NL Industries, Inc. v. Commercial Union Ins. Co.
| Decision Date | 30 April 1996 |
| Docket Number | Civ. No. 90-2124 (WHW). |
| Citation | 926 F. Supp. 446 |
| Parties | NL INDUSTRIES, INC., Plaintiff, v. COMMERCIAL UNION INSURANCE COMPANY, Defendants. COMMERCIAL UNION INSURANCE COMPANY, Third-Party Plaintiff, v. CERTAIN UNDERWRITERS AT LLOYD'S, Insurance Company of North America, and Northbrook Excess and Surplus Insurance Company, Third-Party Defendants. NL INDUSTRIES, INC., Plaintiff, v. CERTAIN UNDERWRITERS AT LLOYD'S, Insurance Company of North America, and Northbrook Excess and Surplus Insurance Company, Third-Party Defendants. |
| Court | U.S. District Court — District of New Jersey |
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Peter B. Bensinger, Jr., Bartlit Beck Herman Palenchar & Scott, Chicago, Illinois and Kirkland & Ellis, Chicago, Illinois and Kevin J. Connell, McCarter & English, Newark, New Jersey, for Plaintiff NL Industries.
Richard S. Feldman, David M. Cassidy, Howard M. Tollin, Michael J. Balch, Rivkin, Radler & Kremer, Uniondale, New York, and Joni F. Mason, Rivkin, Radler & Kremer, Newark, New Jersey, and Einhorn, Harris, Ascher & Barbarito, Denville, New Jersey, for Defendant and Third-Party Plaintiff Commercial Union.
Terry Cosgrove, Peterson & Ross, Chicago, Illinois and William B. McGuire, Tompkin, McGuire & Wachenfeld, Newark, New Jersey, for Third-Party Defendant Certain Underwriter's at Lloyd's, London and British Companies.
Paul Koepff, Joseph Boury, O'Melveny & Myers, New York City, and Ribis, Graham & Curtin, Morristown, New Jersey, for Third-Party Defendant Insurance Company of North America.
This matter comes before the Court on plaintiff NL Industries, Inc. ("NL") motion for summary judgment against defendant Commercial Union Insurance Company ("CU"); on CU's cross-motions for summary judgment against NL, and third-party defendants Certain Underwriters at Lloyd's ("Lloyd's"), and Insurance Company of North America ("INA"); and on Lloyd's cross motion for summary judgment against CU.
This dispute is one skirmish in the battle over insurance coverage for environmental and lead paint claims that have been asserted against NL. These motions, concerning the defense costs relating to both the "old" and "new" lead paint claims, are perhaps emblematic of the protracted nature of the controversy as a whole; though they had originally been brought and seemingly resolved more than three years ago, they have now, phoenix-like, arisen again. Below are the facts which have led to this refrain.
At issue are seven actions seeking relief for harms associated with lead paint in which NL has been named a defendant. In NL's initial complaint against CU it sought a declaration that CU was obligated to defend against and provide coverage for claims brought against NL in the following three suits ("the original suits"): Santiago v. Sherwin-Williams Co. et al., No. 87-2799-T (filed in D.Ma.); Housing Authority of New Orleans v. Standard Paint and Varnish Co., et al., No. 90-6901 (filed in Civ.Dist.Ct, La.); City of New York, et al. v. Lead Industries Association, et al., No. 14365/89 (filed in Sup.Ct., N.Y.). CU in turn filed a third-party complaint against INA and Lloyd's for contribution and indemnity.
NL later amended its complaint to include the following four lead paint actions asserted against it ("the new suits"): Orleans Parish School Bd. v. Apex Sales, Co., No. 91-6104 (filed in La.Pelt. on July 2, 1991); Swartzbauer v. Lead Indus. Assoc, Inc., No. 91-3948 (filed in E.D.Pa. on June 21, 1991); Hurt v. Philadelphia Housing Auth., No. 91-4746 (filed in E.D.Pa. on July 25, 1991) and City of Philadelphia and Philadelphia Housing Authority v. Lead Indus. Assoc., Inc., No. 90-7064-JG (filed in E.D.Pa. on November 5, 1991). CU amended its third-party complaint against INA and Lloyd's for contribution and indemnity relating to these suits, as well.
Santiago v. Sherwin-Williams Co. et al., ("Santiago"), is a products liability action in which the complaint alleges that NL and others produced and marketed lead paint for use in dwellings accessible to young children, and that plaintiff's one year old daughter, ingested lead paint and was diagnosed as having lead paint poisoning in November 1973.
