261 Kan. 806
(934 P2d 65)
No. 75,279
ASSOCIATED WHOLESALE GROCERS, INC., et al., Plaintiffs/Appellees, v. AMERICOLD CORPORATION; SAFEWAY, INC., et al., Defendants, and NORTHWESTERN PACIFIC INDEMNITY COMPANY, Garnishee/Appellant.
SYLLABUS BY THE COURT
1. An insurer assumes a duty to define any limitations on coverage in clear and explicit terms.
2. The test to determine whether an insurance contract is ambiguous is not what the insurer intends the language to mean, but what a reasonably prudent insured would understand the language to mean.
3. Primary insurance coverage is insurance coverage under which liability attaches immediately upon the happening of the occurrence that gives rise to liability. An excess insurance policy is one that provides that the insurer is liable for the excess above and beyond that which may be collected on primary insurance.
4. An excess insurer owes an implied good faith obligation regarding settlement negotiations. Even if it has not assumed the defense or control of settlement negotiations, an excess insurer has the right under the policy to consent to any settlement reaching its coverage level. The excess insurer has an implied obligation to exercise that right in good faith.
5. While the insurer's good faith obligation to settle is implied, the insurer's coverage obligations are set forth in the policy. When an insurer wrongfully denies coverage, the insurer breaches an express contract provision.
6. An insured does not lose rights against the insurer by entering into a settlement after the insurer's bad faith denial of coverage and refusal of a reasonable settlement offer within policy limits.
7. If a covenant not to execute is permissible in a case in which the insurer has defended and provided coverage, but has breached the implied good faith settlement obligation, then it should be no less permissible in a case in which the insurer has breached that obligation by wrongfully denying coverage and rejecting a reasonable policy limits settlement offer.
8. If the insurer's rejection of a reasonable offer to settle within the policy limits is either negligent or in bad faith, after its wrongful denial of coverage, the insured should be free to negotiate a reasonable, good faith settlement with a third-party claimant, even though the insurer offered to defend the insured.
9. The reasonableness of a policy limits settlement offer must be viewed through the insurer's eyes at the time the offer was rejected. The insurer must evaluate the settlement offer without regard to policy limits.
10. In determining whether an insured's settlement above policy limits with a third-party claimant without the insurer's consent is reasonable, the solvency of the insured is relevant.
11. The plaintiff has the burden of initially presenting a prima facie case to establish the reasonableness of a settlement amount. The proof requires, at a minimum, enough information for the district court to make an independent evaluation of the reasonableness of the settlement.
12. An insured's action for damages for breach of an insurer's implied good faith settlement obligation is contractual in nature.
13. Factors for evaluating the circumstances surrounding an insurer's coverage denial include: (1) whether the insured was able to obtain a reservation of rights; (2) efforts or measures taken by the insurer to resolve the coverage dispute promptly or in such a way to limit any potential prejudice to the insured; (3) the substance of the coverage dispute or the weight of legal authority on the coverage issue; (4) the insurer's diligence and thoroughness in investigating the facts specifically pertinent to coverage; and (5) efforts made by the insurer to settle the liability claim in the face of the coverage dispute.
14. Although both a primary and an excess insurer owe the insured an implied duty of good faith, the specific contractual duties owed by each are defined in the insurance policy.
15. In plaintiffs' garnishments against the excess insurer to enforce consent judgments entered against the insured, the record is examined and it is held: (1) Summary judgment for plaintiffs is reversed; (2) denial of summary judgment for the excess insurer is affirmed; (3) the absolute pollution exclusion in the excess insurance policy does not apply to damages caused by smoke from a hostile fire; (4) the occurrence issue is not properly preserved for appellate review; (5) the excess insurer failed to produce sufficient evidence to raise a material issue of fact concerning the "other insurance" issue; and (6) material issues of fact remain as to the good faith and reasonableness of the settlement amount resulting in the consent judgments, the excess insurer's bad faith in denial of coverage and rejection of settlement within the policy limits, and the liability of the excess insurer for the judgments over policy limits.
Appeal from Wyandotte district court; PHILIP L. SIEVE, judge. Opinion filed March 7, 1997. Affirmed in part, reversed in part, and remanded.
Wayne T. Stratton, of Goodell, Stratton, Edmonds & Palmer, L.L.P., of Topeka, argued the cause, and Charles R. Hay, of the same firm, was with him on the briefs for garnishee/appellant.
