H.K. Porter Co. v. Transit Cas. Co.
| Decision Date | 31 October 2006 |
| Docket Number | No. WD 66076.,WD 66076. |
| Citation | 215 S.W.3d 134 |
| Parties | H.K. PORTER COMPANY, INC., Appellant, v. TRANSIT CASUALTY COMPANY IN RECEIVERSHIP, Respondent. |
| Court | Missouri Court of Appeals |
James Kent Lowry, Jefferson City, MO, for appellant.
James Curtis Owen, Chesterfield, MO, for respondent.
Before JAMES M. SMART, JR., P.J., EDWIN H. SMITH, and LISA WHITE HARDWICK, JJ.
H.K. Porter Company, Inc. appeals the judgment of the Circuit Court denying coverage under two insurance policies issued by Transit Casualty Company. We find that at all relevant times, including from May 1, 1982, to May 24, 1982, H.K. Porter Company, Inc. and all its subsidiaries were covered by the policy but subject to the exclusion for asbestos-related bodily injuries. The judgment is affirmed.
In 1958, H.K. Porter Company, Inc. ("Porter"), an asbestos manufacturing company, began acquiring certain other existing asbestos companies (the "Asbestos Companies"), including Thermoid Company, Southern Asbestos Company, and others. Porter's pattern in making the acquisitions was to liquidate or dissolve the company and assume all of the company's liabilities, debts, and other interests.
Subsequently, in the wave of asbestos litigation in the 1970s, Porter was named as a defendant in numerous lawsuits alleging bodily injury resulting from exposure to and inhalation of asbestos-containing products manufactured or sold by Porter or the Asbestos Companies. Though some of these claims arose from asbestos exposure from products distributed solely by Porter, a large number of these claims arose from asbestos exposure from products distributed by the Asbestos Companies prior to Porter's acquisition of these companies.
Transit Casualty Company ("Transit") was incorporated in the State of Missouri in 1945 as an insurance company and conducted the business of insurance until 1985, when it was declared to be insolvent by the Cole County Circuit Court. At pertinent times herein, National Underwriting Agency ("NUA") was managing general agent for Transit.
In April 1982, three years before Transit's insolvency, Porter's agent, Rollins, Burdick, Hunter ("Rollins"), at Porter's direction, contacted Insurance Broker's Services ("IBS") regarding the purchase of excess liability insurance. IBS was an independent wholesale broker dealing in surplus lines. IBS would seek quotes in behalf of a retail broker such as Rollins. If the quotes were favorable, IBS would ask for coverage to be bound. In this instance, Rollins sent a telex to IBS requesting the coverage and also proposing the following specific exclusion in the policy: "It is agreed that this policy does not apply to any liability arising out of asbestosis."1 IBS sent a note to NUA, Transit's agent, asking for the specific asbestos exclusion in the policy. NUA replied to IBS and confirmed that excess umbrella liability coverage would be provided to Porter from May 1, 1982, through May 1, 1983, in the amount of $10 million excess $15 million ("1982 Policy"). The reply stated that "an exclusion" for "asbestos products/related losses" would be included in the policy, but did not state whether the specific exclusion proposed by Rollins or some other exclusion would be included.
On April 28, 1982, Rollins, agent for Porter and not for Transit, sent what purported to be a binder for Transit's coverage to Porter. The binder stated that coverage excluded claims for "asbestosis." The reverse side of the binder stated: "This Binder Memorandum shall be automatically terminated and voided by delivery of the policy(s) to the Insured or as otherwise agreed." That same day, IBS sent a telex to NUA stating,
Further to our binding memo, we would appreciate the following asbestosis exclusion wording on your policy so as to be consistent throughout the placement: "It is agreed that this policy does not apply to any liability arising out of asbestosis." Would appreciate your prompt issuance of your policy. Thanks.
Transit's agent at NUA responded to Terry Winkler, the wholesale agent at IBS, confirming coverage but with the following provision in response to the asbestos issue: "CONDITIONS: EXCLUDE (1) ASBESTOS PRODUCTS/RELATED LOSSES."
The next day, a Confirmation of Insurance was sent from IBS, the broker, to Rollins. It was a short one-page document that stated that the policy period was from May 1, 1982, to May 1, 1983, that the amount of coverage was $10 million excess $15 million, that the premium charged was $10,000. The Confirmation stated: "This insurance is subject to all of the terms and conditions of the Cover Note, Certificate of Insurance and/or Policy which may be issued."
