Case: 4:13-cv-01432-JCH Doc.

#: 1 Filed: 07/23/13 Page: 1 of 11 PageID #: 1

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI EASTERN DIVISION ACE AMERICAN INSURANCE COMPANY, Plaintiff, v. DANISCO, USA, INC., Defendant.
) ) ) ) ) ) ) ) ) ) )

No. JURY TRIAL DEMANDED

COMPLAINT FOR DECLARATORY JUDGMENT Plaintiff ACE American Insurance Company (ACE) brings this Complaint for Declaratory Judgment as follows: NATURE OF ACTION 1. This is an insurance coverage action seeking declaratory relief pursuant to 28

U.S.C. 2201 and 2202. ACE seeks a determination that it has no obligation to indemnify Danisco USA, Inc. (Danisco) under an excess insurance policy issued by ACE to Danisco with respect to Daniscos settlement of the underlying action styled Michael Coffer, et al. v. SigmaAldrich Corp., et al., in the Circuit Court of the City of St. Louis State of Missouri, Cause No. 0922-CC02281 (Coffer Matter). PARTIES 2. Plaintiff ACE is an insurance company organized and existing under the laws of

the Commonwealth of Pennsylvania, with its principal place of business in Philadelphia, Pennsylvania. 3. Defendant Danisco is a Missouri Corporation with its principal place of business

in New Century, Kansas. Danisco maintains two locations in Missouri - one is located in St. 1

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 2 of 11 PageID #: 2

Joseph and one is located in St. Louis. Danisco was a named defendant in the underlying lawsuit identified in this Complaint. JURISDICTION AND VENUE 4. This declaratory judgment action is brought pursuant to 28 U.S.C. 2201 and

2202, and Rule 57 of the Federal Rules of Civil Procedure. 5. An actual justiciable controversy exists between ACE and Danisco within the

meaning of 28 U.S.C. 2201 regarding whether ACE has any obligation to indemnify Danisco for its settlement of the Coffer Matter under an excess liability insurance policy issued by ACE. 6. This Court has diversity jurisdiction pursuant to 28 U.S.C. 1332(a)(1) because

the amount in controversy exceeds the sum or value of $75,000.00, exclusive of interests and costs. 7. Venue is proper in the Eastern District of Missouri pursuant to 28 U.S.C.

1391(a) in that a substantial part of the events or omissions given rise to this claim occurred in this judicial district, and Danisco resides in this judicial district for venue purposes. FACTUAL BACKGROUND 8. Upon information and belief, Danisco manufactures food ingredients for

incorporation into various food products. 9. Upon information and belief, Danisco formerly operated a plant located at 411

East Gano Street, St. Louis, Missouri (East Gano Facility). Upon information and belief, Danisco sold the East Gano Facility to Firmenich International SA on July 2, 2007 (Firmenich). Prior to selling the East Gano Facility, Danisco manufactured and produced food ingredients at the East Gano Facility. Firmenich continued to produce such food ingredients at the East Gano Facility after the sale.

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 3 of 11 PageID #: 3

A.

The Underlying Litigation 10. In approximately 2009, three plaintiffs, Michael Coffer, Gary Worsham, and Mr.

Worshams wife, Shelley Holloway Worsham (collectively Plaintiffs), filed their Petition for Damages in the Coffer Matter. 11. Upon information and belief, Danisco was not a defendant in the original petition

because Mr. Coffer and Mr. Worsham sought compensation for their injuries by filing workers compensation claims. Upon information and belief, Mr. Coffer voluntarily dismissed his workers compensation claim on October 18, 2010, to file a civil action against Danisco. 12. On December 23, 2010, Plaintiffs filed their Second Amended Petition for

Damages, adding Danisco as a defendant to the civil action, and Mr. Coffer brought a cause of action for negligence against Danisco. On approximately October 14, 2011, Plaintiffs filed their Third Amended Petition for Damages (Third Petition). 13. On approximately February 12, 2013, Plaintiffs filed their Fourth Amended

Petition for Damages (Fourth Petition). A true and correct copy of the Fourth Petition is attached hereto as Exhibit A. 14. Mr. Coffer alleged that he was employed by Danisco at the East Gano Facility

from October 29, 2001 until January 1, 2008, and that he continued to work at the East Gano Facility under Firmenich beginning on January 1, 2008. Fourth Petition, 19. Mr. Coffers duties included receiving flavoring chemical and natural and artificial flavoring products from suppliers, including each of the Defendants herein; mixing, blending and formulating flavoring products; packaging those mixed products for shipment and sale; and cleaning the work area where the mixing took place. Fourth Petition, 20.

