PHILADELPHIA – Citing a lack of jurisdiction, a panel of judges from the U.S. Court of Appeals for the Third Circuit ruled against an insurance company’s appeal connected to the costs it incurred in asbestos litigation from one of its customers.
Third Circuit judges David J. Porter, Arianna J. Freeman and D. Michael Fisher ruled on July 28 that the appeal of American Home Assurance Company would not be considered by the federal appellate bench.
Fisher authored the Court’s opinion in this matter and provided background.
“Zurn Industries, LLC is a manufacturer of plumbing products and accessories. For over a decade, it has faced a litany of lawsuits in which claimants allege bodily injury or wrongful death caused by asbestos in its products. To cover litigation costs, Zurn used various insurance policies issued by various insurance companies. Eventually, Zurn was told by its primary and umbrella insurers that Zurn had exhausted the limits of liability under those policies. So Zurn turned to its excess insurance policies for coverage. When Zurn’s excess policy insurers refused to pay, Zurn filed suit [against them] in federal court,” Fisher said.
“Among other relief, Zurn sought a declaratory judgment that it had exhausted the limits of liability under its primary and umbrella policies and that Zurn’s excess policy insurers had a duty to defend and pay defense costs in the underlying asbestos suits. The excess policy insurers responded with counterclaims seeking declaratory judgments to the opposite effect. After discovery, the parties filed numerous partial summary judgment motions regarding pure questions of law and issues of contract interpretation. The District Court addressed some of the motions, interpreting the meaning of various primary, umbrella and excess policies and determining the scope of some duties insurers have under them.”
One such insurer, American Home Assurance Company, was dissatisfied with the District Court’s interpretation of the policy it issued to Zurn [in October 2021] and appealed several of the partial summary judgment orders [to the Third Circuit]. This led Zurn to cross-appeal and challenge other parts of the District Court’s orders interpreting the terms of other excess policies Zurn held.
However, Fisher and his Third Circuit colleagues found that the appeal was invalid and not one which would fall under its auspices and jurisdiction.
“We conclude American Home does not challenge orders that are functionally equivalent to an injunction; thus, we lack the power to review its appeal. And because Zurn’s cross-appeal is jurisdictionally dependent on American Home’s, we also lack jurisdiction to review it,” Fisher said.
According to the Third Circuit, the District Court’s prior order “effectively defined” a portion of American Home Assurance Company’s responsibilities under its policy.
“Far from directing American Home to act now and pay Zurn’s defense costs or take up Zurn’s defense, the orders simply clarify the scope of American Home’s potential future duty, if and when that duty is triggered,” Fisher stated.
Fisher added that “a mere declaration of Zurn’s rights does nothing to compel American Home to act or refrain from acting pursuant to them.”
“Ultimately, we conclude that none of the District Court’s orders is the functional equivalent of an injunction; therefore, we do not have jurisdiction to review them,” Fisher said.
U.S. Court of Appeals for the Third Circuit cases 21-3032 & 21-3119
U.S. District Court for the Western District of Pennsylvania case 1:18-cv-00299
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com