Andrew W. Horstman, of Robins, Kaplan, Miller & Ciresi, of Minneapolis, Minnesota, argued the cause, and Donald W. Bostwick, of Adams, Jones, Robinson & Malone, of Wichita; N. Jack Brown, of Boddington & Brown, of Kansas City; and David S. Evinger and Robert J. Gilbertson, of Robins, Kaplan, Miller & Ciresi, of Minneapolis, Minnesota, were with him on the briefs for plaintiffs Arkwright Mutual Insurance Company; Doskocil Companies, Inc., for itself and as assignee of Industrial Risk Insurers; and Wilson Foods Corporation.
John M. Duggan, of Duggan, Shadwick & Doerr, P.C., of Kansas City, Missouri, argued the cause, and John E. North, Jr., and Pamela K. Black, of McGrath, North, Mullin and Kratz, P.C., of Omaha, Nebraska, were with him on the briefs for ConAgra, Inc. and Swift-Eckrich, Inc.
James A. Durbin and Richard N. Bien, of Swanson, Midgley, Gangwere, Kitchin and McLarney, L.C., of Kansas City, Missouri, were on the briefs for Safeway, Inc.
Edward J. Barbosa, William J. Gotfredson, and Edward L. Smith, of Knipmeyer, McCann, Smith, Manz & Gotfredson, of Kansas City, Missouri, were on the briefs for Safeway, Inc.; Kraft Foodservice, Inc.; Fleming Companies, Inc.; and Marcus Phillips, d/b/a Phillips Confections, Inc., and Hanover Kansas City, Inc.
Daniel J. Strausbaugh and Steffanie Stracke, of Couch, Strausbaugh, Pierce & King, Chartered, of Overland Park, and Laura A. Foggan, Daniel E. Troy, and John C. Yang, of Wiley, Rein & Fielding, of Washington, D.C., were on the brief for amicus curiae Insurance Environmental Litigation Association.
Steven C. Day, of Woodard, Blaylock, Hernandez, Roth & Day, of Wichita, was on the brief for amicus curiae Kansas Association of Defense Counsel.
The opinion of the court was delivered by
SIX, J.: This is a first impression pollution exclusion liability insurance excess coverage case involving a finding of bad faith for refusal to settle within policy limits. The judgments for plaintiffs totaled $58,670,754. The defendant excess carrier's policy limit is $25 million. Our journey to resolution takes us deep into "insurance country," where an unfamiliar landscape is dominated by both primary and excess carrier contractual relationships with the insured and the absence of case law controlling those relationships. Our vehicle is summary judgment.
INTRODUCTION
Various tenants and their subrogated insurers (plaintiffs) sued Americold Corporation and its subsidiary, Americold Services Corporation (both called Americold), the owner and manager of an extensive underground cold storage facility. Plaintiffs in cases pending in both federal district court and the district court of Wyandotte County sought recovery for damaged food products. A fire starting on December 28, 1991, burned for several months and produced smoke spreading throughout the facility. Americold's primary general liability insurer, National Union Fire Insurance Company (National Union), provided Americold's defense. Plaintiffs sought damages of approximately $66 million.
For the year 1991, Americold had primary general liability coverage for tenant claims of $1 million, with $25 million excess coverage, through Northwestern Pacific Indemnity Company (NPIC), the garnishee-appellant, and $15 million excess coverage to the National Union and NPIC policies through TIG Insurance Company (TIG). The plaintiffs and their separate judgments are:
| Arkwright Mutual Insurance Company |
$20,466,087.00 |
| Doskocil Companies, for itself and as assignee of Industrial Risk Insurers and Wilson Foods Corporation |
$ 6,421,104.00 |
| Kraft Foodservice, Inc. |
$ 4,930,373.00 |
| Safeway, Inc., and General Accident Ins. Co. |
$ 5,283,027.00 |
| Fleming Cos., Inc., Commerce & Industry Ins. Co. and Institute of London Underwriters |
$14,037,145.00 |
| Marcus Phillips d/b/a Phillips Confections and Hanover Kansas City, Inc. |
$ 146,876.00 |
| ConAgra, Inc., and Swift-Eckrich, Inc. |
$ 7,386,142.00 |
After extensive discovery, the parties participated in court-ordered settlement conferences (including both federal and state cases) before a federal magistrate. NPIC and TIG contended that various policy provisions, including an absolute pollution exclusion, raised coverage questions and declined to offer any amount in response to a policy limits settlement offer from plaintiffs. Concluding that NPIC and TIG were denying coverage, Americold negotiated a settlement with plaintiffs, which included consent judgments totaling $58,670,754, a covenant by plaintiffs not to execute against the assets of Americold, and an assignment of Americold's claims against its excess insurers. National Union tendered its policy limits on the eve of the settlement. Following entry of the consent judgments in the state and federal cases, plaintiffs filed garnishments in the district court of Wyandotte County against NPIC and TIG. After all parties moved for summary judgment, the district court denied NPIC's and TIG's motions and granted plaintiffs'. Both NPIC and TIG filed notices of appeal. TIG settled and dismissed its appeal. Our jurisdiction is under K.S.A. 20-3017 (motion by a party to transfer).
