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J.H. FRANCE REFRACTORIES CO. AND VAN BRUNT COMPANY v. ALLSTATE INSURANCE COMPANY (04/06/88)

filed: April 6, 1988.

J.H. FRANCE REFRACTORIES CO. AND THE VAN BRUNT COMPANY
v.
ALLSTATE INSURANCE COMPANY, PMA INSURANCE COMPANY, ST. PAUL INSURANCE COMPANY, U.S. FIRE INSURANCE COMPANY, WAUSAU INSURANCE COMPANY, AND ROCKWOOD INSURANCE COMPANY



Appeal from the Order entered April 18, 1986, Court of Common Pleas, Philadelphia County, Civil Division at No. 3933 February Term, 1981 and No. 1146 January Term, 1984.

COUNSEL

Mark D. Turetsky, Norristown, for J.H. France Refractories, Co.

John C. Sullivan, Philadelphia, for Allstate Ins. Co.

Wayne A. Schaible, Philadelphia, for PMA Ins. Co.

Ralph L. Hose, Ardmore, for St. Paul Ins. Co.

John A. Luchsinger, for U.S. Fire Ins. Co.

William F. Sullivan, Jr., Philadelphia, for Wausau Ins. Co.

Mitchell S. Pinsly, Philadelphia, for Rockwood Ins. Co.

Cirillo, President Judge, and Cavanaugh, Brosky, Del Sole, Montemuro, Tamilia, Kelly, Popovich and Johnson, JJ. Brosky, J., files a dissenting opinion. Cirillo, President Judge, files a dissenting statement in which he joins Brosky, J., dissenting opinion.

Author: Johnson

[ 372 Pa. Super. Page 576]

J.H. France Refractories Company (France) manufactures a line of refractory products. Between 1956 and 1972 France used asbestos in one of its products called Franco-Therm. France also sold products containing silica beginning in 1924 and continuing to the time of this litigation. Van Brunt Company was a wholly owned subsidiary of France which achieved its current status as a division of J.H. France Refractories Company through a merger. Van Brunt is a sales organization with warehouse facilities. Van Brunt at one time sold products containing asbestos and presently sells products containing silica.

In 1981 France filed a declaratory judgment action against Allstate Insurance Company, Pennsylvania Manufacturer's Association Insurance Company, St. Paul Insurance Company and U.S. Fire Insurance Company. France sought a declaration of the contractual obligation of the

[ 372 Pa. Super. Page 577]

    defendant insurance companies to afford coverage and provide a defense to France in an asbestos related lawsuit initiated by Charles and Gladys Temple. The Temple lawsuit sought recovery for asbestos-related injuries caused by exposure to asbestos products sold by France and others.

In 1984 Allstate commenced a second declaratory judgment action in which it named as defendants France, Pennsylvania Manufacturers' Association Insurance Company, St. Paul Fire Insurance Company, U.S. Fire Insurance Company, and Wausau Insurance Company. Allstate later added Rockwood Insurance Company as a defendant. Also joined were 14 individual defendants who, like the Temples, were claimants in asbestos and/or silica-related lawsuits brought against France. This action, as did the first, sought to resolve insurance coverage disputes between the parties. Specifically, it sought to determine the extent of the obligation of each insurance company and France for the defense/indemnity of the tort actions.

The two actions were consolidated. France motioned and a number of parties cross-motioned for summary judgment, based on essentially identical policy language in each company's insurance policy. France sought a determination of when coverage was triggered and the scope of the triggered coverage, as well as attorney's fees and expenses based on allegations of bad faith.

The Court of Common Pleas denied the request for counsel fees, finding that no party acted in bad faith. In all other respects the court granted the motion for summary judgment and found the following:

In the context of asbestos or silica-related diseases, "bodily injury" shall mean any part of the process from initial exposure to manifestation, inclusive. Any insurer whose policy was in effect during the period of bodily injury is liable in full for indemnification and defense of any claims arising out of bodily injury during the time its policy was in effect. From among the insurers whose policies were in effect during the entire period of bodily injury, the duty to indemnify and the duty to defend first falls upon

[ 372 Pa. Super. Page 578]

    the insurer whose policy was first in effect. If that insurer's highest applicable policy limit is exhausted, the insurer whose policy was next in effect must indemnify and defend until its highest applicable policy limit is exhausted. Defense costs and indemnity payments shall be allocated among the insurers whose policies activated (including the insured for any relevant period of uninsurance) in accord with the policies' "other insurance" clauses or the equitable doctrine of contribution.

Order of April 18, 1986. Multiple appeals were taken from the order.

The parties ask this Court to review the substantive resolution of issues which was reached by the lower court. This we cannot do because of our determination that the Common Pleas Court lacked jurisdiction to issue a declaratory judgment on this record. We believe this result follows from an application of the Pennsylvania Supreme Court decision in Vale Chemical Company v. Hartford Accident and Indemnity Company, 512 Pa. 290, 516 A.2d 684 (1986), to the facts of this case.

The facts in Vale involve a declaratory judgment action brought by Vale Chemical Company against its insurance carriers, Hartford Accident and Indemnity Company (Hartford), Manufacturers' Casualty Insurance Company (Manufacturer's) and Transamerica Insurance Company (Transamerica). Vale sought a determination of whether its insurance contracts with the companies required them to defend Vale and indemnify it against a separate action commenced by Sandra Smith in Illinois. In this separate action Smith had sued Vale and other manufacturers of the drug diethylstilbestrol (DES) to recover damages for vaginal cancer she claimed to suffer as the result of her mother's use of DES during pregnancy. Transamerica's predecessor-in-interest, Manufacturers', had insured Vale at the time Smith's mother ingested DES. Hartford provided coverage to Vale at the time Smith was diagnosed with cancer.

The Common Pleas Court required the companies to provide a defense. The Superior Court affirmed that ruling,

[ 372 Pa. Super. Page 579]

    and in so doing adopted a "multi-trigger" theory of liability. Under that theory the insurance policy language "bodily injury", "sickness" or "disease" was interpreted to include coverage from the time of exposure to the drug to the time of manifestation. Accordingly, both the company which insured Vale at the time Smith's mother took the drug, and the company which insured Vale when Smith's cancer manifested itself were required to defend and if necessary indemnify Vale.

The insurance companies in Vale appealed by allowance to the Pennsylvania Supreme Court. That court held that the Common Pleas Court lacked jurisdiction to issue a declaratory judgment on the record in Vale. The court therefore vacated the Superior Court's order and remanded the case to the Common Pleas Court with directions to dismiss Vale's suit for lack of subject matter jurisdiction. The court based the dismissal on the failure to join the proper parties.

The court commenced its analysis with reference to the Declaratory Judgments Act, 42 Pa.C.S. § 7531 et seq., which provides that:

When declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding.

42 Pa.C.S. § 7540(a). The court in Vale found that Smith, the Illinois tort plaintiff, had an interest in the Pennsylvania declaratory judgment action commenced by Vale, because the action sought a declaration about coverage for the tort action which Smith had commenced. Smith was thus found to be an indispensable party. She was not joined because personal jurisdiction over her could not be had. However, since Smith had an interest which would have been affected by the declaration, and she was not joined, the ...


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