Opinion
122807-1996.
Decided March 1, 2010.
By motion Sequences Numbers 049 and 050, the defendants Continental Casualty Company and Continental Insurance Company as successor in interest to Fidelity Casualty Company of New York, and defendant OneBeacon America Insurance Company (formerly known as Commercial Union Insurance Company) (collectively the "Excess Insurers") seek partial summary judgment declaring that General Electric ("GE") is not entitled to coverage under the Excess Insurers' policies for claims related to or arising out of non-turbine related exposure to asbestos. GE has cross-moved for an Order permitting it to amend its Answer, Cross-Claims and Counterclaim, to include its non-turbine exposure within this action. These motions are consolidated for purposes of disposition.
In this action, which has been alive and well for over 13 years, GE stated, in a letter dated February 18, 2009, that it is now seeking "reimbursement from the excess carriers for each asbestos claim, regardless of the business line from which it arose." It is undisputed that this is a reference to non-turbine claims. And to emphasize that this is so, GE has moved to amend its Answer, to include coverage of such non-turbine claims.
The history of this remarkable request (as set forth in the respective Rule 19-a Statements) is illuminating. The action began in 1996, by Allstate Insurance Company ("Allstate") seeking a declaration concerning rights and obligations as to GE's liabilities for underlying environmental and asbestos claims under insurance policies issued to GE from 1956-1986. Allstate ultimately settled its claims, and the Appalachian Insurance Company ("Appalachian"), which sought a declaration concerning the asbestos portion of the case, was substituted as plaintiff. GE's answer to Appalachian's complaint dealt with the asbestos claims. Thereafter, in 2001, when answering an interrogatory (No. 19[e]), which asked to "[i]dentify each Asbestos Claim", GE identified only marine and land-based turbines. Its response to another interrogatory (No. 56) was similar (". . . land based and marine turbines which required asbestos-containing insulation"). It is undisputed that in the massive discovery produced through 2002, GE only provided discovery concerning turbines; no discovery was provided for non-turbine claims.
Following the close of this discovery, summary judgment motions were made by the excess insurers, and GE cross-moved for a declaration that its losses related to asbestos turbine claims constituted a single occurrence, and submitted an affidavit from its then Senior Counsel for Environmental Torts and Insurance, Thomas H. Hill, Esq., who averred: "This case is about GE's involvement in the turbine business". A similar statement was made in GE's briefing, and in an amended answer and cross-claim, which it filed in December 2002. Thereafter, in its Memorandum of Law in Opposition to the summary judgment motion, it repeated this statement and added that it "is not seeking coverage for plaintiffs who have sued the company because of its involvement in other product lines." During the pendency of the summary judgment motion, GE filed a Second Amended Answer and Cross-Claims, which limited GE's coverage claim to damages "related to or arising out of the turbines manufactured or sold by GE".
In his April 2003 summary judgment decision, Justice Ira Gammerman wrote that "[w]hile the original action encompassed all asbestos claims, GE has limited the scope of the action to only turbine-related claims. . .". Appealing this decision, GE in its CPLR 5531 statement, wrote that "[t]he action . . . is a dispute over excess insurance coverage***resulting from the use of asbestos-containing insulation ono GE turbines." While GE's appeal was pending, it filed a Third Amended Answer, which reiterated that it was seeking coverage for "damages related to or arising out of the turbines manufactured or sold by GE". On June 14, 2005, in its affirmance of Justice Gammerman's decision, the Appellate Division pointed out that the claims at issue related to "asbestos contained in the turbines manufactured by [GE]".In seeking leave to appeal to the Court of Appeals, GE wrote that its coverage claims had been "limited to asbestos claims arising from only one of GE's multiple lines of business, turbines" and framed the question for the Court to relate to "GE's alleged practice of allowing asbestos to be used to insulate its turbines". Leave was granted, and its brief repeated GE's position that the case related to "its manufacture of turbines used to produce turbines" in which it "permitted asbestos to be used". The Court of Appeals, in its February 15, 2007 decision upholding the lower courts, explained that "this case"concerned claims of exposure "to asbestos-containing insulation used in steam turbines manufactured by GE."
A Note of Issue was filed by GE, dated November 20, 2007, certifying, as GE characterized it in its "Response in Opposition to the Excess Carries Statement of Material Facts", that "all asbestos-related discovery was complete." Following the filing of the Note of Issue, over GE's opposition, on October 28, 2008, I granted motions (No. 045 046) to vacate the "Note of Issue relating to the Asbestos Claims', because the excess carriers persuasively contended that there had been "hundreds of thousands of claims, as to which we have had no discovery", since Justice Gammerman bifurcated the action and stayed all proceedings on the asbestos claims. This allowed the excess carriers to take further discovery regarding turbine liabilities GE incurred while the case was stayed pending appeal.
This is a reference to the fact that, as GE's stated in an Affirmation Accompanying Note of Issue and Certificate of Readiness (Asbestos Claims)(11/17/2007): "The environmental and asbestos portions of the case have at all relevant times proceeded on separate tracks and have operated, de facto, as two separate actions. With respect to its asbestos liabilities, GE has asserted [various] claims". No mention was made there would be non-turbine claims at issue in the asbestos phase.
During the renewal of discovery, and in response to further discovery requests, on February 18, 2009, GE wrote that the excess carriers "are correct that GE previously focused its coverage requests on asbestos turbine claims. . . . [However g]iven that the Court of Appeals has essentially ruled that each individual asbestos-related claim against GE constitutes a separate occurrence, GE"s asbestos claim obviously is not limited to turbine claims." (Emphasis added). GE further wrote: "In view of the Court's ruling, it should be apparent that GE seeks reimbursement form the excess carriers for each asbestos claim, regardless of the business line from which it arose."
