Brandon D. Zeller

All articles by Brandon D. Zeller

 

Bankruptcy Court Vigilant of Attempts to Divert Insurance Proceeds to Legal Fees

WASHINGTON — On appeal from bankruptcy court, a federal district court denied Travelers’ motion to convert a debtor’s Chapter 11 reorganization into a Chapter 7 liquidation. In Travelers Indemnity Company v. Fraser’s Boiler Service, Inc. BHS (W.D. Wash. Aug. 20, 2018), the debtor, Fraser Boiler Service, Inc., was a former boiler repair company that operated for decades installing and maintaining equipment.  Fraser permanently ceased all operations and sold all of its business assets, leaving behind only insurance policies to pay the claims of asbestos…  

Channeling Injunction Protects Insurer Against Industrial Hygiene Claims

The United States Court of Appeals for the Third Circuit held that a channeling injunction entered in the Chapter 11 bankruptcy proceeding of W.R. Grace & Co. (Grace) protected one of its insurers, Continental Casualty Company and Transportation Insurance Company (CNA), from claims that CNA was independently liable for asbestos-related injuries because it was negligent in providing industrial hygiene services in conjunction with worker’s compensation and employer’s liability policies it issued to Grace. Mass-tort liability drove Grace into Chapter 11 bankruptcy reorganization. The Bankruptcy Code…  

Delaware Supreme Court Affirms No Excess Coverage in GM Asbestos Cases

DELAWARE — The Delaware Supreme Court affirmed that several excess policies issues to General Motors do not provide coverage for asbestos-related and environmental claims against the company.  GM purchased primary coverage from Royal Insurance Company for more than 50 years ending in 1993.  Royal handled asbestos claims made under the policies during that period.  The claims at issue were filed after 1993.  Following declaratory judgment actions filed in both Delaware and Michigan, GM and Royal reached a settlement that released all of Royal’s policies from…  

Unavailability Exception in Asbestos Coverage Dispute Affirmed by New Jersey Supreme Court

NEW JERSEY — The decision involved questions about the insurance coverage available to defendant Honeywell International, Inc. (Honeywell), a New Jersey based corporation, for thousands of bodily-injury claims premised on exposure to brake and clutch pads (friction products) containing asbestos.  The court first considered whether the law of New Jersey or Michigan (the headquarters location of Honeywell’s predecessor when the disputed excess insurance policies were issued) should control in the allocation of insurance liability among insurers for nationwide products-liability claims. Second, the court addressed whether…  

No Prejudgment Interest for Warren in Viking Pump Litigation

DELAWARE — In today’s episode of As Viking Pump Turns, a Delaware Superior Court denied Warren Pumps’ request for prejudgment interest on amounts owed by its excess insurers for asbestos claims in the long-running litigation.  In 2005, Viking Pump filed a declaratory judgment complaint against Liberty Mutual regarding coverage for asbestos claims under certain primary and umbrella policies.  In perhaps the high point of the litigation, the New York Court of Appeals in 2015 ruled that all sums allocation and vertical exhaustion applied to…  

Asbestos Claims Related to Operations Ceasing Prior to Coverage Dates of Insurance Policy Deplete Aggregate Limits

The Walter E. Campbell Company (WECCO) was a company that handled, sold, installed, and removed insulation materials containing asbestos. Since the mid-80s, WECCO was subjected to numerous lawsuits from individuals alleging damages due to asbestos exposure. WECCO is now defunct. Although many claims against WECCO remained pending, its insurers contended that they were no longer contractually obligated to defend or indemnify WECCO because their aggregate limits had been exhausted. WECCO responded by arguing that the insurers improperly allocated operations claims as completed operations claims. Unlike…  

Asbestos Cleanup Costs Covered Under Premise Pollution Liability Policy

MISSOURI — A federal district court in Missouri held that Illinois Union Insurance Company was obligated to defend and indemnify its insured, Sunflower Redevelopment, LLC, with regard to requests from a state environmental agency to investigate the possibility of contamination by asbestos and other pollutants at a site that Sunflower was remediating. Sunflower and the U.S. Army were subject to a consent order from the Kansas Department of Health and Environment (KDHE) requiring them to remediate contamination at a former army ammunition plant. In compliance…  

