Certiorari Denied March 8, 1982. See 102 S.Ct. 1644.
Opinion filed by Circuit Judge WALD concurring in part.
BAZELON, Senior Circuit Judge:
This case arises out of the growing volume of litigation centering upon manufacturers' liability for disease caused by asbestos products. In this action, Keene Corporation (Keene) seeks a declaratory judgment of the rights and obligations of the parties under the comprehensive general liability policies that the defendants issued to Keene or its predecessors
Between the years 1948 and 1972, Keene manufactured thermal insulation products that contained asbestos. As a result, Keene has been named as a codefendant with several other companies in over 6000 lawsuits alleging injury caused by exposure to Keene's asbestos products. Those cases typically involve insulation installers or their survivors alleging personal injury, or wrongful death, as a result of inhaling asbestos fibers over the course of many years. The plaintiffs in the underlying suits allege that they contracted asbestosis, mesothelioma, and/or lung cancer as a result of such inhalation.
From 1961 to the present, Insurance Company of North America (INA), Liberty Mutual Insurance Company (Liberty), Aetna Casualty and Surety Company (Aetna), and Hartford Accident and Indemnity Company (Hartford) issued comprehensive general liability (CGL) insurance policies to Keene. From December 31, 1961 through August 23, 1968, INA insured Keene; from August 23, 1967 through August 23, 1968, Liberty insured Keene;
E.g., J.A. II at 627. "Bodily injury" is defined as "bodily injury, sickness or disease sustained by any person," id. at 663; and "occurrence" is defined as "an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury ... neither expected nor intended from the standpoint of the insured. Id. at 664.
Keene tendered the asbestos-related damage cases to its insurance companies for defense and indemnification. Each company, however, either denied all responsibility for the suits or accepted only partial responsibility. Memorandum op. at 2 (J.A. IX at 3532).
On June 6, 1978, Keene filed this suit for a declaratory judgment and damages in the United States District Court for the District of Columbia. Keene contended that any stage in the progression of an asbestos-related disease triggers coverage of Keene's entire liability under each of the policies. Aetna, INA, and Liberty argued that coverage is triggered only when bodily injury manifests itself during a policy period. Hartford took an intermediate position, arguing that coverage is triggered by the inhalation of asbestos fibers, but that each company's coverage is determined by the ratio of exposure years during its policy period to the entire period of inhalation.
Keene and Hartford filed motions for partial summary judgment based on their respective theories of coverage, and Aetna filed a motion for summary judgment asserting that no case or controversy had been presented. On January 30, 1981, the district court granted Hartford's motion; it granted in part and denied in part Keene's motion; and it denied Aetna's motion. 513 F.Supp. 47. The district court held that indemnification and defense costs should be prorated among the insurance companies according to the relative extent of exposure during their respective policy periods. The district court also held that Keene is liable for a pro-rata share of the costs when exposure occurred during a period in which Keene was uninsured. J.A. IX at 3537-38.
Pursuant to 28 U.S.C. § 1292(b) (1976), the district court, sua sponte, certified its order for interlocutory appeal. INA, Liberty, Aetna, and Keene filed Petitions for Leave To Appeal, and on February 20, 1981, this court granted those petitions and ordered that the appeals be consolidated and expedited. We reverse the district court's order and remand the case to trial on the issues of damages and on the issue of the applicability of Liberty's 1967 policy.
I. JUSTICIABILITY
Aetna argues that Keene's declaratory judgment action does not present a case or controversy. Aetna asserts that Keene must raise insurance coverage issues in the context of a particular case in which an insurance company has refused to defend or indemnify Keene. We disagree.
This suit by Keene does not present a hypothetical set of facts. Keene has been, and will continue to be, sued for injuries that result from the use of its asbestos products. For each of these suits — past, present, and future — the rights and obligations of Keene and its insurers must be resolved. There can be no question that the interpretation of the contracts at issue in this case presents a "real and substantial controversy" that can be specifically resolved by a decision in this case.
