Tenneco Auto, Inc. v. El Paso Corp.

2002 Del. Ch. LEXIS 26 (2002)

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Tenneco Auto, Inc. v. El Paso Corp.

Delaware Court of Chancery
2002 Del. Ch. LEXIS 26 (2002)

  • Written by Sharon Feldman, JD

Facts

As part of a restructuring of Tenneco, Inc. (Tenneco), Newport News Shipbuilding, Inc. (NNSI) (plaintiff), Tenneco Auto, Inc. (Tenneco Auto) (plaintiff), and El Paso Tennessee Pipeline Co. (El Paso Tennessee) (defendant) became independent companies. An insurance agreement governed the companies’ rights to Tenneco’s insurance coverage. The non-assignment provision in the agreement provided: (1) except as otherwise provided, no party was permitted to assign or delegate by operation of law or otherwise any of its rights under the agreement without each party’s written consent; (2) no assignment would release the assignor of its obligations or waive or release any rights the other parties may have against the assignor; and (3) except as otherwise provided, all commitments in the agreement would be binding upon and enforceable against the parties’ successors and assigns. NNSI and Tenneco Auto sued El Paso Tennessee and related entities (defendants), seeking a determination of their rights under the insurance agreement. NNSI moved to be substituted by Newport News Shipbuilding, Inc. (NNSII) because Northrup Grumman Corporation (Northrup) had acquired NNSI by merging NNSI into a wholly owned Northrup subsidiary and changing its name to Newport News Shipbuilding, Inc. El Paso opposed the substitution because the merger of NNSI into Northrup’s subsidiary constituted an assignment by operation of law of rights under the insurance agreement and required El Paso’s consent.

Rule of Law

Issue

Holding and Reasoning (Noble, J.)

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