Why it matters

In a dispute over coverage for asbestos claims, a New York court ruled that non-settling carriers could review settlement agreements between Exxon Mobil Corp. and its other insurers. Facing litigation over asbestos-containing products, Exxon filed suit in Exxon Mobil Corp. v. Certain Underwriters at Lloyd’s, London seeking a determination of the rights and obligations of hundreds of primary and excess insurers. Some of the carriers settled with Exxon and the remaining insurers sought to review those agreements. At a hearing, a trial court judge disagreed with Exxon that access to the settlement agreements would give the non-settling carriers an advantage and allowed those insurers access to what Exxon contended were confidential settlement agreements. Over Exxon’s objection, the court found that the information was relevant to the issue of exhaustion and Exxon’s future liability.

Detailed Discussion

In 2012 Exxon Mobil filed suit in New York state court against hundreds of its primary and excess insurers to determine the “rights, duties and obligations” for defense and indemnification costs incurred as a result of asbestos claims. According to the complaint, thousands of plaintiffs making asbestos-related claims had already been “settled or otherwise disposed of,” but “thousands more remain pending . . . and Exxon Mobil expects many more to be filed in the future.”

Exxon reached settlements with several insurers. At a hearing to determine approval of the settlements, the New York Supreme Court had good news and bad news for the policyholder.

The good news: the court approved the settlements. The bad news: the non-settling carriers get to learn all about them.

An attorney for Exxon argued that such access would provide the other insurers with a “road map” on how to make a good deal with the company, according to Law360. “This will facilitate a tactical advantage . . . on the part of the non-settling defendants,” he told the court. “It would be unfair to Exxon Mobil.”

In contrast, a lawyer for some of the non-settling insurers contended that they needed the information about their potential liability and whether or not the underlying policies had been exhausted.

Siding with the insurers, the court ruled that the insurers would be allowed to review the settlement agreements.