The following day, April 30, 1982, NUA, the underwriting agent for Transit, sent a telex to IBS, stating that NUA, in behalf of Transit, would not agree to the wording of the asbestosis exclusion proposed by Rollins because "asbestosis" is only one type of disease associated with prolonged exposure to asbestos. NUA stated that a "tighter" exclusion was needed. On May 1, 1982, Rollins sent a telex to IBS asking if Transit would approve the following:
In consideration of the premium charged, it is understood and agreed that this policy shall not apply to health hazard claims made against the insured arising out of asbestosis resulting from the sale, handling, distribution or manufacturing by the named insured of asbestos or any product containing any asbestos or any products containing any asbestos.
This was sent from IBS to NUA. The letter was stamped received by NUA on May 17, 1982, and the word "NO" is written on it.
On May 18, 1982, NUA sent a telex to IBS reiterating the objections to the wording of the proposed exclusion of May 1. He added that Transit would add the following exclusion to the policy:
In consideration of the premium charged, it is understood and agreed that this policy shall not apply to any injury, disease, or illness arising out of the inhalation, ingestion, and/or exposure to asbestos or products containing asbestos sold, handled, distributed, produced and/or manufactured by the named insured.
(Emphasis added). IBS was instructed to obtain coverage with another carrier if this language was not acceptable. IBS passed the language on to Rollins. On May 21, 1982, IBS directed NUA to issue the policy using the wording in the May 18, 1982, telex.
Transit issued policy SCU956214 on May 24, 1982; relevant portions of the policy are set forth below:
Item 1. Named Insured: H.K. Porter Company, Inc.
....
1. Coverage The Company [Transit] hereby agrees, subject to the limitations, terms and conditions hereinafter mentioned, to indemnify the insured for all sums which the insured shall be obligated to pay by reason of the liability imposed upon the Insured by law, or assumed under contract or agreement by the Insured for damages, direct or consequential and expenses on account of:
(c) Advertising Liability caused by or arising out of each occurrence happening anywhere in the world, and arising out of the hazards covered by and as defined in the Underlying Umbrella Policies stated below and issued by the "Underlying Umbrella Insurers".
....
The words "Named Insured" includes the Named Insured stated in the Declarations forming a part hereof and as stated in the Underlying Policies.
The word "Insured" includes the Named Insured and/or any Officer, Director, Stockholder, Partner, or Employee of the Named Insured, while acting in his capacity as such if so covered in the Underlying Policy.
....
In consideration of the premium charged, it is understood and agreed that this policy shall not apply to any injury, disease or illness arising out of the inhalation, ingestion, and/or exposure to asbestos or products containing asbestos sold, handled, distributed, produced and/or manufactured by the Named Insured.
....
It is understood and agreed that:
1. Item 1. "Named Insured" of the Declarations is amended to read as follows:
"H.K. Porter Company, Inc. and subsidiaries of all and any kinds."
Transit also issued Policy No. SCU956505 covering the period of May 1, 1983, through May 1, 1984, ("1983 Policy") under essentially the same terms. The only term in the 1983 Policy that is different from the relevant terms in the 1982 Policy is set forth below:
Item 1. Named Insured: H.K. Porter Company, Inc
"And subsidiaries of all and
any kinds"
On December 3, 1985, pursuant to section 375.660 RSMo,2 the Circuit Court of Cole County, Missouri (the "receivership court") declared Transit to be insolvent.
Porter timely filed proof of claim forms ("POCs") in the Transit estate for policyholder protection on the two insurance policies at issue. All claims for which Porter seeks coverage and is now appealing to this court are associated with the Asbestos Companies as they were prior to 1958 when they became a part of Porter. On August 12, 1999, Transit issued Notices of Determination ("NODs"), as required by section 375.1214, to Porter denying its claims under the POCs filed. On September 28, 1999, Porter filed a Request for Review3 of the NODs. Transit agreed to defer Porter's review while Porter provided additional documents to substantiate its claims and show impairment to Transit's policies. On October 31, 2000, the receivership court issued its Administrative Order No. 49 in the Transit estate, which stated, in pertinent part:
[A]ll claimants, including those that have already filed policyholder protection proof of claim forms, must file the existing evidence of their current, unresolved claims and any actuarial evidence (or another accepted method of valuing claims with...
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