A-21-16 Continental Insurance Company V. Honeywell International, Inc
SYLLABUSThis syllabus is not part of the opinion of the Court. It has been prepared by the Office of theClerk for the convenience of the reader. It has been neither reviewed nor approved by theCourt. In the interest of brevity, portions of an opinion may not have been summarized.)Continental Insurance Company v. Honeywell International, Inc. (A-21-16) (078152)Argued October 24, 2017 -- Decided June 27, 2018LaVECCHIA, J., writing for the Court.This appeal involves questions about the insurance coverage available to defendantHoneywell International, Inc. (Honeywell), a New Jersey based corporation, for thousands ofbodily-injury claims premised on exposure to brake and clutch pads (friction products)containing asbestos. The Court granted certification to address two issues. First, whether thelaw of New Jersey or Michigan (the headquarters location of Honeywell’s predecessor whenthe disputed excess insurance policies were issued) should control in the allocation ofinsurance liability among insurers for nationwide products-liability claims. Second, whetherit was error not to require the policyholder, Honeywell, to contribute in the allocation ofinsurance liability based on the time after which the relevant coverage became unavailable inthe marketplace (that is, since 1987).The Bendix Corporation (Bendix) -- a corporate predecessor to defendant Honeywell-- for many years manufactured and sold friction products that contained asbestos. Bendixstopped using asbestos in its friction products in 2001, having continued to manufacture theitems even after 1987 when insurance for asbestos-related claims for such products ceased tobe available in the marketplace. In 2000, Continental Insurance Company (Continental)(which wrote many primary insurance policies for Bendix during the relevant years), andrelated companies, commenced this action seeking declaratory relief concerning the rightsand obligations associated with insurance coverage for the asbestos-related bodily injuryclaims filed against Honeywell as a corporate successor to Bendix.The choice-of-law issue: Bendix was incorporated in 1929 under the laws of theState of Delaware. Aspects of its business took place in different states. Between 1969 and1983, Bendix situated its executive headquarters, including its insurance office, in Michigan;another central office was in New York. Bendix also had significant contacts with NewJersey. Until 1973, Bendix’s largest center of operations and payroll was in New Jersey.Honeywell is the corporate successor to Bendix. Honeywell’s headquarters and principalplace of business have always been located in Morristown, New Jersey. Since 1983, allinsurance operations for Bendix and its successors have been located in New Jersey. Theexcess insurance policies at issue here were all brokered, issued, and delivered to Bendix inMichigan. None contain a choice-of-law provision governing the allocation issue. In 2006the trial court held that New Jersey insurance-allocation law would apply in this matter.1
The allocation issue: Under New Jersey’s current law on allocation of liabilityamong insurers, an insured is not forced to assume responsibility in allocation during theinsurance coverage block of policies for years in which insurance is not reasonably availablefor purchase. Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437, 478-79 (1994). TravelersCasualty & Surety Company (Travelers) (taking the lead in argument) and St. Paul Fire andMarine Insurance Company (St. Paul), both excess insurers, argued that the coverage blockshould run until the year in which Honeywell, as the successor to Bendix, ceasedmanufacturing the friction products -- 2001. Honeywell maintained that the coverage blockshould end in the 1986-87 period when first primary (1986) and then excess (April 1, 1987)insurance ceased to be available. Applying Owens-Illinois’s approach to allocation of risk toclaims arising exclusively from pre-1987 initial exposure, the court determined in 2011 thatthe unavailability of commercial insurance should end the coverage block of insurance.The trial court entered a final judgment in 2013, after which Travelers and St. Pauljointly appealed the trial court’s 2006 order, which granted Honeywell’s partial summaryjudgment motion and applied New Jersey allocation law, and the 2011 order, which grantedHoneywell’s partial summary judgment motion and held that Honeywell had no allocationresponsibility for pre-1987 initial exposure claims because after 1987 it was not able toobtain insurance coverage for asbestos claims. The Appellate Division affirmed but requireda remand not pertinent to this appeal. The Court granted certification. 228 N.J. 437 (2016).HELD: New Jersey law on the allocation of liability among insurers applies in this matter, andthe Court sets forth the pertinent choice-of-law principles to resolve this dispute over insurancecoverage for numerous products-liability claims. Concerning the second question, on thesefacts, the Court also affirms the determination to follow the unavailability exception to thecontinuous-trigger method of allocation set forth in Owens-Illinois.1. The first step in a conflicts analysis is to decide whether there is an actual conflictbetween the laws of the states with interests in the litigation. New Jersey law employs thecontinuous-trigger doctrine, as initially adopted in Owens-Illinois, 138 N.J. 437. Given thatthe continuous-trigger theory would implicate multiple insurance policies, the Court alsoadopted a methodology for allocating liability among those policies. Id. at 474-75. Whendetermining an insurer’s liability, a court is to consider both the insurer’s time on the risk andthe degree of risk that insurer assumed. Ibid. Several policy rationales were at work in theOwens-Illinois approach. See id. at 472-76. The Court emphasized that the theoryunderlying insurance is risk allocation, id. at 472, and that an insurance allocation schemethat spreads costs throughout the industry and promotes an efficient use of resourcestranslates to more money available to respond in the event of disease and damage, id. at 478.Michigan utilizes a different allocation method. In Arco Industries Corp. v. AmericanMotorists Insurance Co., 594 N.W.2d 61, 69 (Mich. Ct. App. 1998), aff’d by an equallydivided court, 617 N.W.2d 330 (Mich. 2000), the Michigan Court of Appeals specificallyconsidered and rejected the Owens-Illinois approach, concluding that policy considerationsweighed in favor of adopting the time-on-the-risk method. A substantive differenceseparates the New Jersey and Michigan legal approaches and policy considerations here, andso the Court must engage in a choice-of-law analysis. (pp. 30-37)2
2. The Court stated in State Farm Mutual Automobile Insurance Co. v. Estate of Simmonsthat “the law of the place of the contract ordinarily governs the choice of law because thisrule will generally comport with the reasonable expectations of the parties . . . and willfurnish needed certainty and consistency in the selection of the applicable law.” 84 N.J. 28,37 (1980). In Simmons, the Court relied on § 193 of the Restatement (Second) of Conflict ofLaws (Am. Law Inst. 1971) (Restatement). Id. at 35-36, 57. Since Simmons, the Court hasdiscussed the role of two other pertinent Restatement provisions. Section 188 of theRestatement generally addresses conflicts-of-law determinations in contract settings wherethe parties have not made an effective choice of law. Section 6 of the Restatement sets forththe factors that are relevant in a conflicts determination when there is no local statutorydirective controlling the issue. In Gilbert Spruance Co. v. Pennsylvania Manufacturers’Ass’n Insurance Co., the Court considered choice of law regarding insurance coverage in thecontext of a mass tort and noted that, when determining the conflicts-of-law rule to governcasualty-insurance contracts, Restatement § 193 usually is initially consulted but thatRestatement §§ 188 and 6 are analytically more appropriate. 