January 8, 2019
Back in March 2017, the Connecticut Appellate Court issued a 161 page decision in R.T. Vanderbilt Co. v. Hartford Accident & Indemnity Co., 171 Conn. App. 61, 156 A.3d 539 (2017). Dating back to 2007, the initial dispute arose when R.T. Vanderbilt filed suit against some of their excess and umbrella insurance carriers, including Travelers Casualty & Surety Co., Everest Re Group, Ltd., and TIG Insurance Co., seeking coverage for injury claims by individuals exposed to asbestos from R.T. Vanderbilt’s talc. The Appellate Court ruled, in part, that the insured (Vanderbilt Minerals, LLC as successor to R.T. Vanderbilt Co.) (“R.T. Vanderbilt”) was not responsible for costs during years it was uninsured. How did the court arrive at this decision? The Court ultimately applied the “unavailability of coverage” exception.
In Connecticut, there is a “pro rata” scheme used for allocating coverage of asbestos claims. For the pro rata scheme, each policy holder is liable for a prorated share of indemnity and defense costs during the periods which it uninsured or underinsured. However, the unavailability of coverage exception provides that a policyholder will not be responsible for costs during periods where there was no insurance available. In the case at issue, R.T. Vanderbilt generally stopped offering asbestos related coverage from the year of 1986 to 2008. Therefore, the Court ruled that R.T. Vanderbilt was not responsible during those years. Travelers Casualty & Surety Co., disagrees, pointing out that R.T. Vanderbilt still sold asbestos-containing talc during those years, after they no longer had coverage for asbestos related risks.
The Appellate court alsomade two other significant holdings in its decision. First, it ruled that asbestos-related injuries are governed by the “continuous trigger theory.” The continuous trigger theory, in short, provides that any coverage is triggered for any policy in effect from the first date of asbestos exposure until the manifestation of any asbestos-related disease. Second, the Court ruled, that the “occupational disease exclusion” in R.T. Vanderbilt’s policies bar coverage of asbestos claims not only for the company’s own workers, but for those who have “contracted an occupational disease” due to R.T. Vanderbilt’s products in the course of their employment. Not to gloss over the first holding, but the holding regarding the occupational disease exclusion was a first, and created historical precedent.
The Appellate Court decision was appealed by Plaintiff-Appellant (R.T. Vanderbilt). R.T. Vanderbilt adamantly agrees with the Appellate Court’s interpretation of occupational disease exclusions, arguing it should only apply to its own employees. Although oral argument before the Supreme Court has yet to take place, the question before the Supreme Courtto watch for is:
“Did the Appellate Court properly interpret occupational disease exclusion clauses in certain insurance policies as precluding coverage for claims of occupational disease, regardless of whether the claimant was employed by the policyholder or by a third party user of the claimant’s allegedly harmful product?”
We will have to wait for the ultimate decision by the Supreme Court to find out the answer.