Aetna implies that the rights and obligations created by the insurance policies cannot be determined without consideration of the facts of a particular tort suit. We have before us, however, the terms of the insurance policies and the facts of the particular types of diseases whose coverage is at issue. We are not aware or informed of any facts that would come to light in a particular tort suit that would be relevant to the determination of the policies' applicability to Keene's liability for asbestos-related injury. We hold, therefore, that the case is justiciable.
II. COVERAGE OF THE INSURANCE POLICIES
The language of each policy at issue in this case clearly provides that an "injury," and not the "occurrence" that causes the injury, must fall within a policy period for it to be covered by the policy. Most suits brought under this type of policy involve an injury and an occurrence that transpired simultaneously, or, at least, in close temporal proximity to one another. In cases involving asbestos-related disease, however, inhalation — the "occurrence" that causes the injury — takes place substantially before the manifestation of the ultimate injury — asbestosis, mesothelioma, or lung cancer.
We conclude that each insurer on the risk between the initial exposure and the manifestation of disease is liable to Keene for indemnification and defense costs. If possible, the factual predicate for the allocation of costs among insurers should be based on the facts of the underlying tort suit. If, however, the tort doctrine governing the underlying suit does not require proof of facts that would form a sufficient basis upon which to allocate insurance liability, then the necessary facts may be determined independently of that suit.
In construing the policies' coverage of liability for asbestos-related diseases, our objective must be to give effect to the policies' dominant purpose of indemnity. Couch on Insurance 2d, §§ 15:22, 15:41 (2d ed. Anderson 1959); 4 Williston on Contracts, § 900 (3d ed. Jaeger 1959). An insurance contract represents an exchange of an uncertain loss for a certain loss. In a comprehensive general liability insurance policy, the uncertain loss is the possibility of incurring legal liability, and the certain loss is the premium payment. By issuing the policy, the insurer agrees to assume the risk of the insured's liability in exchange for a fixed sum of money. At the heart of the transaction is the insured's purchase of certainty — a valuable commodity. See S. Huebner, K. Black, Jr., R. Cline, Property and Liability Insurance (2d ed. 1976) 5-7. This view of the insurance policies provides the starting point for analysis.
The next question must be "certainty with respect to what contingencies?" For an insured is only entitled to indemnity for losses that are covered by its policy. We are aided in our analysis of these policies' coverage by the well-accepted rule that ambiguity in an insurance contract must be construed in favor of the insured. See, e.g., Blue Anchor Overall Co. v. Pennsylvania Lumbermens Mut. Ins. Co., 385 Pa. 394, 123 A.2d 413 (1956); Couch on Insurance 2d, § 15:14 (2d ed. Anderson 1959); Williston on Contracts, § 621 (3d ed. Jaeger 1959). We believe, however, that although particular terms of the policies are ambiguous as applied to asbestos-related diseases, the principles embodied in the insurance policies provide a sufficient basis upon which to decide this case. In discerning those principles, our guide is — as it must be — the reasonable expectations of Keene when it purchased the policies. See, e.g., Steven v.
The analysis of the insurers' duty to indemnify Keene is divided into three logical steps: first, the trigger of coverage under the policies; second, the extent of coverage once a policy is triggered; and third, the allocation of liability among insurers if more than one policy is triggered. That analysis is followed by an examination of the insurers' duty to defend Keene and a discussion of the procedural mechanisms by which asbestos-injury suits can be adjudicated.
A. Trigger of Coverage
The first step in the analysis of this problem is to determine what events, from the point of exposure to the point of manifestation, trigger coverage under these policies. In the language of the policies, the question is when did "injury" occur? Both Keene and Hartford advance slightly different versions of the "exposure theory" of coverage. Keene argues that successive coverage is triggered by both exposure to asbestos dust ("inhalation exposure")
INA, Liberty, and Aetna advance the "manifestation" theory of coverage. They
The policy language does not direct us unambiguously to either the "exposure" or "manifestation" interpretation. In the context of asbestos-related disease, the terms "bodily injury," "sickness" and "disease," standing alone, simply lack the precision necessary to identify a point in the development of a disease at which coverage is triggered. The fact that a doctor would characterize cellular damage as a discrete injury does not necessarily imply that the damage is an "injury" for the purpose of construing the policies. At the same time, the fact that an ordinary person would characterize a fully developed disease as an "injury" does not necessarily imply that the manifestation of the disease is the point of "injury" for purposes of construing the policies. In interpreting a contract, a term's ordinary definition should be given weight, but the definition is only useful when viewed in the context of the contract as a whole.
