Judicial Economy Requires Set-Off Rather Than Contribution Action By Non Settling Carriers

General Refractories Co. v. First State Ins. Co., September 6, 2013

The plaintiff, General Refractories Company (GRC), sued multiple defendant insurance carriers for a declaration of excess insurance coverage for underlying claims. Five of the defendant insurance carriers settled with GRC (settled carriers) but seven litigants remain (litigating defendants). Plaintiff GRC and the defendant settled carriers move for dismissal with prejudice of all claims asserted against the settled carriers. As the defendant insurance carriers would be jointly and severally liable for the loss claimed by GRC, the question presented was whether the settled carriers were protected from contribution claims by other defendants whose policies might also be required to pay for the plaintiff’s claim. The court found that the case of Koppers Co. v. Aetna Cas. & Sur. Co., 98 F.3d 1440 (3d Cir. 1996), was controlling. The Koppers court noted that excess insurers were jointly and severally liable for the amount of the loss in excess of the settling insureraEUR(TM)s pro rata share of liability, but noted that judicial economy and settlement required that there be a set off, rather than a subsequent contribution action. Thus, the court found that the Settled Carriers were protected from contribution claims, and that the litigating defendants would have the right to assert a claim for an apportioned share set-off.

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