Why it matters: The U.S. Court of Appeals for the Fifth Circuit, in another per curiam, unpublished decision, held that a policyholder failed to give timely notice of asbestos claims to National Union with respect to a primary policy, leaving the policyholder without coverage for thousands of prior asbestos claims under that National Union policy.
The policyholder faced approximately 2,700 asbestos claims from 1987 to 2008. It sued a group of excess insurers in 2007 and during the litigation discovered a primary policy from National Union that did not exclude coverage for asbestos claims. The policyholder quickly, in 2009, tendered claims to National Union and added that insurer to the pending coverage action.
The Court of Appeals ruled that, although the policyholder had had some discussions with National Union about asbestos claims prior to 2009, those discussions did not concern the specific primary policy. As such, the court held that the policyholder’s notice was untimely with respect to the primary policy and all claims filed before the tender.
This case highlights the importance of carefully cataloging and reviewing all potentially relevant insurance policies when claims arise, particularly in the context of long-tail and mass tort claims. This case further shows that policyholders must be careful and thorough in providing notice, because some insurers, and some courts, will take a technical approach to notice that creates obstacles to obtaining full coverage.
Detailed discussion: Anco Insulations, Inc., sold, installed, repaired, and distributed insulation materials that contained asbestos from approximately 1972 through the early 1980s. As a result, the company faced about 2,700 asbestos-related lawsuits.
National Union sold some excess insurance policies to Anco that evidently contained asbestos exclusions. In the late 1980s, National Union told Anco that National Union’s policies did not cover asbestos claims. In 2000, National Union requested to and did review the asbestos files of one of Anco’s primary insurers. In 2000 and 2001, Anco notified National Union of certain asbestos claims, referencing certain of National Union’s policies, which apparently contained asbestos exclusions, but not an as-yet undiscovered primary policy.
In 2007, Anco filed an asbestos coverage action against a group of excess insurers. During the course of discovery in 2009, Anco became aware of a 1987 National Union primary policy that did not contain an asbestos exclusion. On April 23, 2009, the company tendered all of its asbestos suits to National Union and then added the insurer as a defendant to the coverage action.
National Union filed a motion for summary judgment, contending that it was not liable for any of Anco’s past asbestos claims and defense costs due to Anco’s late tender date of April 23, 2009. A federal district court granted the motion and denied Anco’s attempt to recover statutory penalties for the insurer’s failure to timely participate in its defense, and Anco appealed.
On appeal, the court ruled that Anco’s pre-tender claims were not covered, because they were untimely and prior general communications about asbestos claims were “not relevant to the question whether Anco timely tendered its claims under the Policy ,” at issue. Certain prior letters from Anco to National Union referred only to another policy, not the policy at issue, and the court ruled that such communications did not constitute notice as to the policy at issue.
Anco’s alternative argument, that its untimely tender should be excused because National Union breached its duty to investigate the claims, also failed. The court found no case law to support the testimony of Anco’s expert that National Union “should have conducted a policy search for all of the policies it sold Anco and identified them for Anco,” and found that the testimony therefore was “irrelevant to the question of when Anco first tendered defense of its claims under the Policy.”
Further, because Anco breached the “timely notice” provision of the policy, National Union was not responsible for any costs incurred on or after April 23, 2009, as to the approximately 2,700 asbestos lawsuits filed between 1987 and 2008. While Louisiana law generally requires a demonstration of prejudice by the insured’s late notice to deny coverage, the court said that where timely notice is an express condition precedent to coverage, prejudice is not required.
The decision left open the possibility that Anco could obtain coverage under the primary policy at issue for new claims that are timely noticed.
To read the opinion in Anco Insulations, Inc. v. National Union Fire Insurance Co., click here.