Long Tales About Long Tails – Connecticut’s Appellate Court Makes New Law

In a sprawling 163 page opinion issued just last week, the Connecticut Appellate Court addressed, as a matter of first impression, five different issues that will significantly affect the disposition of asbestos, and potentially other, long tail claims in Connecticut. The case, R.T. Vanderbilt Co., Inc. v. Hartford Accident and Indem. Co., 171 Conn.App. 61, — A.3d — (2017), went to the Appellate Court on an interlocutory appeal (itself a highly unusual occurrence in Connecticut) and contains both good news and bad news for (at least some) insurers.

Vanderbilt arose in connection with a series of underlying suits seeking recovery for injuries claimed to have been suffered from exposure to industrial talc that allegedly contained asbestos. The plaintiff in Vanderbilt – the company that produced and sold the talc – brought suit against its insurers seeking, among other things, a declaration of their respective coverage rights and obligations. The lower court divided the case into a series of phases and, following a trial at the conclusion of the second phase, the defendant insurers were allowed an immediate appeal.

Recognizing that the issues were ones of first impression in Connecticut (and, in one case, nationally) the Appellate Court:

A.  Affirmed the trial court and held that, as regards all “asbestos related disease claims, Connecticut would adopt the “continuous trigger” theory. Pursuant to that theory of coverage, “every policy in effect, beginning at the time of initial asbestos exposure and extending through the latency period and up to the manifestation of asbestos related disease, is on the risk for defense and liability costs.”

B.  Held, again consistent with the trial court’s legal determination, that Connecticut law recognizes the “unavailability rule,” whereby an insured is not required to participate pro rata on the risk for periods of time during which applicable insurance coverage was unavailable.

C.  Affirmed, under the facts developed at trial, that the trial court correctly determined that Connecticut would not recognize an equitable exception to the unavailability rule for insureds who continue to sell a product after its dangerous propensities become known and insurance coverage becomes unavailable.

D.  Affirmed, although acknowledging that the question was a “close one,” the trial court’s finding that the pollution exclusion clause would not preclude coverage in this instance and, instead, would only apply “when the exposure arises from traditional environmental pollution, such as the dumping of waste materials containing asbestos caus[ing] asbestos fibers to migrate onto neighboring properties or into the natural environment.”

E.  As a matter of national first impression, reversed the trial court’s finding that the occupational disease exclusion contained in certain of plaintiff’s secondary policies applied only to occupational disease claims filed by the policyholder’s own employees, as compared to “complainants who developed occupational disease while using the policyholder’s products in the course of working for another employer.”

Plainly, policyholders scored substantial victories in Vanderbilt, while insurers who are benefitted by an occupational exclusion clause also have cause for celebration. That is, at least for now. The sheer length and depth of analysis of the Appellate Court’s opinion makes clear that it fully expects that these issues will ultimately be decided by the Connecticut Supreme Court.