2009 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit

4-2-2009 

# As t e nJ ohnson Inc v

. C olumbi a C slty C o
P r e c e de nt i al or N on-P r e c e de nt i al : P r e c e de nt i al D ocke t N o . 07-2305

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2009

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

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. It h as be e n a c c ept e d for inclusion in 2009 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

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. C o lumb i a C slty C o " (2009). 2009 D e cisio n s . P ape r 1450. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2009/1450P RE CE DE NT I AL
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AST ENJ OHN S ON, I NC. A ppel l ant

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O n A pp eal F rom t he U nit ed S t at es

D istri ct C o u rt Fort he East ern D i s t r i ctof Penns y l vani a ( D

. C

. C i vi l A ct i on N o. 03- cv- 01552) D i s t r i ctJ udge: H on. L aw r ence F. St engel

A r gued O ct ober30, 2008
B E FO R E : SL O V I T E R , ST A PL E T O N and T A SH I M A , * C i r cui tJudges
* H on. A

. W al l ace T as hi m a, Seni or U ni t ed St at es C i r cui tJ udge forthe N i nt h C i r cui t , s i t t i ng bydes i gnat i on.2 ( O pi ni on Fi l ed: A pr i l 2, 2009)
R ober tC

. H ei m ( A r gued) N or yM i l l er John S

. G ho se D e c h e rt 2929 A r ch St r eet C i r a C entr e - 18t h Fl oor Phi l adel phi a, PA 19104 and J ohn N

. E l l i s on R e e d S m ith 1650 M arketSt r eet 2500 O ne Li ber t yPl ace Phi l adel phi a, PA 19103 and M i chae l C onl ey A nder s on, K i l l & O l i ck 1600 M arketSt r eet- Sui t e 2500 Phi l adel phi a, PA 19103 A t t or ney s forA ppel l ant
R onal d P. Schi l l er( A r gued) Ja yI. M o rste in N i col e J

. R os enbl um D L A Pi per O ne Li ber t yPl ace - Sui t e 4900 1650 M arketSt r eet Phi l adel phi a, PA 19103 A t t or ney s forA ppel l ee C ol um bi a C as ual t yC om pany3 St even A

. C ozen ( A r gued) J acob C. C ohn C ozen & O ’ C onnor 1900 M arketSt r eet- 3r d Fl oor Phi l adel phi a, PA 19103 A t t or ney s forA ppel l ee A m er i can I ns ur ance C pm pany A ndr ew M

. R om an R i char d A

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j zak C ohen & G r i gs by 11 St anw i x St r eet- 15t h Fl oor Pi t t s bur gh, PA 15222 and A m yB ach U n it ed P o li cy h o lders 11 Paci fi c A venue – N o. 262 San Fr anci s co, C A 94111 A t t or ney s forA m i cus C ur i ae U n it ed P o li cy h o lders

OPI NI ON O F THE COURT

ST A PL E T O N , C i r cui tJ udge:
A ppel l antA s t enJ ohns on, I nc. (“ A s t en”) , m anufa ctur ed as bes t os dr y erfel t s an d o t herm at er i al s us ed i n t he pape r4 i ndus t r y . A ppel l ees C ol u mbi a Ca s u a l tyCompany( “C ol um bi a”) and A m er i can I ns ur ance C om pany( “A m er i can” ) i s s ued $52 m i l l i on of com p reh ensi ve l i abi l i t yi ns ur ance t o A s t en i n 1981 and 1982. T hes e pol i ci es cont ai ned an e xcl us i on fr om cover age foranycl ai m al l egi ng “an e xpos ur e t o ort he contr act i ng of a sb e sto sis ” ( “ th e A sb e sto sis E x c lu sio n C lau se ” ). B o th C o lu m b ia a n d A m e ric a n h a v e d e n ied c o v e r a g e u n d e r th is excl us i on foral l as bes t os - r el at ed bodi l yi nj ur ycl ai m s . A st en h e re s e e k s , in tera lia , a dec l ar at or yj udgm entt hati t s cover age undert hes e pol i ci es i ncl udes al l cl ai m s r el at ed t o as b es t os ex p o su r e othert han thos e i nvol vi ng t he fi br ot i c l ung di s eas e, asb es to s is

. A fter a th ree -w ee k b en ch tr ial , the D istri ct C o u rt deni ed A s t en t he decl ar at or y r el i ef sought

. T he pr i m aryi s s ues befor e us ar e w hether A s t en w as ent i t l ed t o a j ur yt r i al undert he S ev en th A m e n d m e n t, an d w h ethe r th e D istri ct C o u rt ’s r es ol ut i on of the cove r age i s s ue s houl d s t and.
I