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 4 of 11 PageID #: 4

15.

Mr. Coffer alleges that he was diagnosed with flavoring-induced bronchiolitis

obliterans on April 24, 2009. Petition, 28. 16. As to Danisco, in the Fourth Petition, Mr. Coffer alleged that Danisco owed him a

duty of care, and alleged that Danisco knew or should have known of the health hazards associated with diacetyl exposure andknew or should have known that they should have provided reasonable measures to plaintiff to reduce plaintiffs exposures to diacetyl. Fourth Petition, Count VI, 2-3. Danisco allegedly acted negligently in failing to modify the production line to a closed system to reduce plaintiffs exposure to diacetyl and acted negligently in failing to modify the production line to operate with diacetyl at a cooler temperature to reduce plaintiffs exposure to diacetyl. Fourth Petition, Count VI, 4. As a result of Daniscos alleged negligence, Mr. Coffer was exposed to diacetyl and suffered severe, permanent, and developed progressive damage to the lungs, sever damage to the respiratory system, and/or impairment of the ability to function. Fourth Petition, Count VI, 5. Mr. Coffer alleged that his exposures did not produce at the time of exposure objective symptoms of lung injury caused by a specific exposure during a single work shift. Fourth Petition, Count VI, 6. Mr. Coffer alleged that he has suffered, suffer and will continue to suffer physical pain, loss of consortium, mental and emotional distress, and/or loss of sleep and natural rest. Fourth Petition, Count VI, 7. Further, Mr. Coffer alleges that he has suffered and will continue to suffer lost wages, income and earning capacity and will continue to incur medical expenses. Second Petition, Count VI, 8. 17. Mr. Coffer sought damages in excess of $25,000 from Danisco for his actual

damages, his costs, punitive damages, and for such other and further orders and judgments as the Court may deem proper in the premises. Fourth Petition, Count VI.

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 5 of 11 PageID #: 5

18. 2013. 19.

Upon information and belief, trial in the Coffer Matter commenced on March 18,

Upon information and belief, on January 17, 2013, Plaintiffs demanded

$3,000,000 to settle the Coffer Matter. Upon information and belief, Plaintiffs settlement demand remained at $3,000,000 prior to trial. 20. Upon information and belief, Plaintiffs demand to settle the Coffer Matter

dropped to $2,500,000 on Monday evening, March 18, 2013. 21. Upon information and belief, Danisco settled the Coffer Matter with Plaintiffs on

Thursday, March 21, 2013, for $5,000,000. B. The ACE Policy 22. ACE issued Excess Liability Catastrophe Policy No. XOO G23575371 to Danisco

effective from May 1, 2007 to May 1, 2008 (the Policy). The Policy has a $25,000,000 each occurrence limit, and a $25,000,000 aggregate limit. Relevant here, the Policy is excess to a Workers Compensation and Employers Liability policy issued by Wausau General Insurance Company that provides $1,000,000 in limits (Primary Policy). A true and correct copy of the Policy is attached hereto as Exhibit B. 23. As specified in the Policy, and as set out in more detail below, the coverage

provided is subject to certain definitions, conditions, scope and date restrictions, insuring agreements, policy limits, and exclusions. 24. Under the Policy, the coverage provided is as follows: A. COVERAGE

We will pay on your behalf the ULTIMATE NET LOSS (1) in excess of all UNDERLYING INSURANCE, and (2) only after all UNDERLYING INSURANCE has been exhausted by the payment of the limits of such insurance for losses arising out of OCCURRENCES that take place during OUR policy period and are insured by all of the policies designated in the 5

