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York International Corporation v. Liberty Mutual Insurance

May 26, 2011

YORK INTERNATIONAL CORPORATION,
PLAINTIFF
v.
LIBERTY MUTUAL INSURANCE
COMPANY, DEFENDANT



The opinion of the court was delivered by: The Honorable Sylvia H. Rambo

MEMORANDUM

Before the court is Defendant's motion for summary judgment (Doc.23) and Plaintiff's cross-motion for partial summary judgment (Doc. 25). For the reasons that follow, Plaintiff's motion will be granted in part and denied in part, and Defendant's motion will be denied.

I. Background*fn1

A. History of York International Corporation

This is an insurance indemnification action and breach of contract case brought by York International Corporation ("York International") against Liberty Mutual Insurance Company ("Liberty Mutual") whereby York International is seeking indemnification and defense from Liberty Mutual for over one thousand underlying asbestos complaints.*fn2

Liberty Mutual, from October 1, 1952, through October 1, 1956, provided general liability insurance to York Corporation - not to be confused with York International, Plaintiff here, although the parties agree that through a series of corporate transactions, York International eventually acquired all of the assets of York Corporation. (Stipulation, Doc. 22, ¶ 2.)

On or around June 30, 1956, all assets and liabilities of York Corporation were transferred to Borg-Warner Corporation ("Borg-Warner"), as evidenced by an Agreement of Exchange of Assets for Capital Stock dated May 9, 1956, and a Bill of Sale dated June 30, 1956. (Id., ¶ 5.) The Bill of Sale contained the following relevant language:

[York Corporation] does hereby sell, grant, convey, assign, transfer and set over to Borg-Warner Corporation, its successors and assigns, all of its property and assets, real, personal, and mixed, both tangible and intangible, whatsoever in nature and description and wheresoever situated . . . including without limitation of the foregoing . . . insurance policies of every kind . . . . (Bill of Sale, Ex. 3 to Stipulation, at YORK/LM 00001.)

. . . however, that nothing in this bill of sale and conveyance shall be construed as an attempt hereby to assign any contract, claim, demand or right that is non-assignable but York Corporation covenants to use its best effort to obtain any and all consents necessary to the assignment of any contract, claim, demand or right not now assignable

(Id., at YORK/LM 00002 ("Non-Assignment Clause")).

The assets obtained by Borg-Warner were placed in the York Division of Borg-Warner which operated until the early 1980s. (Stipulation, Doc. 22, ¶ 6.) Meanwhile, in 1972, York International Corporation was formed in Delaware and became a wholly-owned subsidiary of Borg-Warner. (Id., ¶ 12.) In 1981, Borg-Warner also acquired and operated the following companies: Luxaire, Inc.;York-Luxaire, Inc.; and Westinghouse Electric Corporation. (Id., ¶¶ 13-14.) Luxaire, Inc. manufactured products under the brands Luxaire, Fraser-Johnston, Westinghouse and Moncreif. (Id., ¶ 14.)

Through a series of events not pertinent to this action, in December 1985, Borg-Warner - which at this time was called Borg-Warner Air Conditioning, Inc. - changed its name to York International Corporation, not the same company as Plaintiff. (Id., ¶¶ 15-21.) Through another convoluted series of corporate transactions and acquisitions, in 1991, York International, Plaintiff here, was formed. (Id., ¶¶ 22-31.) Notably, the parties stipulate that Plaintiff York International acquired all assets of the predecessor companies.

B. Liberty Mutual Policies

Between October 1, 1952, and October 1, 1956, Liberty Mutual issued four general comprehensive liability policies to the original York Corporation. (Id., ¶ 34.) Each policy contained an assignment clause that stated the following*fn3

"Assignment of interest under this policy shall not bind the company until its consent is endorsed here-on. . . ." (Liberty Mutual, Comprehensive General Liability Policy Nos. CGL20-301369-52PA & LB20-201369-53NY, Exs.. 26 & 27 to Stipulation.) York International stipulated that they have no facts or information available to indicate York Corporation obtained Liberty Mutual's consent when they assigned all of their ...


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