Hamilton v. Anco Insulation, Inc.
| Decision Date | 14 February 2003 |
| Docket Number | No. 2002 CA 0221.,2002 CA 0221. |
| Citation | 844 So.2d 893 |
| Parties | Joseph HAMILTON, Jr. and Mable Young Hamilton v. ANCO INSULATION, INC., the McCarty Corporation, Pittsburgh Corning Corporation, Rapid American Corporation, and C F Industries, Inc. |
| Court | Court of Appeal of Louisiana — District of US |
J. Burton LeBlanc, Baton Rouge, Counsel for Appellee Joseph Hamilton, Jr.
Susan B. Kohn, New Orleans, Counsel for Appellee McCarty Corporation.
Daniel J. Balhoff, Baton Rouge, Counsel for Appellee C.F. Industries.
Gordon P. Wilson, New Orleans, Counsel for Appellee Travelers Casualty and Surety Co.
Michael R. Sistrunk, Metairie, Counsel for Appellee W.R. Grace & Co.
William F. Grace, Earl F. Sundmaker, III, New Orleans, Counsel for Appellee Marsh & McLennan Co., Inc.
Glenn L.M. Swetman, New Orleans, Counsel for Appellee Garlock, Inc.
John J. Hainkel, III, New Orleans, Counsel for Appellee Owens Corning.
James F. Holmes, New Orleans, Counsel for Appellee M.W. Kellogg Constructors, Inc.
Robert A. Redwine, New Orleans, Counsel for Appellant Allianz Underwriters, Inc.
Before: FOIL, McCLENDON, and KLINE,1 JJ.
This is an appeal of a summary judgment rendered in favor of an insured regarding the applicability of provisions in an insurance contract. For the following reasons, we reverse.
Joseph Hamilton, Jr. was employed by C F Industries, Inc. (CFI) at its Donaldsonville, Louisiana facility as a warehouse operator from 1968 to 1983. In June of 1999, Mr. Hamilton was diagnosed with mesothelioma, a known asbestos-related disease. So severe was Mr. Hamilton's illness that his doctor surmised that he would probably not survive beyond June of 2000. On January 19, 2000, Mr. Hamilton filed suit against several defendants including CFI. The petition sought damages for Mr. Hamilton's "occupational exposure to asbestos" and his resulting "contraction of mesothelioma" and asserted a claim on behalf of Mrs. Hamilton for loss of consortium. The petition alleged that in connection with his work at CFI, Mr. Hamilton "was exposed to and inhaled or otherwise ingested significant quantities of asbestos.. . "
From July 1, 1983 until July 1, 1984, primary insurance coverage for CFI was provided by The Hartford in the form of a Standard Workmen's Compensation and Employer's Liability Policy. The Workmen's Compensation portion of the policy only applied if an employee was covered under state workers' compensation law. In the present case, Mr. Hamilton's claim was not covered under Louisiana's workers' compensation law, thus precluding the applicability of that portion of the policy.2 The Employer's Liability portion of the policy covered damages caused by "bodily injury by accident or disease" sustained by an "employee of the insured arising out of and in the course of his employment by the insured" that were not covered under state workers' compensation law. The limit of liability under the Employer's Liability portion of the policy was $100,000 per occurrence. When CFI determined that its liability) exposure in this case might exceed Hartford's $100,000 Employer's Liability policy limit, it sent notice of the suit to Allianz Underwriters, Inc. (Allianz), its excess insurer, on September 1, 2000. Allianz had issued an Umbrella Liability Policy to CFI for the same period to provide coverage in excess of The Hartford's Workmen's Compensation and Employer's Liability Policy.
On October 13, 2000, CFI filed a First Supplemental Third Party Demand against Allianz seeking (1) a declaratory judgment that the Allianz policy provided coverage of the Hamiltons' claims against CFI, and (2) damages allegedly incurred by CFI as a result of Allianz's breach of contract. In a letter to CFI dated October 19, 2000, Allianz declined to indemnify CFI for any loss arising from the Hamiltons' claims. Allianz based its denial on the following contract provisions.
The Allianz policy provided:
CONDITIONS
D. SPECIAL CONDITIONS APPLICABALE TO OCCUPATIONAL DISEASE. As regards personal injury by occupational disease sustained by any employee of the Insured, this policy is subject to the same warranties, terms and conditions (except as regards the premium, the amount and limits of liability and the renewal agreement (if any), as are contained in or as may be added to the Underlying Insurance prior to the happening of an occurrence for which claim is made hereunder. [sic]
The "Underlying Insurance," provided by the Hartford policy, set forth, in pertinent part, as follows:
I. Coverage B—Employers' Liability: To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury by accident or disease, including death at any time resulting therefrom ...
