Stonewall Ins. Co. v. Asbestos Claims Management Corp.
| Decision Date | 13 December 1995 |
| Docket Number | No. 1300,D,1300 |
| Citation | 73 F.3d 1178 |
| Parties | STONEWALL INSURANCE COMPANY, Plaintiff-Appellant-Cross-Appellee, v. ASBESTOS CLAIMS MANAGEMENT CORPORATION, Defendant-Appellee-Cross-Appellant, Liberty Mutual Insurance Company, Underwriters at Lloyds, Continental Casualty Company, American Motorists Insurance Company, Affiliated FM Insurance Company, Republic Insurance Company, First State Insurance Company, United States Fire Insurance Company, Houston General Insurance Company, Twin City Fire Insurance Company, Old Republic Insurance Company, American Centennial Insurance Company, The Constitution State Insurance Company, Employers Insurance of Wausau, and Commercial Union Insurance Company, Defendants-Appellants-Cross-Appellees, and The Travelers Insurance Company, et al., Defendants. ASBESTOS CLAIMS MANAGEMENT CORPORATION, Third-Party-Plaintiff-Appellee-Cross-Appellant, v. INTERNATIONAL INSURANCE COMPANY, Third-Party-Defendant-Appellant-Cross-Appellee, and H.S. Weavers (Underwriting) Agencies, Ltd., Third-Party Defendant. ockets 93-7314(L), 93-7380CON, 93-7382CON, 93-7386CON, 93-7388CON, 93-7390CON, 93-7392CON, 93-7396CON, 93-7398CON, 93-7400CON, 93-7402CON, 93-7404XAP, 93-7406CON, 93-7408CON, 93-7412CON, 94-7030XAP, 94-7034XAP, 94-7036XAP, 94-7040XAP, 94-7042XAP, 94-7044XAP, 94-7046XAP, 94-7048XAP, 94-7050XAP, 94-7052XAP, 94-7054XAP, 94-7056XAP, 94-7058XAP, 94-7060XAP, 94-7062XAP, 94-7064XAP, 94-7066XAP, 94-7068XAP, 94-7070XAP, 94-7072XAP, 94-7074XAP, 94-7076XAP, 94-7078XAP, 94-7080XAP and 94-7082XAP. |
| Court | U.S. Court of Appeals — Second Circuit |
James W. Christie, Philadelphia, Pa. (James A.A. Pabarue, Rex F. Brien, Lynne A. Sitarski, Christie, Pabarue, Mortensen and Young; Nelson F. Barry, Bishop, Barry, Howe, Haney & Ryder, San Francisco, Cal., on the brief), for defendant-appellant-cross-appellee Commercial Union Insurance Company.
David F. Abernethy, Wilson M. Brown, III, Philadelphia, Pa., Charles K. O'Neill, New York City (Lawrence A. Nathanson, Drinker Biddle & Reath, Philadelphia, Pa.; Theresa W. Hajost, John W. Scott, Chadbourne & Parke, New York City, on the briefs), for defendants-appellants-cross-appellees Republic Insurance Company and American Motorists Insurance Company.
Charles A. Booth, New York City (J. Katherine Scott, Suzanne M. Bernard, Justin N. Kinney, Ford Marrin Esposito Witmeyer & Gleser, New York City, on the brief), for defendant-appellant-cross-appellee Continental Casualty Company.
David Holmes, New York City (Leonard A. Sheft, Sheft & Sheft, New York City, on the brief), for plaintiff-appellant-cross-appellee Stonewall Insurance Company.
Barry R. Ostrager, New York City (Jonathan P. Rich, Jean A. Andrews, Simpson Thacher & Bartlett, New York City, on the brief), for defendant-appellant-cross-appellee The Constitution State Insurance Company.
Thomas M. Reiter, Donald E. Seymour, Kirkpatrick & Lockhart, Pittsburgh, Pa. (Gail Kamnitz, Kirkpatrick & Lockhart, New York City, on the brief), for defendant-appellee-cross-appellant Asbestos Claims Management Corporation.
Mary Ann D'Amato, George L. Maniatis, Mendes & Mount, New York City, submitted a brief for defendant-appellant-cross-appellee London Market Insurers.
James vanR. Springer, Howard Schiffman, Melinda Burrows, Dickstein, Shapiro & Morin, Washington, D.C., submitted a brief for defendant-appellant-cross-appellee Affiliated FM Insurance Company.
Kevin Barry McHugh, Costello Shea & Gaffney, New York City, submitted a brief for defendant-appellant-cross-appellee Houston General Insurance Company.
Edwin L. Smith, Joy R. Simon, Smith & Laquercia, P.C., New York City, submitted a brief for defendant-appellant-cross-appellee Old Republic Insurance Company.
Kevin W. Wolff, McElroy, Deutsch & Mulvaney, Morristown, N.J., submitted a brief for defendant-appellant-cross-appellee United States Fire Insurance Company and third-party-defendant-appellant-cross-appellee International Insurance Company.
