London Market Insurers v. Superior Court

Decision Date09 January 2007
Docket NumberNo. B189000.,B189000.
Citation146 Cal.App.4th 648,53 Cal.Rptr.3d 154
CourtCalifornia Court of Appeals Court of Appeals
PartiesLONDON MARKET INSURERS, Petitioners, v. The SUPERIOR COURT of Los Angeles County, Respondent; Truck Insurance Exchange et al., Real Parties in Interest.

Duane Morris, Brian Kelly, and Christina C. Marshall, San Francisco, for Petitioners.

No appearance for Respondent.

Gibson, Dunn & Crutcher and Scott R. Hoyt, Dallas, TX, for Real Party in Interest Truck Insurance Exchange.

Jones Day, Elwood Lui, San Francisco, Philip E. Cook, Reed T. Aljian, Los Angeles, and J.W. Montgomery, III for Real Party in Interest Kaiser Cement & Gypsum Corporation.

Carroll, Burdick & McDonough, Rodney L. Eshelman, David M. Rice, and Laurie J. Hepler, San Francisco, for Real Parties in Interest Columbia Casualty Co., Continental Insurance Co., and London Guarantee & Accident Company of New York.

SUZUKAWA, J.

This petition for writ of mandate presents an issue of first impression in this state: The meaning of "occurrence" in a commercial general liability (CGL) policy as applied to bodily injuries caused by exposure to asbestos. We conclude that, as used in the policies at issue, "occurrence" means injurious exposure to asbestos, not the manufacture and distribution of those products. Accordingly, we grant the writ and direct the trial court to vacate its summary adjudication order.

INTRODUCTION

Real party in interest Kaiser Cement & Gypsum Corporation (Kaiser) manufactured a variety of products containing asbestos (asbestos products) for more than 30 years. In recent years, Kaiser has been named as a defendant in products liability suits brought by thousands of claimants who allege they were injured by their exposure to Kaiser's asbestos products. These claims have been defended by Kaiser's primary general liability carrier, real party in interest Truck Insurance Exchange (Truck).

After making indemnity payments for Kaiser of more than $50 million, Truck filed an action seeking, among other things, a declaratory judgment that Truck's policies were exhausted and that Truck had no further duty to defend or indemnify Kaiser in asbestos-related litigation. Subsequently, Truck sought summary adjudication of the declaratory judgment cause of action. The summary adjudication motion turned on the meaning of the word "occurrence" as used in the CGL policies. According to Truck, all claimants' asbestos injuries resulted from a single "occurrence"—Kaiser's manufacture and distribution of asbestos products—and thus were subject to the policies' per-occurrence liability limits. Thus, Truck contended, because its indemnity payments exceeded policy limits, the policies were exhausted and it had no further obligation to Kaiser.

Petitioners London Market Insurers (LMI), Kaiser's excess insurers, opposed the summary adjudication motion, arguing that the relevant "occurrence" was each claimant's asbestos exposure, not Kaiser's manufacture or distribution of asbestos products. Accordingly, LMI contended, the court could not conclude as a matter of law that all of Kaiser's asbestos claims resulted from a single occurrence or that Truck's policies had been exhausted.

The trial court agreed with Truck that the "occurrence" was Kaiser's decision to manufacture and distribute asbestos products and, thus, that all asbestos injuries arose out of a single annual occurrence. It accordingly granted summary adjudication.

We find that the trial court's interpretation cannot be reconciled with the policies' plain language, which compels our conclusion that an "occurrence" under the policies is injurious exposure to asbestos, not the manufacture and distribution of asbestos products. Thus, the trial court erred in determining that all asbestos injuries arose from a single annual occurrence as a matter of law. Moreover, on the present record we cannot determine how many occurrences are responsible for the alleged injuries and, thus, whether Truck's policies have been fully exhausted. Accordingly, we grant the writ and direct the trial court to vacate its order granting Truck's motion for summary adjudication and to enter a new order denying the motion.

FACTUAL AND PROCEDURAL BACKGROUND

Kaiser manufactured a variety of asbestos products, including joint compounds, finishing compounds, fiberboard, and plastic cements, from 1944 through the 1970's. Kaiser produced these products at 10 different facilities at various times.

By 2004, more than 24,000 claimants (including, among others, carpenters, electricians, sheetrockers, painters, welders, shipyard workers, mechanics, plasterers, plumbers, tile setters, acoustical sprayers and architects) had filed products liability suits against Kaiser alleging that they had suffered bodily injury, including asbestosis and various cancers, as a result of their exposure to Kaiser's asbestos products. Kaiser tendered these claims to Truck, which had issued primary CGL policies to Kaiser between 1964 and 1983. As of July 31, 2001, Truck had paid approximately $22 million to more than 900 asbestos claimants; by October 2004, Truck's indemnity payments for asbestos bodily injury claims exceeded $50 million.

