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Maertin v. Armstrong World Industries

March 29, 2006

JOAN MAERTIN, ET AL., PLAINTIFFS,
v.
ARMSTRONG WORLD INDUSTRIES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Jerome B. Simandle

OPINION

This is a declaratory judgment action arising out of the $7,000,000 settlement of a products liability toxic tort suit against Armstrong World Industries, Inc. ("Armstrong" or "AWI"), in which Plaintiffs seek a determination as a matter of law of the allocation of insurance coverage among the Defendant insurers. On June 15, 2005, the Court issued an Opinion and Order holding that New Jersey law applies to the allocation of insurance coverage relating to the progressive indivisible injury suffered by Plaintiffs.*fn1 Subsequently, Defendant Liberty Mutual Insurance Company moved to amend the Court's June 15, 2005 Order under 28 U.S.C. § 1292(b) to certify the choice-of law issue as a controlling question of law. For the following reasons, the Court will grant the motion and, pursuant to Section 1292(b), stay the proceedings in this Court pending a determination by the Court of Appeals.

I. BACKGROUND

The Court will only recite those facts that bear upon the instant motion under Section 1292(b).

A. Underlying Tort-Related Litigation

This matter arises from two related actions filed in the United States District Court for the District of New Jersey, Maertin, et al. v. Armstrong World Industries, Inc., No. 95-2849 (JBS), ("Maertin I"), and Schmoll v. Armstrong World Industries, Inc., No. 99-3497 (JBS). Plaintiffs had either contracted, or feared contracting, cancer as a result of their exposure to ceiling tiles manufactured by Armstrong and installed in their workplace at Burlington County College. Armstrong manufactured and distributed the ceiling tiles from about August 1968 to April 1970; they were coated with a plasticizer that included the carcinogen polychlorinated biphenyl ("PCB").

The case was heavily litigated until the parties reported a settlement on September 14, 2000. This Court issued an order of dismissal and the parties entered into a "Settlement Agreement and Mutual General Release."*fn2 On November 14, 2001, Plaintiffs filed the instant action against Armstrong, Liberty Mutual Insurance Co., Central National Insurance Co. of Omaha, Certain London Market Insurance Companies, CGU Group, Equitas Reinsurance Limited, First State Insurance Co., International Insurance Co., Puritan Insurance Co., and Peter E. J. Cameron-Webb for a declaratory judgment that the insurers pay the settlement agreement amount, and against Armstrong, Liberty Mutual Insurance Company, Michael Carroll, and Bethann Jakoboski for money damages for fraud, bad faith, and concealment during the settlement negotiations ("Maertin II").

B. Relevant Insurance Policies

Armstrong purchased insurance coverage from a variety of insurers beginning in 1973. As noted in the Court's June 15, 2005 Opinion, for present purposes the Court accepts Plaintiffs' representation that these various insurance contracts were entered into in the Commonwealth of Pennsylvania.

1. Liberty Mutual Primary Policies

Armstrong first purchased primary coverage from Liberty beginning in January 1973. Liberty continued to insure Armstrong until the 1990's. (Liberty Summ. J. Br. at 5.) The Liberty policies in effect from January 1, 1973 to January 1, 1986 were "occurrence policies" -- "[e]ach policy had a $1,000,000 per occurrence limit for personal injury." (Id.)

Each of the Liberty occurrence policies included: (1) a "Declarations" schedule identifying the dollar limits for the different types of coverage provided; (2) a "Limits of Liability" section specifying how the dollar figures identified in the Declarations page apply to different claims; and (3) the "General Amendatory Endorsement" which provides that "all 'personal injury' and 'property' damage arising out of continuous or repeated exposure to substantially the same general conditions . . . shall be considered arising out of one occurrence" and that each occurrence is to be reduced by the amount of each payment made by Liberty under another policy. (Id. at 5-6; Exs. E, G.)

Beginning on January 1, 1986, all of the Liberty policies issued to Armstrong were "claims-made" policies. (Id.) The claims-made policy covering the period January 1, 1988 to January 1, 1989 was "modified by endorsement to allow an unlimited reporting period for PCB claims." (Id.) That policy had a $2,000,000 per occurrence limit for personal injury. Beginning with the policy commencing January 1, 1989, all of the Liberty policies contained a PCB exclusion. (Id.)

2. International And Central National Excess Liability Policies

Plaintiffs' claims against Defendants International Insurance Company and Cravens, Dargan Co., Pacific Coast, as managing general agent of Central National Insurance Co. of Omaha ("ACE USA Companies") are made under two excess liability policies issued by Central Nation and six excess liability policies issued by International. (Certain Defs. Opp. to Pls. Summ. J. Br. at 6.) Three of the International policies are first layer excess policies with per occurrence and aggregate limits of $5 million excess of the $1 million Liberty primary policies. ...


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