Carrier Corp. v. Allstate Ins. Co.

187 A.D.3d 1616

133 N.Y.S.3d 697

CARRIER CORPORATION, Elliott Company, Plaintiffs-Respondents-Appellants, et al., Plaintiff,

v.ALLSTATE INSURANCE COMPANY, Solely as Successor-in-Interest to Northbrook Excess and Surplus Insurance Company, Formerly Known as Northbrook Insurance Company, et al., Defendants, and Fireman's Fund Insurance Company, Defendant-Appellant-Respondent.

396

CA 18-02292

Supreme Court, Appellate Division, Fourth Department, New York.

Entered: October 9, 2020

RIVKIN RADLER LLP, UNIONDALE (MICHAEL A. KOTULA OF COUNSEL), AND HARRIS BEACH PLLC, ALBANY, FOR DEFENDANT-APPELLANT-RESPONDENT.

COVINGTON & BURLING LLP, NEW YORK CITY (TERESA T. LEWI OF COUNSEL), AND HANCOCK ESTABROOK, LLP, SYRACUSE, FOR PLAINTIFFS-RESPONDENTS-APPELLANTS.

PRESENT: WHALEN, P.J., CENTRA, PERADOTTO, WINSLOW, AND BANNISTER, JJ.

MEMORANDUM AND ORDER

It is hereby ORDERED that the judgment so appealed from is unanimously modified on the law by denying plaintiffs' motion for partial summary judgment seeking a declaration that, as a matter of law, injury-in-fact in an asbestos action occurs from the date of first claimed exposure through death or the filing of suit, thereby triggering each policy in effect from the date of first claimed exposure, and vacating that declaration, and as modified the judgment is affirmed without costs.

Memorandum: Plaintiffs Carrier Corporation (Carrier) and Elliott Company (Elliott) (collectively, plaintiffs), once-related corporate entities facing lawsuits claiming personal injuries arising from exposure to asbestos contained in their products, commenced this declaratory judgment and breach of contract action seeking, inter alia, declarations of the rights and obligations of the parties under liability insurance policies issued by various insurers, including fifth-layer excess policies issued by Fireman's Fund Insurance Company (defendant). Defendant appeals from a judgment insofar as it granted several of plaintiffs' motions for partial summary judgment and denied one of defendant's motions for partial summary judgment, and plaintiffs cross-appeal from the judgment insofar as it granted one of defendant's motions for partial summary judgment.

Addressing first defendant's appeal, defendant contends that Supreme Court erred in granting plaintiffs' motion for partial summary judgment declaring that, pursuant to a corporate reorganization agreement that spun off Elliott's predecessor business, Carrier transferred to Elliott the right to insurance coverage for liabilities arising out of business activities conducted by Elliott's predecessor business prior to that date. We reject that contention.

Initially, the court properly concluded that plaintiffs were not collaterally estopped with respect to the issue of the transfer of insurance rights to Elliott by prior court decisions rendered several years ago that denied motions for summary judgment on that issue. "A summary judgment motion presents a snapshot of the proof at a moment in time," and the denial of such a motion "establishes nothing except that summary judgment is not warranted at [that] time" (Siegel, NY Prac § 287 at 542- 543 [6th ed 2018] ) and "does not constitute an adjudication on the merits" ( Jones v. Town of Carroll , 158 A.D.3d 1325, 1327, 72 N.Y.S.3d 657 [4th Dept. 2018], lv dismissed 31 N.Y.3d 1064, 77 N.Y.S.3d 332, 101 N.E.3d 974 [2018] ).

Further, we conclude that, following extensive discovery in the action before us, plaintiffs met their initial burden on the motion by establishing with extrinsic evidence in admissible form that, notwithstanding the ambiguity arising from the absence of an exhibit referred to in the reorganization agreement that ostensibly was to set forth the assets being transferred, the insurance rights were transferred to Elliott under the reorganization agreement (see Wolfson v. Faraci Lange, LLP , 103 A.D.3d 1272, 1273, 959 N.Y.S.2d 792 [4th Dept. 2013] ; Curiale v. DR Ins. Co. , 198 A.D.2d 52, 52-53, 603 N.Y.S.2d 460 [1st Dept. 1993] ). In particular, plaintiffs established through the submission of, inter alia, documents prepared contemporaneously with the reorganization, the deposition testimony of employees involved in the reorganization, and evidence of post-reorganization conduct, that the parties to the reorganization agreement, consistent with the language therein, intended to, and did, transfer assets including insurance rights to Elliott (see Wolfson , 103 A.D.3d at 1273, 959 N.Y.S.2d 792 ). Defendant failed to raise a triable issue of fact in opposition (see id. ; Curiale , 198 A.D.2d at 52-53, 603 N.Y.S.2d 460 ; see generally Zuckerman v. City of New York , 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ).