...
III. Definitions:
...
(c) Bodily Injury by Accident; Bodily Injury by Disease. The contraction of disease is not an accident within the meaning of the word "accident" in the term "bodily injury by accident" and only such disease as results directly from a bodily injury by accident is included within the term "bodily injury by accident." The term "bodily injury by disease" includes only such disease as is not included within the term "bodily injury by accident."
IV. Application of Policy: This policy applies only to injury (1) by accident occurring during the policy period, or (2) by disease caused or aggravated by exposure of which the last day of the last exposure, in the employment of the insured to conditions causing the disease occurs during the policy period.
...
Exclusions
This policy does not apply:
...
(e) under coverage B, to bodily injury by disease unless prior to thirty-six months after the end of the policy period written claim is made or suit is brought against the insured for damages because of such injury or death resulting therefrom;
...
5. Notice of Injury: When an injury occurs written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the injury, the names and addresses of the injured and of available witnesses.
6. Notice of Claim or Suit: If claim is made or suit or other proceeding is brought against the insured, the insured shall immediately forward to the company every demand, notice, summons or other process received by him or his representative.
Allianz averred that although the Hamiltons' suit had been filed in January of 2000, Allianz was not given notice of the suit until September of 2000. Consequently, Allianz argued that "policy Condition # 6 (prompt notice) ha[d] been breached, thus voiding any coverage which might otherwise have been available under the policy(ies)." Allianz further contended that Mr. Hamilton's January 2000 claim for bodily injury by disease was not made within thirty-six months of the end of the policy period, and as the Allianz policy was subject to Hartford's Exclusion (e), Allianz would decline to indemnify CFI for any liability arising from Mr. Hamilton's claim.
On November 22, 2000, the Hamiltons filed a Second Supplemental and Amended Petition to add Allianz as a defendant pursuant to La. R.S. 22:655, Louisiana's Direct Action Statute. Subsequently, the Hamiltons settled their claim with CFI on November 30, 2000. The settlement agreement, entitled "Full and Final Release, Indemnity Agreement and Contractual Assignment of Rights," provided that in return for a specified sum, the Hamiltons agreed to "completely release, acquit and forever discharge [CFI], their predecessors, successors, parents, affiliates, subsidiaries, divisions . . . from any and all rights, claims, demands, or actions of any kind or nature whatsoever" which the Hamiltons "now have, or may have in the future, in whole or in part arising out of, related to, resulting from, or contributed to by [Mr. Hamilton's] alleged exposure to asbestos or asbestos-containing materials... ." It further provided that "[i]n partial consideration" of the settlement payment, the Hamiltons agreed to assign all their rights against Allianz to CFI.
On May 8, 2001, CFI filed a motion for summary judgment against Allianz on the two issues raised by Allianz to deny coverage: the thirty-six month exclusion and the late notice. CFI argued that the thirty-six month exclusion was an impossible resolutory condition and therefore should be given no effect. Furthermore, CFI urged that Allianz must prove that it was prejudiced by any alleged untimely notice of suit.
On May 18, 2001, Allianz filed a cross-motion for summary judgment seeking dismissal of the Hamiltons' and CFI's claims. On July 9, 2001, Allianz filed an opposition to CFI's motion. Subsequently, CFI opposed Allianz's motion on July 11, 2001. A hearing on the motions was held on July 16, 2001. In a judgment rendered on July 31, 2001, the trial court granted CFI's motion for summary judgment and denied the motion of Allianz.
Regarding the thirty-six month exclusion, the trial court noted the following in its reasons for judgment:
This court finds that such a provision is an impossible resolutory condition under the facts of this case and that the provision should be given no effect. In Mr. Hamilton's case, there was no way he could have known or should have known that he had mesothelioma until 1999. In fact, evidence in the record shows that Mr. Hamilton had a chest x-ray in 1982, one year prior to leaving CFI's employ and the x-ray showed no signs of the disease. Subsequent x-rays in the years following also revealed no signs of the mesothelioma. Because of the latency period associated with the disease, it is not surprising that Mr. Hamilton did not discover that he was afflicted with it until almost 20 years after he was exposed to asbestos in his workplace.
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