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A Manhattan judge Monday rejected a bid by General Electric Co. to lump together thousands of asbestos claims and attach numerous insurers to GE’s future liability. The ruling by New York Supreme Court Justice Ira Gammerman could deprive GE of access to hundreds of millions of dollars in insurance coverage for asbestos claims, according to attorneys on both sides of the case. In siding with the insurers, Justice Gammerman ruled that claims by individuals allegedly harmed by asbestos in GE turbines each constitutes a single occurrence. GE had argued that its decision to manufacture turbines insulated with asbestos for nearly 100 years, without providing a warning of the dangers of asbestos, was a single occurrence under its insurance policy. Under GE’s definition of “occurrence,” the company would be able to turn from its primary insurer to its excess insurers much more easily. Since 1966, GE’s primary insurer, Electrical Mutual Liability Insurance Company (EMLICO), has offered full coverage up to $5 million for each occurrence of liability. If an occurrence resulted in more than $5 million in damages, the liability attached to GE’s excess insurers. GE has yet to pay an individual claimant $5 million, and its excess insurers have never been attached in an asbestos claim, according to Justice Gammerman. But when large asbestos defendants such as Owens-Corning Fiberglass began bringing GE into thousands of claims in the early 1990′s, the power company initiated talks with EMLICO on how those claims would be handled. The two sides eventually agreed in 1992 that asbestos claims would be divided by product type, resulting in seven separate “occurrences.” According to the company’s database, Gammerman said, more than 413,000 asbestos claims have been filed against GE as of April 30, 2002, with 95 percent of those resulting from the company’s turbine business. Facing future liability in these turbine claims under GE’s definition of “occurrence,” 10 excess insurers, led by Appalachian Insurance Company, last year moved for declaratory judgment from Gammerman, claiming they were not liable for coverage under the post-1966 policies, since each claimant constituted a single occurrence. Monday the judge, writing in Appalachian Insurance Company v. General Electric Company, 122807/96, sided unequivocally with the insurers. “Neither the case law, nor the policy language, supports GE’s position,” Gammerman wrote. “These asbestos bodily injury claims are not sufficiently close in either time or space to warrant aggregation.” Much of Gammerman’s reasoning was based on federal rulings interpreting New York law, including In re: Prudential Lines Inc. v. American Steamship Owners Mut. Protection and Indem. Assn. Inc., 158 F3d 65, a 1998 ruling from the 2nd U.S. Circuit Court of Appeals. Gammerman noted that GE’s policies with EMLICO from 1965 to 1985 contained occurrence limits but not aggregate limits, which would have placed a cap on the sum of GE’s claims for a policy period. The judge said GE had made a “clear decision to save money on excess insurance” by not purchasing aggregate limits, which in turn made excess insurance available for much lower premiums. Patrick J. Dwyer of Polstein, Ferrara, Dwyer & Speed, who represented the insurers, said the ruling, if upheld, could deprive GE of as much as $800 million in coverage in future claims. Gita F. Rothschild of McCarter & English in Newark, N.J., who represented GE, said the coverage in question would be in the hundreds of millions, but she could not offer a specific amount. Rothschild said GE would appeal the decision, and Gammerman has agreed to stay a trial on the insurers’ claims for pre-1966 policies until the Appellate Division, 1st Department, can consider the case. Scott Seaman and Jason Schulze of Meckler, Bulger & Tilson in Chicago also represented the insurers. Ira Gottlieb of McCarter also represented GE.

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