134 N.J. 96, 97, 104 (1993).Courts have found it “tempting” to extract from Spruance a “bright-line rule.” The Courtclarified in Pfizer, Inc. v. Employers Insurance that “there is no way to avoid a careful sitespecific determination, made upon a complete record,” and that, when the risk is “to somedegree transient,” a court must use the Restatement § 6 factors in its analysis. 154 N.J. 187,197 (1998). Although condensed and reframed into four inquiries, the Pfizer analysisnevertheless remained tethered to the section 6 factors. (pp. 37-46)3. In a contract dispute over insurance allocation for nationwide products liability claimsasserting bodily injury due to asbestos exposure, neither Restatement § 193 nor Simmonsprovides the proper starting point. The conflicts analysis here should center on Restatement§§ 188 and 6, as the later decisions in Spruance and Pfizer have taught. With respect to the§ 188 contacts, not all are of equal importance or value in this fact-specific inquiry. Twostrong considerations under § 188, applied to this matter, combine to point toward NewJersey. Here, the place of performance, § 188(c), and the domicile, residence, and places ofincorporation and of business of the parties, § 188(e), all point to New Jersey. The lattertakes into account enduring characteristics and deserves to be a starting point in the analysis.Further, heavy weight must be given to the nature of the insured risk and its site. New Jerseyis the longstanding domicile of the insured in this litigation (since 1983). Turning to theRestatement’s factors in section 6, helpfully condensed in Pfizer, the question is whetherNew Jersey’s relationship with the case is sufficiently significant to warrant application ofNew Jersey law. The first inquiry described in Pfizer consolidates several § 6 factors andasks, simply, whether application of the competing states’ laws would advance the policyinterests that the law was intended to promote. The second Pfizer factor focuses on whetherapplication of a competing state’s law would frustrate the policies of other states. The thirdfactor considers the interests of the parties, and the contacts outlined in Restatement § 188the come to the fore. Finally, courts look at the interests of judicial administration under thelast Pfizer factor, which asks “what choice of law works best to manage adjudication of thecontroversy before the court.” 154 N.J. at 199. Applying those inquiries, conflicts-of-lawprinciples favor application of New Jersey allocation law in the present dispute over liabilityamong insurers and affirms the Appellate Division on the first issue. (pp. 46-54)3
4. The continuous-trigger and related unavailability exception theories for allocation ofinsurance liability have been recognized and applied in New Jersey since Owens-Illinois.The Court determined to use that method of allocation of liability, finding it superior byvirtue of (1) encouraging the acquisition of insurance and spreading costs throughout theindustry; (2) promoting the efficient use of insurance resources to make more moneyavailable to respond in catastrophic circumstances; (3) compelling insurers to minimize theircosts; and (4) advancing principles of simple justice. 