Appalachian Ins. Co. v. Liberty Mut. Ins. Corp.
| Decision Date | 26 January 1981 |
| Docket Number | Civ. A. No. 78-1151. |
| Citation | 507 F. Supp. 59 |
| Parties | APPALACHIAN INSURANCE COMPANY v. LIBERTY MUTUAL INSURANCE CORPORATION. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
James E. McLaughlin, Pittsburgh, Pa., Phelan & Pope, Chicago, Ill., for plaintiff.
Louis Anstandig, Egler & Reinstadtler, Pittsburgh, Pa., for defendant.
Liberty Mutual Insurance Company has made a claim against Appalachian Insurance Company for indemnification for loss suffered by it in the settlement of claims in the case of Wetzel v. Liberty Mutual Insurance Co., 372 F.Supp. 1146 (W.D.Pa.1974) aff'd 508 F.2d 239 (3d Cir. 1975), cert. denied 421 U.S. 1011, 95 S.Ct. 2415, 44 L.Ed.2d 679 (1975) vacated portion of order dealing with pregnancy benefits, 579 F.2d 236 (3d Cir. 1977); cause of action under Equal Pay Act, 449 F.Supp. 397 (W.D.Pa.1978); 451 F.Supp. 967 (W.D.Pa.1978). Appalachian Insurance Company filed the present suit praying for a declaratory judgment that it was not liable to Liberty Mutual under the policy in effect between them. Both parties have filed motions for summary judgment on this issue and the court finds that the matter is appropriate for summary judgment, that there are no genuine issues of material fact and that the question may be determined as a matter of law.
The insurance policy in question was issued by Appalachian Insurance Company to Liberty Mutual Insurance Company, effective August 1, 1971 through August 1, 1974. It was designated as an excess third-party liability policy providing for indemnification over and above a policy effective the same date provided by Lloyd's of London. This policy is excess to the extent that Appalachian is liable to pay the excess over the first $25,000 of liability for each occurrence, but is a participating insurance policy for all other purposes. The excess policy adopted the same terms as the underlying Lloyd's policy in providing coverage for an "occurrence" which was defined as:
... an accident or a happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally results in personal injury, property damage or advertising liability during the policy period. All such exposure to substantially the same general conditions existing or emanating from one premise location shall be deemed one occurrence.
The situation which gave rise to Liberty Mutual's loss for which it claims indemnification is as follows: Under the Civil Rights Act of 1964, Title VII, Congress prohibited discrimination in employment because of sex. The Act became effective on July 2, 1965. Beginning in 1965, Liberty Mutual initiated certain personnel policies attempting to accommodate women employees in its claims department all over the country. However well-intentioned the move was, it was met with claims that the policies discriminated against women in the claims department in hiring and promotion, in pay, and in the provision of certain health benefits. In May, 1971, claims were filed before the Equal Employment Opportunity Commission by certain aggrieved women under the statutory plan for relief. Upon satisfying the requirement for administrative review, the claimants filed suit in this court on February 28, 1972 on their behalf and on behalf of a class of women similarly situated. After various hearings the court found that the hiring and promotional policies discriminated against women and that the compensation plan discriminated against women employees. No injunction was issued against the hiring and promotional policies because Liberty Mutual had changed these after the filing of the EEOC complaint in May 1971 to eliminate the discriminatory factors before the case came to hearing in this court. The court's finding of discrimination in its denial of maternal benefits was set aside after the decision of the Supreme Court in Gilbert v. General Electric Co., 429 U.S. 125, 97 S.Ct. 401, 50 L.Ed.2d 343 (1976). After further hearing the court found the pay differentials in various categories to be discriminatory against women and found Liberty Mutual to be liable to those female employees damaged thereby. A settlement of these claims to members of the class, dependent upon a formula to determine each individual's proper share, was entered into in September 1978, in an amount in excess of $5,500,000.
Neither party disputes that the policy coverage extends to loss due to liability for sex discrimination.
Appalachian Insurance Company moves for Summary Judgment of non-liability for three reasons, without waiving any other defenses that it may wish to assert:
(1) There is no coverage under the Appalachian policy since the personal injuries sustained by the plaintiff class in Wetzel were the foreseeable result of Liberty Mutual's deliberate discrimination policies:
(2) Pursuant to the Lloyd's insurance policies issued to Liberty Mutual prior to 1971 and by operation of law the personal injuries sustained by the plaintiffs in the Wetzel litigation resulted from one occurrence for which Liberty Mutual must look to Lloyd's for coverage.
(3) If there are multiple "occurrences" for the purpose of coverage determination under the Appalachian excess policy, the underlying coverage of Lloyd's is adequate to fully pay the losses due to each of the multiple occurrences during the policy period.
Leaving aside Appalachian's first ground set forth above, the deliberate nature of Liberty Mutual's actions, in support of its other defenses, Appalachian claims that it is not liable to Liberty Mutual under its policy issued August 1, 1971 for the following reasons:
(1) Both the Appalachian 1971 policy and the Lloyd's 1971 policy are "occurrence" policies, defining occurrences as set forth above.
(2) An "occurrence" is identified by the cause of the loss and not its effect. Where there is one cause which results in several injuries, or injuries to several parties, there is only one occurrence.
(3) The "occurrence" which caused the injuries for which Liberty Mutual was required to pay damages to many claimants was Liberty Mutual's institution of certain job classifications in 1965 which discriminated against women in hiring, promotion and pay.
(4) Although there were many claimants in the Wetzel suit who were found to be entitled to damages, their claims arose out of the same initial occurrence or incident.
(5) Although the settlement required payment of damages suffered by some claimants as late as 1974, all such damages were a continuing result of a cause or occurrence set in motion in 1965, and are not covered by a policy which indemnifies for occurrences after August 1, 1971.
(6) The Wetzel lawsuit was initiated by an administrative claim filed in May 1971 by persons alleging discriminatory treatment before the effective date of the Appalachian policy.
(7) The Appalachian 1971 policy is an excess policy over and above the underlying coverage provided by an umbrella policy effective on the same date issued by Lloyd's of London.
(8) If there are multiple occurrences here, some of which occurred during the Appalachian policy coverage period 1971-1974, Appalachian is not liable because no single claim paid by Liberty Mutual exceeds $25,000 and Appalachian coverage extends only to claims exceeding $25,000.
Liberty Mutual argues first that the insurance contract should be construed under the law of Massachusetts, and we find that conclusion supported either under the doctrine that applies the law of the place of the contract or the place having the most significant contacts. However, we are unaware of any significant differences between the law of Massachusetts and the law of the forum state with respect to the issues considered here.
There seems to be little disagreement between the parties that the Appalachian policy here in question is an "occurrence" policy....
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