Elrod Defends $1.2 Billion Claim and Negotiates Settlement of $30 Million
In 2006, the ELROD firm finalized the settlement of a $1.2 billion claim brought by Shell Oil Company and CNA Holdings, Inc., against U.S. Brass Corporation, now known as Zurn Pex, Inc. The basis of the claims, filed in connection with U.S. Brass' Chapter 11 reorganization, was the hundreds of millions of dollars which Shell and CNA Holdings had paid to settle homeowner and consumer claims resulting from the allegedly defective plumbing systems which had been manufactured by U.S. Brass in the 1970's and 80's using resins manufactured by Shell and CNA Holdings. After consolidation of the claims into one proceeding, Shell and CNA Holdings sought a recovery against U.S. Brass under diverse legal theories, including contribution, indemnity, assignment of claims, breach of contract, and fraud. At the time that the Shell and Celanese claims were being litigated, a coverage litigation case had been filed by U.S. Brass against its many excess carriers for payment of the Shell and Celanese claims.
Approximately 18 months into the case, the ELROD firm filed motions for summary judgment and for judgment on the pleadings that, if successful, could have disposed of the majority of the Shell and CNA Holdings claims against U.S. Brass. While awaiting rulings from the court on the dispositive motions, the parties, along with U.S. Brass's insurers, aggressively pursued a series of mediation sessions held over a five month period of time.
"We felt that we had presented very good legal grounds for summary judgment in favor of U.S. Brass and that the dispositive motions put a lot of pressure on the plaintiffs to come off their original demand of $1.2 billion by a considerable amount," said ELROD attorney Barbara Wohlrabe. "The insurance carriers had raised numerous defenses to coverage and felt confident in their position, and thus had no incentive to settle for anything other than a very low dollar amount. Considering that there were potentially hundreds of millions of dollars of excess insurance at stake, we felt that the final settlement amount of approximately $30 million was an exceptional outcome for U.S. Brass."
The case was incredibly complex and involved large databases of plumbing system leak information, millions of pages of documents, dozens of prior trials between the parties, and hundreds of fact and expert depositions taken in the earlier litigation. "The case involved very complicated causation and evidentiary issues which our firm was excited to bring to trial," said lead trial attorney David Elrod. “We felt very confident about the defenses that we had raised to the Shell and Celanese claims, and looked forward to presenting our case to the judge had the insurers not decided to settle the claims.”
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