Nationwide Mutual Fire Insurance Company (Nationwide) issued a liability policy to Geo V. Hamilton, Inc. (GVH) to insure against claims of asbestos-related injuries. In 1992, GVH entered into an Interim Claims Handling and Settlement Agreement (Agreement) with Nationwide and three of its other insurers. The Agreement included an arbitration provision and provided that each insurer’s obligation to pay defense and indemnity costs continued only up until its policy limits were exhausted. Nationwide’s policy limits were exhausted in 1997.

Thereafter, two of GVH’s other insurers filed lawsuits in state courts to determine their obligations to GVH under their insurance policies. One of the insurer (PMA) was party to the Agreement, while another (ACE) was not. In 2007, GVH submitted new asbestos-related claims to Nationwide and filed an amended cross-claim in the ACE litigation that included claims against Nationwide. In response, Nationwide sent a letter to GVH demanding arbitration under the Agreement. When GVH refused to arbitrate, Nationwide filed a petition to compel arbitration in Pennsylvania federal court.

The district court initially denied Nationwide’s petition, but after remand from the Third Circuit, reversed its prior ruling and granted Nationwide’s motion to compel. GVH then appealed to the Third Circuit, which affirmed, rejecting GVH’s argument that Nationwide waived its right to arbitration because it participated in the litigation and did not seek a stay of proceedings. The court noted that Nationwide’s petition was filed less than two months after it was brought into the ACE action, and within seven days of being notified of GVH’s refusal to arbitrate. Moreover, most of the actions that GVH alleged were evidence of Nationwide’s participation in the litigation occurred after it filed its arbitration demand. Finally, the Third Circuit rejected GVH’s claim of prejudice, noting that the discovery pursued by Nationwide concerned nonarbitrable matters, and that it was not to blame for any expenses or delay incurred by which had brought Nationwide into the action in the first place.

Click here to review a copy of the court’s decision captioned Nationwide Mutual Fire Insurance Company v. Geo V Hamilton Inc., No. 10-2329 (3d Cir. February 1, 2011).