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Koppers Co., Inc. v. Aetna Cas. and Sur. Co.

July 22, 1998

KOPPERS COMPANY, INC., APPELLANT
v.
THE AETNA CASUALTY AND SURETY COMPANY; ZURICH INSURANCE COMPANY; THE TRAVELERS INDEMNITY CO.; THE AMERICAN HOME ASSURANCE COMPANY; COMMERCIAL UNION INSURANCE COMPANY; THE HOME INSURANCE COMPANY; UNDERWRITERS AT LLOYD'S OF LONDON



On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. No. 85-cv-02136)

Before: Alito, Rendell and Garth, Circuit Judges

The opinion of the court was delivered by: Garth, Circuit Judge.

Argued, Monday, April 27, 1998

(OPINION FILED AS A NOT-FOR-PUBLICATION OPINION ON JULY 22, 1998)

OPINION OF THE COURT

The issue we must decide in this appeal is whether an excess insurer (here, INA) was an indispensable party under Rule 19(b) of the Federal Rules of Civil Procedure so as to cause the dismissal of certain of the Appellant's claims when INA was not joined in this action against various other excess insurers. We hold that INA was not an indispensable party and accordingly that the claims should not have been dismissed. We therefore reverse.

I.

Appellant Koppers Company, Inc. ("Koppers") appeals the district court's dismissal of its claims against Appellees, certain underwriters from Lloyd's of London and certain London market insurance companies (hereinafter, "the London Insurers"), pertaining to seven (7) insurance policies that the London Insurers issued to Koppers to provide coverage for various environmental property damages that occurred from 1960-65 (hereinafter, "the 1960-65 policies"). The district court dismissed the claims relating to these policies because Koppers failed to join two other insurers -- Indemnity Insurance of North America and Insurance Company of North America (collectively, "INA") -- as indispensable parties pursuant to Rule 19(b) of the Federal Rules of Civil Procedure.

II.

As we have set forth the facts of the underlying dispute in an earlier opinion, see Koppers Co., Inc. v. Aetna Cas. & Sur. Co., 98 F.3d 1440, 1444 (3d Cir. 1996), we recite only the facts pertinent to the issues before us here.

Koppers is a large manufacturing company based in Pittsburgh, Pennsylvania. In the 1980s, federal and state agencies brought claims against Koppers based on environmental contamination at approximately 150 plant and disposal sites. Although Koppers had purchased insurance from several insurance companies, all of the insurers initially denied coverage for these claims when Koppers sought indemnification. Accordingly, in 1985, Koppers sued its two (2) primary comprehensive insurers for breach of contract in federal court, based upon diversity of citizenship.

In 1988, Koppers amended its complaint to sue other primary insurers and several excess insurers. Excess insurers -- such as the London Insurers in this case -- are insurers who contract to provide coverage only when the amount of the claim is beyond that of a primary insurer. In amending its complaint, however, Koppers decided not to sue INA (an excess insurer) because INA is a Pennsylvania company and joining it to the instant action would have defeated complete diversity. Thus, instead of suing INA in a federal forum, Koppers initiated suit in Pennsylvania state court over the same insurance claims.*fn1

In July 1994, the London Insurers filed a Motion to Dismiss claims pertaining to the 1960-65 policies because Koppers failed to join INA pursuant to Rule 19 of the Federal Rules of Civil Procedure. The London Insurers claimed that the relationship between the coverage that they provided and the coverage that INA provided concerning the 1960-65 policies made INA an indispensable party to the federal suit.

On October 20, 1994, without comment, the district court granted the London Insurers' Motion to Dismiss. Koppers filed a Motion for Reconsideration, but the district court denied that motion on March 24, 1995. As a result, Koppers brought suit against the London Insurers relating to the 1960-65 policies by adding them as defendants in the state court action against INA.

After the initial dismissal of Koppers' claims against the London Insurers pertaining to the 1960-65 policies, all of the defendant insurers except for the London Insurers settled with Koppers before trial. Thus, following the dismissal and settlement, the only remaining claims in the case were those against the London Insurers for the period from the 1940s to 1959 and 1966 to the 1970s. See Koppers, 98 F.3d at 1444.

In April-May 1995, the district court conducted a trial over Koppers' claims against the remaining defendants (the London Insurers) but the court limited the scope of that trial to policies that provided coverage from late 1953 until January 1960. The district court further limited the scope of the trial to only eighteen of the contaminated sites. Following a three week trial, the jury awarded Koppers $70 million. See id. On July 20, 1995, pursuant to Rule 54(b), the district court certified as final for interlocutory appeal the part of its judgment relating to the claims litigated at the jury trial, noted ...


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