Union Carbide Corp. v. Affiliated FM Ins. Co.
(Supreme Court, Appellate Division, First Department, December 6, 2012)
This environmental coverage dispute arises out of an underlying asbestos claim. The trial court granted Union Carbide
partial summary judgment striking the insurer’s defense that there was no coverage for the claims because the manufacturer expected or intended the bodily injury that resulted from exposure to its asbestos products.
The insurer asserted that Union Carbide intended the damages because it knew that asbestos would cause injuries and that claims would be filed against it. The Appellate Court concluded that Union Carbide met its burden that the damages at issue were the result of an “occurrence” and therefore, the insurer’s policy provided coverage. Specifically, the court noted that the records supported Union Carbide’s contention that, although it was aware of some risk involved in the use of asbestos, at all times it believed that its asbestos products could be used safely under the right conditions. The manufacturer also proved the lack of any intent, provided evidence that it published regulatory information in trade periodicals, and provided information regarding the dangers of asbestos, as well as the proper use of its products.
Conversely, the Appellate Court concluded that the insurers failed to meet their burden in proving the applicability of the expected or intended injury exclusion. The court noted that the manufacturer was “merely aware” that asbestos could cause injuries and that claims “could be filed.” Therefore, Union Carbide’s ‘calculated risk’ in manufacturing and selling its products, despite its awareness of possible injuries, did not amount to an expectation of damage.
Lastly, the court rejected the insurers’ claims that Union Carbide was re-litigating issues already decided by a California jury directing the company to pay punitive damages. The court held that it was impossible to discern exactly which facts played a part in the jury’s punitive damage verdict based on the nature of the instructions provided.