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Continental Insurance Co. v. Honeywell International, Inc.

Supreme Court of New Jersey

June 27, 2018

CONTINENTAL INSURANCE COMPANY, FIDELITY & CASUALTY COMPANY OF NEW YORK, COMMERCIAL INSURANCE COMPANY OF NEWARK, N.J., and COLUMBIA CASUALTY COMPANY, Plaintiffs,
v.
HONEYWELL INTERNATIONAL, INC. (f/k/a ALLIEDSIGNAL, INC., successor to BENDIX AVIATION CORPORATION and BENDIX CORPORATION), Defendant-Respondent, and ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellant, and AFFILIATED FM INSURANCE COMPANY, ALLSTATE INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, AMERICAN INSURANCE COMPANY, CALIFORNIA UNION INSURANCE COMPANY, CENTURY INDEMNITY COMPANY, COMMERCIAL UNION INSURANCE COMPANY as successor to EMPLOYERS LIABILITY ASSURANCE CORPORATION, LTD., EMPLOYERS INSURANCE OF WAUSAU, FIREMAN'S FUND INSURANCE COMPANY, GRANITE STATE INSURANCE COMPANY, GREAT AMERICAN INSURANCE COMPANY, HOME INSURANCE COMPANY, INSURANCE COMPANY OF NORTH AMERICA, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, NORTH RIVER INSURANCE COMPANY, TRAVELERS INDEMNITY COMPANY, UNDERWRITERS AT LLOYDS LONDON and CERTAIN LONDON MARKET COMPANIES, including ANGLO SAXON INSURANCE ASSOC. LTD., DOMINION INSURANCE COMPANY, DRAKE INSURANCE COMPANY, EAGLE STAR INSURANCE COMPANY, INSTITUTE OF LONDON UNDERWRITERS, LONDON & EDINBURGH INSURANCE COMPANY LTD., PRUDENTIAL ASSURANCE COMPANY LTD., SOUTHERN INSURANCE COMPANY, and WORLD AUXILIARY INSURANCE CORP., LTD., Defendants, and HONEYWELL INTERNATIONAL, INC. (f/k/a ALLIEDSIGNAL, INC., successor to BENDIX AVIATION CORPORATION and BENDIX CORPORATION), Defendant/Third-Party Plaintiff-Respondent,
v.
TRAVELERS CASUALTY & SURETY COMPANY (f/k/a AETNA CASUALTY & SURETY COMPANY), Third-Party Defendant-Appellant, and AIU INSURANCE COMPANY, AMERICAN CENTENNIAL INSURANCE COMPANY, ASSOCIATED INTERNATIONAL INSURANCE COMPANY, CENTRE INSURANCE COMPANY (f/k/a LONDON GUARANTEE AND ACCIDENT COMPANY OF NEW YORK), CONTINENTAL CASUALTY COMPANY, THE CONTINENTAL INSURANCE COMPANY as successor in interest to HARBOR INSURANCE COMPANY (f/k/a HARBOR INSURANCE COMPANY), EVEREST REINSURANCE COMPANY (f/k/a PRUDENTIAL REINSURANCE COMPANY), EXECUTIVE RISK INDEMNITY INC. (f/k/a AMERICAN EXCESS INSURANCE COMPANY), FEDERAL INSURANCE COMPANY, FIRST STATE INSURANCE COMPANY, FREMONT INDEMNITY COMPANY (f/k/a INDUSTRIAL INDEMNITY COMPANY), GENERAL REINSURANCE CORPORATION, HARTFORD ACCIDENT & INDEMNITY COMPANY, INTERNATIONAL INSURANCE COMPANY (f/k/a INTERNATIONAL SURPLUS LINES INSURANCE COMPANY), LEXINGTON INSURANCE COMPANY, MT. MCKINLEY INSURANCE COMPANY (f/k/a GIBRALTAR CASUALTY COMPANY), MUTUAL FIRE, MAINE & INLAND INSURANCE COMPANY, ROYAL INDEMNITY COMPANY, THE TOKIO MARINE & FIRE INSURANCE COMPANY, LTD., TWIN CITY FIRE INSURANCE COMPANY, UTICA MUTUAL INSURANCE COMPANY, WESTPORT INSURANCE COMPANY (f/k/a PURITAN INSURANCE COMPANY), and CERTAIN LONDON MARKET COMPANIES, including ACCIDENT & CASUALTY INSURANCE COMPANY, ALBA GENERAL INSURANCE COMPANY (f/k/a ALBA GENERAL INSURANCE COMPANY LIMITED), AVIATION & GENERAL INSURANCE COMPANY LIMITED, AXA INSURANCE PLC (f/k/a PROVINCIAL INSURANCE PUBLIC LIMITED COMPANY), THE BRITISH AVIATION INSURANCE COMPANY LIMITED, BRITISH LAW INSURANCE COMPANY LIMITED, BRITISH RESERVE INSURANCE COMPANY LIMITED, BRITISH TRADERS INSURANCE COMPANY LTD., C.A.M.A.T. INSURANCE COMPANY LIMITED, C.F.A.U., CONTINENTAL ASSURANCE COMPANY OF LONDON, LTD., CORNHILL INSURANCE PUBLIC LIMITED COMPANY (f/k/a CORNHILL INSURANCE COMPANY LIMITED), EDINBURGH ASSURANCE