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Acands Inc. v. Aetna Casualty and Surety Co.

June 17, 1985


On Appeal from the United States District Court for the Eastern District of Pennsylvania.

Seitz and Adams, Circuit Judges, and Fisher, District Judge.*fn*

Author: Seitz

SEITZ, Circuit Judge.

Defendants Aetna Casualty and Surety Company ("Aetna") and Travelers Indemnity Company and Travelers Insurance Company ("Travelers") Appeal from a judgment of the district court made final pursuant to Fed. R. Civ. P. 54(b) that granted plaintiff ACandS, Inc.'s (ACandS") motion for partial summary judgment in this declaratory judgment action. Subject matter jurisdiction in the district court existed pursuant to 28 U.S.C. § 1332. this court has Appellate jurisdiction under 28 U.S.C. § 1291.

I. Background

ACandS is a contracting company that installs insulation products. From 1958 until Approximately 1973 ACandS is currently a defendant in thousands of lawsuits in which plaintiffs have alleged personal injury as a result of exposure to these products. Such claims have in turn generated extremely difficult problems as to the insurance obligations of liability insurance carriers.

Asbestosis, mesothelioma, and broncheogenic carcinoma are the three asbestos-related diseases that have been brought to this court's attention. The parties do not agree on the precise etiology of each of these diseases. It is undisputed, however, that the inhalation of asbestos particles may cause these diseases, and that decades may elapse between the inhalation of asbestos and manifestation of the diseases.

It is undisputed for the purposes of this Appeal that ACandS purchased comprehensive general liability insurance policies for the entire period in which it used asbestos products. Travelers issued these policies from 1958 to 1963, and Aetna issued the policies for the rest of the period in which ACandS used asbestos products. Aetna continued to issue policies after ACandS stopped using asbestos, up until 1981.

When persons alleging asbestos-related injuries began to bring actions against ACandS, it called upon its insurers to provide legal defense to these actions and indemnification for any losses incurred. Disputes arose among ACandS, Aetna, and Travelers concerning the interpretation of the policies in the asbestos context. Most significantly, Aetna and Travelers disagreed between themselves as to which policies covered these claims.

ACandS brought this declaratory judgment action against Aetna and Travelers in order to determine their obligations to it under the respective policies. The district court dismissed the case as nonjusticiable, and that dismissal was reversed by this court. ACandS, Inc. v. Aetna, 666 F.2d 819 (3d Cir. 1981). On remand, ACandS moved for partial summary judgment arguing, among other things, that coverage*fn1 is triggered on all policies in effect from the time a personal injury plaintiff was exposed to asbestos until the time asbestos-related disease manifested itself. The district court granted ACandS' motion, declaring that "exposure," "exposure-in-residence,"*fn2 and "manifestation" all trigger coverage under the policies. The court decided related issues submitted for summary judgment that also will be addressed herein.

II. Trigger of Coverage

This Appeal requires us to interpret insurance contacts between ACandS and its insurers, and to determine what events must have occurred during the term of a policy to trigger that policy's coverage in an asbestos-related personal injury action. Under Pennsylvania law, which we deem controlling,*fn3 "the task of interpreting a contract is generally performed by a court . . . . The goal of that task is, of course, to ascertain the intent of the parties as manifested by the language of the written instrument." Standard Venetian Blind, Co. v. American empire Insurance Co., 503 Pa. 300, 304-05, 469 A.2d 563, 566 (1983). Thus, in order to determine how coverage is triggered under these liability insurance policies, we turn to the policy language.

The language with respect to this issue changes somewhat over the various policy years, but none of the parties attribute any special significance to these changes. The policies in force from 1976 until 1981 are thus representative. They provide:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated ...

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