Excess Insurer Not Allowed To Introduce Asbestos Exclusion In Upcoming Trial In Pennsylvania

In a lingering dispute related to the insurance available to a manufacturer of asbestos-containing products, the last non-settling excess insurer sought to preclude the manufacturer from presenting “any evidence of damages at trial.”  That insurer, Insurer A, contended that the manufacturer cannot prove any insured damages because Insurer A‘s policies incorporate an asbestos exclusion contained in an umbrella liability policy that Insurer B sold to the manufacturer.  Insurer A‘s policy, however, does not contain or attach the exclusion and does not mention Insurer B by name, nor does Insurer B‘s policy refer to Insurer A‘s policies.  The “Schedule of Underlying Insurance” contained in Insurer A‘s policies names a different insurer, Insurer C, as the controlling underlying umbrella liability insurance.

Yesterday, the U.S. District Court for the Eastern District of Pennsylvania rejected Insurer A’s argument that the language of its “Schedule of Underlying Insurance” be construed to mean that Insurer B‘s policy — and not Insurer C‘s policy — is the controlling underlying umbrella liability insurance.  The court concluded that the assertion that Insurer C really means Insurer B is an assertion of fact founded on inferences drawn from circumstances and materials extrinsic to the plain language of Insurer A‘s policies:  “In short, [Insurer A‘s] motion is not one to interpret the meaning of the Schedule’s express terms.  Instead, it is one to reform [Insurer A‘s] policies to coincide with the parties’ supposed intent … Yet [Insurer A] did not plead a counterclaim for reformation or rescission of its policies [as did several of the insurers that previously settled].”

The court ruled that Insurer A could not introduce evidence or argument about the Insurer B policy at trial.