Liberty Mutual v. Lone Star Ind.

Full title: LIBERTY MUTUAL INSURANCE CO. v. LONE STAR INDUSTRIES, INC. ET AL

Court: Connecticut Superior Court Judicial District of Waterbury, Complex Litigation Docket at Waterbury

Date published: Jan 25, 2007

2007 Ct. Sup. 1673 (Conn. Super. Ct. 2007)

Opinion

No. X 02 CV-04-4001208-S

January 25, 2007

MEMORANDUM OF DECISION RE SUMMARY JUDGMENT MOTIONS

DENNIS EVELEIGH, JUDGE

I. BACKGROUND

At all times relevant hereto, Defendant Lone Star Industries, Inc. (hereinafter referred to as Lone Star) and its subsidiaries were involved in the manufacture and/or distribution of silica-containing products including such items as cement, sand, and construction materials. Plaintiff Liberty Mutual (hereinafter referred to as Liberty) entered into primary insurance coverage contracts with Lone Star from January 1, 1972, until January 1, 1992, and into umbrella excess liability contracts with Lone Star from January 1, 1986, until January 1, 1992. Liberty alleges that it has paid at least $25,037,737.00 for defense costs and $34,548,000.00 for indemnity costs incurred on Lone Star's behalf for subsequent silicosis claims made through September 30, 2005. These subsequent silicosis claims are the only silicosis claims at issue in this case. Subsequent silicosis claims are defined as:

Silicosis claims initially reported, either orally or in writing to Liberty Mutual, Helmsman and/or Lone Star or other insurers of Lone Star after the exhaustion of the Fund or at a time when the remaining Fund is determined by Liberty Mutual or Helmsman to be allocated in full to open Future Silicosis Claims because of existing reserve amounts on Future Silicosis Claims . . . but only if such silicosis claims also allege latent bodily injury, sickness or disease alleged to arise out of pre-petition exposure to free silica and in connection with Lone Star's pre-petition sale of sand for blasting operations and/or in connection with the claimant's pre-petition use of other silica related products or silica related operations.

Liberty seeks pro rata contribution from Lone Star and numerous insurers it has named as defendants to recover a substantial portion of these costs, and a declaratory judgment with respect to future costs.

Approximately 30,000 silica claims have been asserted against Lone Star. Lone Star first received a claim in 1976 and received numerous claims in the 1980s and 90s. There are still some 4,900 claims pending. These silica claims have been asserted against Lone Star for a variety of materials including . . . cement and ready-mixed concrete (which, at various times in Lone Star's history, have been sold on a nationwide basis). Lone Star and its subsidiaries have been in the business of selling construction materials on a continuous basis since 1919. Typically, claimants in the Subsequent Silicosis Claims allege that they were exposed to silica-containing products at multiple locations and at different times. Some claimants allege repeated exposures and others allege intermittent exposures to silica-containing products over several decades.

During the period of 1943-1965, the Texas Construction Material Company (hereinafter referred to as TCM) sold sand, which was used in sandblasting. This sandblasting process produced silica dust which could be inhaled by the workers while sandblasting. Inhaled silica dust can cause silicosis and other diseases. The sand was known as "Texblast."

TCM sold "Texblast" until its dissolution in 1969. After TCM's dissolution in 1969, Lone Star sold material containing silica, including "Texblast" sand, in its Southwest Region and elsewhere, from 1970 until 1985. Lone Star had purchased the assets of TCM in 1965.

In the past, most of the silica claims were filed in Texas, Mississippi or Louisiana. While the allegations in the plaintiffs' complaints were rarely specific, discovery typically revealed that the claims arose out of the claimants' alleged exposure to sand that was initially marketed by TCM under the name "Texblast" and that was used, inter alia, for sandblasting. Some of the silica claims asserted against Lone Star have nothing to do with TCM, Texas, "Texblast" or even sandblasting.

Lone Star did not begin incurring significant defense and indemnity costs until October 2005, well after this action was filed. Neither Lone Star nor any of its insurers has reimbursed Liberty for any of its expenditures.

From 1972 through 1975, Liberty Mutual sold Lone Star primary policies with limits of $500,000.00. From 1976 through 1984, Liberty sold Lone Star primary policies with limits of $1,000,000.00. In 1985, the limit of Liberty's primary policy increased to $3,000,000.00. Liberty issued primary policies for Lone Star until January 1, 1992, and provided excess liability policies from January 1, 1986, until January 1, 1992.

On December 10, 1990, Lone Star and a number of its wholly-owned subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. An agreement was subsequently reached between Lone Star, Liberty Mutual, and an affiliate of Liberty Mutual called Helmsman Management Services, Inc.

On December 6, 2005, this court ruled on several motions for partial summary judgment filed by the defendants. In its ruling, this court held that the parties' respective liability, if any, for defense and indemnity costs for the underlying silica and asbestos claims must be allocated on a pro rata basis based upon each party's time on the risk. Further, the court held that Lone Star must pay its share of defense and indemnity costs for claims allocated to periods when it had no insurance coverage or when coverage was no longer available. Further, the court held that all of the remaining insurer defendants were not bound by the provisions of the 1994 agreement between Lone Star and Liberty since they were not signatories to that agreement.

Liberty has filed two motions for partial summary judgment at this time. In the first motion it claims (a) a declaration that Lone Star is liable for all amounts paid by Liberty Mutual in excess of Liberty Mutual's pro rata share of defense and indemnity costs for silica and asbestos-related bodily injury claims against Lone Star, which costs have not been paid by Lone Star or any of Lone Star's other insurers; (b) an award to Liberty in the amount of $18,083,276.00 for the defense costs paid by Liberty Mutual in excess of its pro rata share; and (c) an award to Liberty of prejudgment interest thereon. Liberty has also moved for summary judgment relating to an asbestos exclusion contained in a 1987 policy. Eighteen other insurers have filed for summary judgment and/or partial summary judgment based upon the policy language contained in policies which they had issued to Lone Star. This court heard argument relating to all of the motions on December 20, 2006, and reserved judgment at that time. The body of this opinion will contain the court's decision relating to all of the summary judgment motions. The order of the decision will be the order in which each summary judgment motion was argued. All of the law and facts reported shall apply with equal force to all motions, regardless of the section in which said law and facts are contained.

