Unigard Sec. Ins. Co. v. North River Ins. Co.
Decision Date | 23 April 1991 |
Docket Number | No. 88 Civ. 0789 (RWS).,88 Civ. 0789 (RWS). |
Citation | 762 F. Supp. 566 |
Parties | UNIGARD SECURITY INSURANCE COMPANY, INC., successor to Unigard Mutual Insurance Company, Inc., Plaintiff, v. NORTH RIVER INSURANCE COMPANY, Defendant. |
Court | U.S. District Court — Southern District of New York |
COPYRIGHT MATERIAL OMITTED
Mound, Cotton & Wollan, New York City (Eugene Wollan, Michael H. Goldstein, of counsel), for plaintiff.
Simpson Thacher & Bartlett, New York City (Dennis G. Jacobs, Andrew S. Amer, Robert E. Rice, Mary Beth Forshaw, of counsel), for defendant.
MODIFIED OPINION
TABLE OF CONTENTS
This diversity action involves a facultative reinsurance certificate (the "Certificate") issued by plaintiff Unigard Security Insurance Company ("Unigard") to defendant North River Insurance Company ("North River"). Unigard seeks a declaratory judgment relieving it of any obligation to indemnify North River for losses paid by North River to its insured Owens-Corning Fiberglass Corporation ("Owens-Corning"). North River by way of counterclaim seeks to recover such indemnification. Based upon the findings of fact and conclusions of law set forth below, judgment will be entered granting relief to North River on its counterclaims in accordance with this opinion.
This action is significant not only because of North River's counterclaim for over $15 million in indemnity and related expenses but also because it raises, apparently for the first time, significant issues concerning reinsurance for losses suffered by a manufacturer of asbestos and its insurer. These issues include the effect upon the "follow the fortunes" and "right to associate" clauses of the Certificate and any Unigard reinsurance obligations of the participation of Owens-Corning and North River in the Asbestos Claims Facility (the "Facility"), an instrumentality which sought on behalf of insurers and manufacturers to handle asbestos bodily injuries claims. In addition, determinations are required as to the notice of coverage required to be given by the insurer North River to its reinsurer Unigard and the timeliness of such notice and the obligation of the reinsurer for defense costs and the coverage for a stub period of the policy.
These issues are presented against the complicated factual background arising out of the mass tort asbestos litigation, which has to date defied the efforts of the courts to provide a speedy and effective resolution of the hundreds of thousands of claims brought to recover damages by injured plaintiffs and their representatives against hundreds of manufacturers and users of asbestos products throughout the nation. Traditional litigation has been so far unsatisfactory in resolving this mass tort dispute in an efficient, cost-effective and equitable manner.1 The potentially overwhelming nature of this litigation is well-recognized, and the ultimate resolution of the issues presented here has the potential to affect obligations in the billions of dollars.
This action was filed by Unigard on February 3, 1988. Discovery was had, and on July 12, 1990 an opinion was filed denying the summary judgment sought by Unigard (the "July Opinion"). That opinion described the parties and issues, and the findings contained there remain unchanged but are supplemented as set forth below.
Following the July Opinion, additional discovery was conducted, and as if the action were not complicated enough, the parties concluded that North River would assume the role of plaintiff and Unigard the role of defendant for purposes of the presentation of evidence. A bench trial was held from November 8, through November 27, 1990. Final arguments and briefs were submitted on January 18, 1991.
Unigard is the successor to Unigard Mutual Insurance Company, Inc. ("Unigard Mutual") and is a Washington corporation with its principal place of business in Seattle. In 1984, it was purchased by the John Hancock Mutual Life Insurance Company.
North River is a New Jersey corporation with its principal place of business there and is a subsidiary of Crum and Forster, Inc. ("Crum & Forster").
Owens-Corning is a Delaware corporation with its principal place of business in Toledo, Ohio.
North River through its agent L.W. Biegler,...
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