Document NGapVrKxozk53n3yv1jmeKQ1p

. pijUNTiFFs*.isxiin9rr EXPOSURE THEORY APPLIED IN ASBESTOSIS CASES In Insurance Co. of North America v. Forty-Eight In sulations. Inc..' a declaratory judgment was sought by an insurance carrier against its former insured (FortyEight) and four other insurance carriers to determine which carrier had the duty to defend or indemnify Forty-Eight. In the underlying actions, construction workers claim to have suffered injury or death from asbestoscaused lung diseases as a result of being exposed to Forty-Eight's asbestos-containing products from a few to up to 48 years. Although the particular facts are complex, it is sufficient to say that, over the years, Forty-Eight was insured by at least five carriers who, sometime after 1955. each stood as a primary. For prior years. Forty-Eight was uninsured. The controversy centers around when coverage arises. Is it at the time of exposure to the asbestos dust! Or is it when a lung disease is manifested? After boiling down the policy language in the host of policies used within the period, the court stated that in each policy the insurer has agreed to pay on behalf of the insured such damages as are determined be cause of "bodily injury" caused by an "occurrence" during the policy period. "Bodily injury" includes in jury, sickness and disease.' "Occurrence" includes a continuous or repeated exposure to conditions which result in bodily injury.1 Most of the carriers contended that, in lawsuits alleging lung disease, coverage is pro vided by Forty-Eight's insurer on the date on which the condition became known or should have become known to the plaintiff or the date on which the plaintiff's condition was medically diagnosed, whichever comes first. The insurers argued that, al though there is tissue damage long before manifesta tion. a person cannot be considered injured or dis eased until symptoms are noticeable or a diagnosis is made. They pointed out that exposure is not necessar ily related to injury. The correlation between the onset or progression of the disease with specific incidents, the extent of damage at any particular date, or the time at which bodily function begins to be impaired cannot be determined with any accuracy. But, Forty-Eight and one Insurer contended that the liability policies are "occurrence" or "accident" policies, not "discovery" or "claims made" policies. They pointed out that tne uncontroverted medical evi dence indicates that the tissue damage occurs shortly after inhalation. The asbestos-caused diseases involve 1 _ FSupp__ Civ Action No 7.71654 (ED Mich May 4, t97BI. The "occurrence" and "duty to defend" aspects of this decision are considered in Houser & Cordon. Practical Considerations in De termining the Duty to Defend, in DRI monograph, KsuRtas Duty to Diiisd at 50-51 (Vol 1978 No }. May 19781. 1 for the sake of accuracy. H should be noied that (based on the court's synopsis! many oif the INA policies referred only to "sick ness and disease" 1 Again, for the sake of accuracy (and again based on the court's synopsis) it should be noted that the INA policies twith one pos sible encepfionl did not include this definition. The "repeated e>posure" language applied to property damage only. 130 cumulative minute injuries and are progressive, con stituting a "continuing tort." All insurers on the risk from the time of alleged initial exposure through man ifestation, they contended, are jointly and severally ob ligated to defend and to indemnify Forty-Eight if liabil ity is found. The court held that the exposure theory applied.* One reason given for the holding was that some insur ers did not begin to espouse the manifestation theory until after Bore/ v. Fiberboard Paper Products.