Columbus Mckinnon Corp. v. Travelers Indem. Co. (336 F. Supp. 3d 231, 2018)

United States District Court for the Southern District of Illinois 2018-09-28

Citations

Full opinion text

VICTOR MARRERO, United States District Judge

I. BACKGROUND

Plaintiff Columbus McKinnon Corporation ("Columbus McKinnon" or "Plaintiff") brought this action against defendants The Travelers Indemnity Company ("Travelers") and Liberty Mutual Insurance Company ("Liberty Mutual," and together with Travelers, "Defendants"), alleging that insurance policies issued to Columbus McKinnon by Travelers and Liberty Mutual obligate them to defend and indemnify Columbus McKinnon regarding thousands of personal injury lawsuits filed against Columbus McKinnon. (See Dkt. No. 1.)

By Order dated December 7, 2017 (Dkt. No. 159), the Court referred several dispositive motions to Magistrate Judge Debra Freeman. Specifically, the Court referred Plaintiff's motion for partial summary judgment regarding Defendants' duty to defend ("Plaintiff's Motion," Dkt. No. 114) and Defendants' five cross-motions for partial summary judgment regarding the duty to defend (Dkt. No. 132), allocation of defense costs (Dkt. No. 136), Plaintiff's breach of the cooperation and voluntary payments provisions (Dkt. No. 128), defense rates (Dkt. No. 135), and the duty to indemnify (Dkt. No. 130) (collectively, "Defendants' Cross-Motions").

On August 10, 2018, Magistrate Judge Debra Freeman issued a Report and Recommendation, a copy of which is attached and incorporated herein, recommending that Plaintiff's Motion be granted in part and denied in part. (See"Report," Dkt. No. 168 at 269.) The Report further recommended that Defendants' Cross-Motions be resolved as follows: the motion regarding the duty to defend be granted in part and denied in part; the motion regarding allocation of defense costs be granted in part and denied in part; the motion regarding Plaintiff's breach of the cooperation and voluntary payments provisions be denied; the motion regarding defense rates be denied; and the motion regarding the duty to indemnify be granted in part and denied in part. (See id. at 269-70.)

On September 7, 2018, Columbus McKinnon, Travelers, and Liberty Mutual filed timely objections to the Report and Recommendation, and challenged its findings and conclusions on various grounds. (See"September 7 Objections," Dkt. Nos. 178, 179, 180.) On September 21, 2018, Columbus McKinnon, Travelers, and Liberty Mutual filed timely responses to the September 7 Objections. (See Dkt. Nos. 185, 186, 189.)

For the reasons stated below, the Court adopts the recommendations of the Report in their entirety.

II. STANDARD OF REVIEW

A district court evaluating a magistrate judge's report may adopt those portions of the report to which no "specific written objection" is made, as long as the factual and legal bases supporting the findings and conclusions set forth in those sections are not clearly erroneous or contrary to law. Fed. R. Civ. P. 72(b) ; see also Thomas v. Arn, 474 U.S. 140, 149, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985). However, "[w]hen a timely and specific objection has been made, the court is obligated to review the contested issues de novo." Fischer v. Forrest, 286 F.Supp.3d 590, 600-01 (S.D.N.Y. 2018) (citing Fed. R. Civ. P. 72(b) and Hynes v. Squillace, 143 F.3d 653, 656 (2d Cir. 1998) ). A district court is not required to review any portion of a magistrate judge's report that is not the subject of an objection. See Thomas, 474 U.S. at 149, 106 S.Ct. 466. Because motions for summary judgment require a final determination of the parties' claims, a district court's review of a magistrate judge's determination of such a motion should be evaluated under the de novo standard applicable to dispositive matters under Federal Rule of Civil Procedure 72(b), as opposed to the clearly erroneous or contrary to law standard applicable to a magistrate judge's ruling as to non-dispositive matters under Federal Rule of Civil Procedure Rule 72(a). A district judge may accept, set aside, or modify, in whole or in part, the findings and recommendations of the magistrate judge. See Fed. R. Civ. P. 72(b).

III. DISCUSSION

Upon a de novo review of the full factual record in this litigation, including the pleadings and the parties' respective papers submitted in connection with the underlying motions and in this proceeding, as well as the Report and applicable legal authorities, the Court reaches the same conclusions as Magistrate Judge Freeman. The Court further concludes that the findings, reasoning, and legal support for the recommendations made in the Report are consistent with applicable law as set forth in the cases and statutes relied upon therein, and are thus warranted. Accordingly, for substantially the reasons set forth in Magistrate Judge Freeman's thorough and detailed Report, the Court adopts in their entirety the Report's factual and legal analyses and determinations, as well as its substantive recommendations, as the Court's ruling on Plaintiff's Motion (Dkt. No. 114) and Defendants' Cross-Motions (Dkt. Nos. 128, 130, 132, 135, 136).

IV. ORDER

For the reasons discussed above, it is hereby

ORDERED that the Report and Recommendation of Magistrate Judge Debra Freeman dated August 10, 2018 (Dkt. No. 168) is adopted in its entirety, and the objections of Plaintiff Columbus McKinnon Corporation, Defendant/Third-Party Plaintiff The Travelers Indemnity Company, and Defendant Liberty Mutual Insurance Company (Dkt. Nos. 178, 179, 180) are DENIED. It is further

ORDERED that Plaintiff's motion for partial summary judgment (Dkt. No. 114) is GRANTED IN PART AND DENIED IN PART ; and it is further

ORDERED that Defendants' cross-motion for partial summary judgment regarding the duty to defend (Dkt. No. 132) is GRANTED IN PART AND DENIED IN PART ; and it is further

ORDERED that Defendants' cross-motion for partial summary judgment regarding allocation of defense costs (Dkt. No. 136) is GRANTED IN PART AND DENIED IN PART ; and it is further

ORDERED that Defendants' cross-motion for partial summary judgment regarding Plaintiff's breach of the cooperation and voluntary payments provisions (Dkt. No. 128) is DENIED ; and it is further

ORDERED that Liberty Mutual's cross-motion for partial summary judgment regarding defense rates (Dkt. No. 135) is DENIED ; and it is finally

ORDERED that Defendants' cross-motion for partial summary judgment regarding the duty to indemnify (Dkt. No. 130) is GRANTED IN PART AND DENIED IN PART.

SO ORDERED .

REPORT AND RECOMMENDATION

DEBRA FREEMAN, United States Magistrate Judge

TO THE HONORABLE VICTOR MARRERO, U.S.D.J.:

In this insurance coverage action, plaintiff Columbus McKinnon Corporation ("Plaintiff") is seeking a declaration that its insurers, defendants Travelers Indemnity Company ("Travelers") and Liberty Mutual Insurance Company ("Liberty Mutual") (together, the "Insurers" or "Defendants") breached their duties to defend and indemnify Plaintiff in connection with numerous product liability claims (specifically, bodily injury claims resulting from asbestos exposure) that have been asserted against Plaintiff in several jurisdictions across the United States (the "Underlying Asbestos Claims" or the "Claims"). On the claims raised in its Complaint, Plaintiff is also seeking reimbursement for the costs it incurred, both to defend against the Underlying Asbestos Claims and to settle certain of them, after Defendants allegedly breached their obligations.

