177 A.D.2d 61, Continental Cas. Co. v. Rapid-American Corp.
|Citation:||177 A.D.2d 61, 581 N.Y.S.2d 669|
|Party Name:||Continental Cas. Co. v. Rapid-American Corp.|
|Case Date:||February 25, 1992|
|Court:||New York Supreme Court Appelate Division, First Department|
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Charles A. Booth, of counsel (Victor G. Gleser and Mona Jha, with him on the brief, Ford Marrin Esposito & Witmeyer, attorneys), for plaintiffs-respondents.
Martin J. Schwartz, of counsel (Stephen A. Marshall, with him on the brief, Rubin Baum Levin Constant & Friedman, attorneys), for defendant-appellant.
[581 N.Y.S.2d 670] Jerold Oshinsky, Randy Paar, David L. Elkind, Robert L. Carter, of counsel (Anderson Kill Olick & Oshinsky, P.C., attorneys) on behalf of W.R. Grace & Company, Pfizer Inc. and Keene Corp. as amici curiae.
Before CARRO, J.P., and ROSENBERGER, WALLACH, ROSS and ASCH, JJ.
This appeal requires us to scrutinize the insurance coverage and exclusion provisions of the standard form comprehensive general liability ("CGL") policy in the course of determining whether the insurance carrier must defend claims against the policyholder arising from asbestos-induced respiratory injury. Although the meaning and effect of these insurance clauses has been extensively litigated in asbestos-related cases around the country, with conflicting results, the issue--whether a CGL insurer can invoke its policy exclusion for environmental pollution in disclaiming its duty to defend
asbestos-related personal injury actions commenced against its insured--has thus far remained unanswered at the appellate level in New York. Under our construction of the CGL policy, we conclude that the environmental exclusion clause does not absolve the carrier of its duty to defend.
Plaintiff Continental Casualty Co. ("Continental") issued to defendant Rapid-American Corp. ("Rapid") and its predecessor, Glen Alden Corp., two CGL insurance policies, one covering the periods January 1, 1971 to January 1, 1974, and a second from the latter date to January 1, 1977; additionally, Continental and plaintiff Transportation Insurance Co. (collectively "CNA") sold similar coverage to Rapid for the period January 1, 1977 to January 1, 1980.
(1) The Insurance Coverage.
These four CGL policies issued by CNA, for which Rapid paid $21.6 million in premiums, require CNA, among other things,
To pay on behalf of the Insured [Rapid] all sums which the Insured shall become legally obligated to pay as damages ..., direct or consequential, because of:
A) Bodily Injury, or
B) Property Damage, or
C) Personal Injury, or
D) Employer's Malpractice Liability
Caused by or arising out of an occurrence happening during the policy period anywhere in the world, and the [insurance] Company shall have the right and the duty to defend any suit against the Insured seeking damages payable under the terms of this Policy, even if any of the allegations of the suit are groundless, false or fraudulent ...
These insurance policies define "Bodily Injury" to mean
bodily injury, mental injury, mental anguish, shock, sickness, disease or disability including death resulting therefrom sustained by any person.
"Occurrence" is defined to mean
an accident or a happening or event or a continued or repeated exposure to conditions which unexpectedly and unintentionally results during the policy period in Bodily Injury, or Property Damage or Personal Injury, or Employer's Malpractice Liability. [Emphasis added.]
From early October 1990 to the time Rapid served its motion for partial summary judgment on November 20, 1990, Rapid timely notified CNA of 14 asbestos-related bodily injury actions which had recently been commenced against Rapid, and requested that CNA defend and indemnify Rapid. Instead of undertaking the defense of these actions, clearly involving "continued and repeated exposure" to asbestos, CNA disclaimed coverage and commenced this action for declaratory judgment relieving CNA of any further liability under the policies.
The complaints in the underlying personal injury actions based upon asbestos exposure, which Rapid requested CNA to defend, assert a familiar combination of product liability theories (e.g., negligence, breach of warranty, strict product liability). The claimants in those cases alleged bodily injury as a result of exposure to asbestos [581 N.Y.S.2d 671] dust and fibers throughout the periods covered by CNA's CGL policies, in most cases extending from the 1950's to the 1980's, thus encompassing the coverage period of January 1, 1971 to January 1, 1980.
We note at the outset that CNA's duty to defend Rapid under these CGL policies is "exceedingly broad" (Colon v. Aetna Life and Casualty Ins. Co., 66 N.Y.2d 6, 8, 494 N.Y.S.2d 688, 484 N.E.2d 1040), and indeed far broader than any ultimate liability to indemnify (Spoor-Lasher Co. v. Aetna Cas. & Sur. Co., 39 N.Y.2d 875, 876-877, 386 N.Y.S.2d 221, 352 N.E.2d 139; Fitzpatrick v. American Honda Motor Co., 78 N.Y.2d 61, 65, 571 N.Y.S.2d 672, 575 N.E.2d 90). The test to be applied, which we find wholly satisfied here, is whether within the four corners of the complaints in the underlying actions brought against Rapid, those pleadings "permit proof" of facts establishing coverage. (See American Home Products Corp. v. Liberty Mutual Ins. Co., 565 F.Supp. 1485, 1500, aff'd as modified 748 F.2d 760 [applying New York law]. In Abex Corp. v. Maryland Casualty Co., 790 F.2d 119, the D.C. Circuit noted (at pp. 128-129):
Under well-settled principles of New York law, [the insured] is entitled to defense by the insurance companies if the underlying tort complaints "permit proof" of the facts establishing coverage, or if the complaints do not...
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