II. LAW 1. Liberty Mutual's Motion for Partial Summary Judgment and for the Entry of a Judgment in its Favor

"The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law [and] the courts hold the movant to a strict standard." Allstate Ins. Co. v. Barron, 269 Conn. 394, 405 (2004); P.B. Section 17-49. In order to prevail, all of the moving parties, herein, must make a showing that it is quite clear what the "truth is" and this showing must exclude "any real doubt as to the existence of any genuine issue of material fact." Id. at 405.

The Supreme Court of Connecticut has determined that the insured must pay its fair share of defense costs for long latency loss claims that implicate multiple insurance policies. Security Ins. Co. of Hartford v. Lumbermens Mut. Cas. Co., 264 Conn. 688, 826 A.2d 107 (2003). Silicosis, like the effects of asbestos, has been described as an affliction that has a long latency period. Therefore, in light of this court's previous ruling, Liberty is seeking a further "clarification" of the court's ruling that Liberty was only responsible for its pro rata share of the defense costs. It requests that the court declare that Lone Star is responsible for all amounts paid by Liberty Mutual in excess of Liberty Mutual's pro rata share of defense and indemnity costs for silica and asbestos-related bodily injury claims against Lone Star which costs have not been paid by Lone Star or any of Lone Star's other insurers. It also requests the entry of a money judgment and interest thereon.

Lone Star opposes the motion on several grounds. First, it argues that Liberty goes beyond the relief requested in its complaint. It argues that in its complaint Liberty seeks contribution against Lone Star for "self-insured" periods, and contribution against other insurance carriers for periods covered by such insurers. However, in its motion, Lone Star contends that Liberty seeks recovery from Lone Star for all periods outside of its own, whether there was applicable coverage or not. Second, it contends that there is an issue of fact as to the reasonableness of Liberty's payments for attorneys fees. Third, it argues that the court did not determine the exact allocation period in its prior decision and that an issue of fact exists in this regard. Fourth, it argues that any request made with respect to the asbestos claims should be rejected because adequate facts have not been presented to justify an award. Fifth, it argues that there is an issue of fact as to the successor liability of Lone Star when it purchased the stock of TCM. Finally, during oral argument, it raised the issue of whether or not Liberty must produce its reservation of rights declaration in order to make a claim in this case.

Lone Star's argument relating to the pleadings is not persuasive. Liberty has sought a declaration to the effect that Lone Star is responsible for its pro-rata share of defense and indemnity costs for periods during which it did not have responsive insurance coverage for the Subsequent Silicosis Claims. The word "responsive" is key in this review. Lone Star has admitted that it has done nothing to seek payments or coverage from its other insurers in this case. It did have a cross-complaint in the action which it claims no longer applies in view of the court's prior ruling (this matter will be discussed in a later section). Liberty argues, therefore, that Lone Star must accept the financial responsibility for those periods for which no responsive insurance coverage has been obtained. As the Security Insurance Court observed:

ACMAT (the insured) is in the best position to pursue claims against any insurance companies it believes issued coverage for the disputed years. ACMAT has the standing to initiate such a suit and has the best access to the information that would be necessary to prove a claim against a company . . . Security and its fellow participating insurers bear no blame for the loss of ACMAT's insurance policies. They are not as well situated as ACMAT to pursue claims against insurers that deny coverage or to pursue bills of discovery against suspected insurers of ACMAT. It would be grossly inequitable to make them bear the financial loss of ACMAT's actions or inactions that have rendered ACMAT essentially uninsured for a period when asbestos related injury insurance coverage was available.

Id. at 719-20.

This court has already ruled that the pro rata method of allocation shall apply in this case, on a time on the risk calculation. Liberty has used the correct methodology in its calculation. The coverage bloc and the companies involved, however, are subjects for further determination by a jury or trier of fact. This court will neither revisit its prior ruling nor clarify what is clear on its face. The ruling shall apply to all parties remaining in the case at the time of trial.

Liberty has acknowledged in its pleadings that its payments for the attorneys must be fair and reasonable. Indeed, it is a condition precedent to the recovery of any reimbursement for defense or indemnity payments. Black v. Goodwin, Loomis Britton, 239 Conn. 144, 152, 381 A.2d 293 (1996); State Farm Mut. Auto. Ins. Co. v. MFA Mut. Ins. Co., 671 S.W.2d 276, 279 (Mo. 1984).

In the instant motion Liberty has submitted the amount it has paid and its calculation of the time period involved. However, its argument that the bills are fair and reasonable relies, principally on the fact that Lone Star has never objected to the payments, and that many of the attorneys were selected by Lone Star, including Lone Star's principal attorney who argued part of these motions. While the actions of Lone Star may be introduced as indicia of reasonableness at trial, the court requires more testimony on the issue of reasonableness. This is not to say that Liberty is confined to the burden of proof suggested by Lone Star to the effect that each of the 30,000 cases must be analyzed individually. However, inter alia, the hourly rate, nature of the litigation, and general work performed for the cases would be subjects for an expert to offer an opinion on the reasonableness of the charges and payments by Liberty. The fact that Liberty was requested by Lone Star to offer a defense to these cases would also be probative evidence. Query whether the request by Lone Star for a defense by Liberty and the subsequent request to pay the claims arising as early as the 1940s and 1950s raises an issue of estoppel on the part of Lone Star to contest the payments? In either event, it remains the burden of Liberty to establish the reasonableness of the charges. That issue is one of fact for the jury or trier of fact. A genuine issue of material fact exists. Therefore, Liberty's Motion for Partial Summary Judgment is denied.

