Document gDBmq6Mvo8OJ49DRz6O3ady9e

7 1( Telephone: PAUL E. MERRELL Lawyer 7493 East Fiva River* Road Tidewater# Oregon 97390 <503) 528-7151 Telefax; Via Voioeline February 5/ 1991 Chuck McCrea# Sr. Re: Nevada Power settlement letter Dear Chuck; My efforts to pass this project off onto you last night weren't entirely successful. Enclosed are new drafts of both letters# incorporating changes Bill and David suggested. Also# they concur with the idea of sending the separate malpractice letter. I'm heading to bed for a few hours# been up all night. Call anyway if it's urgent. If I haven* t heard from you by the time I get up# I'll check in as soon as I get my blood moving. Paul t<-23 _*0O >. .3* m i w .sufi l./>*a.z.stt ,C1(* M O ite zoos-tA*' C. L. > a a* a. -*ao* a<oew*c*jaio*s.aOeta*ctrr Aam Oai. .9*CS ..> 4 :**ici- *ic>u.i* s o .c j h ca-cs c 4 j :',**i .*-t* m ca*CC* .Oisia m * t.: 3*** M t a O S. 33*00* C**aO ' 0(..t* < C *Okrwbt iO*a f. -OC* **Wk *. -X*Cl I ,tM**ao ala 3 .( * it01tB* 3, -*4*t ** 1*0* ** \aa- ,a*l a. l*CC*iti tvn a l*9^*aar** *>C**t. Z. a** _Aw 3 ,r C H J ones, J ones. Close & Brown Chapter*d 4 aaotl'3*i. osaaoaaf'Oia StvCNT* *uOO - val-Cy | ank laa 3 0 0 SOU*" lf a aracCT lae vsoae..yiv*o* secoi<4oa MESSAGE VIA PANAFAX UF-600 TELECOPIER: TO*.' 3S9<*2CJ t.t::ca 17) JSA-iiifl !7oi!jaj-ccaa 1* :3iiH. 00' C. *-4 s DATE : / C 6 4 / f ^ / CLIENT/MATTER . A / S w - t s t t/ M * lS*-+ U TO: PUu / P^\<r t~<. / ( / / ^ 7 . `Z_ TELECOPY #: FROM: 7^^"/ VERIFICATION #: 6 f Cti i I t t j 1NUMBER OF PAGES (INCLUDING COVER PAGE) COMMENTS : 'aJ *^* X ?4 c/ (2 J cLr-z* iff 9-^-^ '1 hr/g-yf If you do not receive all of tha nassaga, plaasa call: (702) 385-4202 TRANSMISSION COMPLETED: DATE: __________________ TIME: OPERATOR: ______________________ Admin\Panfax.frm CNO 0 * riC C I CAST USCNTY. U lte SIA * MCMO. NCVAO* O i-H 'O Ttw C O N C 170*1 J A * - 0 0 TClCCO A 'C " 170*1 3 * * O S ^Vt f y & /<% *A- & 4 tX OCPBSr PAUL HERRELL 2/4/91 DRAFT OF LETTER /ns& r (Addressees) Re: Nevada Power Co. v. Monsanto# et al cause number* etc. Dear Counsel: We suggest/immediate settlement discussions In this matter#- before Nevada Power's reply brief must be filed on February 11, The reason for this unusual r equesters that defendants' brief leaves us with little choice but to suggest in our reply brief that the Ninth Circuit solicit amici curiae briefs from the insurance carriers for Monsant and Westinghouse. Time is thus of the essence. The problem we face Is defendants' position in their brief that the EFA-imposed expenses Nevada Power seeks to recover are beyond the scope of the "damages'* available in indemnity. See Defendants1 brief at *___ . This position is blatantly inconsistent with the position of Monsanto and Westinghouse in their litigation against their insurance carriers#@ where they must prove that identical expenses suffered by these defendants impliedly fall within the meaning of "damages" in the insurance indemnification agreements. See e.g.# Chesapeake Utilities Coro, v. American Home Assurance Co. # 704 F. Supp. 551# 558-61 CD. Del. D1ir9a8i?9\)(.^ S S this inconsistency ^irsyaiTgva -bfewjunintentional# J>*a * the result necessarily is a bad faith posture in one suit or the _o_t_h_e__r# andYis likely to result in an estoppel ruling in at l1east one of the cases. See generally# R. Boyers# Precluding Inconsistent Statements: The Doctrine of Judicial Estoppel# 80 Northwestern Univ. L. Rev. 1244 < 1987); Parklane Hosiery Co. v. Shore# 439 U. S. 322 ( 1979) (offensive non-mutual collateral estoppel following prior inconsistent judgment# notwithstanding present interpretation of the law) iation also unfortunately 3s the s pectre that "def8ndantsnr~^gunse.l^in "OTTb" t'Ke cases may later^f-i-nd~"fFself sufT a m a l p r a c t ice action .to recover damages loBt as a resul -estoppel pos-Lt4trr| we Theretfff 0 Case citations# noting that complaints are in record. 