(Insured Was Not Collaterally Estopped From Relying on California Law Governing Trigger of Coverage for Asbestosis Claim Settlement)
(May 2020) - In Textron, Inc. v. Travelers Cas. and Sur. Co., 45 Cal.App.5th 733 (February 25, 2020), the California Second District Court of Appeal reversed the trial court's entry of summary judgment in favor of Travelers Casualty and Surety Company ("Travelers") in connection with coverage of a settlement of an underlying personal injury asbestosis lawsuit against Textron, Inc. ("Textron"). In support of its motion, Travelers argued that Textron was collaterally estopped from relying on California law to trigger coverage under Travelers policies issued to Textron for the period of 1966 to 1987 in connection with an underlying asbestosis lawsuit, which alleged injury due to exposure to asbestos fibers from 1964 to the date of diagnosis of asbestosis in 2010. Rather, Travelers argued that Textron had secured a judgment in 1991 in an action filed in Rhode Island addressing coverage under multiple policies for asbestos claims, wherein, Textron argued that Rhode Island law applied to the same Travelers policies. In that regard, Rhode Island applies a manifestation trigger to asbestosis claims, wherein, California applies a continuous trigger to progressive injury claims.
Textron argued that with respect to the personal injury asbestosis lawsuit pending in California, California law ought to apply. In response, Travelers argued that Textron was collaterally estopped from relying on California law. Hence, under Rhode Island law, since the plaintiff in the underlying lawsuit was diagnosed with asbestosis in 2010, after the expiration of the Travelers policies, coverage was not afforded to Textron for the lawsuit.
The trial court agreed with Travelers and ruled that Textron was collaterally estopped from relying on California law to secure coverage of the underlying asbestosis lawsuit settlement. Thus, because the injuries sustained by the plaintiff manifested after the expiration of the Travelers policies, Travelers was entitled to summary judgment that its policies did not cover Textron for the settlement.
In reversing the trial court's decision, the Court of Appeal noted that choice of law was not addressed in the Rhode Island court's decision. Further, the issues in dispute in the Rhode Island action were not identical to the personal injury lawsuit settlement in California. Because the issues were not identical, Travelers could not rely on collateral estoppel to prevent Textron from relying on California law to trigger coverage under the Travelers polices for the settlement.
The Court of Appeal also noted that California had a much greater interest in applying a continuous trigger theory for purposes of coverage under the Travelers policy, as the underlying lawsuit involved a California resident and the location of the risk was in California. As such, there was a question of fact relative to whether Rhode Island's interest would be impaired by application of California law to resolve the parties' coverage dispute.
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