The plaintiffs, seeking payment of judgments entered against a supplier of raw asbestos fiber to employer of the plaintiffs’ decedents under New York Insurance Law § 3420 and a declaration that insurance companies’ transfer of insurance funds to the supplier constituted fraudulent conveyances in violation of New York Debtor Creditor Law, filed several actions against defendant insurers. The defendants filed motions for summary judgment seeking dismissal, and the plaintiffs moved for summary judgment on New York Insurance Law § 3420 as to all defendants and on the Debtor and Creditor Law claim against Continental and London Insurance Companies.
In 1967, a subsidiary of Gulf and Western acquired a majority stake in the supplier of raw asbestos fiber, Hedman. On September 9, 1979, Hedman repurchased its stock from Gulf and Western. Hedman maintained insurance from Royal Insurance Co. of Canada and Commercial Union Insurance Co. of Canada from December 1963 to July 31, 1982. Aetna, the predecessor of Travelers, issued commercial general liability policies to Gulf Western from December 31, 1966 to January 1, 1980. One Beacon issued excess policies to Gulf and Western effective January 17, 1967 to January 17, 1970 and February 1, 1970 through 1973 with a 5 million dollar limit. Seaton issued an umbrella policy to Gulf and Western with a 20 million limit for each annual period effective February 1, 1973 through January 1, 1976. Harbor issued a policy covering $900,000 of a $1,000,000 occurrence effective January 1, 1976 through 1977. Harper and Generali covered the remaining $100,000 per 1 million for that period.
By agreement in 1993 Hedman’s insurers Royal Insurance Co. of Canada and Commercial Union Insurance Co. of Canada conceded $10,900,000 in coverage under their policies for asbestos claims, and in 2001, counsel updated payments and advised Hedman and Travelers that the primary and excess coverage had been exhausted, requiring Travelers to assume the defense of the unresolved claims. In February 2009, Travelers advised RMI, administrator for Seaton, and Continental that the Travelers primary policies for Gulf and Western for the 13 years that entity controlled Hedman would soon be exhausted and providing loss runs to the excess insurers. The excess insurers disputed the exhaustion of the Travelers policy following verdicts in asbestos personal injury cases. One Beacon, Seaton, Continental, and London, among the excess insurers, filed coverage actions which were resolved with payments of settlements which were distributed to Hedman’s creditors. Subsequently the plaintiffs, including Mineweaser, obtained default judgments against Hedman in personal injury actions, were awarded damages, and served demands for payment on Hedman and its insurers under New York Insurance Law § 3420. The defendants argued that their settlement agreements with Hedman regarding coverage precluded an action under New York Insurance Law § 3420, as Hedman had released the insurers from liability prior to these actions and there was no longer any coverage available, and § 3420 only permits the plaintiffs to “step into the shoes” of Hedman. Citing New York law, the magistrate recommended that summary judgment be granted to the plaintiffs on the § 3420 claim. The magistrate found on the basis of New York law that the plaintiffs as judgment creditors could not be divested of their rights by the settlements between Hedman and the insurers, as the plaintiffs’ rights against under § 3420 accrued at the time of the injury, and subsequent settlements between the tortfeasor/insured and insurance companies were not determinative of the plaintiffs’ rights.
The court, reviewing de novo the defendants objections to the Magistrates report and recommendations, granted the plaintiffs’ motion for summary judgment on the § 3420 claim, concurring with the magistrate that courts applying New York law have determined that insurance coverage for diseases caused by asbestos is triggered by an injury in fact which can be measured from the time of first exposure through manifestation of the disease, and that this accrual of the cause of action under § 3420 is distinct from the accrual of the underlying personal injury action. The court therefore granted summary judgment to the plaintiffs on the § 3420 claims, finding that the plaintiffs were entitled to recover their judgments from the excess insurers because the plaintiffs had sustained injury as contemplated under § 3420 during the life of the relevant policies and prior to the policy buybacks or settlements.