The Pennsylvania Superior Court on March 4 affirmed a trial court ruling that said an American International Group subsidiary had a duty to defend Titeflex Corp. in the remaining litigation over a connector device that was implicated in a 1998 gas leak. The three-judge panel concluded that National Union Fire Insurance Co. (NUFIC), as Titeflex’s excess liability insurer, was obligated to defend the manufacturer because, under Pennsylvania law, the company had exhausted coverage under its primary insurer.
The court said that Pennsylvania law, rather than New York law, applies to the case, and emphasized the state does not recognize the “multiple-trigger theory” for this type case. That theory is used in asbestos cases to apportion liability across multiple coverage periods. Instead, the court said the incident in this case just triggered one policy year for the primary insurer, Kemper Corp., and as a result the $1 million limit on that policy was depleted. Senior Judge Eugene Strassburger wrote in the opinion:
The 1997-1998 policy covered any “occurrence” that happened during that time period. Thus, even though some alleged injuries did not manifest until years later … only the policy of the year of the occurrence is implicated.
The litigation stems from a leak at a gas station in Montgomery County owned by Thomas Wagner, which led to leakage on a number of neighboring properties. Wagner and Titeflex, which made a flexible connector used at the site, along with other manufacturers and installers, were sued in a series of lawsuits. Wagner, the owner, filed cross claims against Titeflex. According to the court’s opinion, Titeflex held a primary insurance policy with Kemper, which had a limit of $1 million per occurrence and an aggregate limit of $2 million. NUFIC provided an umbrella policy with limits of $50 million per occurrence with a $100 million aggregate.
The court’s opinion says that Titeflex and Kemper together paid $1 million to settle some of the claims in 2007, while NUFIC paid another $9 million in the settlement under its umbrella coverage. That same year, Titeflex filed a declaratory judgment suit against NUFIC in a Philadelphia court, seeking to hold the insurer responsible for coverage. That suit also included claims of bad faith and breach of contract.
In June 2012, the trial court ruled in favor of Titeflex in multiple motions for summary judgment, concluding that the insurer was obligated to defend the company against Wagner in the remaining portions of the underlying lawsuits. NUFIC appealed. Titeflex initially argued that the Superior Court did not have jurisdiction over the case, contending that no final orders had been entered by the trial court. But the appeals court disagreed, concluding that the only thing left for the trial court to decide was “the amount of indemnification,” which could not be resolved until “the resolution of the underlying lawsuits.”
The Superior Court, in dealing with the substance of the appeal, said that NUFIC had asserted a false conflict between Pennsylvania and New York law in the case. The court concluded that both state’s laws would treat the accident as one occurrence, thereby triggering the excess policy. Judge Strassburger wrote in his order:
Because the instant case does not concern a toxic tort, but instead emanates from injuries alleged to have occurred as a result of one specific event, a gasoline leak, we conclude that NUFIC’s argument is without merit.
This was a most interesting case and the conclusions reached by both the trial and appellate courts appear to be factually and legally sound. Insurance Companies continue to find ways to attempt to avoid covering claims under their policies.
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