International Surplus Ins. v. Underwriters at Lloyd, C2-92-829.

CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
Citation868 F. Supp. 917
Docket NumberNo. C2-92-829.,C2-92-829.
PartiesINTERNATIONAL SURPLUS LINES INSURANCE COMPANY, Plaintiff v. CERTAIN UNDERWRITERS AND UNDERWRITING SYNDICATES AT LLOYD'S OF LONDON, Subscribing to Lloyd's Policy Nos. 614/NC 8097; 614/NC 8098; 614/NC 8100; 614/NC 8101; 614/NTA 208; 614/NTA 209; 614/NTA 210; 614/NTA 211; 614/NTA 662; 614/NTA 663; 614/NTA 664; 614/NTA 665; 614/NTB 086; 614/NTB 087; 614/NTB 088; 614/NTB 089; Abeille-Paix Reassurances; Allianz International Insurance Company Ltd; Banco De Seguros Del Estado; Beacon Insurance Company; Bermuda Fire & Marine Insurance Company Ltd; British National Life Insurance Society Ltd; Brittany Insurance Company Ltd; Bryanston Insurance Company Ltd; Caja Nacional De Ahorro Y Seguro; CNA Reinsurance of London Ltd; Compagnie D'Assurances Industrielles; Dominion Insurance Company Ltd; Folksam International Insurance Company (UK) Ltd; Grupo De Empresas Seguradora Brasileiras; Heddington Insurance Company (UK) Ltd; Inder Instituto Nacional De Reaseguros; Instituto De Reasseguros Do Brasil; Lexington Insurance Company; Ludgate Insurance Company Ltd; Nissan Fire & Marine Insurance Company Ltd; North Atlantic Insurance Company Ltd; Pacific & General Insurance Company Ltd; Scottish & Commonwealth Insurance Company Ltd; Sovereign Marine & General Insurance Company Ltd; St. Katherine Ins. Co.; Storebrand Insurance Company (UK) Ltd; Stronghold Insurance Company Ltd; Tiasho Marine & Fire Insurance Company (UK) Ltd; Terra Nova Insurance Company Ltd; Tokio Marine & Fire Insurance Company (UK) Ltd; Union Atlantique D'Assurances S A; Vera Cruz Seguradora S A; Winterhur Swiss Insurance Company; Yasuda Fire & Marine Insurance Company (UK) Ltd; La Fonciere Compagnie D'Assurances Et Reassurances Transports; Compagnie Europeene D'Assurances Industrielles, Defendants.
Decision Date27 September 1994

Michael Proctor Graney, Simpson Thacher & Bartlett, Columbus, OH, for plaintiff.

Mark E. Defossez, Reminger, Reminger, Hunter & Enders, Columbus, OH, Wendy B. Millman, Mendes & Mount; Leonard A. Sheft, Sheft & Sheft, New York City, Douglas Michael Kennedy, Roetzel & Andress, Columbus, OH, and Gerald A. Greenberger, Sheft & Sheft, Jersey City, NJ, for defendants.


BECKWITH, District Judge.

This matter is before the Court on Plaintiff's motion for summary judgment. This order considers whether several reinsurers must reimburse their reinsured, the International Surplus Lines Insurance Company ("ISLIC") for losses it incurred when the Owens-Corning Fiberglass Company ("Owens-Corning") was confronted with hundreds of millions of dollars in asbestos-related claims. ISLIC filed this diversity action in this Court on September 15, 1992, seeking a declaratory judgment forcing the reinsurers to pay their share of the asbestos-related losses.

The Court has carefully studied the unnecessarily voluminous briefs filed in this matter, and concludes that Plaintiff's motion is well taken.


From 1979 through September 1, 1983, Owens-Corning purchased several layers of liability insurance. The first layer, an umbrella policy, provided coverage in each of the four years in the amount of $25 million for each "occurrence." One endorsement found in those policies provided that the policy limits were subject to a $1 million deductible, payable by Owens-Corning for "each and every occurrence." See Endorsement No. 4 of Northbrook Ins. Co. Umbrella Policy # 63 006 019, at definition VI.