COMPANY LTD., EDINBURGH INSURANCE COMPANY LIMITED, EDINBURGH NO. 2 GROUP, ELVIA SWISS INSURANCE COMPANY (f/k/a HELVETIA ACCIDENT INSURANCE COMPANY LIMITED), EXCESS INSURANCE COMPANY LIMITED, FIDELIDADE INSURANCE COMPANY OF LISBON, GE SPECIALTY INSURANCE (UK) LIMITED (f/k/a THREADNEEDLE INSURANCE COMPANY LIMITED), GENERAL INSURANCE COMPANY HELVETIA LIMITED, GROUPAMA INSURANCE COMPANY LIMITED (f/k/a MINISTER INSURANCE COMPANY LIMITED), HELVETIA INSURANCE COMPANY LTD., HELVETIA SWISS INSURANCE COMPANY LIMITED (f/k/a HELVETIA ACCIDENT SWISS INSURANCE COMPANY), IRON TRADES INSURANCE COMPANY LIMITED (f/k/a IRON TRADES MUTUAL INSURANCE COMPANY LIMITED), LA MINERVE INSURANCE COMPANY LIMITED, LOMBARD MARINE & GENERAL INSURANCE COMPANY LTD., LONDON & EDINBURGH GENERAL INSURANCE COMPANY, LONDON & OVERSEAS AVIATION A.C., MOTOR UNION INSURANCE COMPANY LIMITED, NATIONAL CASUALTY COMPANY, NATIONAL CASUALTY COMPANY OF AMERICA, THE NEW INDIA ASSURANCE COMPANY LIMITED, PHOENIX ASSURANCE PUBLIC LIMITED COMPANY, PHOENIX AVIATION INSURANCE COMPANY LIMITED, PHOENIX INSURANCE COMPANY LTD., RIVER THAMES INSURANCE COMPANY LIMITED, ROAD TRANSPORT & GENERAL INSURANCE CO. LTD., ROYAL SCOTTISH ASSURANCE PLC (f/k/a THE ROYAL SCOTTISH INSURANCE COMPANY LIMITED), SCOTTISH LION INSURANCE COMPANY LTD., STRONGHOLD INSURANCE COMPANY LIMITED, SWISS NATIONAL INSURANCE COMPANY LIMITED, SWISS UNION GENERAL INSURANCE COMPANY LIMITED, SWITZERLAND GENERAL INSURANCE COMPANY LIMITED, TRENT INSURANCE COMPANY LIMITED, TUREGUM INSURANCE COMPANY LIMITED, ULSTER INSURANCE COMPANY LIMITED, UMA, UNITED SCOTTISH INSURANCE COMPANY AVIATION LTD., UNITED SCOTTISH INSURANCE COMPANY LIMITED, VANGUARD INSURANCE COMPANY LIMITED, VICTORIA AVIATION, VICTORIA INSURANCE COMPANY, LTD., and THE WORLD MARINE & GENERAL INSURANCE PLC (f/k/a THE WORLD MARINE & GENERAL INSURANCE COMPANY LIMITED), CONTINENTAL INSURANCE COMPANY, FIDELITY & CASUALTY COMPANY OF NEW YORK, COMMERCIAL INSURANCE COMPANY OF NEWARK, N.J., and COLUMBIA CASUALTY COMPANY, Plaintiffs,
v.
HONEYWELL INTERNATIONAL, INC. (f/k/a ALLIEDSIGNAL, INC., successor to BENDIX AVIATION CORPORATION and BENDIX CORPORATION), Defendant-Respondent, and ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellant, and AFFILIATED FM INSURANCE COMPANY, ALLSTATE INSURANCE COMPANY, AMERICAN HOME ASSURANCE COMPANY, AMERICAN INSURANCE COMPANY, CALIFORNIA UNION INSURANCE COMPANY, CENTURY INDEMNITY COMPANY, COMMERCIAL UNION INSURANCE COMPANY as successor to EMPLOYERS LIABILITY ASSURANCE CORPORATION, LTD., EMPLOYERS INSURANCE OF WAUSAU, FIREMAN'S FUND INSURANCE COMPANY, GRANITE STATE INSURANCE COMPANY, GREAT AMERICAN INSURANCE COMPANY, HOME INSURANCE COMPANY, INSURANCE COMPANY OF NORTH AMERICA, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, NORTH RIVER INSURANCE COMPANY, TRAVELERS INDEMNITY COMPANY, UNDERWRITERS AT LLOYDS LONDON and CERTAIN LONDON MARKET COMPANIES, including ANGLO SAXON INSURANCE ASSOC. LTD., DOMINION INSURANCE COMPANY, DRAKE INSURANCE COMPANY, EAGLE STAR INSURANCE COMPANY, INSTITUTE OF LONDON UNDERWRITERS, LONDON & EDINBURGH INSURANCE COMPANY LTD., PRUDENTIAL ASSURANCE COMPANY LTD., SOUTHERN INSURANCE COMPANY, and WORLD AUXILIARY INSURANCE CORP., LTD., Defendants, and HONEYWELL INTERNATIONAL, INC. (f/k/a ALLIEDSIGNAL, INC., successor to BENDIX AVIATION CORPORATION and BENDIX CORPORATION), Defendant/Third-Party Plaintiff-Respondent,
v.
