PENNSYLVANIA RECORD

A Philadelphia judge has dismissed a complaint lodged against an insurance company by Anheuser-Busch over the insurer’s denial of coverage for claims brought against the plaintiff by a former worker who alleged asbestos injuries.

The case dated back to the spring of 2008, when Missouri resident Pete Seper and his wife, Merle June Seper, filed suit against the beer maker over allegations that Pete Seper sustained injuries from continuously being exposed to asbestos at the company’s St. Louis brewery from 1948 to 1982.

Seper retired from the company in 1982 and passed away after settling his claim with Anheuser-Busch years later.

In June 2008, according to background on the case, Anheuser-Busch put Insurance Company of North America on notice of the underlying Seper action at INA’s New York location as required by the policy the beer maker held with the insurer.

On Aug. 25, 2009, the insurance companied denied coverage to Anheuser-Busch for the Seper claim because the former employee’s lawsuit was not filed within 36 months of the July 1, 1982, expiration of the insurance policy.

In mid September 2009, Anheuser-Busch informed the insurer that it was submitting the Seper claim under the Excess Liability Policy, which provided coverage to Anheuser-Busch for ultimate net loss in excess of the retained limit for damages that Anheuser-Busch became obligated to pay as personal injury damages.

The retained limit on the policy was $100,000.

In early October 2009, the insurer agreed to defend Anheuser-Busch under the Excess Liability Policy, and later that month the beer maker settled the injury suit with the Sepers for $1 million.

About a week later, the insurer denied coverage under the Excess Liability Policy, claiming that the policy was not required to respond until Anheuser-Busch paid $100,000 retention for each of the 30 years that Seper alleged he was exposed to asbestos.

The beer maker had paid $52,907.17 in defense costs during the underlying case, it claims.

Anheuser-Busch filed suit against the insurance company on March 1 of last year alleging breach of contract and bad faith.

The insurer subsequently filed a motion for summary judgment on the matter of choice of law and allocation. It also sought dismissal of the bad faith claim.

In her Nov. 1 opinion, Philadelphia Common Pleas Court Judge Patricia A. McInerney granted both of the insurer’s motions and denied Anheuser-Busch’s motion for summary judgment as moot.

The beer company had claimed that the insurer breached its contract with the plaintiff by refusing to indemnify Anheuser-Busch for the defense costs and settlement paid to Seper in the underlying action, minus the $100,000 retention.

The insurer had applied Missouri law when denying coverage, and then argued that New York law should apply, court documents say.

Both Missouri and New York endorse the allocation method at question.

Anheuser-Busch, however, argued that allocation is not the law in Pennsylvania, and that Pennsylvania law should apply in this case, since Pennsylvania is where the insurance company is based.

And under Pennsylvania law, the plaintiff asserted, the insurer should be jointly and severally liable for the entirety of the Seper claim.

The judge determined that in this case, the choice forum is New York, with the facts of record demonstrating that the insurance policy was sent from the insurer’s New York office to Anheuser-Busch’s broker in New York.

“Hence, it is clear that all action regarding the place of contracting is New York,” McInerney wrote.

The judge wrote that other than the insurer being a Pennsylvania company, no further contacts between the parties occurred in the commonwealth.

“Having determined that the applicable choice of law is New York and upon a clear reading of the policy, INA does not owe Anheuser-Busch a duty to indemnify,” McInerney wrote.

The judge further wrote that when damages are allocated over the 30-year span in the Seper case, Anheuser-Busch’s losses do not trigger the excess liability coverage for within the 1981 to 1982 policy, and therefore a duty to indemnify does not exist.

In dismissing the bad faith claim, McInerney wrote that since the court already determined that the insurer’s excess layer of coverage was never reached, “it is impossible based on said finding for Anheuser-Busch to demonstrate that INA lacked a reasonable basis to deny coverage. Therefore, Anheuser Busch has failed to prove bad faith and summary judgment on the bad faith claim is appropriate.”

The judge also wrote that Pennsylvania’s Bad Faith statute was primarily intended to protect Pennsylvania residents, and since Anheuser-Busch is based in Missouri, no Pennsylvania residents have been harmed in this case.

“It would be inappropriate to overextend Pennsylvania bad faith law to cover matters in which Pennsylvania has little interest,” McInerney wrote.