Metropolitan Life Ins. Co. v. Aetna Casualty & Surety Co.

• Decision Date: 06 February 2001
• Citation: 255 Conn. 295,765 A.2d 891
• Court: Connecticut Supreme Court
• Parties: METROPOLITAN LIFE INSURANCE COMPANY v. AETNA CASUALTY AND SURETY COMPANY ET AL.

255 Conn. 295

765 A.2d 891

METROPOLITAN LIFE INSURANCE COMPANY v. AETNA CASUALTY AND SURETY COMPANY ET AL.

(SC 16205), (SC 16206), (SC 16207)

Supreme Court of Connecticut.

Argued September 26, 2000.

Officially released February 6, 2001.

Norcott, Katz, Palmer, Vertefeuille and Spear, JS. Francis J. Brady, with whom were Randy K. Paar, pro hac vice, Wesley W. Horton, and, on the brief, Everett E. Newton, Jerold Oshinsky, pro hac vice, Eugene R. Anderson, pro hac vice, and Mark Garbowski, pro hac vice, for the appellant (plaintiff).

Thomas J. Groark, Jr., with whom was Kathleen D. Monnes, for the appellees (defendant Travelers Casualty and Surety Company et al.).

Stephen A. Fennell, pro hac vice, with whom were John B. Farley and, on the brief, Charles G. Cole, pro hac vice, Brian J. Leske, pro hac vice, Margaret A. Arnold, pro hac vice, Stephen R. Apel, pro hac vice, R. Cornelius Danaher, Kathleen F. Munroe, Ralph G. Eddy and Keith McCabe, for the appellees (defendant The Home Insurance Company et al.).

Louis B. Blumenfeld, Laura A. Foggan, pro hac vice, Daniel E. Troy, pro hac vice, and Keith U. Kuder, pro hac vice, filed a brief for the Insurance Environmental Litigation Association as amicus curiae.

Opinion

KATZ, J.

This appeal requires us to determine the scope and meaning of the "per occurrence" limit of liability under certain excess insurance policies issued by the defendant insurers¹ to the plaintiff, Metropolitan Life Insurance Company (Metropolitan). In particular, we must determine whether, under the circumstances of this case, there was one occurrence under the policies, namely, Metropolitan's alleged failure to warn of the dangers of asbestos exposure, which resulted in bodily injury to the underlying claimants, or whether each claimant's exposure was a separate occurrence. The trial court rendered summary judgment in favor of all of the defendants, concluding that each claimant's exposure to asbestos was a separate occurrence. Because we agree that there are multiple occurrences in this case, we affirm the judgment of the trial court.

The trial court found the following facts. "Metropolitan... is a large mutual insurance company that insured employee health care plans of various manufacturers and distributors of asbestos and products containing asbestos.... Beginning in the 1970s and continuing to the present time, [Metropolitan] has been named as a defendant in thousands of lawsuits filed throughout the United States seeking recovery for asbestos-related bodily injuries resulting from [Metropolitan's] alleged failure to publicize adequately the health risks of asbestos exposure. These underlying claims refer to a period of time beginning in the 1930s when [Metropolitan] engaged in medical research activities. Certain reports and articles were generated either by or under the direction of Dr. Anthony Lanza, [Metropolitan's] assistant medical director.

"To date, approximately 200,000 claims against [Metropolitan] have been filed; half of them have been settled, at a `nuisance value' averaging about $2500 per claim. The underlying claims themselves basically allege that Dr. Lanza, and therefore [Metropolitan], knew or should have known of the hazards of asbestos exposure through the research activities and failed to warn the public by publication of the results of those studies. There are also claims that [Metropolitan] distorted or misstated the results in various articles and reports. Many of the underlying claimants are industrial, shipyard and construction workers who are not [Metropolitan] policyholders or persons who worked in asbestos plants where [Metropolitan] performed studies. Rather, liability is predicated on the claim that [Metropolitan] assumed a duty to disclose to the general public when it undertook its research on asbestos.