138 N.J. at 472-78. The continuoustrigger method assumes the availability of insurance and incorporates an unavailabilityexception. Courts have applied the “unavailability exception,” in accordance with OwensIllinois, to require an insured to share in an allocation of liability under the continuoustrigger doctrine only when it foregoes purchasing available insurance. (pp. 54-55)5. St. Paul and Travelers ask the Court to create an equitable exception to the unavailabilityrule, whereby corporations that continue to manufacture products after insurance becomesunavailable for those products would be deprived of the insurance coverage they purchasedprior to that unavailability. The Court has affirmed that the continuous-trigger theory ofliability is the law of New Jersey multiple times since Owens-Illinois. That theory holdsinsurers responsible for the losses that actually occur on their watch, using a formula thatapproximates a scientific assessment of the amount of injury, even if the actual injurymanifests later. Clearly, the law on allocation methodology differs among the states. Nodoubt, legitimate policy reasons may have led sister courts to reach diverse conclusions. InOwens-Illinois the Court acknowledged that “[i]f, after experience, we are convinced that oursolution is inefficient or unrealistic, we will not hesitate to revisit” the allocation paradigmwith its continuous-trigger and unavailability doctrines. 138 N.J. at 478. This appeal,however, does not present a compelling vehicle to reconsider New Jersey precedent onallocation. None of the initial asbestos exposures, on which claims Honeywell is seekinginsurance coverage, occurred after insurance became unavailable. Although the disputedpolicies involved in this appeal concern excess insurance, they are occurrence policies. Thiscase simply does not present facts on which to consider abandoning the unavailabilityexception, let alone whether to create a novel equitable exception to that exception. Indeed,the basic policy objectives of Owens-Illinois are all served by affirming the judgment as tothe coverage block and moving the case to closure. (pp. 55-64)AFFIRMED.JUSTICE ALBIN, dissenting in part, expresses the view that, as applied here, thejudicially created doctrine known as the “unavailability exception” gives a corporation a freepass if it continues to expose workers to extremely dangerous products after insurancecoverage becomes unavailable and stresses that equity demands that a corporation thatcontinues to manufacture a dangerous product without insurance become the ultimate insurerfor its actions. Justice Albin concurs in the Court’s conflict-of-law analysis and resolution.CHIEF JUSTICE RABNER and JUSTICES FERNANDEZ-VINA, SOLOMON, andTIMPONE join in JUSTICE LaVECCHIA’s opinion. JUSTICE ALBIN filed anopinion, dissenting in part. JUSTICE PATTERSON did not participate.4
SUPREME COURT OF NEW JERSEYA-21 September Term 2016078152CONTINENTAL INSURANCECOMPANY, FIDELITY & CASUALTYCOMPANY OF NEW YORK,COMMERCIAL INSURANCE COMPANYOF NEWARK, N.J., and COLUMBIACASUALTY COMPANY,Plaintiffs,v.HONEYWELL INTERNATIONAL, INC.(f/k/a ALLIEDSIGNAL, INC.,successor to BENDIX AVIATIONCORPORATION and BENDIXCORPORATION),Defendant-Respondent,andST. PAUL FIRE AND MARINEINSURANCE COMPANY,Defendant-Appellant,andAFFILIATED FM INSURANCECOMPANY, ALLSTATE INSURANCECOMPANY, AMERICAN HOMEASSURANCE COMPANY, AMERICANINSURANCE COMPANY, CALIFORNIAUNION INSURANCE COMPANY,CENTURY INDEMNITY COMPANY,COMMERCIAL UNION INSURANCECOMPANY as successor toEMPLOYERS LIABILITY ASSURANCECORPORATION, LTD., EMPLOYERSINSURANCE OF WAUSAU,FIREMAN’S FUND INSURANCECOMPANY, GRANITE STATE1
