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Port Auth. of N.Y. & N.J. v. Affiliated FM Ins. Co.

Citation: 33 ELR 20108
No. No. 01-2513, 311 F.3d 226/(3d Cir., 11/14/2002)

The court affirms a district court holding that a port authority failed to introduce evidence of physical loss or damage necessary to recover the expense of asbestos abatement at various buildings and structures under its first-party insurance policy. The authority's first-party insurance policies insure it for all "physical loss or damage" occurring during the policy period. The court holds that a physical loss or damage under the authority's policy occurs only if an actual release of asbestos fibers from asbestos-containing materials has resulted in contamination of the property such that its function is nearly eliminated or destroyed, the structure is made useless or uninhabitable, or there exists an imminent threat of release of a quantity of asbestos fibers that could cause such loss of utility. The court then holds that because the authority failed to produce evidence concerning the manifestation of an imminent threat of asbestos contamination, it has no viable claim for expenses under the first-party insurance policy. Although the port authority demonstrated that many of its structures used asbestos-containing substances, those buildings had continuous and uninterrupted usage for many years. The mere presence of asbestos or the general threat of its future release is not enough to survive summary judgment or to show a physical loss or damage to trigger coverage under a first-party policy.

Carlene V. McIntyre
Port Authority of New York and New Jersey
Law Department
One Madison Ave., 7th Fl., New York NY 10010
(212) 435-7000

Counsel for Appellees
Kenneth W. Erickson
Ropes & Gray
One International Place
Boston MA 02110
(617) 951-7000