TRAVELERS CASUALTY & SURETY COMPANY (f/k/a AETNA CASUALTY & SURETY COMPANY), Third-Party Defendant-Appellant, and AIU INSURANCE COMPANY, AMERICAN CENTENNIAL INSURANCE COMPANY, ASSOCIATED INTERNATIONAL INSURANCE COMPANY, CENTRE INSURANCE COMPANY (f/k/a LONDON GUARANTEE AND ACCIDENT COMPANY OF NEW YORK), CONTINENTAL CASUALTY COMPANY, THE CONTINENTAL INSURANCE COMPANY as successor in interest to HARBOR INSURANCE COMPANY (f/k/a HARBOR INSURANCE COMPANY), EVEREST REINSURANCE COMPANY (f/k/a PRUDENTIAL REINSURANCE COMPANY), EXECUTIVE RISK INDEMNITY INC. (f/k/a AMERICAN EXCESS INSURANCE COMPANY), FEDERAL INSURANCE COMPANY, FIRST STATE INSURANCE COMPANY, FREMONT INDEMNITY COMPANY (f/k/a INDUSTRIAL INDEMNITY COMPANY), GENERAL REINSURANCE CORPORATION, HARTFORD ACCIDENT & INDEMNITY COMPANY, INTERNATIONAL INSURANCE COMPANY (f/k/a INTERNATIONAL SURPLUS LINES INSURANCE COMPANY), LEXINGTON INSURANCE COMPANY, MT. MCKINLEY INSURANCE COMPANY (f/k/a GIBRALTAR CASUALTY COMPANY), MUTUAL FIRE, MAINE & INLAND INSURANCE COMPANY, ROYAL INDEMNITY COMPANY, THE TOKIO MARINE & FIRE INSURANCE COMPANY, LTD., TWIN CITY FIRE INSURANCE COMPANY, UTICA MUTUAL INSURANCE COMPANY, WESTPORT INSURANCE COMPANY (f/k/a PURITAN INSURANCE COMPANY), and CERTAIN LONDON MARKET COMPANIES, including ACCIDENT & CASUALTY INSURANCE COMPANY, ALBA GENERAL INSURANCE COMPANY (f/k/a ALBA GENERAL INSURANCE COMPANY LIMITED), AVIATION & GENERAL INSURANCE COMPANY LIMITED, AXA INSURANCE PLC (f/k/a PROVINCIAL INSURANCE PUBLIC LIMITED COMPANY), THE BRITISH AVIATION INSURANCE COMPANY LIMITED, BRITISH LAW INSURANCE COMPANY LIMITED, BRITISH RESERVE INSURANCE COMPANY LIMITED, BRITISH TRADERS INSURANCE COMPANY LTD., C.A.M.A.T. INSURANCE COMPANY LIMITED, C.F.A.U., CONTINENTAL ASSURANCE COMPANY OF LONDON, LTD., CORNHILL INSURANCE PUBLIC LIMITED COMPANY (f/k/a CORNHILL INSURANCE COMPANY LIMITED), EDINBURGH ASSURANCE COMPANY LTD., EDINBURGH INSURANCE COMPANY LIMITED, EDINBURGH NO. 2 GROUP, ELVIA SWISS INSURANCE COMPANY (f/k/a HELVETIA ACCIDENT INSURANCE COMPANY LIMITED), EXCESS INSURANCE COMPANY LIMITED, FIDELIDADE INSURANCE COMPANY OF LISBON, GE SPECIALITY INSURANCE (UK) LIMITED (f/k/a THREADNEEDLE INSURANCE COMPANY LIMITED), GENERAL INSURANCE COMPANY HELVETIA LIMITED, GROUPAMA INSURANCE COMPANY LIMITED (f/k/a MINISTER INSURANCE COMPANY LIMITED), HELVETIA INSURANCE COMPANY LTD., HELVETIA SWISS INSURANCE COMPANY LIMITED (f/k/a HELVETIA ACCIDENT SWISS INSURANCE COMPANY), IRON TRADES INSURANCE COMPANY LIMITED (f/k/a IRON TRADES MUTUAL INSURANCE COMPANY LIMITED), LA MINERVE INSURANCE COMPANY LIMITED, LOMBARD MARINE & GENERAL INSURANCE COMPANY LTD., LONDON & EDINBURGH GENERAL INSURANCE COMPANY, LONDON & OVERSEAS AVIATION A.C., MOTOR UNION INSURANCE COMPANY LIMITED, NATIONAL CASUALTY COMPANY, NATIONAL CASUALTY COMPANY OF AMERICA, THE NEW INDIA ASSURANCE COMPANY LIMITED, PHOENIX ASSURANCE PUBLIC LIMITED COMPANY, PHOENIX AVIATION INSURANCE COMPANY LIMITED, PHOENIX INSURANCE COMPANY LTD., RIVER THAMES INSURANCE COMPANY LIMITED, ROAD TRANSPORT & GENERAL INSURANCE CO. LTD., ROYAL SCOTTISH ASSURANCE PLC (f/k/a THE ROYAL SCOTTISH INSURANCE COMPANY LIMITED), SCOTTISH LION INSURANCE COMPANY LTD., STRONGHOLD INSURANCE COMPANY LIMITED, SWISS NATIONAL INSURANCE COMPANY LIMITED, SWISS UNION GENERAL INSURANCE COMPANY LIMITED, SWITZERLAND GENERAL INSURANCE COMPANY LIMITED, TRENT INSURANCE COMPANY LIMITED, TUREGUM INSURANCE COMPANY LIMITED, ULSTER INSURANCE COMPANY LIMITED, UMA, UNITED SCOTTISH INSURANCE COMPANY AVIATION LTD., UNITED SCOTTISH INSURANCE COMPANY LIMITED, VANGUARD INSURANCE COMPANY LIMITED, VICTORIA AVIATION, VICTORIA INSURANCE COMPANY, LTD., and THE WORLD MARINE & GENERAL INSURANCE PLC (f/k/a THE WORLD MARINE & GENERAL INSURANCE COMPANY LIMITED), Third-party Defendants.

