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    U.S. Court of Appeals (11th Circuit) Upheld Bankruptcy Victory for LLBL's London Client

    Articles

    The United States Court of Appeals, Eleventh Circuit, recently upheld a Bankruptcy trial court victory for Locke, Lord Bissell & Liddell’s London client:  Certain Underwriters at Lloyds and London Companies who provided excess insurance to the Jim Walter Company.  Jim Walter’s subsidiary, Celotex Corporation, sought $120 million in insurance coverage from London for its asbestos related liability for thousands of asbestos bodily injury and property damage claims, including class action cases filed by building owners for asbestos removal, which were asserted against the Company eventually causing it to put Celotex into bankruptcy.

    The Eleventh Circuit, applying Illinois law, upheld the trial court (a Tampa, Florida Bankruptcy Court Adversary Proceeding) ruling that Celotex’s conduct in failing to give timely notice was unreasonable and contrary to Celotex’s own investigation and internal conclusions.  In April of 1983 Celotex was said to have had an “Epiphany” when it determined that it had coverage for certain asbestos bodily injury claims from excess insurers notwithstanding the existence of “asbestosis” exclusions in the excess policies.  At this time Celotex had pending against it both substantial numbers of asbestos bodily injury cases and also asbestos related property damage cases.  Eventually over $20 billion in proofs of claim have been filed against Celotex for asbestos property damage.  Nevertheless Celotex failed to give notice of its asbestos bodily injury and property damage claims in its annual policy renewals or otherwise until years later notwithstanding its significant claims.   The facts were complicated by the presence of “asbestosis” and later “asbestosis and related diseases” exclusions in the policies, combined single limits in the policies for both bodily injury and property damage and the reporting requirements necessary during Celotex’s annual policy renewals.  

    Locke Lord’s partner, David C. McLauchlan acted as Lead Trial and Appellate Counsel for the London Insurers on this matter seeking $120 million in London coverage.

    Click here to view the court opinion.

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