Appeals court blocks American Home motion for relief in WTC asbestos case.
- David Pilla
- January 2019
This court finds that the insureds are entitled to a declaration that American Home must continue to defend the WTC asbestos claims, even if the policy becomes exhausted.
Judge Eileen Bransten
New York State
A New York appeals court upheld a state court decision to deny a motion for declaratory relief from an affiliate of American International Group Inc. in an asbestos case involving liabilities related to the construction of the World Trade Center.
The appellate division of the state Supreme Court found a state Supreme Court judge was right to deny American Home Assurance Co.'s claim asbestos exposure arising from spray-on fireproofing during the World Trade Center's construction constituted a “single occurrence.”
In November 2017, the state court judge denied a motion for declaratory relief from American Home in the case. Judge Eileen Bransten of the New York State Supreme Court in 2017 denied the motion for relief by American Home Assurance as the plaintiff, while partially granting motions by the defendants, including the Port Authority of New York and New Jersey, Alcoa Inc. and several contractors.
The defendants, who had been insured by American Home, are entitled to declarations under a general liability policy “for asbestos-related personal injury claims allegedly arising from exposure to asbestos at the World Trade Center site during construction of the project,” according to Bransten.
American Home provided a general liability policy for the Port Authority and its contractors related to construction of the WTC site, including damages from personal injury. The total limit of the insurer's liability for all personal injury damages was $10 million per occurrence. According to the judge's finding, “the policy does not define the term occurrence.”
Bransten wrote American Home contends it has paid more than $30.5 million on behalf of the insureds under the policy to settle claims alleging personal injury resulting from exposure to asbestos in connection with the WTC construction. More than $10 million in claims was paid specifically to resolve claims related to fireproofing that was used in the construction process.
American Home sought declaration the fireproofing claims are a “single occurrence” and its $10 million limit has been exhausted.
Bransten found the WTC asbestos claims “arising out of 'spray-on fireproofing' do not constitute a single occurrence” under the policy then in force as well as under New York law. According to the judge, “American Home's course of conduct in defending and settling the WTC asbestos claims for over two decades supports a multiple occurrence finding.”
Bransten also found the policy “is not exhausted” as the claims are not considered “one occurrence.”
The judge further found American Home's duty to defend its insureds extends beyond the policy's liability limit and American Home cannot obtain a declaration of no coverage for pending WTC asbestos claims. “This court finds that the insureds are entitled to a declaration that American Home must continue to defend the WTC asbestos claims, even if the policy becomes exhausted,” wrote Bransten.
The appeals court ruled the Supreme Court judge was correct to conclude that, “in the absence of a single event or accident, all claims alleging exposure to asbestos from spray-on fireproofing at the site over a three-year period did not arise from a single occurrence under the policy.”
The appeals court also found “as plaintiff reserved its right to recoup expenses it incurred that are not covered by the policies, Supreme Court correctly declined to dismiss its recoupment reclaim.”
At the same time, the appeals court found “the court incorrectly concluded that plaintiff's duty to defend survives exhaustion of the policy's liability limit. The policy explicitly provides that defense costs are subject to that limit.”
The general liability policy was originally purchased by the Port Authority from American Home in 1966 for the construction site known at the time as the WTC Hudson Tubes Project. American Home notified the Port Authority in December 1975 at the policy was to be canceled in February 1976.
Individual claimants sued the insureds between 2011 and 2014, claiming recent diagnoses of asbestos-related diseases.