Moreover, the legal definition of "injury" in other contexts informs the term's definition in this case only if the term operates in a functionally similar manner in the other contexts. In the areas of workmen's compensation, health insurance, and statutes of limitations, the concept of "injury" performs a function that is different from its function in the context of comprehensive general liability policies.
If exposure to asbestos were deemed to constitute a discrete injury and thereby trigger coverage, as Hartford and Keene suggest, the subsequent development of a disease would be characterized best as a consequence of the injury. Future stages of development would not constitute new injuries
Thus, if the purpose of the policies is not to be undercut, the manifestation of disease must constitute an "injury". Any characterization of exposure as a discrete injury, therefore, must be rejected. This is the same result that courts have reached in determining when an injury or disease begins for purposes of health and accident insurance policies. In those cases, courts have held that a manifestation rule is necessary to protect the reasonable expectations of the insured. E.g., Silverstein v. Metropolitan Life Ins. Co., 254 N.Y. 81, 171 N.E. 914 (1930); Cohen v. North American Life & Casualty Co., 150 Minn. 507, 185 N.W. 939 (1921). In health and accident insurance policies, as in liability insurance policies, the purpose of the contracts would be defeated if the insured had to bear the risk of disease that is latent at the time a policy is purchased. See Comment, Liability Insurance for Insidious Disease: Who Picks Up the Tab? 48 Fordham L.Rev. 657, 671 (1980) (this rule is necessary to provide security policyholder seeks).
None of this implies, however, that insurance policies may not also be triggered prior to manifestation. In fact, we conclude that coverage is also triggered by both inhalation exposure and exposure in residence.
To demonstrate why the policies require that both exposure and manifestation trigger coverage, we begin by positing a rule in which manifestation is the sole trigger of coverage. If that interpretation were adopted, as INA, Liberty, and Aetna propose, Keene would not be covered for diseases manifesting themselves after 1976.
The possibility of that result would undermine the function of the insurance policies. When Keene purchased the policies, it could have reasonably expected that it was free of the risk of becoming liable for injuries of which it could not have been aware prior to its purchase of insurance.
Thus, in order for Keene's rights under the policies to be secure, both inhalation exposure and exposure in residence must also trigger coverage. Regardless of whether exposure to asbestos causes an immediate and discrete injury, the fact that it is part of an injurious process is enough for it to constitute "injury" under the policies.
This conclusion is consistent with the law involving insurance coverage of losses that begin during a period of coverage but continue to develop after a policy's expiration. For example, Snapp v. State Farm Fire & Cas. Co., 206 Cal.App.2d 827, 24 Cal.Rptr. 44 (1962) involved a fire insurance policy that included coverage of most types of physical damage to property. The policy was issued on the plaintiff's house, which had been damaged due to movement of the land under the house. While the land was still unstable, the policy expired, and the insurer sought to limit its liability to the amount of damage that had occurred prior to the policy's termination date. The court held that the insurer's liability was not so limited, and that it had to indemnify the policyholder for all damage caused until the land movement ceased. The court stated that "[t]o permit the insurer to terminate its liability while the fortuitous peril which materialized during the term of the policy was still active would not be in accord either with applicable precedents or with the common understanding of the nature and purpose of insurance." See also Harman v. American Cas. Co., 155 F.Supp. 612 (S.D. Cal.1957) (insurer cannot terminate property loss or fire protection while land remains unstable).
These cases illustrate the principle that when it becomes known that an occurrence has set in motion a process that has a significant probability of resulting in a covered loss, the insurer on the risk at that time is liable for the full loss. It does not matter whether the insurer learns of a progressing loss through direct observation, as in Snapp, or through statistical inference, as in asbestos-injury cases. It is the use of
In sum, the allocation of rights and obligations established by the insurance policies, would be undermined if either the exposure to asbestos or the manifestation of asbestos-related disease were the sole trigger of coverage. We conclude, therefore, that inhalation exposure, exposure in residence, and manifestation all trigger coverage under the policies. We interpret "bodily injury" to mean any part of the single injurious process that asbestos-related diseases entail. We now proceed to consider the extent to which an insurer is liable to its policyholder once coverage under its policy is triggered.