There is another issue of fact which must be discussed as an aid to the parties. Liberty did not commence insurance coverage with Lone Star until 1972. Lone Star purchased the stock of TCM in 1965 and TCM voluntarily dissolved in 1969. Many of the claims in this case involve the activities of TCM in the 1940s, 1950s and 1960s. The issue is whether or not Lone Star assumed the liabilities of TCM when it purchased the assets and stock. If the liabilities were not assumed, then Liberty's pro rata allocation dating back to 1944 may be in error for those complaints which only allege TCM silica or asbestos-related involvement. There is some evidence that Lone Star did assume the liabilities. However, many of the carriers have argued that the assumption was never completed properly under Texas law. Lone Star has asserted this defense in the actions brought against it. However, in the only case that has been tried, Lone Star chose not to pursue the issue. Lone Star argues that the matter is to be decided by a Texas Court, and that this court should not offer an opinion.

If all of the silica cases have language which relates to both the activities of TCM and Lone Star, there is no issue relative to the propriety of Liberty's defense. If, however, there are cases which only relate to TCM with, no independent claim against Lone Star, there may be a question as to whether the coverage bloc should be much shorter than the period from 1944 suggested by Liberty. Obviously, it is to Liberty's benefit to have a longer coverage bloc so that Lone Star and, perhaps, other insurers, may bear a greater burden of the defense and indemnity costs. A question of fact exists as to the assumption of liability by Lone Star of TCM's liabilities. This will require, at the time of trial, expert testimony regarding Texas law on dissolutions. It serves as another reason why the court cannot grant summary judgment at this time.

2. Liberty Mutual's Motion for Partial Summary Judgment regarding the Asbestos Exclusion

Commencing with the 1987 policy year, the Liberty Mutual Insurance policies contained an asbestos exclusion providing that:

This insurance does not apply to "bodily injury," "property damage," "personal injury," or "advertising injury" arising out of or related in any way to asbestos, the exposure to asbestos or any claims arising from asbestos.

Through August 31, 2005, approximately 200 lawsuits and other claims have been asserted against Lone Star and other defendants alleging latent bodily injury, sickness or disease arising out of the claimants' alleged exposure to asbestos-containing products used, manufactured, sold or distributed by Lone Star. Liberty Mutual has paid approximately $350,000.00 in defense costs and over $200,000.00 in indemnity costs for asbestos-related claims against Lone Star through August 31, 2005. Lone Star has not contributed to the defense and indemnity of the asbestos-related claims. Under a reservation of rights declaration, Liberty has defended and indemnified Lone Star for the asbestos-related claims and has been paying the full cost of such defense and indemnity to date. Liberty urges the court to enter summary judgment on this issue declaring that Liberty has no coverage obligations with respect to the 1987 policy and all policies thereafter that contain the asbestos exclusion.

Lone Star opposes the motion on several grounds. First, it argues that this court cannot properly address the allocation of Liberty's responsibilities with respect to the asbestos-related claims, due to Liberty's failure to join, in this action, all of the insurers with an interest in the matter. Further, it argues that Lone Star is entitled to full defense and indemnity coverage from Liberty under the state of Washington's "joint and several" allocation rule with respect to the most significant asbestos claims. Third, it notes that Liberty does not seek to allocate responsibility for any asbestos-related claims beyond the 1986 policy year and, therefore, it is unnecessary to consider such exclusions.

As a matter of law, "no case is too complex for summary judgment . . . The interpretation and construction of a written contract present only questions of law, within the province of the court . . . so long as the contract is unambiguous and the intent of the parties can be determined from the agreement's face." Gould v. Mellick and Sexton, 263 Conn. 140, 147, 150, 819 A.2d 216, 220, 222 (2003). Under Connecticut law, the construction of an insurance policy also presents questions of law for the Court and is appropriate for resolution by summary judgment. QSP, Inc. v. Aetna Cas. Surety Co., 256 Conn. 343, 352, 773 A.2d 906 (2001).

Lone Star's first two arguments do not appear to apply to the current situation wherein it concedes that Liberty does not seek to allocate responsibility for any asbestos-related claims beyond the 1986 policy year. It argues, therefore, that it is unnecessary to consider the exclusions of the 1987 policy and all other policies that contained the exclusion. This court disagrees. The language of the exclusion is "plain and unambiguous" and must be enforced as written. LaBonte v. Federal Mutual Ins. Co., 159 Conn. 252, 257, 268 A.2d 663, 666 (1970). There is no room for construction or interpretation of this clear and unambiguous policy exclusion. In view of the fact that the Asbestos-Related Claims either arise out of or are related to asbestos, the 1987 policy and all subsequent Liberty Mutual policies with similar language do not provide coverage for the Asbestos-Related Claims. Liberty's Motion for Partial Summary Judgment, in this regard, is, therefore, granted.

A. Threshold Issue with respect to Summary Judgment Motions filed by Other Insurers

Numerous other summary judgment motions have been filed by insurers who were named as defendants by Liberty. These motions address both the complaint filed by Liberty and the cross-claim filed against said insurers by Lone Star. During oral argument, Lone Star maintained that there was no longer a cross-claim in the case, in view of the court's prior ruling. Liberty and others have suggested that, at least a portion of the cross-claim was not covered by the court's ruling. It is obvious to the court that Lone Star does not wish to formerly withdraw the cross-claim for fear of prejudicing its appeal rights with respect to the court's prior ruling. Therefore, before deciding the remaining motions the court has decided to clarify the matter for the purposes of these motions, and in order to establish an additional framework for the trial, which is scheduled later this year.

In Paragraph 9 of its revised cross-claim against the codefendant insurers Lone Star alleged as follows:

Because Lone Star has a legal interest by reason of danger of loss or uncertainty as to its rights, and because there is no other form of proceeding that can provide Lone Star with immediate redress, Lone Star is entitled to a declaration confirming: (i) that Lone Star has no additional obligation to contribute to the defense or indemnity costs for Subsequent Silcosis Claims; (ii) that the responsibility for handling and paying the Subsequent Silicosis Claims is established by the 1994 Agreement; and (iii) and that the responsibility for handling and paying Subsequent Silicosis Claims rests with co-defendant insurers all of which issued insurance policies for the years from 1965 through 1991, inclusive.

Liberty and other insurers argue that paragraph (ii) is the only paragraph which references the 1994 agreement which was the principal subject of this court's prior decision. Paragraph (i), they suggest, may also have been covered by the decision. Paragraph (iii), however, they argue, is not covered by the decision and the cross-claim is still viable. Lone Star maintains that all paragraphs were covered by the court's decision and that there is no longer a cross-claim against the co-defendant insurers.

