Continental Cas. Co. v. Synalloy Corp.
| Decision Date | 26 June 1985 |
| Docket Number | CV182-158. |
| Citation | 667 F. Supp. 1550 |
| Parties | CONTINENTAL CASUALTY COMPANY, Plaintiff, v. SYNALLOY CORPORATION, General Accident Fire and Life Assurance Corporation, Ltd., Midland Insurance Company, Stonewall Insurance Company, Certain Underwriters at Lloyd's and All Other Underwriters Subscribing to a Policy of Insurance No. LOM 9081, Certain Underwriters at Lloyd's and All Other Underwriters Subscribing to a Policy of Insurance No. LOM 9080, Certain Underwriters at Lloyd's and All Other Underwriters Subscribing to a Policy of Insurance No. LOM 9520, First State Insurance Company, Lexington Insurance Company, American Mutual Liability Insurance Company, Affiliated F.M. Insurance Company, Defendants. and SYNALLOY CORPORATION, Third-Party Plaintiff, v. COLUMBIA CASUALTY COMPANY and Fidelity & Casualty Company of New York, Third-Party Defendants. |
| Court | U.S. District Court — Southern District of Georgia |
David A. Handley, Thomas E. McCarter, Michael W. Higgins, Atlanta, Ga., for plaintiff.
Blake & Thompson, Joseph J. Blake, Jr., Haynsworth, Marion, McKay & Guerard, Thomas H. Coker, Jr., Greenville, S.C., James M. Thompson, Lee & Clark, P.C., Savannah, Ga., for Synalloy Corp.
Laronce Beard, Augusta, Ga., for Joe Roberts.
Daniel S. Reinhardt, John P. Dalton, Atlanta, Ga., for defendants Charles Allen Skey, Rep Underwriter at Lloyd's, Walbrook Ins. Co., Ltd., St. Katherine Ins. Co., Ltd (XA/C), St. Katherine Ins. Co., Ltd., Turegum Ins. Co., Bellefonte Ins. Co., English & American Ins. Co., Dominion Ins. Co., Ltd., & Lexington Ins. Co.
David B. Higdon, Joseph H. Davis, Macon, Ga., for Fidelity & Cas. Ins. of New York.
Taylor Putney, Jr., John D. Jones, Atlanta, Ga., for American Mut. Liability Ins. Co.
Luhr G.C. Beckmann, Jr., Andrew J. Hill, III, Beckmann & Pinson, P.C., Savannah, Ga., for Gen. Acc. Ins. Co.
R. Coleman Miller, James B. Hiers, Jr., Atlanta, Ga., for defendant Gen. Ace. Fire and Life Assur. Corp. Ltd.
Ronald D. Reemsnyder, Atlanta, Ga., for First State Ins.
James McGuire, Mendes & Mount, New York City, Wm. Byrd Warlick, Augusta, Ga., for third-party defendant Columbia Cas. Co.
Percy J. Blount, Burnside & Wall, Augusta, Ga., for Brown, Hall, Oliphant, Powell, Sturgis, Utley and White.
J. Robert Persons, Lord, Bissell & Brook, Atlanta, Ga., for Appalachian Ins. Co., and Affiliated FM Ins. Co.
John W. Winborne, III, Atlanta, Ga., for Midland Ins. Co. and First State Ins. Co.
Richard R. Mehrhof, Jr., Augusta, Ga., for Stonewall Ins. Co.
Continental Casualty Company ("Continental") maintains this declaratory judgment action in diversity against its insured, Synalloy Corporation ("Synalloy"), and Synalloy's various primary and excess insurers, for the purpose of having this Court decide which, if any, of these insurers, including Continental, are obligated under the terms, conditions, exclusions, and limitations of their individual policies with Synalloy, to defend Synalloy against certain tort claims asserted by its employees, and to indemnify Synalloy in the event that a judgment is rendered against it on any of these underlying claims. Synalloy in response has asserted a counterclaim against Continental for damages allegedly arising out of Continental's refusal to respond to its demands for coverage on these claims, and Synalloy likewise seeks by way of cross-claim against the defendant insurers a declaratory judgment as to its rights and their obligations under their respective insurance contracts. Synalloy also impleaded Columbia Casualty Company and Continental Insurance Company (later substituted as Fidelity & Casualty Insurance Company of New York), as two additional carriers who had issued policies of insurance to Synalloy.
This action was filed on July 23, 1982, and during the last three years, the Court has issued several orders on the basis of facts found on the record and determined as pertinent to the particular issues decided. The Court follows that procedure in this opinion, expressing as its findings only those facts that furnish the background necessary to decide the issues discussed. In that connection, the parties should be aware that any facts found in this ruling are within its background and discussion.
