & Publication, Publication of Opinions, Governments, Courts, Judicial Precedent, Evidence, Claim, Contract & Practice Issues, Policy Interpretation, Reservation of Rights, Business & Corporate Compliance, Contracts Law, Types of Contracts, Contracts Implied in Fact, Express Contracts, Reservation of Rights, Notice to Insured Parties