The New Jersey Supreme Court on Wednesday ruled that Honeywell International will not be required to contribute to damages from asbestos claims relating to brake and clutch pads from a company it purchased after insurance companies ceased writing policies that would cover asbestos-related illnesses.
The court was divided 5-1, affirmed a trial court’s ruling that Honeywell had no responsibility for pre-1987 initial exposure claims.
“Under our current law on allocation of liability among insurers, an insured is not forced to assume responsibility in that allocation during the insurance coverage block for years in which insurance coverage is not reasonably available for purchase,” said Justice Jaynee LaVecchia for the majority, citing the high court’s precedent-setting 1994 ruling in Owens-Illinois v. United Insurance.
The majority said it did not believe there was any reason to depart from that precedent.
Bendix, which was subsumed by Honeywell in later years, continued to use asbestos in its brake- and clutch-pad products until 2001, LaVecchia said.
Two insurers, Travelers and St. Paul, urged the court to recognize an equitable “exceptional circumstance” rule to depart from Owens-Illinois, and said the “coverage block” should run until the 2001 end of production of those products. Honeywell contended it had not sought coverage for a claim stemming from any post-1987 initial asbestos exposure.
“No doubt, legitimate policy reasons may have led sister courts to reach diverse conclusions regarding each one’s allocation analysis and whether an unavailability exception is sensible in a particular scheme,” but this case “does not present a proper factual basis to revisit the unavailability rule that is part of the coherent principles that comprise our allocation methodology,” LaVecchia wrote.
She said the “basic policy objectives of Owens-Illinois—of maximizing insurance resources, encouraging the spreading of risk throughout the insurance industry, promoting the purchase of insurance when available, and of simple justice—are all served by affirming the judgment and moving to closure this mammoth allocation dispute, going back to 1940 through to the ending of insurance availability in 1987.”
The majority denied that its holding disincentivizes responsible manufacturing practices, but Justice Barry Albin dissented on that point. The majority ruling “gives a corporation a free pass if it continues to expose workers to extremely dangerous products after insurance coverage becomes unavailable,” Albin said in his separate dissenting opinion.
“This case is not just about Bendix or asbestos products, but about the signal this court gives to corporate actors who must assess costs and risks—and profits—when deciding to unloose their dangerous products on the public or their uninsured dangerous substances into their environment,” Albin said.
On a choice-of-law issue, the court ruled that New Jersey’s more liberal coverage laws should apply in the apportionment of liability among Bendix’s lead carrier, Continental Insurance Co., and the dozens of other carriers who must defend asbestos liability claims, rather than Michigan’s law.
During much of its history, Bendix’s headquarters were in Michigan, although LaVecchia said the company maintained significant contacts to New jersey, and sold many of its products in that state and in many others.
Dozens of carriers involved in the case had been arguing that Michigan’s law should apply.
The insurers’ lead attorney, Andrew Frankel of New York’s Simpson Thatcher & Bartlett, did not return a call seeking comment.
Honeywell’s attorney, Michael Lynch of the Pittsburgh office of K&L Gates, also did not return a call.