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Ironshore Specialty Ins. Co. v. Haines & Kibblehouse, Inc.

United States District Court, E.D. Pennsylvania

March 13, 2014

IRONSHORE SPECIALTY INSURANCE COMPANY, Plaintiff,
v.
HAINES & KIBBLEHOUSE, INC., et al., Defendants

For IRONSHORE SPECIALTY INSURANCE COMPANY, Plaintiff: KEVIN M. HAAS, LEAD ATTORNEY, PRO HAC VICE, CLYDE & CO U.S. LLP, FLORHAM PARK, NJ; NANCY STUART PORTNEY, LEAD ATTORNEY, WILLIAM F. STEWART, STEWART BERNSTIEL REBAR & SMITH, BLUE BELL, PA.

For HAINES & KIBBLEHOUSE, INC., READING MATERIALS, INC., Defendants: JAY M. LEVIN, REED SMITH, PHILADELPHIA, PA; LAUREN ANGELUCCI, REED SMITH LLP, PHILADELPHIA, PA.

For EVANSTON INSURANCE COMPANY, Movant: RICHARD W. YOST, YOST & TRETTA, PHILADELPHIA, PA.

OPINION

Page 304

MEMORANDUM

LAWRENCE F. STENGEL, J.

This is a declaratory judgment action concerning the parties' rights and obligations under an excess liability insurance policy issued by Ironshore to Haines & Kibblehouse, under which Reading Materials, Inc. and Haines & Kibblehouse are named as insureds. This action relates to insurance coverage for a Pennsylvania state court tort action. The defendants filed a motion to dismiss or stay this action under Brillhart. For the foregoing reasons, I will grant the motion to dismiss.

I. BACKGROUND

a. State Court Tort Action

On October 9, 2009, John Hanlon was an electrician employed by Haines & Kibblehouse (H& K), who was working on an electrical problem at an asphalt production facility operated by Reading Materials, Inc. (RMI) in Reading, Pennsylvania. H& K is the corporate parent of RMI.[1] An explosion occurred during the course of his

Page 305

work, injuring Hanlon. On June 21, 2011, Hanlon and his wife filed suit in Pennsylvania state court against Current Connection & Mechanical Services, Inc., Current Connection Electrical Contractor, Inc., and Metropolitan Edison Company--the electrical service providers to the RMI plant--seeking tort recovery.[2]

On September 7, 2011, Metropolitan Edison filed a Joinder Complaint against RMI in order to hold it liable to Metropolitan Edison to the extent Metropolitan Edison may be held liable to the Hanlons.[3] Current Connection & Mechanical Services, Inc., Current Connection Electrical Contractor, Inc., and Metropolitan Edison Company were to be dismissed from the suit, leaving RMI as the only defendant in the Hanlons' action. Neither Metropolitan Edison nor any other party had joined H& K in the Hanlons' action.

b. The Ironshore Policy and Federal Declaratory Judgment Action

Ironshore issued a Commercial Excess Liability Policy No. OWC 30913001 to H& K, effective January 1, 2009 through January 1, 2010. Both H& K and RMI are named as insureds under that Policy. By letter dated October 26, 2012, Ironshore agreed to defend the Hanlons' action under a reservation of rights and RMI tendered the defense to it.[4] In its letter, Ironshore specifically reserved the right to deny coverage and terminate its defense of the Hanlons' action based on two policy exclusions related to workers' compensation and the employer's liability.

In a letter dated November 13, 2012, Hanlons' counsel issued a settlement demand to RMI for payment of $3.9 million under the Policy by November 30, 2012. The letter also stated that, should the demand not be accepted and should the Hanlons obtain a judgment in excess of $3.9 million, the Hanlons would seek an assignment from RMI of a purported bad faith claims against Ironshore.[5] The Policy would be limited to $3.1 million because $1.9 million of the $5 million policy limit has been paid out for other claims.[6]

On December 3, 2012, Ironshore filed this declaratory judgment ...


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