1 Insert 1 If the estoppel argument is made in any court, it becomes an issue in every court where relevant litigation is pending, irrespective of whether it succeeds. Necessarily this makes the position of counsel extremely delicate. Legal arguments which place a litigant with numerous claims pending in circumstances where it must forfeit any opportunity to recover damages in some of them surely will find counsel awkwardly counterposed beneath the spectre of malpractice. Your clients and their counsel in the insurance litigation might offer guidance on this. your own sakes that you transmit this letter or its matter to your clients and to their:-- rrr-tTHe insurance litigation, and thaJk^-your^ecurethe ir written guidance on your^_reJs-pons''~io'~thi6 offer to negotiate.( Defendants' unexpected argument in this case unfortunately aligns Nevada Power* interests with those of defendants' insurance carriers, leaving us little ethical choice but to solicit the participation of the insurance carriers in this litigation, in order that the Ninth Circuit be fullyVawara^of-- the potenti-uk rainlXlcJOt-arons-- ofc-- arr-sr" rul^i-ng. ^ J We frankly would prefer to avoid Buch a move, but our professional obligations to our client must control our ft* /position on February 11. Moreover/ as attorneys we -H&e- ejitgoinchLy^incomfortable w tth tho~"pgteirlri"d 1 Luiifrl 1uL* representing the insurance carriers' interests ffc'Vjgul lull without their direct participation. Finally, it appears that defendants now occupy a a no- win"pos it forty t-hus there-ts no reason to prolong the litigation. If defendants should win this case on the arguments now advanced, they would only slit their own \ throats in the insurance litigation. On -4-hc other hand> \ s h o u l d defendants lose this case, the verdict of fraud would undoubtedly be asserted pffpnpively by the Insurance carriers to deny coverage for intentional Infliction of damages. Defendants have only the comparatively m inor sums sought by Nevada Power tc gain through obtaining a,(published opinion from the Ninth Circuit in this case, and everything to lose in the higher-stakojinsurapoe litigation. _ In order to avoid this l/n&o -S'-SW /_e-- regrettable s i t u a t i o (-ViAA n,7W (^A--1a y?-- -frwgg b h t"th t-^-it--miqht--1 this litigation now, before our hands are tiedTby the^ poa ilrlpu we musttisatkSL,^--- in our reply brief. brief are attached. > (Relevant portions ofj^fou.rJ d/ f-t reply^^-i^ Therefore, we offer to meet crsepenM * fagjj counsel for all defendants and with key executives of all companies to discuss prompt settlement of all issues on Saturday, February 9, 1991, M a location-conven4k3ntr-to^ H = . We would of course appreciate an early indication of your probable response so that travel arrangements might be made if necessary. ' S in c e re ly , 2 ir . t II litigation against their Insurers* of prevailing in this case on the issue of the availability of the indemnity remedy. In those cases, defendants oontend that indemnity provides a remedy for "damages0 of the sort involved here. Indeed# defendants in the insurance litigation seek a declaration that their insurers must defend them in cases such as this and Indemnify them for losses should they lose cases of this type. Should they prevail in this case, defendants will undoubtedly face even more determined argument# from their insurers that they^ifhuulUi Iht judicially estopped in those oases from asserting -t=he inconsistent