Evanston Insurance v. Oea, Inc.

I.

Background

OEA is a Delaware corporation with its principal place of business in Denver, Colorado. Until 1994, it manufactured booster caps and other items for use in the aerospace industry; many of its products had explosive components, including the booster caps. Aerospace is located in Fairfield, California and is the wholly owned subsidiary of OEA. OEA alleges that it transferred its aerospace business to Aerospace in 1994 and, from that point on, limited its business to manufacturing auto- motive safety devices.

In two incidents in late 1995 and early 1996, Aerospace employees Patricia Shugart (“Shugart”) and Karen Wise (“Wise”) were injured while repairing booster caps originally sold and manufactured by OEA. Both employees eventually retained the same attorney—Paul Kranz (“Kranz”). Shugart filed suit on December 18, 1996, and Wise did so on February 6, 1997. The complaints are virtually identical: both name “OEA, OEA Aerospace, and Does 1 through 200” as defen- dants and allege liability under theories of general negligence, products liability, premises liability, and strict liability.

OEA purchased a general liability policy from Evanston in 1998, with policy limits…