ASARCO Can Argue For Legal Expenses From Fireman's Fund

NU Online News Service, June 25, 3:24 p.m. EDT

ASARCO, an Arizona-based copper company that declared bankruptcy in 2005, will have its day in court regarding the payment of legal expenses if it prevails in its case against Fireman's Fund Insurance Company, a Texas judge ruled.

Judge J. Manuel Ba?ales, of the 105th Judicial District Court of Nueces County, Corpus Christi, Texas, denied Fireman's motion for partial summary judgment in the case involving a dispute over asbestos claims coverage

Fireman's argued that the language of the policy in question "unambiguously" gave it sole discretion to decide if it wished to pay any legal expenses, according to Rhonda D. Orin, managing partner in the Washington, D.C. office of Anderson Kill & Olick and lead insurance counsel to ASARCO.

As reported in a March, 13 NU Online article, the underlying legal action involves a determination of insurance coverage for past, present and future asbestos liabilities. In March, Judge Ba?ales ruled that an "asbestosis" exclusion in the Fireman's policy does not bar coverage from other asbestos-related diseases.

Ms. Orin said in this latest decision, Judge Ba?ales did not give a reason why he denied Fireman's motion for summary judgment regarding payment of legal expenses, and under Texas law, she noted, he is not obligated to give a reason.

Ms. Orin noted that Judge Ba?ales did not say Fireman's has to pay the legal expenses, but rather that the policy language is not unambiguous. This means if Fireman's is found liable during trial, ASARCO will subsequently be able to argue for the payment of legal expenses in court.

Ms. Orin said the cutoff in discovery proceedings for the upcoming trial is Feb. 1, 2010.

A spokesperson from Fireman's said, "While Fireman's Fund had asked the court to grant its motion for partial summary judgment last week and to remove the issue of defense costs from the case at this time, all that happened on Friday was that the judge left the issue of defense costs to be decided at trial. Fireman's Fund looks forward to presenting its position then."