United States District Court, E.D. Virginia
Decided September 4, 2013.
For Ford Motor Company, Plaintiff: Scott Charles Oostdyk, LEAD ATTORNEY, H. Carter Redd, J. Tracy Walker, IV, Jeremy Stephen Byrum, Matthew Devane Fender, McGuireWoods LLP, Richmond, VA.
For National Indemnity Company, Defendant: Michael Scott Levine, LEAD ATTORNEY, Hunton & Williams, McLean, VA; Renita Sharma, LEAD ATTORNEY, PRO HAC VICE, Andrew Mark Berdon, PRO HAC VICE, Brad Evan Rosen, Corey Worcester, PRO HAC VICE, Jane Marie Byrne, PRO HAC VICE, Jason Toji Calabro, PRO HAC VICE, Michael Carlinsky, PRO HAC VICE, Quinn Emanuel Urquhart & Sullivan, LLP (NY-NA), New York, NY; George Peter Sibley, III, Hunton & Williams LLP, Richmond, VA; John Nonna, PRO HAC VICE, Suman Chakraborty, PRO HAC VICE, Patton Boggs LLP (NA-NY), New York, NY; Richard Irving Werder, Jr., PRO HAC VICE, Quinn Emanuel Urquhart & Sullivan LLP, New York, NY.
Robert E. Payne, Senior United States District Judge.
This matter is before the Court on the DEFENDANT NATIONAL INDEMNITY COMPANY'S MOTION FOR SUMMARY JUDGMENT (Docket No. 181). For the reasons set forth below, the motion will be denied as to Count I and will be granted as to Count II.
In this action, Ford Motor Company (" Ford" ) asserts against National Indemnity Company (" NICO" ) claims for tortious inference with contract (Count I) and conspiracy to injure another in its trade or business under Va. Code § 18.2-499 (Count II). Generally speaking, Ford's claims arise out of NICO's conduct in connection with the failure to pay so-called " Non-Batch claims" under Ford's Aggregate Stop Loss Policy (" ASLP" ). Having previously filed substantive motions based on the application of Virginia law, NICO now argues that Michigan's substantive law should apply to this action. NICO now seeks summary judgment on both counts under Michigan law, asserting that as an agent of Ford's counterparty NICO cannot be held liable. NICO also seeks summary judgment on Count II on the basis that Michigan law does not encompass the Virginia statute and therefore renders Count II insufficient as a matter of law.
The facts, and the reasonable inferences therefrom, must be viewed in the light most favorable to Ford, the non-moving party. With that in mind, the facts pertinent to the motion for summary judgment on Count II are set forth below. 
In 1995, Ford entered into a series of ASLP agreements with Gerling-Konzern Allgemeine Versicherungs-Aktiengesellschaft (" Gerling" ). Under those agreements Gerling agreed to indemnify Ford for certain potential liabilities.
In 2002, Gerling and Ford's other ASLP carriers established a protocol for the submission of claims by Ford to an entity called Mitigate, Inc. (" Mitigate" ). (Id. at 4). Mr. Scott Friedman worked for Mitigate and was the auditor responsible for verifying that the claims submitted by Ford to Gerling were among the covered Non-Batch Claims that deserved payment. The protocol did not require Ford to demand payment following the issuance of a report from Mitigate. Instead, the insurers, including Gerling and HDI-Gerling, before the intervention of NICO into the relationship, regularly paid most, but not all, of such claims once Mitigate had reviewed and verified them.
Ford's policy coverage with Gerling lapsed in 2003, but not before Ford had incurred unexpectedly large liabilities during the policy periods. As a result of the financial strain created by the ASLP payments, Gerling merged with another insurance carrier, HDI, to form HDI-Gerling Industrie Versicherung AG (" HDI-Gerling" ) in 2006.
In 2007, HDI-Gerling entered into a retroactive reinsurance agreement with NICO. Under this agreement HDI-Gerling paid NICO a premium of $310,600,000 in exchange for NICO's assumption of the primary obligation to pay claims covered by the ASLP with Ford up to $500,000,000. A part of the reinsurance agreement was a Loss Portfolio Transfer agreement, whereby NICO also obtained the right to directly control HDI-Gerling's claims process, including the initial decision whether to contest or pay a particular claim that Ford submitted for payment. If HDI-Gerling disagreed with NICO, or if HDI-Gerling wished to reassume responsibility for management of a particular claim, it was obligated to negotiate a commutation with NICO and forfeit that portion of its premium. Ford was unaware of both the reinsurance agreement and the Loss Portfolio Transfer at their inception.
Gerling made regular payments on claims submitted by Ford under the ASLP. By 2003, those payments were made by wire transfers to a Ford bank account in Michigan that had been established for the specific purpose of receiving ASLP payments. Although Ford would have permitted Gerling to issue checks to a different account in Chicago, Ford communicated a clear preference for wire transfers to Michigan and Gerling used those wire transfers as the vehicle for the performance of its payment obligations. It appears that HDI-Gerling continued the practice begun by Gerling and that the practice continued even after NICO became involved pursuant to the Loss Transfer Portfolio.
In February 2010, Ford's counsel in Virginia wrote to HDI-Gerling to demand payment of certain Non-Batch ASLP claims that had been pending. In May 2010, Kent Wilson, a lawyer claiming to be acting on behalf of HDI-Gerling, gave Ford instructions on how to submit Non-Batch claims to Mitigate. Ford submitted all the requested information by the end of 2010.
In November 2010, NICO directed HDI-Gerling to file for arbitration against Ford for certain so-called " Batch" claims. NICO did not use the arbitration demand as an opportunity to stop payment on Non-Batch claims. In fact, in December 2010, another insurance payment was made by wire transfer to Ford's Michigan account in HDI-Gerling's name. Ford filed an answer in the arbitration and also filed a counterclaim in January 2011, seeking payment of all Non-Batch claims under the ASLP.
Mitigate issued a revised report verifying Ford's Non-Batch claims on March 17, 2011. On March 21, 2011, HDI-Gerling, at NICO's direction, sent a letter from its arbitration counsel in New York to Ford's counsel in Virginia. In that letter, NICO characterized Ford's counterclaim as a " demand that Gerling pay an unspecified amount of money for . . . 'under-paid claims' that Ford has never substantiated with documentation despite several requests from ...