All-Sums Allocation Applied to Additional Insured Coverage for Wrongful-Death Claim Based on Asbestos Exposure

CALIFORNIA — Plaintiff Polar-Mohr Maschinenvertriebsgesellschaft (Polar-Mohr) was sued by claimants seeking damages for the alleged wrongful death of their father, a former service technician for Polar-Mohr machines who died from mesothelioma due to exposure to asbestos and/or asbestos-containing products.  Polar-Mohr sought coverage from Zurich American Insurance Company as an additional insured on a policy issued by Zurich to Heidelberg Eastern, which was Polar-Mohr’s only customer during the policy period.  The issues before the court were whether Zurich’s liability to Polar-Mohr would be based on pro-rata…  

Wisconsin Federal Court Denies Insurers’ Attempt to Consolidate Coverage Actions

WISCONSIN — A federal judge in Wisconsin denied several insurers’ request that it abstain from hearing claims against them for coverage in asbestos-related related suits against Eaton Corporation. Some of the underlying claims brought against Eaton were based on personal injuries from using products produced by a company Eaton acquired by merger, Cutler-Hammer, Inc. Each of the defendant insurers had, at some time, issued an excess liability insurance policy to Cutler-Hammer. Eaton has coverage actions pending against insurers in both Ohio and Wisconsin. The Ohio…  

California Bankruptcy Court Holds Coverage Action is Core Bankruptcy Proceeding

CFB Liquidating Corporation emerged from the Chapter 11 bankruptcy of Chicago Fire Brick Co. (CFB), a company that manufactured products containing asbestos. Asbestos-related claims overwhelmed the company, and the Plan of Reorganization that was confirmed in the bankruptcy proceedings essentially directs the Trustee to administer the company’s remaining assets to pay asbestos-related claims. CFB’s remaining assets included several insurance policies. While most of CFB’s insurers settled with the bankruptcy estate and made payments, Continental Casualty Company elected to file a proof of claim and negotiate…  

New York Appellate Court Won’t Take Insured’s Word in Asbestos Coverage Case

Duro Dyne National Corporation, Duro Dyne Corporation, and Duro Dyne Machine Corporation have been named as defendants in hundreds of lawsuits throughout the country in which the plaintiffs seek to recover damages for injuries allegedly sustained as result of exposure to asbestos contained in products manufactured and/or distributed by Duro Dyne. One of Duro Dyne’s insurers, North River, filed a lawsuit seeking a declaration that it had no duty to defend or indemnify Duro Dyne in the underlying lawsuits. Duro Dyne moved for summary judgment,…  

Asbestos Plaintiffs Too Late to Take Advantage of Expansive Maryland Coverage Ruling

A large group of asbestos plaintiffs failed to file claims seeking more expansive coverage within the applicable statute of limitations.  MCIC Inc. (formerly McCormick Asbestos Company, “MCIC”) sold and installed asbestos insulation products. By the early 1970s, it was clear that asbestos was hazardous, and MCIC ceased selling and installing asbestos-containing products in approximately 1973.  In the late 1980s, several law firms collectively filed several thousand lawsuits against MCIC asserting personal injury claims resulting from exposure to asbestos-containing products. The cases of 8,555 plaintiffs were…  

Connecticut Appeals Court Adopts Continuous Trigger and Unavailability Rule of Insurance Allocation

R.T. Vanderbilt Company, Inc., which formerly manufactured and sold industrial talc that purportedly contained asbestos, brought this action seeking, inter alia, a declaratory judgment to determine its rights and obligations, and those of approximately thirty defendant insurance companies, as to the costs of defending and indemnifying the plaintiff in thousands of underlying lawsuits brought against it in the past several decades that alleged personal injuries resulting from exposure to asbestos. In this 147-page decision, the court determined a multitude of issues related to allocation of…  

Reinsurer Not Automatically Bound to Follow Asbestos Settlement That May Have Been Targeted at Access to Reinsurance

Utica Mutual Insurance Company had issued multiple policies of insurance to Goulds Pumps. Goulds became the subject of thousands of asbestos bodily injury claims. Eventually, Utica reached a $325 million settlement with Goulds for payment under the various insurance policies on the asbestos claims. Utica then sought indemnity for portions of the settlement from its reinsurers, including a $35 million claim against Fireman’s Fund Insurance Company (FFIC). The court here ruled on several motions to eliminate various claims and defenses. Most notably, both parties had…  

