Muir v. Lamorak Insurance Company et al
Filing
52
DECISION AND ORDER: Magistrate Judge H. Kenneth Schroeder, Jr.'s 39 Report and Recommendation is hereby adopted consistent with the findings as set forth herein. The matter is recommitted to Magistrate Judge Schroeder for further proceedings. SO ORDERED. Signed by Hon. Richard J. Arcara on 11/4/2021. (LAS)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
EDNA K. MINEWEASER
Executrix of the Estate of
Paul J. Mineweaser, Deceased
and Individually as Surviving Spouse
Plaintiff,
v.
ONE BEACON INSURANCE COMPANY;
RESOLUTE MANAGEMENT, INC.;
SEATON INSURANCE COMPANY,
Individually and as Successor to Unigard
Insurance Company;
CONTINENTAL INSURANCE COMPANY;
HARPER INSURANCE LIMITED,
formerly known as
Turegum Insurance Company;
and
ASSICURAZIONI GENERALI, SPA,
Defendants.
DECISION AND ORDER
14-CV-0585A(Sr)
EVA L. POWERS
Executrix of the Estate of
Arthur E. Neilson
Plaintiff,
14-CV-1093A(Sr)
v.
ONE BEACON INSURANCE COMPANY,
RESOLUTE MANAGEMENT, INC.
Administrator for One Beacon America Insurance
Company;
SEATON INSURANCE COMPANY,
Individually and as Successor to Unigard
Insurance Company;
CONTINENTAL INSURANCE COMPANY
Individually and as Successor in Interest to
Harbor Insurance Company (CNA);
HARPER INSURANCE LIMITED;
and
ASSICURAZIONI GENERALI, SPA,
Defendants.
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RHODA PEACE
Executrix of the Estate of
Hubert A. Peace ,
Plaintiff,
15-CV-177A(Sr)
v.
ONE BEACON INSURANCE COMPANY,
RESOLUTE MANAGEMENT, INC.,
Administrator for One Beacon America
Insurance Company;
SEATON INSURANCE COMPANY,
Individually and as Successor to Unigard
Insurance Company;
CONTINENTAL INSURANCE COMPANY,
Individually and as Successor in Interest to
Harbor Insurance Company (CNA);
HARPER INSURANCE LIMITED,
formerly known as
Turegum Insurance Company;
ASSICURAZIONI GENERALI, SPA;
and
HEDMAN RESOURCES LTD1
Defendants.
1
Hedman has not appeared in this action.
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NANCY M. MUIR
Executrix of the Estate of
Joseph L. Muir, Deceased
Plaintiff,
16-CV-89A(Sr)
v.
LAMORAK INSURANCE COMPANY,
formerly known as One Beacon Insurance Company;
RESOLUTE MANAGEMENT, INC.;
CONTINENTAL INSURANCE COMPANY (CNA);
PROVIDENCE WASHINGTON INSURANCE COMPANY,
formerly known as Seaton Insurance Company;
HARPER INSURANCE LIMITED;
and
ASSICURAZIONI GENERALI, SPA,
Defendants.
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Plaintiffs commenced these actions against defendant insurance companies
pursuant to New York Insurance Law § 3420, seeking payment of judgments entered
against Hedman Resources, Ltd., formerly known as Hedman Mines, Ltd. (“Hedman”),
the supplier of raw asbestos fiber to plaintiffs’ employer, Durez Plastics (“Durez”),
following plaintiffs’ bodily injuries and subsequent deaths caused by exposure to
Hedman’s asbestos, and seeking a declaration that the insurance companies’ transfer
of insurance funds to Hedman constituted fraudulent conveyances in violation of New
York Debtor Creditor Law.
The cases were referred to Magistrate Judge H. Kenneth Schroeder, Jr.,
pursuant to 28 U.S.C. § 636(b)(1)(B). Defendants filed motions for summary judgment
pursuant to Fed. R. Civ. P. 56(c) seeking dismissal of the complaint in the Mineweaser
action; plaintiffs moved for summary judgment against all defendants on the Insurance
Law § 3420 claim; and plaintiff Mineweaser moved for summary judgment against
Continental and the London Companies on the Debtor & Creditor Law § 273-a claim.
