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Chemical Leaman Tank Lines, Inc. v. Aetna Casualty & Surety

November 1, 1999

CHEMICAL LEAMAN TANK LINES, INC.
PLAINTIFF,
V.
THE AETNA CASUALTY & SURETY ROBIN ANTHONY GILDART JACKSON,
INSURANCE COMPANY LTD. AN UNDERWRITER AT LLOYD'S LONDON, ET AL.
DEFENDANTS.



The opinion of the court was delivered by: Stanley S. Brotman U.S. District Judge

FOR PUBLICATION

OPINION ON MOTION REGARDING THE 1977-80 POLICIES

BROTMAN, DISTRICT JUDGE

Before this Court is plaintiff Chemical Leaman Tank Lines, Inc.'s motion regarding the 1977-80 policies. Specifically, the plaintiff asks this Court to enforce its August 10th 1992 Stipulation and Order, which provides, in pertinent part, that Walbrook Insurance Company Ltd. is liable for a 19.05% share of the first 80% of coverage under excess policy number 77-3833-19. *fn1

I. PROCEDURAL AND FACTUAL BACKGROUND

On August 10th, 1992, this Court approved and entered a stipulation between plaintiff Chemical Leaman Tank Lines, Inc. ("Chemical Leaman") and defendant London Market Insurers ("LMI") which identified the applicable insurers and their relative percentages of coverage liability under the various policies at issue in the upcoming jury trial. See August 10th 1992 Stipulation and Order at 10. The stipulation identified a page stamped "X1186" as an amendment determinative of the parties rights with respect to policy number 77-3833-19. See id.

Page X1186 provided, in pertinent part, that Walbrook Insurance Company Ltd. ("Walbrook") would be liable for a 19.05 % share of the first 80% of coverage under the policy. See Decl. of John P. Dean Ex. 3. At trial Chemical Leaman offered into evidence, without objection from LMI, the documents stipulated to as policy 77-383319. See Pl.['s] Br. at 3-4. Included within these submissions was page X1186. See Pl.['s] Br. at 3. Following the trial, this Court entered a judgment declaring LMI liable in accordance with the policy limits set forth in the stipulation. On appeal, the Third Circuit affirmed the Court's liability determinations, but remanded for further allocation proceedings unrelated to the issue in the instant motion. *fn2

Over four years after the initial jury determination, during an October 1997 settlement conference with Magistrate Judge Rosen, counsel for LMI asserted that the subscribers for policy 77-3833-19 were not determined by X1186, but rather by "endorsement 17," a document that was not included in the 1992 stipulation. See Pl.['s] Br. at 4-5. The defendant contended that endorsement 17 amended X1186 by providing that Walbrook would assume 80% of the liability risk, not the 15.24 % *fn3 prescribed by the stipulation. See Decl. of Henry Lee Ex. A.; see also Def.['s] Br. at 6; Decl. of John P. Dean Ex. 5.

The issue of endorsement 17's validity has taken on critical importance since Walbrook, the London insurer whose liability percentage was significantly increased, has become insolvent. See Pl.['s] Br. at 5. While the London Market Insurers acknowledge that endorsement 17 was in their possession prior to the agreement, LMI claims that the document was inadvertently omitted from the stipulation. See Lee Decl. at ¶ 4; Def.['s] Br. at 6. The excess insurers contend that they were first alerted to the omission by the instant motion, and that relief would have been promptly sought had they been informed sooner. See Def.['s] Br. at 14. Although LMI does not dispute endorsement 17's absence from the stipulation, it opposes Chemical Leaman's motion on two grounds: 1) the defendant argues that the express language of the stipulation allows for post-trial modification; and 2) LMI alternatively contends that enforcement of the stipulation would result in "manifest injustice" since the modification allegedly occurred at the behest of agents for Chemical Leaman.

II. DISCUSSION

A. MANIFEST INJUSTICE

As a general rule, absent an express limitation or a clear manifestation of intent to the contrary, pretrial stipulations remain binding between parties during subsequent proceedings. See Waldorf v. Shuta, 142 F.3d 601, 616 (3d Cir. 1998). Courts have, however, allowed for modification in "exceptional circumstances." See Kohn v. American Metal Climax, Inc., 458 F.2d 255, 307 (3d Cir. 1972). The Third Circuit has recognized that "[a]llowing parties easily to set aside or modify stipulations . . . wast[es] judicial resources and undermin[es] future confidence in such agreements." See Waldorf v. Shuta, 142 F.3d 601, 616 (3d Cir. 1998). Therefore, federal caselaw clearly establishes that a stipulation remains in effect unless a failure to modify or set it aside would result in "manifest injustice." See Waldorf, 142 F.3d at 616; Wheeler v. John Deere Co., 935 F.2d 1090, 1097 (10th Cir. 1991); Hunt v. Marchetti, 824 F.2d 916 (11th Cir. 1987).

In Waldorf v. Shuta, the Third Circuit listed four factors that courts have focused on in determining whether a refusal to alter or modify a stipulation would result in manifest injustice:

1) the effect of the stipulation on the party seeking to withdraw the stipulation; 2) the effect on the other parties to the litigation; 3) the occurrence of intervening events since the parties agreed to the stipulation; and 4) whether evidence contrary to ...


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