Currently before this Court, pursuant to a reference to report and recommend on dispositive motions, are (1) a motion by Plaintiff seeking partial summary judgment in its favor on the issue of whether Defendants have a duty to provide Plaintiff with a complete defense on any pending Underlying Asbestos Claims and any similar claims that may be asserted in the future (Dkt. 114), and (2) five separate cross-motions by Defendants, seeking partial summary judgment in their favor on the issues of (a) whether the Claims give rise to a duty to defend at all (Dkt. 132); (b) whether, assuming a defense obligation, any defense costs should be allocated pro rata with Plaintiff, based on the fact that Plaintiff was self-insured for a period of time relevant to the Claims (Dkt. 136); (b) whether any duty to defend and/or indemnify has been vitiated by Plaintiff's purported lack of cooperation in its defense by the Insurers, and/or by Plaintiff's voluntary payments to resolve some of the Claims (Dkt. 128); (d) whether the attorneys' fees charged to Plaintiff by the law firm that it retained to defend against the Claims (after Defendants' allegedly breached their duty to defend) are based on billing rates that are unreasonably high as a matter of law, such that, if Defendants are required to pay any past-incurred defense costs, Defendants should not have to reimburse Plaintiff at those rates (Dkt. 135); and (e) whether Defendants have any obligation to indemnify Plaintiff on the Underlying Asbestos Claims (Dkt. 130).

In this Report and Recommendation, this Court will address: first, Plaintiff's motion on the duty to defend, together with Defendants' cross-motions on the duty to defend and the allocation of defense costs; second, Defendants' cross-motions on Plaintiff's alleged failure to abide by the cooperation and voluntary payment provisions of the relevant insurance policies, and on the reasonableness of defense costs; and, finally, Defendants' cross-motion on the duty to indemnify. For the reasons discussed below, I recommend that Plaintiff's motion, as well as Defendants' cross-motions on the duty to defend, the allocation of defenses costs, and the duty to indemnify, be granted in part and denied in part, and that Defendants' cross-motions regarding Plaintiff's duty of cooperation, voluntary payments, and the reasonableness of defense costs be denied.

BACKGROUND

A. Factual Background

The relevant evidentiary record in this case has been presented by the parties through nine Declarations or Affidavits and exhibits thereto. In addition, pursuant to Local Civil Rule 56.1, the parties have filed no fewer than 17 dueling statements of facts that are supposedly undisputed, or that the parties claim are contested. This Court has reviewed the submitted evidence and the parties' several Rule 56.1 Statements, and, in the following summary, has attempted to highlight those undisputed and disputed facts that are most pertinent to this Court's recommendation as to how the motion and cross-motions should be resolved.

1. The Insurance Policies Issued by Defendants

This litigation involves insurance policies issued by both Travelers (the "Travelers Policies") and Liberty Mutual (the "Liberty Mutual Policies") (collectively, the "Policies"), as described below.

a. The Travelers Policies

The Travelers Policies consist of various primary general liability, umbrella and/or catastrophe, and excess insurance policies issued by Travelers to Plaintiff, as the named insured, over a 27-year period, from April 1, 1958 to April 1, 1985 (the "Travelers Policy Period"). (Pl. 56.1 Stmt. ¶¶ 38, 40, 44, 48, 52, 56, 60, 63, 66, 69, 72, 75, 78, 81, 84; Def. Duty To Defend 56.1 Stmt. ¶¶ 1-3, 8.) The general liability policies were in effect for the entire Travelers Policy Period. (Pl. 56.1 Stmt. ¶ 38; Def. Duty To Defend 56.1 Stmt. ¶ 1.) The umbrella/catastrophe policies were in effect only from sometime in June 1970 to January 1, 1973, and again from January 1, 1974 to January 1, 1977. (Pl. 56.1 Stmt. ¶¶ 40, 44, 48, 52, 56; Def. Duty To Defend 56.1 Stmt. ¶ 2.) The excess policies were in effect only from January 1, 1968 to January 1, 1974, and again from January 1, 1977 to April 1, 1984. (Pl. 56.1 Stmt. ¶¶ 60, 63, 66, 69, 72, 75, 78, 81, 84; Def. Duty To Defend 56.1 Stmt. ¶ 3).

The general liability policies contain the same, or very similar, coverage provisions, and state, in relevant part:

The company [Travelers] will pay on behalf of the insured [Plaintiff] all sums which the insured shall become legally obligated to pay as damages because of ... bodily injury ... to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury ... even if any of the allegations of the suit are groundless, false, or fraudulent ...

(Pl. 56.1 Stmt. ¶¶ 5, 8, 11, 15, 19, 23, 27, 31, 35; Def. Duty To Defend 56.1 Stmt. ¶¶ 4, 5 (emphasis omitted).)

Travelers also issued umbrella/catastrophe policies to Plaintiff, which generally provide coverage "for damages in excess of the retained limit [of the general liability policies] because of bodily injury ... to which [the] policy applies" (Pl. 56.1 Stmt. ¶¶ 41, 45, 49, 53, 57; Def. Duty To Defend 56.1 Stmt. ¶ 6), and excess policies that provide additional coverage, "subject to all of the conditions, agreements, exclusions and limitations of ... the underlying insurance in all respects." (Pl. 56.1 Stmt. ¶¶ 67, 70, 73, 76, 79; Def. Duty To Defend 56.1 Stmt. ¶ 7).

The Travelers Policies also contain cooperation and voluntary payment provisions, which generally provide:

The insured shall cooperate with the company ... and the insured shall attend hearings and trials and assist in securing and giving evidence and obtaining the attendance of witnesses. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for first aid to others at the time of the accident.

(See, e.g. , Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 4 (quoting Schretzman Decl., Ex. 1 (Dkt. 116-1), at TRA V000658).)

b. The Liberty Mutual Policies

The Liberty Mutual Policies consist of general primary liability policies issued by Liberty Mutual to Plaintiff for the period from April 1, 1985 to April 1, 1989 (the "Liberty Mutual Policy Period") (together with the Travelers Policy Period, the "Policy Periods"). (Pl. 56.1 Stmt. ¶¶ 88, 90, 92, 94, 96; Def. Duty To Defend 56.1 Stmt. ¶ 9.) Plaintiff is the named insured under these Liberty Mutual policies. (See generally Pl. 56.1 Stmt.; Def. Duty To Defend 56.1 Stmt. ¶ 13.) The policies in effect from April 1985 through March 1988 generally provide:

The company [Liberty Mutual] will pay on behalf of the insured [Plaintiff] all sums which the insured shall become legally obligated to pay as damages because of ... bodily injury ... to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury ... even if any of the allegations of the suit are groundless, false, or fraudulent ...