position? /^ \ vto*ory^neiFaWveda^Powe^-s-coi^aEatr$-ve3iy^iid^cnid^=cteiiftw4^ht prove -fcn b cr^i'^ihyirifiit v4otoc-yr^lndeed-r0- 0 Defendants may be caught in a double bind of their own manufacture. Should Nevada Power ultimately prevail on its fraud claims, their insurers will undoubtedly use the evidence and verdict^f-rom thiB case to argue an estoppel against coverage because of defendants1 Intentlonal, rather than negligent wrongs# vwhlchjl Drel-y are not covered, ender-t~hcir"-pollc4^& . Thus, re^frawl ay~r>X* whether defendants win or lose this case, this Court's decision will endanger defendants' likelihood of success in their insurance litigation. Defendants4 argument that the harm inflicted upon Nevada Power is beyondb ^tShfSe reachC^oYfi/i-e*1qdutitable indemnity is not Well-taken. There is n o>fce-ee=apbn thrat the 'cou"rts'1'r-plowers ate broader In express contractual indemnity than in equitable indemnity, which is premised on the lmt>l led Contractual liability of one who negligently or tortiously causae another to be exposed to liability or compelled to 19 I pay damages. 42 C.J.S. Indemnity < 21*- pg. 596. @ | Defendants suggest that their own written agreements executed years ago indemnifying each other for PCB-related losses# Opening Br. at *,,__ # should not apply by analogy because Nevada Power seeks tort indemnity. Def. Br. at 34 n. 35. Defendants apparently do not understand that equitable indemnity is Implied contractual liability# l.e.# that where it is fair to do so and where there is a sufficient relationship established to support an Implied contract arising out of a breached duty owed by the guilty Indemnitor to the more innocent indemnitee/ the courts will! Imply a contract requiring Indemnification. The "action is not changed from one for a breach of contract to one for a tort#" as defendants contend# simply because recovery may turn upon the breach of a duty established in tort. Ryan Stevedoring Co. v. Pan-Atlantlc Steamship Coro.# 350 U. S. 124# 100 L. Ed. 133# 142 <1956). NOTE CHANGE OF DATE ON THIS CASE DECISION FROM JONES & JONES DRAFT, / 20 It is frankly troubling to ses thse defendants, maintaining to this day that PCBs are not hazardous, cone before this Court suggesting that innocent Nevada Power should have suspected their fraudulent sales and their duty to warn, when they still attempt to obscure PCB hazards in their briefs by unfailingly character ItIng c uoh hazards as merely " a l l e g e d . ^ This defense position is inconsistent with far more than their burdens of persuasion and proof in this litigation; in fact# for defendant Westinghouse it must be a bad faith position either in this case or In its lawsuit filed against its insurers, where it steadfastly maintains that PCB hazards are real end their own similar damages'are recoverable. @FN PFN See e.a., S.E. R. * <Westinghouss complaint in case against Its insurers where it seeks indemnification for its costs of oleaning up Its own PCB-contamlnated properties; in that case, Westinghouse consistently asserts, as it must, the hazards of PCBs. Should this Court remand, Weatinghouse should be judicially estopped from asserting its inconsistent factual position in this litigation. (Alternatively, should this Court be inclined to rule against Nevada Power in this case, Nevada Power requests an express finding by this Court on West inghouse's duplieity.) Ironically, defendant Monsanto apparently expects somehow to win its similar case against its insurers based on a position consistent with this litigation that * MPCBs are only "allegedly" hazardous. B.E.R, ___ (Complaint). The sourcfl of Monsanto's confidence is unknown. 