B. The Extent of Coverage
The policies at issue in this case provide that the insurance company will pay on behalf of Keene "all sums" that Keene becomes legally obligated to pay as damages because of bodily injury during the policy period. We have defined "bodily injury" to mean any part of the injurious process that begins with an initial exposure and ends with manifestation of disease. As a result, when Keene is held liable for an asbestos-related disease, only part of the disease will have developed during any single policy period. The rest of the development may have occurred during another policy period or during a period in which Keene had no insurance. The issue that arises is whether an insurer is liable in full, or in part, for Keene's liability once coverage is triggered. We conclude that the insurer is liable in full, subject to the "other insurance" provisions discussed in section C below.
Hartford argues that each insurer is required to pay only a pro-rata share of Keene's liability. Once an insurer's coverage is triggered, its share would be determined by the duration of a plaintiff's exposure to Keene's products during its policy periods in relation to the entire duration of the plaintiff's exposure to Keene's products. Under Hartford's scheme, if there is a period of exposure during which Keene is uninsured, then Keene would bear a pro-rata share of the liability.
Hartford's argument is based on its characterization of asbestos-related diseases as consisting of a multitude of discrete injuries to the lung tissue. We have declined, however, to rely on that factual characterization in determining the trigger of insurance coverage,
Our starting point is the interpretation of the policies as the insurers' promises of certainty to Keene. The policies that were issued to Keene relieved Keene of the risk of liability for latent injury of which Keene could not be aware when it purchased insurance. Keene did not expect, nor should it have expected, that its security was undermined by the existence of prior periods in which it was uninsured, and in which no known or knowable injury occurred.
Judge Wald suggests that the rationale of our decision is consistent with prorating insurance obligations to Keene for the years in which it was not insured. Judge Wald believes such a pro-rata allocation is fair, and we do not think her view is unreasonable. As we have just shown, however, such an allocation is inconsistent with the terms and underlying principles of the insurance policies at issue in this case.
We read Judge Wald's reasoning as follows: 1) As the court interprets the term, an asbestos-related "injury" occurs over a long period of time; 2) if Keene was uninsured during part of that time, then Keene is not covered for the full injury; 3) therefore, Keene should pay a pro-rata share of its own liability.
If we read Judge Wald correctly, her position is problematic. Although we have defined the term "injury," we have done so only as an incidental aspect of a logically prior determination of Keene's rights under the policies viewed in their entirety. The insurance policies provide Keene with the right to be free of all liability for asbestos-related disease, unless such a disease was known or knowable by Keene at the time it purchased an insurance policy.
As stated above, each policy has a built-in trigger of coverage. Once triggered, each policy covers Keene's liability. There is nothing in the policies that provides for a reduction of the insurer's liability if an injury occurs only in part during a policy period. As we interpret the policies, they cover Keene's entire liability once they are triggered. That interpretation is based on the terms of the policies themselves. We have no authority upon which to pretend that
Hartford argues that this allocation of liability allows Keene to "enjoy the benefits of insurance coverage which it has never paid for." Hartford's brief at 31.
In support of its argument for pro-rata apportionment of liability, Hartford asserts that the liability scheme we now adopt would leave an insured equally off with one year of insurance coverage as it would be with several years of coverage. Id. That assertion is inapposite for two reasons. First, as a matter of probability, the more years of coverage that an insured has purchased, the smaller will be the number of injuries for which it will be liable. An insured will not be covered for an injury if it has insurance neither when a plaintiff's disease was developing nor when the disease manifested itself.