. B ackgr ound A

. T he P oli ci es A tIs sue (“the S ubj ectP oli ci es)

1. C ol um bi a Pol i ci es a. A pr i l 1, 1981, t o A pr i l 1, 1982, Pol i cyPer i od
C ol um bi a s ol d A s t en a one - y earpr i m ary -l ay er compre hens i ve gener al l i abi l i t yi ns ur ance pol i cycover i ng t he per i od betw een A pr i l 1, 1981, and A pr i l 1, 1982 ( “1981 C ol u mbi a Pr i ma r y Pol i cy ”)

. T he pol i cy pr ovi ded occurr ence / aggr egat e l i m i t s of $1, 000, 000 and had a $2, 500 per cl ai m deduct i bl e. C o lum bi a al s o s ol d A s t en an e xces s t hi r dpar t yl i abi l i t ypol i cyfort hi s per i od, w hi ch pr ovi ded o c c u rre n c e /ag g re g a te lim its o f $ 1 0 ,0 0 0 ,0 0 0 (“ 1 9 8 1 C o lu m b ia E x c e s s P o lic y ” ).5 b. A pr i l 1, 1982, t o O ct ober1, 1983, Pol i cyPer i od
C ol um bi a s ol d A s t en a compre hens i ve l i abi l i t ypol i cyfor t he ei ght een- m ont h per i od betw een A pr i l 1, 1982, and O ct ober 1, 1983, pr ovi di ng occurr ence / aggr egat e l i m i t s of $1, 000, 000 a n d h a v in g a $ 2 ,5 0 0 p e r c laim d e d u c tib le ( “ 1 9 8 2 C o lu m b ia P ri m aryP o li cy ”). C o lum b ia also so ld A sten an ex ce ss third p a rtyliab ili typ o licy p ro v id in g p e r o c c u rre n c e /ag g re g a te lim its of $10, 000, 000 ( “1982 C ol um bi a Exces s Pol i cy ”). T he pol i cy w as i n exce s s t o t he l i m i t s s et for t h i n t he under l y i ng A m er i can p o lic y .

c. T erm s of the C ol um bi a Pol i ci es T he C ol um bi a pol i ci es con tai n the f o ll ow i ng “exc l us i on”:
I t i s agr eed t hat t hi s pol i cy does not appl y t o any cl ai m al l egi ng an expos ur e t o ort he contr act i ng of a s b e s to s is o r a n ylia b ility re s u ltin g th e re f ro m . It is f u rth e r a g re e d th a t th is po licy d o e s n o t ap p ly to a n yc laim a risin g o u t th e In su re d ’s m e m b e rsh ip in th e A s b e s to s T e x tile In s titu te

. A I0 0 5 3 . “ A s b e s to s is ” w a s n o t d e f in e d in a n yo f

th e p o lic ie s . T he pr i m arypol i ci es cont ai ned an o t i c e p r ovi s i on, s t at i ng i n r el evantpar tt hat“[i ] n t he eve nt o f an occurr ence , w r i t t en not i ce cont ai ni ng par t i cul ar s s uffi ci entt o i dent i fythe i ns ur ed and al s o r eas onabl yobt ai nabl e i nform at i on . . . s hal l be gi ven .

. . as soon a s pract i cable. ” A I0054

. T he ex cess pol i ci es al so6 cont ai ned a pr ovi s i on s t at i ng t hatnot i ce s hal l be gi ven “a s s oon a s p ra c tic a b le .” A I0 0 5 4

.

2. A m er i can Pol i ci es a. T he 1980 Pol i cyPer i od
I n 1 9 8 0 , Am e r i c a n s o l d As t e n a b l a n k e te x c e s s pol i cy w i t h $10, 000, 000 i n annual i ndemni t yl im it s , exce s s t o a $1, 000, 000 pr i m ary p ol i cyi s s ued byA r gonautI ns ur ance C om pany . T he 1980 pol i cy di d notcont ai n an as bes t os - r el at ed e x c lu sio n . T h e 1 9 8 0 A m e ric a n P o licyc o n tain e d a p ro d u c ts liab ili tye n d o rse m e n t, ho w e v e r, w h ich sta ted th a t th e p o licyd id not appl y exce pt i ns ofar as “cove r age i s avai l abl e t o t he i ns ur ed underpr i m arypol i ci es . ” A I 0055. b. A pr i l 1, 1981, t o A pr i l 1, 1982, Pol i cyPer i od
Fort he annua l per i od begi nni ng A pr i l 1, 1981, A m er i can s ol d A sten a bl anketexce s s l i abi l i t ypol i cy( “1981 A m er i can U m b re lla P o licy” ) w ith a $ 1 0 ,0 0 0 ,0 0 0 a n n u a l in d e m n itylim it, e x c e ss to th e $ 1 ,0 0 0 ,0 0 0 1 9 8 1 C o lu m b ia P rim a ry P o licy

