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September 25, 1990

CAREY CANADA, INC., Plaintiff,

The opinion of the court was delivered by: PRATT



 This case is presently before the Court for renewed consideration of plaintiff Carey Canada, Inc.'s motion for partial summary judgment on the "trigger of coverage" issue. We previously deferred ruling on this motion pending supplemental briefing on the issues of when and how asbestos causes property damage. *fn1" See Memorandum Opinion, Mar. 31, 1988, at 17-19. Also before the Court is defendant First State's motion to strike and for sanctions, *fn2" which concerns the so-called Fulbright & Jaworski memorandum, attached as Exhibit C to plaintiff's reply memorandum in support of its motion for partial summary judgment on the "trigger of coverage" issue. Finally, plaintiff and defendants First State and National Union have cross-moved for partial summary judgment. At issue is whether an exclusion contained in the policies these defendants issued for the year 1977-78 bars coverage in this case.

 The Court will address each of these motions in turn. As we earlier held, principles of Florida insurance law govern our interpretation of the policy provisions. See Memorandum Opinion, Mar. 31, 1988, at 8-10. For any issue on which Florida has taken no "specific position," we will consult general principles of insurance law. General Accident, Fire & Life Assurance Corp. v. Liberty Mutual Insurance Co., 260 So. 2d 249, 252 (Fla.Dist.Ct.App. 1972).

 I. The "Trigger of Coverage" Issue

 Carey Canada asks us to rule that, where liability in an underlying case against it is based on property damage caused by asbestos-containing material ("ACM"), "such damage presumptively was continuous . . . from installation of that material through [its] removal or containment, and all policies . . . in force during that period are triggered and provide coverage." Pl. Reply Mem. in Supp. of Mot. for Part. Summ. Judg. at 2. Defendant insurers could avoid this trigger only by proving that no property damage occurred during the periods for which they issued coverage. See id. Thus, the burden of proof in this regard would fall on the insurers, not the insured. For the reasons that follow, we are unable to grant plaintiff's motion.

 As we stated in our earlier decision, resolution of this motion turns on the nature and timing of the asbestos contamination process in buildings. *fn3" See Memorandum Opinion, Mar. 31, 1988, at 15. In response to that ruling, the parties have submitted great volumes of material in support of their respective positions. Unfortunately, defendants largely ignored our directive that no further briefing be submitted on the issue of whether asbestos causes property damage. See id. at 15, 20. Their unhelpful conduct left us with a Hobson's choice: ignore their submissions completely or sift through reams of irrelevant material in an effort to decipher which of their arguments and exhibits were pertinent to the issues at hand. Although tempted to take the former course, we have, in this instance, given defendants the benefit of the doubt. Any future disregard of our orders, however, may warrant the imposition of sanctions pursuant to Rule 11, Fed. R. Civ. P., or 28 U.S.C. § 1927 (1988).

 Apparently, defendants' position is that property damage occurs only when asbestos fibers become airborne, and that this occurrence is sporadic and rare. Defendants deny plaintiff's contention that ACM "continuously emits asbestos fibers" and "deteriorates with age." Dfs.Jt.Subm'n at 13. In support of their position, defendants have introduced, inter alia, affidavits of several experts and various publications, including the EPA's most recent pronouncements on the subject. This evidence, defendants argue, raises a genuine issue of material fact concerning the nature and timing of asbestos contamination, and therefore precludes us from determining that a continuous trigger of coverage presumptively applies. See id.

 Carey Canada, on the other hand, continues to argue that friable ACM, even if undisturbed, will deteriorate continuously over time, releasing asbestos fibers in the process. Plaintiff further contends that commonplace, minor disturbances of ACM -- caused, for example, by routine maintenance and water leaks -- are sufficient to cause a release of asbestos fibers into the air. Accordingly, it argues, a presumptively continuous trigger should apply. Plaintiff relies on, inter alia, expert and lay testimony introduced in property damage cases similar to those currently pending against it, as well as government and technical publications describing the hazards associated with ACM in buildings and airborne asbestos fibers. See generally, e.g., Pl. Subm'n.

 In order to prevail on its motion, Carey Canada must demonstrate that no genuine dispute exists as to whether asbestos contamination occurs continuously from the date of installation through the date of containment or removal. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). While the word "continuous," in this context, may not denote an everyday occurrence, plaintiff at least must show that contamination occurs with such high frequency that we may presume it to have occurred during each policy period at issue here. *fn4" This plaintiff has failed to do.