Paul Verbesey, Kramer Martynetz & Verbesey, New York City, submitted a brief for defendant-appellant-cross-appellee Employers Insurance of Wausau.
Eugene R. Anderson, Anderson Kill Olick & Oshinsky, New York City; Martha Churchill, Mid-America Legal Foundation, Chicago, Ill., submitted a brief for amicus curiae Mid-America Legal Foundation.
Laura A. Foggan, Marilyn E. Kerst, Dennis A. Tosh, Wiley, Rein & Fielding, Washington, D.C., submitted a brief for amicus curiae Insurance Environmental Litigation Ass'n.
Robert N. Sayler, William F. Greaney, Rebecca S. Campbell, Covington & Burling, Washington, D.C.; Kurt W. Melchior, Nossaman, Guthner, Knox & Elliott, San Francisco, Cal.; Tom F. Freeman, David M. Halbreich, Brobeck, Phleger & Harrison, San Francisco, Cal.; Anthony Bartell, McArthur & English, Newark, N.J., submitted briefs for amici curiae Armstrong World Industries, Inc., The Flintkote Company, Western Mac-Arthur Company, and Owens-Illinois, Inc.
Contents
Glossary ................................................................. 1186
Background ............................................................... 1187
I. Asbestos Claims Against NGC and NGC's Insurance Policies .......... 1187
A. Bodily Injury and Property Damage Claims ..................... 1187
B. NGC's Insurance Program ...................................... 1187
C. The ACF and CCR Claims-Handling Facilities ................... 1188
D. NGC's Chapter 11 Bankruptcy Reorganization ................... 1189
II. Procedural Background and Rulings ................................. 1189
A. Pretrial Proceedings ......................................... 1189
B. Jury Trial and Bench Trial Proceedings ....................... 1190
C. Judgments and Permission to Appeal ........................... 1191
Discussion ............................................................... 1191
I. Summary of Holdings ............................................... 1191
II. Issues Related to Coverage for Bodily Injury Claims ............... 1192
A. Bodily Injury Trigger of Coverage ............................ 1192
1. Policy Language ........................................... 1192
2. NGC's and Insurers' Positions ............................. 1192
3. Jury and Bench Trial Decisions ............................ 1193
4. New York and Texas Case Law ............................... 1194
5. Evidence on Etiology of Asbestos Diseases ................. 1197
(a) Asbestosis and Pleural Plaques ....................... 1197
(b) Asbestos-Induced Cancers ............................. 1198
6. Coverage for Injury Resulting from Exposure to Other
Manufacturers' Products ................................. 1200
7. Estoppel From Applying Standard Trigger of Coverage to
Certain 1983-85 Excess Policies ......................... 1201
B. Scope of Responsibility for Claims Triggering Multiple
Policies ................................................... 1201
C. "Expected or Intended" Injuries .............................. 1204
D. The Wellington and CCR Issues ................................ 1206
III. Issues Related to Coverage for Property Damage Claims ............. 1208
A. Existence of Property Damage ................................. 1208
B. Property Damage Trigger of Coverage .......................... 1209
C. "Business Risk" Property Damage Exclusions ................... 1210
D. Number of Occurrences ........................................ 1212
IV. Issues Related to Coverage for All Claims ......................... 1214
A. "Known Loss" Defense ......................................... 1214
B. Aggregate Policy Limits of Short-Term Policies ............... 1216
C. Excess Policy Defense Obligations ............................ 1218
D. Insurers' Peremptory Jury Challenges ......................... 1219
Conclusion 1219
Glossary
ACF ......... Asbestos Claims Facility
ACIC ........ American Centennial Insurance Co
ACMC ........ Asbestos Claims Management Corp
ACMs ........ Asbestos-Containing Materials
AHP ......... American Home Products Corp. v. Liberty Mutual Insurance Co., 748
F.2d 760 (2d Cir.1984)
AMICO ....... American Motorists Insurance Co
BI .......... Bodily Injury
CCC ......... Continental Casualty Co
CCR ......... Center for Claims Resolution
CGL ......... Comprehensive General Liability
CSIS ........ The Constitution State Insurance Co.
CU .......... Commercial Union Insurance Co.
NGC ......... National Gypsum Co.
OR .......... Old Republic Insurance Co.
PD .......... Property Damage
Before: NEWMAN, Chief Judge, WINTER and MAHONEY, Circuit Judges.
These consolidated appeals and cross-appeals present numerous issues concerning liability insurance coverage in the context of claims for personal injury and property damage arising from exposure to asbestos. The principal issue is to determine the relevant time period or periods for which liability insurance coverage is available to a former asbestos product manufacturer confronted with thousands of asbestos-related claims, where the policies at issue are triggered not by the assertion of a claim against the insured but by the occurrence of bodily injury or property damage during the policy period.
National Gypsum Company ("NGC"), now Asbestos Claims Management Corporation ("ACMC"), 1 and a number of its liability insurers (collectively referred to as "the Insurers") sought declaratory relief clarifying the extent to which NGC is entitled to indemnification for claims...
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