Relying on this case history, which is disputed by GE only to the extent that in its "Response in Opposition to the Excess Insurer's Statement of Material Facts and. . . . Counter-Statement of Facts" it claims that it "never intended to waive or otherwise forever limit its ability to pursue coverage for non-turbine asbestos or other products claims or to limit its ability to rely on such claims to establish underlying exhaustion", the Excess Insures seek partial summary judgment, barring GE from pursuing non-turbine claims. In addition to their waiver argument the Excess Insurers also claim that these repeated representations, in various court filings, "constitute judicial admissions. . . . as to the scope of GE's coverage claim." And finally, the Excess Insurers claim that "[l]aw of the case principles prevent [the] parties from re-ligating issues that have already been decided in the same proceeding."
In addition to its contention that it "did not relinquish its right to coverage for non-turbine asbestos losses", GE argues that "the doctrines of judicial estoppel, judicial admission and law of the case'" do not apply.
Extensive discussion is unwarranted. It is evident from the recitation of the history of this case, that GE deliberately had expressly chosen to forego all non-turbine claims. It repeatedly stated that this case was about claims arising out of GE manufactured turbines. It amended its pleadings to that effect. It told this to the Appellate Division, to the Court of Appeals, and in its Note of Issue, there was no reservation concerning non-turbine claims. Rather, GE asserted that all pleadings had been served and that all discovery was completed. It opposed the motion by the excess carriers to vacate the Note of Issue to permit further discovery; never once mentioning — either in is opposition papers or at oral argument — that there would be non-turbine asbestos claims asserted and that there would be the need for non-turbine asbestos claim discovery; nor was there any mention of non-turbine asbestos claims in the Note of Issue or accompanying Affirmation. (See note 1, supra).
Now, as set forth in its opposition to this motion, after multiple representations that the asbestos claims were, in GE's own words, "limited to asbestos claims arising from only one of GE"s multiple lines of business, turbine", GE states that "the circumstances that caused GE to so limit the scope of this case are no longer extant." Rather GE seeks to include non-turbine claims, which have "escalated, such that these claims now represent a far more substantial percentage of GE's docket. From 1996-2001, non-turbine-based claims represented less than 12% of GE's total asbestos liability expenditures (and only 4% in 2001 alone). Such claims were only 11% of the total claims filed in 2002. In the past three years, non-turbine claims have represented 64% of the total claims and more than 20% of the total expenditure (including 22% in 2007 and 23% in 2008). GE has spent nearly $108 million to resolve non-turbine asbestos claims since this action began. As a result of these changed circumstances, it is fair and reasonable and well within the bounds of this Courts discretion to now include these claims within the scope of this case". (M.O.L. of GE in Opp., pp. 3-4) (emphasis added). These assertions are also set out in GE's Counter-Statement of Facts (¶¶ 53-61).
It is cannot be seriously disputed that this action, or at least the asbestos portion of it, as it developed over its long history, was limited by GE — itself — to turbine related asbestos personal injury claims. Thus, GE statements in its Rule 19 (a) Response that it "never intended to waive" such claims, and that "the Excess Insurers never asked GE if it intended to waive" such claims are stunning: in light of the repeated declarations of GE, that this action was not about such claims, why would the Excess Insurers have made such inquiry? Or, have even imagined such inquiry to be necessary.
Moreover, equally stunning, in connection with these motions and cross-motion, is the statement by GE, in its Counter-Statement of Facts, that "GE believed that, upon the conclusion of this action, it could seek to address coverage for its non-turbine liabilities via negotiated settlements (informed by the outcome of this case)."(¶ 14). Illuminated by GE's admission in its Memorandum of Law, that there are now "changed circumstances" warranting the exercise of my "discretion now to include these claims within the scope of this case", this admission demonstrates that GE could not have reasonably expected that it would be permitted to "to address coverage for its non-turbine liabilities" in this action without court permission.
In light of the prior acknowledgments and statements by GE, without qualification, that this case concerned only turbine-related claims, in light of the fact that GE filed its Note of Issue, without a murmur about extant non-turbine related claims, in light of the fact that GE opposed vacating the Note, again without a hint, that if the motion were granted it would, as stated by the Excess Insurers "unilaterally massively expand the scope of this action to include claims arising from myriad products and businesses for which there had been no discovery, and which are not even in its pleading" (M.O.L. in Supp. Of Excess Insurer's Motion, p. 11), there is simply no basis for me to permit amendment as requested by GE. To do so would dramatically alter the landscape of this action, would turn it for all practical purposes into a totally new action, would require new and once-again massive discovery, and would, of course, severely and unfairly prejudice the remaining two Excess Carriers. Therefore, GE's cross-motion to amend its Answer, Cross-claims, and Counterclaim, "to include its non-turbine exposures within this action", is, in all respects, denied. Moreover, putting the request for amendment aside, in light of the undisputed statements by GE that this action is limited to turbine claims, all aspects, and references to, the non-turbine exposure claims are precluded from any further consideration in this action; By its unequivocal conduct, GE has waived any right to assert them in this action.
Since I have concluded that, in this action, GE may not assert any non-turbine claims, whether by amending its Answer, Cross-claims, and Counterclaim, or otherwise, it is unnecessary to decide the Excess Carriers' motion for partial summary judgment declaring that GE is not entitled seek to coverage for claims related to or arising out of non-turbine claims related exposure to asbestos. Based upon this decision, such claims are proscribed in Index No. 122807-1006.
Accordingly, it is
ORDERED, that Sequence Nos. 049 050, (motions for partial summary judgment) are denied; and it is further
ORDERED, that General Electric Company's cross-motion to amend the complaint is also denied.