THE ISSUES
The issues are: (1) Does the absolute pollution exclusion in the NPIC policy apply to eliminate coverage for plaintiffs' claims; (2) did plaintiffs carry their burden of proof that their damages resulted from an "occurrence" within the NPIC policy period and that the "other insurance" provision in the NPIC policy was satisfied; (3) is NPIC bound by the $58,670,754 settlement agreement reached by Americold and plaintiffs or, on summary judgment, do material issues of fact remain as to the reasonableness and good faith of the agreement; (4) did the district court improperly impose bad faith liability on NPIC for damages above policy limits; and (5) did the district court improperly increase the amount of the judgment after entering summary judgment against NPIC?
We hold:
ISSUE (1): The absolute pollution exclusion in the NPIC policy does not exclude coverage.
ISSUE (2): The occurrence issue was not advanced in the district court and is not properly before us on appeal. NPIC failed to raise any material issue of fact regarding application of the other insurance provision.
ISSUES (3 and 4): Material issues of fact remain concerning: (1) the reasonableness of the policy limits settlement offer, (2) the reasonableness of the Americold settlement agreement, and (3) NPIC's bad faith liability in denying coverage and refusing to settle within the policy limits.
ISSUE (5): Because of our disposition of Issues (3) and (4), we do not reach Issue (5).
FACTS
Americold's underground facility, a former limestone quarry located in Kansas City, Kansas, covers approximately 170 acres. The facility consists of two main areas, Portals A and B, separated by various walls and roadways. Americold Corporation is in the warehouse and cold storage business. Americold Services Corporation operates the facility under a lease. Besides containing areas leased to tenants, the facility also provided records storage and warehousing. Plaintiffs are either tenants leasing space in Portal B for food product storage or their subrogated insurers.
During the early morning hours of December 28, 1991, a fire was detected in Portal A. The local fire department's efforts to extinguish a fire were unsuccessful. The fire continued to burn and generate toxic smoke over the next several days. Americold hired a firm to seal Portal A to keep smoke from entering Portal B, and to pump carbon dioxide into Portal A to extinguish the fire. The fire was believed to be extinguished on January 10, 1992, and Portal A was vented. However, after venting, the fire burned for another 4 months, remaining within Portal A. Smoke spread into Portal B, contaminating plaintiffs' food products. Some products may have been moved in and out of Portal B before January 9, 1992, the date the Kansas Department of Health and Environment placed an embargo on goods stored in Portal B. Testing confirmed that products in Portal B were contaminated with many toxic substances.
Americold notified NPIC of the fire on December 31, 1991. NPIC assigned Melba Lynn as the claims representative, and on January 2, 1992, retained Wallace, Saunders, Austin, Brown and Enochs, Chtd., (Wallace, Saunders) as coverage counsel to monitor the situation.
Lynn prepared a "Claim Abstract" dated January 2, 1992, which noted: "estimated 200 million in values inside cave. Possible pollution exposure." Lynn notified National Union on January 7, 1992, that NPIC's policy "has a $25 million limit in excess of your $1 million primary general liability coverage." The letter (copied to Americold) noted that there may be "coverage issues" and requested a copy of National Union's coverage position, stating: "Your immediate attention will allow us to take a prompt and accurate coverage position." The letter further requested that Lynn be copied on all correspondence and investigative materials and suggested that National Union "provide these same materials" to TIG, the other excess carrier "because of the potential for multi-million dollar claims." During January 1992, NPIC informed Americold that if National Union did not investigate or defend, NPIC would assume those duties.
