Keene Corp. v. Insurance Co. of North America

Nos. 81-1179; -1180; -1181; -1182 (D.C. Cir. October 1, 1981)

ELR Digest

The D.C. Circuit rules that a company that manufactured asbestos from 1948 to 1972 and was insured under various policies from 1961 to 1980 is protected against liability in any products liability action if either the victim's initial exposure to asbestos or manifestation of an asbestos-related disease occurred during the period of the manufacturer's insurance coverage, and that each insurer may be jointly and severally liable in full for such personal injuries. Keene Corp., a codefendant in thousands of lawsuits alleging injury caused by exposure to Keene's asbestos products, carried comprehensive general liability insurance policies issued over a 20-year period by four different insurers. Keene sought a determination of the extent to which each policy covers its liability for asbestos-related diseases. Initially, the court holds that the case is justiciable since the interpretation of the insurance contracts at issue presents controversy that can be specifically resolved by the court. Turning to the merits, the court rules that inhalation exposure, exposure in residence, and manifestation all trigger coverage under the insurance policies. Keene's reasonable expectations of certainty and protection with respect to future liability for asbestos-related diseases would be undermined if either the exposure to asbestos or the manifestation of the asbestos-related disease were the sole trigger of coverage. The court therefore interprets the term "bodily injury" within the meaning of the policies as any part of the injurious process that begins with inhalation exposure and ends with manifestation of disease. Next the court rules that once an insurer's coverage is triggered, the insurer is liable to Keene in full for Keene's liability up to its policy limits but subject to the "other insurance" provisions in the policy that govern the allocation of liability when more than one policy covers an injury. Furthermore, prorating insurance obligations to Keene for the years in which it was and was not insured would violate Keene's reasonable expectation of and right to freedom from all liability for asbestos-related diseases, unless such a disease was known or knowable by Keene at the time it purchased an insurance policy. In addition, the court rules that each insurer is fully liable to Keene for its defense costs since each is fully liable to Keene for indemnification. A trial court may resolve both the underlying tort dispute and the insurance contract dispute together, provided such a procedure does not disrupt the tort victim's suit and does not impose undue inconvenience on the victim. A concurring judge would distribute the ultimate financial responsibility on a pro rata basis among the various insurers on line during the risk period and consider Keene a self-insurer for the years when it failed to take out any insurance.

The full text of this opinion is available from ELR (40 pp. $5.50, ELR Order No. C-1265).

Counsel for Keene Corp.
Eugene R. Anderson, Jerold Oshinsky
Anderson, Russell, Kill & Olick
Rockefeller Ctr., 630 5th Ave., New York NY 10020
(212) 397-9700

Harold D. Murry
Clifford & Warnke
815 Connecticut Ave. NW, Washington DC 20006
(202) 828-4200

Counsel for Aetna Casualty & Surety Co.
John F. Mahoney Jr.
Pledger & Mahoney
925 Washington Bldg., 15th St. & N.Y. Ave. NW, Washington, DC 20005
(202) 347-6161

Counsel for Hartford Accident & Indemnity Co.
John P. Arness, David J. Hensler, Elliott M. Mincberg
Hogan & Hartson
815 Connecticut Ave. NW, Washington DC 20006
(202) 331-4500

Counsel for Insurance Co. of N. America
Michael R. Gallagher, Dennis M. Flannery, John Payton
wilmer, Cutler & Pickering
1666 K St. NW, Washington DC 20006
(202) 872-6000

Counsel for Liberty Mutual Insurance Co.
Gerald V. Weigle Jr.
Dinsmore, Shohl, Coates & Deupree
2100 Fountain Sq. Plaza, Cincinnati OH 45202
(513) 621-6747

Bazelon, J.

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]