Motion To Strike Should Be Decided On Pleadings Only

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Pacific Employers Ins. Co. v. Global Reinsurance Corp. of America E.D. PA., April 18, 2011

This case involves a dispute over a facultative reinsurance contract entered into by plaintiff policyholder with defendant reinsurer for an umbrella commercial liability policy insuring Buffalo Forge Co.  Some time after the facultative reinsurance contract was executed; Buffalo Forge was named as a defendant in numerous asbestos products personal injury lawsuits.  Plaintiff participated in the defense and indemnity of the suits and made payments in excess of $1 million.  Plaintiff then billed defendant reinsurer pursuant to the Facultative Certificate but has not paid the amounts billed. 

Plaintiff filed this complaint claiming breach of contract and seeks declaratory relief for a declaration of its rights under the Facultative Certificate.  Defendant then filed a counterclaim seeking a declaration that the $1 million limit of liability set forth in the Facultative Certificate is the maximum that plaintiff could potentially recover under the Facultative Certificate in connection with the asbestos litigation liabilities. 

The court is now asked to decide whether or not to strike certain defenses contained in defendant’s answers, affirmative defenses, and counterclaim.  Plaintiff contends that those paragraphs are no longer relevant because of representations made by defendant during the discovery phase of the litigation, including deposition testimony and responses to discovery demands. 

The court held that plaintiff was could file a motion to strike even though it has been more then 21 days after being served with a pleading because the rule allows the court to have discretion to act on its own.  Given the substantial disagreement between the parties regarding the affirmative defenses the court will consider the motion to clarify the issue before trial. 

The court held that plaintiff’s motion to strike will not be decided on references on matters outside of the pleadings because a determination of a motion to strike should be on the pleadings alone.

As to the claim of prejudice plaintiff’s motion will be granted since the court rejected plaintiff’s motion to compel discovery on that issue based on defendant’s representation that it had withdrawn its prejudice claim based on notice.  Specifically, the court rejected defendant’s motion that even though it has conceded to waive its prejudice argument, allowing that paragraph to remain in the pleading will not cause any harm to plaintiff. 

As to whether or not the breach of utmost good faith claim has been withdrawn, there is too much ambiguity and the motion to strike that claim is denied.  Specifically, the phrase “i.e., the only remaining dispute in this action” is too vague to operate as a waiver of the affirmative defense of breach of the duty of good faith. 

For a copy of the decision click here

Sarah Fang and Jon Kuller