 Based on all the evidence submitted, we find that the following "material facts exist without substantial controversy," Fed. R. Civ. P. 56(d): (1) property damage, as defined in defendants' policies, results from (a) installation of ACM; and (b) release and reentrainment *fn5" of asbestos fibers into the air; and (2) release and reentrainment occur when ACM or asbestos fibers are damaged or disturbed. See, e.g., EPA Study of Asbestos-Containing Materials in Public Buildings, Feb. 1988; EPA Guidance for Controlling Asbestos-Containing Materials in Buildings, June 1985; Morse Aff. at 5; see also In re Asbestos Insurance Coverage Cases, Statement of Decision Concerning Phase V-A Issues at 9 (Cal.Super.Ct. Jan. 24, 1990) [hereinafter Phase V-A Decision ]; id. at 13 ("Release of asbestos material and fiber and reentrainment are all property damage events because each is an act of contamination which makes the building more hazardous."). A genuine issue exists, however, as to whether release and reentrainment occur continuously. Defendants have presented "significantly probative" evidence that ACM does not release asbestos fibers as it deteriorates with age. Liberty Lobby, 477 U.S. at 249-50; see, e.g., Bragg Aff. at 6; Morse Aff. at 5, 6. Their evidence also indicates that incidents of fiber release due to damage and disturbance may be infrequent -- perhaps several years apart. See, e.g., Bragg Aff. at 7, 14-15; Morse Aff. at 7. While Carey Canada vehemently contests the validity of this evidence, see Pl. Reply to Dfs. Subm'n at 13-18, 21-26, it is not our role at this stage "to weigh the evidence and determine the truth of the matter." Liberty Lobby, 477 U.S. at 249; see also Shields v. Eli Lilly & Co., 283 U.S. App. D.C. 41, 895 F.2d 1463, 1465 (D.C.Cir. 1990) (court must "grant all reasonable inferences to the nonmoving party") (citation omitted). That function must await a trial. See Liberty Lobby, 477 U.S. at 249.

 At present then, all we can conclude is that defendants' duty to defend is triggered if the allegations of an underlying complaint would permit proof that any of the following occurred while their policies were in effect: (1) installation of ACM in the building; (2) release of asbestos fibers into the air of the building; or (3) reentrainment of settled releases of fibers into the air of the building. See Phase V-A Decision, supra, at 16. Similarly, defendants' duty to indemnify is triggered if plaintiff can establish that any of these events occurred while defendants' policies were in effect. See id. Because there is a genuine dispute as to whether fiber release and reentrainment occur continuously, we are unable to adopt the presumptive continuous trigger plaintiff seeks. *fn6" See id. at 15-17. While mindful that insurance policies must be "liberally construed in favor of the insured," Feldman v. Central National Insurance Co., 279 So. 2d 897, 898 (Fla.Dist.Ct.App. 1973), we emphasize that the insured bears "the burden of proving that the alleged loss . . . occurred within the period that the policy was in force." Banco Nacional de Nicaragua v. Argonaut Insurance Co., 681 F.2d 1337, 1339 (11th Cir. 1982); see Exhibitor, Inc. v. Nationwide Mutual Fire Insurance Co., 494 So. 2d 288, 289 (Fla.Dist.Ct.App. 1986), review denied, 503 So. 2d 327 (Fla. 1987); see also American States Insurance Co. v. Piasecki, 392 So. 2d 1369, 1370 (Fla.Dist.Ct.App. 1981); Universal Underwriters Insurance Corp. v. Reynolds, 129 So. 2d 689, 691 (Fla.Dist.Ct.App. 1961). Because it remains unclear whether property damage caused by ACM is a continuous process, Carey Canada has not yet satisfied that burden. Compare Keene Corp. v. Insurance Co. of North America, 215 U.S. App. D.C. 156, 667 F.2d 1034, 1047 (D.C.Cir. 1981), cert. denied, 455 U.S. 1007, 102 S. Ct. 1644, 71 L. Ed. 2d 875, 102 S. Ct. 1645 (1982) (continuous trigger applies because bodily injury caused by asbestos begins with inhalation of fibers and ends with manifestation); accord Phase V-A Decision, supra, at 15 ("The continuous trigger adopted . . . in the bodily injury cases was based upon a finding that bodily injury from asbestos exposure was a continuous process beginning with first exposure."). Accordingly, plaintiff's motion for summary judgment on the trigger of coverage issue is denied. We turn now to defendant First State's motion to strike and for sanctions.

 II. First State's Motion to Strike and for Sanctions

 This motion concerns the so-called Fulbright & Jaworski memorandum, which plaintiff attached as Exhibit C to its reply memorandum in support of its motion for partial summary judgment on the trigger of coverage issue. Prepared in 1983 at the request of the Asbestos Claims Council -- of which Aetna, First State's parent, was a member -- this memorandum discusses case law relevant to the question of insurance coverage in asbestos property damage lawsuits. Carey Canada attached the memorandum as evidence that First State's "own counsel concluded [both] that the underlying asbestos building cases ...

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