Housing Authority of New Orleans v. Standard Paint and Varnish Co., et al., ("HANO"), is brought against NL and others to recover expenses incurred by the Housing Authority of New Orleans in complying with a consent judgment requiring the Housing Authority to adhere to federal regulations regarding lead abatement; the need for lead abatement allegedly arose from lead paint applied to various areas within the Housing Authority's buildings.
The complaint in City of New York, et al. v. Lead Industries Association, et al., ("City of New York"), demands recovery for the cost of inspecting, testing, monitoring, and abating lead paint in both municipally and privately owned residential buildings. It also seeks recovery of the costs of any judgments or settlements in seventy-eight personal injury actions claiming lead poisoning made against the City is a defendant. The causes of action sound in negligent design, failure to warn, strict products liability, fraud and misrepresentation. On December 23, 1991, all of these claims, except those based on fraud, were dismissed on statute of limitations grounds.
On July 22, 1991, NL was named defendant in Orleans Parish School Bd. v. Apex Sales, Co., No. 91-6104 ("Orleans Parish"). This claim of the Orleans Parish School Board against NL and other producers and manufacturers of lead pigment and lead paint seeks to recover costs for an abatement program to remove lead from plaintiff's buildings. Plaintiff alleges that large amounts of lead paint were applied to the interior and exterior surfaces of plaintiff's building during the 1940s, 1950s, and 1960s. Plaintiff also alleges that the presence of lead-based paint in plaintiff's school buildings "represent a potential hazard to the children who are students in these schools."
Swartzbauer v. Lead Indus. Assoc, Inc., No. 91-3948, ("Swartzbauer"), is a lead paint class action served upon NL on June 21, 1991. The plaintiffs — purportedly over 21,000 New Jersey and Pennsylvania painters and their spouses — allege bodily injury and/or fear of bodily injury as a result of exposure to the lead products produced and marketed by NL and other defendants. They claim that their injuries resulted from a course of conduct by NL and other defendants dating from 1928 to at least 1978. They further allege "chronic long term exposure" to the defendants' lead-containing products.
On July 25, 1991, NL was named as a defendant in Hurt v. Philadelphia Housing Auth., No. 91-4746 ("Hurt"), a class action in the United States District Court for the Eastern District of Pennsylvania. Plaintiffs are residents of public housing maintained by the Philadelphia Housing Authority. They seek damages for bodily injury and/or the threat of injury from exposure to lead pigment manufactured by NL and others. Further, plaintiffs seek to recover the cost of abating alleged hazards caused by the presence of lead in buildings built or repainted before 1978, including the cost of removal of the lead. Plaintiffs allege injuries resulting from a course of conduct by defendants, including NL, dating from the 1920's to at least 1978.
On November 5, 1990, NL was named defendant in a class action in the United States District Court for the Eastern District of Pennsylvania captioned City of Philadelphia and Philadelphia Housing Authority v. Lead Indus. Assoc., Inc., No. 90-7064-JG, ("City of Philadelphia"). This claim is brought on behalf of a putative class of all cities in the United States with a population over 100,000, whose housing or public health authorities are engaged in or contemplating a lead abatement program. Plaintiffs seek to recover liability costs in bodily injury actions based on alleged lead poisoning of residents and the costs of abating lead paint hazards. The plaintiffs declared that from the early 1900's to 1977, NL processed, manufactured, designed, developed, tested, packaged, inspected, sold, distributed, supplied, delivered and/or marketed lead pigments for use in lead paint that was used on interiors and surfaces in properties within plaintiffs' jurisdictions.
CU, INA and Lloyd's issued primary insurance policies to NL which were allegedly effective during time periods relevant to the underlying claims.
Under a series of policies from February 1, 1966 to January 1, 1978, CU provided NL with primary comprehensive general liability insurance coverage (the "CU policies"). In those policies, CU promised to "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of" — "Coverage A bodily injury" and "Coverage B property damage." These policies all contain this standard clause:
The company shall have the right and duty to defend any suit against the insured seeking damages on account of bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent.
INA issued primary liability coverage to NL under policies that were in effect from January 1, 1978 to March 1, 1989. These agreements provide:
The INA policies define "occurrence" as an "event including injurious exposure to conditions, which results during the policy period in bodily injury or property damage neither expected nor intended from the standpoint of the Insured."...
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