Four Corners Rule Determines Employment Status in Coverage Case

Burns & Scalo Roofing Co. was the defendant in an underlying state court action brought by a former employee who had developed mesothelioma due to exposure to asbestos while employed by Burns & Scalo. Burns & Scalo sought defense and indemnity from National Union, which had issued occurrence-based policies to Burns & Scalo for a four-year period after the underlying plaintiff’s employment had ended. After initially denying coverage, National Union agreed to defend Burns & Scalo under a reservation of rights. National Union then filed…  

New York Federal Court Refuses to Apply Viking Pump Without First Receiving Briefs From Parties

Columbus McKinnon Corporation (CMCO) sued Travelers Indemnity Company and Liberty Mutual Insurance Company alleging that insurance policies issued to CMCO obligate them to defend and indemnify CMCO with respect to thousands of lawsuits filed against CMCO for personal injury allegedly caused by exposure to asbestos-containing products manufactured and sold by CMCO and its predecessors. CMCO sought leave to file an expedited motion seeking to compel Liberty Mutual to pay 100 percent of CMCO’s defense costs in the underlying lawsuits based on the New York Court…  

Sixth Circuit Applies Pro-Rata Allocation for Michigan, Allows Reimbursement

Indian Head acquired a gasket manufacturing company that had for some time produced gaskets containing asbestos and continued to manufacture and sell such gaskets for five years after the acquisition. Shortly after acquiring the manufacturing company, Indian Head purchased three consecutive liability insurance policies from Continental Casualty Company. Later, Indian Head was sued in thousands of lawsuits for asbestos-related injuries. The Continental policies had an exclusion precluding coverage for any liability assumed “under any contract or agreement” except for an “incidental contract,” defined as a…  

Ohio Appellate Court Applies Triggering-Event Theory of Occurrence, Annualization of Policy Limits in Asbestos Coverage Matter

The William Powell Company makes industrial valves. Some valves manufactured before 1987 contained asbestos. In 2001, Powell began receiving personal-injury claims emanating from asbestos exposures involving its products. Faced with potentially thousands of claims, Powell sought defense and indemnification under various insurance policies. At issue here were occurrence-based policies that were written by a predecessor to OneBeacon Insurance Company between 1955 and 1977. OneBeacon asked the court to define “occurrence” as used in the policies as Powell’s decision to manufacture valves containing asbestos without providing…  

Bankruptcy Injunction Extends to Debtor’s Insurers

W.R. Grace & Co. (Grace), a Chapter 11 bankruptcy debtor, at one time operated a vermiculite mine, and related mining activities released asbestos-containing dust into the atmosphere. It began facing asbestos-related lawsuits in the 1970s. Grace filed a voluntary Chapter 11 bankruptcy in 2001, and a plan of reorganization was confirmed in 2014. The plan created a trust for the payment of asbestos personal injury claims. As part of a settlement agreement, one of Grace’s liability, excess, and workers’ compensation insurers, Continental Casualty Company and…  

Pro Rata Allocation and Exposure Trigger Confirmed in New York Federal Court Decision for Insurers

Troy Belting & Supply Co. was named as a defendant in lawsuits alleging bodily injury caused by exposure to asbestos from products it manufactured. It became involved in a dispute with its insurers over coverage for the costs of settling such lawsuits. Pacific Employers provided coverage for Troy Belting from 1974 to 1984, and various Hartford Insurance Company entities provided coverage from 1984 to 1992. Pacific Employers and Hartford sought reimbursement from Troy Belting for cases where they paid 100 percent of the settlement costs…  

Delaware Justices: Asbestos Injury Triggers Coverage Continually from First Significant Exposure

The Delaware Supreme Court took up several issues in the ongoing dispute between plaintiffs, Viking Pump, Inc. and Warren Pumps, LLC, and various insurers who issued excess policies to Viking and Warren’s predecessor, Houdaille Industries, Inc. between 1972 and 1985 (the Excess Insurers). Houdaille, and later Viking and Warren, manufactured pumps containing asbestos, and a multitude of claims against Viking and Warren related to asbestos exposure have given rise to a lengthy dispute between Viking and Warren and their insurers. In the present decision, the…  

