Opinion
CIVIL ACTIONS NOS. 02-10289-RWZ
May 6, 2002
MEMORANDUM OF DECISION
Plaintiff, the trustee in bankruptcy for Molten Metal Technology, Inc. ("MMT") and its subsidiaries, filed suit in the United States Bankruptcy Court for the District of Massachusetts against certain of MMT's insurers seeking a declaration that the estate's claims against MMT's officers and directors are covered under the director and officer's ("DO") liability policy and excess coverage policies issued by those insurers to MMT's officers and directors. The insurers denied coverage, in part because they insist that a provision of the policy (the "insured v. insured" exclusion) bars claims brought by MMT's trustee against its officers and directors on the ground that they are effectively claims by one insured against another. Plaintiff had moved for partial summary judgment on that limited issue.
The bankruptcy judge determined that the applicability of the "insured v. insured" exclusion is not a "core" bankruptcy issue and is therefore outside of her jurisdiction. Accordingly, she submitted to this Court a set of proposed conclusions of law pursuant to 28 U.S.C. § 157(c)(1) and F.R.Bankr.P. 9033(a). Her recommendation is in full agreement with my December 28, 2001, decision regarding the effect of an "insured v. insured" exclusion in Peter A. Lewis v. Executive Risk Indemnity, Inc., No. 00-CV-11093.
The insurers have filed extensive objections. To the extent that their objections relate to the bankruptcy court's contract interpretation and determination that the trustee of MMT's bankruptcy estate does not share the same legal identity as MMT for purposes of the "insured v. insured" exclusion, those objections are overruled. That interpretation is clearly correct in light of the pertinent case law and considering the adversarial positions of the bankruptcy trustee and the insured directors and officers. To the extent that the insurers' objections stem from minor quibbles with Judge Kenner's phrasing, these are also overruled. The essence of the bankruptcy court's decision is correct. Accordingly, I accept the conclusions of the bankruptcy judge. An order may be entered returning the matter to the bankruptcy judge so that she may grant the trustee's motion for partial summary judgment.