On January 14, 1992, Lynn requested that Americold's counsel, Paul Niewald, send her copies of the tenant leases and certificates of insurance. Niewald complied. Lynn was interested in the tenants' obligations to maintain liability coverage listing Americold as an additional insured. Lynn discussed the leases with counsel. She requested that Americold make claims for liability coverage under the leases, because most showed a mutual waiver of subrogation and required Americold to be listed as an additional insured on tenants' liability policies.
In January 1992, Niewald's firm prepared a memorandum analyzing available insurance coverages for the fire loss. The memorandum anticipated that the excess general liability carriers might raise the absolute pollution exclusion as excluding coverage for smoke damage, but concluded: "In our opinion, the excess carriers would be on shaky ground in attempting to deny coverage for smoke or soot damage to lessees' property." The memorandum further concluded that general liability coverage of $41 million under the National Union, NPIC, and TIG policies should be available for tenant claims.
Beginning in April 1992, various lawsuits were filed against Americold and eventually consolidated in both federal and state court. Claimants generally included record storage customers, warehouse bailors, and tenants at the facility.
National Union initially denied coverage for two lawsuits filed against Americold in state court. On May 27, 1993, Americold filed a declaratory judgment action against National Union to resolve the coverage issues. However, the declaratory judgment action remained dormant. During mid-1993, National Union paid out $33,000 to settle a claim, which Americold viewed as an admission that coverage existed.
Lynn wrote National Union on December 9, 1992:
"To date, we have not received a response to our inquiries regarding your investigation nor your coverage position. We trust you recognize your duties and responsibilities as the primary carrier to both Americold and to our company. Your delays, without adequate explanation nor a definite time for accomplishing these requests, may constitute a breach of your duty to Americold and our company."
On the same date, Lynn wrote to Americold: "[O]n two previous occasions we have written to the primary insurance company and requested information from them, including their coverage position. As you know, their position on coverage directly effects [sic] your coverage under our policy of insurance."
In response, Niewald wrote to Lynn on December 11, 1992: "We certainly expect our liability insurance companies to appropriately investigate this matter and to give full details of any information which would cause them to believe that coverage is not available."
On March 15, 1993, Lynn reiterated to National Union, NPIC's concern that National Union accept defense of the pending lawsuits against Americold. Lynn also suggested that some litigation might be disposed of if tenants making claims had named Americold as an additional insured under their own insurance policies, thus possibly preventing a subrogated insurer of a tenant from making a claim against its own insured, Americold.
National Union eventually retained the firm of Armstrong, Teasdale, Schlafly & Davis (Armstrong, Teasdale) to represent and defend Americold under a reservation of rights against the tenants' liability claims. Other liability insurers and law firms were involved in defending Americold against the warehouse and records storage claims. Lynn routinely received reports prepared by Douglas Richmond, an attorney with Armstrong, Teasdale, concerning the fire investigation and the pending tenant lawsuits.
In April 1993, David Bissell of NPIC took over the Americold file. Bissell recognized the potential for excess damages being awarded against Americold and thought coverage litigation was a strong possibility.
By June 1993, Bissell concluded that the pollution exclusion in the NPIC policy probably applied to foreclose coverage for claims arising from smoke damage at the Americold facility. However, relying on advice of counsel, Bissell did not believe that NPIC was obligated to reveal its coverage position to Americold unless NPIC took control of the defense.
Richmond's status reports show that the fire investigation and discovery proceeded at an intense pace during 1992 and 1993. Although Richmond attempted to be positive, it became apparent that Americold had serious defense problems. For example, Richmond observed in one of his reports regarding expert depositions: "The experts retained by our co-counsel were ill prepared, lacked knowledge about the facility or the facts of this case." He opined that two experts "made terrible appearances as witnesses," and concluded generally that "the witnesses engaged by our co-counsel embarrassed us and Americold."