Not surprisingly, the policies do not explicitly provide a means of applying the limits of liability to injuries that are covered by multiple policies. Keene claims that it is entitled to full indemnity for each injury up to the sum of the limits provided by the applicable policies. We do not agree. The principle of indemnity implicit in the policies requires that successive policies cover single asbestos-related injuries. That principle, however, does not require that Keene be entitled to "stack" applicable policies' limits of liability. To the extent possible, we have tried to construe the policies in such a way that the insurers' contractual obligations for asbestos-related diseases are the same as their obligations for other injuries. Keene is entitled to nothing more. Therefore, we hold that only one policy's limits can apply to each injury. Keene may
C. Allocation of Liability
In any suit against Keene for an asbestos-related disease, it is likely that the coverage of more than one insurer will be triggered. Because each insurer is fully liable, and because Keene cannot collect more than it owes in damages, the issue of dividing insurance obligations arises. The only logical resolution of this issue is for Keene to be able to collect from any insurer whose coverage is triggered, the full amount of indemnity that it is due, subject only to the provisions in the policies that govern the allocation of liability when more than one policy covers an injury. That is the only way that Keene can be assured the security that it purchased with each policy. Our holding each insurer fully liable to Keene is also consistent with other courts' allocation of liability when more than one insurer covers an indivisible loss. E.g., Gruol Construction Co. v. Insurance Company of North America, 11 Wn.App. 632, 524 P.2d 427 (1974) (continuous damage to property insurance policy).
This does not mean that a single insurer will be saddled with full liability for any injury. When more than one policy applies to a loss, the "other insurance" provisions of each policy provide a scheme by which the insurers' liability is to be apportioned. For instance, INA's policy states:
J.A. II at 551. The contribution provision referred to contains formulae for "contribution by equal shares" and for "contribution by limits," depending upon the provisions of other applicable policies.
D. Costs of Defending Suits Against Keene
The policies provide that the insurer shall defend any suit against Keene for damages due to bodily injury, even if the suit is groundless, false or fraudulent. The insurers' duty to defend Keene and to pay Keene for its defense costs are more broad than their duty to indemnify Keene. As long as a complaint indicates that Keene may be liable for an injury, an insurer must defend Keene if the facts alleged in the complaint indicate that its policy covers the alleged injury. Because we hold that each insurer is fully liable to Keene for indemnification, it follows that each is fully liable for defense costs.
E. Resolution of Factual Issues
In a typical suit for products liability, the same set of facts would prove both the manufacturer's tort liability and the insurer's contractual liability. That is not true of suits that arise out of an asbestos-related disease. The leading case concerning manufacturers' liability for asbestos damage claims is Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th Cir. 1973), cert. denied, 419 U.S. 869, 95 S.Ct. 127, 42 L.Ed.2d 107 (1974). The court in Borel held that each manufacturer who contributed in any way, and at any time, to a claimant's bodily injury is fully liable for all of the resulting damages. If a victim was exposed to the products of more than one manufacturer, each manufacturer is jointly and severally liable to the victim. See also Karjala v. Johns Manville Products Corp., 523 F.2d 155 (8th Cir. 1975). As a result, a plaintiff in a suit against Keene need not prove the full extent of his or her exposure to asbestos. Yet that set of facts is essential to determining which policies cover Keene's liability.
The doctrine of joint and several tort liability in this context is an accepted means of vindicating the rights of the tort victims. Nothing that we decide concerning the contractual liability of the insurers to Keene should impair the tort plaintiff's prosecution of his or her suit.
Thus initially, the full insurance obligation to Keene must be divided among the insurers whose policies are triggered based on the facts brought out in the tort suit against Keene. The possibility of additional coverage can be determined consensually among insurers, or it can be adjudicated among insurers in a subsequent lawsuit. At that point the insurance obligations can be reallocated among all the insurers whose policies are found to cover a particular injury.
If a victim sues more than one asbestos-product manufacturer, it may be impossible to prove which company's products were used at which time. If so, it will be impossible to prove that exposure to Keene's products — as opposed to those of another manufacturer — occurred during a particular time period. In such a case, there should be a presumption that throughout the victim's period of exposure to asbestos he or she was exposed to Keene's and the other manufacturers' products. The insurer defending Keene in the underlying tort suits may then try to show that Keene's products could not have been involved for certain years.
III. LIBERTY'S 1967-68 POLICY
The district court included Liberty's 1967-68 policy among the policies that potentially cover Keene's liability for asbestos-related injury.
