A California judge has sided with property/casualty insurers in a case questioning coverage limits in asbestos-injury cases, finding the industry properly defined "completed operations" and "product hazards" subject to coverage limits in policies sold to now-bankrupt insulation contractor Plant Insulation Co.
Judge John Munter of the San Francisco Superior Court found Plant's primary and excess general commercial liability insurers have met their coverage obligations because completed operations and product hazard limits kicked in once Plant finished installing the asbestos-containing products.
Munter's tentative decision could help the industry quash future lawsuits questioning when completed operations and product hazard provisions limiting coverage go into effect a "highly litigious" issue, according to insurance defense attorneys.
During the lawsuit against its insurers, Plant argued once asbestos-related bodily injury claims are deemed to stem from active operations under the policy in place at the time of the installation, they should be considered the same under all subsequent policies. Plant's argument is based on its contention that policy provisions addressing completed operations and product hazard limits were ambiguous and left open to interpretation.
Munter wrote in the Jan. 31 opinion that Plant's argument was flawed because it "completely ignores" the definition of "bodily injury" in the policies, "In the context of long-tail injuries, such as those in the underlying asbestos suits here, the fact that 'some of the bodily injury' may have occurred before and after the operations were completed is made irrelevant by the clear and unambiguous definition of the completed hazard," Munter said. "For purposes here relevant, what matters is the timing of the bodily injury during a given policy period."
The underlying case stems from lawsuits filed against Plant since the 1970s by claimants who said they suffered bodily injuries related to asbestos insulation installed by the company.
Plant's insurers issued primary and excess CGL policies between 1958 and 1985. Under those policies, the insurers defended and indemnified Plant for over two decades. By 2001, the insurers had paid more than $125 million to resolve the asbestos claims.
Had Plant's interpretation of the completed operations and product hazard provisions in its policies been upheld, its insurers could have had to provide substantial additional coverage. Plant has settled with several of its insurers.
The remaining insurers named as defendants in Plant's suit seeking a declaration that it was owed additional coverage are American Home Assurance Co.; Granite State Insurance Co.; Fireman's Fund Insurance Co.; Insurance Company of the State of Pennsylvania; Insurance Company of the West; OneBeacon Insurance Co.; Transport Indemnity Co.; Safety National Casualty Corp.; U.S. Fidelity and Guaranty Co.; and U.S. Fire Insurance Co.
Tanc Schiavoni, a New York-based partner at O'Melveny & Myers, said in a statement that Munter's decision will "serve as a guidepost" for other courts facing similar questions going forward. O'Melveny & Myers represented Ace Fire Underwriters Insurance Co. and Ace Property & Casualty, both of which settled with Plant prior to the decision being released. "By delivering certainty, this decision should significantly reduce coverage actions in an area that historically has been very litigious," Schiavoni said.
At this stage, Munter's decision is considered tentative because the parties in the case can still challenge the ruling. Under California procedural rules, the parties have 25 days to file objections. Unless Munter orders a hearing, the decision will become final after the last filings are submitted.
Recently, other states have taken moves to limit asbestos litigation.
In Pennsylvania, Philadelphia moved from the top spot on the American Tort Reform Association's 2011 list of "Judicial Hellholes" because of the implementation of a 15-point reform plan ATRA said leveled the playing field in the Complex Litigation Center. The number of asbestos cases on the CLCs docket soared in part because it was accepting claims from other jurisdictions. But the new rules eliminated mass tort cases, including asbestos cases, while limiting out-of-state filings.
Last year, Ohio became the first state to pass workers' compensation reform legislation requiring claimants to disclose information about asbestos bankruptcy trust cases before going to trial against companies for tort claims. Supporters said the legislation would prevent claimants from "double-dipping" when filing claims against companies not part of asbestos bankruptcy trusts.