          Argued October 24, 2017

         On certification to the Superior Court, Appellate Division.

          Andrew T. Frankel argued the cause for appellants St. Paul Fire and Marine Insurance Company and Travelers Casualty and Surety Company (Windels Marx Lane & Mittendorf, and Simpson Thacher & Bartlett, attorneys; Stefano V. Calogero, of counsel; Stefano V. Calogero, Andrew T. Frankel, Tanya M. Mascarich, on the briefs).

          Michael J. Lynch (K&L Gates) of the Pennsylvania bar, admitted pro hac vice, argued the cause for respondent Honeywell International, Inc. (K&L Gates, attorneys; Michael J. Lynch, Donald E. Seymour, John T. Waldron, and Donald W. Kiel, on the briefs).

          Carl A. Salisbury and Paul E. Breene submitted a brief on behalf of amicus curiae United Policyholders (Bramnick, Rodriguez, Grabas, Arnold & Mangan, and Reed Smith, attorneys).

          Brian R. Ade submitted a brief on behalf of amicus curiae Complex Insurance Claims Litigation Association (Rivkin Radler, attorneys).

         This appeal involves questions about the insurance coverage available to defendant Honeywell International, Inc. (Honeywell), a New Jersey based corporation, for thousands of bodily-injury claims premised on exposure to brake and clutch pads (friction products) containing asbestos. The Court granted certification to address two issues. First, whether the law of New Jersey or Michigan (the headquarters location of Honeywell's predecessor when the disputed excess insurance policies were issued) should control in the allocation of insurance liability among insurers for nationwide products-liability claims. Second, whether it was error not to require the policyholder, Honeywell, to contribute in the allocation of insurance liability based on the time after which the relevant coverage became unavailable in the marketplace (that is, since 1987).

         The Bendix Corporation (Bendix) -- a corporate predecessor to defendant Honeywell -- for many years manufactured and sold friction products that contained asbestos. Bendix stopped using asbestos in its friction products in 2001, having continued to manufacture the items even after 1987 when insurance for asbestos-related claims for such products ceased to be available in the marketplace. In 2000, Continental Insurance Company (Continental) (which wrote many primary insurance policies for Bendix during the relevant years), and related companies, commenced this action seeking declaratory relief concerning the rights and obligations associated with insurance coverage for the asbestos-related bodily injury claims filed against Honeywell as a corporate successor to Bendix.

         The choice-of-law issue: Bendix was incorporated in 1929 under the laws of the State of Delaware. Aspects of its business took place in different states. Between 1969 and 1983, Bendix situated its executive headquarters, including its insurance office, in Michigan; another central office was in New York. Bendix also had significant contacts with New Jersey. Until 1973, Bendix's largest center of operations and payroll was in New Jersey. Honeywell is the corporate successor to Bendix. Honeywell's headquarters and principal place of business have always been located in Morristown, New Jersey. Since 1983, all insurance operations for Bendix and its successors have been located in New Jersey. The excess insurance policies at issue here were all brokered, issued, and delivered to Bendix in Michigan. None contain a choice-of-law provision governing the allocation issue. In 2006 the trial court held that New Jersey insurance-allocation law would apply in this matter.

          The allocation issue: Under New Jersey's current law on allocation of liability among insurers, an insured is not forced to assume responsibility in allocation during the insurance coverage block of policies for years in which insurance is not reasonably available for purchase. Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437, 478-79 (1994). Travelers Casualty & Surety Company (Travelers) (taking the lead in argument) and St. Paul Fire and Marine Insurance Company (St. Paul), both excess insurers, argued that the coverage block should run until the year in which Honeywell, as the successor to Bendix, ceased manufacturing the friction products -- 2001. Honeywell maintained that the coverage block should end in the 1986-87 period when first primary (1986) and then excess (April 1, 1987) insurance ceased to be available. Applying Owens-Illinois's approach to allocation of risk to claims arising exclusively from pre-1987 initial exposure, the court determined in 2011 that the unavailability of commercial insurance should end the coverage block of insurance.

         The trial court entered a final judgment in 2013, after which Travelers and St. Paul jointly appealed the trial court's 2006 order, which granted Honeywell's partial summary judgment motion and applied New Jersey allocation law, and the 2011 order, which granted Honeywell's partial summary judgment motion and held that Honeywell had no allocation responsibility for pre-1987 initial exposure claims because after 1987 it was not able to obtain insurance coverage for asbestos claims. The Appellate Division affirmed but required a remand not pertinent to this appeal. The Court granted certification. 228 N.J. 437 (2016).

         HELD: New Jersey law on the allocation of liability among insurers applies in this matter, and the Court sets forth the pertinent choice-of-law principles to resolve this dispute over insurance coverage for numerous products-liability claims. Concerning the second question, on these facts, the Court also affirms the determination to follow the unavailability exception to the continuous-trigger method of allocation set forth in Owens-Illinois.

         1. The first step in a conflicts analysis is to decide whether there is an actual conflict between the laws of the states with interests in the litigation. New Jersey law employs the continuous-trigger doctrine, as initially adopted in Owens-Illinois, 138 N.J. 437. Given that the continuous-trigger theory would implicate multiple insurance policies, the Court also adopted a methodology for allocating liability among those policies. Id. at 474-75. When determining an insurer's liability, a court is to consider both the insurer's time on the risk and the degree of risk that insurer assumed. Ibid. Several policy rationales were at work in the Owens-Illinois approach. See id. at 472-76. The Court emphasized that the theory underlying insurance is risk allocation, id. at 472, and that an insurance allocation scheme that spreads costs throughout the industry and promotes an efficient use of resources translates to more money available to respond in the event of disease and damage, id. at 478. Michigan utilizes a different allocation method. In Arco Industries Corp. v. American Motorists Insurance Co., 594 N.W.2d 61, 69 (Mich. Ct. App. 1998), aff'd by an equally divided court, 617 N.W.2d 330 (Mich. 2000), the Michigan Court of Appeals specifically considered and rejected the Owens-Illinois approach, concluding that policy considerations weighed in favor of adopting the time-on-the-risk method. A substantive difference separates the New Jersey and Michigan legal approaches and policy considerations here, and so the Court must engage in a choice-of-law analysis. (pp. 30-37)