The court has reviewed its December 6, 2005, decision. In that decision the court held that the 1994 agreement was never intended to release Lone Star completely from the Subsequent Silicosis Claims. Thus, paragraph (i) of the cross-claim was covered in the opinion. Further, the court ruled concerning the respective obligations of the 1994 agreement, thus covering paragraph (ii) of the Lone Star cross-claim. Further, the court ruled that the defendant co-insurers were not bound by the terms of the 1994 agreement because they were not signatories to that agreement. Paragraph (iii) of the Lone Star cross-claim is basically a restatement of paragraph (i). Once the court determined that Lone Star was not released from its obligation to contribute to the defense and indemnity costs for Subsequent Silicosis Claims, and that the co-defendant insurers were not bound by the 1994 agreement; the allegations contained in the Lone Star cross-claim were no longer viable.

The court can understand the reluctance on the part of the co-defendant insurers and Liberty to concede that there is no longer a cross-claim in existence. The cross-claim was not formally withdrawn and paragraphs (i) and (iii) do not specifically reference the 1994 agreement. However, it is clear to the court that the issues raised in the Lone Star cross-claim have been decided in the court's December 6, 2005, ruling. Therefore, the allegations and relief requested in the Lone Star cross-claim against the co-defendant insurers will not be part of the trial scheduled for later this year. The issues contained in the cross-claim have previously been decided by the court.

It should be noted that the court has considered the briefs filed by Lone Star in opposition to the various motions for summary judgment filed by various other defendant insurers. Even though Lone Star no longer has a viable cross-claim in this matter, the presence of other insurers in the case may have an effect upon the ultimate verdict and allocation of the pro rata costs. Therefore, Lone Star has standing to contest the motions filed by the other insurers.

3. Defendants Travelers Casualty and Surety Company's (f/n/a The Aetna Casualty and Surety Company) and The Standard Fire Insurance Company's Motion for Summary Judgment

Travelers issued certain excess liability insurance policies to Lone Star and one or more of its subsidiaries for various periods between 1971 and 1987. Travelers also provided coverage for TCM. It moves for summary judgment on the ground that Lone Star is not entitled to coverage under policies issued to TCM. Second, it claims that Lone Star is not entitled to coverage under five excess ("XN") policies Travelers issued to Lone Star from 1985 through 1987.

Travelers claims that Lone Star is not entitled to coverage on the basis of the TCM policies because, inter alia, Lone Star was not named as an insured on the policies and the policies did not transfer to Lone Star as a matter of law when Lone Star acquired the stock. The court has already ruled that the circumstances surrounding the Lone Star purchase of the stock and acquisition of the assets of TCM constitutes an issue of material fact for trial. Therefore, the first part of the Traveler's motion is denied.

Travelers further claims that the claims directed to the five excess policies are not ripe, in that, neither Liberty nor Lone Star has alleged that the very high attachment points of these excess policies has been reached. Further, it argues, the 1986 and the 1987 XN Policies expressly exclude silica and asbestos-related bodily injury claims from coverage. Moreover, any coverage allegedly available under the 1985 XN Policies is explicitly dependent upon the terms of a separate underlying insurance policy purportedly issued to Lone Star by another insurer, namely, Granite State Insurance Company.

The Travelers XN Policies state that Travelers "will indemnify the INSURED against EXCESS NET LOSS arising out of an accident or occurrence during the policy period subject to the limits of liability stated in Section 1, and to all the terms of this policy." The XN Policies define "EXCESS NET LOSS" as:

that part of the total of all sums which the INSURED becomes legally obligated to pay or has paid, as damages on account of any one accident or occurrence, and which would be covered by the terms of the Controlling Underlying Insurance, if written without any limit of liability, less realized recoveries and salvages, which is in excess of any self insured retention and the total of all applicable limits of liability of all policies described in Section 3, Schedule of Underlying Insurance, whether or not such policies are in force. Loss shall not include any costs or expense in connection with the investigation or defense of claims or suits, or interest on any judgment which accrues after the entry of judgment.

By specific endorsement ("Asbestos Exclusion"), both the 1986 and 1987 XN Policies, in identical language, exclude coverage for bodily injury arising from asbestos: "It is agreed that this policy does not apply to EXCESS NET LOSS arising out of asbestos, including but not limited to bodily injury arising out of asbestosis or related diseases or to property damage." The 1986 and 1987 Hartford Umbrella Policies, to which the Travelers 1986 and 1987 XN Policies follow form, each contain a Silicosis Hazard Exclusion Endorsement which excludes from coverage any obligation for the defense or payment of silica-related claims. "Silicosis Hazard" is defined to include "an actual exposure (or) threat of exposure to the harmful properties of silicon." The 1985 XN Policies identify a 1985 Granite State Policy as the controlling insurance.

In addition to the TCM and XN policies, Travelers issued ten excess (umbrella) policies of insurance to Lone Star.

The availability of declaratory relief pursuant to Connecticut General Statutes Section 52-29 "is limited to solving justiciable controversies." Milford Power Co., LLC v. Alstom Power, Inc., 263 Conn. 616, 625 (2003). A declaratory judgment action is not justiciable where it is "not yet ripe for adjudication." Id. at 627. Justiciability requires:

(1) that there be an actual controversy between or among the parties to the dispute . . . (2) that the interests of the parties be adverse . . . (3) that the matter in controversy be capable of being adjudicated by judicial power . . . (4) that the determination of the controversy will result in practical relief to the complainant.

Seymour v. Region One Board of Education, 261 Conn. 475, 481 (2002). "In other words, because the plaintiff's claims were contingent on the outcome of a dispute that had not yet transpired, and indeed might never transpire, the injury was hypothetical and, therefore, the claim was not justiciable." Milford Power, supra, at 627. The question of whether a claim for relief is justiciable "must be resolved as a threshold matter because it implicates the court's subject matter jurisdiction." Id. at 624.

