Carey Canada, Inc. v. Columbia Cas. Co.
| Decision Date | 09 August 1991 |
| Docket Number | Nos. 89-7266,89-7267,s. 89-7266 |
| Citation | 940 F.2d 1548,291 U.S. App. D.C. 284 |
| Parties | CAREY CANADA, INC., Appellant, v. COLUMBIA CASUALTY COMPANY, et al. The CELOTEX CORPORATION, Appellant, v. COLUMBIA CASUALTY COMPANY, et al. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeals from the United States District Court for the District of Columbia.
Jerold Oshinsky, Washington, D.C., with whom Nicholas J. Zoogman, New York City, and Karen L. Bush, Washington, D.C., were on the brief, for appellants.
James P. Schaller, with whom M. Elizabeth Medaglia, Washington, D.C., was on the brief, for appellees Nat. Union Fire Ins. Co. of Pittsburgh, Pa.
James W. Greene, Washington, D.C., was on the brief for appellee Columbia Cas. Co.
Before EDWARDS, D.H. GINSBURG, and SENTELLE, Circuit Judges.
Opinion for the Court filed by Circuit Judge SENTELLE.
As Lord Mansfield propounded, "[m]ost of the disputes in the world arise from words." Morgan v. Jones, 98 Eng.Rep. 587, 596 (K.B. 1773) (citing Vide Essay on Human Understanding, c. 9, 10, 11). Courts agonize over the prospect of rendering judgment of far-reaching effect based on the construction of a single word. This is such a case.
Carey Canada, Inc. ("Carey Canada"), an asbestos mining company, and its parent company, The Celotex Corporation ("Celotex") (collectively, "the insureds" or "appellants"), are co-defendants in thousands of lawsuits alleging injury due to exposure to asbestos. During the period October 1, 1977 through April 12, 1983, Carey Canada and Celotex were sued in 22,490 asbestos-related disease claims. Carey Canada, Inc. v. Cal. Union Ins. Co., 720 F.Supp. 1018, 1023 (D.D.C.1989). They here appeal a final judgment of the District Court in two consolidated cases denying a declaration that three excess liability insurance policies with Columbia Casualty Company ("Columbia Casualty") and National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("National Union") (collectively, "defendant insurance carriers" or "appellees") provide coverage for all claims alleging personal injury from exposure to asbestos except those alleging exclusively the distinct, non-cancerous disease of asbestosis, which the policies expressly exclude from coverage. We are called upon to decide whether the District Court, after reviewing thousands of pages of materials, evaluating the testimony of a multitude of witnesses, and applying the laws of Florida and Illinois 1 governing the admissibility of parol evidence, properly determined that the parties, in using the term "asbestosis," intended to exclude all asbestos-related claims and not only the single disease asbestosis. We affirm the District Court's judgment in part, and vacate and remand in part for consideration not inconsistent with this opinion.
Carey Canada, a wholly-owned subsidiary of Celotex organized under the laws of the Province of Quebec, has its principal place of business in Quebec, Canada. Celotex, a privately-owned Delaware corporation with its principal place of business in Florida, manufactures and sells building materials. Celotex is a wholly-owned subsidiary of the Jim Walter Corporation ("Jim Walter" or "JWC"). JWC (not a party to this action), through its in-house insurance company, Best Insurors, Inc., its agent, Rollin Burdick Hunter Co., and other brokers, purchased the three policies at issue to cover Jim Walter, Celotex, Carey Canada, and most of Jim Walter's subsidiaries.
Appellees Columbia Casualty and National Union are two of the insureds' excess liability insurance carriers. Aetna Casualty & Surety Company ("Aetna") is the primary carrier. Aetna's policies for the relevant period exclude all asbestos-related disease claims. Specifically, the Aetna policy excludes:
[A]ll bodily injury which arises in whole or in part, either directly or indirectly, out of asbestos, whether or not the asbestos is airborne as a fiber or particle, contained in a product, carried on clothing or transmitted in any fashion whatsoever.
Carey Canada, 708 F.Supp. at 2 n. 2. Aetna is no longer a party to this action.
In 1983 and 1986, the insureds brought declaratory judgment actions to determine the scope of coverage of policies they purchased from the defendant insurance carriers. See id. at 2. Appellants sought a declaration that the "asbestosis" exclusion in each policy "is limited to an exclusion for a distinct medical disease known as asbestosis and that other diseases that occur as a result of exposure to asbestos, such as mesothelioma and other forms of cancer, are not excluded from coverage." Id. (emphasis in original). The defendant insurance carriers maintain that the parties intended the asbestosis exclusion to exclude all bodily-injury claims arising out of exposure to asbestos and not to restrict the exclusion to the single disease asbestosis. Id.
