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Ltee v. Superintendent of Insurance of the State of New York6/1/2000
Appeal and cross-appeal from an order of the Supreme Court, New York County (Beverly Cohen, J.), entered August 5, 1998, which, inter alia, granted in part and denied in part the Superintendent's motion to confirm and the claimant's cross-motion to reject the report and recommendation of the Referee.
This appeal requires us to determine important issues of insurance law which arise in the context of a liquidation proceeding under the supervision of respondent Superintendent of Insurance. Among the questions presented are a determination as to when insurance coverage attaches ("triggers") with respect to a policy covering "exposure" to asbestos-related risks; the effect, whether binding or otherwise, of a New Jersey Federal District Court decision on the outcome here; and the construction and effect of "other insurance" clauses in both the Midland and other policies co-extensive with Midland Insurance Company's excess coverage during certain relevant time periods. The claimant ("LAQ"), here asserting the broadest possible Midland coverage, is a mining, manufacturing and distributing company. Opposing these arguments, on behalf of other claimants and creditors against Midland's assets, is respondent Superintendent.
The matter comes to this Court on an agreed statement of facts, pertinent of which are as follows. LAQ is a Delaware corporation which, until the cessation of operations in 1986, engaged in the mining, milling and selling of asbestos fiber in Quebec, Canada. It is a wholly-owned subsidiary of ASARCO, a New Jersey corporation headquartered in New York.
From 1954 through 1962 ASARCO purchased liability insurance, including coverage for product liability hazards, from Employers' Liability Assurance Corporation, with annual policy limits of $50,000. From 1962 through 1976 it purchased similar coverage from Canadian General Insurance Company, with aggregate limits of $100,000 from 1972 to February 1974, and $300,000 to February 1976. Canadian General has entered into a $1.7 million settlement with LAQ for all obligations under policies it issued.
From March 15, 1975 through March 15, 1976, LAQ was also covered by a $3 million umbrella policy issued by American Home Assurance Company (AHAC). For the period from March 15 through April 29, 1975, LAQ purchased an additional $20 million in excess coverage from Highlands Insurance Company. By its terms, the Highlands policy was subject to, and would follow the form of, the underlying AHAC policy. An affidavit from the insurance manager for ASARCO indicates that the Highlands policy was originally intended to be limited to one year, but that Highlands canceled the coverage effective April 29, 1975. Inasmuch as the form policy was not actually generated until May 7, 1975, after coverage had been canceled, the policy actually recited coverage for the period from March 15 to April 29.
For the period from April 29, 1975 through March 15, 1976, LAQ purchased $20 million in excess coverage from Midland. This is the policy at the heart of the disputes on this appeal. The Midland policy, which also followed the form of the underlying AHAC policy, provided that it was in excess of both the $3 million AHAC coverage and a $500,000 self-insured retention by LAQ.
The underlying AHAC policy, whose form Midland agreed to follow, provides personal injury coverage for an occurrence, which is defined as "an event, including continuous or repeated exposure to conditions, which result in Personal Injury ... neither expected nor intended from the standpoint of the insured. All such exposure to substantially the same general conditions shall be deemed one occurrence."
The AHAC policy, and consequen
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