(Pl. 56.1 Stmt. ¶¶ 89, 91, 93, 95; Def. Duty To Defend 56.1 Stmt. ¶¶ 10-12.)

The policy in effect from April 1, 1988 through April 1, 1989 differs somewhat from the other Liberty Mutual Policies. That policy provides that Liberty Mutual "will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." (Pl. 56.1 Stmt. ¶ 97; Def. Allocation 56.1 Stmt. ¶ 9.) It also contains the following non-cumulation provision:

If the same "occurrence" gives rise to "bodily injury" or "property damage" which occurs partly before and partly within the policy period, our each occurrence limit under this policy will be reduced by the amount of each payment made by us with respect to such "occurrence" under a previous policy or policies of which this policy is a replacement.

(Pl. 56.1 Stmt. ¶ 98; Def. Allocation 56.1 Stmt. ¶ 12.)

All of the Liberty Mutual Policies contain similar cooperation and voluntary payment provisions, which generally provide:

The insured shall cooperate with the company and, upon the company's request, assist in making settlements in the conduct of suits and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of injury or damage with respect to which insurance is afforded under this policy, and the insured shall attend hearings and trials and assist in securing and giving evidence and obtaining the attendance of witnesses. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for first aid to others at the time of the accident.

(See, e.g. , Schretzman Decl, Ex. 25 (Dkt. 116-35), at LMIC000059; Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 7.)

2. Plaintiff's Captive Insurer

In 1990, after the last of the Policies had expired, Plaintiff incorporated a wholly-owned subsidiary, CM Insurance Company, Inc. ("CMIC"), to act as Plaintiff's captive insurance company. (Def. Allocation 56.1 Stmt. ¶ 13; Pl. Allocation 56.1 Response ¶ 13.) According to Plaintiff, "captive insurance is a form of self-insurance," and CMIC "was set up so [Plaintiff] could self-insure its product liability claims." (Pl. Allocation 56.1 Response ¶ 15.) During the time that CMIC has acted as its captive insurer, Plaintiff asserts that it has remained "financially responsible for all defense and indemnity costs associated with any [a]sbestos [s]uits because [Plaintiff] and CMIC [have] effectively operate[d] as one company." (Id. ¶ 16.)

3. The Underlying Asbestos Claims Against Plaintiff and Its After-Acquired Entities

Plaintiff has manufactured hoists since approximately 1935. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 10; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 10.) The last of the Travelers and Liberty Mutual Policies, which provided coverage for bodily injury claims arising out of claimants' use of Plaintiff's hoists, lapsed in 1985 and 1989, respectively. (See Background, supra , at Section (A)(1).) In 1995, several years after the expiration of the Policies, Plaintiff acquired LTI Holdings, Inc. ("LTI"), a manufacturer and distributer of cranes, as well as hoists. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶¶ 11-12; Pl. Coop./Vol. Paymt. 56.1 Response ¶¶ 11-12.) Then, in 1997, Plaintiff acquired Spreckels Industries Inc., now known as Yale International, Inc. ("Yale"), which also manufactured both cranes and hoists. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶¶ 13-14; Pl. Coop./Vol. Paymt. 56.1 Response ¶¶ 13-14.) As both LTI and Yale were acquired by Plaintiff after the Policies had lapsed, they will both be referred to herein as the "After-Acquired Entities." Plaintiff had not manufactured cranes prior to its acquisition of the After-Acquired Entities, nor had a corporate relationship between Plaintiff and those entities existed prior to the dates of their acquisition. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 15-16; Pl. Coop./Vol. Paymt. 56.1 Response ¶¶ 15-16.)

Since the early 1990s, Plaintiff has been named as a defendant on bodily injury claims resulting from exposure to asbestos-containing products manufactured by Plaintiff and/or the After-Acquired Entities. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 18; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 18.) The asbestos litigation commenced in Maryland, but, over time, emerged in other jurisdictions, as well, including Michigan, California, Illinois, West Virginia, and Pennsylvania. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶¶ 18-20; Pl. Coop./Vol. Paymt. 56.1 Response ¶¶ 18-20.) With the exception of the Maryland litigation and "a single case venued in New York," Defendants assert that the Underlying Asbestos Claims have "universally" involved cranes (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 21), which Plaintiff did not manufacture prior to its acquisition of LIT and Yale. Thus, with few exceptions, Defendants assert that any liability that Plaintiff could face on the Claims, based on the claimants' exposure to asbestos during the coverage periods of the Policies, could only arise from the claimants' exposure to products manufactured by LTI and Yale, which were not acquired by Plaintiff until after the Policies lapsed, and were not themselves insured under the Policies. (See generally id. )

Plaintiff disputes this version of the facts, and contends that the asbestos litigation concerns Plaintiffs products generally and, as such, could involve products within the scope of the Policies. Specifically, Plaintiff claims that, although LTI and Yale also made hoists, Plaintiff itself had a "huge market share in hoists" during the Policy Periods, and that the hoists it manufactured were almost always attached to cranes manufactured by others. (Pl. Coop./Vol. Paymt. 56.1 Response ¶ 21 (quoting Maloney Decl., Ex. 11 (Deposition of William Kiniry, Jr. ("Kiniry Dep.") ), at 65:15-17, 59:17-20).) Further, Plaintiff explains that hoists themselves were once manufactured with asbestos in their braking mechanisms. (Id. ) Accordingly, Plaintiff contends that - whether the allegations of the Underlying Asbestos Claims state this explicitly or not - there is a high likelihood that, during the Policy Periods, any given claimant's exposure to asbestos in a crane could have been the result of exposure to asbestos in a hoist (manufactured by Plaintiff) that was itself attached to the crane (manufactured by an After-Acquired Entity). (See Pl. Duty To Defend 56.1 Response ¶ 35.)

4. The Parties' Defense of Underlying Asbestos Claims Prior to 2011

At some point - the exact timing is disputed - the parties began discussing a cost-sharing agreement to deal with the defense of the Maryland asbestos claims which, by and large, arose from the claimants' alleged exposure to asbestos at a Mack Truck plant in the state (the "Mack Truck Claims"). (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶¶ 27-28; Pl. Coop./Vol. Paymt. 56.1 Response ¶¶ 27-28.) On March 31, 1997, the parties entered into a written cost-sharing agreement regarding defense of the Mack Truck Claims (the "Mack Truck Agreement"). (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 29; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 29.) Pursuant to the Mack Truck Agreement, each party's share of the defense costs was calculated using a pro rata formula based on the periods covered by the Policies or Plaintiff's self-insurance. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 30; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 30.) Defendants assert that, pursuant to the Mack Truck Agreement, the parties' shares of the defense costs for these claims were periodically adjusted, "with Defendants' shares gradually decreasing and [Plaintiff's] share gradually increasing over time." (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 30.) The Mack Truck Agreement has not yet been terminated, and Plaintiff has not placed the Mack Truck Claims at issue in this case (see Complaint, dated June 29, 2015 ("Compl.") (Dkt. 1) at 12 n.1; Pl. Coop./Vol. Paymt. 56.1 Response ¶¶ 30-31), although, to some extent, the parties' arguments on the instant motions nonetheless implicate those claims.