The Travelers XN Policies have very high attachment points. The lowest sits excess $10 million of underlying coverage provided by other insurers. The limits of the 1985 XN Policies are excess of $30 million, $50 million and $75 million, respectively, of coverage issued for the same period by underlying primary and excess carriers. Neither Liberty nor Lone Star allege that the Subsequent Silicosis Claims or the Asbestos-Related Claims will reach the Travelers' attachment points.

The court agrees with the Travelers' position. In the briefs, there is only a passing reference to the fact that all of the claims have not been resolved and that the amount expended may be substantially greater. However, there is no suggestion that the amounts may approach the limits of Travelers' policies. The claims for declaratory relief as to the XN Policies are not justiciable and the Court lacks subject matter jurisdiction to enter the declaratory relief sought as to those policies. See Employers Ins. of Wausau v. McGraw-Edison Co., 1987 WL 58061, at 4 (W.D.Mich. Aug. 8, 1987) (finding that there was "no case or controversy of sufficient immediacy or reality to warrant the exercise of jurisdiction" over claims for declaratory relief concerning excess policies attaching in excess of twenty million dollars in any one policy year). Therefore, Traveler's Motion for Summary Judgment with respect to the XN Policies is granted.

As indicated previously, the pro rata method of distribution will apply to all insurance carriers in the case, upon proof that they provided coverage within the applicable coverage bloc, pursuant to the reasoning in the court's prior opinion. It is noteworthy that during the time in which the XN policies were issued Lone Star's corporate headquarters were in Connecticut. Further, both Travelers and The Hartford were Connecticut Insurers. Therefore, Connecticut law controls the interpretation of the XN Policies. In view of the contacts with Connecticut, the pro rata method of allocation will apply to all defendants. Any argument that the state of Washington method of allocation should apply is not persuasive, due to this court's view of the law of contract interpretation.

4. Century Indemnity Company's Motion for Partial Summary Judgment

Century moves for partial summary judgment on three grounds. First, it claims that summary judgment should enter with regard to claims arising out of the operations of TCM for policies which existed and expired prior to Lone Star's acquisition of TCM. This relates to the entire acquisition question regarding Lone Star and TCM which the court has ruled presents an issue of fact for the trier. It also goes to Liberty's claim that policies issued in the 40s 50s and 60s should be considered in the coverage bloc. The motion is denied with respect to the first ground.

Second, Century claims that the indemnity policies at issue contain exclusions relating to TCM and Texas Operations exclusions. Certainly, the Century exclusion would apply to those complaints based solely upon the TCM Texas-based operations. To the extent that there are complaints which rely solely upon the Texas-based TCM operations which are covered in the Century contract exclusion, the motion is granted.

Third, Century argues that the Products Hazard Exclusions in certain Century Indemnity policies expressly preclude Lone Star from obtaining coverage for claims arising out of a defective product or for a breach of warranty relating to a product. Certain of the Subsequent Silicosis Claims asserted against Lone Star allegedly involve the product "Texblast." Some of the Subsequent Silicosis Claims arose from a claimant's alleged exposure to a silica product produced by Lone Star. Lone Star has admitted that it faces a substantial number of asbestos-related "products liability" claims in Washington, California, and Ohio. Lone Star currently views asbestos-related "products" claims as a more significant liability threat than "premises" claims. Therefore, the court holds that there is no coverage for the underlying silica and any asbestos claim premised on a theory of products liability. In this respect Century's Motion for Partial Summary Judgment is granted.

5. Defendant Certain Underwriters at Lloyd's, London's Motion for Partial Summary Judgment

Defendant Lloyd's (hereinafter referred to as Underwriters) has moved for summary judgment based upon the fact that Lone Star is not a successor to TCM's liabilities. The court has previously ruled in this decision that the issues relating to TCM and Lone Star present an issue of fact for the jury or fact finder. Therefore, the Motion for Partial Summary Judgment is denied.

6. Defendant Certain Underwriters at Lloyds, London's Motion for Summary Judgment on all claims asserted by Plaintiff Liberty Mutual Insurance Company

Underwriters have moved for partial summary judgment relating to three policies which it issued to TCM from 1958-1961. These policies contained a provision that the company would respond to claims for damages "on account of personal injuries caused by or arising out of each occurrence." Occurrence was defined as "one happening or series of happenings arising out of or due to one event taking place during the term of this policy." Under this definition, unless an event leading to an injury occurs during the policy period, it argues, the insurer's coverage cannot be triggered.

In this matter, the claims at issue concern exposure to silica and asbestos. Underwriters takes the position that the "event" is the exposure to the harmful substance. It has been held that an event is not a continuous happening or process; it is an act or action that takes place at a specific time, in a specific location. Babcock Wilcox Co. v. Arkwright-Boston Mfg Mut. Ins. Co., 53 F.3d 762 (6th Cir. 1995). Therefore, it argues, unless Liberty can show that there are amounts constituting damages that are caused by or arising out of a specific event or events, it cannot show that Underwriters have any contractual obligation to pay any amount. Without any evidence of an event during the policy period that gives rise to the liability, it contends, Underwriters are entitled to summary judgment that there is no coverage regarding these policies.

The Security Insurance case, supra, stands for the proposition that, where multiple successive policies are triggered, each insurer with an obligation to pay need pay no more than a percentage share of the losses that trigger its policies. It does not say that an insurer must pay losses where there is no evidence that its policies have been triggered in the first place. Unlike the insurers in Security Insurance, Underwriters' policies do not contain a duty to defend. This is the typical difference between primary and excess coverage. Underwriters' policies do have a duty to pay a share of all the insured's costs associated with a covered claim — whether defense costs or losses — but this is not a duty to defend. Underwriters' obligation does not arise until the policy is triggered by a covered claim in excess of the underlying amount.