. T h is pol i cy co nt ai ned no as bes t os - r el at ed l anguage , butpr ovi ded a p ro d u c t li a b ili tye n d o rse m e n t w h ich in d ica ted th a t th e p o licyd id n o t ap p lyu n les s c o v e ra g e w a s a v a ilab le u n d e r th e C o lu m b ia Pr i m aryPol i cy . I tfur t hercontai ned a not i ce pr ovi s i on, w hi ch sta ted th a t “[ w ]h e n a n o c c u rre n c e tak e s p lac e w h ich is r eas onabl y l i kel y t o gi ve r i s e t o a cl ai m undert hi s pol i cy ” not i ce s h a l l b e p r o v i d e d “ a s s o o n a s p r a c t i c a b l e ” t o t h e c o m p a n y. A I0 0 5 6

.

c. A pr i l 1, 1982, t o O ct ober1, 19837 Fort he ei ght een- m ont h per i od begi nni ng A pr i l 1, 1982, A m er i can s ol d A s t en a bl anket exce s s l i abi l i t ycover age ( “1982 A m e ric a n U m b re lla P o licy ” ) th a t w a s s u b sta n tiallyid e n tica l to t he 1981 A m er i can U m br el l a Pol i cy . T he r el evantnot i ce p o rtio n o f

th e p o licy sta ted th a t “ [ t]h e In su re d sh a ll i m m e d iate ly a d v ise th e c o m p a n y o f a n yo c c u rre n c e o r d isa ste r w h ich w ill pr obabl yr es ul ti n l i abi l i t yundert hi s Pol i cy . ” A I 0059.
A m eri can als o sold t o A st en an add i t i on al blanketexcess l i abi l i t y pol i cy fort he pol i cyper i od A pr i l 1, 1982, t o O ct ober1, 19 83 (“1982 A m eri can E xcess P oli cy ”). T he A m eri can E xcess Pol i cyhad l i abi l i t yl i m i t s of $10, 000, 000, exce s s t o t he u n d e rly in g lim its c o n tain e d in th e 1 9 8 2 A m e ric a n U m b r e lla P o l i c y a n d t h e 1 9 8 2 C o l u m b i a E x c e s s P o l i c y.

B

. P retri al P roceedings.
As t e n ’ s M a r c h 1 3 , 2 0 0 3 , c o mp l a i n ta s s e r t e d t h r e e c l a i ms r el at i ng t o i t s as bes t os l i t i gat i on w hi ch i tdes cr i bes as cl ai m s for

“ leg a l re lief

” : d e c lar a to ryju d g m e n t cla im s a g a in st C o lu m b ia and A m er i can a nd a bre ach of contr actcl ai m agai ns tC ol um bi a. I ti ns i s t s t hat t he D i s t r i ct C our t i m pr oper l y deni ed i t a j ur yt r i al on t hese cl ai m s. C ou nt I , con tain ing the “declar at oryj ud gm ent” cl ai m s, a lleg e d th a t C o lu m b ia a n d A m e ric a n h a d re f u se d to h o n o r th e ir o b lig a tio n s u n d e r t h e in s u ra n c e c o n tr a c ts a n d a s k e d , in tera lia , fora dec l ar at i on t hatA s t en w as ent i t l ed t o have Col um bi a and A m er i can “ r ei m bur s e A s t enJ ohns on for , orpay o n behal f of A ste n Jo h n so n , a n y a n d a ll ju d g m e n ts o r se ttl e m e n ts re a c h e d in th e U n d e rly in g A c tio n s , u n til su c h tim e a s th e to tal a g g re g a te8 l i m i t s of ea ch of the for egoi ng i ns ur ance p o li ci es have be en ex h au sted

