Riverwood International Corp. v. Employers Insurance

Citation: 420 F.3d 378Docket: 04-30608

Court: Court of Appeals for the Fifth Circuit; August 25, 2005; Federal Appellate Court

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The appeal involves whether an asbestos-related disease qualifies as a “bodily injury by accident” under specific workers’ compensation and employers’ liability insurance policies held by Graphic Packaging International, Inc. (formerly Riverwood International Corp) from Employers Insurance of Wausau. The court affirmed the district court's summary judgment in favor of Wausau, concluding that the policies reasonably interpret asbestos-related injuries as not constituting a “bodily injury by accident.” 

Riverwood, which operates a paperboard manufacturing facility in Louisiana, faced multiple lawsuits from current and former employees for asbestos-related conditions, resulting in a settlement of $1.513 million for 260 claims. Riverwood notified Wausau of these claims, identifying them as “bodily injury by disease,” but Wausau denied coverage citing a thirty-six month exclusion for such claims if not asserted within that timeframe after the policy period, as well as Riverwood's inability to meet self-insured retention (SIR) requirements.

Initially, the district court denied Wausau's motion for partial summary judgment, deeming the policy language ambiguous regarding the classification of asbestos-related diseases. However, following Wausau's subsequent motion for summary judgment, the court ruled in Wausau's favor, confirming that the claims were indeed "bodily injury by disease" and subject to the exclusion. Riverwood also filed additional suits for indemnity under various other policies, but claims related to blanket liability policies were voluntarily dismissed.

The court granted summary judgment against Riverwood regarding standard policies, determining they did not cover the employees' claims, which Riverwood did not appeal. Riverwood had also sought coverage for non-employees' claims, but those were dismissed voluntarily. The court reassessed the thirty-six month exclusion provision and concluded that the claims pertained to bodily injury by disease, thereby enforcing the exclusion. The court cited precedents that treated asbestos-related claims similarly. Additionally, the court stated that each bodily injury by disease claim required a separate self-insured retention (SIR) to be met, but no claims exceeded the per-employee SIR of $100,000 or the $500,000 SIR on later policies. It noted that only Walter Graves’s $400,000 claim might meet the SIR, but his last exposure was outside the policy period. Even if claims were considered bodily injury by accident, Riverwood failed to demonstrate it could satisfy the SIR requirement for each accident. The court required pro rata allocation of losses across policy years due to multiple exposures, concluding Riverwood could not satisfy any SIR for any employee in any policy year. Riverwood's argument that all claims arose from a single accident was rejected due to lack of evidence showing simultaneous exposure at a common location. On appeal, Riverwood contends genuine factual issues remain regarding coverage entitlement and SIR fulfillment, asserting policy language ambiguity and that SIRs should be apportioned pro rata under Fifth Circuit precedent. The court reviews summary judgment grants de novo, affirming it is proper if no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. The nonmoving party must present specific facts indicating a trial issue, with evidence viewed favorably towards them.

Riverwood contends that there is a material factual dispute regarding whether the asbestos claims fall under "bodily injury by disease" or "bodily injury by accident" as defined by the insurance Policies. Under Louisiana law, insurance policies are contracts that should be interpreted according to civil code rules. A contract is considered ambiguous if it allows for multiple reasonable interpretations regarding the parties' intent. The district court concluded that the Policies can only be reasonably interpreted to mean that asbestos-related injuries do not qualify as "bodily injury by accident." 

The Policies state coverage for loss due to bodily injury by accident or disease, specifying that injuries must occur during the policy period. The definition section clarifies that the contraction of disease is not an accident unless it directly results from a bodily injury by accident. Riverwood argues the term "accident" is ambiguous due to its lack of definition in the Policies, asserting its common understanding as an unforeseen event should apply. However, it is noted that the absence of a definition does not inherently create ambiguity; the term must be interpreted in its plain meaning. 

Wausau, the opposing party, argues that the Policies align with workers' compensation law, which defines "accident" as an unexpected event producing immediate, identifiable injuries. This legal definition implies that asbestos-related diseases are not classified as "accidents," as exposure to asbestos does not produce sudden or violent injuries or immediate objective findings. Thus, the court's interpretation that asbestos-related injuries do not fall under "bodily injury by accident" is supported by the established definitions and the intent of the Policies.

An asbestos-related disease manifests after prolonged exposure, not as an accident, according to Louisiana law and relevant case law. Riverwood argues that such diseases could be interpreted as “bodily injury by accident,” but Wausau contends this interpretation would undermine the distinct provision for “bodily injury by disease.” Louisiana law mandates that policy provisions be read in context and interpreted to maintain their effectiveness. Coverage for “bodily injury by disease” requires exposure during the policy period and a claim asserted within thirty-six months post-expiration, emphasizing that exposure, not an accident, triggers coverage. Conversely, “bodily injury by accident” necessitates an accident occurring during the policy period. This distinction is upheld by the Louisiana First Circuit Court of Appeal, which ruled that diseases like asbestosis are classified as “bodily injury by disease,” not by accident, affirming that disease contraction does not meet the policy's definition of an accident. Thus, Riverwood's view that asbestos-related diseases could qualify as “bodily injury by accident” is rejected.

Riverwood argues that the insurance Policies can be interpreted in multiple reasonable ways, citing Faciane v. S. Shipbuilding Corp., where the Louisiana Fourth Circuit Court of Appeal identified ambiguity in policy language regarding whether silicosis constituted a bodily injury by disease or by accident. The court noted the inconsistency in the policy definition, which seemed to both exclude and permit the classification of certain diseases as accidental injuries. However, the current court finds the reasoning in Faciane unconvincing and aligns more with Hubbs, asserting that silicosis and asbestos-related injuries have been consistently classified as bodily injuries by disease in similar policies. The court concludes that the district court correctly interpreted the Policies, holding that asbestos-related diseases fall under "bodily injury by disease," thereby applying the thirty-six month exclusion clause. Consequently, Riverwood is not entitled to coverage under this exclusion, and the court affirms the district court's summary judgment in favor of Wausau, finding it unnecessary to consider Riverwood's arguments regarding the use of extrinsic evidence or other alleged errors by the district court. The ruling allows for affirmance of summary judgment on any supported ground, regardless of the district court's reasoning.