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Formosa Plastics Corp., U.S.A. v. ACE American Insurance Co.

August 14, 2009

FORMOSA PLASTICS CORPORATION, U.S.A. PLAINTIFF,
v.
ACE AMERICAN INSURANCE COMPANY, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Esther Salas United States Magistrate Judge

OPINION

Pending before the Court is Plaintiff Formosa Plastic Corporation's Motion to Amend its Complaint to add an additional defendant. (Docket Entry No.42.) Having considered the parties' submissions, and for the reasons set forth below, the Court GRANTS Plaintiff's Motion.

BACKGROUND

This insurance coverage action arises from an explosion and resulting fire on April 23, 2004, at Formosa's plastics manufacturing plant in Illiopolis, Illinois ("The Illiopolis Plant"). This accident resulted in the death of five Formosa employees, severe injuries to others, and the destruction of "much of the facility." (Compl. ¶ 18.) Formosa is a Delaware corporation with its principal place of business in Livingston, New Jersey. Plaintiff instituted this action in this Court on October 20, 2006. The action is currently pending against the following Defendants: ACE American Insurance Company; Zurich American Insurance Company; New Hampshire Insurance Company; Commonwealth Insurance Company; Arch Specialty Insurance Company; Everest Reinsurance (Bermuda Ltd.); Allied World Assurance Company Ltd.; Lloyd's Syndicate 1200 (AA-1127200) (UK); Lloyd's syndicate 1221 (UK); Lloyd's Syndicate 282 (UK); and Lloyd's Syndicate 2003 (UK) (collectively, the "Property Carriers" or "Defendants"). Formosa is seeking to recover from Defendants amounts not paid for the April 2004 accident.

For the policy period applicable to the April 2004 accident, Formosa enjoys property insurance coverage through a first-party all-risk property insurance program with a market of several contributing first-party insurers and four reinsurers. This insurance program, jointly underwritten by the Property Carriers in varying percentages, has a total limit of $350 million per loss and a deductible of $5 million per loss. The Property Carriers are all first-party insurers.

Formosa also has coverage under a Pollution Legal Liability Select Policy, provided by Commerce and Industry Insurance Company ("Commerce"), which provides "coverage for various categories of damage associated with or related to pollution, including cleanup costs and third party claims." (Proposed Am. Compl. ¶¶ 20-21.) This policy has a total limit of $100 million per loss and a deductible of $1 million per loss. (Id. at ¶ 20.)

After receiving several extensions of time in which to do so, the Property Carriers moved to dismiss this action on January 5, 2007. (Docket Entry No. 12.) After the motion was fully briefed, this Court notified the parties that the motion to dismiss would be converted to a motion for summary judgment. (Docket Entry No. 30.) That motion was denied by the Honorable Harold A. Ackerman in an Opinion and Order dated September 22, 2008. (Docket Entry No. 34.)

On November 5, 2008, the Undersigned notified the parties that a scheduling conference would take place in the case on January 8, 2009. (Docket Entry No. 38.) At the scheduling conference, certain discovery deadlines were set, and Plaintiff advised the Court of its desire to amend its Complaint to add Commerce as a Defendant in the case. The existing Defendants refused to consent to this amendment, and the Court set January 23, 2009, as the deadline by which Plaintiff was to file its Motion to Amend. (Docket Entry No. 43.)

Formosa now seeks leave to amend its Complaint to add Commerce as a defendant. The Property Carriers jointly oppose this Motion. The Court evaluates the Motion to Amend against the equitable and legal considerations underpinning Fed. R. Civ. P. 15(a).

ANALYSIS

Fed. R. Civ. P. 15(a) allows a party to amend its pleading by leave of court when justice so requires. Leave to amend pleadings is to be freely given. Fed. R. Civ. P. 15(a)(2); see also Foman v. Davis, 371 U.S. 178, 182 (1962). The decision to grant leave to amend rests within the discretion of the court. Foman, 371 U.S. at 182. Pursuant to Foman, leave to amend may be denied on the basis of: (1) undue delay; (2) bad faith or dilatory motive; (3) undue prejudice to the opposing party; and (4) futility of amendment. Id. "Only when these factors suggest that amendment would be 'unjust' should the court deny leave." Arthur v. Maersk, Inc., 434 F.3d 196, 203 (3d Cir. 2006) (internal citations omitted).

Formosa has argued that Commerce should be added to this action so that it can obtain "complete resolution of all Accident-related insurance matters." (Pl.'s Mem. in Supp. 3.) According to Formosa, all of the insurers involved have refused to pay the total amount of the loss, namely because "the Property and Pollution Carriers each assert that reimbursement of a significant portion of Formosa's loss is not their responsibility." (Id. at 4, see also Proposed Am. Compl. ¶ 5 ("Formosa's carriers have taken conflicting positions regarding which coverage applies to certain losses.").) The insurers thus provide "interlocking coverage" for the loss, and a global determination of coverage cannot be rendered unless all insurers are parties to the suit. (Pl.'s Mem. in Supp. 4.)

The Property Carriers argue that their policies should be evaluated separately from Commerce's policy to determine which, if any, insurance provider is liable for Plaintiff's loss. (Defs.' Mem. in Opp'n 11.) According to the Property Carriers, Plaintiff "is deliberately confusing first-party insurance with third-party insurance," neither of which has any bearing on the availability of coverage under the other type of policy. (Id.)

The Property Carriers oppose this Motion on several grounds. Many of the Property Carriers' arguments seek to attack factual allegations set forth in the Proposed Amended Complaint. The issue before this Court is not whether, in fact, the policies at issue provide "interlocking coverage." Rather, we are here to decide whether, taking the allegations in the proposed Amended Complaint as true, if it is appropriate to allow Plaintiff to amend its Complaint. Therefore, the Court ...


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