The need to trigger each policy arises out of the reasoning that requires multiple policies to pay, that is, the conclusion that the injury to the claimants took place over a period of time. Because each claimants' exposure is different, each claim must be evaluated independently. The Second Circuit's decision in Stonewall Insurance Co. v. Asbestos Claims Management, Inc., 73 F.3d 1178, 1202 (2d Cir. 1995) relied on by the Security Insurance court, so held when it upheld the trial court's ruling that "each triggered policy was responsible for only a pro rata share of NGC's liability as to a particular claimant. [It further approved the trial court's calculation of the share] by multiplying the judgment or settlement by a fraction that has as its denominator the entire number of years within that period when the policy was in effect." Liberty has failed to show an event that would trigger the Underwriters' policies. Further, Liberty has not shown liability for a single claimant in excess of $25,000.00 properly allocated among the policy years.

Courts construing the "event" language contained in the Underwriters' policies (as opposed to the "occurrence" wording found in most policies issued by domestic U.S. insurers) have consistently held that in order to trigger the policy there must be a discrete causative event during the policy term. Resultant injury during the policy period will not, by itself, trigger coverage. PSI Energy, Inc. v. Home Ins. Co., 801 N. F.2d 705, 735 (Ind.Ct.App. 2004). The "continuous trigger" language in CT Page 1688 Security Insurance construed a different contract policy provision which related to an "occurrence." Liberty claims that fifteen claimants have raised claims alleging exposure during the term of the three policies. However, it fails to establish an "event" causing these claims. It further fails to establish that any of the product liability losses exceeded $25,000.00, which would trigger the Underwriters' policies. It may be sufficient to raise a duty to defend on a primary insurer. However, Underwriters, as an excess carrier, did not have a duty to defend.

The law in Connecticut remains today that a party may not obtain equitable contribution for amounts that it had no obligation to pay in the first instance. Hanover Ins. Co. v. Fireman's Fund Ins. Co., 217 Conn. 340, 353-54, 586 A.2d 567, 574-75 (1991). Therefore, Liberty has no right of contribution for amounts that it had no obligation to pay in the first instance. Nor does the right of an insurer to sue its insured for unjust enrichment, approved in Security Insurance, afford Liberty the right to sue another insurer for contribution. The facts have not been presented to the court to establish that the three Underwriters' policies should be triggered in this case. Therefore, the court grants Underwriters' motion for Partial Summary Judgment with respect to those policies.

7. Hartford Entities' Motion for Partial Summary Judgment

Hartford Entities (hereinafter referred to as Hartford) has moved for partial summary judgment seeking a declaratory judgment that (1) Hartford has no coverage obligations with respect to silica-related and/or asbestos-related bodily injury claims under five excess or umbrella policies that contain broad silica and asbestos exclusions, and (2) defense and indemnity costs incurred in the underlying actions against Lone Star must be allocated pro rata, based on time on the risk, across all "triggered" policy periods.

The Court reiterates its prior holding to the effect that all defense and indemnity costs incurred in the underlying actions against Lone Star must be allocated pro rata, based on time on the risk, across all "triggered" policy periods. Therefore, the second part of the motion is granted. This ruling shall apply to all insurance companies left in the case at the time of trial.

Hartford claims that it does not provide coverage for the five policies claimed on the basis of an exclusion from coverage for the term "silicosis hazard" in the text of the exclusion as "(A) An actual exposure or threat of exposure to the harmful properties of silicon, or (B) The presence of silicon in any place, whether or not within a building or structure. Silicon means the mineral in any form, including but not limited to fibers or dust." Thus, the term "silicosis hazard" is clearly not limited to the disease silicosis, as argued by Lone Star, but rather extends to any bodily injury claims related to exposure to silicon in any form.

Lone Star also argues that, because the exclusions use the broader term "silicon" rather than the more narrow term "silica" they do not exclude coverage for bodily injury claims related to exposure to silica and silica dust. Lone Star agrees with the definition of "silica" as a naturally occurring compound of silicon and oxygen and is the principal form of silicon found in nature. Thus, because silica is but one form of silicon and because the Hartford Silica Exclusions clearly relate to silicon in all of its forms, the Hartford Silica Exclusions exclude coverage for bodily injury arising out of exposure to silica, as well as any other substance containing silicon.

Hartford's First State Policy No. EU 002158 follows form to Granite State Policy No. 6484-0153 which contains a broad asbestos and silica exclusion. Lone Star argues that the fact that the Granite State Exclusion is entitled "Asbestos Exclusion Endorsement" creates ambiguity as to the scope of the exclusion with respect to silica-related liabilities. However, the Granite State Exclusion clearly excludes coverage for liability arising out of "the manufacture of, mining of, use of, sale of, installation of, removal of, distribution of or exposure to asbestos, asbestos products, asbestos fibers or asbestos dust, silica dust." Thus, both policies, exclude coverage for all asbestos-related bodily injury and all silica-related bodily injury resulting from exposure to silica dust.

Lone Star argues that Hartford's motion raises a question of fact and suggests that Lone Star rejected certain of the Hartford Silica Exclusions while at the same time claiming that it accepted the Hartford policies. The fact that a representative of Lone Star did not sign the endorsement page to Hartford Policy No. 10 HU SG4258, does not create an issue of fact, since a representative did sign the declarations page. The endorsement specifically provides that "if this endorsement takes effect as of the effective date of the policy and, at issue of said policy, forms a part thereof, countersignature on the declarations page of said policy by a duly authorized agent of the company shall constitute valid countersignature of this endorsement." Thus, Lone Star's signature on the declarations page of Hartford Policy No. 10 HU SG4258 constituted valid acceptance by Lone Star of the policy's silica endorsement.

Lone Star also claims that it "rejected" the silica exclusion in Hartford Policy No. 10 XS SG5699. This contention is based upon what appears to be a mark on the copy of the endorsement which Lone Star has attached to the papers. However, Lone Star has not attached a supporting affidavit to this effect from a person with knowledge of the facts surrounding the purchase of this policy and/or the signing of the endorsement. Such a suggestion would infer that Lone Star could unilaterally accept or reject certain items of coverage without consulting the insurer. Certainly, any deletion of an exclusion would affect the premium paid by Lone Star. Yet, there was no contention that Lone Star paid an increased premium in return for a bargained for deletion of the exclusion. "It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact . . ." Buell Indus., Inc. v. Greater New York Mut. Ins. Co., 259 Conn. 527, 550, 791 A.2d 489 (2002).