. ” A V 0 2 3 1

. T h e “ U n d e rl y ing A cti o n s” w ere as bes t os - r el at ed s ui t s fi l ed aga i ns tA s t en as of the f il i ng of the c o m p l ai nt. C ou nt I al so soug ht a declar at ory j ud gm ent w ith resp ec t t o the a g g reg ate lim its of li ab il ityu n d er A m erican ’s 1 9 8 2 U m b re lla a n d E x c e ss P o licie s a n d w ith re sp e c t to A m eri can’s dutyt o p aydefe nse cost s und er i t s 198 2 E xcess P o l i c y. C ou nt I I al l eged a “breach o f con t ract ” cl ai m against C o lu m b ia f

o r re f u sin g to d e f

e n d a n d in d e m n if

yA ste n f o r c e rta in as bes t os - r el at ed cl ai m s t hathad bee n t ender ed t o i t i n t he Fal l of 2 0 0 1 . It a s k s f

o r “ a n a w a rd re q u ir in g C o lu m b ia . . . to p a y. . . al l m onet arydamages s uffe r ed” byA s t en. A V 0233.
A ft ert he cl os e of di s co v eryand i n ant i ci pat i on of the fi nal pr e- tr i al confe r ence on J anuary 23, 2006, and the the n s chedul ed J anuary30, 2006, t r i al , t he part i es w er e r equi r ed by loca l ru le t o fil e p re-tr ial m em o ran d a inc lud ing “a li st o f e v ery i t em of m onet arydamage cl ai m ed, i ncl u d ing ( as appr opr i at e) comput at i ons . ” A s t en’ s pr e- tr i al m emora ndum cont ai ned no i t emi zat i on orcomput at i on of the moneydamages i thad thus far su f f e re d a n d id e n tifie d n o e x p e rt w itn e ss e s w h o in ten d e d to test ifyab o u t th o se d am ag es. A t the pr e-tri al co n fe ren ce , A sten ’s couns el w as unabl e t o ar t i cul at e i n r es pons e t o t he C our t ’ s di r ect q u e stio n s w h a t d a m a g e s A ste n h a d su f f e re d . A s a re su lt, C o lum b ia an d A m erican fil ed m o tio n s to stri k e A sten ’s j u ry dem and s. T he tr i al w as del ay ed and the mot i ons t o s t r i ke w er e not hear d unt i l J une 20, 2006, fourm ont hs af te rt hei rfi l i ng. Pr i or9 to th a t h e a rin g , A ste n ten d e re d n o d e sc rip tio n o f th e d a m a g e s it so u g h t o r th e e v id e n c e it p ro p o se d to in tro d u c e in su p p o rt o f its damage cl ai m . A tt he hea r i ng, A s t en’ s couns el acknow l edged to th e C o u rt th a t A ste n h a d n o t y e t su f f e re d “ o u t-o f

-p o c k e t” l os s es beca us e i thad “ha d i t s ot hercarr i er s pay ” t o defe nd and ind em n ifyit

. W h en ask ed w h at A sten w o u ld be ask ing the ju ry t o aw ard i t , t he respon se w as as fol l ow s: T H E C O U R T : W h at w il l y o u b e ask ing the ju ry t o aw ar d t o y ou?
M R . E L L IS O N : W e ’ll b e a sk in g th e ju ryto a w a rd u s the a m o u n t o f in su ra n c e w e h a v e h a d to us e up i n pr e- 1981 cover age, t hat i s cover age that had t o be us ed for non- as bes t os i s cl ai m s , t hatw as – thatw e w ere r equ i red to u se or needed t o u se beca us e the cover age t hat w as avai l abl e undert he C ol um bi a pol i cy w as w r ongful l ydeni ed t o us and – and s ame w i t h A m er i can. T H E C O U R T : A n d w h a t’s th a t am o u n t?
M R

. E L L ISO N : T hat am ou nt, Y ou r H on or, i s – i s m i l l i ons of dol l ar s . I – I don’tknow t he exa ct num ber

. M r . Y oung and M r . G ibson both have fi rs t han d k no w l edg e of – of thatprocess. T H E C O U R T : W e ll, y o u ’r e

– y o u ’r e te n d a ys fr om t ri al and y ou can’ tt el l m e w hatnum ber y ou’ r e goi ng t o as k t he j ur yt o aw ar d t o y ou?10 M R

. E L L I SO N : I – I can t el l y ou i t ’ s m i l l i ons of dol l ar s . T he burn r at e overt he l as tcoupl e of y ear s has been a bout$2 m i l l i on a y eari n cover age t hatt heyhave us ed up.
T H E C O U R T : S o , o n the j u ryin terrog atory w her e – w her e w e s ayt o t he j ur y , w hatamount do y o u a w a rd to th e p lain tiff , y o u w a n t th e m to w rite i n m i l l i on s of do l l ars ?
M R

. E L L I SO N : N o, i tw i l l be s i x – r oughl y$6 m i l l i on. A V 0306- 07

. T her e w as no fur t hert enderof evi dence of d a m a g e s b yA ste n p rio r to o r a t trial.