          2. The Court stated in State Farm Mutual Automobile Insurance Co. v. Estate of Simmons that "the law of the place of the contract ordinarily governs the choice of law because this rule will generally comport with the reasonable expectations of the parties . . . and will furnish needed certainty and consistency in the selection of the applicable law." 84 N.J. 28, 37 (1980). In Simmons, the Court relied on § 193 of the Restatement (Second) of Conflict of Laws (Am. Law Inst. 1971) (Restatement). Id. at 35-36, 57. Since Simmons, the Court has discussed the role of two other pertinent Restatement provisions. Section 188 of the Restatement generally addresses conflicts-of-law determinations in contract settings where the parties have not made an effective choice of law. Section 6 of the Restatement sets forth the factors that are relevant in a conflicts determination when there is no local statutory directive controlling the issue. In Gilbert Spruance Co. v. Pennsylvania Manufacturers' Ass'n Insurance Co., the Court considered choice of law regarding insurance coverage in the context of a mass tort and noted that, when determining the conflicts-of-law rule to govern casualty-insurance contracts, Restatement § 193 usually is initially consulted but that Restatement §§ 188 and 6 are analytically more appropriate. 134 N.J. 96, 97, 104 (1993). Courts have found it "tempting" to extract from Spruance a "bright-line rule." The Court clarified in Pfizer, Inc. v. Employers Insurance that "there is no way to avoid a careful site-specific determination, made upon a complete record," and that, when the risk is "to some degree transient," a court must use the Restatement § 6 factors in its analysis. 154 N.J. 187, 197 (1998). Although condensed and reframed into four inquiries, the Pfizer analysis nevertheless remained tethered to the section 6 factors. (pp. 37-46)

         3. In a contract dispute over insurance allocation for nationwide products liability claims asserting bodily injury due to asbestos exposure, neither Restatement § 193 nor Simmons provides the proper starting point. The conflicts analysis here should center on Restatement §§ 188 and 6, as the later decisions in Spruance and Pfizer have taught. With respect to the § 188 contacts, not all are of equal importance or value in this fact-specific inquiry. Two strong considerations under § 188, applied to this matter, combine to point toward New Jersey. Here, the place of performance, § 188(c), and the domicile, residence, and places of incorporation and of business of the parties, § 188(e), all point to New Jersey. The latter takes into account enduring characteristics and deserves to be a starting point in the analysis. Further, heavy weight must be given to the nature of the insured risk and its site. New Jersey is the longstanding domicile of the insured in this litigation (since 1983). Turning to the Restatement's factors in section 6, helpfully condensed in Pfizer, the question is whether New Jersey's relationship with the case is sufficiently significant to warrant application of New Jersey law. The first inquiry described in Pfizer consolidates several § 6 factors and asks, simply, whether application of the competing states' laws would advance the policy interests that the law was intended to promote. The second Pfizer factor focuses on whether application of a competing state's law would frustrate the policies of other states. The third factor considers the interests of the parties, and the contacts outlined in Restatement § 188 the come to the fore. Finally, courts look at the interests of judicial administration under the last Pfizer factor, which asks "what choice of law works best to manage adjudication of the controversy before the court." 154 N.J. at 199. Applying those inquiries, conflicts-of-law principles favor application of New Jersey allocation law in the present dispute over liability among insurers and affirms the Appellate Division on the first issue. (pp. 46-54)

          4. The continuous-trigger and related unavailability exception theories for allocation of insurance liability have been recognized and applied in New Jersey since Owens-Illinois. The Court determined to use that method of allocation of liability, finding it superior by virtue of (1) encouraging the acquisition of insurance and spreading costs throughout the industry; (2) promoting the efficient use of insurance resources to make more money available to respond in catastrophic circumstances; (3) compelling insurers to minimize their costs; and (4) advancing principles of simple justice. 138 N.J. at 472-78. The continuous-trigger method assumes the availability of insurance and incorporates an unavailability exception. Courts have applied the "unavailability exception," in accordance with Owens-Illinois, to require an insured to share in an allocation of liability under the continuous-trigger doctrine only when it foregoes purchasing available insurance. (pp. 54-55)

         5. St. Paul and Travelers ask the Court to create an equitable exception to the unavailability rule, whereby corporations that continue to manufacture products after insurance becomes unavailable for those products would be deprived of the insurance coverage they purchased prior to that unavailability. The Court has affirmed that the continuous-trigger theory of liability is the law of New Jersey multiple times since Owens-Illinois. That theory holds insurers responsible for the losses that actually occur on their watch, using a formula that approximates a scientific assessment of the amount of injury, even if the actual injury manifests later. Clearly, the law on allocation methodology differs among the states. No doubt, legitimate policy reasons may have led sister courts to reach diverse conclusions. In Owens-Illinois the Court acknowledged that "[i]f, after experience, we are convinced that our solution is inefficient or unrealistic, we will not hesitate to revisit" the allocation paradigm with its continuous-trigger and unavailability doctrines. 138 N.J. at 478. This appeal, however, does not present a compelling vehicle to reconsider New Jersey precedent on allocation. None of the initial asbestos exposures, on which claims Honeywell is seeking insurance coverage, occurred after insurance became unavailable. Although the disputed policies involved in this appeal concern excess insurance, they are occurrence policies. This case simply does not present facts on which to consider abandoning the unavailability exception, let alone whether to create a novel equitable exception to that exception. Indeed, the basic policy objectives of Owens-Illinois are all served by affirming the judgment as to the coverage block and moving the case to closure. (pp. 55-64)

         AFFIRMED.

          JUSTICE ALBIN, dissenting in part, expresses the view that, as applied here, the judicially created doctrine known as the "unavailability exception" gives a corporation a free pass if it continues to expose workers to extremely dangerous products after insurance coverage becomes unavailable and stresses that equity demands that a corporation that continues to manufacture a dangerous product without insurance become the ultimate insurer for its actions. Justice Albin concurs in the Court's conflict-of-law analysis and resolution.

