Matter of Celotex Corp.

• Decision Date: 15 November 1994
• Docket Number: Bankruptcy No. 90-10016-8B1. Adv. No. 91-40.
• Parties: In the Matter of the CELOTEX CORPORATION, et al., Debtors. The CELOTEX CORPORATION and Carey Canada, Inc., Plaintiffs, v. AIU INSURANCE COMPANY, et al., Defendants.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida

175 B.R. 98 (1994)

In the Matter of the CELOTEX CORPORATION, et al., Debtors The CELOTEX CORPORATION and Carey Canada, Inc., Plaintiffs, v. AIU INSURANCE COMPANY, et al., Defendants.

Bankruptcy No. 90-10016-8B1. Adv. No. 91-40.

United States Bankruptcy Court, M.D. Florida, Tampa Division.

November 15, 1994.

COPYRIGHT MATERIAL OMITTED

Jeffrey W. Warren, Bush, Ross, Gardner, Warren & Rudy, P.A., Charles P. Schropp, William R. Daniel, Schropp, Buell & Elligett, P.A., Jeffrey W. Warren, Bush, Rush, Gardner, Warren & Rudy, P.A., Tampa, FL, Deborah A. Swindells, Anderson, Kill, Olick & Oshinsky, Washington, DC, Nicholas J. Zoogman, Anderson, Kill, Olick & Oshinsky, New York City, Stephen A. Madva, Montgomery McCracken Walker & Rhoads, Philadelphia, PA, Bruce Bishop, Willcox & Savage, Norfolk, VA, George N. Wood, Vice President and Gen. Counsel, Celotex Corp., Tampa, FL, for Celotex Corp. and Carey Canada, Inc.

Sara Kistler, Asst. U.S. Trustee.

John W. Kozyak, Kozyak Tropin Throckmorton & Humphreys, P.A., Miami, FL, for Asbestos Property Damage Claimants Committee.

Charles M. Tatelbaum, Johnson, Blakely, Pope, Boker, Ruppel & Burns, P.A., Clearwater, FL, for Unsecured Trade Creditors Committee.

William Knight Zewadski, Trenam, Simmons, Kemker, Scharf, Barkin, Frye & O'Neill, Tampa, FL, for Unofficial Asbestos Health Claim Co-Defendants Committee.

H.C. Goplerud, Honigman Miller Schwartz and Cohn, Tampa, FL, for Asbestos Health Claimants Committee.

James W. Greene, Kathleen Silbaugh, Bromley Greene & Walsh, Washington, DC, for Columbia Cas. Co., Employers Ins. of Wausau, Federal Ins. Co., Protective Nat. Ins. Co.

John A. Yanchunis, Blasingame, Forizs and Smiljanich, P.A., St. Petersburg, FL, and Stuart P. Ross, William H. Briggs, Jr., William E. O'Brian, Jr., Ross, Dixon & Masback, Washington, DC, for Continental Cas. Co., Transp. Ins. Co., Columbia Cas. Co., American

Reinsurance Co., Eric Reinsurance Co., Zurich American Ins. Co.

Daniel C. Sauls, John A. Flyger, Steptoe & Johnson, Washington, DC, for Highlands Ins. Co., Old Republic Ins. Co., St. Paul Surplus Lines Ins. Co.

David C. McLauchlan, Andrew Kochanowski, Lord, Bissell & Brook, Chicago, IL, for Certain Underwriters at Lloyd's of London.

Deborah M. Paris, Paris & Hanna, P.A., Tampa, FL, and Robert J. Bates, Jr., Maryann C. Hayes, Stanley Figura, Bates, Meckler, Bulger & Tilson, Chicago, IL, for Eric Reinsurance Co.

Thomas B. Keegan, Robins, Kaplan, Miller & Ciresi, Chicago, IL and William Cleary, Mendes & Mount, New York City, and Gregory J. Willis, Bart Billbrough, Walton Lantaff Schroeder & Carson, Miami, FL, for Employers Mut. Cas. Co.

Robert Berkes, Barbara Hodous, Bodkin, McCarthy, Sargent & Smith, Los Angeles, CA, for Hartford, First State & Twin City.

Virginia Vermillion, Gleason McGuire & Shreffler, Chicago, IL, for Northbrook, as successor in interest for Allstate Ins. Co.

Rolf Gilbertson, Zeele & Larson, Minneapolis, MN, for Employers Ins. of Wausau.

Margaret Jones, Grippo & Eldon, Chicago, IL, for American Ins. Co. and Nat. Sur. Corp.

Elizabeth B. Sandza, Cynthia Andreason, LeBoeuf Lamb Greene & MacRea, Washington, DC, for Hudson Ins. Co. and Gibraltar Cas. Co.

Louis Shulman, William S. Daskam, IV, St. Petersburg, FL, for Continental Ins. Co., U.S. Fire Ins. Co., Intern. Ins. Co.

Rick Dalan, Clearwater, FL, for Royal Ins. Co.

Susan B. Morrison, Morrison Morris & Mills, Tampa, FL, for Barrett and London Market Companies.

Elizabeth G. Repaal, Harris Barrett Mann & Dew, St. Petersburg, FL, for Northbrook.

Thomas B. Mimms, Jr., MacFarlane Ferguson, Tampa, FL, for American Home Assur. Co., AIU Ins. Co., Highlands Ins. Co., Old Republic Ins. Co., Granite State Ins. Co., National Union Fire Ins. Co. of Pittsburgh, PA, Employers Mut. Casualty Co., American Ins. Co., National Sur. Co., St. Paul Surplus Lines Ins. Co.