Lone Star also notes that the silica endorsement contained in Hartford Policy No. 10 XS SG5699 was signed in December 1988 while the policy term ended on January 1, 1988. The endorsement is included on the "List of Endorsements Forming a Part of the Policy at Issue" and clearly states that it was effective as of January 1, 1987. Therefore, Lone Star's argument, in this regard, is without merit.

Lone Star also argues that there is a question of fact with respect to the asbestos exclusion contained in Hartford Policy No 10 HU SG4258. Specifically, Lone Star argues that because the endorsement was signed by Lone Star on August 14, 1986, and the policy took effect on January 1, 1986, that there is a question of fact regarding whether it was the parties' intent to include it from the beginning.

The asbestos exclusion to Hartford Policy No. 10 HU SG4258 states that it "takes effect as of the effective date of said policy unless another effective date is stated herein." There is no other effective date stated in the endorsement. Moreover, the endorsement is listed in the Form Numbers of Endorsements containing the endorsements that formed a part of the policy at the time of issuance. The endorsement, therefore, was effective as of January 1, 1986.

Hartford's Motion for Partial Summary Judgment is, accordingly, granted.

8. Republic Insurance Company and Government Employees Insurance Company Motions for Summary Judgment

Republic Insurance Company (hereinafter referred to as "Republic") and Government Employees Insurance Company (hereinafter referred to as "GEICO") have moved for summary judgment on the grounds that there is not a justiciable claim in the case as to them, because the high-level excess policies they issued will never be impacted by the underlying silica and asbestos claims. The Republic and GEICO policies are excess of at least $30 million and $50 million.

In view of the fact that Lone Star has admitted, and this court has so ruled, that Lone Star no longer has a cross-claim in this matter, the motions of Republic and GEICO must be granted. Also, the motion must be granted in light of the court's prior opinion relating to a similar justiciability claim. Further, it is noteworthy that Liberty has agreed to withdraw its action against Republic and GEICO, under certain conditions, to which all have agreed. In view of the court's ruling the court would expect that the withdrawal will be filed shortly after the receipt of the court's opinion.

9. Northern Assurance Company of America's Motion For Partial Summary Judgment on the Duty to Defend

Northern Assurance Company of America ("Northern") has moved for partial summary judgment on the grounds that it has no current duty with respect to the underlying silica and asbestos claims because it has not been established that the Highlands Insurance Company ("Highlands") primary policies beneath the Employers Surplus Line Insurance Company ("Employers") Policy No. S-1605967 have been properly exhausted. "Proper" exhaustion, it argues, means that the claims for which Highlands paid indemnity actually involved injury during the Employer's policy period and that Highlands properly allocated the payments on a pro rata basis in accordance with the applicable law. Further, it contends, that even if proper exhaustion can be established, Northern has no affirmative duty to defend any of the underlying claims because under the terms of the Employers contract, Northern can only be obligated to reimburse Lone Star for defense costs incurred in connection with claims that are proven to be covered under the Employers policy.

In opposition, Lone Star agrees that Northern has no current obligation with respect to the underlying claims, because Lone Star has admitted that the Highlands policies have not been proven to be properly exhausted. Liberty Mutual, on the other hand, argues that there is no requirement of "proper" exhaustion of the Highlands policies, and that exhaustion is established merely by the purported payment of the policy limits. In addition Liberty argues that Northern has waived the right to require proper exhaustion.

The limits of the applicable Highlands policy have been exhausted. There is a question regarding whether or not the claims paid by Highlands involved occurrences during the Employers policy period. Northern is required, pursuant to the terms of its policy, to pay a share of defense expenses for a claim once it is established that the claim involves a covered occurrence under the policy.

The Court finds that the issue of the exhaustion of the Highlands policy, and whether the exhaustion involved covered occurrences within the Employers policy period, are questions of fact for the jury or trier of fact. The issue of Northern's share of defense expenses can only be determined after the issue of proper exhaustion is decided by the jury or trier of fact. Northern's Motion for Summary Judgment is, accordingly, denied.

10. Employers Insurance of Wausau's Motion for Partial Summary Judgment

Wausau has moved for partial summary judgment on the grounds that the Wausau policies do not provide any coverage for silica or asbestos-related claims. Wausau issued five excess policies which are at issue in this litigation.

The Wausau policies sit above and follow form to an underlying Granite State policy. Endorsement 1 of said policy provides that the Wausau policies "shall follow the same insuring agreements, exclusions, definitions and other terms and conditions of Granite State Insurance Company." Endorsement 12 to the Granite State Policy states:

It is hereby understood and agreed that the insurance afforded by this policy shall not apply . . . to any liability for property damage, personal injury . . . arising out of the manufacture of, removal of, distribution of or exposure to asbestos, asbestos products, asbestos fibers or asbestos dust, silica dust . . .

The Wausau policies also contain an exclusion for:

silicosis or any lung disease or any ailment caused by or aggravated by inhalation, consumption or absorption of silica fibers or silica dust.

The wording of the Wausau policies is clear and unambiguous. Wausau has no coverage obligations under the Wausau policies with respect to silica or asbestos-related claims. Therefore, Wausau's Motion for Partial Summary Judgment is granted.

11. Zurich International (Bermuda), Ltd's Motion for Partial Summary Judgment

Zurich issued five excess policies to Lone Star for various policy periods between January 1, 1985, and January 1, 1988. Three of the policies contain a silicosis exclusion. Another policy follows the form of a Hartford policy and contains a silica and asbestos exclusion. Another policy follows a different Hartford policy and contains both silica and asbestos excursions. Thus, Zurich has moved for the entry of partial summary judgment relating to these policy exclusions.

For the reasons stated above, in particular the ruling on the Hartford motions, the court grants Zurich's Motion for Partial Summary Judgment.

12. Granite State Insurance Company's Motion for Summary Judgment

Granite State has moved for the entry of summary judgment on the basis of the fact that Granite State's Policy No. 6484-0153, for the policy period from December 31, 1984, to January 1, 1986, contains an "Asbestos Exclusion Endorsement" which excludes coverage for Subsequent Silicosis Claims and Asbestos-Related Claims, as defined in the plaintiff's complaint.

