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CNA wins asbestos coverage dispute


A federal appeals court has reversed a lower court ruling and decided in favor of a CNA Financial Corp. unit in long-running, complex asbestos litigation involving a coverage allocation method.

At issue in the case is Charlotte, North Carolina-based Indian Head Industries’ production and sale of gaskets, according to Wednesday’s ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in Continental Casualty Co. v. Indian Head Industries Inc.

In 1984, Indian Head acquired a gasket-manufacturing division from a Detroit company and purchased three consecutive liability insurance policies from CNA unit Continental that provided coverage from April 1984 to April 1987. Indian Head then manufactured the gaskets, which contained asbestos, from 1984 until 1989.

Indian Head was eventually flooded with tens of thousands of lawsuits, and for a while Continental defended and indemnified Indian Head on all the claims.

But in 2005, it sought to avoid paying all the defense costs and sued Indian Head to clarify its rights and obligations under the policy, said the ruling.

Following years of litigation, a proper coverage allocation method was decided, according to the ruling. The current litigation turns on whether that method applies to costs incurred after Dec. 31, 2012.

A unanimous three-judge panel reversed a lower court ruling by the U.S. District Court in Detroit on the issue.

“We decline to consider for the first time on appeal the further actual questions necessary to resolve the motion, including whether Continental properly calculated damages using the coverage allocation method,” said the ruling.

“Such factual questions are better reserved for the district court. Accordingly, we remand for consideration of the coverage allocation methods application to Continental motion to recoup payments made between December 31, 2012 and September 30, 2015,” the ruling said.

Earlier this month, the Connecticut Supreme Court unanimously affirmed a state appeals court ruling in a complex insurance coverage dispute over alleged asbestos-related claims arising out of industrial talc use and product. 


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