In Greene, Tweed & Co., Inc. v. Hartford Acc. & Indem. Co., No. 03-3637, 2006 WL 1050110 (E.D. Pa. Apr. 21, 2006), the U.S. District Court for the Eastern District of Pennsylvania ruled that thousands of asbestos claims constituted only one occurrence under umbrella excess liability policies.

 

Greene Tweed was the defendant in thousands of actions claiming that “it is subject to a tort liability for bodily injury, sickness, and disease allegedly sustained by the underlying claimants as a result of asbestos-containing products” it allegedly manufactured. The number of claims against Greene Tweed amounted to about 60,000 claims.

 

Greene Tweed was insured under primary liability policies with Hartford between 1965 and 1977. The policy limits of those policies are close to being exhausted. Greene Tweed also had an excess liability policy with Hartford from 1970 to 1973, when it was replaced with a policy from American Home. Greene Tweed also bought an Allstate umbrella excess liability policy in 1974 with a three year, eight month term.

 

While Allstate and American Home argued that the claims against Greene Tweed resulted from one occurrence, Greene Tweed countered that the claims represent multiple occurrences.

 

The court found that Liberty Mut. Ins. Co. v. Treesdale, Inc., 418 F.3d 330 (3d Cir. 2005) governs in this case. In that case, the Third Circuit said that “in the insurance industry, 'occurrence' is commonly understood to mean all loss caused by a single act or related events.” That court applied the causes of loss test: is there but one proximate, uninterrupted, and continuing cause that resulted in all of the damage and injuries?

 

The district court, after applying the causes of loss test, found that one occurrence did cause all of the injuries and damage in this case. The court said, “In the instant case, the 60,000 asbestos claims against Greene Tweed have a common source or cause, that is, Greene Tweed's manufacture and sale of asbestos products.”

 

Greene Tweed also alleged that the per occurrence limits should apply separately for each year of the multiyear policies. The court, though, said that the policy distinguished between aggregate and per-occurrence limits, providing a single limit per occurrence during the entire multiyear term; the aggregate limit applied as an annual limit, regardless of the number of occurrences that occur during the annual period.

 

The American Home policy contained a noncumulation clause, which the insurer said prevents the insured “from 'stacking' successive excess insurance policies to respond to the same loss.” The court, however, found it to be an unenforceable escape clause and cannot be enforced under Pennsylvania law.

 

The court granted Greene Tweed's motion for partial summary judgment over the issue of the noncumulation clause; the motion over the number of occurrences was denied.