C

. T he D i s t r i ctC our t ’ s D eci s i ons T h e D istri ct C o u rtg ra n te d th e m o ti o n to stri k e A sten ’s j ur ydemand. It n ot ed thatt he Seventh A m endmentr i ghtt o a ju ry tria l “ a tta c h e s to a c tio n s a t la w , b u t n o t a c tio n s in e q u ity,” A I I 0006 , an d t hati n i t s anal y s i s i tw as r equi r ed t o l ook t o t he su b sta n c e o f

a c laim ra th e r th a n th e lab e lin g u se d b yth e p a rty as s er t i ng i t

. B eca us e A s t en a s o f tw o w eeks pr i ort o t r i al had t ender ed n o compet entevi dence t hatr ecove r abl e damage had y etbeen suffered b y A ste n an d b ecause “resul t ant dam ages” w er e an e s sen ti al el ementof a c aus e of a ct i on forbr eac h of contr actunderPenns y l vani a l aw , t he C our t concl uded thatt he b re a c h o f

c o n tra c t c laim d id n o t re q u ire a ju rytrial. It th e n h e ld t h a tA s t e n ’ s r e m a i n i n g c l a i m s w e r e e q u i t a b l e a n d , a c c o r d i n g l y, t hata benc h t r i al w as appr opr i at e.11 F o ll o w ing a thre e-w ee k b en ch tr ial , the D istri ct C o u rt f o u n d th a t th e p a rties h a d in ten d e d th e e x c lu sio n c lau se to e x c lu d e a ll as b e sto s-r e late d c a se s. It re c o g n ize d th a t as b e sto sis w as a s peci fi c r es pi r at or ydi s eas e caus ed byi nhal i ng as bes t os fi ber s . I tno t e d, ho w e ve r , t ha tr e a d l i t e r a l l yt he ph r a se “expos ure t o as bes t os i s ” w oul d onl yexcl ude l i abi l i t yfor s om eone a l l egi ng t hathe or s he w as harm ed bybei ng expos ed to a p erso n w ith a n o n -co m m u n icab le disea se. T h e C o u rt t her efor e dec l i ned t o at t r i but e t o t he par t i es t he l i t er al m eani ng o f th e tex t w ith o u t co n sid e rin g th e o th e r p e rm iss ib le a id s to contr acti nt erpr et at i on underPenns y l vani a l aw – i

. e. , t r ade us age, t he p erf

o rm ance of the part i es , and the s i tuat i on and negot i ati o n s pr ovi di ng cont extfort he part i es ’ or i gi nal agr eement

. “[I ] nform ed byt he us age o f tr ade, us age of t he p arti es, a n d the co u rse o f p erf o rm an ce o f th e p arti es,” the C o u rt concl uded thatt he as bes t os i s excl us i on “l en[t ] i t s el f t o onl yone i nt erpr et at i on . . . [– i

. e. it] w a s in ten d e d b yth e p a rties to e x c lu d e f ro m c o v e ra g e a ll cla im s d e riv in g f ro m th e e x p o su re to A s te n ’s a s b e s to s -c o n ta in in g p ro d u c ts .” A I0 1 4 2

. T h e D istri ct C o u rtalso h eld (1 ) th at A sten ’s de clarato ry j ud gm ent cl ai m against C olum bia, al t ho ug h no t i t s cl ai m against A m e ric a n , w a s b a rre d b ylac h e s; a n d (2 ) th a t th e d e f e n d a n ts w e re e n tit led to re f

o rm a tio n o f

th e e x c lu sio n c lau se to c lea rly excl ude al l as bes t os - r el at ed cl ai m s . Fi nal l y , t he C our t rul ed ( 3) t hatt he one- y ear aggr egat e l i abi l i t y l i m i tappl i ed t o t he ent i r e 18 m ont hs o f ea ch of A m er i can’ s 1982 pol i ci es ; and ( 4) t hat A m er i can’ s exce s s pol i ci es di d noti m pos e a d u tyt o defe nd or paydefe nse cost s. T he C ou rtdecli ned t o r each the def end ants ’ d e f e n se th a t A ste n w a s b a r r e d f ro m re lief

b yits f a ilu re to com plyw i t h the noti ce prov i si on s of t he p oli ci es.12 I I

