828 F. Supp. 2d 481
N.D.N.Y.2011Background
- Fulton Boiler Works, Inc. sued AMICO, OneBeacon, and others in state court; case removed to federal court; numerous counterclaims and third-party claims followed.
- The dispute concerns allocation of indemnity and defense costs for thousands of Asbestos Claims arising from Fulton’s boilers between 1949 and 2005, including uninsured periods.
- The court previously granted partial summary judgment on defense costs but left indemnity allocation and related issues unresolved.
- The core issues include how to allocate indemnity costs pro rata among insurers, whether Fulton can bear costs for pre-1976 uninsured years, whether equitable estoppel applies, and Travelers’ notice/disclaimer obligations.
- The court addresses pre- and post-1993 periods, notice/disclaimer requirements under NY law, and determines which defendants owe what portions of indemnity and defense costs.
- The decision provides guidance for ongoing handling of asbestos claims under the “time-on-the-risk” proration framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How should indemnity costs be pro rata allocated among insurers? | Fulton seeks full indemnity by defendants for all applicable periods. | Insurers argue pro rata allocation according to coverage periods and responsibility. | Indemnity costs must be prorated by each insurer’s coverage period during the injury. |
| Is Fulton liable for indemnity costs for pre-1976 years when it allegedly lacked insurance? | Fulton contends no pre-1976 allocation due to no intentional loss of coverage. | Fulton was uninsured or underinsured; liable for the uninsured period. | Fulton may be allocated indemnity costs for 1949–October 1976; pre-1976 allocation granted to defendants. |
| Does equitable estoppel bar indemnification for uninsured years? | Fulton relied on insurers’ defense/indemnity for many years. | Insurers repeatedly reserved rights and sought contribution; no prejudice shown. | Equitable estoppel not applicable to bar indemnity for uninsured years. |
| Can Fulton be allocated indemnity costs for post-1993 claims? | Insurance was unavailable post-1993; Fulton should not bear costs. | Post-1993 claims are not within the insured risk; no indemnity to Fulton. | Fulton cannot be allocated indemnity costs for injury-in-fact beginning after October 1, 1993. |
| What are Travelers’ obligations regarding notice and disclaimer of coverage? | Travelers should be liable for costs for claims it had notice of. | Travelers disputes notice; seeks to disclaim; argues late disclaimer. | Travelers must contribute pro rata for claims with proper notice; disclaimer timely not satisfied; notice found proper for many claims. |
Key Cases Cited
- Appalachian Ins. Co. v. Gen. Electric Co., 8 N.Y.3d 162 (N.Y. 2007) (treats asbestos claims as multiple occurrences for trigger analysis)
- Consolidated Edison Co. of New York v. Allstate Insurance Co., 98 N.Y.2d 208 (N.Y. 2002) (upheld pro rata allocation for continuous exposure claims)
- Olin Corp. v. Ins. Co. of N. Am., 221 F.3d 307 (2d Cir. 2000) (endorsed pro rata allocation over joint-and-several)
- Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d 1178 (2d Cir. 1995) (endorsed proration-to-the-insured approach for uninsured periods)
- Webster ex rel. Webster v. Mount Vernon Fire Ins. Co., 368 F.3d 209 (2d Cir. 2004) (notice provisions are a condition precedent; timely disclaimer required)
- Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp., 302 F.3d 83 (2d Cir. 2002) (predecessor evidence standards for lost insurance policies; clear/convincing evidence standard discussed)
- J.T. Magen v. Hartford Fire Ins. Co., 64 A.D.3d 266 (N.Y. App. Div. 1st Dep’t 2010) (notice/disclaimer on insured’s claim triggers insurer duty to disclaim)
- N.Y. Funeral Chapels, Inc. v. Globe Indem. Co., 33 F.Supp.2d 294 (S.D.N.Y. 1999) (insurer may be bound to defend before indemnity depending on coverage)