Aggregate limits exhausted because claims were from Completed Operations

The Fourth Circuit Court of Appeals affirmed summary judgment issued by a Maryland district court that St. Paul Fire and Marine (“St. Paul”) and U.S. Fire had no further duty to defend or indemnify Walter E. Campbell Co’s (“Campbell”), in asbestos bodily injury claims made against the former insulation company.

The insurers had provided Campbell with primary and umbrella liability policies from 1975 through 1983.  Campbell was a defendant in cases alleging exposure to its asbestos-containing insulation materials, which it stopped selling and using in 1972.  The issue was the insurers’ claim that they had exhausted their policies’ aggregate limits for “Completed Operations” claims.  Campbell had argued that many of their claims were not Completed Operations claims, and thus, the aggregate limits did not apply.  St. Paul had paid out their $32M in aggregate limits and U.S. Fire $6.3M in aggregate limits.  In particular, they argued, based on a previous Fourth Circuit case, Wallace & Gale Co., 385 F.3d 820, 833-34 (4th Cir. 2004) that a claim by an individual alleging exposure to asbestos during Campbell’s operations before 1972, but whose injury continued thereafter, was by definition a Completed Operations claim.

The district court ruled that the Fourth Circuit’s reasoning in Wallace & Gale governed the issue, and held that because all of the insurers’ policies post-dated 1972 when Campbell ceased asbestos operations, all of the injury claims brought by individuals first exposed to asbestos during Campbell’s asbestos operations were Completed Operations claims.  Thereafter, he found that St. Paul had exhausted its aggregates.  As to U.S. Fire, he found all of the claims against it were barred by the applicable statute of limitations.

On appeal, Campbell argued that claims involving exposure during its ongoing operations were not Completed Operations claims.  The Fourth Circuit characterized this as an attempt to “re-litigate” the Wallace & Gale case. And, because all of the operations at issue ceased before the inception of the first policy at issue, they were correctly categorized as Completed Operations claims. The Fourth Circuit also found that most of Campbell’s claims were time-barred because it had failed to bring them within the three years statute of limitations for breach of contract after learning of the insurers’ classification approach.  Walter E. Campbell Co. Inc. v. United States Fire Ins. Co., No. 17-1585 (4th Cir. Mar. 26, 2018).