Christine A. Nykiel, Jackson & Campbell, Washington, DC, for American Home Assur. Co., AIU Ins. Co., Granite State Ins. Co., Lexington Ins. Co., National Union Fire Ins. Co. of Pittsburgh, PA.

ORDER ON MOTION FOR SUMMARY JUDGMENT

THOMAS E. BAYNES, Jr., Bankruptcy Judge.

THIS MATTER came on for consideration upon the Plaintiff/Debtors' Motion for Partial Summary Judgment and Defendants' Motion for Partial Summary Judgment in the above captioned case. This Court has considered all arguments and evidence consistent with a ruling on a motion for summary judgment. See Celotex v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The Court having considered the Motion, together with the record, finds the undisputable facts as follows:

Debtors, Celotex Corporation and Carey Canada, Inc., filed a voluntary petition for relief under Chapter 11 of Title 11, United States Code, in October 1990. At the time of filing of the petition there were over 140,000 asbestos related bodily injury lawsuits pending against Debtor. On that date, over 100 appeals were pending in asbestos related bodily injury cases in which Debtors and others were appealing adverse judgments. There were also numerous asbestos property damage claims that were in litigation in one form or another. There were some environmental claims that were being prosecuted, but most importantly, there were numerous cases being adjudicated even within alternative resolution facilities as relates the applicability of Debtors' insurance policies and their coverage of all the asbestos claims.

The Celotex Corporation is a major manufacturer of building and roofing products for residential and commercial use. They and their predecessors, over numerous decades, were involved in the manufacture of asbestos products up until the mid-1970s. Carey Canada, Inc., a subsidiary of Celotex Corporation, had been a miner of raw chrysolite asbestos fibers which were used extensively throughout the United States in various asbestos products. Through the course of merger with and acquisition of other corporations, Debtor has been involved in a multitude of lawsuits which have alleged damage caused by asbestos products sold by them or their predecessors. At the time of filing bankruptcy, Debtor was a judgment debtor in over 100 asbestos lawsuits and had posted various supersedeas bonds to stay collection of these judgments pending appeal. These issues have been extensively litigated in this Court and in three circuit courts of appeal.

In August 1992, this Court set a bar date as to all non-asbestos related claims. In the Celotex case, 6,267 claims were filed for a total of almost 3 billion dollars. In the Carey Canada case, 2,137 claims were filed totalling almost 2 billion dollars. In July 1993, in the Celotex case, a bar date was set as regards asbestos property damage claims. Approximately 780 claims in this case were filed totaling almost 20 billion dollars, with approximately 700 claims being filed in the Carey Canada case with its asbestos property damage claims of almost 8 billion dollars.

This Adversary Proceeding arises in the context of asbestos-related bodily injury, property damage, and environmental contamination claims and the respective liabilities of the insurers and Debtors. The instant motions are limited to interpretation of certain insurance policies in the bodily injury phase.¹ Debtors assert the exclusionary language of all policies at issue is unambiguous and the exclusion in each policy is limited to the singular asbestos-related disease of asbestosis. Defendants are insurance companies claiming exclusions to all asbestos-related bodily injury claims. They assert "asbestosis" was meant to exclude all asbestos-related diseases.²

In the instant case, there is no question asbestosis is excluded from coverage under the Defendants' insurance policies at issue. The policies encompassed are for the periods of October 1978 through October 1982, and October 1, 1982 through October 1, 1984.³ For policies from October 1982 through October 1984, the exclusion at issue is for "asbestosis and related diseases arising out of asbestos products." The linchpin of this analysis is determining whether the term asbestosis, as used in certain insurance policies, is ambiguous, and susceptible to more than one meaning. There are specific applicable jurisdictions this Court will consider with respect to the parties assertions of applicable law.⁴

I. HOW COURTS HAVE DEALT WITH THE TERM "ASBESTOSIS"

Analysis must begin with the sole term "asbestosis," and ascertaining its meaning. It is not incumbent upon this Court to determine the medical meaning of asbestosis, but at a minimum understand how the term "asbestosis" has been used. While all policies under consideration use the term "asbestosis," the policies using "asbestosis" as the only exclusion are for the periods of October 1978 through October 1982, and October 1, 1982 through October 1, 1984.

Some decisions have described "asbestosis" with a simple dictionary definition,⁵ while others have painstakingly received affidavits⁶ and expert testimony which analyzed various medical reports, treatises and periodicals.⁷ Courts have generally taken the position asbestosis is a nonmalignant disease which depends on the presence of a fibrosis, or scarring process, which clogs the alveoli, or small airways to the lungs. This scar tissue is considered simply dead tissue, not being organized into cells, which does not have respiratory or nutrient circulation. Insurance Co. of North America v. Forty-Eight Insulations, Inc., 451 F.Supp. 1230, 1236-37 (E.D.Mich.1978), aff'd, 633 F.2d 1212 (6th Cir.1980), aff'd on reh'g, 657 F.2d 814 (6th Cir.1981), cert. denied, 454 U.S. 1109, 102 S.Ct. 686, 70 L.Ed.2d 650 (1981). In other words, asbestosis is not formed by the proliferation of malignant cells, or a cancer. See H.R.Rep. No. 14816, 90th Cong., 2d...