          CHIEF JUSTICE RABNER and JUSTICES FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE LaVECCHIA's opinion. JUSTICE PATTERSON did not participate.

          LaVECCHIA, J.

         This appeal involves questions about the insurance coverage available to defendant Honeywell International, Inc. (Honeywell), a New Jersey based corporation, for thousands of bodily-injury claims premised on exposure to brake and clutch pads (friction products) containing asbestos. We granted certification to address two issues. First, we consider whether the law of New Jersey or Michigan (the headquarters location of Honeywell's predecessor when the disputed excess insurance policies were issued) should control in the allocation of insurance liability among insurers for nationwide products-liability claims. Second, we address whether it was error not to require the policyholder, Honeywell, to contribute in the allocation of insurance liability based on the time after which the relevant coverage became unavailable in the marketplace (that is, since 1987).

         In addressing the allocation question, we note that Honeywell does not seek coverage in this dispute for claims that involve initial product exposure occurring after insurance was not available and while the policyholder continued to manufacture the product. Although some of the claims presented involve injury that manifested after the date of excess-insurance unavailability, the class of claims to be addressed by the coverage block of insurance all presume that product exposure predated the insurance unavailability. Thus, consistent with New Jersey's continuous-trigger doctrine, Honeywell is seeking coverage under excess insurance policies for claims only from exposure occurrences during the period of policy coverage.

          Different jurisdictions approach pinpointing the occurrence of injury using varying methodologies. We, and a majority of jurisdictions, rely on medical science that teaches asbestos-related disease is progressive, as body tissue is injured when an individual inhales asbestos fibers. Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437, 454 (1994). That concept led to our adoption of the continuous-trigger doctrine in insurance liability allocation, which assumes progressive injury in each policy year following initial exposure. See ibid. To some extent that determination involves a legal fiction. Id. at 457. However, by allocating responsibility based on the date of initial exposure and every policy year thereafter, we maximize the insurance resources available to claimants suffering bodily injury.

         Under our current law on allocation of liability among insurers, an insured is not forced to assume responsibility in that allocation during the insurance coverage block of policies for years in which insurance is not reasonably available for purchase. Id. at 478-79 (referring to unavailability rule).

         The trial court and the Appellate Division both concluded that New Jersey law applied, although for different reasons. Both courts further determined that, under the circumstances, the second question must be answered in the negative.

          For the reasons that follow, we also hold that New Jersey law on the allocation of liability among insurers applies in this matter, and we set forth the pertinent choice-of-law principles to resolve this dispute over insurance coverage for numerous products-liability claims.

         Concerning the second question, on these facts, we also affirm the determination to follow the unavailability exception to the continuous-trigger method of allocation set forth in Owens-Illinois.

         I.

         The unpublished Appellate Division decision in this matter distilled the extensive record developed by the trial court. We draw from the panel's summary of the facts and procedural history and credit the panel for its fine work.

         A.

         By way of general background, The Bendix Corporation (Bendix) -- a corporate predecessor to defendant Honeywell --for many years manufactured and sold friction products that contained asbestos. Bendix stopped using asbestos in its friction products in 2001, having continued to manufacture the items even after 1987 when insurance for asbestos-related claims for such products ceased to be available in the marketplace.

         Beginning around 1975, Bendix began to receive liability claims asserting that asbestos in its friction products caused bodily injury to users. In the years leading up to the summary judgment proceedings in this matter, Bendix and its successors received approximately 147, 000 claims, of which about 71, 000 have been resolved. Claimants sued Bendix in almost all fifty states, and its insurers have spent more than $1 billion on indemnity payments.

         Certain matters are undisputed. The friction products contained asbestos. Honeywell is responsible for asbestos liabilities attributed to Bendix, although it disputes the dangerousness of its friction products. And, excess insurance coverage for asbestos-related personal injury claims became unavailable for purchase after April 1, 1987.

         In 2000, Continental Insurance Company (Continental) (which wrote many primary insurance policies for Bendix during the relevant years), and related companies, commenced this action seeking declaratory relief concerning the rights and obligations associated with insurance coverage for the asbestos-related bodily injury claims filed against Honeywell as a corporate successor to Bendix. Bendix advanced cross-claims and third-party claims against various insurers, including Travelers Casualty & Surety Company (Travelers) and St. Paul Fire and Marine Insurance Company (St. Paul).

         Honeywell settled with Continental and most other insurers. The ten insurance policies that remain at issue involve excess insurance issued to Bendix by Travelers and St. Paul. Eight of the policies were issued to Bendix by Travelers's predecessor, Aetna Casualty & Surety Company (Aetna). Two of the policies were issued by St. Paul. St. Paul was since acquired by Travelers but is separately identified for purposes of this appeal.

         The choice-of-law issue in this matter arose from the following procedural actions. Honeywell filed a motion for partial summary judgment in 2006, asking the court to apply New Jersey insurance allocation law while opposing the application of Michigan law. Travelers opposed Honeywell's motion and filed a cross-motion, seeking the application of Michigan law to its policies. St. Paul did not oppose Honeywell's motion or make a separate motion. The motion judge granted Honeywell's motion, denied Travelers's cross-motion, and held that the laws of New Jersey would apply to the insurance allocation questions. The court memorialized its order on November 9, 2006.

         With that general background in mind, we turn to some finer details.

         B.

         Bendix was incorporated in 1929 under the laws of the State of Delaware. Aspects of its business took place in different states. During the course of its corporate existence, Bendix had manufacturing operations in all fifty states and twenty-two foreign countries, and sold its products throughout the United States. Administratively though, from about 1940 to 1969, Bendix maintained its headquarters in South Bend, Indiana, while also having central offices in Detroit and New York. Its insurance office was in South Bend. Between 1969 and 1983, Bendix situated its executive headquarters, including its insurance office, in Michigan; another central office was in New York. Bendix also had significant contacts with New Jersey. Until 1973, Bendix's largest center of operations and payroll was in New Jersey.

