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BRINCO MINING LTD. v. FEDERAL INS. CO.

December 2, 1982

BRINCO MINING LTD., Plaintiff,
v.
FEDERAL INSURANCE COMPANY, Defendant



The opinion of the court was delivered by: SIRICA

 This matter is before the Court on defendant's motion to dismiss and on a motion by plaintiff for summary judgment. The plaintiff is a Canadian corporation whose principal place of business is Vancouver, British Columbia. The defendant is an American insurance company which insured the plaintiff under two separate policies for the period from October, 1974 to October, 1975. The plaintiff corporation began its corporate existence in 1952 and obtained insurance coverage for its mining activities with four insurance companies from then until 1976 when insurance became unavailable for asbestos related businesses. The plaintiff has brought suit in this Court seeking a declaratory judgment to the effect that the defendant is jointly and severally liable with plaintiff's other insurers for both indemnification and legal defense costs associated with over 2,000 asbestosis suits currently in progress throughout the United States. In addition, plaintiff seeks a judgment in this Court that the defendant has breached its contractual obligation to pay claims and assume the defense of these hundreds of claims.

 The Court must first address the defendant's motion to dismiss this cause of action in favor of a Canadian suit instituted by plaintiff in 1979, some three years prior to the present suit. The Canadian suit is currently pending before the Supreme Court of Ontario. In order to properly understand the position of the case before this Court a lengthy factual and legal discussion of both cases is necessary.

 BACKGROUND

 The plaintiff instituted suit in the Supreme Court of Ontario in 1979 against the four insurance companies with whom it had contracted for coverage over a twenty-four year period. Two of the companies, Commercial Union Assurance Company and the Royal Insurance Company, are Canadian domicilliaries and thus cannot be sued by Brinco under this Court's diversity jurisdiction. The third insurance company that has been joined in Brinco's consolidated Canadian lawsuit is the American Home Insurance Company. American Home Insurance is a domicilliary of the United States but, to the best of the Court's knowledge, has not been brought into the present action by either plaintiff or the defendant. The fourth defendant in the Canadian suit is Federal Insurance Company, the defendant in the case before this Court.

 The present suit was filed by the plaintiff on April 27, 1982, some eight weeks after the Supreme Court denied certiorari in the case of Keene Corp. v. Insurance Co. of North America, 215 U.S. App. D.C. 156, 667 F.2d 1034 (D.C. Cir. 1981), cert. denied, 455 U.S. 1007, 102 S. Ct. 1644, 71 L. Ed. 2d 875, 102 S. Ct. 1645 (1982). The District of Columbia Circuit Court of Appeals in Keene adopted what has probably become the broadest viewpoint on insurer liability for suits by those afflicted with the insidious disease of asbestosis. The Canadian courts have yet to address the difficult issue raised in Keene and it is likely that the pending suit in Canada will force some final resolution of the Canadian law on the issue of insurer liability for asbestosis injuries. For the purposes of this case, however, it is sufficient to observe that the District of Columbia Circuit's position in the Keene case has not been adopted by any other federal or state court in the United States. *fn1" Instead, the other courts of the United States which have addressed the issue of what constitutes an "injury" triggering coverage pursuant to boilerplate insurance contracts in asbestosis litigation have reached more narrow interpretations. Of course, this is not to imply that the conclusion reached by the D.C. Circuit in Keene is in any sense erroneous. Rather, recognition of the fact that this Circuit, through the opinion of Judge Bazelon writing for the Keene court, arrived at a position directly opposite to that of Chief Judge Coffin writing for the First Circuit in Eagle-Picher Industries v. Liberty Mutual Insurance Co., 682 F.2d 12 (1st Cir. 1982), can only serve to underscore the conclusion that reasonable minds can reasonably differ on the precise scope of coverage afforded by similar insurance policy language. Moreover, this observation is offered as more than simply a restatement of the obvious. While the Court need not rule at this time, the Court notes that because almost all aspects of the contract at issue took place in Canada there is a high likelihood that Canadian insurance law will govern the construction of the insurance contract in this case. See Steorts v. American Airlines, Inc., 207 U.S. App. D.C. 369, 647 F.2d 194 (D.C. Cir. 1981); Mariner Water Renaturalizer, Inc. v. Aqua Purification Systems, Inc., 214 U.S. App. D.C. 248, 665 F.2d 1066, 1068 n.3 (D.C. Cir. 1981); Restatement 2d, Conflict of Laws, ยงยง 6, 188, 193 (1971). Should Canadian law control, this Court would be placed in the position of predicting what theory of asbestosis liability will be adopted by the pertinent Canadian court. While this may be a familiar task for a federal court sitting in diversity, resort to the "general principles" of insurance law, as urged by plaintiff and suggested by the Keene court, cannot provide guidance when the circuits of the United States federal courts have failed to agree on appropriate "general principles."

