Keene Corp. v. Insurance Co. of North America

• Decision Date: 21 December 1981
• Docket Number: Nos. 81-1179,s. 81-1179
• Citation: 215 U.S.App.D.C. 156,667 F.2d 1034
• Parties: , 12 Envtl. L. Rep. 20,105 KEENE CORPORATION v. INSURANCE COMPANY OF NORTH AMERICA, et al. Aetna Casualty and Surety Company, Appellant. KEENE CORPORATION, Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, et al. KEENE CORPORATION v. INSURANCE COMPANY OF NORTH AMERICA, Liberty Mutual Insurance Company,Appellant. KEENE CORPORATION v. INSURANCE COMPANY OF NORTH AMERICA, Appellant, Aetna Casualty and SuretyCompany, et al. to 81-1182.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1034

667 F.2d 1034

215 U.S.App.D.C. 156, 12 Envtl. L. Rep. 20,105

KEENE CORPORATION v.INSURANCE COMPANY OF NORTH AMERICA, et al.Aetna Casualty and Surety Company, Appellant.

KEENE CORPORATION, Appellant, v.INSURANCE COMPANY OF NORTH AMERICA, et al.

KEENE CORPORATION v.INSURANCE COMPANY OF NORTH AMERICA, Liberty Mutual Insurance

Company,Appellant.

KEENE CORPORATION v.INSURANCE COMPANY OF NORTH AMERICA, Appellant, Aetna

Casualty and SuretyCompany, et al.

Nos. 81-1179 to 81-1182.

United States Court of Appeals District of Columbia Circuit.

Argued June 16, 1981.

Decided Oct. 1, 1981.

As Amended Dec. 21, 1981.

Gerald V. Weigle, Jr., Cincinnati, Ohio, with whom Frank W. Gaines, Jr., Robert L. Hoegle, Washington, D. C., and Christopher C. Mansfield, Boston, Mass., were on the brief for Liberty Mutual Insurance Company, appellee in Nos. 81-1179, 81-1180and81-1182 and cross/appellant in No. 81-1181.

Robert O. Tyler, Washington, D. C., entered an appearance for Pennsylvania Manufacturers Association Insurance Company, appellee in Nos. 81-1179, 81-1180, 81-1181and81-1182.

Richard A. Epstein, Chicago, Ill., and Leo A. Roth, Jr., Washington, D. C., were on the brief for Federal Insurance Company, et al., Amici Curiae urging reversal in Nos. 81-1179, 81-1180, 81-1181and81-1182.

Thomas M. Susman was on the brief for Walbrook Insurance Company, Ltd., et al., Amici Curiae urging reversal in Nos. 81-1179, 81-1180, 81-1181and81-1182.

David Booth Beers and William R. Galeota, Washington, D. C., were on the brief for Cassiar Resources Limited, Amicus Curiae urging affirmance in part and reversing in part in Nos. 81-1179, 81-1180, 81-1181and81-1182.

Daniel J. Popeo, Paul D. Kamenar and Nicholas E. Calio, Washington, D. C., were on the brief for The Washington Legal Foundation, Amicus Curiae urging remand for full consideration in Nos. 81-1179, 81-1181and81-1182.

Richard H. Gimer, M. Stuart Madden and Donald E. Santarelli, Washington, D. C., were on the brief for Commercial Union Insurance Companies, Amici Curiae urging remand for full consideration in Nos. 81-1179, 81-1180, 81-1181and81-1182.

John Mahoney, Jr., Washington, D. C., for Aetna Casualty and Surety Company, appellant in No. 81-1179 and appellee in Nos. 81-1180, 81-1181and81-1182.

Eugene R. Anderson, New York City, with whom Harold D. Murry, Jr., and Jerold Oshinsky, Washington, D. C., were on the brief for Keene Corporation, appellant in No. 81-1180 and cross/appellee in Nos. 81-1179, 81-1181and81-1182.

Robert N. Sayler, Washington, D. C., with whom Wynne M. Teel, John E. Heintz, Scott D. Gilbert, Washington, D. C., and Frank H. Griffin, III, Philadelphia, Pa., were on the brief for Armstrong World Inc., et al., amici curiae urging reversal in Nos. 81-1179 thru 81-1182.

John P. Arness, Washington, D. C., with whom David J. Hensler and Elliot M. Mincberg, Washington, D. C., were on the brief for Hartford Accident and Indemnity Company, appellee in Nos. 81-1179 thru 81-1182.

Michael R. Gallagher, Cleveland, Ohio, with whom Thomas E. Betz, Alan M. Petrov, Cleveland, Ohio, Dennis M. Flannery and John Payton, Washington, D. C., were on the brief for Insurance Company of North America, appellee in Nos. 81-1179, 81-1180and81-1182 and cross/appellant in No. 81-1181.

Appeals from the United States District Court for the District of Columbia(D.C. Civil ActionNo. 78-01011).