Beginning in late 2000, Plaintiff was also named in a number of asbestos-related bodily injury lawsuits in Michigan. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 34; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 34.) Based on a "handshake" agreement between the parties in or about 2002, defense costs in the Michigan cases were also shared. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 35; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 35; see also id. ¶ 31.) Then, over time, the parties entered into informal agreements to share the costs of defending asbestos claims brought in other jurisdictions, as well. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶¶ 37, 54; Pl. Coop./Vol. Paymt. 56.1 Response ¶¶ 37, 54.) Under these informal agreements, Defendants participated in the defense of Underlying Asbestos Claims, although it appears that Defendants did not make any indemnity payments in connection with settlements of claims. (See Def. Coop./Vol. Paymt. 56.1 Stmt. ¶¶ 40, 121; Pl. Coop./Vol. Paymt. 56.1 Response ¶¶ 40, 121.)

From December 2002 to 2011, Timothy Harvey ("Harvey") served as Plaintiff's general counsel, and, together with Donald Miller ("Miller"), who was Plaintiff's local counsel for the Michigan cases, Harvey served as "de facto " national coordinating counsel ("NCC") for the Underlying Asbestos Claims. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶¶ 26, 42, 59; PI. Coop./Vol. Paymt. 56.1 Response ¶¶ 26, 42, 59.) On their cross-motions, Defendants characterize the parties' pre-2011 relationship as one of unity and cooperation, by which outside counsel "regularly provided status update reports to the insurers for the cases they were handling" (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 48 (citing Maloney Decl., Ex. 6 (Deposition of Harvey ("Harvey Dep.") ), at 184:18-24), Defendants paid only "their proportionate share of defense costs" (id. ¶ 55 (citing Maloney Decl., Ex. 22 (Deposition of Jenna Perkins), at 28:19-29:8, 29:20-30:5, 34:12-21; Maloney Decl., Ex. 21 (Deposition of Susan Gunty ("Gunty Dep.") ), at 42:8-10) ), and "[l]ocal counsel collaborated both with the insurers and with each other" (id. ¶ 58 (citing Harvey Dep., at 184:18-24; Gunty Dep., at 48:21-49:3) ).

Plaintiff, in response, paints Defendants' relationship with local counsel, during the pre-2011 time frame, as professional, courteous, and responsive, but not as collaborative. (Pl. Coop./Vol. Paymt. 56.1 Response ¶ 58 (citing Gunty Dep., at 48:17-20).) Although it has continued to honor the cost-sharing agreement made with respect to the Mack Truck Claims (and has been willing to carve those claims out from its Complaint in this action (Compl. ¶ 74 n.1) ), Plaintiff nonetheless contends that Defendants are obligated, under the Policies, to pay 100 percent of the defense costs for the Underlying Asbestos Claims, and not just a pro rata share (Pl. Coop./Vol. Paymt. 56.1 Response ¶ 55). Plaintiff also cites instances in which Defendants seemed to be working against Plaintiff, by, for example, forcing "defense counsel (Don Miller) to reduce his rates, which forced [Plaintiff] to make up the difference." (Id. ¶ 47 (citing Maloney Dec, Ex. 10 (Deposition of Miller ("Miller Dep.") ), at 88:16-89:22).) In further describing the purported conflict of interest between the parties, Plaintiff states that Harvey warned Plaintiff to "[b]e careful of Candace Buehner [Defendants' representative]," and to "look very carefully at any proposal she [made]," because, according to Harvey, Travelers "had mentioned a while back that [they] wanted to decrease Travelers contribution to the [underlying asbestos] cases." (Pl. Coop./Vol. Paymt. 56.1 Response ¶ 58 (quoting Luttinger Decl., Ex. 36, at 1).)

5. The Parties' Defense of Underlying Asbestos Claims from 2011 to the Present

Up until 2011, it had been the parties' understanding that Harvey's eventual successor as Plaintiffs general counsel would assume Harvey's role as NCC for the asbestos litigation, with Miller's continued assistance. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 59 n.9; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 59.) In January 2011, however, Alan Korman ("Korman") became Plaintiff's new general counsel (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 65; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 65), and, according to Defendants, Korman "wasted no time" in retaining the law firm of DLA Piper as NCC for the Underlying Asbestos Claims (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 66 (citing Maloney Decl., Ex. 27 (DLA Piper engagement letter) ) ).

While Plaintiff concedes that, prior to becoming Plaintiff's general counsel, Korman had a relationship with DLA Piper, it takes issue with Defendants' characterization of events, and states that Korman initially retained the firm "for corporate litigation and intellectual property matters." (Pl. Coop./Vol. Paymt. 56.1 Response ¶ 66 (citing Maloney Decl., Ex. 8 (Deposition of Korman ("Korman Dep.") ), at 27:11-14, 27:20-28:4).) According to Plaintiff, Korman only retained DLA Piper as NCC for the Underlying Asbestos Claims following a meeting with local counsel on those Claims two or three weeks into his tenure, at which time he assessed Plaintiff's potential liability and determined that he needed to bring in DLA Piper as NCC. (Id. (citing Korman Dep., at 33:10-20).)

In any event, it is undisputed that Korman retained DLA Piper as NCC in February 2011. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 73; Pl. Coop./Vol. Paymt. 56.1 Response ¶ 73.) It appears, however, that Korman may not have given Defendants any formal notice of this action, and certainly did not do so until after the action was taken. (See Def. Coop./Vol. Paymt. 56.1 Stmt. ¶ 75 (citing Korman Dep., at 33:21-34:7, 328:18-329:4, as support for Defendants' assertion that Plaintiff "never directly advised Defendants of DLA's retention"); Pl. Coop./Vol. Paymt. 56.1 Response ¶ 75 (quoting Korman Dep., at 34:8-14, as support for Plaintiff's assertion that Korman "had several conversations in ... March of [20]11 with Candace ... of Travelers" about DLA Piper's retention).) Korman also did not notify Defendants when he replaced some of Plaintiff's then-existing local counsel with DLA Piper attorneys. (See, e.g. , Def Coop./Vol. Paymt. 56.1 Stmt. ¶ 83 (citing Maloney Decl., Ex. 35 (Letter to Plaintiff's former local counsel in Illinois from Plaintiff's Associate General Counsel, dated June 15, 2011).) Plaintiff contends that Korman did not inform Defendants of these changes because Defendants were not "fully defending" Plaintiff in the Underlying Asbestos Claims (i.e. , paying 100 percent of Plaintiff's defense costs, instead of a pro rata share), because he was dissatisfied with Defendants' representation of Plaintiff based on his discussions with local counsel, and because he believed that Defendants' litigation strategy was allowing asbestos liability to go "unchecked" in a way that would eventually "bankrupt" Plaintiff. (Pl. Coop./Vol. Paymt. 56.1 Response ¶ 69 (citing Korman Dep., at 327:16-328:17); see also Korman Dep., at 117:24-118:5.) Plaintiff claims that Defendants just wanted local counsel to reduce their fees, even though Plaintiff was facing ever-growing liabilities in the asbestos arena. (Id. ¶ 70 (citing Korman Dep., at 95:8-24).)