We hold that there was before the district court a genuine issue of material fact on this point. Therefore, the district court erred in including the issue in its summary judgment order.
CONCLUSION
In view of the above, we reverse the district court's order of summary judgment. The district court should enter a judgment and institute further proceedings consistent with this opinion.
So ordered.
*
Indemnification Defense
Insurer Policy Period Provision Provision Definitions Policy Period/Territory
----------------------------------------------------------------------------------------------------------------------------------------------
INA 12/31/61-12/31/64 ** To pay on behalf of [T]he company shall... The words "bodily This policy applies
the insured ... damages defend any suit against injury" ... mean only to occurrences
because of bodily the insured alleging such bodily injury, or accidents which
injury ... arising injury ... even if such sickness, disease take place during
out of ... all ... suit is groundless, the policy period
operations [other false or fraudulent
than automobile] of
the insured
1/1/65-1/1/68 Same Same Same Same
1/1/68-8/23/68 INA will pay on INA shall have the right [P]ersonal injury This insurance
behalf of the and duty to defend any means ... bodily applies only to
Insured ... damages suit against the Insured injury, disability personal injury ...
because of personal seeking damages on account which occurs
injury ... to of such personal injury... "[B]odily injury" during the policy
which this insurance even if any of the means bodily period
applies, allegations of the suit injury, sickness
caused by an occurrence, are groundless, false or or disease sustained
fraudulent by any
person
[Definition of
"occurrence" applies
only to
---------------------------------------------------------------------------------------------------------------------------------------------- property damage)
* Source: J.A. III at 1031-35.
** All policy provisions are taken from the 1/1/65-1/1/68 policy.
Liberty 8/23/67-8/23/68 * The company will pay [T]he company shall "[B]odily injury" Not relevant Mutual on behalf of the have the right and means bodily insured ... damages duty to defend any injury, sickness because of ... bodily suit against the or disease ... which injury ... to which insured seeking occurs during the this policy applies, damages on account policy period caused by an occurrence of such bodily injury ... even if "[O]ccurrence" any of the allegations means an accident of the suit including continuous are groundless, or repeated false or fraudulent exposure to conditions which results in bodily injury Aetna 8/23/68-8/23/71 The company will [T]he company shall "[B]odily injury" This insurance pay on behalf of have the right and means bodily injury, applies only to the insured... duty to defend any sickness or disease bodily injury damages because suit against the ... which occurs of bodily injury insured seeking "[O]ccurrence" means during the policy ... to which damages on account an accident, including period this insurance of such bodily injury injurious applies, caused ... even if any exposure to conditions, by an occurrence of the allegations which results, of the suit are during the groundless, false policy period, in or fraudulent bodily injury* All policy provisions are taken from the 10/1/74-10/1/75 policy.
Hartford 8/23/71-8/23/72 The company will pay [T]he company shall "[B]odily injury" This insurance on behalf of the insured have the right and means bodily injury, applies only to ... damages because duty to defend any sickness bodily injury ... of ... bodily injury suit against the or disease which occurs ... to which this insured seeking during the insurance applies, damages on account "[O]ccurrence" policy period caused by an occurrence of such bodily injury means an event ... even if any including injurious of the allegations exposure of the suit are to conditions groundless, false which or fraudulent result, during the policy period in bodily injury 8/23/72-8/23/73 Same Same Same Same 8/23/73-10/1/74 Same Same "[B]odily injury" Same means bodily injury, sickness or disease ... which occurs during the policy period "[O]ccurrence" means an event including injurious exposure to conditions which result, during the policy period in bodily injury