INSURANCE COMPANY, GREATAMERICAN INSURANCE COMPANY,HOME INSURANCE COMPANY,INSURANCE COMPANY OF NORTHAMERICA, NATIONAL UNION FIREINSURANCE COMPANY OFPITTSBURGH, PA, NORTH RIVERINSURANCE COMPANY, TRAVELERSINDEMNITY COMPANY,UNDERWRITERS AT LLOYDS LONDONand CERTAIN LONDON MARKETCOMPANIES, including ANGLOSAXON INSURANCE ASSOC. LTD.,DOMINION INSURANCE COMPANY,DRAKE INSURANCE COMPANY,EAGLE STAR INSURANCE COMPANY,INSTITUTE OF LONDONUNDERWRITERS, LONDON &EDINBURGH INSURANCE COMPANYLTD., PRUDENTIAL ASSURANCECOMPANY LTD., SOUTHERNINSURANCE COMPANY, and WORLDAUXILIARY INSURANCE CORP.,LTD.,Defendants,andHONEYWELL INTERNATIONAL, INC.(f/k/a ALLIEDSIGNAL, INC.,successor to BENDIX AVIATIONCORPORATION and Respondent,v.TRAVELERS CASUALTY & SURETYCOMPANY (f/k/a AETNA CASUALTY& SURETY COMPANY),Third-Party DefendantAppellant,2
andAIU INSURANCE COMPANY,AMERICAN CENTENNIAL INSURANCECOMPANY, ASSOCIATEDINTERNATIONAL INSURANCECOMPANY, CENTRE INSURANCECOMPANY (f/k/a LONDONGUARANTEE AND ACCIDENTCOMPANY OF NEW YORK),CONTINENTAL CASUALTY COMPANY,THE CONTINENTAL INSURANCECOMPANY as successor ininterest to HARBOR INSURANCECOMPANY (f/k/a HARBORINSURANCE COMPANY), EVERESTREINSURANCE COMPANY (f/k/aPRUDENTIAL REINSURANCECOMPANY), EXECUTIVE RISKINDEMNITY INC. (f/k/aAMERICAN EXCESS INSURANCECOMPANY), FEDERAL INSURANCECOMPANY, FIRST STATEINSURANCE COMPANY, FREMONTINDEMNITY COMPANY (f/k/aINDUSTRIAL INDEMNITYCOMPANY), GENERAL REINSURANCECORPORATION, HARTFORDACCIDENT & INDEMNITY COMPANY,INTERNATIONAL INSURANCECOMPANY (f/k/a INTERNATIONALSURPLUS LINES INSURANCECOMPANY), LEXINGTON INSURANCECOMPANY, MT. MCKINLEYINSURANCE COMPANY (f/k/aGIBRALTAR CASUALTY COMPANY),MUTUAL FIRE, MAINE & INLANDINSURANCE COMPANY, ROYALINDEMNITY COMPANY, THE TOKIOMARINE & FIRE INSURANCECOMPANY, LTD., TWIN CITY FIREINSURANCE COMPANY, UTICAMUTUAL INSURANCE COMPANY,WESTPORT INSURANCE COMPANY(f/k/a PURITAN INSURANCECOMPANY), and CERTAIN LONDONMARKET COMPANIES, including3
ACCIDENT & CASUALTY INSURANCECOMPANY, ALBA GENERALINSURANCE COMPANY (f/k/a ALBAGENERAL INSURANCE COMPANYLIMITED), AVIATION & GENERALINSURANCE COMPANY LIMITED,AXA INSURANCE PLC (f/k/aPROVINCIAL INSURANCE PUBLICLIMITED COMPANY), THE BRITISHAVIATION INSURANCE COMPANYLIMITED, BRITISH LAWINSURANCE COMPANY LIMITED,BRITISH RESERVE INSURANCECOMPANY LIMITED, BRITISHTRADERS INSURANCE COMPANYLTD., C.A.M.A.T. INSURANCECOMPANY LIMITED, C.F.A.U.,CONTINENTAL ASSURANCE COMPANYOF LONDON, LTD., CORNHILLINSURANCE PUBLIC LIMITEDCOMPANY (f/k/a CORNHILLINSURANCE COMPANY LIMITED),EDINBURGH ASSURANCE COMPANYLTD., EDINBURGH INSURANCECOMPANY LIMITED, EDINBURGHNO. 2 GROUP, ELVIA SWISSINSURANCE COMPANY (f/k/aHELVETIA ACCIDENT INSURANCECOMPANY LIMITED), EXCESSINSURANCE COMPANY LIMITED,FIDELIDADE INSURANCE COMPANYOF LISBON, GE SPECIALTYINSURANCE (UK) LIMITED (f/k/aTHREADNEEDLE INSURANCECOMPANY LIMITED), GENERALINSURANCE COMPANY HELVETIALIMITED, GROUPAMA INSURANCECOMPANY LIMITED (f/k/aMINISTER INSURANCE COMPANYLIMITED), HELVETIA INSURANCECOMPANY LTD., HELVETIA SWISSINSURANCE COMPANY LIMITED(f/k/a HELVETIA ACCIDENTSWISS INSURANCE COMPANY),IRON TRADES INSURANCE COMPANYLIMITED (f/k/a IRON TRADESMUTUAL INSURANCE COMPANY4
LIMITED), LA MINERVEINSURANCE COMPANY LIMITED,LOMBARD MARINE & GENERALINSURANCE COMPANY LTD.,LONDON & EDINBURGH GENERALINSURANCE COMPANY, LONDON &OVERSEAS AVIATION A.C., MOTORUNION INSURANCE COMPANYLIMITED, NATIONAL CASUALTYCOMPANY, NATIONAL CASUALTYCOMPANY OF AMERICA, THE NEWINDIA ASSURANCE COMPANYLIMITED, PHOENIX ASSURANCEPUBLIC LIMITED COMPANY,PHOENIX AVIATION INSURANCECOMPANY LIMITED, PHOENIXINSURANCE COMPANY LTD., RIVERTHAMES INSURANCE COMPANYLIMITED, ROAD TRANSPORT &GENERAL INSURANCE CO. LTD.,ROYAL SCOTTISH ASSURANCE PLC(f/k/a THE ROYAL SCOTTISHINSURANCE COMPANY LIMITED),SCOTTISH LION INSURANCECOMPANY LTD., STRONGHOLDINSURANCE COMPANY LIMITED,SWISS NATIONAL INSURANCECOMPANY LIMITED, SWISS UNIONGENERAL INSURANCE COMPANYLIMITED, SWITZERLAND GENERALINSURANCE COMPANY LIMITED,TRENT INSURANCE COMPANYLIMITED, TUREGUM INSURANCECOMPANY LIMITED, ULSTERINSURANCE COMPANY LIMITED,UMA, UNITED SCOTTISHINSURANCE COMPANY AVIATIONLTD., UNITED SCOTTISHINSURANCE COMPANY LIMITED,VANGUARD INSURANCE COMPANYLIMITED, VICTORIA AVIATION,VICTORIA INSURANCE COMPANY,LTD., and THE WORLD MARINE &GENERAL INSURANCE PLC (f/k/aTHE WORLD MARINE & GENERALINSURANCE COMPANY LIMITED),5
