St. Louis Record

Saturday, April 4, 2020

Judge finds insurer's pollution exemption to policy clears it from Anheuser-Busch asbestos settlement obligation


By Scott Holland | May 30, 2019

ST. LOUIS – A federal judge has determined Insurance Co. of North America (INA) owes no money to Zurich American Insurance Co. stemming from the settlement of an asbestos claim.

Both companies provided coverage for Anheuser-Busch during the time period in which the underlying plaintiff's asbestos exposure allegedly occurred. It was Zurich that settled and paid the claim on behalf of Anheuser-Busch in 2014, after which it sued INA over allegations of equitable contribution, subrogation and unjust enrichment. INA asserted a defense of failure to include all necessary parties, prompting Zurich to add the beer company as a defendant, only for it to be dismissed from the suit on May 8, 2018.

In an opinion issued May 21, Judge Catherine Perry of the U.S. District Court for the Eastern District of Missouri said both parties moved for summary judgment. She explained the underlying lawsuit, Cotter v. Am. Insulation Corp., was a 2008 wrongful death claim from the wife of a former brewery employee who alleged she contracted mesothelioma from asbestos fibers her husband carried home from work on his clothing.

Perry pointed to a 2017 Missouri Court of Appeals opinion in Nooter Corp. v. Allianz Underwriters Insurance holding a “targeted insurer” that covers an entire loss can seek contributions from other “trigged insurers,” as well as recovery standards allowing one insurer to recover the excess it may have paid from another.

INA maintained the policies it wrote for Anheuser-Busch had a pollution exclusion, but Zurich said INA waived its right to assert that exclusion when failed to plead it as an affirmative defense. INA said it made such a pleading in its 12th affirmative defense. Perry noted the burden of proving the exclusion lies with INA, then explained how it met that burden.

“There is no ambiguity in the terms of the policy, which plainly bars coverage for the types of asbestos claims raised in the Cotter case,” Perry wrote, adding Zurich’s arguments about the ambiguity of the policy regarding whether asbestos is an irritant or a contaminant fail because “the policy is not rendered ambiguous as a matter of law merely because asbestos is not explicitly listed in the exclusion.”

Perry said the Missouri Supreme Court, in a 2017 opinion in Doe Run Residential Corp. v. American Guarantee & Liability Insurance, said an insurer’s pollution exemption precluded coverage connected to alleged lead pollution even though the exemption language didn’t explicitly mention lead.

Zurich also argued INA’s exemption was insufficient because it addresses pollutants discharged in the atmosphere, whereas the wrongful death suit alleged contact with asbestos fibers on clothing. Perry said that argument failed because the type of contaminant release alleged “clearly and unambiguously constitutes a release ‘in the atmosphere’ because it occurred outside the confines of the brewery’s building. (Zurich) offers no explanation — nor could it — of how the asbestos could travel from inside the brewery and come into contact with the decedent without also being released into the “atmosphere.’”

INA also had to demonstrate how the alleged discharge of asbestos fibers was neither sudden nor accidental, but Zurich didn’t contest whether INA demonstrated its burden of proof on that issue. Further, Perry wrote, the Anheuser-Busch “allegedly had knowledge of the dangers posed by the toxic dust when it released from the brewery and of the need for hygienic procedures to protect from these dangers, but failed and refused to implement any safety procedures, such as laundry services, to protect those at risk from these dangers.”

Finding the pollution exemption meant INA had no obligation to contribute to the policy, regardless of the timing of the underlying complaint or exposure, Perry granted INA’s motion for summary judgment.

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U.S. District Court for the Eastern District of Missouri