Defendants assert that Plaintiff repeatedly postponed meetings with them during this time period. (Def. Coop./Vol. Paymt. 56.1 Stmt. ¶¶ 106-07 (citing Maloney Decl., Ex. 17 (Deposition of Craig Paul Olen Johnson), at 65:21-66:9).) Plaintiff, though, contends that it actively wanted to meet with Defendants to discuss defense strategy, but that Defendants only wanted to talk about cementing a pro rata fee-sharing arrangement for the new crop of cases, and did not want to meet with DLA Piper. (Pl. Coop./Vol. Paymt. 56.1 Response ¶ 108 (citing Korman Dep., at 52:12-22).)

Defendants also state that the attorneys' fees charged to Plaintiff by DLA Piper for its defense of the Underlying Asbestos Claims have been "excessive," in that the rates charged by DLA Piper attorneys have been higher than the "prevailing market rates for attorneys of the same or similar experience level[s], providing comparable services in the same respective geographic communities." (Liberty Mutual Rates 56.1 Stmt. ¶¶ 23, 24; Pierce Decl. ¶ 15; see also, generally , Travelers Rates 56.1 Stmt.)

B. Procedural History

Plaintiff filed its Complaint against Travelers and Liberty Mutual on June 29, 2015, asserting claims for breach of contract and breach of the covenant of good faith and fair dealing, and seeking a declaration of its rights under the Policies. (See Compl.) The Complaint alleges that Defendants wrongfully refused "to defend and indemnify their insured, [Plaintiff], with respect to thousands of lawsuits commenced in various jurisdictions across America claiming personal injury, including in some cases wrongful death, arising out of alleged exposure to asbestos contained within the products of [Plaintiff] and its predecessor companies." (Compl. ¶ 2.) In addition to seeking damages, costs, interest, and attorneys' fees, Plaintiff seeks a declaration that Defendants are obligated to pay, on behalf of Plaintiff, all past, present, and future defense and indemnity costs associated with the Underlying Asbestos Claims, except for those costs associated with the Mack Truck Claims. (See Compl.)

Liberty Mutual filed an Answer to the Complaint on August 28, 2015. (Dkt. 18).) On the same day, Travelers filed a combined Answer, Cross-Claim, Counter-Claim, and Third-Party Complaint against Sentry Insurance Mutual Company ("Sentry") and CMIC. (Dkt. 20.) CMIC answered Travelers' Third-Party Complaint on October 13, 2015 (Dkt. 36), and Plaintiff answered the Third-Party Complaint on behalf of Sentry on February 16, 2016 (Dkt. 48).

During the course of these proceedings, but separate from any court filings, the parties apparently exchanged correspondence that set forth their positions as to the scope of their responsibilities under the Policies. In the parties' motion and cross-motions, they now specifically reference one piece of that correspondence - a letter from Defendants to Plaintiff dated June 12, 2017. (Letter to Alan Korman, from Craig P. Johnson (on behalf of Travelers) and Jamie Owen (on behalf of Liberty Mutual), dated June 12, 2017 ("Def 6/12/17 Ltr.") (Dkt. 116-43).) In addition to reiterating the legal contentions that they make in this case, Defendants informed Plaintiff in the June 2017 letter that, subject to a number of conditions and reservation of rights, they would "pay 100% of the reasonable and necessary defense [costs] on a going forward basis with respect to all active and pending [asbestos] cases outlined in Attachment A" to the letter (with Attachment A, to this Court's understanding, consisting of a list of all then-pending Underlying Asbestos Claims on which Plaintiff was named as a defendant in its individual capacity). (Def. 6/12/17 Ltr., at 2; see also Def. Duty To Defend 56.1 Stmt. ¶¶ 73, 75.) Among the conditions stated in the June 2017 letter was the replacement of DLA Piper with other attorneys, selected by Defendants. (See 6/12/17 Ltr., at 2.) Further, with respect to its reservation of rights, Defendants stated, inter alia :

If the facts of any underlying matter establish that the liability for which [Plaintiff] is being sued arises out of a product manufactured, sold, distributed and/or handled by an entity that is not a named insured, Travelers and Liberty [Mutual] reserve the right to withdraw from the defense at the close of fact discovery and disclaim any obligation to indemnify [Plaintiff].

(Id. , at 3.) Plaintiff did not accept the going-forward defense proffered by Defendants in the June 2017 letter, but rather chose to proceed with this action in its entirety.

As noted above and discussed further below, currently before this Court are Plaintiff's motion for partial summary judgment, which it filed on August 18, 2017, and Defendants' several cross-motions, which they filed on September 22, 2017.

DISCUSSION

I. SUMMARY JUDGMENT STANDARDS

Under Rule 56 of the Federal Rules of Civil Procedure, a motion for summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Holt v. KMI-Continental, Inc. , 95 F.3d 123, 128 (2d Cir. 1996). The moving party bears the burden of showing that no genuine issue of material fact exists. Adickes v. S.H. Kress & Co. , 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). This burden may be satisfied "by pointing out the absence of evidence to support the non-movant's claims." Citizens Bank of Clearwater v. Hunt , 927 F.2d 707, 710 (2d Cir. 1991) (citing Celotex , 477 U.S. at 325, 106 S.Ct. 2548 ).

