No Liability Coverage Allocation for Manufacturers Who Continued Making Products with Asbestos After 1987 N.J. App. Ct. July 20, 2016

 

A New Jersey appellate court held that policyholders who continued to manufacture products containing asbestos after 1987 — when coverage for injuries arising from such products was no longer available — need not shoulder any portion of liability for injuries related to asbestos exposure from their products, so long as any portion of such exposure occurred prior to 1987.

The Bendix Corporation, predecessor of Honeywell International, Inc., manufactured and sold brake and clutch pads that contained asbestos. Honeywell has been sued in tens of thousands of actions asserting personal injuries and wrongful death from exposure to asbestos from Bendix pads. Honeywell and its insurers have been litigating their obligations with respect to such actions for the past 13 years. Two insurers, Travelers Casualty & Surety Company and St. Paul Fire and Marine Insurance Company, appeal an order holding, among other things, that Honeywell need not share in coverage allocations as if it were self-insured after 1987 because excess insurance for asbestos bodily injury claims was no longer available after 1987. The policies at issue were eight excess policies issued to Bendix between 1977 and 1983 by Travelers’ predecessor and two policies issued by St. Paul from 1968 to 1970.

Travelers argued that Honeywell had effectively self-insured between 1987 and 2001 by continuing to manufacture friction materials with asbestos, even though insurance coverage was no longer available for such products. Honeywell continued to manufacture friction products containing asbestos from 1987-2001 despite knowing of the risks associated with asbestos exposure and despite having the capability to produce an asbestos-free product. Honeywell contended that claims related to such products were covered by its pre-1987 policies so long as a claimant alleges injuries from exposure to a Bendix product before 1987, even if the injuries manifested after 1987.

The court sided with Honeywell. The court noted that New Jersey applies a continuous trigger theory of insurance coverage for exposure to asbestos. Under that theory, New Jersey distinguishes between times when a policyholder consciously decides not to buy available insurance for a period of time — when responsibility for loss will be allocated to the policyholder — and situations where no insurance was reasonably available for purchase. In the latter situation, no portion of liability is allocated to the uninsured period. Regardless of Honeywell’s knowledge of the danger or ability to produce an asbestos-free product, no insurance was available for Honeywell to purchase after 1987. Thus, for any injury that was at least partially due to exposure to Bendix’s product before 1987, no portion of the liability would be allocated to Honeywell.

Read the full decision here.

Leave a Reply

Next ArticleArgument That Plaintiff’s Counsel Misrepresented Return of Privileged Memo Unavailing; Defendant’s Own Actions Waived Privilege