On May 30, 2018, Magistrate Judge Schroeder filed a Report and Recommendation
(Dkt. No. 159), recommending that: (1) defendants’ motions for summary judgment be
denied with respect to plaintiff Mineweaser’s Insurance Law § 3420 claim; (2)
defendants Continental and the London Companies’ motions for summary judgment be
denied with respect to plaintiff Mineweaser’s Debtor & Creditor Law § 273 and § 274
claims and the remaining defendants’ motions for summary judgment be granted with
respect to plaintiff Mineweaser’s Debtor & Creditor Law § 273 and § 274 claims; (3)
defendants’ motions for summary judgment be granted with respect to plaintiff
Mineweaser’s Debtor & Creditor Law § 273-a claim; (4) defendants’ motions for
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summary judgment be denied with respect to plaintiff Mineweaser’s Debtor & Creditor
Law § 275 and § 276 claims; (5) plaintiffs’ motions for summary judgment be granted
with respect to their Insurance Law § 3420 claims; and (6) plaintiff Mineweaser’s motion
for summary judgment be denied with respect to his Debtor & Creditor Law § 273-a
claim. The Court presumes the parties’ familiarity with the evidentiary record and the
legal issues before the Court. Pursuant to 28 U.S.C. § 636(b)(1)(B), the Court applies
de novo review of the defendants’ objections to the Report and Recommendation.
Defendants object that additional discovery is required with respect to coverage
issues and seek discovery of documents possessed by Hedman and Travelers which
may be relevant to determining whether Hedman was an insured under the contracts of
insurance, but the Court finds no cause to consider extrinsic evidence because the
underlying insurance policies and excess insurance policies unambiguously include
Hedman as an insured. See W.W.W. Assoc’s, Inc. v. Giancontieri, 77 N.Y.2d 157, 163
(1990) (“It is well settled that extrinsic and parol evidence is not admissible to create an
ambiguity in a written agreement which is complete and clear and unambiguous upon
its face.”) (internal quotation omitted). Moreover, plaintiffs have met their burden of
demonstrating exhaustion of the underlying insurance contracts by virtue of Travelers’
loss runs and response to defendants’ inquiries, and defendants’ arguments regarding
the adequacy of those documents are insufficient to raise a triable issue of fact as to
exhaustion. Furthermore, defendants have failed to demonstrate good cause for failing
to conduct discovery to meet their burden of proof as to the exclusion for coverage of
bodily injuries that are expected or intended prior to the filing of the motions for
summary judgment. See Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d
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1178, 1205 (2d Cir. 1995). Similarly, defendants failed to meet their burden of
demonstrating Hedman’s lack of cooperation. See West Street Props., LLC v. American
States Ins. Co., 124 A.D.3d 876, 878-879 (2 nd Dep’t 2015). Although the Muir case had
yet to proceed to discovery, all of these cases concern the same questions of law and
fact vis-a-vis insurance coverage and the Magistrate Judge afforded the parties nine
months to complete all discovery in the Mineweaser action after considering plaintiff
Mineweaser’s objection to defendants’ suggestion that discovery related to insurance
coverage be delayed pending resolution of dispositive motions addressing the insurers’
settlement agreements with Hedman, yet defendants proffer no evidence of any
attempt to conduct discovery of Hedman or Travelers with respect to these issues.
The crux of defendants’ objections goes to the distinction between the accrual of
plaintiffs’ underlying personal injury action and the accrual of plaintiffs’ cause of action
pursuant to Insurance Law § 3420(a). As the Magistrate Judge concluded, courts
applying New York law have determined that insurance coverage for latent diseases
caused by asbestos is triggered by an injury in fact, which can be measured from the
time of first exposure through manifestation of disease. Stonewall Ins. Co. v. Asbestos
Mgmt., 73 F.3d 1178, 1198-99 (2d Cir. 1995); See Danaher Corp. v. Travelers Indem.