"The underlying claimants allegedly suffered bodily injuries resulting from exposure to asbestos over a period of several years. In paying the settlement sums in addition to its defense costs, [Metropolitan] has expended hundreds of millions of dollars in connection with this litigation and anticipates substantial expenditures in the future." Metropolitan Life Ins. Co. v. Aetna Casualty & Surety Co., Superior Court, judicial district of New London at Norwich, Complex Litigation Docket, Docket No. X04-CV-95-0115305S (April 16, 1999) (24 Conn. L. Rptr. 381, 381-82). "From 1976 to 1986, the [defendant Travelers Indemnity Company (Travelers Indemnity)] sold primary, umbrella and first-layer excess comprehensive general liability insurance policies to [Metropolitan]. During the same period, Travelers and the remaining defendants sold excess liability insurance policies to [Metropolitan]. None of the excess liability policies provide coverage for underlying claims unless and until an amount equal to the total annual coverage provided by the underlying [Travelers Indemnity] policies ($25 million) is exhausted." Id., 381.²

The following undisputed facts and procedural history are also relevant to this appeal. The defendants' insurance policies "all provide a stated dollar amount of insurance on a `per occurrence' basis, and are in excess of [the Travelers Indemnity] coverage of $25 million per occurrence." Id., 382. Thus, the defendants' policies are not implicated until Metropolitan exhausts the underlying coverage of $25 million per occurrence. In addition, the defendants' policies contain, or incorporate by reference, the following batch clause (hereinafter referred to as the continuous exposure clause) contained in the Travelers Indemnity umbrella insurance policies: "`The total liability of the company for all damages, including damages for care and loss of services, as the result of any one occurrence shall not exceed the limit of liability stated in the declarations as applicable to "each occurrence." For purposes of determining the limit of the company's liability and the retained limit, all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence.'"³ Id., 383. The defendants' policies do not define the term "occurrence."

In 1995, Metropolitan brought the present action against the defendants, all excess liability carriers, seeking coverage for the various asbestos related claims. Specifically, Metropolitan sought declaratory relief and damages for breach of contract. In the first count, Metropolitan requested that the court enter a declaratory judgment that: (1) the defendants were liable to pay in full Metropolitan's defense costs and all sums it had paid, or would become legally obligated to pay, as damages with respect to the underlying claims; and (2) Metropolitan was entitled to designate the policy years called upon to provide such payments. In the second count, Metropolitan alleged that the defendants had breached or would breach the contractual obligations set forth in the excess policies.

The defendants filed motions for summary judgment based on various grounds, including: (1) that each underlying claim for which Metropolitan sought coverage from the defendants should be treated as a separate occurrence (exposure to asbestos being the defining event);⁴ (2) that the injuries should be allocated on a pro rata basis to all periods in which the injuries or damage took place;⁵ (3) that Metropolitan could not sue for breach of contract because, before the filing of the action, it had failed to tender a claim and the defendants had not disclaimed coverage;⁶ and (4) that the professional services exclusion in the policies precluded coverage.⁷

On April 16, 1999, the trial court rendered summary judgment for the defendants on the first two grounds. Id., 387. Applying New York and Connecticut law, the court determined that the occurrence, as that term was used in the subject policies, had been each claimant's exposure to asbestos, and not Metropolitan's alleged failure to publicize adequately the dangers of asbestos exposure. Id., 384. Because the claimants had been exposed to asbestos separately, the trial court concluded that there had been multiple occurrences. Id. The trial court also determined that, because the claimants' injuries had spanned several years and Metropolitan was unable to prove "what portion of injury [had] occurred during the policy periods," the damages should be allocated on a pro rata basis "to all periods in which injury or damage took place."⁸ Id. Thereafter, Metropolitan appealed to the Appellate Court and, pursuant to Practice Book § 65-1 and General Statutes § 51-199, we transferred the appeal to ourselves.

On appeal, Metropolitan claims that the trial court improperly concluded that: (1) each of the claims alleging exposure to asbestos constituted a separate occurrence under the excess liability policies at issue; and (2) Metropolitan's damages should be allocated on a pro rata basis to all periods in which injury or damage took place.⁹ Specifically, on the occurrence issue, Metropolitan contends that we must examine the cause of its liability in the underlying claims. On that basis, it argues that there is a single occurrence,¹⁰ i.e., its alleged failure to warn of the health risks of asbestos exposure. Given this "common cause," and the continuous exposure clause in the policies, Metropolitan seeks a determination of a single occurrence as a matter of law. The defendants dispute Metropolitan's claims and argue additionally that, with regard to the allocation of damages count, they had not breached their contracts with Metropolitan, and that consequently, summary judgment was proper.¹¹

The principal issue in this appeal is "whether an omission, i.e., an alleged failure to publicize adequately the dangers of asbestos exposure, which began at some point in the 1930s and continues to the present time, can be considered a single occurrence for purposes of coverage under the excess...