Document km1aXNGZoBXpD46dmyDX4orRD

Vol. 15, #8 MEALEY'S LITIGATION REPORT: Asbestos May 19, 2000 Bloomington, Ind. Owens Corning is repre sented by Glen E. Amundsen and Michael Resis of O'Hagan, Smith & Amundsen in Chicago. A.P. Green is represented by Michael Drumke of Segal, McCambridge, Singer & Mahoney in Chicago. Springmann is repre sented by Cathy A. Stephens-Molchin in Mapleton, 111. Pa. Judge Finds `Unwarranted,' `Deceptive' Discovery Practices PHILADELPHIA -- An insurer's pro hac vice counsel was removed from General Refrac tories Co.'s (GRC) bad faith action April 20 by a Philadelphia judge who also ordered the carrier to pay GRC and the City of Philadel phia for time and costs due to its conduct during discovery (General Refractories Co.. et al. v. Fireman's Fund Insurance Co.. No. 1499, Pa. Common Pleas, Phila. Co.). (Memorandum Opinion available. Document #03-000516-106. 13 pages.) GRC, a defendant in thousands of asbestos exposure bodily injury suits, filed this action against Fireman's Fund Insurance Co. for breach of contract, breach of fiduciary duty and bad faith. GRC moved for sanctions against Fireman's Fund, asserting that the insurer's central rep resentative (Mr. West) lied under oath at a deposition in stating that certain documents did not exist. GRC maintained that Fireman's Fund pro hac vice counsel knew the testimo ny was perjurious, did not correct the testi mony and actively concealed the documents. The existence of the notes was acknowledged after Fireman's Fund counsel used the hid den documents during a subsequent deposi tion of GRC's principal representative, "Initially presented along with a hundred other motions on other cases in Discovery Court, this Court heard oral argument over a four day period, reviewed voluminous fil ings, memoranda, appendices and exhibits and has determined that the defendant's conduct in concealing the West computer records and numerous other highly significant documents was intentional, inexcusable, and warrant severe sanctions," the court held. `Stonewalling, Deception' Reviewing the case's discovery history. Judge Mark I. Bernstein found "a clear pattern of delay, stonewalling, deception, obfuscation and pretense. Defendant intentionally withheld critical documents, ignored Court orders, permitted false testimony at depositions and misrepresented facts to opposing counsel and the Court. The defendant, through its em ployees, its house counsel, and its engaged litigation counsel participated in an intentional campaign to hide critical facts and documents. At every stage of discovery, reasonable and relevant requests have been met by incom plete responses, unreasonable objections, un founded claims of privilege and intentional ly incomplete 'privilege' logs. Whenever plain tiff sought Court intervention additional doc uments were 'found', 'voluntarily produced' and the privilege log expanded. Finally, de fendant found hundreds of additional docu ments and submitted a box of documents entitled 'J. Richard West, Attorney File Sub mitted Under Seal For Review In-Camera With Privilege Log Pursuant To Court Order Dat ed December 23, 1999.' It is conspicuously odd in character." The court determined that no privileged at torney-client relationship existed and reject ed work product privilege arguments. "Concerned with protecting its own funds, to the detriment of its insured, in a conscious effort to avoid this very claim of bad faith, defendant attempted to use counsel to con struct a 'privilege' wall against discovery of the true nature of their decision making. This was no client attorney relationship. Mr. West is an employee of the defendant acting not as counsel but as an adjuster with a law de gree. There is no privileged relationship." The insurer's conduct constituted waiver of all right to assert attorney-client or work prod uct privileges as to Mr. West, according to Judge Bernstein, who added that numerous probative documents, on which no good faith claim of privilege can be asserted, are still hidden in West's files and are discoverable. Vol. 15, #8 MEALEY'S LITIGATION REPORT: Asbestos May 19, 2000 While denying the requested sanction of judg ment for GRC, the court ordered removal of the insurer's pro hac vice counsel, ordered that Fireman's Fund pay GRC $126,897.81 for time and costs expended and the same amount to the City of Philadelphia for "unwarrant ed, obstreperous and deceptive conduct in discovery." GRC is represented by John N. Ellison and Timothy P. Law of Anderson Kill & Olick of Philadelphia. Proration By Months Increases Insurer's Reimbursement Of Settlement MILWAUKEE -- A federal judge has amended a prior ruling to prorate liability by months on the risk, increasing the amount an insurer is to be reimbursed for payment of an un derlying settlement agreement CSybron Tran sition Corp.. et al. v. Security Insurance Com pany of Flartford. No. 92-C-779, E.D. Wis.; See 3/21/97, Page 16). Decision and Order available. Document #03000516-105. 34 pages.) Sybron and Kerr Manufacturing Corp. seek a declaration that Security Insurance Company of Hartford is liable for all or most of a $1.3 million settlement made to the survivors of Dr. Alan Press, who died from mesotheloma caused by his exposure in dental school to asbestos manufactured by Kerr. The Press action was settled in 1992 for $1.3 million, with Security Insurance Co., Hartford Fire Insurance Co. and Sybron contributing to the settlement. Security and Hartford paid $500,000; Sybron paid $300,000. When Hart ford was dismissed from the action pursuant to prior court rulings, Sybron paid Hartford back its $500,000 contribution. In an August 1999 ruling, the court found the injury occurred over 10 of 19 years at issue and prorated the $1.3 million settlement amount over all 10 triggered years. Dividing the $1.3 million by 10 years, the court found three Security policies triggered for a total of $390,000. Because Security has paid $500,000 toward the settlement, it was entitled to judg ment on its counterclaim seeking refund of any overpayment in the amount of $110,000. Judgment was entered in favor of the insureds for $390,000 on their claim; in favor of Secu rity for $110,000 on its counterclaim for re imbursement of the $500,000 it paid toward the Press settlement while reserving its right to contest liability; and in favor of plaintiffs on Security's counterclaim for reimbursement of defense costs. The parties moved to alter or amend the judgment. Security's Motion Security maintained that the court erred by treating partial years of injury or coverage the same as full years when prorating the settle ment amount. U.S. Judge Lynn Adelman agreed with Security that her final decision treats Security as if it had insured Sybron for the full year in 1971 and lets Sybron off the hook for another insurer's period. The judge held, upon reconsideration, that Security is to be allocated only 1/12 of the portion of the $1.3 million Press settlement allocated to 1971. Another review of pertinent case law indi cates that while the authorities discuss allo cation or proration on a yearly basis, they do not specifically address or hold that part-year allocation is improper, the judge said. "Sev eral cases refer to 'time on the risk' rather than or in addition to 'years on the risk,"' the judge said, noting that nothing mandates allocation by year as opposed to months or days. Except for the months in which Press first noticed symptoms and died, months are the unit of time the parties presented in their stipulations at trial. "As a result, my decision of August 13 is amended to hold for proration of liability evenly across trigger periods of September 1969 through May 1973 (45 months) and Jan uary 1984 until April 1988 (51 months), for a total of 96 months. Security was on the risk for 17 months. Dividing $1,300,000 by 96 months equals $13,541.67 per month. Secu rity's share, therefore, is $230,208.39. The