* BoreI held that all manufacturers of asbestos products to which a plaintiff was exposed were jointly and sever ally liable. The shift from an exposure theory, the court found, was instructive on how the parties them selves had interpreted the contracts. Second, the court found, the evidence established that each tiny deposit of scar-like tissue from the fibers causes injury to the lung; each deposit resulted in an occurrence, the pat tern constituting a continuing tort. The court noted that a plaintiff must show exposure to the asbestos products of an asbestos manufacturer and the existence of disease in order to make out a prima facie case of injury. The inability to fix the exact time when each injury occurred does not preclude liability, where such injuries are cumulative and pro gressive, and cannot be apportioned among given points or periods of time. By being on the risk during an indivisible, injurious process, each insurer is jointly and severally liable to defend and indemnify. Any other theory of coverage, the court held, would render Forty-Eight's insurance coverage illusory. The court reviewed the implications of adopting the exposure theory. It concluded that, since the insurers covered Forty-Eight for differing periods, the obligation to indemnify should be apportioned on the basis of the relative lengths of their respective coverage periods. But no insurer, the court said, should be li able in any one case to indemnify Forty-Eight for judgment liability for more than the highest single yearly limit in a policy that existed during the period of the claimants' exposures for which judgment was obtained. The court expressed confidence that when other questions arise, insurers would resolve them, ex ercising their settlement and compromise skills. Fearing unequal treatment from a rule that would require the insurer on the risk at the time suit was brought to defend, the court opted for a rule that made the duty to defend coextensive with the duty to indemnify, with an apportionment of the defense costs. This includes Forty-Eight's responsibility to bear costs in direct proportion to the years it was unin sured. The triggering mechanism will be the dates of The court took a different view when considering the statute of limitations. It is at the time an asbestos-caused disease manifests itself in a way that implicates a causal relationship to the man. ufactured product that the public interest in limiting the time for asserting a claim attaches and it is then that the statute of limrtalions begins to run. (Slip opinion. Page 12.) * 49J F2d 1076 IS Cu 107SI 8002-1040 HFM -010130 SCF-ALLF-07340 pRonnrpn w coon exposure to asbestos alleged in the complaint. If more than one insurer was on the risk during the dates or period alleged, their obligation to assume the defense will be joint and severalT K no specific dates are al leged, then the insurer providing coverage on the date of suit must assume the defense. Under this analysis Forty-Eight would be treated as an insurer for the years it was, or will be, without insurance. _ There are several aspects of this case worthy of note. First, each insurer stood in turn as a primary as the exposure progressed. Thus, issues concerning primary-excess, other insurance and even stacking, al though briefly mentioned in the case, do not arise. Second, the case deals with the manufacture of a product alleged to produce the disease, a point the court relied on when distinguishing this case from one in which a suit was brought against the manufacturer of a respirator under the claim that the use of a defec tive respirator caused the asbestos worker's asbestosis. There, the manifestation theory was held to apply.