MADISON, WIS. A Wisconsin Supreme Court ruling that an insurer should pay damages for individual asbestos claimants as separate occurrences and should cover injuries suffered outside of a policy period is a big victory for commercial general-liability policyholders in the state, observers say.
In Plastics Engineering Co. vs. Liberty Mutual Insurance Co., the high court ruled that each individual plaintiff's repeated and continuous exposure constitutes a separate occurrence within an insurance policy.
In addition, the court ruled that if an individual was injured during a policy period, an insurer is responsible for all of the damages, even if part of the injuries took place outside of the policy period.
The ruling is expected to shape insurance disputes relating to long-tail exposure claims in the state, observers say. Courts throughout the country have ruled differently on both issues.
The case involves Sheboygan, Wis.-based Plastics Engineering Co., which has been a defendant in hundreds of lawsuits for claims arising from individuals' exposure to asbestos-containing products it made from 1950-83.
Boston-based Liberty Mutual provided primary general-liability coverage to the manufacturer, known as Plenco, from February 1968 through January 1989; and umbrella policies from May 1970 through January 1984, and January 1986 through January 1988.
Through 2005, Liberty Mutual paid $14.3 million in damages related to Plenco's asbestos claims, court papers say. The insurer then argued that it had paid out its applicable limits under the primary policies and sought a declaration as to the total amount it owed under the umbrella policies.
To determine that, a Wisconsin federal court in 2006 ruled that each person's injury resulting from exposure to asbestos-containing products constituted one occurrence under Liberty Mutual's policies. It also ruled that Liberty Mutual was obligated to pay all sums arising from an occurrence and is not entitled to a pro rata contribution from Plenco.
On appeal, the U.S. Court of Appeals for the Seventh Circuit stayed the case and asked the state Supreme Court to certify unresolved Wisconsin law: What constitutes an occurrence in an insurance contract when exposure injuries are sustained by numerous individuals, at varying geographical locations, over many years; and whether Wisconsin courts should adopt an ``all sums'' or pro-rata allocation approach to determining liability when an injury spans multiple, successive insurance policies.
On Jan. 29, the state Supreme Court concluded that, based on the language of the policies and the facts of the case, each claimant's repeated exposure is one occurrence and that Liberty Mutual must fully defend the lawsuit in its entirety and pay for all sums up to the policy limits that Plenco is obligated to pay because of the injury.
Plenco's lawyer Jeff Davis, a partner with Quarles & Brody LLP in Milwaukee, hailed the decision, which he said is significant for environmental cases going forward.
Liberty Mutual's lawyer, John Sullivan of Post & Schell PC in Philadelphia, declined to comment.