In April 2001, Truck filed an insurance coverage action concerning its obligations to continue to defend and indemnify Kaiser for asbestos bodily injury claims. Kaiser filed a cross-complaint against its excess insurers, including LMI, seeking a declaration of coverage under its excess policies in the event Truck were able to establish that it had no further obligation to defend or indemnify Kaiser.

In October 2004, Truck moved for summary adjudication that all its policies had been exhausted and it had no further duty to defend or indemnify Kaiser.1 The basis for Truck's motion was the "per-occurrence" liability limitation in its CGL policies, which capped Truck's exposure for bodily injuries resulting from "any one occurrence." According to Truck, under the plain language of the policies, all asbestos-related claims in any given year arose out of a single "occurrence" because all had the same underlying cause: "the design, manufacture and distribution by Kaiser and its subsidiaries of asbestosbearing products." Further, Truck urged that the parties' course of conduct—specifically, Kaiser's payment of a single deductible per policy year for all asbestos bodily injury claims, rather than a deductible for each claim—was consistent with the conclusion that all asbestos claims resulted from a single occurrence. Thus, notwithstanding its indemnity payments exceeding $50 million, Truck contended that its liability for asbestos bodily injury claims for all policy years was only $8.3 million and that the policies were exhausted as of January 1999.

Kaiser responded that Truck was entitled to summary adjudication, but contended that its analysis was only "'half right.'"2 Kaiser agreed that under the plain language of Truck's policies, all asbestos bodily injury claims resulted from a single annual occurrence. Thus, it agreed that Truck's policies had been exhausted. However, Kaiser did not agree that this result was compelled by the course of the parties' performance; to the contrary, Kaiser contended that neither it nor Truck ever believed that they had reached an agreement on the number-of-occurrences issue.

LMI opposed the summary adjudication motion, contending that the court could not conclude as a matter of law that all asbestos bodily injury claims resulted from a single annual occurrence or that Truck's policies had been exhausted. Further, LMI contended that the parties' conduct demonstrated that they believed that the asbestos claims resulted from multiple occurrences. Thus, LMI urged that Truck's motion should be denied because there were triable issues of fact as to the meaning of "occurrence."

The trial court initially denied the summary adjudication motion. It explained that under California law, insurance policies are interpreted based on their plain language and the insured's objectively reasonable expectations when the policies are issued. Further, it said that in California "occurrence" means the "underlying cause of injury—the act, or acts, of the insured that gives rise to the ABIC [asbestos bodily injury claims]." Thus, the dispositive question was whether Kaiser reasonably could have believed that its decision to incorporate asbestos into many different products over many decades was a single occurrence. The court held that it could not: "[A]s a matter of law ... it is not now, nor was it at the time the Truck policies were issued, objectively reasonable to assume that the incorporation of chrysotile asbestos into multiple products over a period of many years would constitute a single occurrence."

Although the court thus concluded that the asbestos bodily injury claims were not a single occurrence as a matter of law, it said that on the present record it could not decide how many occurrences were responsible for the asbestos claims. It explained: "The more difficult issue presented by Truck's motion is determining the number of occurrences under the policies, given that they are to be determined based on an analysis of the underlying cause of injury. The Court finds that a reading of the policies as a whole does not support a determination that the manufacture, sale, and distribution of all Kaiser's asbestos-containing products constitute a single `occurrence.' By the same token, however, the policies do not support LMFs interpretation that each ABIC filed against Kaiser was an `occurrence.' While a `decision' to manufacture a given product in a certain manner, or warn or not warn of the dangerous propensities of that product may constitute an occurrence, such a decision must be made with reference to a product or family of products."

Thus, the court said, by denying summary adjudication it was "not determining that the number of occurrences under the Truck policies will...