The umbrella policies each contained a similar definition of the term "occurrence." For example, the 1979-1982 policy defined the term as

An accident, event or happening including continuous or repeated exposure to conditions which results, during the policy period, in personal injury.... All such personal injury ... caused by one event or by continuous or repeated exposure to substantially the same conditions shall be deemed to result from one occurrence.

ISLIC provided Owens-Corning with excess liability coverage above the umbrella policies. ISLIC's excess liability policy was structured in layers to cover each of the four years insured by the umbrella policies. ISLIC was obligated to provide all or part of the excess liability incurred in each layer. In total, ISLIC issued sixteen excess policies providing a $410 million liability limit. In each of the excess policies, ISLIC incorporated by reference the definition of occurrence set forth in the umbrella policies.

To reduce its potential risk, ISLIC purchased reinsurance from the Defendant foreign reinsurance companies and others. Each of the reinsurers agreed to reinsure a proportionate share of ISLIC's risk under one or more of the policies in exchange for a share of the premium collected by ISLIC from Owens-Corning. Collectively, the reinsurers provided $255 million of coverage. Thus, a little more than half of ISLIC's $410 million excess liability was covered by reinsurance contracts. Those reinsurance contracts provide that the reinsurers will indemnify ISLIC against all loss, damage or liability after such loss is proved.

Owens-Corning, ISLIC's insured, is an Ohio corporation that was in the business of manufacturing, distributing, and selling insulation products containing asbestos. The company was confronted with over 85,300 personal injury claims asserting asbestos-related injuries by December, 1992. In February 1992, Owens-Corning began presenting many of these asbestos claims to ISLIC for payment. When it submitted the bills to ISLIC, Owens-Corning took the position that the asbestos claims against it arose from one occurrence — the decision to manufacture and sell products containing asbestos.

ISLIC accepted Owens-Corning's position, and began making payments on a single occurrence basis. Thus, Owens-Corning paid ISLIC only a single $1 million "per occurrence" deductible in each of the four annual policy periods. To date, ISLIC has paid Owens-Corning more than $400 million under these policies.

When ISLIC sent bills to its various reinsurers for payment of their share of the losses, the Defendant reinsurers refused to pay. The Defendant reinsurers challenged ISLIC's acceptance of Owens-Corning's single occurrence position. They assert that each asbestos claim by each individual claimant must be treated as a separate occurrence, subject to a separate $1 million deductible. The reinsurers contend that the umbrella policies serving as a basis for ISLIC's excess coverage contemplate "multiple occurrences," rather than single occurrences. Further, the Defendant reinsurers point to other Owens-Corning policies that contemplate multiple occurrences. Finally, the Defendant reinsurers contend that because Owens-Corning is a signatory to the Wellington Agreement, ISLIC may have unreasonably committed itself to the single occurrence position set forth in that agreement.

Faced with nonpayment of several million dollars, Plaintiff ISLIC initiated this action. Following several protracted discovery and procedural disputes, ISLIC filed the instant motion for summary judgment.

Standard of Review

Rule 56(c) of the Federal Rules of Civil Procedure provides:

Summary judgment ... shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

The purpose of a summary judgment motion is not to resolve factual issues, but to determine if there are genuine issues of fact to be tried. Lashlee v. Sumner, 570 F.2d 107, 111 (6th Cir.1978).

In 1986, the United States Supreme Court issued three decisions which gave new life to Rule 56 as a mechanism for weeding out certain claims at the summary judgment stage. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); and Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). It is well recognized that these cases brought about a "new era" in summary judgment practice. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1476 (6th Cir.1989). The three opinions by the Supreme Court reflect a return to the original purpose of the summary judgment motion. Id.

Accordingly, the summary judgment "standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-8, 106 S.Ct. at 2510 (emphasis in original). Moreover, when a party cannot establish the existence of an element essential to that party's case on which the party will have the burden of proof at trial, the Court must enter summary judgment against that party, pursuant to Rule 56. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552. Thus, in order to survive a motion for summary judgment,

when the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.... In the language of the Rule, the nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial."

Matsushita, 475 U.S. at 586-775, 106 S.Ct. at 1356. (emphasis in the original) (Footnote and citations omitted).

Rule 56(e) of the Federal Rules of Civil Procedure provides:

When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary

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