J.H. France Refractories Co. v. Allstate Ins. Co.

• Court: Pennsylvania Supreme Court
• Writing for the Court: Before NIX; FLAHERTY; In keeping with this analysis, we conclude that each insurer which was on the risk during the development of an asbestosis-related disease is a primary insurer. In order to accord J.H. France the coverage promised by the insuran
• Citation: J.H. France Refractories Co. v. Allstate Ins. Co., 534 Pa. 29, 626 A.2d 502 (Pa. 1993)
• Decision Date: 27 May 1993
• Parties: , 61 USLW 2796 J.H. FRANCE REFRACTORIES COMPANY and the Van Brunt Company, Appellants, v. ALLSTATE INSURANCE COMPANY, PMA Insurance Company, St. Paul Insurance Company, U.S. Fire Insurance Company, Wausau Insurance Company and Rockwood Insurance Company, Appellees. ALLSTATE INSURANCE COMPANY, Appellee, v. J.H. FRANCE REFRACTORIES COMPANY, Appellant. Pennsylvania Manufacturers Insurance Company, St. Paul Fire Insurance Company, U.S. Fire Insurance Company, Wausau Insurance Company and Rockwood Insurance Company, Appellees.

Page 502

626 A.2d 502

534 Pa. 29, 61 USLW 2796

J.H. FRANCE REFRACTORIES COMPANY and the Van Brunt Company, Appellants, v. ALLSTATE INSURANCE COMPANY, PMA Insurance Company, St. Paul

Insurance Company, U.S. Fire Insurance Company,

Wausau Insurance Company and Rockwood

Insurance Company, Appellees.

ALLSTATE INSURANCE COMPANY, Appellee, v. J.H. FRANCE REFRACTORIES COMPANY, Appellant.

Pennsylvania Manufacturers Insurance Company, St. Paul Fire

Insurance Company, U.S. Fire Insurance Company,

Wausau Insurance Company and Rockwood

Insurance Company, Appellees.

Supreme Court of Pennsylvania.

Argued April 7, 1992.

Decided May 27, 1993.

Mark D. Turetsky and Lisa D. Stern, Norristown, for appellants.

Robert F. Pugliese, Pittsburgh, for amicus, Westinghouse Elec. Corp. Donald E. Seymour, Peter J. Kalis, David J. Strasser and Thomas Reiter, Pittsburgh, for amicus, Dresser Industries, Inc. and Westinghouse Elec. Corp.

James J. Restivo, Jr., Douglas E. Cameron, and Kathy L. Cerminara, Pittsburgh, for amicus, Pittsburgh Corning, Corp.

John A. Murphy, Philadelphia, and Dennis M. Flannery, Washington, DC, for amicus, Ins. Co. of North America.

Daniel S. Coval, Jr., David T. Scott and Ralph L. Hose, Ardmore, for St. Paul Ins. Co.

Martin Mullen, Philadelphia, for Employees of Wausau Ins. Co.

John C. Sullivan, Philadelphia, for Allstate Ins. Co.

Allan C. Molotsky, Philadelphia, for Wausau Ins. Co.

Francis T. McDevitt, Philadelphia, for Rockville Ins. Co.

Lee M. Epstein, Philadelphia, for amicus, Keene Corp., Colt Industries and Mid-America Legal Foundation.

Arthur S. Olick, pro hoc vice, New York City, for Keene Corp.

Robert L. Pratter, Philadelphia, for PMA Ins. Co.

Daniel J. Doyle, Deputy Atty. Gen., Harrisburg, Robert N. Saylor and William P. Skinner, Washington, DC, for amicus, Armstrong World Industries, Inc.

Louis C. Long, Pittsburgh, and Robert J. Kelly, New York City, for U.S. Fire Ins. Co.

Before NIX, C.J., and FLAHERTY, McDERMOTT, ZAPPALA, PAPADAKOS and CAPPY, JJ.

OPINION OF THE COURT

FLAHERTY, Justice.

This case was before us in 1989 to determine the jurisdiction of the trial court when it was alleged that all indispensable parties were not joined in the action. Our opinion in that appeal is helpful in understanding the background of the case.

The factual background of the case is that J.H. France Refractories Company (hereinafter J.H. France) and its now wholly-owned subsidiary, the Van Brunt Company, between 1956 and 1972 manufactured and marketed a product containing asbestos. J.H. France also marketed and continues to market products containing silica, which, like asbestos, is claimed to cause physical injury to those who breathe it. On April 19, 1979, Gladys Temple, administratrix of the estate of Charles Temple, filed suit against J.H. France, claiming that her decedent, Charles Temple, suffered from asbestos-related diseases contracted through exposure to J.H. France's asbestos-containing products from 1948 through 1978.