To continue reading

Request your trial
40 cases
  • Plastics Engineering v. Liberty Mut. Ins.
    • United States
    • Wisconsin Supreme Court
    • January 29, 2009
    ...an occurrence in asbestos-related claims has produced varying results throughout the country. See London Mkt. Insurers v. Superior Court, 146 Cal.App.4th 648, 53 Cal.Rptr.3d 154, 161 (2007) (discussing the different approaches that courts have taken around the country). For example, some co......
  • Greystone Homes, Inc. v. Midtec, Inc.
    • United States
    • California Court of Appeals Court of Appeals
    • December 2, 2008
    ...and the matter can be adjudicated as a question of law. (Code Civ. Proc., § 437c, subds. (c), (f)(1).)" (London Market Insurers v. Superior Court (2007) 146 Cal.App.4th 648, 655 .) In reviewing a trial court's ruling on a motion for summary judgment or summary adjudication, the reviewing co......
  • Kaiser Cement & Gypsum Corp. v. Ins. Co. of Pa.
    • United States
    • California Court of Appeals Court of Appeals
    • August 24, 2011
    ...Carl J. West, J., granted the motion. Excess insurer petitioned for writ of mandate. The Court of Appeal granted petition, 146 Cal.App.4th 648, 53 Cal.Rptr.3d 154. The Superior Court, Carl J. West, J., found that manufacturer's excess coverage would “drop down” upon exhaustion of the per-oc......
  • Luk Clutch Sys., LLC v. Century Indem. Co.
    • United States
    • U.S. District Court — Northern District of Ohio
    • July 26, 2011
    ...as a matter of law that the word ‘occurrence’ has the same meaning in all insurance contracts.” London Mkt. Insurers v. Superior Court, 146 Cal.App.4th 648, 53 Cal.Rptr.3d 154, 161 (2007) (citation and internal quotations and ellipses omitted). 7. While the language of the clause at issue a......
  • Request a trial to view additional results
2 firm's commentaries
  • Kaiser Cement v. ICSOP: Court Of Appeal Grapples With Horizontal Exhaustion And Stacking
    • United States
    • Mondaq United States
    • August 11, 2011
    ...the 1980s. The court initially addressed coverage for these claims in its earlier opinion in London Market Insurers v. Superior Court, 146 Cal.App.4th 648 (2007) ("LMI"), where it held that the claims against Kaiser did not constitute a single annual "occurrence" within the meaning of polic......
  • Accessing Excess Policies In Continuous Trigger Cases
    • United States
    • Mondaq United States
    • May 7, 2013
    ...thus each asbestos bodily injury claim is subject to a separate per occurrence limit. (London Market Insurers v. Superior Court, 146 Cal. App. 4th 648.) Had Kaiser Cement's policy limits been provided on an aggregate basis, such a ruling may not have much significance. For instance, Kaiser ......
6 books & journal articles
  • Chapter 3
    • United States
    • Full Court Press Business Insurance
    • Invalid date
    ...Guarantee and Liability Insurance Co., 181 Cal. App.4th 616, 105 Cal. Rptr.3d 64 (2010); London Market Insurers v. Superior Court, 146 Cal. App.4th 648, 53 Cal. Rptr.3d 154 (2007); O’Hanesian v. State Farm Mutual Automobile Insurance Co., 52 Cal. Rptr.3d 463 (Cal. App. 2006). Colorado: Hoan......
  • Chapter 6
    • United States
    • Full Court Press Business Insurance
    • Invalid date
    ...Systems, Inc. v. St. Paul Fire & Marine Insurance Co., 53 Cal. Rptr.3d 786 (Cal. App. 2007); London Market Insurers v. Superior Court, 53 Cal. Rptr.3d 154 (Cal. App. 2007). Colorado: Bailey v. Lincoln General Insurance Co., 255 P.3d 1039 (Colo. 2011); Hoang v. Assurance Company of America, ......
  • CHAPTER 7 Comprehensive General Liability Exclusions for Coverage A
    • United States
    • Full Court Press Insurance for Real Estate-Related Entities
    • Invalid date
    ...Systems, Inc. v. St. Paul Fire & Marine Insurance Co., 53 Cal. Rptr.3d 786 (Cal. App. 2007); London Market Insurers v. Superior Court, 53 Cal. Rptr.3d 154 (Cal. App. 2007). Colorado: Bailey v. Lincoln General Insurance Co., 255 P.3d 1039 (Colo. 2011); Hoang v. Assurance Company of America, ......
  • CHAPTER 3 The Insurance Contract
    • United States
    • Full Court Press Insurance for Real Estate-Related Entities
    • Invalid date
    ...Guarantee and Liability Insurance Co., 181 Cal. App.4th 616, 105 Cal. Rptr.3d 64 (2010); London Market Insurers v. Superior Court, 146 Cal. App.4th 648, 53 Cal. Rptr.3d 154 (2007); O’Hanesian v. State Farm Mutual Automobile Insurance Co., 52 Cal. Rptr.3d 463 (Cal. App. 2006). Colorado: Hoan......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT