Mine Safety Appliances Company (“MSA”), a safety appliances company, faced a multitude of personal injury claims due to alleged defects in its safety equipment.  MSA, in turn, sought costs, including legal fees, costs of judgments and settlement amounts from its insurers, including The North River Insurance Company (“North River”).  North River, however, disputed the applicability and availability of certain insurance policies, which resulted in litigation in state and federal courts in Pennsylvania between MSA, on the one hand, and North River and some, but not all, of MSA’s other insurers, on the other hand, as to certain policies issued to MSA.  After the litigation in Pennsylvania was commenced, MSA brought an action in the Delaware Superior Court against North River and its other insurers, most of whom were not in the Pennsylvania actions, seeking declaratory relief with respect to certain North River insurance policies already at issue in the Pennsylvania actions and other policies issued by North River and the other insurers.  The Superior Court initially stayed the entire action in Delaware in favor of the Pennsylvania actions because of the similarity of issues.  Eventually, the Superior Court lifted the stay as to all defendants.

At the same time as the litigation between MSA and North River was proceeding in Pennsylvania and Delaware, MSA was defending tort claims in West Virginia.  Beginning in 2012, MSA settled certain tort claims brought against it by agreeing to a settlement amount, paying a portion of that amount in cash to the plaintiff, and then assigning to the tort claimant MSA’s rights under a policy issued by North River to collect the remaining amount.  After the assignment, the tort claimants added North River as a defendant to the action in West Virginia seeking to recover under the policy, and MSA filed cross-claims against North River seeking a declaration of North River’s obligations under the insurance policy.  All of the policies at issue in the West Virginia action were already at issue in the Pennsylvania or Delaware declaratory judgment actions.  North River alleged that MSA was attempting to circumvent the pending decisions in Pennsylvania and the stay of the action in Delaware, by obtaining a declaration of rights in the West Virginia actions which may be inconsistent with the adjudications in the far more developed Pennsylvania and Delaware actions.

To avoid this result, in April 2013, North River filed an action in the Court of Chancery seeking an anti-suit injunction to prevent MSA from prosecuting its cross claims in West Virginia, as well as assisting any claimants, absent court order, who are litigating against North River; prosecuting any claims for coverage other than those actions pending in Pennsylvania or Delaware; or assigning any rights to any North River policies.  Thereafter, the parties cross-moved for judgment on the pleadings.

The Court of Chancery denied North River’s request for injunctive relief, holding that a permanent injunction would not protect North River from the “harm that it fears.”  As the Court explained, under West Virginia’s Uniform Declaratory Judgments Act, the West Virginia tort victims have a right, independent of any assignment from MSA, to bring a declaratory judgment suit against North River.  Therefore, even if the Court were to enjoin MSA, the Court has no jurisdiction over the West Virginia tort victims to prevent them from litigating issues in West Virginia.  As such, North River will inevitably face the possibility of inconsistent judgments.

As to North River’s additional request for injunctive relief – to prevent MSA from assisting any claimants, absent court order, who are litigating against North River, prosecuting any claims for coverage other than those actions pending in Pennsylvania or Delaware or assigning any rights to any North River policies – the Court reiterated that since it has no jurisdiction over the West Virginia tort victims who may seek declaratory relief, North River would still face the risk of inconsistent judgments.

Thereafter, North River appealed to the Delaware Supreme Court.  During the pendency of the appeal, the West Virginia Supreme Court affirmed the denial of North River’s motion to stay the West Virginia actions.  As a result of that ruling, North River withdrew its appeal of the Court of Chancery’s denial of an injunction preventing MSA from litigating the current claims in West Virginia.  North River’s argument focused solely on the denial of the injunction preventing future assignments by MSA of its rights under North River policies. The Supreme Court ultimately rejected each of North River’s arguments finding no abuse of discretion in the Court of Chancery’s denial of its request for permanent injunctive relief.

North River first argued that the Court of Chancery erred in concluding that the tort claimants would assert claims against North River absent an assignment to them of MSA’s rights under the insurance policies.  In rejecting this argument, the Supreme Court held that, under its deferential standard of review, the Court of Chancery did not err in finding a legitimate risk that tort claimants might proceed directly against North River independent of any assignment of rights by MSA.  Citing West Virginia courts, the Supreme Court reiterated that tort claimants in West Virginia should be able to litigate these issues in West Virginia.

North River next argued that the Court of Chancery erred in denying permanent injunctive relief because it would be useless since the injunction would not eliminate irreparable harm.  The Supreme Court similarly rejected this argument, holding that under West Virginia law, tort plaintiffs have the right, independent of any assignment, to bring a declaratory judgment suit against North River.  Thus, an injunction would not completely remedy the harm sought to be avoided as the Court of Chancery could not prevent the tort claimants from bringing claims against North River in West Virginia.  The Supreme Court acknowledged that while there was no per se requirement that an injunction provide complete relief, the Court declined to find that the Court of Chancery abused its discretion in balancing the overall equities and in denying North River’s request for permanent injunctive relief.

Finally, the Supreme Court addressed North River’s final argument that no facts in the record supported the Court of Chancery’s conclusion that MSA would be hampered by in its ability to settle claims if it were enjoined from assigning its rights.  As to this argument, the Supreme Court declined to find error in the Court of Chancery’s conclusion noting that the record evidence was scant and inconclusive.