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A Liberty Mutual Insurance Co. unit must pursue its coverage litigation against an Axa SA unit in Ireland, not Pennsylvania, because of the terms of Axa’s master policy, said a federal appeals court in upholding a lower court ruling in Axa’s favor.
Liberty Mutual’s attorney said the insurer will pursue the litigation in Ireland.
Dublin-based Ardagh Group SA provided its Carnegie, Pennsylvania-based Ardagh Metal Packaging USA Inc. unit with excess insurance worldwide under a global master policy with Axa unit Axa Corporate Solutions Assurance SA that included coverage for product liability claims, according to Friday’s ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Liberty Surplus Insurance Corp. v. Axa Insurance Co.; Axa Corporate Solutions Assurance SA
The master policy included a forum selection and choice of law clause that provided any disputes would be governed by Republic of Ireland laws and any underlying insurance policy is part of the global master policy, according to the ruling.
Under that mandate, Ardagh US maintained two policies with Axa US and obtained product recall liability insurance from Liberty Mutual Insurance unit Liberty Surplus, according to the ruling.
After Ardagh US incurred losses related to a product recall of steel tuna fish cans it manufactured, it asked for payment from both Axa US and Liberty. Axa US forwarded the claim to Axa CS.
Although both Axa US and Liberty each initially refused to pay the claim, Liberty eventually paid it. Liberty then filed suit in U.S. District Court in Philadelphia seeking a declaratory judgment the claim was covered by Axa CS and Axa US policies.
The District Court ruled in Axa’s favor and was upheld by a unanimous three-judge panel of the 3rd Circuit on appeal. Liberty contended the forum selection clause is unenforceable. “We disagree,” said the ruling.
“The forum selection clause governs any ‘dispute concerning (the Global Master) policy,’” said the ruling, in citing an earlier ruling. “Indeed, the claim on its face relies on the terms of that policy,” said the ruling, in affirming the lower court’s judgment.
“The court’s decision was incorrect,” said Liberty attorney Timothy E. Corriston, a partner with Connell Foley LLP in Roseland, New Jersey. “Ultimately we will be able to pursue the claim in Ireland. The claim is still there. It’s just (a matter of) where we’re going to fight it. We think Pennsylvania is the appropriate jurisdiction, but we will pursue it in Ireland.”
Axa’s attorney did not respond to a request for comment.
Dismissal of litigation filed against Liberty Mutual Insurance Co. units against an Ohio school district that was seeking reimbursement of funds stolen by a former employee has been upheld by a federal appeals court based on a policy exclusion for employees.