Synalloy is a South Carolina corporation which purchased the assets of Augusta Chemical Company in 1967. During the period between 1949 and 1972, Augusta Chemical Company and then Synalloy used in its manufacturing process the chemical betanapthalamine ("BNA") which was publicized starting in 1981 as having carcinogenic properties. Following this publicity, a number of lawsuits were filed by current and former employees of Synalloy and Augusta Chemical Company, contending that their employer had been negligent in its use of BNA, that it had fraudulently concealed its knowledge that BNA could cause cancer, and that these employees were entitled to damages for personal injury and mental suffering as a result of their exposure to BNA and their discovery of the effects of exposure to BNA.
These lawsuits filed by employees naturally raised the question of insurance coverage. Numerous carriers have provided various kinds and amounts of insurance coverage for Augusta Chemical Company and Synalloy during the years from 1949 to the present. Briefly, primary coverage apparently was afforded by American Mutual Liability Insurance Company ("American Mutual") to Augusta Chemical Company up to and including 1967, at which time Synalloy purchased primary coverage from General Accident Fire and Life Assurance Corporation, Ltd. ("General Accident"), which insurer has continued its coverage to date. In addition to primary insurance coverage, Synalloy purchased excess coverage during the following years from the following companies:
Continental Casualty Company 1969-1975
Affiliated FM Insurance Company 1975-1976
Columbia Casualty Company 1975-1976
Midland Insurance Company 1975-1977
Stonewall Insurance Company 1975-1977
Lloyd's 1977-1980
First State Insurance Company 1980-1982
Fidelity & Casualty Company of New
York 1982
When Synalloy began receiving the BNA lawsuits from its employees1 in 1981, it notified its primary insurance carrier, General Accident. By letter dated July 30, 1981, General Accident informed Synalloy that it would undertake defense of these claims under a reservation of rights, based on its position that a question of coverage existed. Specifically, General Accident knew that Synalloy had discontinued use of BNA in 1972, and Insurance Agreement IV2 and Exclusion (e)3 of its workers' compensation and employer's liability policy in effect from January 1, 1972 to January 1, 1973 precluded coverage of the claims raised in the lawsuits, according to General Accident. Indeed, this insurer informed Synalloy that it intended to seek declaratory relief on this question of coverage. General Accident further denied any obligation to defend or indemnify any claims for injury or death of Augusta Chemical Company employees, whose exposure to BNA had occurred prior to September 29, 1967, and also denied any coverage at all under the comprehensive general liability policies. General Accident noted in addition that the limit of its coverage was $100,000 per year under its 1972-73 policy, in the event coverage was available.
Rather than wait for General Accident's next move, Synalloy in 1981 brought a declaratory judgment action on these issues in the United States District Court for the District of South Carolina. While that action was pending, General Accident and Synalloy negotiated an agreement whereby General Accident agreed to provide coverage for the BNA claims under Coverage B of its workers' compensation and employer's liability policies in effect from January 1, 1967 to January 1, 1973, waiving Exclusion (e) as contained these policies. No other terms, conditions, exclusions, or limitations included in these policies were amended. As consideration, Synalloy agreed to place its worker's compensation, general liability, and auto liability coverage with General Accident under a three-year retrospective plan for the period January 1, 1982 to January 1, 1985. Coverage for losses and legal expenses paid in connection with the BNA claims were included in this retrospective plan.
After entering into this "1982 Letter Agreement," as it has been termed in the instant action, Synalloy dismissed, without prejudice, the South Carolina declaratory judgment action. General Accident undertook to defend those BNA claims which it deemed as possibly existing within its policy limits, which did not include all the claims asserted against Synalloy. Accordingly, Synalloy turned to its excess carriers for additional defense and indemnity. These excess insurers uniformly denied coverage on the BNA claims, and on July 23, 1981, Continental, as one of these excess insurance carriers, filed the complaint commencing this declaratory judgment action, as amended on October 18, 1984.
Meanwhile, the tort claims instituted by employees exposed to BNA were proceeding through litigation in other forums. The winning contention of Synalloy in those suits was that workers' compensation was the exclusive source of relief available to the BNA claimants, and this defense received published attention in decisions issued by both a federal district court and the Georgia appellate court.4 As to the instant action, this Court ruled by an order dated February 19, 1985 that the employees of Augusta Chemical Company are employees of Synalloy for purposes of determining insurance coverage on the BNA claims. Then in Synalloy Corp. v. Newton, 254 Ga. 174, 326 S.E.2d 470 (1985), reversing 171 Ga.App. 194, 319 S.E.2d 32 (1984), reh'g denied, No. 41336 (March 28, 1985), the Supreme Court of Georgia held that workers'...
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