Document 4aMz9XQBZezvjpEXqqNdY49BV

e MO*0AN M(iM SPttlVOOCl JAM|| L VlNCKNt J. CIAC<N N'kL'AM f. RBART NORMAN s. RAAPP RlCMAA J. SAOOLAtO RiCMAR (. ARVIOSON JOHN SCOTT OONINOTON JOHN I. LISOWMI LLOTT ARAt/TVN H.j. ONir N.T N.J. SAAR N.J. S PA. SARS* MORGAN. MELHUISH. MONAGHAN fit SPIELVOGEL. (JACM 8CMNEI0CR KXNIIDCR CMNIIOCR *CMNtlDCA MORGAN 10-1 ) COUNSELLORS AT LAW 301 S. Livingston Avenue Livingston, New Jersey 07039 (301) 884-2S00 NEW YORK Office MORGAN. MELHUIRM. MONAOMAN METER 2 WORLD TRADE CENTER SUITE 1844 NEW YORK. NEW YORK 10048 (31 31 838- 8800 AlCMAR TONIOLO PAUL A. fRIPODO 'SANPOA avi karian CANA* A. kCAOC WILUAM 4. SALMON JOHN A. PARKCR aathlckn P. MOAN LlSf CA s. OOLOSLAtr* AANDV D. ROTCL JAMBS OS1S ONALO M. CARSON** THOMAS . LTNCM JOHN A. TOSIASOH* AtCHAA M. O'MCAAA MAnMIW i. CONNANAH NAN SANAA October 28, 1980 NOV 31980 Gentlemen: - CONSUMER TECHNICAL AFFAIRS The United States Sixth Circuit Court of Appeals has decided IMA v. Forty-Eight Insulations, Inc. Each of the carriers who provided -liability insurance to Forty-Eight Insulations issued an occurrence contract, and the problem faced by the court was which policies applied to asbestosis claims. The court in a preface states that in discussing liability it will be discussing asbestosis. not lung cancer or mesothelioma. The court states that it, in coming to its conclusions, will *fl!1nw the law H-H-tmMs pr'ft J^rr^y, the states which control the applicable contracts since all of the policies were issued in Illinois, except the Liberty Mutual which was issued in Mew Jersey. INA and other carriers adopted a manifestation theory. That is when the symptoms of the condition became obvious, coverage attaches. The other carriers adopted the -exposure theory (actually there is more than one exposure theory advanced by the different insurance companies). Judge Keith for the majority states that in each case a Hearing could be held to determine at which point the build up of asbestos resulted in the body's defenses being overwhelmed and at that point asbestosis could truly be said to occur. From then on all companies who insured the manufacturer would be treated as being on the risk. The court rejects this theory for practical reasons such as cost and states that there is a need to arrive at an "administratively manacable lnt-.arproaiiii->n the insuranbe policies.'' 8002 0725 SCF-ALLF-08290 5? PRODUCED BY FORD '"'N The court finds that cumulative disease cases are different from ordinary accidents or diseases; that the underlying theory of tort liability is that the asbestos manufacturers continually fall to warn the asbestos workers and therefore continuous breathing of asbestos particles allowed asbestosis to progress to the"point of injury or death; that the contracting parties to the insurance policies would expect coverage to parellel the theory of liability. The court affirmed the decision below that injury occurs and coverage attaches upon the inhalation of asbestos fibers during the policy period. If three carriers were on the risk for three years each during a nine year period of exposure, each insurer would be liable for a 1/3 pro rata share of the costs. As to the obligation of Forty-Eight, to indemnify for the years that, it had no insurance and as to the proration of the costs of defense the court held that proration should apply both to indemnity and expenses. ' " As to those years'in which'avplaintiff was not exposed to the product of Forty-Eight the oongation will be on the insurance carrier to show that no exposure to asbestos manufactured by its insured took place during those years. The court concedes that its solution creates problems with "stacking". but concludes that this problem is caused by the insurance industry which adopted a standard policy which is inadequate to deal with the problems of asbestos. In a dissent Judge Merritt adopts the rule that a carrier's coverage should begin with the discoverability stage and arbitrarily selectslEen years from the date ot tne first exposure. There seems to be little legal support for the position of Judge Aerritt. Very urs. HGM:scp gan 8002 0726 . .. PRODUCED BY FORD