1 (O lte,k t */4zy - k 'fiu * e/fcy tn &m ( p v jffij 'ffuLAr*. $ ^-9 <ZervJ\+ *fteX A J tU & d i tfa& 15 \&&3L\de> UJVUSJZa^ M W * /Z (S e z i'F / r< * /S ^ 3. DAMAGES ve, LIABILITY. There is no merit to defendants' contention that tht monetary liabllIty^inflicted upon Nevada tower does not constitute "damages" fiiiu ihi^ ^ f f g rEr^of a court exercising powers of egultable lndefttnit^^a-- awee4t The expenses Nevada Power incurred as a result of the EPA tules/orders can clearly be regarded as "damages" for purposes of express contractual indemnity. Chesapeake Ut ilitles Corp. V, American Home Assurance Co, 704 P. Supp. 551# 556-61 <D. Del, 1989); see also Avondale Industries v. Travelera Indemnity Co,, 697 P. Supp* 1314, 1319 <D, N.Y. 1988) (analogizing from "damages" available under chemical nuisance/trespass theories to property clean-up costs imposed by pollution control agencies), There la no reason a court of equity should feel its powers more limited in equitable Imolled Indemnity than in express contractual indemnity, where the courts have had no difficulty implying that the term "damages" encompasses liability of the type involved here. See Chesapeake (Jtilities# supra. Defendants have adopted a contrary position In their litigation against their Insurance carriers, where they argue that expenses of the type C iinrveol- vj ed in this case are within the reach of indemnity* Defendants^gficuld simp-ly be Judicially estopped from asserting a contrary position in this litigation. See a.o., R. Royers, Precluding Ineons latent Statements: The Doctrine of Judicial Estoppel, 60 Northweatern Univ. L, Rev, 1244 ( 1987) Tucth^cmore, J.,, , . . wevad# Power~B^dnociAesrfae~4lpy~-qugskt'CisoiLnj a(<r--f wsh atii}ho c theee--c/ J dor onaa-nta have bu^-l^ uo^^ ex^mlJiadAhe-pofts^uenGca-#^ In their own if $ Wi*/J J/O *A/~0 iHliAtfybC' ft*a4^ V 18 /f & Telephone PAUL E. MERRELL Lawyer 7493 East Five Rivers Road Tidewater# Oregon 97390 (503) 528-7151 Telefax: Via Voicaline February 4# 1991 Chuck MeCrea David McCrea Bill Snyder Guys: Following this page is the third draft settlement proposa1. It incorporates changes suggested by Chuck# Bill# and Carol. Please note that I have deleted the language about being aligned with the interests of the insurance carriers and have substituted other language. Fortunately# I realized in time that the insurance carriers would be arguing for Defendants* present position and the defendants would thus be forced to abandon it at hearing. We obviously would be opposing the insurance carrier's position. Sorry# guys! If anyone can suggest some refinements to this argument that would make it more effective# bring *em on. Chuck# I appreciate your substitute approach to the malpractice issue. It's much more sensitive and far less confrontive, I did embellish on it a little bit# and left you with a quick bit of research if you want to use the smbe11ishment. It occurred to me that it might be wise to delete the malpractice paragraph from this letter and put it into a short covering letter# thereby leaving the defense lawyers perhaps more willing to show the main letter to their clients, It's one thing to ask attorneys to admit to their clients that they screwed up; it's another thing entirely to ask them to show their clients a letter suggesting there's a m a 1pract ice cause of act ion. I've enclosed suggested language for the malpractice letter following the main letter# from which the malpractice paragraph should be pulled if you select that option. Query whether the mal-pract ice letter should go to all opposing counsel or just to one# and if the latter which one? Because of the time factor# I suggest that Chuck take the lead on the letter from this point forward. One