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 6 of 11 PageID #: 6

Declarations as UNDERLYING INSURANCE. If any UNDERLYING INSURANCE does not pay a loss for reasons other than the exhaustion of an aggregate limit of insurance then WE shall not pay such loss. The Definitions, Terms, Conditions, Limitations and Exclusions of the first policy of UNDERLYING INSURANCE, in effect at the inception date of this policy, apply to this coverage unless they are inconsistent with provisions of this policy, or relate to premium, subrogation, any obligation to defend, the payment of expenses, limits of insurance, cancellation or any renewal agreement. 25. obligations: C. DEFENSE PROVISIONS AND SUPPLEMENTAL PAYMENTS 1. DEFENSE PROVISION When insurance is available to YOU in any UNDERLYING INSURANCE, WE shall not be called upon to assume charge of the investigation, settlement or defense of any SUIT brought against YOU, but WE shall have the right and be given the opportunity to be associated in the defense and trail [sic] of any SUITS relative to any occurrence which, in OUR opinion, may create liability on the part of US under the terms of this policy. 26. The Policy contains the following relevant definitions: A. OCCURRENCE means an accident including continuous or repeated exposure to substantially the same general harmful conditions. The Policy provides the following with regard to the insurers defense

C. ULTIMATE NET LOSS means the amount paid or payable in cash in the settlement or satisfaction of claims for which the insured is liable, either by adjudication or compromise with OUR written consent, after making proper deduction for all recoveries and salvages.

Defense expense payments shall be included within the ULTIMATE NET LOSS, provided that such expenses are included within the terms conditions, and limits of insurance of any UNDERLYING INSURANCE. 6

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 7 of 11 PageID #: 7

D.

UNDERLYING INSURANCE means the policy or policies of insurance as described in the Declarations and Schedule of Underlying Insurance forming a part of this policy.

27.

The Policy contains the following relevant exclusion: This insurance does not apply: B. 1. To any injury, damage, expense, cost, loss, liability or legal obligation arising out of or in any way related to pollution, however, caused.

Pollution includes the actual, alleged or potential presence in or introduction into the environment of any substance, including pollutants, if such substance has or is alleged to have the effect of making the environment impure, harmful, or dangerous. Environment includes any air, land, structure or the air therein, watercourse or water, including underground water. Pollutants include any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids alkalis, chemicals and waste. Waste includes material to be recycled, reconditioned or reclaimed. 28. The Policy contains the following relevant conditions: F. DUTIES IN THE EVENT OF OCCURRENCE, OFFENSE, CLAIM OR SUIT 1. YOU must see to it that WE receive prompt written notice of an OCCURRENCE or an offense which may result in a claim. Notice should include: a. b. 2. How, when and where the OCCURRENCE or offense took place; The names and address of any injured persons and witnesses.

If a claim is made or suit brought against YOU, YOU must see to it that WE receive written notice of the claim or suit as soon as practicable.

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 8 of 11 PageID #: 8

29. 30.

ACE received notice of the Coffer Matter on Thursday, March 14, 2013. Upon receiving notice of the Coffer Matter ACE immediately commenced its

investigation of the Coffer Matter. On Monday, March 18, 2013, ACE issued an initial reservation of rights letter to Danisco. In the reservation of rights letter, ACE requested documentation and information from the insured to continue to evaluate coverage. 31. On Wednesday, March 20, 2013, ACE received email correspondence from a

claims representative of the Primary Policy stating that the Plaintiffs settlement demand was $2,500,000. 32. On Thursday March, 21, 2013, ACE learned, again from the claims representative

of the Primary Policy, that Danisco had settled the Coffer Matter with Plaintiffs for $5,000,000. 33. On Friday, March 22, 2013, ACE sent a letter to Danisco denying any obligation

to indemnify Danisco for any amount in excess of Daniscos Primary Policy arising from Daniscos settlement with Plaintiffs for the Coffer Matter because ACE was prejudiced by Daniscos late notice of the Coffer Matter. 34. ACE was prejudiced in a number of ways by Daniscos late notice of the Coffer

Matter, including the following: a. ACE was prejudiced by Daniscos late notice of the Coffer Matter because

ACE lost the opportunity to associate in the defense of the Coffer Matter, ACEs right under the Policy, before Danisco settled with Plaintiffs in the Coffer Matter. Daniscos delay in giving notice eviscerated the protection of ACEs right to associate in the defense of the Coffer matter. b. ACE was prejudiced by Daniscos late notice of the Coffer Matter because

ACE lost the opportunity to evaluate the merits of Plaintiffs claim before Danisco settled with Plaintiffs in the Coffer Matter.

