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UNITED STATES DISTRICT COURT 

 FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

 

 ) 

ARMSTRONG WORLD INDUSTRIES, INC., ) 

 ) 

 Plaintiff, ) 

 ) Civil Action No. 02-CV-4360 

v. ) 

 ) 

LIBERTY MUTUAL INSURANCE COMPANY, ) 

 ) 

 Defendant. ) 

 ) 

RESPONSE OF LIBERTY MUTUAL TO ARMSTRONG’S MOTION FOR 

LEAVE TO FILE A FIRST AMENDED COMPLAINT

 Defendant Liberty Mutual Insurance Company hereby responds to the Motion Of 

Armstrong World Industries, Inc. For Leave To File A First Amended Complaint. As 

detailed below, Liberty Mutual disagrees with Armstrong’s asserted justification for 

amending the complaint to place before the Court in this case all coverage issues 

regarding the 1977-1981 insurance policies. Nonetheless, Liberty Mutual agrees that all 

such coverage issues should be before the Court in this case and, thus, assents to the 

motion to amend. 

 Armstrong says that the complaint should be amended “[a]s a precautionary 

measure” to put all issues regarding insurance coverage under 1977-1981 policies before 

the Court, because of a recent Appellate Arbitration Award in favor of Liberty Mutual. 

In reality, the Appellate Arbitration Award did not change the necessary scope of the 

litigation concerning the 1977-1981 policies, because the parties long ago agreed that 

they would litigate issues related to those policies. Liberty Mutual issued general 

liability insurance policies to Armstrong for nine years, from 1973 through 1981. There 

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exists a major dispute between Armstrong and Liberty Mutual about the extent of 

insurance coverage afforded by those policies to Armstrong for the asbestos-related 

bodily injury claims against Armstrong arising from Armstrong’s historical asbestos 

insulation installation activities. 

 In 1985, Armstrong and Liberty Mutual, along with other manufacturers and 

insurers, signed the Wellington Agreement, which resolved certain disputes among the 

parties concerning insurance coverage for asbestos bodily injury claims.1

 The claims 

were to be paid by insurance policies designated by each manufacturer for its “coverage 

block.” Armstrong designated the four 1973-1976 Liberty Mutual policies as its 

“coverage block,” and these policies coincidently were designated as so-called “pre-date” 

policies under Wellington. The five 1977-1981 Liberty Mutual policies were “post-date” 

policies, not in the “coverage block.” Wellington provided for binding arbitration to 

resolve disputes regarding the “pre-date” policies. Resolution of disputes regarding the 

“post-date” policies such as the 1977-1981 policies was expressly left to litigation. 

 Liberty Mutual paid more than $4 million in indemnity and defense costs for 

Armstrong’s asbestos claims under the four 1973-1976 “coverage block” policies. But 

Liberty Mutual consistently took the position that its policies, which were not issued until 

years after Armstrong had completed its asbestos insulation installation operations, did 

not provide additional coverage beyond the amounts it had already paid for claims arising 

from those historical operations. In 1996, Armstrong initiated an arbitration under the 

Wellington Agreement, seeking additional coverage for its historical asbestos insulation 

 

1

 In its motion papers, Armstrong references the Wellington Agreement, notes that it has filed a copy of 

that Agreement with the Court as PX 1 in the case captioned Armstrong World Industries, Inc. v. Liberty 

Mutual Ins. Co., No. 04-CV-0499 (E.D. Pa.), and offers to file a copy of that Agreement in this case if the 

Court prefers. 

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installation claims under the 1973-1976 policies. On July 30, 2003, an Appellate 

Arbitration Panel comprised of three former federal judges unanimously ruled that 

Armstrong’s claim for further coverage under the 1973-1976 policies was barred in its 

entirety by the statute of limitations, because Armstrong had waited more than a decade 

after first asserting that claim in 1985 until initiating its arbitration in 1996. 

