Cont'l Ins. Co. v. Honeywell Int'l, Inc.
188 A.3d 297
N.J.2018Background
- Bendix (predecessor to Honeywell) manufactured asbestos-containing brake and clutch friction products sold nationwide; Honeywell is now Bendix's successor and is headquartered in New Jersey.
- Beginning in the mid-1970s Bendix faced thousands of asbestos bodily-injury claims; by the relevant period excess insurance for asbestos risks became unavailable after April 1, 1987.
- Travelers (and St. Paul) issued excess policies to Bendix (policies were brokered/issued in Michigan); Honeywell moved to apply New Jersey law to allocation and to limit the coverage block to years insurance was available.
- The trial court applied New Jersey allocation law and held the coverage block ended when commercial insurance became unavailable (1987); a special allocation master then allocated among insurers for 1940–1987.
- The Appellate Division affirmed; Travelers and St. Paul appealed to the New Jersey Supreme Court on choice-of-law (New Jersey v. Michigan) and on whether Honeywell must contribute for post-1987 manufacturing years despite insurance unavailability.
Issues
| Issue | Plaintiff's Argument (Honeywell) | Defendant's Argument (Travelers / St. Paul) | Held |
|---|---|---|---|
| Choice of law for allocation among insurers (New Jersey vs. Michigan) | Apply New Jersey law (continuous-trigger / Owens-Illinois) because Honeywell is NJ-based, performance and contacts point to NJ, and §6/Pfizer factors favor NJ | Apply Michigan law (time-on-the-risk / Arco) because policies were brokered/issued in Michigan and Simmons/Restatement §193 favors place of contracting | New Jersey law applies; Restatement §§188 and 6 (Pfizer analysis) govern; Simmons/§193 not controlling for nationwide movable risk |
| Scope of coverage block — should allocation include years after 1987 when Honeywell continued manufacturing? | Coverage block ends when insurance was no longer reasonably available (1987); Owens-Illinois unavailability exception shields Honeywell from contributing for years when insurance was unavailable | Insurers: create equitable exception — Honeywell continued manufacturing post-1987 and thus should share liability for later years; extend coverage block to 2001 | Held for Honeywell: Owens-Illinois continuous-trigger with unavailability exception applies; no equitable exception created; coverage block fixed through 1987 |
Key Cases Cited
- Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437 (1994) (adopting continuous-trigger doctrine and allocation methodology with unavailability exception)
- Arco Indus. Corp. v. Am. Motorists Ins. Co., 232 Mich. App. 146 (1998) (adopting time-on-the-risk pro rata allocation; rejected Owens-Illinois)
- Gilbert Spruance Co. v. Pa. Mfrs.' Ass'n Ins. Co., 134 N.J. 96 (1993) (applying §6 factors and declining mechanical lex loci contractus for movable/multistate risks)
- Pfizer, Inc. v. Employers Ins., 154 N.J. 187 (1998) (condensing §6 choice-of-law factors into four inquiries for environmental/multistate risk cases)