. D ecl ar at or yJ udgm entas a M at t erof Law
A st en insists t hat the ex cl usi on cl ause i s unam biguou s, t hatt h e D i s t r i ctC our ti m pr oper l ycons i der ed anyt hi ng ot her t han t he t extof thatcl aus e, t hatt her e ar e no mat er i al di s put es of fac t , and thati ti s ent i t l ed t o t he decl ar at or y j udgm ent i ts eeks as a mat t erof l aw . W e ca nnotagr ee. T h e D istric t C o u rt p ro p e rly c o n sid e re d th e e x trin sic evi dence w hi ch i tdi d. Penns y l vani a l aw fol l ow s t he R es t at ementappr oach t o t he i nt erpr et at i on of w r i t t en, i nt egr at ed c o n tr a c t s . Sunbeam C or p. v. Li ber t

y Mut ualI

ns . C o. , 566 Pa. 494, 781 A

. 2d 1189 ( Pa. 2 0 01) ; R es t at ement( Second) of C o n tr a c ts § 2 0 2 (1 9 8 1 ), et s eq . Par ol evi dence cannotbe us ed t o contr adi ctt he pr ovi s i ons of s uch a c ont r act

. I n det erm i ni ng w hethers uch a c ont r adi ct i on w oul d occur , how ever , t he t extof t he contr actm us tfi r s tbe i nt erpr et ed i n l i ghtof anyevi dence of t r ade us age a nd t he per form ance of t he part i es undert he c o n tr a c t. Sunbeam , 781 A

. 2d at1193. I f af t ert he cons i der at i on o f su ch ev iden c e , the in tent o f th e p arti es re m ains u n clea r, evi dence conce r ni ng t he pr e- contr act negot i at i ons of the part i es m ayal s o be cons i der ed i n r eac hi ng a conc l us i on conce r ni ng t he in te n tio n o f

th e p a rt ie s . R es ol ut i on Trus tC or p. v. U r ban R edev

. A uth. of P i t t s bur gh , 536 Pa. 219, 225- 26, 638 A

. 2d 972, 975- 76 (P a. 19 9 4 ).
T he D i s t r i ctC our tfi r s tfound, bas ed on exper tt es t i m ony and t he tes t i m on yo f A st en’s pr ocu ri ng agen t , G l ori a F orbes, t hat i n the i nsurance w orl d o f the 1 98 0 s “ t he term ‘as best osi s’ w as us ed t o m ean tw o di ffe r ent t hi ngs . Fi r s t , t he t erm w as us ed t o me a n t h e s p e c i f

i c a s b e s t o s - r e l a t e d d i s e a s e d i s c u s s e d a b o ve13 and fou nd i n a m edical dict i on ary . S econ d, itw as used as a g e n e ri c te rm , i

. e. , an a ll en c o m p a ss in g ter m th a t in c lu d e s a ll as bes t os - r el at ed di s eas es . ” A I 0138. T he D i s t r i ctC our tnext loo k ed to th e co u rse of p erf o rm an ce , fin d ing th a t “ A sten ’s cour s e o f

p e r f o r ma n c e o v e rt h e t wen t yp l u s y e a r s a f t e rt he exec ut ion o f the Subj ectPol i ci es i s t he mostcompel l i ng evi dence of the i nt ent i on of t he par t i es . ” A I 0130. I n t he vi ew of the C our t , t hatevi dence “cl ear l ydemonstr at es t hatA s t en u n d e rsto o d a n d in ten d e d th e A sb e sto sis E x c lu sio n to b a r a ll cl ai m s al l egi ng anyas bes t os - r el at ed di s eas e. ” Id

. O n lyaf ter th ese co n clus ion s d id the D istri ct C o u rtturn t o t h e c i r c u ms t a n c e s s u r r o u n d i n g t h e e n t e r i n g o f t h e p o l i c i e s . At t hatpo i nt , t her e w as cl ear l ys uffi ci entdoubtaboutt he l i t er al r eadi ng of t he t extt o w arr antcons i der at i on of par ol evi dence

. B as ed on t he par ol evi dence , t he C our tfound thatt he “A pr i l 2, 1981 comm uni cat i on betw een D V U A and B abb, agent s for C ol um bi a and A s t en r es pect i vel y , r efl ect [ed] a meet i ng of the m i nds , ” A I 0138, t hatal l as bes t os - r el at ed cl ai m s w oul d be excl uded. T he C our tfur t herconcl uded thatt he ci r cums t ance s s ur r oundi ng t he i s s uance of t he pol i ci es s t r ongl ys ugges t ed that th e e x c lu sio n w a s n o t in ten d e d to e x c lu d e liab ili tyf o r a sb e sto sis o n ly . A s th e C o u rt p u t it : G iv e n th e n a tu re o f

th e u n d e rly in g c o m p lain ts in th e e a rly1 9 8 0 s, w h e re p lain tiff s o f ten w o u ld al l ege a n as best o s i s i nj ur yal ong w i t h ot her as bes t os - r el at ed i njuri es, th e A sb est os i s E xcl us i on th a t o n ly a p p lied to th e sp e c if ic d ise a se a sb e sto sis w o u ld o f