The Granite State Endorsement No. 12 excludes coverage for liability arising out of "the manufacture of, mining or, use of, sale of, installation of, removal of, distribution of or exposure to asbestos, asbestos products, asbestos fibers, or asbestos dust or silica dust."

Lone Star has raised an issue about the propriety of a submission of two pages of this policy. There is also a question relating to another potential policy that may have been in existence with one number changed in the policy number. The court is satisfied, however, that a complete policy has been sent to all of the parties concerned. Therefore, on the basis of the prior ruling of the court, relating to similar contract exclusion language, Granite State's Motion for Summary Judgment is granted.

13. Lexington Insurance Company's Motion for Summary Judgment

Lexington issued a series of Excess Liability policies to Lone Star for the period of January 1, 1993, through January 1, 1995. These policies sit atop Umbrella Liability policies issued by National Union Fire Insurance Company during the same period. These policies contain a similar exclusion for damages arising out of silica dust. In addition, Lexington issued an Excess Umbrella Liability policy to Lone Star for the period of January 1, 1989 to January 1, 1990. This policy contains both an "Asbestos" exclusion and a "Silicosis" exclusion.

For the reasons previously stated, Lexington's Motion for Summary Judgment is granted.

14. National Union Fire Insurance Company of Pittsburgh's Motion for Summary Judgment

National Union provided Lone Star with primary coverage from 1992 through 2003. National Union issued a series of Commercial General Liability policies to Lone Star for the period of January 1, 1994, through January 1, 2000. All of those policies contained an "Asbestos Exclusion Endorsement" similar to the exclusion previously discussed. In addition, National Union issued an Umbrella policy for the period of January 1, 1985, through January 1, 1986, which contained a silicosis exclusion endorsement. In view of the court's prior ruling National Union's motion is granted.

15. American Home Assurance Company's Motion For Summary Judgment

American Home issued Commercial General Liability policies to Lone Star for the periods of December 31, 1999, through December 31, 2003. All of said policies contained an "Asbestos Exclusion Endorsement" and a "Silicosis Exclusion Endorsement" which contains similar language to those policies previously discussed. Therefore, American Home's Motion for Summary Judgment is granted.

16. TIG's Motion for Summary Judgment

TIG issued certain Excess Umbrella policies to Lone Star. Those policies exclude coverage for bodily injury and property damage that arises from irritants, contaminants, or pollutants.

Lone Star argues that the definition of "pollution hazard" contained in the TIG policies does not expressly include silica or asbestos and, therefore, the underlying silica and asbestos claims do not trigger the pollution exclusion. However, in the case of Peerless Ins. Co. v. Gonzalez, 241 Conn. 476, 483 (1997), the Connecticut Supreme Court held that there "is no specific requirement that a policy exclusion be cast in specific rather than general terms."

The exclusion in the Peerless policy applied to "injuries resulting from exposure to, or contact with lead contained in goods, products, or materials." Id. at 480. The plaintiff claimed that the exclusion did not apply because it did not specifically state "lead paint." The Connecticut Supreme Court rejected this argument. The Court stated that the "relevant inquiry is not whether the policy issued by Peerless expressly excludes lead paint from its coverage but, rather, whether the language of the exclusionary provision nevertheless clearly and unambiguously applies to lead paint." Id. at 483.

There can be no question that silica and asbestos are "pollutants" within the meaning of the policy. Therefore, the motion filed by TIG for Summary Judgment is granted.

17. Agricultural Excess and Surplus Insurance Company's Motion for Summary Judgment

Agricultural issued Policy XS 0005347 to Lone Star for the period from April 16, 1986, through December 31, 1986. The policy contains an endorsement which has a silicosis exclusion, which states that the policy does not apply to bodily injury caused by or exacerbated by silicosis including any material or products containing any silica.

Based upon the court's prior ruling, there is no coverage for silicosis-based claims. Agricultural's Motion for Summary Judgment is granted.

18. National Casualty's Motion for Summary Judgment

National Casualty issued an Excess Umbrella policy of insurance to Lone Star bearing policy number XU00000394, with effective dates of April 1, 1986, through January 1, 1987. The policy excluded claims for an underlying Hartford policy, and National Casualty has also joined in the Hartford's Motion for Summary Judgment. The National Casualty policy has a clear exclusion for asbestos. The underlying Hartford policy has a clear exclusion for silicosis. Therefore, based upon the court's prior ruling, National Casualty's Motion for Summary Judgment is granted.

19. Hartford Entities' Cross-Motion for Partial Summary Judgment with respect to First State Policy No. 002158

Hartford Entities' company First State Insurance issued an Excess Umbrella policy to Lone Star for the policy period from January 1, 1985, until January 1, 1986. The First State policy follows form to and incorporates the terms and provisions of the Granite State policy previously discussed. The court has already ruled that the Granite State policy excludes coverage for silica-related and/or asbestos-related bodily injury claims. Therefore, coverage for said claims is also excluded under the First State policy. The Motion for Summary Judgment filed by Hartford Entities with respect to the First State policy, is, therefore, granted.

20. Federal Insurance Company's Motion for Summary Judgment

Federal Insurance issued an Excess Liability policy to Lone Star for the policy period from January 1, 1985, to January 1, 1986, which incorporates the terms and provisions of the Granite State policy to the extent those terms and provisions are consistent with the Federal policy. Thus, the Federal policy also excludes coverage for Subsequent Silicosis Claims and Asbestos-Related Claims, as defined in the complaint, pursuant to the Granite State Asbestos Exclusion Endorsement. Thus, any claims for the Subsequent Silicosis Claims and Asbestos-Related Claims are not covered under Federal Excess Liability Policy bearing policy number (86) 7928-86-08 issued for the policy period from January 1, 1985, to January 1, 1986.

Federal Insurance's Motion for Summary Judgment is granted.

III. CONCLUSION

Based upon the foregoing reasons, the court has ruled regarding all of the summary judgment motions submitted at this time. The rulings in each individual section shall become the judgment or rulings of the court upon each motion. In those cases where the court has granted the summary judgment motion, judgment shall enter accordingly.