Once the movant meets this burden, the non-moving party "must come forward with admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid summary judgment." Jaramillo v. Weyerhaeuser Co. , 536 F.3d 140, 145 (2d Cir. 2008) (citing Celotex , 477 U.S. at 322-23, 106 S.Ct. 2548 ). Specifically, the non-moving party must cite to "particular parts of materials in the record" or show "that the materials cited [by the movant] do not establish the absence ... of a genuine dispute" as to any material fact. Fed. R. Civ. P. 56(c)(1). The party opposing summary judgment "may not rely on conclusory allegations or unsubstantiated speculation," Scotto v. Almenas , 143 F.3d 105, 114 (2d Cir. 1998) (citing D'Amico v. City of New York , 132 F.3d 145, 149 (2d Cir. 1998) ), as "unsupported allegations do not create a material issue of fact," Weinstock v. Columbia Univ. , 224 F.3d 33, 41 (2d Cir. 2000) (citation omitted). Rather, a party opposing summary judgment "must lay bare [its] proof in evidentiary form and raise an issue of fact sufficient to send to the jury." Weiss v. La Suisse, Societe D'Assurances Sur La Vie , 293 F.Supp.2d 397, 408 (S.D.N.Y. 2003) (internal quotation marks and citations omitted); see Smith v. Menifee , No. 00cv2521 (DC), 2002 WL 461514, at *3 (S.D.N.Y. Mar. 25, 2002) (holding that the non-moving party must present "significant probative evidence" tending to support its claims (citing First Nat'l Bank of Ariz. v. Cities Serv. Co. , 391 U.S. 253, 290, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) ) ).

In reviewing the evidentiary record, the court "must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in his favor." L.B. Foster Co. v. Am. Piles, Inc. , 138 F.3d 81, 87 (2d Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ); Brown v. Henderson , 257 F.3d 246, 251 (2d Cir. 2001). If, even viewed in this light, there is not "sufficient evidence favoring the non[-]moving party for a jury to return a verdict for that party," or if the "evidence is not significantly probative," then summary judgment may be granted. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citations omitted). It is well-settled, however, that "[c]redibility assessments, choices between conflicting versions of the events, and the weighing of evidence are matters for the jury, not for the court on a motion for summary judgment." Fischl v. Armitage , 128 F.3d 50, 55 (2d Cir. 1997) (citations omitted). The issue for summary judgment is "not whether [the court] thinks the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the [non-movant] on the evidence presented." Cine SK8, Inc. v. Town of Henrietta , 507 F.3d 778, 788 (2d Cir. 2007) (internal quotation marks and citation omitted).

Under this Court's rules, a party moving for summary judgment under Rule 56 must also submit "a separate, short and concise statement, in numbered paragraphs, of the material facts as to which the moving party contends there is no genuine issue to be tried," Local Civ. R. 56.1(a), and the opposing party must submit a correspondingly numbered statement in response, additionally setting out, if necessary, material facts showing genuine triable issues, see Local Civ. R 56.1(b). "The purpose of Local Rule 56.1 is to streamline the consideration of summary judgment motions by freeing the district courts from the need to hunt through voluminous records without guidance from the parties." Holtz v. Rockefeller & Co. , 258 F.3d 62, 74 (2d Cir. 2001). Local Rule 56.1, however, does not relieve the party seeking summary judgment of the burden of establishing that it is entitled to judgment as a matter of law. Id. Thus, the Court may not rely solely on the statement of undisputed facts contained in the moving party's Rule 56.1 statement; it also must be satisfied that the moving party's assertions are supported by the record. See Vt. Teddy Bear Co. v. 1-800 Beargram Co. , 373 F.3d 241, 244 (2d Cir. 2004) ; see also Zerafa v. Montefiore Hosp. Hous. Co. , 403 F.Supp.2d 320, 329 n.12 (S.D.N.Y. 2005).

II. THE PENDING MOTIONS

As a preliminary matter, this Court notes that the submissions made by the parties in connection with the pending motion and cross-motions are voluminous.

Not only did the parties, as noted above, file 17 different Rule 56.1 Statements (either in support of affirmative motions or as counter-statements in opposition), but they also filed 20 separate legal memoranda in support of their positions. Moreover, as can be seen by the lists of the parties' submissions in footnotes 1-2, supra , a number of documents that should have been filed separately share the same docket numbers; this is because the parties filed certain documents under seal in groups, rather than individually. In fact, with the exception of Plaintiff's initial moving papers (Dkts. 114, 115, 116, and 118), the Rule 56.1 Statements filed by Defendants in opposition to Plaintiff's motion (Dkt. 127, 134), and the Notices of Defendants' cross-motions (Dkts. 128, 130, 132, 135, 136, 139, and 140), all of the above-listed papers - including 19 of the parties' 20 legal memoranda, and nearly all of the Declarations/Affidavits, exhibits, and Rule 56.1 Statements placed before the Court - have been filed by the parties under seal. The parties have made no attempt to redact these many submissions, and have not sought leave of court to afford them blanket confidentiality protection.

To the extent this Court has relied on any materials filed by the parties under seal, this Court now considers those materials to be "judicial documents," entitled to a presumption of public access. See Lugosch v. Pyramid Co. of Onondaga , 435 F.3d 110, 119-20 (2d Cir. 2006) ; see also, e.g. , In re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation , MDL No. 1358 (SAS), 2013 WL 3531600, at *3 (S.D.N.Y. July 12, 2013) (finding documents submitted in conjunction with a motion to be "judicial documents"). Certainly, to the extent this Court explicitly discusses any such materials, they should be considered integral to its analysis, and thus the presumption of public access to those materials should be accorded significant weight. See United States v. Amodeo , 71 F.3d 1044, 1048-49 (2d Cir. 1995) (noting that the weight of the presumption will vary depending on where on the "continuum" the confidential information falls, with the greatest weight given when the information "directly affect[s] an adjudication"). For this reason, and because, on balance, this Court finds that any "competing considerations" to public access (such as the privacy interests of innocent third parties, see, e.g. , Amodeo , 71 F.3d at 1050-51 ) are either non-existent or weak, this Court is not placing any part of this Report and Recommendation under seal.

Furthermore, although Judge Marrero previously issued a Protective Order in this case to protect the confidentiality of certain types of discovery material (such as trade secrets and private personal material) (see Dkt. 54), the parties' rationale for filing most of their papers under seal, pursuant to that Protective Order, cannot be readily discerned from those papers. Rather, what is obvious is that the parties have grossly over-designated their submissions as "Confidential," placing under seal extensive amounts of legal argument and plainly public information. I therefore recommend that all of the papers submitted in connection with the motion and cross-motions be unsealed, absent a focused showing by the parties that portions of those papers contain information that is particularly sensitive, such that the balance of interests weigh in favor of maintaining confidentiality.