Court Rules Summary Judgment Not Appropriate Due to Ambiguity on How Non-Cumulation Clause Operated

Liberty Mutual Insurance Company issued successive annual insurance policies to the Fairbanks Company from January 1, 1974 to January 1, 1982. Liberty issued both comprehensive general liability and umbrella policies. Multiple lawsuits were filed in several jurisdictions against Fairbanks, alleging injuries due to exposure to asbestos, and this coverage litigation resulted. On March 21, 2016, the court ruled on Liberty’s motion for summary judgment, concluding that the policies were subject to pro rata allocation such that Liberty was only liable to indemnify Fairbanks for the…  

New York Court of Appeals Opts for “All Sums” Allocation in Asbestos Coverage Case

In a landmark ruling, the New York Court of Appeals held that “all sums” allocation and vertical exhaustion applied in a case involving coverage for injuries related to asbestos exposure. The court based its holding on the language of the insurance policies, which included non-cumulation clauses or non-cumulation and prior insurance provisions. The plaintiffs, Viking Pumps, Inc. and Warren Pumps, LLC acquired pump manufacturing businesses from Houdaille Industries in the 1980s. These acquisitions later subjected Viking and Warren to significant potential liability in connection with…  

Court Sides with Insurers; Rules Pro Rate Approach Applies on Liability Costs

The case involves two consolidated lawsuits — one from the federal district court for the Southern District of New York, and another from Georgia state court. The Georgia state court action was removed to federal court and then transferred to the Southern District of New York. This lawsuits concern insurance coverage for The Fairbanks Company for liability arising from asbestos-related personal injury actions. Prior to 1984, Fairbanks manufactured packings and gaskets that contained asbestos. Fairbanks entered into insurance policies with several insurers, including Liberty, between…  

Court Rules Insurer Has Duty to Pay Defense and Indemnification Costs of Asbestos Claims

Liberty Mutual had a duty to pay defense and indemnity costs for a variety of asbestos-related cases filed nationwide against its insured, York International Corporation, and York Corporation, the insured’s predecessor. Liberty Mutual had elected not to defend the underlying lawsuits or file a declaratory judgment action regarding coverage, and the underlying suits were settled by the insured. The insured then submitted the complaints in the underlying cases and invoices for defense and indemnity costs to Liberty Mutual. In this case, the court ruled on…  

Massachusetts Court Grants Defendants’ Motion to Dismiss in Case Where Plaintiff Sought Reimbursement for Litigation Expenses in Asbestos-Related Cases

The U.S. District Court for the District of Massachusetts ruled that the Massachusetts Insurers Insolvency Fund could not pierce the corporate veil or impose successor liability on a corporation that purchased the assets of another corporation, which was the subject of workplace injury claims based on exposure to asbestos and whose liability insurers had become insolvent. Beacon Sales Company, Inc. (BSC) sold nearly all of its assets to the defendant Beacon Sales Acquisition, Inc., (BSAI) a subsidiary of defendant Beacon Roofing Supply, Inc. (BRS), in…  

Fifth Circuit Rules Insurance Company Has No Duty to Defend After Primary Insurer Declared Insolvent

Canal Insurance Company was the excess and umbrella insurer of Montello, Inc., a manufacturer of oilfield drilling equipment that contained asbestos.  Montello had been sued by individuals claiming injuries as a result of exposure to asbestos in connection with its equipment. In 2003, Montello’s primary insurer, The Home Insurance Company, was declared insolvent by a New Hampshire court without having paid out any claims for bodily injury on Montello’s behalf. Thereafter, Canal filed suit for declaratory judgment that it had no duty to defend Montello…  

Court Applied Pennsylvania Law in Asbestos Coverage Case Based on Insured’s Residence

York Int’l Corp. v. Liberty Mut. Ins. Co., No. 1:10-CV-0692 (M.D. Pa. Oct. 13, 2015) This decision involves a dispute over whether Pennsylvania or New York law would apply to an insurer’s duty to defend and indemnify an insured for asbestos-related claims. Due to the passage of more than 50 years between the period covered by the relevant policies and the initiation of the lawsuit, no party with firsthand knowledge of the negotiation and consummation of the policies could be identified, and complete copies of…