Eagle-Picher Industries, Inc. v. Liberty Mutual Insurance

523 F. Supp. 110, 1981 U.S. Dist. LEXIS 9762
CourtDistrict Court, D. Massachusetts
DecidedAugust 14, 1981
DocketCiv. A. 78-2739-Z
StatusPublished
Cited by47 cases

This text of 523 F. Supp. 110 (Eagle-Picher Industries, Inc. v. Liberty Mutual Insurance) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eagle-Picher Industries, Inc. v. Liberty Mutual Insurance, 523 F. Supp. 110, 1981 U.S. Dist. LEXIS 9762 (D. Mass. 1981).

Opinion

MEMORANDUM OF DECISION

ZOBEL, District Judge.

This is a declaratory judgment action in which Eagle-Picher Industries, Inc. (“EaglePicher”) requests a declaration of the rights, liabilities and obligations of the parties to certain insurance contracts. The defendants are insurance companies which had provided Eagle-Picher with primary comprehensive general liability insurance and with first and second layer excess insurance during the years 1968-1979. The questions of interpretation arise because Eagle-Picher has been named as a defendant in approximately 5,500 lawsuits in which the plaintiffs allege that they contracted certain asbestos-related diseases as a result of contact with asbestos-containing products manufactured by Eagle-Picher between 1931 and 1971. The basic question the Court must determine is whether insurance coverage is triggered as of the time or times the claimant was exposed to the asbestos-containing product (“Exposure Theory”), or whether such coverage is triggered when the asbestos-related disease first manifests itself by discoverable and diagnosable signs or symptoms, typically as much as twenty years after the initial exposure (“Manifestation Theory”). Whichever insurance company was “on the risk” at what is determined to be the triggering time or times must provide coverage, including payment of damages and provision of legal defense. The Court’s interpretation of the policies will determine which insurance company or companies, if any, must defend against and pay any damages for the increasingly numerous underlying claims against Eagle-Picher. Plaintiff, Liberty Mutual Insurance Company and certain companies and underwriters in the London Market, known in these proceedings as the Bird Defendants 1 , espouse the manifestation theory. American Motorists Insurance Company (“American Motorists”) and certain other named members of the London Market, the so-called Froude Defendants 2 , maintain that only policies in effect at the time of exposure provide coverage.

This opinion constitutes both Findings of Fact and Conclusions of Law.

Prior to 1968 Eagle-Picher was uninsured for the underlying asbestosis and related claims. From January 1968 through 1978 Liberty Mutual provided primary insurance with varying limits. From June 1973 to 1979 plaintiff was covered in addition by, first one and later two layers of excess insurance.

*112 The coverage provided by each excess layer goes into effect only if the policy limits of the layer beneath become exhausted. This three-layer coverage was achieved through the issuance of many short-term policies, by each insurer, typically covering one year at a time. Appendix A provides a graphic representation of the coverages in effect during the relevant period.

In 1977 Liberty Mutual sent to EaglePicher a warning notice that the policy limits for 1974 and 1975 might be exhausted. Eagle-Picher forwarded this notice to American Motorists and the London Market. American Motorists acknowledged receipt of the notice but indicated disagreement with Liberty Mutual’s assignment of claims to policy periods and its handling of claims under the manifestation theory. By letter dated October 13, 1977 a New York law firm acting for the entire London Market sent a reservation of rights letter to Eagle-Picher concerning the underlying claims. The reservation of rights is based on the issue whether liability is to be determined under the manifestation or exposure theory. A genuine controversy exists between the parties with regard to the defendants’ duties and obligations under their respective policies in connection with the underlying asbestos related claims.

All defendants with interests adverse to those of Eagle-Picher are citizens of states or countries other than Ohio, the state of incorporation of Eagle-Picher and the state where its principal place of business is located.

The insurance policies at issue all contain “coverage” clauses defining in general terms the scope of the coverage. In addition, the policies provide definitions of relevant terms. All are “occurrence-based”, that is, coverage is provided for personal injury caused by an “occurrence” during the policy period. The policies, while quite similar, contain minor variations in language and punctuation which do not, however, affect the determination of the question presented so as to produce different results for different insurers. Before analyzing the policies, it is useful to lay out the relevant language.

1. Between January 1,1968 and January 1, 1978, Liberty Mutual provided the plaintiff with primary comprehensive general liability insurance. The fourteen separate policies contain no more than two variations of each relevant clause. With respect to coverage, one variation, found primarily in policies written during the early years, provides:

The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of. . .bodily injury. . .to which this policy applies, caused by an occurrence...

The second variation, found in policies covering January 1,1976 to January 1,1978, provides:

The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury due to asbestos exposure caused by an occurrence if the bodily injury is included within the products hazard. . .

The policies include two slightly different definitions of relevant terms. The first provides:

Bodily injury means bodily injury, sickness or disease sustained by any person. Occurrence means an accident, including continuous and repeated exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the insured.
The second provides:
Bodily injury means bodily injury, sickness or disease sustained by any person, which occurs during the policy period, including death at any time resulting therefrom.
Occurrence means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected or intended from the standpoint of the insured.

*113 2. From June 1, 1973 to October 1975 American Motorists provided the plaintiff with a first layer excess umbrella policy, containing the following coverage clause:

The Company agrees to indemnify the insured for all sums which the insured shall become obligated to pay as damages, by reason of liability. . . because of personal injury... caused by or arising out of an occurrence which takes place during the policy period anywhere in the world.

The policy also contains the following definitions:

Personal injury means (a) bodily injury, shock, sickness or disease (including death, mental anguish, and mental injury resulting therefrom); . . .
Occurrence

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Bluebook (online)
523 F. Supp. 110, 1981 U.S. Dist. LEXIS 9762, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eagle-picher-industries-inc-v-liberty-mutual-insurance-mad-1981.