The origin of the fire remained in dispute. Plaintiffs contended that the fire started in an area controlled by Americold, possibly from exploding dust after rock fell from the ceiling onto bags of powdered milk. Americold claimed that the fire started on the premises of Return, Inc., one of its tenants in Portal A. Plaintiffs claimed that, despite where or how the fire started, Americold was negligent in at least the following respects: (a) The facility violated applicable codes, had no sprinkler system, had an inadequate fire alarm system, had improper firewall openings, and lacked a ventilation system that could have prevented the smoke from spreading throughout the facility; (b) Americold employees were not properly trained in dealing with cave fires, and after first detecting the fire, failed to notify the fire department for almost an hour; and (c) the contractor retained by Americold to extinguish the fire exacerbated the smoke contamination problem with its use of carbon dioxide in unsuccessful attempts to extinguish the fire and seal off Portal A.
The leases generally had exculpatory "hold harmless" clauses applying to Americold Services Corporation, as landlord, except for gross negligence. Also, some leases provided for waiver of subrogation claims, under certain circumstances, for damages covered by the tenant's property insurance. However, only Americold Services Corporation was a party to the leases. Americold Corporation may not have been protected by this exculpatory language. Also, the evidence could have been sufficient to surpass the gross negligence hurdle.
On November 5, 1993, Richmond received a settlement demand from a group of plaintiffs (including Arkwright Mutual Insurance Company, as subrogated insurer of Swift-Eckrich; Wilson/Doskocil and IRI; Fleming; Safeway; and Kraft) for Americold's general liability insurance policy limits of $41 million, which offer was to remain open until November 24, 1993. Richmond forwarded the offer to Bissell, along with Richmond's letter to National Union containing his observations. Richmond commented: "I expect that within the next several months, or at least by February 1, 1994, Mr. Niewald will demand on behalf of Americold that this case be settled for policy limits."
In December 1993, upon Richmond's recommendation, National Union retained Arthur Andersen & Co. to evaluate plaintiffs' damage claims. On December 16, 1993, Richmond advised Bissell of a favorable decision in federal court, Butler Mfg. Co., Inc. v. Americold Corp., 841 F. Supp. 1107 (D. Kan. 1993), upholding certain exculpatory language in the leases. Richmond noted that plaintiffs would be required to prove gross negligence to overcome that language. On January 3, 1994, three plaintiffs filed a motion to amend their petitions to claim punitive damages against Americold.
Richmond forwarded to Bissell in November and December 1993, detailed settlement demands from Safeway for $5,930,650, Kraft for $5,634,726, Arkwright, as subrogated insurer of Swift-Eckrich, for $22,923,342, IRI, as subrogated insurer of Doskocil/Wilson, for $7,875,641, and Fleming for $16 million.
Paul Hasty, of Wallace, Saunders, informed Richmond on January 3, 1994, that NPIC had retained Hasty's firm in the Americold matter. Hasty's letter also requested that Richmond provide him information and documents relating to whether Americold was pursuing claims against its tenants' liability insurance carriers for coverage as an additional insured.
Bissell requested that Richmond come to Dallas to brief Bissell, Hasty, and other NPIC officials on the Americold case. In preparation for the January 21, 1994, Dallas meeting, Richmond sent Bissell a "Damages Summary & Analysis--Lease Plaintiffs," which listed the damages claimed by each tenant, all totaling $66,045,987.85. The summary also noted that several motions for partial summary judgment were pending and that trial in the federal cases was scheduled for April 5, 1994.
TIG's counsel, in a January 11, 1994, letter to Hasty, demanded a coverage position from NPIC. Hasty replied on January 18, 1994: "National Union . . . continues to defend those claims that may be indemnifiable under their contract. Furthermore, the primary limits have not been exhausted by payment of claims or satisfaction of judgments which would trigger [NPIC's] duties under its policy. Therefore, I believe your request for a 'coverage position' is premature."
Hasty continued his requests to Richmond for information and discovery regarding the possibility of Americold pursuing counterclaims for coverage under plaintiffs' liability insurance policies.
On February 4, 1994, Richmond received a revised settlement proposal for the policy limits from counsel for all plaintiffs, except Swift-Eckrich, allowing Americold to carve out a sufficient reserve to defend against Swift-Eckrich's claim for approximately $7 million. By letter of January 31, 1994, Richmond furnished Bissell an updated settlement demand for the policy limits. This offer was to remain open until February 15, 1994. Richmond forwarded the offer to National Union, NPIC, and TIG, noting:
"Americold believes quite strongly that a counteroffer in the $20,000,000 range must be made before the plaintiffs' existing February 15th deadline. Americold believes quite strongly that any offer below $20,000,000 will be viewed as a sign of bad faith by the plaintiffs and impair or impede further attempts at settlement, perhaps to everyone's detriment if [federal District Court] Judge Lungstrum ultimately rules against us at the end of next week [on the pending summary judgment motions]. It is Americold's opinion that the lease claims can be settled for between $20,000,000 and $25,000,000 and should be so settled as soon as possible."