         Bendix had a variety of businesses, spanning such areas as automotive products, aerospace products, industrial products, financial services, and others. Included among its products are those at the center of the claims at issue here: friction products.

         Bendix and its successors manufactured asbestos products in New York from 1939 until 2001 and in Tennessee from 1965 through 2001. As noted, asbestos ceased to be used as a component of the friction products in 2001.

         Honeywell is the corporate successor to Bendix as a result of the following corporate changes. The Allied Corporation (Allied) acquired Bendix in 1983 and operated it as a wholly owned subsidiary, assuming Bendix's obligations and liabilities. Allied was incorporated under the laws of the State of New York and had its principal place of business in New Jersey. In 1985, Allied and Signal Companies merged, becoming wholly-owned subsidiaries of The Allied-Signal Inc., a new Delaware corporation that also has been headquartered in New Jersey since the merger. The Allied-Signal Inc. changed its name to AlliedSignal Inc. in 1993; AlliedSignal Inc. merged with Honeywell, Inc., in December of 1999 and changed its name to Honeywell. Honeywell was incorporated under the laws of the State of Delaware, but its headquarters and principal place of business have always been located in Morristown, New Jersey.

         Since 1983, all insurance operations for Bendix and its successors have been located in New Jersey. In total, Honeywell has purchased more than $3.5 billion in umbrella and excess insurance for Bendix's and its successors' liabilities from insurers whose principal places of business were located in over fourteen states and countries, including New Jersey.

         It appears not to be disputed that the excess insurance policies, which were not subject to settlement before the trial court, were all brokered, issued, and delivered to Bendix in Michigan. Travelers's predecessor, Aetna, issued its disputed policies to Bendix between 1977 and 1983; St. Paul issued its disputed policies between 1968 and 1970. None of the policies contain a choice-of-law provision governing the allocation issue before us.

          C.

         As noted, the trial court granted Honeywell's motion for partial summary judgment in 2006, holding that New Jersey insurance-allocation law would apply in this matter.

         When, in 2011, the motion court addressed motions for partial summary judgment that involved the dispute over the duration of the coverage block of insurance, the parties were eleven years into the case. The parties asked the court to consider resolving six issues as a matter of law, as well as to appoint a special allocation master as Owens-Illinois suggested would be appropriate for complicated, long tail, asbestos-injury-claims cases.

         The duration of the coverage block teed up the issue of the unavailability rule's application in this matter. All parties agreed that the beginning point would be 1940. Continental, the primary insurer for many years, started paying out claims in the 1980s, before Owens-Illinois was decided in 1994. It had some years in which its policy had no upper limit. Consistent with promoting the interests of its insured, it began paying claims for claimants and to assist Bendix and its successors in the resolution of claims, leaving coverage disputes to be resolved independently. Eventually, Continental assigned to Honeywell its rights with respect to the primary's responsibilities under allocation. That assignment included the considerable complication that its records made it difficult to determine how Continental had been variously assigning costs (i.e., defense costs or liability costs and to which matter), which affected the order of exhaustion of policies among insurers. As the record highlights, between 1980 and 1994, Continental's assignment of past defense costs was unclear and, once those costs could be identified, required assessment in respect of the allocation theory to be applied to this matter. That and other issues were implicated in this complicated matter of insurance liability allocation that was the essence of the complaint in this matter.

         The trial court determined that one law on allocation should apply and that should be New Jersey law. That approach allowed the court to use one set of rules to sensibly and coherently allocate responsibility among insurers, over decades of actions, and the many payments already made by insurers, as well as the insured, depending on the policy-imposed obligations and coverage limitations held to apply. And, the court's determination was consistent with previous decisions that recognized that Owens-Illinois could be applied retroactively, including for defense costs. See Champion Dyeing & Finishing Co. v. Centennial Ins. Co., 355 N.J.Super. 262, 270-71 (App.Div. 2002); see generally Chem. Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 177 F.3d 210, 229-31 (3d Cir. 1999) (applying Owens-Illinois retroactively).

         The determination of the coverage block was immensely important to the continued resolution of the issues. The Owens-Illinois allocation methodology, simply described, looks at the time on the risk horizontally and the total limits in each annual period vertically. Thus, an endpoint to the coverage block of insurance to be divvied up for claims and defense costs is essential to the calculation and to the assignment of risk to be borne by primary insurers and exhausted in each policy year before the excess insurer is tapped for its contributions for that year.

         Owens-Illinois utilizes that allocation approach, recognizing also a continuous-trigger doctrine to explain the basis for recognizing occurrences in the year of first exposure to asbestos and in each subsequent policy year. To avoid having its insurance triggered, an insurer has the burden of showing that exposure did not occur earlier or during the policy year for which it wrote coverage for the insured. Otherwise, manifestation of injury presenting itself thereafter resulted in allocation of that individual's claim, in accordance with mathematical formulae, to that insurer's policy year.

         It was within the context of that setting and law that the motion court considered the parties arguments over the duration of the coverage block. Travelers (taking the lead in argument) and St. Paul, both excess insurers, argued that the coverage block should run until the year in which Honeywell, as the successor to Bendix, ceased manufacturing the friction products -- 2001. Honeywell maintained that the coverage block should end in the 1986-87 period when first primary (1986) and then excess (April 1, 1987) insurance ceased to be available. To the excess insurers, Honeywell was arguing for truncating the insurance coverage block. To Honeywell, Travelers was arguing for extenuation of the insurance coverage block.