A. Plaintiff's Motion for Partial Summary Judgment on the Duty To Defend (Dkt. 114), and Defendants' Cross-Motions on the Duty To Defend (Dkt. 132) and on the Appropriate Allocation of Defense Costs (Dkt. 136)

As noted above, this Court will first address Plaintiff's motion for partial summary judgment, in which Plaintiff asserts that the Court should declare that, as a matter of law, Defendants have contractual obligations to provide Plaintiff with a complete defense to all pending Underlying Asbestos Claims (except for the Mack Truck Claims) involving bodily injuries that occurred, in whole or in part, during the Policy Periods, and that this defense obligation will continue with all similar claims that may be asserted in the future. (Dkt. 114.) In conjunction with addressing Plaintiff's motion, this Court will also consider Defendants' cross-motions for partial summary judgment in their favor on the issues of whether the Underlying Asbestos Claims (and future similar claims), by their nature, give rise to a duty to defend at all (Dkt. 132), and, to the extent they do, whether that duty requires Defendants to pay 100 percent of Plaintiff's defense costs, as opposed to a pro rata allocated share, based on Defendants' time on the risk, relative to the time that Plaintiff has been self-insured (Dkt. 136). Essentially, these two particular cross-motions represent the flip-side of Plaintiff's motion: by arguing that, as a matter of law, Defendants are required to provide it with a "complete defense," Plaintiff is teeing up two separate issues for resolution as a matter of law: (1) whether the Claims give rise to a duty to defend (an issue on which Defendants themselves claim to be entitled to judgment, in the first of the cross-motions referenced here), and (2) whether that duty to defend requires Defendants to pay 100 percent of Plaintiff's defense costs (an issue on which Defendants also claim to be entitled to judgment in their favor, in the second of those cross-motions).

For the reasons discussed below, I recommend that each of these motions - Plaintiff's motion seeking a declaration that it is entitled to a complete defense, and Defendants' cross-motions regarding (a) whether the Claims give rise to a duty to defend, and (b) on the issue of allocation - be granted in part and denied in part.

1. Applicable Legal Standards Regarding the Duty To Defend

An insurer's "exceedingly broad" duty to defend is triggered "whenever the four comers of the [underlying] complaint suggest - or the insurer has actual knowledge of facts establishing - a reasonable possibility of coverage." Continental Cas. Co. v. Rapid-American Corp. , 80 N.Y.2d 640, 648, 593 N.Y.S.2d 966, 609 N.E.2d 506 (1993) (internal quotation marks and citations omitted); accord Frontier Insulation Contractors, Inc. v. Merchants Mut. Ins. Co. , 91 N.Y.2d 169, 175, 667 N.Y.S.2d 982, 690 N.E.2d 866 (1997). It is the insured's burden to establish that the claimed loss falls within the scope of the relevant insurance policy, but this burden is met "[i]f the complaint contains any facts or allegations which bring the claim even potentially within the protection purchased." Mount Vernon Fire Ins. Co. v. Munoz Trucking Corp. , 213 F.Supp.3d 594, 601 (S.D.N.Y. 2016) (internal quotation marks and citations omitted), appeal withdrawn , No. 16-3699, 2016 WL 10519923 (2d Cir. Nov. 15, 2016).

Further, an insurer is required to pay 100 percent of an insured's defense costs, for both covered and non-covered claims, when the non-covered claims are "intertwined" with covered ones. Travelers Cas. & Sur. Co. v. Alfa Laval, Inc. , 37 Misc.3d 1230(A), 2011 WL 9557466 (Sup. Ct., N.Y. County 2011), at *3 ("The obligation to defend is readily understood and its requirement is clear - the insurer must afford a defense to the insured for covered as well as non-covered claims if the latter are intertwined with covered claims."), aff'd as modified , 100 A.D.3d 451, 954 N.Y.S.2d 23 (1st Dep't 2012). Where covered and non-covered claims are readily distinguished, however, an insurer need only pay to defend covered claims, and the insured should pay for non-covered ones. Generali-U.S. Branch v. Caribe Realty Corp. , No. 25499/91, 1994 WL 903279, at *2 (Sup. Ct., N.Y. County 1994) ("An insurer contracts to pay the entire cost of defending a claim which has arisen within the policy period. The insurer has not contracted to pay the defense costs for occurrences which took place outside the policy period. Where the distinction can be readily made, the insured must pay its fair share for the defense of the non-covered risk.").

2. Import of Defendants' June 12, 2017 Letter

Before proceeding to the substance of the parties' legal arguments regarding Defendants' purported duty to provide a complete defense to the Underlying Asbestos Claims, this Court first notes that, in support of its motion, Plaintiff points to Defendants' June 2017 letter (see Background, supra , at Section B) as evidence that Defendants have "recently admitted that they have a duty to provide 100% of the defense" (Pl. Mem., at 7 (emphasis added); see also id. , at 9 (arguing, with reference to Defendants' June 2017 letter, that "there is no genuine dispute that Travelers and Liberty [Mutual] have now finally acknowledged their respective insuring obligations and agreed, albeit belatedly, to 'assume 100% of the reasonable and necessary defense costs in connection with open and pending asbestos cases against [Plaintiff]' ") ). For their part, and not conceding that they have made any admissions, Defendants contend that Plaintiff's motion on the duty to defend should, in part, be found to be "moot," in light of Defendants' "offer to assume" the complete defense of certain of the Underlying Asbestos Claims - specifically, those Claims asserted against Plaintiff in its individual capacity. (See Def. Duty To Defend Mem., at 18 n.19 (emphasis added) (internal quotation marks and citations omitted).)

Given the legal contentions asserted in Defendants' June 2017 letter, however, as well as its conditional nature and Defendants' express reservation of certain rights, that letter cannot rationally be construed as an admission, nor can it be read to render any portion of Plaintiff's motion moot. For one thing, it is this Court's understanding that, by their letter, Defendants did not offer to provide a defense for any Underlying Asbestos Claims asserted against Plaintiff solely in its capacity as successor-in-interest to the After-Acquired Entities (see Def. Duty To Defend Mem., at 18 n.19), even though Plaintiff plainly seeks a ruling, via its motion, that such claims give rise to a duty to defend (see Pl. Duty To Defend Opp./Reply Mem., at 12-13). Moreover, even to the extent Defendants offered in their letter to assume a complete defense of any claims, on a going-forward basis, they expressly reserved the right to discontinue such a defense after the "fact discovery" phase of the litigation - i.e. , before expert discovery and any summary judgment motion practice - if, in their view, it had become apparent that the facts "establish[ed]" that the claimants' injuries arose out of products "manufactured, sold, distributed and/or handled" by any party not named in the Policies as an insured, presumably including the After-Acquired Entities. (Def. 6/12/17 Ltr., at 3.) This hardly represents an unqualified admission that Defendants owed Plaintiff a "complete" defense of any claims, or even an "offer" to provide such a defense.

Accordingly, this Court will proceed to consider the legal arguments made by the parties with respect to the duty to defend, and the scope of that duty.

3. The Three "Buckets" of Asbestos Claims at Issue

In its motion, Plaintiff argues that, for all asbestos litigation at issue in this case, Defendants are obligated, under the Policies, to pay 100 percent of Plaintiff's reasonable defense costs, regardless of whether the particular claims in question were or will be (a) asserted against Plaintiff in its individual capacity, (b) asserted against Plaintiff both individually and in its capacity as a successor in interest to one or both of the After-Acquired Entities, or (c) asserted against Plaintiff solely in its capacity as successor in interest, or, for that matter, asserted only against some or all of the After-Acquired Entities themselves, and not naming Plaintiff directly on the claims at all. (See generally Pl. Mem.) Defendants, however, reasonably divide the Claims into three "buckets," labeling the first of these categories "Bucket A," the second "Bucket B," and the third "Bucket C," and addressing them separately.

