We have a two-part blog here for you regarding a case that’s been winding through the California courts for a long time, Truck Insurance Exchange v. Kaiser Cement. In part one, which follows below, we lay out the relevant facts of the case, discussing what has happened that has led us to this point. In part two, we will take a closer look at one of the insurance issues before the court—a potentially important limitation on an insurer’s ability to escape from an insured’s Armstrong election.
Background
Kaiser Cement was a company that was sued by thousands of workers for asbestos-related injury claims. These workers were injured due to the asbestos found in the products supplied by the Kaiser company in various different iterations.
In this case, we want to pay close attention to the indifferent aggregate limits of Kaiser’s insurance policies. From the end of 1964 through March of 1983, the company had primary comprehensive general liability insurance with Truck Insurance Exchange. The policies provided as follows:
- Policies from 1965 to January 1971: $100,000 per-person, $300,000 per occurrence and $300,000 aggregate.
- Policies from January 30, 1971, to April 1, 1980: $500,000 per occurrence limit and no aggregate limit.
- Policies from April 1, 1980, through April 1, 1983: $500,000 per occurrence limit and $1,500,000 annual aggregate.
Victims of asbestos exposure began to bring claims against Kaiser for injuries starting in the 1970s. Kaiser submitted these claims to Truck, who defended and indemnified Kaiser in the cases. Kaiser had three other primary insurers as well, but their respective limits were exhausted by April 2004.
Kaiser began exercising its right to make an Armstrong election (choosing a single policy year to defend and settle claims), targeting wherever possible the Truck 1974 policy, which had no aggregate limit. Truck defended and settled those claims (subject to its per occurrence limit). Truck then sought to re-allocate those defense and settlement payments to other Truck primary policies. Kaiser resisted, both because such re-allocation would contravene its Armstrong election and because, if permitted, the proposed Truck re-allocation would impair and potentially even exhaust the limits of more recent policies.
We’ll discuss that issue in detail in our next blog.