Liberty 10/1/74-10/1/75 The company will pay [T]he company shall "[B]odily injury" Not relevant Mutual on behalf of the insured have the right and means bodily ... damages because duty to defend any injury, sickness, of ... bodily injury suit against the or disease ... ... to which this insured seeking which occurs policy applies, damages on account during the policy caused by an occurrence of such bodily injury period ... even if any "[O]ccurrence" of the allegations means an accident, of the suit are including continuous groundless, false or repeated or fraudulent exposure to conditions which results in bodily injury 10/1/75-10/1/76 Same Same Same Same 10/1/76-10/1/77 The company will pay [T]he company shall "Personal injury" Not relevant on behalf of the insured have the right and means ... bodily ... damages because duty to defend any injury of ... personal suit against the injury * ... to which insured seeking "[B]odily injury" this policy applies, damages on account means bodily injury, caused by an occurrence of such personal sickness or injury ... even if disease ... which any of the allegations occurs during of the suit the policy period are groundless, "[O]ccurrence" false or fraudulent [as amended] means ... exposure to conditions which results in "bodily injury" ... neither expected nor intended from standpoint of the "insured"* The term "personal injury" was substituted, by endorsement, for bodily injury
Liberty 10/1/77-10/1/78 Same Same Same Same Mutual 10/1/78-10/1/79 Same Same Same Same 10/1/79-10/1/80 Same Same Same Same
WALD, Circuit Judge, concurring in part:
This is a case of first impression and, irrespective of how it is resolved, requires a "leap of logic," maj. op. n. 34, from existing precedent, for it concerns diseases about which there is no medical certainty as to precisely how or when they "occur." We do know the prerequisite — exposure to asbestos fibers — and the symptoms that manifest themselves, generally too late for effective treatment. What happens in between is still something of a mystery; why does one exposed person fall victim to the diseases while another does not? This suit is one of several filed in different courts to ascertain the liability of insurers of manufacturing companies when those companies are sued by asbestosis, mesothelioma and lung cancer victims who have been exposed to the companies' products. Two circuits, the Fifth
The approach taken in the panel opinion here is different from the approaches of other courts in two significant respects. First, it defines the "injury" that triggers insurance coverage not merely as exposure to asbestos fibers or manifestation of the symptoms of asbestosis, mesothelioma or lung cancer, but also — at least in the case of asbestosis — as the process by which the victim's body resists, adapts, and tries to accommodate itself to a foreign matter — a
Second, the majority opinion exempts asbestos manufacturers from all financial responsibility arising from a suit if the manufacturer had purchased insurance which covered any part of the injury period.
Subject to this concern, I concur with the majority opinion.
FootNotes
Mesothelioma is a malignant tumor of the lining of the lungs or the lining of the peritoneum, which surrounds the organs of the gastrointestinal tract. It is well-established that prolonged inhalation of asbestos fibers causes mesothelioma. The disease can develop many years after inhalation ceases, and can manifest itself several months after it begins to develop.
Lung cancer, or bronchogenic carcinoma, is also generally thought to be caused by prolonged inhalation of asbestos. It too can develop and manifest itself long after inhalation ceases.
The details of the development of these diseases are not relevant to the issues decided below. The only relevant facts are that the diseases develop long after exposure to Keene's products, and that Keene can be held liable for their occurrence.
Keene is incorporated in Delaware, has its principal place of business in New York, and is licensed to do business in the District of Columbia. INA is incorporated in Pennsylvania and has its principal place of business in Pennsylvania. Aetna is incorporated in Connecticut and has its principal place of business in Pennsylvania. Hartford is also incorporated in Connecticut and has its principal place of business in Connecticut. And Liberty is incorporated in Massachusetts and has its principal place of business in Massachusetts. None of the laws of these states gives us specific guidance in resolving this case, and the basic principles governing the interpretation of insurance policies are the same in each state. There is thus no conflict of laws. (There is what some have termed — somewhat confusingly — a "false conflict." See, e.g., R. Leflar, American Conflicts of Law 188 (3d ed. 1977); Comment, False Conflicts, 55 Calif.L.Rev. 74, 113 (1967).) Therefore, we need not engage in the exercise of identifying which jurisdiction's law governs. See Waters v. American Automobile Ins. Co., 363 F.2d 684, 687 (D.C.Cir.1966); Williams v. Rawlings Truck Line, Inc., 357 F.2d 581, 585 (D.C.Cir.1965).
Keeton, Insurance Law Rights at Variance with Policy Provisions, 83 Harv.L.Rev. 961, 967 (1970). Professor Keeton argues that the principle is appropriate in view of the fact that an insurance policy is a contract of adhesion. Id. As applied to this case, we agree with Judge Keeton and explicitly base our interpretation of these policies on the expectations that Keene could have reasonably formed, as an objective matter, on the basis of the policies' language.