Co., 414 F. Supp.3d 436, 456-457 (S.D.N.Y. 2019) (“In sum, the Court holds that a
triggering of injury in fact for the Underlying Claims may be found as early as the time of
first exposure to asbestos or silica, and may continue progressively through the
claimant’s death or the date of filing the claim, whichever occurs earlier.”); Hopeman
Bros., Inc. v. Continental Cas. Co., 307 F.Supp.3d 433, 468-469 (E.D.Va 2018)
(accepting date of first exposure as event that triggers coverage and acknowledging
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that New York law does not require diagnosis to trigger coverage for bodily injury from
asbestos). Insurance Law § 3420 authorizes any person who has obtained a judgment
against an insured for damages for injury sustained during the life of an insurance
policy to maintain an action against the insurer to recover the amount of the judgment in
accordance with the terms of that policy; it does not limit claims to injuries discovered
during the life of the policy. Defendants are bound by the factual findings in the state
court personal injury actions that Mr. Mineweaser sustained injury from exposure to
Hedman’s asbestos between 1968 and 1979; Mr. Neilson sustained injury from
exposure to Hedman’s asbestos between 1966 and 1979; Mr. Peace sustained injury
from exposure to Hedman’s asbestos between 1966 and 1979 and Mr. Muir sustained
injury from exposure to Hedman’s asbestos between 1970 and 1977. Thus, even
though plaintiffs’ personal injury claims did not accrue until discovery of injury from
asbestos exposure, plaintiffs’ had each sustained injury as contemplated by Insurance
Law § 3420 during the life of the relevant insurance policies and prior to the policy buybacks. Because “plaintiffs’ right of action under Section 3420(a)(2) accrued at the tim e
of the injury . . . any subsequent settlement or release effectuated by [the tortfeasor]
and [insurance company] is not determinative of plaintiffs’ rights.” Sales v. U.S.
Underwriters Ins. Co., No. 93 Civ. 7580, 1995 WL 144783, *9 (S.D.N.Y. April 3, 1995).
As a result, plaintiffs are entitled to recover their judgments from the excess insurers in
accordance with the terms of the policies as to pro rata or all sums allocation.
With respect to Mr. Mineweaser’s New York Debtor & Creditor Law § 273 and
§ 274 claims, denial of summary judgment is proper because regardless of the date the
parties resolved their dispute over excess insurance coverage, the settlement
agreements state that the release of the London Companies was effective upon receipt
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of the settlement amount which was due within 10 business days of the November 22,
2012 execution date of the settlement agreement, and the release of Continental was
likewise effective upon receipt of the settlement amount which was due after the
December 31, 2012 execution date of the settlement agreement. Furthermore, Mr.
Edell’s affidavit and Hedman’s financial statements and communications with the
excess insurance carriers clearly demonstrate Hedman’s insolvency at the time of the
allegedly fraudulent release of insurance coverage in exchange for the settlement
amount.
The Court has considered defendants’ remaining objections and finds them to be
without merit.
The Court therefore adopts the Report and Recommendation and (1) denies
defendants’ motions for summary judgment with respect to plaintiff Mineweaser’s
Insurance Law § 3420 claim; (2) denies defendants Continental and the London
Companies’ motions for summary judgment with respect to plaintiff Mineweaser’s
Debtor & Creditor Law § 273 and § 274 claims and grants the remaining defendants’
motions for summary judgment with respect to plaintiff Mineweaser’s Debtor & Creditor
Law § 273 and § 274 claims; (3) grants defendants’ motions for summary judgment with
respect to plaintiff Mineweaser’s Debtor & Creditor Law § 273-a claim; (4) denies
defendants’ motions for summary judgment with respect to plaintiff Mineweaser’s
Debtor & Creditor Law § 275 and § 276 claims; (5) grants plaintiffs’ motions for
summary judgment with respect to plaintiffs’ Insurance Law § 3420 claims; and (6)
denies plaintiff Mineweaser’s motion for summary judgment with respect to his Debtor &
Creditor Law § 273-a claim.
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The case is referred back to Magistrate Judge Schroeder for further proceedings.
IT IS SO ORDERED.
S/Richard J. Arcara
HONORABLE RICHARD J. ARCARA
UNITED STATES DISTRICT COURT
DATED: November 4, 2021
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