         The unavailability rule's application in this case became a point of debate. Travelers asserted earlier in this matter that a fact question existed about whether insurance was available in the marketplace. In 2007, another motion judge ordered discovery and a hearing on that question. When the presently discussed motion for partial summary judgment came before the deciding motion judge, the court concluded that there was no genuine issue of fact concerning the question. The court held that commercial policies were not available to Honeywell beginning with the 1986/87 period as it had maintained, and we note that fact determination is not challenged in this appeal.

         As a result of the discovery that had taken place though, Travelers also argued, in connection with the partial summary judgment motion, that Honeywell was self-insured. In advancing that argument, it pointed to the company's maintenance of corporate reserves. Travelers further argued that Honeywell had assumed the risk and should be treated as responsible for the years that it continued to manufacture friction products after 1987 until 2001 -- another fifteen years, which would reduce the exposure of the excess carriers in the allocation methodology form that which would occur under a coverage block that ended in 1987.

         With respect to the reserves, the trial court dismissed the argument that maintenance of reserves is the equivalent of self-insurance. The court also rejected the argument that somehow that business practice of maintaining reserves represented an assumption of insurance risk relevant to resolution of the coverage block dispute.

         The focal point to the argument and decision by the court was the unavailability rule application, or not, to determining triggered years of insurance for purposes of allocation under the Owens-Illinois paradigm.

         On that point, the court heard from Travelers the arguments that continued manufacturing by Honeywell from 1987 to 2001 increased the number of pre-1987 exposure claims, increased the potential value of pre-1987 claims by alleged enhanced injury from continued exposure, and resulted in encouraging more people to file claims based on pre-1987 exposure.

          Honeywell argued that the record lacked factual or expert evidence to support those assertions of inference. Moreover, Honeywell emphasized that Owens-Illinois allocation theory addressed assumption of insurance risk not assumption of tort risk.

         Ultimately, the trial court agreed with Honeywell that the insurance coverage period should not be extended, as Travelers requested, to include years from 1987 to 2001. Applying Owens-Illinois's approach to allocation of insurance risk to claims arising exclusively from pre-1987 initial exposure, the court determined that the unavailability of commercial insurance should end the coverage block of insurance. Hence, the decision fixed with certainty the policies, with their specific terms and amounts, that were available for the special master to consider when allocating among insurers and Honeywell for that period of time alone. That July 22, 2011 decision had the result of not requiring the court, or anyone else, to attempt to determine how policy amounts or limits or related insurance concerns for post-1987 years would be overlaid on Honeywell during the 1987-2001 period when manufacturing continued or how such corporate finances would be sorted out between post- and pre-1987 claims.

         After the parties consented to the appointment of a special allocation master (SAM), this matter proceeded before the SAM with policy years, policies, and amounts certain for the period of 1940-1987 as he addressed the already complicated issues before him. As the SAM's initial report to the trial court clearly noted before delving into the difficult issues assigned to him,

[a] Bendix asbestos claim triggers those policies issued to Bendix and/or Honeywell that were in effect during the portion of the Trigger Period that is within the coverage block. Exposure to an asbestos product shall be presumed to be exposure to a Bendix product, with the burden shifting to each insurer to prove that there was no exposure to a Bendix product before or during its policy period. There is no coverage under a policy where the claimant's first exposure to asbestos from a Bendix product takes place after the effective period of a given policy expired.

         After holding hearings and hearing argument, the SAM issued a report and supplemental report containing recommendations on allocation. The trial court adopted the SAM's recommendations, with one exception not relevant to this appeal, and entered a final judgment on September 16, 2013. By the time this matter reached appellate processes, almost all claims had settled.

         D.

         Travelers and St. Paul jointly appealed the trial court's two orders to the Appellate Division. They appealed the November 9, 2006 order, which granted Honeywell's partial summary judgment motion and applied New Jersey allocation law, and the July 22, 2011 order, which granted Honeywell's partial summary judgment motion and held that Honeywell had no allocation responsibility because after 1987 it was not able to obtain insurance coverage for asbestos claims. The Appellate Division affirmed the trial court but required a limited remand not pertinent to this appeal.

         The appellate panel considered the trial court's choice-of-allocation-law ruling only as applied to Travelers's eight excess policies.[1] In its substantive review of that question, the panel determined that there was a conflict between the insurance-allocation methodologies of New Jersey, as determined by Owens-Illinois, and the Michigan time-on-the-risk methodology, espoused by the Michigan Court of Appeals in Arco Industries Corp. v. American Motorists Insurance Co., 594 N.W.2d 61 (Mich. Ct. App. 1998) (Arco), aff'd by an equally divided court, 617 N.W.2d 330 (Mich. 2000). The appellate panel found inapplicable the Restatement (Second) of Conflict of Laws (Am. Law Inst. 1971) (Restatement) § 193, entitled "Contracts of Fire, Surety or Casualty Insurance," because its site-specific approach was inconsistent with Travelers's nationwide insurance policies and Bendix's selling of the friction products throughout the United States. The appellate panel instead analyzed the issue through Restatement §§ 188 and 6. The panel particularly relied on the § 6 factors, as distilled by this Court in Pfizer, Inc. v. Employers Insurance, 154 N.J. 187, 198-99 (1998). The appellate panel considered the public policy interests of both states; the interests of commerce among the states; the interests of the parties, including an evaluation of where the insurance policies were brokered, negotiated, underwritten, and issued; and the interest of judicial administration. Ultimately, the panel agreed with the trial court and concluded that the choice-of-law analysis supported the application of New Jersey law to Travelers's eight excess policies, which were in effect between February 1, 1977 and October 1, 1983.

         The appellate panel further agreed with the trial court that, under Owens-Illinois, Honeywell was not required to contribute to allocation for pre-1987 initial exposure claims even if the claimant did not manifest injury until after 1987, given that excess insurance ...


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