For reasons discussed throughout this opinion, however, we decline to adopt the approach taken in those cases.
Statute of limitations cases are not at all relevant. The date that a disease is deemed to occur for purposes of statutes of limitations is generally the date of manifestation. E.g., United States v. Kubrick, 444 U.S. 111, 100 S.Ct. 352, 62 L.Ed.2d 259 (1979). If the date of a disease's origin were to begin statute of limitations periods, meritorious claims would be barred. As a matter of policy, courts have held that the purpose of the statutes of limitations — to protect defendants against stale claims — does not warrant barring such claims. See, e.g., id. at 117, 100 S.Ct. at 357; Urie v. Thompson, 337 U.S. 163, 169-71, 69 S.Ct. 1018, 1024-25, 93 L.Ed. 1282 (1949). The considerations involved in those cases have no bearing on the considerations relevant to this case.
The health insurance cases are more relevant to this case. The only problem in those cases, however, is to determine when a disease begins in order to decide whether it began during a policy period. The cases hold that if a disease manifests itself during a policy period, then that policy covers the disease even if the origin of the disease can be traced back to a point in time prior to the policy period. See, e.g., Wilkins v. Grays Harbor Community Hospital, 71 Wn.2d 178, 427 P.2d 716 (1967); Reiser v. Metropolitan Life Insurance Co., 262 App.Div. 171, 28 N.Y.S.2d 283 (1941) aff'd, 289 N.Y. 561, 43 N.E.2d 534 (1942). In those cases, the security that the policies provided would be undermined if a disease were not covered by the insurer on the risk at the time the disease manifests itself.
The court in Forty-Eight, supra note 16, expressed a similar opinion concerning the relevance of cases in these areas of the law. 633 F.2d at 1220-22.
Thus, rather than engaging in further heuristic constructs to avoid this inappropriate result, we have approached this problem in a straightforward manner that avoids the problem from the outset. We treat the diseases at issue in this case as single injuries that occur over extended periods of time.
Keene did not raise the exposure-in-residence aspect of its argument below. Because we do not rely, however, on any legal or factual aspect of Keene's argument, see note 19 supra, we are not precluded from deciding that exposure in residence triggers coverage.
But see note 20 supra. Hartford argues that only inhalation exposure should be taken into account in prorating liability.
The possibility of injury as a result of prolonged exposure to a substance was not unknown at the time these policies were issued. Cases of asbestosis were reported among asbestos textile workers early in the twentieth century, and by the 1930s it was well recognized that prolonged exposure to asbestos causes the disease. See Borel v. Fibreboard Paper Products Corp., supra note 2. See generally Selikoff, Churg, and Hammond, supra note 3 (discussion of asbestosis). Moreover, most of the policies explicitly recognize continuous exposure to certain conditions as an occurrence that can result in injury. They provide that such exposure within a single policy period is considered a single occurrence for purposes of the limit of liability provisions. Yet none of the policies provided that the insurer's liability would be limited in any way when exposure extends over several policy periods. The absence of such a provision supports our view that Keene could have reasonably expected complete security from each policy it purchased.
As Judge Wald points out, concurring op. at p. 1058 n.7, this interpretation of the policies provides the basis of our entire decision. She is correct in pointing out that it is an "indispensable initial premise of the liability theory [that we espouse]." Id. We rest our interpretation on the terms and principles of the insurance policies in issue. See pp. 1044, 1046 supra. Judge Wald's reliance on fairness in support of an alternative — but unstated — basic premise is appealing. Id. However, the contracts at issue in this case do not warrant such an independent appeal to fairness as a basis for deciding to allocate liability among all of the parties. At the same time, we see nothing unfair in holding that Keene is fully covered by each of the policies that it purchased.
J.A. II at 551.
In addition, nothing we hold today bars insurers from collecting from one another under the doctrine of contribution.
It should also be noted that we are not requiring that the company that defends Keene must also be the company whose policy limits determine the extent to which Keene may be indemnified. See p. 1049 supra.
J.A. III at 1047.
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