A product distributor in the oil-drilling industry was sued by several individuals claiming they were exposed to asbestos in the products distributed. The distributor subsequently filed claims with its multiple insurance companies seeking liability coverage. The insurers disagreed there was coverage for the liability claims under the policies. A series of declaratory judgment actions ensued in which the parties requested the Court to determine which party(ies), if any, were responsible for the cost of the extensive asbestos litigation the distributor was defending.
In one of the declaratory judgment actions in Federal court, the distributor/insured filed a counterclaim adding the parent company of the insurer as a separate party even though there was no contract with the parent company. It was argued by the distributor that the parent insurance company was responsible for the claims of its subsidiary which was merely an alter ego of the parent company. The parent insurance company filed a motion to dismiss the action alleging it was not liable for the subsidiaries obligation as it was a separate corporation.
The Court decided Oklahoma law did not apply to the issue of liability as to the parent company since the subsidiary was incorporated in the state of Indiana. Despite being filed in an Oklahoma Federal court, the court was required to look to the laws of the state of incorporation of the subsidiary insurance company as to whether to pierce the corporate veil. The court granted the parent company’s motion to dismiss. Canal Ins. Co. v. Montello, Inc., et al., 822 F.Supp.2d 1177 (Okla. 2011).