Before BAZELON, Senior Circuit Judge, and WILKEY and WALD, Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge BAZELON.

Opinion filed by Circuit Judge WALD concurring in part.

BAZELON, Senior Circuit Judge:

This case arises out of the growing volume of litigation centering upon manufacturers' liability for disease caused by asbestos products.In this action, Keene Corporation(Keene) seeks a declaratory judgment of the rights and obligations of the parties under the comprehensive general liability policies that the defendants issued to Keene or its predecessors ¹ from 1961 to 1980.Specifically, Keene seeks a determination of the extent to which each policy covers its liability for asbestos-related diseases.²

Between the years 1948 and 1972, Keene manufactured thermal insulation products that contained asbestos.As a result, Keene has been named as a codefendant with several other companies in over 6000 lawsuits alleging injury caused by exposure to Keene's asbestos products.Those cases typically involve insulation installers or their survivors alleging personal injury, or wrongful death, as a result of inhaling asbestos fibers over the course of many years.The plaintiffs in the underlying suits allege that they contracted asbestosis, mesothelioma, and/or lung cancer as a result of such inhalation.³

From 1961 to the present, Insurance Company of North America (INA), Liberty Mutual Insurance Company(Liberty), Aetna Casualty and Surety Company(Aetna), and Hartford Accident and Indemnity Company(Hartford) issued comprehensive general liability (CGL) insurance policies to Keene.From December 31, 1961 through August 23, 1968, INA insured Keene; from August 23, 1967 through August 23, 1968, Liberty insured Keene; ⁴ from August 23, 1968 through August 23, 1971, Aetna insured Keene; from August 23, 1971 through October 1, 1974, Hartford insured Keene; and from October 1, 1974 through October 1, 1980, Liberty insured Keene.⁵ The policies that these companies issued to Keene were identical in all relevant respects.The coverage language of the policy that Hartford issued to Keene from 1971 to 1974 is typical.It states that

(t)he company 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 company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury ... even if any of the allegations of the suit are groundless, false or fraudulent....

E.g., J.A. IIat 627."Bodily injury" is defined as "bodily injury, sickness or disease sustained by any person,"id. at 663; and "occurrence" is defined as "an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury ... neither expected nor intended from the standpoint of the insured.Id. at 664. ⁶

Keene tendered the asbestos-related damage cases to its insurance companies for defense and indemnification.Each company, however, either denied all responsibility for the suits or accepted only partial responsibility.Memorandum op.at 2(J.A. IXat 3532).

On June 6, 1978, Keene filed this suit for a declaratory judgment and damages in the United States District Court for the District of Columbia.Keene contended that any stage in the progression of an asbestos-related disease triggers coverage of Keene's entire liability under each of the policies.Aetna, INA, and Liberty argued that coverage is triggered only when bodily injury manifests itself during a policy period.Hartford took an intermediate position, arguing that coverage is triggered by the inhalation of asbestos fibers, but that each company's coverage is determined by the ratio of exposure years during its policy period to the entire period of inhalation.

Keene and Hartford filed motions for partial summary judgment based on their respective theories of coverage, and Aetna filed a motion for summary judgment asserting that no case or controversy had been presented.On January 30, 1981, the district court granted Hartford's motion; it granted in part and denied in part Keene's motion; and it denied Aetna's motion.513 F.Supp. 47.The district court held that indemnification and defense costs should be prorated among the insurance companies according to the relative extent of exposure during their respective policy periods.The district court also held that Keene is liable for a pro-rata share of the costs when exposure occurred during a period in which Keene was uninsured.J.A. IXat 3537-38.

Pursuant to 28 U.S.C. § 1292(b)(1976), the district court, sua sponte, certified its order for interlocutory appeal.INA, Liberty, Aetna, and Keene filed Petitions for Leave To Appeal, and on February 20, 1981, this court granted those petitions and ordered that the appeals be consolidated and expedited.We reverse the district court's order and remand the case to trial on the issues of damages and on the issue of the applicability of Liberty's 1967 policy.⁷

I. JUSTICIABILITY

Aetna argues that Keene's declaratory judgment action does not present a case or controversy.Aetna asserts that Keene must raise insurance coverage issues in the context of a particular case in which an insurance company has refused to defend or indemnify Keene.We disagree.

The standard for finding a justiciable "case or controversy" in a declaratory judgment action is no less demanding than the standard in any other type of action.Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 461, 65 S.Ct. 1384, 1389, 89 L.Ed. 1725(1945);Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41, 57 S.Ct. 461, 463-64, 81 L.Ed. 617(1937).The dispute "must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts."Aetna, supra, 300 U.S. at 241, 57 S.Ct. at 463.This standard was illuminated by Justice Murphy in Maryland Casualty Co. v. Pacific Co., 312 U.S. 270, 61 S.Ct. 510, 85 L.Ed. 826(1941), where he stated that "the question (of justiciability) in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment."Id. at 273, 61 S.Ct. at 512.See generallyWright & Miller,...