Third-Party Defendants.CONTINENTAL INSURANCE COMPANY,FIDELITY & CASUALTY COMPANY OFNEW YORK, COMMERCIAL INSURANCECOMPANY OF NEWARK, N.J., andCOLUMBIA CASUALTY COMPANY,Plaintiffs,v.HONEYWELL INTERNATIONAL, INC.(f/k/a ALLIEDSIGNAL, INC.,successor to BENDIX AVIATIONCORPORATION and BENDIXCORPORATION),Defendant-Respondent,andST. PAUL FIRE AND MARINE INSURANCECOMPANY,Defendant-Appellant,andAFFILIATED FM INSURANCE COMPANY,ALLSTATE INSURANCE COMPANY,AMERICAN HOME ASSURANCE COMPANY,AMERICAN INSURANCE COMPANY,CALIFORNIA UNION INSURANCECOMPANY, CENTURY INDEMNITYCOMPANY, COMMERCIAL UNIONINSURANCE COMPANY assuccessor to EMPLOYERSLIABILITY ASSURANCECORPORATION, LTD., EMPLOYERSINSURANCE OF WAUSAU,FIREMAN’S FUND INSURANCECOMPANY, GRANITE STATE6
INSURANCE COMPANY, GREATAMERICAN INSURANCE COMPANY,HOME INSURANCE COMPANY,INSURANCE COMPANY OF NORTHAMERICA, NATIONAL UNION FIREINSURANCE COMPANY OFPITTSBURGH, PA, NORTH RIVERINSURANCE COMPANY, TRAVELERSINDEMNITY COMPANY,UNDERWRITERS AT LLOYDS LONDONand CERTAIN LONDON MARKETCOMPANIES, including ANGLOSAXON INSURANCE ASSOC. LTD.,DOMINION INSURANCE COMPANY,DRAKE INSURANCE COMPANY,EAGLE STAR INSURANCE COMPANY,INSTITUTE OF LONDONUNDERWRITERS, LONDON &EDINBURGH INSURANCE COMPANYLTD., PRUDENTIAL ASSURANCECOMPANY LTD., SOUTHERNINSURANCE COMPANY, and WORLDAUXILIARY INSURANCE CORP.,LTD.,Defendants,andHONEYWELL INTERNATIONAL, INC.(f/k/a ALLIEDSIGNAL, INC.,successor to BENDIX AVIATIONCORPORATION and Respondent,v.TRAVELERS CASUALTY & SURETYCOMPANY (f/k/a AETNA CASUALTY& SURETY COMPANY),7
Third-Party DefendantAppellant,andAIU INSURANCE COMPANY,AMERICAN CENTENNIAL INSURANCECOMPANY, ASSOCIATEDINTERNATIONAL INSURANCECOMPANY, CENTRE INSURANCECOMPANY (f/k/a LONDONGUARANTEE AND ACCIDENTCOMPANY OF NEW YORK),CONTINENTAL CASUALTY COMPANY,THE CONTINENTAL INSURANCECOMPANY as successor ininterest to HARBOR INSURANCECOMPANY (f/k/a HARBORINSURANCE COMPANY), EVERESTREINSURANCE COMPANY (f/k/aPRUDENTIAL REINSURANCECOMPANY), EXECUTIVE RISKINDEMNITY INC. (f/k/aAMERICAN EXCESS INSURANCECOMPANY), FEDERAL INSURANCECOMPANY, FIRST STATEINSURANCE COMPANY, FREMONTINDEMNITY COMPANY (f/k/aINDUSTRIAL INDEMNITYCOMPANY), GENERAL REINSURANCECORPORATION, HARTFORDACCIDENT & INDEMNITY COMPANY,INTERNATIONAL INSURANCECOMPANY (f/k/a INTERNATIONALSURPLUS LINES INSURANCECOMPANY), LEXINGTON INSURANCECOMPANY, MT. MCKINLEYINSURANCE COMPANY (f/k/aGIBRALTAR CASUALTY COMPANY),MUTUAL FIRE, MAINE & INLANDINSURANCE COMPANY, ROYALINDEMNITY COMPANY, THE TOKIOMARINE & FIRE INSURANCECOMPANY, LTD., TWIN CITY FIREINSURANCE COMPANY, UTICAMUTUAL INSURANCE COMPANY,8
WESTPORT INSURANCE COMPANY(f/k/a PURITAN INSURANCECOMPANY), and CERTAIN LONDONMARKET COMPANIES, includingACCIDENT & CASUALTY INSURANCECOMPANY, ALBA GENERALINSURANCE COMPANY (f/k/a ALBAGENERAL INSURANCE COMPANYLIMITED), AVIATION & GENERALINSURANCE COMPANY LIMITED,AXA INSURANCE PLC (f/k/aPROVINCIAL INSURANCE PUBLICLIMITED COMPANY), THE BRITISHAVIATION INSURANCE COMPANYLIMITED, BRITISH LAWINSURANCE COMPANY LIMITED,BRITISH RESERVE INSURANCECOMPANY LIMITED, BRITISHTRADERS INSURANCE COMPANYLTD., C.A.M.A.T. INSURANCECOMPANY LIMITED, C.F.A.U.,CONTINENTAL ASSURANCE COMPANYOF LONDON, LTD., CORNHILLINSURANCE PUBLIC LIMITEDCOMPANY (f/k/a CORNHILLINSURANCE COMPANY LIMITED),EDINBURGH ASSURANCE COMPANYLTD., EDINBURGH INSURANCECOMPANY LIMITED, EDINBURGHNO. 2 GROUP, ELVIA SWISSINSURANCE COMPANY (f/k/aHELVETIA ACCIDENT INSURANCECOMPANY LIMITED), EXCESSINSURANCE COMPANY LIMITED,FIDELIDADE INSURANCE COMPANYOF LISBON, GE SPECIALITYINSURANCE (UK) LIMITED (f/k/aTHREADNEEDLE INSURANCECOMPANY LIMITED), GENERALINSURANCE COMPANY HELVETIALIMITED, GROUPAMA INSURANCECOMPANY LIMITED (f/k/aMINISTER INSURANCE COMPANYLIMITED), HELVETIA INSURANCECOMPANY LTD., HELVETIA SWISSINSURANCE COMPANY LIMITED(f/k/a HELVETIA ACCIDENT9
