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Air Products and Chemicals Inc. v. Hartford Accident and Indemnity Co.

argued: January 24, 1994.

AIR PRODUCTS AND CHEMICALS, INC., PLAINTIFF
v.
HARTFORD ACCIDENT AND INDEMNITY COMPANY; AND LIBERTY MUTUAL INSURANCE COMPANY; AND AETNA CASUALTY AND SURETY COMPANY, DEFENDANTS V. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.; AND THE TRAVELERS INSURANCE COMPANY, THIRD-PARTY DEFENDANTS V. AIR PRODUCTS & CHEMICALS, INC., THIRD-PARTY DEFENDANT AETNA CASUALTY AND SURETY COMPANY, APPELLANT NO. 91-1681 HARTFORD ACCIDENT & INDEMNITY COMPANY, APPELLANT NO. 91-1682



Appeals from the United States District Court for the Eastern District of Pennsylvania D.C. Civil No. 86-7501.

Before: Mansmann, Nygaard, and Seitz, Circuit Judges.

Author: Seitz

Opinion OF THE COURT

SEITZ, Circuit Judge.

These appeals principally involve the duty of two insurance carriers under Pennsylvania law to defend their insured in numerous actions instituted against it. The carriers contend that the claims asserted against their insured could not have arisen during the periods of their policy coverage. Additionally, if such duties to defend are found, they assert that the proper allocation of defense and indemnity costs must be addressed.

The district court had diversity jurisdiction, while we have jurisdiction over partial summary judgment orders made final by certification under Fed. R. Civ. P. 54(b). Our standard of review is plenary. The parties agree that Pennsylvania law controls.

I. ACTION AGAINST AETNA

Air Products & Chemicals, Inc. ("Air Products") instituted this declaratory judgment action against, inter alia, appellant Aetna Casualty & Surety Company ("Aetna"), which provided it with coverage from May 16, 1951 to June 8, 1953. Air Products sought a determination that Aetna breached a duty that it owed to defend and indemnify it*fn1 in numerous underlying civil actions pending against it, thus requiring Air Products to take up its own defenses. The plaintiffs in these underlying actions alleged injuries as a result of their exposure at their workplaces to fumes and gases emitted from welding rod material sold to their employers by numerous defendants, including Air Products.

The parties here filed cross-motions for partial summary judgment. The district court granted Air Products' motion on the ground that Aetna had breached a duty to defend it*fn2 in the underlying actions for injuries incurred during the period of Aetna's coverage. The district court denied Aetna's cross-motion. Aetna appeals.

Generally speaking, under Pennsylvania law, the issuer of a general liability insurance policy has a duty to defend its insured when the allegations in the complaint against it could potentially fall within the coverage of the policy. Gedeon v. State Farm Mut. Auto. Ins. Co., 410 Pa. 55, 188 A.2d 320, 321-22 (Pa. 1963); see Cadwallader v. New Amsterdam Cas. Co., 396 Pa. 582, 152 A.2d 484, 488 (Pa. 1959); Wilson v. Maryland Cas. Co., 377 Pa. 588, 105 A.2d 304, 307 (Pa. 1954). The district court applied that rule in finding for Air Products.

The resolution of this dispute first requires us to examine the pertinent allegations of a typical complaint in one of the underlying actions to determine whether it could potentially fall within the coverage of Aetna's policy. We turn to such allegations:

The Defendants, [including Air Products] during all the times herein mentioned and for a long time prior thereto, have been and now are engaged in the manufacture of materials used for, insulation containing asbestos and/or welding rods, that the products manufactured, compounded, and prepared by Defendants, acting through their servants, employees, representatives and agents were and are placed on the market to be purchased and used by the public.

The Plaintiff says that during the years 1951 to 1984, inclusive, he was employed as a welder, and that in the performance of his duties as a welder, he was required to handle large quantities of the products manufactured and distributed by the above-named Defendants. That in addition to the fact that Plaintiff actually used the product manufactured by the above-named Defendants, [including Air Products] and many more, as a welder, and specifically many and various products containing asbestos, the Plaintiff says that on many of the jobs, while not using himself the specific products manufactured by the Defendants, he was nevertheless exposed to ...


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