Certain Underwriters at Lloyd's v. NL Indus., Inc.

• Decision Date: 24 March 2022
• Docket Number: 15282,Index No. 650103/14,Case No. 2021–00241
• Citation: 203 A.D.3d 595,164 N.Y.S.3d 607
• Parties: CERTAIN UNDERWRITERS AT LLOYD'S, LONDON et al., Plaintiffs–Appellants, v. NL INDUSTRIES, INC., Defendant–Respondent, Ace American Insurance Company et al., Defendants–Appellants, Certain London Market Insurance Companies, Nominal Defendants–Appellants.
• Court: New York Supreme Court — Appellate Division

203 A.D.3d 595

164 N.Y.S.3d 607

CERTAIN UNDERWRITERS AT LLOYD'S, LONDON et al., Plaintiffs–Appellants,

v. NL INDUSTRIES, INC., Defendant–Respondent,Ace American Insurance Company et al., Defendants–Appellants,Certain London Market Insurance Companies, Nominal Defendants–Appellants.

15282

Index No. 650103/14

Case No. 2021–00241

Supreme Court, Appellate Division, First Department, New York.

ENTERED March 24, 2022

O'Melveny & Myers LLP, Washington, DC (Jonathan D. Hacker of the bar of the District of Columbia, admitted pro hac vice, of counsel), and Zuckerman Spaeder LLP, New York (Carl S. Kravitz of counsel), for appellants.

Law Offices of Joel L. Herz, New York (Joel L. Herz of counsel), for respondent.

Gische, J.P., Kern, Moulton, Kennedy, Rodriguez, JJ.

Order, Supreme Court, New York County (Andrea Masley, J.), entered on or about December 29, 2020, which denied the insurers’ motion for summary judgment declaring that there is no coverage under the commercial general liability insurance policies issued to defendant NL Industries, Inc. for its liability for representative public nuisance in the underlying action in Santa Clara, California, unanimously affirmed, without costs.

In 2000, Santa Clara County and other California municipalities filed an action against, among others, NL, as manufacturer and promoter of Dutch Boy lead paint, asserting, as relevant here, a claim for "representative public nuisance" under California law (see County of Santa Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292, 299, 304–305, 40 Cal. Rptr. 3d 313, 320, 324 [Cal. App. 2006] ). The complaint alleged that NL purposefully promoted lead paint for use inside homes with actual knowledge that this was a dangerous use that would poison and seriously harm children and result in a public health hazard/nuisance. After a trial of that claim, NL and others were found liable and ordered to abate the nuisance by paying into an abatement fund.

After the judgment was, to the extent relevant here, affirmed on appeal ( People v. ConAgra Grocery Prods. Co., 17 Cal. App. 5th 51, 227 Cal. Rptr. 3d 499 [Cal. App. 2017], cert denied ––– U.S. ––––, 139 S. Ct. 377, 202 L.Ed.2d 288 [2018] ), the insurers brought this declaratory judgment action pursuant to CPLR 3001 for a declaration that no coverage obligation was owed to NL for the Santa Clara abatement. Supreme Court correctly denied their ensuing motion for summary judgment.

The court correctly rejected the insurers’ argument that the rulings in the Santa Clara action mandated the conclusion that NL's creation of the public health hazard by promoting lead paint use in homes constituted knowing and intentional conduct uninsurable under public policy and the terms of the policies. The Santa Clara courts found that NL's liability for the public nuisance was premised on actual knowledge of "the hazard" that the interior use of lead paint would create, as the product was one that NL ...