Richmond recommended settlement.
At a February 7, 1994, status conference in the federal cases, the judge announced that the trial would be bifurcated, with liability to be tried first and then damages. The liability phase was scheduled to start on April 12, 1994. Pending summary judgment motions were to be ruled on by February 18 or 21, and a pretrial conference was scheduled for March 10, 1994.
On February 10, 1994, Niewald, on behalf of Americold, demanded that Americold's insurers settle plaintiffs' claims within the coverage afforded. Richmond wrote Bissell on February 10, 1994, about his concern that Hasty "seems to be attempting to influence defense strategy while, at the same time, serving as coverage counsel." Richmond said further: "Americold does not believe it proper for Mr. Hasty to wear both coverage and defense hats at the same time, nor is it proper for [NPIC] to direct him to do so."
On February 16, 1994, Hasty stated NPIC's coverage position, which raised coverage defenses, including, among others: (a) the absolute pollution exclusion bars coverage for smoke damage, and all lease space claims appear to have arisen from such damage; (b) underlying coverage must be exhausted before NPIC coverage applies; and (c) because Americold may have waived compulsory counterclaims for coverage under the liability insurance policies of its tenants, this may constitute a breach of the NPIC policy. The letter did not expressly say that coverage was denied.
Niewald promptly responded to Hasty's February 16, 1994, coverage letter by sending to Bissell a copy of a brief addressing the pollution exclusion. The brief emphasized that such an exclusion was never intended to apply to smoke damage from a hostile fire. Niewald followed with a letter dated February 25, 1994, stating: "We need your prompt advices as to whether the company will withdraw its denial of coverage." Niewald warned that should the coverage denial remain, Americold would seek indemnification against NPIC for any judgment against Americold.
Hasty continued to request tenant liability policy information from Richmond and to ask whether Americold was pursuing counterclaims for liability coverage. Richmond sent copies of the insurance policies of some plaintiffs to Bissell, but stated in his letter of February 22, 1994, that Americold did not believe NPIC was excess to any of those policies.
The court-ordered settlement conferences continued for a total of 5 days, February 18-19 and March 8-10. Bissell and Hasty attended. However, Niewald objected to Hasty's participation because of Niewald's perception of a conflict of interest from Hasty's involvement in both NPIC coverage issues and Americold liability issues. During the settlement conferences, some plaintiffs produced copies of their insurance policies, which were given to Hasty. At the second settlement conference, all plaintiffs offered settlement within the policy limits. On March 9, 1994, National Union said that it would pay out the balance of its policy limits. Neither NPIC nor TIG tendered any amount toward settlement.
Niewald repeated Americold's demand that the lease claims be settled within the policy limits. On March 10, 1994, Hasty responded on behalf of NPIC, acknowledging that National Union advised him on the evening of March 9, 1994, that its policy limits had been exhausted. However, NPIC would neither admit nor deny that there was any coverage. NPIC offered to defend Americold under a reservation of rights (although no reservation of rights letter had yet been issued), which Americold declined. Niewald advised NPIC and TIG that he would be attempting to negotiate a settlement on behalf of Americold with plaintiffs, without the involvement of NPIC or TIG.
On March 10, 1994, Americold and plaintiffs agreed to settle the lease claims for consent judgments totaling $58,754,574, contingent on plaintiffs' investigation of Americold's ability to pay any judgment. The agreement was completed in the summer of 1994. Americold dismissed its counterclaims and assigned its claims against NPIC and TIG for excess coverage and any bad faith to plaintiffs, in return for plaintiffs' covenant not to execute against Americold. In the agreement, Americold represented its financial condition as follows:
"5.1 Substantially all of Americold's assets are held as collateral by Americold's secured creditors and Americold's indebtedness to its secured creditors exceeds the value of all Americold assets by at least $ 50 million. . . .
"6.1 . . . . Americold represents to Plaintiffs that it has a negative net worth and that Americold is now an operating corporation, capable of servicing its deb