The liability insurance policies at issue are three policies the insureds purchased from the defendant insurance carriers to cover the three-year period between October 1977 and October 1980. National Union issued two policies to JWC; policy no. 1189777 (10/1/77-10/1/78) ("1977 National Union Policy"), and policy no. 1226411 (10/1/79-10/1/80) ("1979 National Union Policy"). Columbia Casualty issued a single policy, no. RDX 416-93-97 (10/1/78-10/1/79) ("Columbia Casualty Policy"), to JWC. Prior to 1977, none of the policies issued to appellants by the defendant insurance carriers contained asbestos exclusions of any kind. Beginning in October 1977, however, and in the face of thousands of lawsuits, the defendant insurance carriers issued policies with variously worded asbestos-related exclusions.
The 1977 National Union Policy exclusion states, " 'it is understood and agreed that any bodily injury or property damage claim or claims arising out of all asbestosis operations is excluded from the policy.' " Carey Canada, 708 F.Supp. at 3 (emphasis in original). The 1979 National Union Policy contained no asbestos-related exclusion. Rather, this policy incorporated or "followed form" to the asbestos-related exclusion of the umbrella policy sold to appellants by another insurance company, United States Fire Insurance Company ("U.S. Fire"). Id. The applicable U.S. Fire exclusion provides, " '[t]his policy shall not apply to any liability imposed upon the insured arising out of ASBESTOSIS.' " Carey Canada, 720 F.Supp. at 1019 (emphasis in original).
The Columbia Casualty Policy contains an exclusion which provides that the policy " '[s]hall not apply to liability imposed upon the insured arising out of asbestosis,' " id., adopting the exact wording of the exclusion contained in the U.S. Fire Policy.
Carey Canada and Celotex each filed separate actions against nine insurance companies that sold excess liability policies to Jim Walter between October 1, 1977 and October 1, 1982. 2 In 1986, the District Court consolidated the actions after Celotex's case before the District of Columbia Superior Court had become diverse and Columbia Casualty, among others, had removed the case to the United States District Court for the District of Columbia.
Prior to consolidation, Carey Canada moved for partial summary judgment on the ground that the meanings of the policies' asbestos-related exclusions and the term "asbestosis" were clear and unambiguous. The District Court denied the motion. Carey Canada, Inc. v. Cal. Union Ins. Co., Civ. No. 83-1105, Memorandum Opinion ("Memorandum Opinion"). In reaching its conclusion, the District Court reviewed two policies sold to a non-party insured, H.K. Porter Co., in which Columbia Casualty and First State had "used asbestosis in a narrow sense" to refer only to asbestosis. Id. at 8-9. The court reasoned that "[a]lthough this evidence is not dispositive, it does strongly support [Carey Canada's] position that the insurance companies knew that asbestosis was a distinct disease, independent of mesothelioma." Id. at 9.
During discovery, the insureds filed motions to compel the defendant insurance carriers to produce other documents related to "policies sold by the defendants to non-party insureds," which contained asbestos-related exclusions. Carey-Canada, 118 F.R.D. at 243-44. Although the court found the documents relevant, see id. at 244, it restricted appellants' discovery to documents relating to policies with an asbestos-related exclusion which were written or referred to by the individual underwriters of the policies at issue, prior to the sale of those policies. Id. at 245. Under the District Court's order, the defendant insurance carriers produced no new non-party insured documents. Appellants complained to the court. The court consequently modified its original order. Again, the defendant insurance carriers produced no new non-party insured evidence.
On March 31, 1988, one month before the close of discovery, appellants again filed a motion to compel the defendant insurance carriers to produce the non-party insured documents sought in appellants' new discovery request. The District Court denied appellants' request because "[t]his motion, filed on the eve of the discovery cutoff in this action, is long out of time, and hence must be denied." The Celotex Corp. v. Cal. Union Ins. Co., Civ. No. 86-1142, Memorandum Order at 3 (D.D.C. July 26, 1988).
In response to appellees' motion in limine, the court excluded all of appellants' non-party insured documents, including the H.K. Porter Policies, because they did not comport with the court's prior discovery orders. Moreover, when appellants proffered the non-party insured exhibits at trial, the court precluded appellants from cross-examining the defendant insurance carriers' underwriters with the exhibits.
After the close of discovery, the parties filed motions for summary judgment on...
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