United States District Court, W.D. Washington, Tacoma
In re FRASER'S BOILER SERVICE, INC., Debtor.
FRASER'S BOILER SERVICE, INC., et al., Appellees. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Appellant,
ORDER ON NATIONAL UNION'S MOTION TO SUPPLEMENT
THE RECORD DKT. # 23
B. LEIGHTON, UNITED STATES DISTRICT JUDGE
MATTER is before the Court on Appellant National Union Fire
Insurance Company of Pittsburgh, PA's Motion to
Supplement the Record. Dkt. # 23. Although this is a
relatively simple motion, it is part of a convoluted dispute
and thus requires a lengthy preamble.
case revolves around an effort by Appellee Fraser's
Boiler Service, Inc. (“FBS”), a defunct company
that exists solely to pay out asbestos claims, to sell back
the majority of its insurance policies. In 2018, FBS
negotiated a Settlement Agreement with several of its
insurers (the “Settling Insurers”) to sell back
policies free and clear of all third-party claims, including
equitable and contractual claims for contribution by
FBS's other insurers (the “Inter-Insurer
Claims”). The Bankruptcy Court approved the Agreement
and enjoined the Inter-Insurer Claims on July 18, 2018. In
March of 2019, this Court reversed the Bankruptcy Court's
order and dissolved the injunction. See In re
Fraser's Boiler Serv., Inc., No. 3:18-CV-05637-RBL,
2019 WL 1099713 (W.D. Wash. Mar. 8, 2019).
Union is one of FBS's few insurers that was not a party
to the Settlement Agreement and therefore would have
continued insuring FBS without the Settling Insurers after
the other policies were sold back. Before FBS entered
bankruptcy, National Union had filed a lawsuit in California
state court asserting equitable and contractual contribution
claims against the Settling Insurers. However, after
approving the Settlement Agreement, the Bankruptcy Court
issued an order staying the California action (the
“Contribution Stay Order”) that National Union
and the Settling Insurers stipulated to.
this Court reversed the Bankruptcy Court's order
approving the Settlement Agreement, National Union moved to
modify, lift, or vacate the Contribution Stay Order. The
Bankruptcy Court denied this motion on July 2, 2019.
Simultaneously, the Bankruptcy Court issued another order
lifting the automatic stay in FBS's bankruptcy, effective
October 1, 2019. This would allow asbestos plaintiffs to
revive stayed lawsuits against FBS. Seeing these decisions as
an end-run around this Court's reversal of the Bankruptcy
Court's order approving the Settlement Agreement,
National Union appealed the Bankruptcy Court's denial of
its motion to lift the Contribution Stay Order.
National Union has moved to supplement the record on appeal.
Dkt. # 23. Several of the documents submitted by National
Union were “inadvertently omitted from its designation
of the record for this appeal” and are not contested by
FBS or the Settling Insurers. Dkt. # 23, Appendix 1-3.
However, National Union also seeks to introduce letters (sent
via email) evidencing FBS's recent tender of asbestos
claims exclusively to National Union, Certain Underwriters at
Lloyd's, London, and London Market Insurers but not the
Settling Insurers. Dkt. # 23, Appendix 4. These letters
post-date the Bankruptcy Court's order that is the
subject of this appeal. Consequently, the Settling Insurers
argue that they cannot be included in the record.
See Dkt. # 29. National Union responds that the
Court should allow supplementation of the record because the
letters are directly relevant to a key issue in the appeal
and will help the Court reach a well-informed decision.
See Dkt. ## 23, 30.
following reasons, the Court GRANTS National Union's
an appellate court should not allow parties to supplement the
record on appeal absent “extraordinary
circumstances.” United States v. Boulware, 558
F.3d 971, 976 (9th Cir. 2009) (citing Lowry v.
Barnhart, 329 F.3d 1019, 1024 (9th Cir. 2003)). However,
in Teamsters Local Union No. 117 v. Washington Dept. of
Corrections, the Ninth Circuit recently allowed a party
to supplement the record with evidence of standing because it
was “in the interests of justice and efficiency”
to do so. 789 F.3d 979, 986 (9th Cir. 2015) (citing
Ouachita Watch League v. Jacobs, 463 F.3d 1163, 1170
(11th Cir. 2006) (allowing supplementation where the
“additional material would be dispositive of pending
issues in the case”)). The court observed that refusing
to supplement the record could result in “a remand or
dismissal on procedural grounds [that] would merely prolong
resolution of the underlying issues.” Id.
also may supplement the record by taking judicial notice.
See Lowry, 329 F.3d at 1024. Under Fed.R.Evid.
201(b)(2), courts may take judicial notice of facts that
“can be accurately and readily determined from sources
whose accuracy cannot reasonably be questioned.”
See E.E.O.C. v. Ratliff, 906 F.2d 1314, 1318 n.6
(9th Cir. 1990) (taking judicial notice of facts pertinent to
determining if Title VII applied to appellee's business).
This rule has been found particularly applicable in
bankruptcy appeals due to the ongoing nature of the
underlying insolvency proceeding. See In re Cummins,
20 B.R. 652, 653 (B.A.P. 9th Cir. 1982); see also In re
Victory Const. Co., Inc., 37 B.R. 222, 227 (B.A.P. 9th
Cir. 1984) (“An appellate court may take judicial
notice of developments subsequent to appeal.”). In
Cummins, the court was particularly un-swayed by the
appellee's attempt to withhold facts from the record that
he readily acknowledged were true. 20 B.R.at 654.
the Bankruptcy Court's decision not to lift the
Contribution Stay Order focused on the balance of equities
between National Union and the Settling Insurers. June 26
Hearing Transcript, Dkt. # 18-1, at 144-45. The court
observed that the harm to the Settling Insurers from lifting
the stay would be concrete because any defense and
indemnification costs incurred by the Settling Insurers would
be deducted from the settlement money paid to FBS if the
Ninth Circuit ultimately upheld the Settlement Agreement.
Id. at 127-128. In contrast, the Bankruptcy Court
viewed the potential harm to National Union as hypothetical
because National Union had not yet incurred costs defending
revived asbestos claims and the court doubted it would
anytime soon. Id. at 147-48. The court even left the
door open for National Union to renew its motion to lift the
Contribution Stay Order if it could make a showing of
“actual and substantial loss.” Id. at
the Bankruptcy Court's order depended partly on
predicting future events, it would make little sense for this
Court to needlessly take the same speculative approach to
events that have come to pass. If there is new,
straightforward evidence that may alter the Bankruptcy
Court's calculus of the equities, it would be in the
interests of justice and efficiency for this Court to
consider it. See Teamsters Local Union No. 117, 789
F.3d at 986. Ignoring it could result in National Union
simply renewing its motion to lift the Contribution Stay
Order before the Bankruptcy Court based partly on the same
letters contained in Appendix 4 qualify as such
straightforward evidence. They “accurately and
readily” indicate that FBS has tendered numerous claims
either to National Union alone or to National Union and
Lloyd's/London Market Insurers. See Fed. R.
Evid. 201(b)(2); Dkt. # 23, Appendix 4, at 2, 6, 10, 14,
& 16. Although their ultimate impact on the issues is
uncertain, the letters undoubtedly shed new light on the
threats faced by National Union if the Contribution Stay
Order is not lifted. The Settling Insurers do not argue to
the contrary. ...