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Guaranty Nat'l Ins. Co. v. Azrock Indus. Inc.

Citation: 30 ELR 20389
No. No. 98-21031, 205 F.3d 253/(5th Cir., 03/02/2000)

The court holds that an insurer has a duty to indemnify an asbestos tile manufacturer for underlying asbestos-related personal injury claims that were triggered during the one-year commercial general liability policy period. The district court concluded that because none of the personal injury complaints became manifest during the policy period, the insurer had no duty to defend the claims and no duty to indemnify the manufacturer in the underlying claims.

The court first holds that the policy provisions are susceptible to more than one reasonable interpretation in the progressive disease context and, therefore, are ambiguous as a matter of law. Consequently, under Texas law, the court will resolve the ambiguities in the manufacturer's favor. The court then holds that it agrees with the district court's determination that "occurrence during the policy period" requires that the actual "injury," not merely the negligent act or omission that causes the injury, must happen during the policy period. The court, however, declines to apply the "manifestation theory" to trigger coverage on the instant facts. Cumulative disease cases are different from the ordinary accident or disease situation. Moreover, the court declines to adopt a version of the manifestation theory that equates "injury" with "diagnosis." No doctor would say that asbestosis occurred when it was discovered. The district court, however, was correct in applying the manifestation theory to trigger coverage for an underlying property damage claim under Texas law. The court then holds that it will apply the "exposure theory," which triggers coverage at the time of initial exposure to the injury-causing agency. On remand, therefore, the district court must determine which of the underlying complaints allege exposure to asbestos during the policy period.

Counsel for Plaintiff
Christopher W. Martin
Bracewell & Patterson
South Tower Pennzoil Pl.
711 Louisiana St., Ste. 2900, Houston TX 77002
(713) 223-2900

Counsel for Defendant
Reagan M. Brown
Fulbright & Jaworski
1301 McKinney St., Ste. 5100, Houston TX 77010
(713) 651-5151

Before Stewart, J.