Defendant also contends that the court erred in granting plaintiffs' motion for partial summary judgment declaring that, as a matter of law, injury-in-fact in an asbestos action occurs from the date of first claimed exposure through death or the filing of suit, thereby triggering each policy in effect from the date of first claimed exposure. The subject excess policies obligate defendant to indemnify the insured for its ultimate net loss—all sums actually paid or which the insured is legally obligated to pay for covered damages after deduction of all recoveries or salvage—in excess of an umbrella policy, which covers personal injuries caused by or arising out of an occurrence. Following form of the umbrella policy, the subject excess policies define an occurrence to include "a continuous or repeated exposure to conditions which unexpectedly and unintentionally result in personal injury ... during the policy period," and define personal injury, in relevant part, as "bodily injury (including death at any time resulting therefrom), mental injury, mental anguish, shock, sickness, disease, [and] disability." The parties do not dispute that the applicable test in determining what event constitutes personal injury sufficient to trigger coverage is injury-in-fact, "which rests on when the injury, sickness, disease or disability actually began" ( Continental Cas. Co. v. Rapid-American Corp. , 80 N.Y.2d 640, 651, 593 N.Y.S.2d 966, 609 N.E.2d 506 [1993] ; see American Home Prods. Corp. v. Liberty Mut. Ins. Co. , 748 F.2d 760, 764-765 [2d Cir. 1984] ). Rather, the parties dispute when an asbestos-related injury actually begins: plaintiffs assert that injury-in-fact occurs upon first exposure to asbestos, while defendant denies that assertion and instead maintains that injury-in-fact occurs only when a threshold level of asbestos fiber or particle burden is reached that overtakes the body's defense mechanisms. The court concluded, as a matter of law, that injury-in-fact occurs upon first exposure to asbestos. We agree with defendant for the reasons that follow that the court erred in that regard, and we therefore modify the judgment by denying the subject motion for partial summary judgment and vacating the declaration with respect to that motion.

Initially, the court improperly rejected defendant's contention that the coverage trigger issue under the injury-in-fact test presented a question of fact and, in doing so, incorrectly resolved the issue as a matter of law based on prior holdings in other cases. The court relied on inapposite cases where the parties stipulated or otherwise did not dispute that first exposure triggered coverage (see Pacific Empls. Ins. Co. v. Troy Belting & Supply Co. , 2015 WL 5708360, *4 [N.D. N.Y., Sept. 29, 2015, No. 1:11–CV–912] ; United States Fid. & Guar. Co. v. Treadwell Corp. , 58 F Supp 2d 77, 95 [S.D. N.Y. 1999] ), or where the issue was not, in fact, specifically resolved on summary judgment and instead presented a factual question for resolution by the factfinder at trial based on medical evidence (see Stonewall Ins. Co. v. Asbestos Claims Mgt. Corp. , 73 F.3d 1178, 1193 [2d Cir. 1995], op mod on denial of reh 85 F.3d 49 [2d Cir. 1996] ; American Home Prods. Corp. , 748 F.2d at 765 ; Fulton Boiler Works, Inc. v. American Motorists Ins. Co. , 828 F. Supp. 2d 481, 489 [N.D. N.Y. 2011], citing Stonewall Ins. Co. , 73 F.3d at 1194, 1196-1197 ; In re Viking Pump, Inc. , 148 A.3d 633, 684 [Del. 2016] ; see also Borel v. Fibreboard Paper Prods. Corp. , 493 F.2d 1076, 1083 [5th Cir. 1973], cert denied 419 U.S. 869, 95 S.Ct. 127, 42 L.Ed.2d 107 [1974] ).

Next, to the extent that the court resolved the subject motion for partial summary judgment upon its consideration of the parties' submissions, we likewise conclude that the court erred in granting the motion. Even assuming, arguendo, that plaintiffs met their initial burden on the motion by submitting evidence in admissible form that asbestos-related injury actually begins upon first exposure, we conclude that defendant raised a triable issue of fact in opposition (see generally Zuckerman , 49 N.Y.2d at 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 ). In particular, defendant submitted the affidavits of two medical experts contradicting the claim that damage from asbestos occurs immediately after initial exposure and averring instead that harm occurs only when a threshold level of asbestos fiber or particle burden is reached that overtakes the body's defense mechanisms. Plaintiffs' assertion that the opinions of defendant's experts are inconsistent with older scholarly publications authored by those experts, and with their prior testimony in another case, raised an issue of credibility, which the court improperly resolved on the motion for partial summary judgment by discounting the experts' affidavits on that basis (see Ferrante v. American Lung Assn. , 90 N.Y.2d 623, 631, 665 N.Y.S.2d 25, 687 N.E.2d 1308 [1997] ; Rew v. County of Niagara , 115 A.D.3d 1316, 1318, 983 N.Y.S.2d 170 [4th Dept. 2014] ).

Plaintiffs nonetheless contend, as a properly raised alternative ground for affirmance (see Parochial Bus Sys. v. Board of Educ. of City of N.Y. , 60 N.Y.2d 539, 545-546, 470 N.Y.S.2d 564, 458 N.E.2d 1241 [1983] ), that defenda...