J.H. France was insured during various time periods relevant to this action by the Pennsylvania Manufacturers Association, St. Paul, Allstate, U.S. Fire, Wausau, and Rockwood Insurance Companies. Upon receipt of this suit, J.H. France presented the Temple claim to Allstate, St. Paul and PMA for defense and indemnity, the insurers who had provided coverage between 1967 and 1979. None of these insurers agreed to defend or indemnify, and J.H. France undertook its own defense. In 1981 J.H. France filed this declaratory judgment action for the purpose of determining the insurers' duty to defend and indemnify against the Temple claim. Subsequent to the filing of this declaratory judgment action, additional asbestos and silica-related lawsuits were filed against J.H. France. Apparently because these actions were for injuries allegedly sustained during a time period which went beyond 1979 (into the 1980's), additional insurance companies became involved. In 1984, Allstate filed its own declaratory judgment action, naming PMA, St. Paul, U.S. Fire, Wausau and Rockwood Insurance Companies, as well as fourteen individuals who had filed asbestos or silica-related lawsuits after J.H. France filed its original declaratory judgment action. Still other asbestos or silica-related claims against J.H. France were filed after Allstate's declaratory judgment actions were consolidated, and the carriers who insured J.H. France during the relevant time periods have taken differing positions with respect to their duty to indemnify and defend. If a defense has been provided, it has been provided subject to reservation of rights.

The issues at trial were whether the various insurance companies were liable for the defense and indemnification of J.H. France for claims based on exposure to its products containing asbestos and silica, and if they were liable, how the liability was to be apportioned among the insurers. The various insurance contracts could be adjudicated in one action because the relevant language was virtually identical in all of the contracts. The trial court ... worked out a scheme ... in which the various insurers were required to defend and indemnify against asbestos or silica related claims made against J.H. France and determined that the insurers had not acted in bad faith in failing to defend or indemnify at an earlier time.

Multiple appeals were filed in Superior Court challenging the substance of the trial court's determination, but Superior Court declined to address the merits of the case on the grounds that the lower court did not have jurisdiction because parties who filed claims against J.H. France after the declaratory judgment actions were filed had not been included in the declaratory judgment action.

J.H. France Refractories Co. v. Allstate Insurance Co., 521 Pa. 91, 93-95, 555 A.2d 797, 798-99 (1989). The first appeal resulted in a decision that the declaratory judgment action was proper despite the nonjoinder of parties who filed claims after the initiation of this proceeding, and the case was remanded for the Superior Court to review the substantive aspects of the appeal. Id. The review having been accomplished, we have allowed the appeal of J.H. France which challenges several aspects of the Superior Court's disposition of the case, 396 Pa.Super. 185, 578 A.2d 468.

Some additional facts are necessary to resolve the detailed issues under review. The six insurers which are parties to this action provided comprehensive liability insurance coverage to J.H. France at all times relevant to this action. ¹ All the policies contained identical language insofar as the relevant clauses are concerned:

[The Insurer] will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury ... to which this insurance applies, caused by an occurrence, and [the Insurer] shall have the right and duty to defend any suit against the Insured seeking damages on account of such bodily injury....

"Bodily injury" means bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom....

"Occurrence" means an accident, including continuous or repeated exposure to conditions, which result in bodily injury ... neither expected nor intended from the standpoint of the Insured.

Pursuant to the stipulation of all parties, the medical evidence at trial included the testimony of Dr. John E. Craighead, an anatomical and clinical pathologist who is an expert in pneumoconiosis and asbestos-related disease. In summary, he testified that "injury" is a "process which alters structure," and the term is applicable in reference to a cell, a tissue, an organ, or the entire body. "Disease" means "an injury and a response to that injury." The presence of asbestos in the lungs stimulates a wide range of reactions, which Dr. Craighead divides into three responses.

First, characterized as "direct injury," asbestos fibers in the respiratory tract interact with the membranes of the cells lining the trachea and cause the release of enzymes and superoxides which either damage or kill individual cells. If sufficient cells are damaged, tissue (an accumulation of cells) is damaged or destroyed. This injury occurs within minutes after asbestos fibers enter the cells.

Second, characterized as "indirect injury," the presence of asbestos fibers stimulates macrophages to accumulate. Macrophages are scavenger cells which attempt to envelope foreign particles. As microphages attempt to ingest the fibers, there is a release of enzymes which have a damaging effect on tissue. There is also a chemical reaction which scars the injured tissue. The accumulation of scar tissue in the respiratory system prevents the lung from performing its normal oxygen-carbon dioxide gas exchange. The process of macrophage accumulation, tissue scarring, and functional impairment of the lungs begins to occur within a month of exposure.

The third response in the asbestosis process is a change in the form of the cells lining the bronchial tree. The normal lining, designed to move dust particles out of the body, is replaced by cells lacking cilia, resulting in a tendency toward accumulation of asbestos particles.

The asbestosis process continues to progress even after exposure to asbestos ceases. Medical authorities differ on the reasons for this fact. Substantial authority regards this as the nature of the asbestosis pathogenesis. Another view theorizes that disease progression may be attributable to the eventual, and inevitable, decrease in the respiratory function involved in aging, and also to other factors such as cigarette smoking or infection. In either view, the injury process continues after exposure and may culminate in "manifestation," such severe functional impairment that asbestosis is finally diagnosed, and of course, the disease may be fatal.

Based on the foregoing record, the...