* The court also distinguished this case from those workers' compensation cases in which the manifesta tion theory has been applied, reasoning that Congress had altered the common law.' Lastly, the resolution of the defense costs issue can be distinguished from a situation in which two insurers insure the identical risk and both policies provide for the furnishing of a de fense. It has been held that, absent a contractual rela tionship, the insurer which undertakes the defense cannot require contribution from the other for defense costs where the other denies liability and refuses to defends Porter v.'American Optical. _ FSupp__ Civ Action No. 75-2202 . (ED U November .21,1977) ' General Dynamic* Corp. v. Benefits Review Board. S6S F2d 208 (2 Cir 2977) (longshoremen's and Harbor Workers' Compensa tion Act) .. ' . ' See, Sloan Cento. Co., Inc. v. Central Nafl Ins. Co. o( Omaha. 216 $E2d 618 (SC 1977) DRI WELCOMES NEW MEMBERS CORPORATE ANTHONY AGENCY, INC., Tuc son, AZ; CANADIAN INST. OF CHARTERED ACCOUNTANTS, To ronto, Ontario, CANADA; PACIFIC MUTUAL LIFE INSURANCE, New port Beach, CA; TRANSPORT AD JUSTMENT SERVICE, Murrysville, PA; VIKING INSURANCE COM PANY OF WISCONSIN, Madison, Wl INDIVIDUAL J. DAVID ANDREWS, Seattle, WA; JOHN F. ASLIN, Seattle, WA; JOSEPH H. BADGEWICK, Rutland, VT; LAWRENCE A. BENNETT, San Francisco, CA; PETER M. BLAUVELT, Rochester, NY; THOMAS R. BRETT, Tulsa, OK; ROBERT M. BROWN, San Fran cisco, CA; CAROLYN M. CARPEL, Cleveland, OH; JOHN J. CARllNO, Boston, MA; FRANK LOUIS CARRABA, Houston, TX; WAL LACE A. CHRISTENSEN, Washing ton, DC; MICHAEL B. CLAPP, Bur lington, VT: JOE W. CONTRERAS, Phoenix, AZ; BRIAN CRAWFORD, Monroe, LA; CHARLES W. DAVIS, Bluefield, WV; FRED L. DAVIS, JR.; Parkersburg, WV; ROBERT V. DEWEY, JR., Peoria, 1L; EDWARD L. DONNELLAN, Springfield, MA; CHARLES A. DUNNAGAN, An chorage, AK; JAMES C. EASTMAN, Washington, DC; EDWARD I. ElLAND, Logan, WV; ROBERT L. ELLIS, Arlington, VA; WOOTEN EPES, JR., Helena, AR; NORMAN K. FENSTERMAKER, Huntington, WV; DANIEL C. FLANNERY, Wilkes-Barre, PA; MORTON G. FORBES, Savannah, CA; MICHAEL S. FRANCIS, New Martinsville, WV; HENRY G. GARRARD III, Athens, GA; RICHARD E. GRIFFIN, Crossett, AR; STEVE J. HAND- LOVICS, Cleveland, OH; JAMES M. HEFFLER, Washington, DC; PAMELA L. HEMMINGER, Los Angeles, CA; SAMUEL E. HOOPER, Houston, TX; WILLIAM V. HOYLE, Newport News, VA; FRANK R. KENNEDY. Denver, CO; D. j. LaBREC, El Paso, TX; FRE DERICK J. LEWIS, Memphis, TN; M. BYRON LEWIS, Phoenix, AZ; ROBERT H. MARTIN, Southfield, Ml; STEPHEN G. MORRISON, Columbia, SC; R. KEMP MORTON, Huntington, WV; NICHOLAS S. ' McCONNELL, Washington, DC; J. ROBERT McGROARTY, Deptford, NJ; WILLIAM P. NEWKIRK, Knox ville, TN; WILLIAM WARD NEW TON, Lyons, CA; JOHN C. PALMER IV, Charleston, WV; AL BERT H. PARNELL, Atlanta, CA; ERNEST J. PHILIPP, Milwaukee. Wl; STANLEY A. PROKOP, Detroit, Ml; WALTER P. ROBERTSON, Junction City, KS; JOHN C. ROSS, JR., El Paso, TX; JAMES M. ROY, JR., Springdale, AR; WILLIAM R. SCANLAN, Washington, DC; LAURENCE T. SCOTT, Washing, ton, DC, ELMER F. SLOVACEK, Crystal Lake, IL; LEE SMITH, Dal las, TX; ROBERT SPRAGENS, JR.. Lebanon, KY; FREDERICK P. STAMP, JR., Wheeling, WV; OSCAR DAVILA SULIVERES, Old San Juan, PR; SHAUN S. SULLI VAN, New Haven, CT; EVONNE W. J. TOLBERT, New York, NY; RICHARD W. TURNER, Washing ton, ex:,- MICHAEL T. VARN, Cor don, NE; DAVID B. WALLER, Washington, DC; CHARLES E. WEAVER, Denver, CO; IOHN F. WOOD, JR., Huntington, WV; FRED ZIMRING, Dallas, TX NEW BRIEF AVAILABLE) The DRI Brief Bulk hu brief* la the wee of Chicago, B. 1. v. Pacific B. B. v. Btdiktr (dieeueeed on pete 126 of thie i**ue), In which the U. & Supreme Court (rented certiorari Issue* include defendant's right to eetnbluh imped of income taxee on projected future leet wages. Brief* are available to DRI member* for 620 handling fee. Request Caa* FOa 78-86. . ) 19 FTD (July, 1978) 8002-1041 131 I J HFM -010131 pRODHCFn bv rnon