Appeals court upholds coverage ruling against Weyerhaeuser

A parent company’s absence as a named insured on commercial general liability insurance policies means insurers do not have to defend or indemnify it, a federal appeals court ruled, affirming a lower court decision.

Weyerhaeuser NR Co., a wholly owned subsidiary of Seattle-based Weyerhaeuser Co., the world’s largest private owner of timberlands, reached a manufacturing agreement with Shreveport, Louisiana-based Simsboro Coating Services LLC in 2015 to provide a fire retardant coating to Weyerhaeuser joists, according to Friday’s ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Weyerhaeuser Co.; Weyerhaeuser NR Co. v. Burlington Insurance Co.; Evanston Insurance Co.

The agreement between the companies required Simsboro to acquire CGL insurance and name “Weyerhaeuser and its Subsidiaries” as additional insureds, the ruling said. 

However, while Weyerhaeuser NR’s name was added as an additional insured to Burlington’s primary and Markel Corp. unit Evanston’s excess policies that Simsboro obtained, parent company Weyerhaeuser Co. was not.

 Between October 2017 and July 2018, three personal injury lawsuits were filed in Louisiana and Washington against Simsboro and Weyerhaeuser by former Simsboro employees and their spouses who alleged the workers were exposed to dangerous levels of formaldehyde at Weyerhaeuser Co.’s’ Simsboro, Louisiana, facility.

The lawsuits were settled for an undisclosed amount, and Weyerhaeuser demanded that Burlington and Evanston pay for the settlement’s defense and indemnity costs, which they refused to do.

Weyerhaeuser and Weyerhaeuser NR sued the insurers and Simsbury in U.S. District Court in Monroe, Louisiana, charging breach of contract claims against the three defendants plus a prompt payment violation against Burlington.

The district court ruled in the insurers’ favor and was affirmed by a three-judge appeals court panel.

“As a preliminary matter, the CGL policies did not list (Weyerhaeuser Co.) as an additional insured; neither does the excess policy, which incorporates the CGL policies by reference,” it said in ruling in the insurers’ favor.

Attorneys in the case did not respond to a request for comment or could not be reached.