SWISS INSURANCE COMPANY),IRON TRADES INSURANCE COMPANYLIMITED (f/k/a IRON TRADESMUTUAL INSURANCE COMPANYLIMITED), LA MINERVEINSURANCE COMPANY LIMITED,LOMBARD MARINE & GENERALINSURANCE COMPANY LTD.,LONDON & EDINBURGH GENERALINSURANCE COMPANY, LONDON &OVERSEAS AVIATION A.C., MOTORUNION INSURANCE COMPANYLIMITED, NATIONAL CASUALTYCOMPANY, NATIONAL CASUALTYCOMPANY OF AMERICA, THE NEWINDIA ASSURANCE COMPANYLIMITED, PHOENIX ASSURANCEPUBLIC LIMITED COMPANY,PHOENIX AVIATION INSURANCECOMPANY LIMITED, PHOENIXINSURANCE COMPANY LTD., RIVERTHAMES INSURANCE COMPANYLIMITED, ROAD TRANSPORT &GENERAL INSURANCE CO. LTD.,ROYAL SCOTTISH ASSURANCE PLC(f/k/a THE ROYAL SCOTTISHINSURANCE COMPANY LIMITED),SCOTTISH LION INSURANCECOMPANY LTD., STRONGHOLDINSURANCE COMPANY LIMITED,SWISS NATIONAL INSURANCECOMPANY LIMITED, SWISS UNIONGENERAL INSURANCE COMPANYLIMITED, SWITZERLAND GENERALINSURANCE COMPANY LIMITED,TRENT INSURANCE COMPANYLIMITED, TUREGUM INSURANCECOMPANY LIMITED, ULSTERINSURANCE COMPANY LIMITED,UMA, UNITED SCOTTISHINSURANCE COMPANY AVIATIONLTD., UNITED SCOTTISHINSURANCE COMPANY LIMITED,VANGUARD INSURANCE COMPANYLIMITED, VICTORIA AVIATION,VICTORIA INSURANCE COMPANY,LTD., and THE WORLD MARINE &10
GENERAL INSURANCE PLC (f/k/aTHE WORLD MARINE & GENERALINSURANCE COMPANY LIMITED),Third-party Defendants.Argued October 24, 2017 – Decided June 27, 2018On certification to the Superior Court,Appellate Division.Andrew T. Frankel argued the cause forappellants St. Paul Fire and Marine InsuranceCompany and Travelers Casualty and SuretyCompany (Windels Marx Lane & Mittendorf, andSimpson Thacher & Bartlett, attorneys; StefanoV. Calogero, of counsel; Stefano V. Calogero,Andrew T. Frankel, Tanya M. Mascarich, on thebriefs).Michael J. Lynch (K&L Gates) of thePennsylvania bar, admitted pro hac vice,argued the cause for respondent HoneywellInternational, Inc. (K&L Gates, attorneys;Michael J. Lynch, Donald E. Seymour, John T.Waldron, and Donald W. Kiel, on the briefs).Carl A. Salisbury and Paul E. Breene submitteda brief on behalf of amicus curiae UnitedPolicyholders (Bramnick, Rodriguez, Grabas,Arnold & Mangan, and Reed Smith, attorneys).Brian R. Ade submitted a brief on behalf ofamicus curiae Complex Insurance ClaimsLitigation Association (Rivkin Radler,attorneys).JUSTICE LaVECCHIA delivered the opinion of the Court.This appeal involves questions about the insurance coverageavailable to defendant Honeywell International, Inc.(Honeywell), a New Jersey based corporation, for thousands ofbodily-injury claims premised on exposure to brake and clutch11
pads (friction products) containing asbestos.certification to address two issues.We grantedFirst, we consider whetherthe law of New Jersey or Michigan (the headquarters location ofHoneywell’s predecessor when the disputed excess insurancepolicies were issued) should control in the allocation ofinsurance liability among insurers for nationwide productsliability claims.Second, we address whether it was error notto require the policyholder, Honeywell, to contribute in theallocation of insurance liability based on the time after whichthe relevant coverage became unavailable in the marketplace(that is, since 1987).In addressing the allocation question, we note thatHoneywell does not seek coverage in this dispute for claims thatinvolve initial product exposure occurring after insurance wasnot available and while the policyholder continued tomanufacture the product.Although some of the claims presentedinvolve injury that manifested after the date of excessinsurance unavailability, the class of claims to be addressed bythe coverage block of insurance all presume that productexposure predated the insurance unavailability.Thus,consistent with New Jersey’s continuous-trigger doctrine,Honeywell is seeking coverage under excess insurance policiesfor claims only from exposure occurrences during the period ofpolicy coverage.12