 Attention to the significant effect that these different interpretations may have upon the parties to asbestosis litigation will be of assistance in understanding why Canadian litigants are now appearing in a District of Columbia forum. When Brinco first filed its action in Canada against its insurers in 1979 there were as yet no dispositive rulings in the United States on the issue of what constitutes an asbestosis "injury" under relevant insurance provisions which would trigger coverage by the boilerplate language found in insurance contracts. The plaintiff in this case may have been motivated to bring suit against its insurers in a Canadian forum for reasons of jurisdiction, ease of execution for any judgment, or possibly the hope of a more favorable judicial climate in favor of a significant economic industry native to Canada. *fn2" The motives of plaintiff in instituting suit in Canada, however, are not properly before this Court and the Court has no need to speculate on plaintiff's purposes in that regard. Reflection on legal developments in the United States since plaintiff invoked Canada jurisdiction, however, does shed light on why plaintiff is now seeking this Court's jurisdiction. It is this light that the Court cannot ignore.

 Since 1980, the federal courts in the United States have struggled to define the operative event for determining what constitutes an asbestosis "injury." Medical evidence demonstrates that there are three discrete stages in the development of asbestosis in an asbestosis victim. The first stage is simply that of exposure to the asbestos fibers contained in asbestos dust which causes the inhalation of the fibers into the victim's lungs. The second stage occurs when these microscopic fibers continue to invade and scar lung tissue while they are lodged within the respiratory tract of the victim. Keene, 667 F.2d at 1042. The third stage, which may occur as late as fifteen to twenty years after the initial inhalation, begins when the physiological symptoms of the disease manifest themselves in such a way as to be susceptible to clinical diagnosis. See Keene, 667 F.2d at 1040. Which of these stages comports with the definition of an "injury" for purposes of triggering coverage under liability insurance contracts has been the source of litigation in at least four federal circuits since 1980. Not surprisingly, each stage of the disease has found its supporters. The narrowest position, that coverage is triggered only when the disease "manifests" itself while the insurer is on the risk, has been endorsed by the First Circuit. Eagle-Picher Industries v. Liberty Mutual Insurance Co., 682 F.2d 12 (1st Cir. 1982). A middle ground position has been taken by the Sixth and Fifth Circuits. See Porter v. American Optical Corp., 641 F.2d 1128 (5th Cir.), cert. denied, 454 S. Ct. 1109, 102 S. Ct. 686, 70 L. Ed. 2d 650 (1981); Insurance Co. of North America v. Forty-Eight Insulations, 633 F.2d 1212 (6th Cir. 1980), aff'd on rehearing, 657 F.2d 814 (6th Cir.), cert. denied, 454 U.S. 1109, 70 L. Ed. 2d 650, 102 S. Ct. 686 (1981). The position of these two circuits is that the "injury" which determines coverage is the initial inhalation of asbestos fiber by the asbestosis victim. As such, any insurer who was on the risk during a period of a victim's exposure to asbestos inhalation must assume the liability of defending and indemnifying the insured asbestos company. The third, and broadest, position is that taken by the D.C. Circuit in Keene. The D.C. Circuit has centered on the ongoing, internal assault on the integrity of lung tissue by the microscopic asbestos fibers as the critical factor for insurance coverage. As a logical corollary to this position, the D.C. Circuit has defined asbestos "injury" to include all three stages -- from initial inhalation through internal scarring to the point at which the disease becomes susceptible to medical diagnosis. Keene, 667 F.2d at 1044-45. See generally Note, The Calculus of Insurer Liability in Asbestos-Related Disease Litigation: Manifestation Injurious Exposure = Continuous Trigger, 23 B.C.L. Rev 1141 (1982).

 THE MOTION TO DISMISS

 The defendant has sought to have the present case dismissed in favor of the prosecution of the pending Canadian consolidated case. In the alternative, the defendant has urged this Court to exercise its inherent powers, Landis v. North America, 299 U.S. 248, 57 S. Ct. 163, 81 L. Ed. 153 (1936) (Cardozo, J.), to stay this action pending the outcome of the Canadian litigation. In support of its motion the defendant has put forward two reasons for dismissing the current case. These two arguments will be addressed separately.

 Before discussing the defendant's grounds for dismissing this action the Court should clarify what it views as the gravamen of plaintiff's suit.

 At oral argument on this motion, counsel for the plaintiff did not attempt to conceal the two advantages that plaintiff hoped to obtain by his action in this forum. Apparently, not only is plaintiff attempting to invoke the fruits of the Keene decision as to liability but also seeks to capitalize on the relatively swift summary judgment procedures available under the federal rules. According to the affidavits submitted by Canadian counsel for both parties the Canadian courts have not adopted procedures similar to those found in Rule 56 of the Federal Rules of Civil Procedure. An additional dissimilarity is the fact that declaratory judgments as they have come to be used in the federal courts of the United States have no precise correlate in Canadian jurisprudence. Although it appears that Canadian courts have only endorsed the use of declaratory relief subsequent to the filing of plaintiff's Canadian cause of action, there remains some dispute as to the prospective effect of a declaratory judgment in Canadian courts. *fn3" See Great West Steel Industries Ltd. v. Simco & Erie General Insurance Co. [1979] 27 O.R. (2d) 379, 382-83. This Court, having viewed the high quality of Brinco's legal representation before this Court, finds it difficult to credit plaintiff's claim that "Brinco [brought this suit in Canada to seek legal defense in the United States] at a time when it did not appreciate the significant legitimate practical ...


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