 During the pendency of the arbitration regarding the 1973-1976 policies, 

Armstrong in 2002 filed the present case in this Court, raising certain selected issues 

about insurance coverage for its historical asbestos insulation installation claims under 

the 1977-1981 policies. After the complaint was filed, Liberty Mutual desired to add 

additional issues to the case by way of counterclaims, so that all pertinent issues 

concerning the 1977-1981 policies would be before the Court in this case. Because 

Armstrong was in bankruptcy, Liberty Mutual needed permission from the Bankruptcy 

Court to bring those counterclaims. Armstrong opposed Liberty Mutual’s motion in the 

bankruptcy case to lift the bankruptcy stay in order to permit Liberty Mutual to file its 

counterclaims in this case. Ultimately, Liberty Mutual and Armstrong reached an 

agreement, which this Court has approved, to allow Liberty Mutual to file its 

counterclaims after Armstrong’s bankruptcy reorganization plan becomes effective. 

 Armstrong now asserts that it must amend its complaint to put before this Court 

additional coverage issues concerning the 1977-1981 policies because the Appellate 

Arbitration Award recently reversed in favor of Liberty Mutual certain findings of the 

trial-level arbitrator regarding the 1973-1976 policies. That theory is wrong, because the 

arbitration as to the 1973–1976 policies did not eliminate the potential need to litigate any 

issues that might arise concerning the 1977-1981 policies. The Wellington Agreement 

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expressly provides that disputes regarding “post date” policies such as the 1977-1981 

Liberty Mutual policies “shall” be resolved, ultimately, by “litigation.” Wellington 

Agreement, Art. XVI.B.1, Art. XVII.B. Thus, Armstrong’s present motion, seeking to 

broaden its complaint in this case to encompass a general declaration of the parties’ rights 

under the 1977-1981 policies (see Count VI in the proposed Amended Complaint), is 

appropriate, albeit based on a flawed contention by Armstrong that its need to amend 

somehow was dependent on the outcome of the arbitration proceeding concerning the 

1973-1976 pre-date policies. 

 If Armstrong had conferred with Liberty Mutual prior to filing its motion to 

amend, Armstrong could have filed it as uncontested pursuant to Local Rule 7.1(b). 

Armstrong having proceeded to file the motion, Liberty Mutual now assents to it. 

 Respectfully submitted, 

 LIBERTY MUTUAL 

 INSURANCE COMPANY 

 By its attorneys, 

 

 Edward F. Mannino 

 Jason A. Snyderman 

 One Commerce Square 

 2005 Market Street, Suite 2200 

 Philadelphia, PA 19103 

 (215) 965-1229 

 

 and 

 A. Hugh Scott 

 John A. Nadas 

 Gregg D. Shapiro 

 Choate, Hall & Stewart 

 53 State Street 

 Boston, MA 02109 

 (617) 248-5000 

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and 

Gerald V. Weigle, Jr. 

Dinsmore & Shohl 

1900 Chemed Center 

255 East Fifth Street 

Cincinnati, OH 45202 

 (513) 977-8251

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CERTIFICATE OF SERVICE

 I, Jason A. Snyderman, Esquire, hereby certify that on March 1, 2004, a true and 

correct copy of the Response to Liberty Mutual to Armstrong’s Motion for Leave to File 

a First Amended Complaint was served on the following: 

VIA HAND DELIVERY

Howard M. Klein, Esquire 

Frank Emmerich, Esquire 

Conrad O’Brien Gellman & Rohn, P.C. 

1515 Market Street, 16th Floor 

Philadelphia, PA 19102-1916 

VIA REGULAR FIRST-CLASS MAIL

William P. Skinner, Esquire 

S. William Livingston , Esquire 

Philip E. Dubé , Esquire 

Covington & Burling 

1201 Pennsylvania Ave., N.W. 

Washington, D.C. 20004 

 __________________________________ 

 Jason A. Snyderman 

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