Different jurisdictions approach pinpointing the occurrenceof injury using varying methodologies.We, and a majority ofjurisdictions, rely on medical science that teaches asbestosrelated disease is progressive, as body tissue is injured whenan individual inhales asbestos fibers.Owens-Illinois, Inc. v.United Ins. Co., 138 N.J. 437, 454 (1994).That concept led toour adoption of the continuous-trigger doctrine in insuranceliability allocation, which assumes progressive injury in eachpolicy year following initial exposure.See ibid.To someextent that determination involves a legal fiction.Id. at 457.However, by allocating responsibility based on the date ofinitial exposure and every policy year thereafter, we maximizethe insurance resources available to claimants suffering bodilyinjury.Under our current law on allocation of liability amonginsurers, an insured is not forced to assume responsibility inthat allocation during the insurance coverage block of policiesfor years in which insurance is not reasonably available forpurchase.Id. at 478-79 (referring to unavailability rule).The trial court and the Appellate Division both concludedthat New Jersey law applied, although for different reasons.Both courts further determined that, under the circumstances,the second question must be answered in the negative.13
For the reasons that follow, we also hold that New Jerseylaw on the allocation of liability among insurers applies inthis matter, and we set forth the pertinent choice-of-lawprinciples to resolve this dispute over insurance coverage fornumerous products-liability claims.Concerning the second question, on these facts, we alsoaffirm the determination to follow the unavailability exceptionto the continuous-trigger method of allocation set forth inOwens-Illinois.I.The unpublished Appellate Division decision in this matterdistilled the extensive record developed by the trial court.Wedraw from the panel’s summary of the facts and proceduralhistory and credit the panel for its fine work.A.By way of general background, The Bendix Corporation(Bendix) -- a corporate predecessor to defendant Honeywell -for many years manufactured and sold friction products thatcontained asbestos.Bendix stopped using asbestos in itsfriction products in 2001, having continued to manufacture theitems even after 1987 when insurance for asbestos-related claimsfor such products ceased to be available in the marketplace.Beginning around 1975, Bendix began to receive liabilityclaims asserting that asbestos in its friction products caused14
bodily injury to users.In the years leading up to the summaryjudgment proceedings in this matter, Bendix and its successorsreceived approximately 147,000 claims, of which about 71,000have been resolved.Claimants sued Bendix in almost all fiftystates, and its insurers have spent more than 1 billion onindemnity payments.Certain matters are undisputed.contained asbestos.T
Continental Insurance Company v. Honeywell International, Inc. (A-21-16) (078152) Argued October 24, 2017 -- Decided June 27, 2018 LaVECCHIA, J., writing for the Court. This appeal involves questions about the insurance coverage available to defendant Honeywell International, Inc. (Honeywell), a New Jersey based corporation, for thousands of
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