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 9 of 11 PageID #: 9

c.

ACE was prejudiced by Daniscos late notice of the Coffer Matter because

ACE lost the opportunity to review the file of the primary insurer, the file of defense counsel, and the file of its insured before Danisco settled with Plaintiffs. d. ACE was prejudiced by Daniscos late notice of the Coffer Matter because

ACE lost the opportunity to adequately evaluate Plaintiffs settlement demand before trial in the Coffer Matter. e. ACE was prejudiced by Daniscos late notice of the Coffer Matter because

ACE lost the opportunity to adequately evaluate Daniscos potential liability before the settlement occurred. f. ACE was prejudiced by Daniscos late notice of the Coffer Matter because

ACE was deprived of the opportunity to conduct a comprehensive coverage analysis and to determine if coverage existed under the Policy before Danisco settled with Plaintiffs. COUNT 1 DECLARATORY JUDGMENT 35. ACE hereby incorporates and re-alleges the allegations in paragraphs 1-34 as if

fully set forth herein. 36. There exists a genuine and bona fide dispute, and an actual controversy and

disagreement, between ACE and Danisco with regard to whether ACE has an obligation to indemnify Danisco, for any amount in excess of Daniscos Primary Policy, for Daniscos settlement with Plaintiffs in the Coffer Matter. 37. Pursuant to the Uniform Declaratory Judgment Act, 28 U.S.C. 2201 and 2202,

ACE in good faith requests that the Court declare the following as to the Coffer Matter under the Policy:

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 10 of 11 PageID #: 10

a.

That ACE has no obligation under the Policy to indemnify Danisco in the

Coffer Matter because Danisco breached the Policys conditions, a condition precedent to entitlement to coverage under the Policy, when Danisco provided late notice to ACE of the Coffer Matter. b. That ACE has no obligation under the Policy to indemnify Danisco in the

Coffer Matter because Daniscos late notice breach of the Policys conditions resulted in substantial prejudice to ACE because Daniscos late notice resulted in lost opportunities to ACE. c. That ACE has no obligation under the Policy to indemnify Danisco in the

Coffer Matter because there was no occurrence during the Policy. d. That ACE has no obligation under the Policy to indemnify Danisco in the

Coffer Matter because coverage under the Policy is barred by the pollution exclusion. e. That ACE has no obligation under the Policy to indemnify Danisco in the

Coffer Matter to the extent that coverage is barred under the Primary Policy, to which the Policy follows form. PRAYER FOR RELIEF WHEREFORE, ACE prays that the Court enter judgment: A. Declaring that ACE has no obligation to indemnify Danisco for any amount

arising from its settlement with Plaintiffs in the Coffer Matter; B. C. and equitable. DATED: July 23, 2013 Awarding ACE its costs and attorneys fees; Awarding ACE such other and further relief as the Court may deem just, proper,

10

Case: 4:13-cv-01432-JCH Doc. #: 1 Filed: 07/23/13 Page: 11 of 11 PageID #: 11

s/ Marisa L. Saber Marisa L. Saber, COZEN OCONNOR 333 West Wacker Drive, Suite 1900 Chicago, IL 60606 Telephone: 312.382.3100 Fax: 312.382.8910 msaber@cozen.com Thomas M. Jones, pro hac vice application to be filed Meredith E. Dishaw, pro hac vice application to be filed COZEN OCONNOR 1201 Third Avenue, Suite 5200 Seattle, WA 98101-3071 Telephone: 206.340.1000 Fax: 206.621.8783 tjones@cozen.com mdishaw@cozen.com Attorneys for Plaintiff, Ace American Insurance Company

11