Frontier Insulation Contractors, Inc. v. Merchants Mut. Ins. Co.

• Decision Date: 22 December 1997
• Citation: 91 N.Y.2d 169,690 N.E.2d 866,667 N.Y.S.2d 982
• Parties: , 690 N.E.2d 866, 1997 N.Y. Slip Op. 11,116 FRONTIER INSULATION CONTRACTORS, INC., Appellant, v. MERCHANTS MUTUAL INSURANCE COMPANY et al., Respondents, et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

Page 982

667 N.Y.S.2d 982 91 N.Y.2d 169, 690 N.E.2d 866, 1997
N.Y. Slip Op. 11,116 FRONTIER INSULATION CONTRACTORS, INC., Appellant,
v.
MERCHANTS MUTUAL INSURANCE COMPANY et al., Respondents, et
al., Defendants. Court of Appeals of New York. Dec. 22, 1997.

Page 983

Kavinoky & Cook, L.L.P., Buffalo (Randolph C. Oppenheimer, Joseph J. Welter and Marilyn A. Hochfield, of counsel), for appellant.

Jaeckle Fleischmann & Mugel, L.L.P., Buffalo (Howard S. Rosenhoch and Charles J. Scibetta, Jr., of counsel), for Merchants Mutual Insurance Company, respondent.

Saperston & Day, P.C., Buffalo (Richard J. Cohen, of counsel), for Utica Mutual Insurance Company, respondent.

Covington & Burling, Washington, DC (Mitchell F. Dolin, Richard D. Shore, Jay T. Smith, Eric G. Lasker, Catherine E. Long and Jonathan B. Mirsky, of the District of Columbia Bar, admitted pro hac vice, of counsel), for Armstrong World Industries, Inc., and others, amici curiae.

Page 984

OPINION OF THE COURT

TITONE, Judge.

The narrow issue before us in this declaratory judgment action is whether the "product hazards" exclusions in the insurance policies at issue relieve defendant insurers of the duty to defend their insured, an asbestos insulation contractor, in 21 underlying personal injury suits. We resolve this question in favor of the insured because defendant insurers have failed to establish that the personal injury claims fall entirely within the product-hazards exclusions.

Plaintiff Frontier Insulation Contractors, a Buffalo-based industrial and commercial insulation contractor, engaged in the business of installing and applying asbestos insulation on plumbing, fittings, ductwork, boilers and other equipment from 1929 through the 1970's. Frontier purchased comprehensive general liability insurance policies from defendants Merchants Mutual Insurance Company, Utica Mutual Insurance Company and Travelers Insurance Company, to cover its asbestos installation operations. This appeal concerns only one policy issued by defendant Utica and five policies issued by defendant Merchants in which the insurers agreed to pay on Frontier's behalf "all sums" which the insured shall become legally obligated to pay as damages because of bodily injury due to an accident or occurrence, including the continued exposure to conditions.

Between 1993 and 1994, Frontier was named as a defendant in 21 lawsuits alleging bodily injury and resulting damages caused by asbestos exposure at various locations. Both insurers disclaimed coverage pursuant to "product hazards" exclusions contained in their respective policies.

Frontier brought this action, seeking a declaration that defendant insurers have a duty to defend and indemnify it in the underlying personal injury suits. Supreme Court granted Frontier's motion for partial summary judgment, and, with relevance to this appeal, declared that Merchants had a duty to defend Frontier in 18 of the 21 actions, and Utica in 15 of the 21 actions. The court rejected the insurers' claims that their product-hazards exclusions relieved them of their duties to defend and indemnify Frontier, and did not accept defendants' late-notice defenses.

The Appellate Division disagreed. The Court ruled that "[b]ecause none of the underlying complaints alleges any cause of action sufficiently removed from the allegedly defective and injurious nature of the asbestos to warrant classifying Frontier's liability as something other than a 'products hazard' * * * defendants have no obligation to defend...