667 F.3d 669
6th Cir.2011Background
- RPM and subsidiaries Bondex and New Republic seek additional coverage for thousands of asbestos claims tied to The Reardon Company (Old Reardon) and its Reardon Division; policies issued in Ohio (1973–1985) did not name Old Reardon but covered Reardon-derived claims under Products Hazard caps; district court held de facto merger extended caps to Old Reardon; this court affirming because policy language and dealing support the result; Reardon assets were acquired in 1966, with Reardon Division continuing the business and adopting Reardon dates; Plaintiffs previously settled with insurers exhausting primary and excess limits by 2003, and 1990s settlements treated Old Reardon and Reardon Division as insureds; this appeal centers on whether Old Reardon and Reardon Division are Named Insureds under the policies and whether Products Hazard caps apply
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Old Reardon and the Reardon Division qualify as Named Insureds under the policies? | Named Insured includes entities under control at inception; Reardon Division controlled by RPM; Old Reardon’s continuity extends to Named Insured | Policy defines Named Insured to include only entities at inception; Reardon pre/post-1966 status irrelevant | Yes; both qualify, so Products Hazard caps apply |
| Do the Named Insured’s Products and Products Hazard terms extend to pre-1966 Old Reardon claims via continuity? | Broad interpretation of Named Insured’s Products covers Reardon products post-1966 and pre-1967 sales | Caps apply based on plain language; no basis to unlimited pre-merger coverage | Yes; contiguous business and product lines trigger caps for pre- and post-1966 Reardon products |
| Was there an additional, contractual-liability-based theory of uncapped coverage against Mt. McKinley? | Contractual liability should provide unlimited coverage due to Gibraltar primary and Cardinal policy integration | Contractual-liability coverage does not override express Products Hazard caps; insufficient pleadings against Century; Gibraltar and Cardinal policies do not support uncapped exposure | Rejected; no uncapped coverage under contractual-liability theory; focus remains on policy language |
Key Cases Cited
- Welco Indus., Inc. v. Applied Cos., 617 N.E.2d 1129 (Ohio 1993) (use of hallmarks for de facto merger analysis)
- Guman Bros. Farm v. Nationwide Mut. Fire Ins. Co., 652 N.E.2d 684 (Ohio 1995) (ambiguous terms construed in insured’s favor; plain meaning rule)
- Chicago Title Ins. Co. v. Huntington Nat’l Bank, 719 N.E.2d 955 (Ohio 1999) (interpretation of policy language in light of whole policy)
- Monticello Ins. Co. v. Hale, 114 F. App’x 198 (6th Cir. 2004) (ambiguous coverage terms construed in insured’s favor)
- Lager v. Miller-Gonzalez, 896 N.E.2d 666 (Ohio 2008) (ambiguity exists if reasonable alternative interpretation shown)
- Hacker v. Dickman, 661 N.E.2d 1005 (Ohio 1996) (ambiguous terms resolved in insured’s favor when possible)
- SmithKline Beecham Corp. v. Rohm & Haas Co., 89 F.3d 154 (3d Cir. 1996) (broad vs. narrow construction of indemnity language)
- United Nat’l Ins. Co. v. SST Fitness Corp., 182 F.3d 447 (6th Cir. 1999) (definition of terms governs coverage scope)
- Cincinnati Indem. Co. v. Martin, 710 N.E.2d 677 (Ohio 1999) (plain and ordinary meaning applied to undefined terms)