For the reasons that follow, I recommend that the Court grant partial summary judgment in Plaintiff's favor on the issue of whether the so-called Bucket A and B claims give rise to Defendants' duty to defend, but that it grant partial summary judgment in Defendants' favor on the same issue with respect to the Bucket C claims. Further, as to the issue of defense-cost allocation for the Bucket A and B claims, I recommend that - except with respect to the Mack Truck Claims, as to which Plaintiff has agreed to continue to contribute to defense costs - the Court grant Plaintiff partial summary judgment declaring that, at the defense stage of those claims, Plaintiff has no obligation to share in the costs of defense. I also recommend, however, that the Court deny Plaintiff's request for a declaration that the Defendants are jointly and severally liable for the full defense costs of the Bucket A and B claims. Rather, I recommend that (unless the duty to defend is found to be vitiated by any conduct by Plaintiff, as discussed further below), the complete cost of defense of such claims be allocated pro rata between Defendants, based on their relative time on the risk.

a. Bucket A and B Claims

i. Whether the Claims Give Rise to a Duty To Defend

Defendants concede that Plaintiff is the named insured on the Policies (Def. Duty To Defend 56.1 Stmt. ¶¶ 8, 13), and it is undisputed that the Policies require Defendants to defend Plaintiff against claims seeking damages for bodily injury that occurred during the Policy Periods (see Background, supra , at Section A(1) ). With respect to Bucket A claims, on which Plaintiff is named as a defendant only in its individual capacity, Defendants' duty to defend should be found to be triggered, if not by the face of the underlying complaints themselves, then by the Insurers' actual knowledge of facts establishing a reasonable possibility of coverage. See Continental Casualty Ins. , 80 N.Y.2d at 648, 593 N.Y.S.2d 966, 609 N.E.2d 506. The same should be found for Bucket B claims, as, in the defense stage, the covered claims (as to which Plaintiff may be directly liable) are too closely intertwined with the non-covered ones (as to which Plaintiff may only be liable in its capacity as successor in interest to the After-Acquired Entities) to allow for those claims to be readily distinguished. See Alfa Laval , 2011 WL 9557466, at *3 ; cf. Generali , 1994 WL 903279, at *2.

In arguing that none of the Underlying Asbestos Claims give rise to a duty to defend, Defendants do not contest that the nature of the injuries alleged could give rise to coverage under the Policies. Instead, their arguments boil down to the assumption that, regardless of whether Plaintiff is named in its own capacity on any of the Claims, it cannot be liable on those Claims because any asbestos-containing products that could have caused the claimants' injuries during the Policy Periods were actually manufactured by the After-Acquired Entities (which were not covered by the Policies), rather than by Plaintiff itself. This assumption by Defendants as to who manufactured the products in question is not drawn from the four corners of the existing underlying complaints; instead, Defendants argue that the assumption is warranted because, after "decades of litigation," it has become clear that the injury-causing products were not made by Plaintiff. (Def. Duty To Defend Mem., at 13.)

To the extent Plaintiff has been sued for asbestos-related injuries that could only have been caused by products manufactured by the After-Acquired Entities, the law would support Defendants' assertion that they would have no duty to defend those suits. As correctly noted by Defendants, " '[t]here is no provision in the [Policies] that purports to extend coverage specifically to after-acquired entities for previously incurred liability. An alternative reading would lead to an absurd scenario in which [Defendants] would be obligated to provide coverage to any company acquired by the insured for an indefinite period of time.' " (Def. Duty To Defend Mem. at 15 (quoting Maryland Cas. Co. v. W.R. Grace & Co. - Conn , No. 88cv2613 (SWK), 1994 WL 592267, at *4-5 (S.D.N.Y. Oct. 26, 1994) ).) Nonetheless, to avoid the duty to defend, Defendants would have to "establish[ ] as a matter of law that there is no possible factual or legal basis on which [they] might eventually be obligated to indemnify [their] insured under any policy provision," Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp. , 302 F.3d 83, 97 (2d Cir. 2002) (emphasis added), and this they have not done.

First, Defendants' blanket proposition that, even where Plaintiff has been named in an underlying suit in its individual capacity, it "is only being sued as a result of its acquisition of uninsured entities" (Def. Duty To Defend Mem., at 16) is undercut by Defendants' concession, in footnotes, that the Mack Truck Claims and at least one other Underlying Asbestos Claim did involve Plaintiff's own products (id. , at 16 n. 16, 17 n. 17; cf. id. , at 13 (arguing that the products at issue in the Underlying Asbestos Claims were "virtually exclusively" manufactured by LTI and Yale (emphasis added) ) ). Defendants' only explanation as to why even the Mack Truck Claims do not give rise to a duty to defend is that Defendants have never, in the past, been required make any indemnification payments. (Id. , at 16 n.16.) Defendants argue that, as "no indemnity has ever been paid" in those cases, it should be concluded that there was "no real liability," and hence no duty to defend from the outset. (Id. ) Yet the fact that Defendants did not , in the past, indemnify Plaintiff for any resolved Mack Truck Claims is insufficient to establish that there was no possibility, based on the complaints, that they might have been obligated to indemnify Plaintiff on those claims or that they might have such an obligation on similar claims that have not yet been resolved.

Second, and more broadly, this Court is unaware of any authority supporting Defendants' attempt to redefine the well-settled question of when the duty to defend is triggered by reference to an insurer's historical experience with indemnification. Even accepting Defendants' representation regarding how earlier cases have played out, the Shakespearian maxim that "what's past is prologue" has no bearing on the legal question of when a duty to defend arises. Defendants' seeming argument that, because the evidence adduced in past cases against Plaintiff did not lead to an indemnification requirement, all present and to-be-filed asbestos claims against Plaintiff will necessarily end the same way - and that Defendants should therefore not be required to defend Plaintiff against any such claims - would turn the law on its head. An insurer's prediction as to how an evidentiary record in a case will eventually be developed should not deprive an insured of an early defense where an allegation against it could possibly (even if not probably) lead to a finding of liability.

Third, as to Bucket A claims, asserted against Plaintiff in its individual capacity, the Insurers' cannot avoid their duty to defend merely because the claimants' pleaded allegations may not have identified those specific products, made by Plaintiff, that could have caused or contributed to the claimants' injuries. In some instances, while giving notice pleading of the general nature and cause of their injuries, claimant crane operators who were exposed to asbestos may not have identified, in their complaints, any of the particular component parts of the cranes that allegedly contained the asbestos. In others, as in the complaint of claimant Harold Stone (the "Stone Complaint") that has been offered by Plaintiff as an exemplar (see Pl. Mem., at 5-6), claimants may have identified those crane componen