f e r a n in su ra n c e c o m p a n yv e rylittle p ro tec tio n . T h a t is b e c a u se u n d e r P e n n sy lv a n ia14 l a w, a n i n s u r e re x c l ud i n g j u s ta s b e s t o s i s c l a i ms w oul d s t i l l be r equi r ed t o defe nd an yas bes t os l aw s ui tal l egi ng as bes t os i s and any ot herof the dis eases t hat res ult from exp osure t o a sb est os. T he i n s u r e r ’ s d u t y t o d e f e n d wou l d o n l ybe r el i eved i f the cl ai m ant ’ s di s eas e w as narr ow ed d o w n to a sb e sto sis o n ly . A n d if th e d iag n o sis c o u ld n e v e r b e n a rro w e d d o w n to e x c lu d e a ll d ise a s e b u t as b e sto sis , the in su re r w o u ld h a v e to in d e m n if ya s w e ll.
* * *
A nd bot h A s t en and Col um bi a w er e w el l aw ar e of th is. A s it l e a rn e d in C a n a d a , A ste n k n e w it w oul d no tbe abl e t o acqui r e cove r age f or as bes t os - r el at ed cl ai m s . A s t en manufactur ed as bes t os and i t s expos ur e t o as bes t os l i abi l i t yhad b eg u n p ri o r t o 1 9 8 1

. C o lum b ia kn e w A sten ’s h ist o ryan d itex p resse d to A sten ’s ag en t i ts de sir e t o ex cl ud e al l asbest os-r el at ed clai m s. A I0 1 3 9 (f

o o tn o te o m itte d ); A I0 1 4 1

. A s w e have i ndi cat ed, w e fi nd no faul tw i t h t he D i s t r i ct C our t ’ s cons i der at i on of evi dence bey ond t he t ex t of t he pol i ci es . A s t en’ s pr i m aryar gum ent s t o t he contr aryar e: ( 1) t hat t he t ext o f t he as bes t os i s excl us i on i s notambi guous , and ( 2) t hatcons i der at i on of evi dence i ndi cat ing t r ade us e of “as bes t os i s ” as a cat chal l foras bes t os - r el at ed di s eas e w as i mp r o p e rb e c a u s e i twa s n o ts h o wn t o b e “ c o n t i n u o u s , u n i f o r m,15 and not or i ous . ” W e addr es s t hos e ar gum ent s i n tur n. A s te n poi nt s t o di ct i onarydefi ni t i ons of “e xpos ur e” w hich i nclude t he ac t o f being op en to som et hing t hat poses a dangerorr i s k. B as ed on this d efi ni t i on, A s t en i ns i s t s t hat “expos ur e t o asbest os i s ” i n t he cont extof the contr actual l ang uag e “ e xp osure t o o r cont ract i ng of asb est osi s” unambi guous l ym eans “expos ur e t o t he r isk o f cont r act i ng as bes t os i s . ” A s t en’ s i nt erpr et at i on equat es exposur e t o t he as bes t os i s di s eas e w i t h t he r i s k of contr act i ng t hatdi s eas e. H ow ever , as not ed byt he D i s t r i ctC our t , t hes e ar e s epar at e and d ist inc t h a rm s. T h e D istri ct C o u rt , em p loy ing the d ict ion ary defi ni t i on r el i ed upon by A s t en, poi nt ed out t hat s om eone expos ed t o t he as bes t os i s di s eas e runs no r i s k of contr act i ng t hat d i s e a s e . W h i l e As t e n ’ s s u g g e s t e d i n t e rp r e t a t i o n u n d e rs o me ci r cumst ance s m i ghtbe a pe r m i s s i bl e one, it does notr ender “expos ur e t o as bes t os i s ” unambi guous . M or eover , as w e have i ndi cat ed, underPenns y l vani a l aw , t he D i s t r i ct C our tw oul d be e n tit led to c o n sid e r tra d e u sa g e a n d p a rtyp e rf o rm a n c e e v e n if A s t en’ s s ugges t ed r eadi ng w er e cons i s t ent w i t h a l i t er al r eadi ng of the t extof the exc l us i on. A ste n f u rth e r a rg u e s th a t th e D istric t C o u rt im p ro p e rly cons i der ed the tr ade us age e vi den ce t hat“as bes t os i s ” w as c o m m o n ly u se d in th e in su ra n c e w o rld in th e e a rly1 9 8 0 s to re f e r to a ll as b e sto s-r e late d d ise a se s. I n su p p o rt o f th is arg u m en t, A sten p o ints t o (1) e v iden ce that tho se in the in d u stry r egul ar l yus ed “a s bes t os i s ” t o m ean the s peci fi c di s eas e, ( 2) e v id e n c e th a t 1 9 8 1 p o licie s is su e d b yo th ers broa d lye x c lu d e d a ll asb es t os - r el at ed di s eas es w i t houtus i ng “as bes t os i s ” as s hor t hand fort he br oad exc l us i on, and ( 3) the fa ctt hatt he16 defe ndant s ’ t r ade usa ge evi dence di d not i ncl ude otherpol i ci es i n w hi ch “a s bes t os i s ” w as us ed t o m ean a s bes t o s-r el at ed di s eas es . A s w e r ead Pe n n s y l vani a l aw , how ever , t o be an in terp re tatio n a id , t r a d e u sa g e e v id e n c e n e e d n o t d e m o n stra te t hata part i cul art erm al w ay s carr i es a part i cul arm eani ng ort hat t he part i cularm eani ng cl ai m ed ca nnotbe otherw i s e s t at ed. W h il e e v iden ce o f n ea rl yu n iver s a l u s e o f a tr ad e u sag e term m i ghtw el l be r equi r ed i n or dert o al t erw hat w oul d ot herw i s e be an unambi guous contr actt erm orphr as e, w her e, as her e, a l i t er al r eadi ng o f the contr actpr oduces a nons ens i cal oruncl ear m e a n in g a n d th e C o u rt f in d s th a t th e tra d e u sa g e ter m is in f r e q u e n tu s e b y p e o p l e i n t h e t r a d e a tt h e r e l e v a n tt i me , we concl ude that t he t r ade use evi dence of t he ki nd her e pr es ent ed can pr oper l ybe cons i der ed.
Itfoll ow s that A st en is no tenti t l ed to j ud gm ent as a m at t erof l aw on i t s decl ar at or yj udgm entcl ai m s r egar di ng t he A s bes t os i s E xcl us i on C l aus e. I I I

