In April 1977, a few weeks before I began practicing law, senior claims executives of eighteen liability insurance companies met to discuss the insurance implications of asbestos bodily injury claims. A majority of those at the meeting concluded:
“. . . that coverage existed for each carrier throughout the period of time the asbestosis condition developed, i.e. from the first exposure through the discovery and diagnosis. The majority also contended that each carrier on risk during any part of that period could be fully responsible for the cost of defense and loss.”
Rather than acknowledge this conclusion in responding to their policyholders’ asbestos claims, the insurance industry chose instead to dispute coverage and to seek narrower interpretations of their policies in courts across the country. The insurers’ efforts to restrict coverage have largely failed ever since. Except for one early decision, Eagle-Picher Industries, Inc. v. Liberty Mut. Ins., 682 F.2d 12, 25 (1st Cir. 1982) cert. denied 460 U.S. 1028 (1983), those insurers seeking to limit coverage to the period in which an asbestos-related disease first became “manifest” lost time and time again. Instead, courts have routinely adopted approaches consistent with the conclusion of the April 1977 meeting. These courts adopted a “continuous injury” approach, which found coverage under all policies in effect from first exposure to manifestation, Keene Corp. v. Ins. Co. of North America, 667 F.2d 1034 (D.C. Cir. 1981) cert. denied 455 U.S. 1007 (1982), or an “injury-in-fact” approach, which in practice has led to essentially the same result as “continuous injury.” Armstrong World Ind. V. Aetna Cas. & Sur., 52 Cal. Rptr. 2d 702-03 (Cal. App. 1 Dist. 1996) pet for review denied ________. Far less often, courts adopted an “exposure-only” approach, which found coverage under all policies in effect during actual exposure, but not during the period after last exposure to manifestation. Ins. Co. of North America v. Forty-Eight Insulations, 633 F.2d 1212, 1218-20, clarified 657 F.2d 814 (6th Cir. 1980) cert. denied, 454 U.S. 1109 (1981).
The insurers also sought rulings that, contrary to the majority view of the April 1977 meeting, would permit them to allocate portions of each claim to their policyholders by pro-rating liabilities to uninsured periods. The insurers had more success with this effort, but still failed to achieve their goal more often than not. Most courts, particularly state courts, have adopted the “all-sums approach” in concluding that any policy triggered by a claim is obligated to pay the entire amount of the claim up to the limits of the policy, subject to obtaining contribution from other insurers whose policies are also triggered by the same claim. [Armstrong, Keene] Fewer courts adopted the pro-rata approach, which limits each policy’s liability to a pro-rata share. [Forty-Eight] Even then, some courts have rejected proration to periods when insurance for asbestos was not available. Owens-Illinois, Inc. v. United Ins. Co., 650 A.2d 924, 992-995 (N.J. 1994).
Judge Brown’s trial court ruling in Armstrong in 1987 was the fourteenth court to address coverage for asbestos claims. Many thought, including perhaps Judge Brown himself, that the California case would bring an end to asbestos coverage litigation. The case—one of the largest in the history of American jurisprudence—gave more than 50 American and London market insurers every opportunity to prove their cases against coverage. The parties produced hundreds of thousands of documents and conducted over a thousand depositions. They engaged in a fifteen-month trial during which they developed a comprehensive record on the medical aspects of asbestos-related injuries, on the drafting history of the standard form general liability policies used by the insurance industry since the 1940s and sold to thousands of policyholders, and on the course of dealings between policyholders and their carriers. Why continue litigating after such an exhaustive (and exhausting) effort? But another 30 years have passed since Judge Brown’s decision, and over 40 since that insurance industry meeting in 1977, and yet policyholders are still forced to litigate to secure the coverage that insurers have long known that they promised to provide.
The latest round of decisions continue the 40 year trend of largely favoring policyholders. In 2016, on a question certified to it by the Delaware Court of Chancery, the New York Court of Appeals adopted the “all sums” approach for policies containing non-cumulation or prior insurance clauses, thus undercutting the generally held view that New York was a pro-rata state. In re Viking Pump, Inc., 27 N.Y. 3d 244 (N.Y. Ct. App 2016). [The Delaware trial court also rejected the insurers efforts to relitigate the medical evidence supporting a continuous injury trigger.] In March 2017, the appellate court of Connecticut adopted a continuous injury trigger, rejecting the insurers’ proffered medical evidence, and ruled that Connecticut’s previously-established pro-rata rule did not require pro-ration to periods after 1985 in which insurance for asbestos claims was unavailable. R.T. Vanderbilt Co., Inc. v. Hartford Acc & Ind. Co., 171 Conn. App. 61 (2017). In August, a California superior court, considering both California and New York law, also rejected the insurers’ efforts to relitigate the medical evidence and reaffirmed the continuous injury trigger. Cannon Electric, Inc. v. Ace Property & Cas Co., slip op no. BC 290354 (Cal. Sup. LA Cty, Aug. 17, 2017). It also followed Armstrong and Viking Pump in applying the “all-sums” rule. Finally, in October, a Missouri Court of Appeals was the latest court to adopt the “all sums” approach, based on the plain meaning of the policy. Nooter Corp. v. Allianz Underwriters Ins. Co., slip op no. ED 103835, Mo. Ct of App. Oct. 3, 2017). The trial court’s decision rejecting the insurers’ medical evidence and adopting a continuous injury trigger was not appealed.
It appears that many insurers have not learned much from this forty year experience, and have been doomed to repeat their failures. As I wrote 30 years ago:
“forcing each policyholder to relitigate issues already resolved against the insurance industry in other coverage litigation inevitably backfires. In the California case, some carriers continued to press the manifestation position even though it had been rejected in twelve of the thirteen previous asbestos coverage decisions and had been adopted in the thirteenth case in large part because the policyholder sought that result. Carriers gain little, from either a legal or business perspective, by continuing to argue a point so clearly rejected by so many courts . . . the carriers who persisted to the bitter end in California paid a heavy cost in legal fees, in ultimate liability, and in credibility in and out of court — because they ignored reality. The carriers should ask themselves whether they want to look back ten years from now only to find that they learned nothing from their experience with asbestos claims and that they repeated their mistakes in other coverage litigation.” Heintz, John, Lessons from the Asbestos Insurance Wars, Business Insurance, ______, 1987.
After 30 more years of fighting, it is clear that, to borrow from the Eagles, the insurers can “stab it with their steely knives, but they just can’t kill the beast.”