. J ur yT r i al
F irst, w e c o n c lu d e th a t th e D istric t C o u rt w a s e n tit led to fi nd t hatA s t en w as unabl e t o pr ove re cover abl e dam ages att r i al and t o r el y upon t hat fac t i n r es ol vi ng the Seventh A m endment iss u e b e f o r e it. C o n tra ryto A ste n ’s s u g g e stio n , this w a s n o t a s i tuat i on i n w hi ch damage evi dence w as found t o be t oo s pecul at i ve o runcert ai n. T hi s w as a s i tuat i on w her e i tw as fi r m l yes t abl i s hed tha t A s t en w as notpr epar ed t o pr ove rec o v era b le da m ag es. W h il e it is true, as A sten str esse s b ef o re us , t hat it is n o ti m pos s i bl e foran i ns ur ed t o exper i ence r ecove r abl e l os s as a r es ul tof havi ng t o reso rtt o al t ernat i veSee, e. g. , F l i ntkot e C o. v. G en. A cci dent A ssu ra n ce C o. of 1 C anada , N o. 04- 01827, 2008 W L 3270922 ( N

. D

. C al

. A ug. 6, 2 0 0 8 ) (rec o v era b le l o ss p rov en u n d er the “p rem ature exh a us t i on” theory , hol di ng in tera lia thatt he ca l cul at i ons under t hat t heory m us tt ake i nt o acc ountt hatt he al t ernat e s our ce may h av e a co n tr ibu ti o n claim ag ains t th e ins u rer). T he part i es have notbr i efe d, and w e expr es s no opi ni on 2 w ith resp ec t t o , w h at, if an y , ef fe ct th is ru li n g h as o n A sten ’s 17 so u rc e s o f

c o v e ra g e , an in su re d is o b v io u sl y n o t en tit led to re c o v e r liti g a tio n e x p e n se s a n d in d e m n ity f o r a p a rticu lar c laim t w i ce f r om t w o di ffe r enti ns ur er s . M or eover , farm or e than a “burn r at e” ne eds t o be s how n t o s ucces sful l ys uppor tt he “pr ematur e exha us t i on” theoryw hi ch A s t en appear s t o be pr es s i ng i n i t s br i ef be for e us , and no s uch evi dence w as 1 tend ere d in resp o n se to the D istri ct C o u rt ’s ca ll fo r a t en d er. I n s hor t , no evi dence has been t ender ed t o pr ove t hat A s t en had y et s uffe r ed a l os s as a r es ul tof C ol um bi a’ s deni al of cove r age. W hen fa ced w it h a s i tuat i on i n w hi ch a pa r t ycannot t enderevi dence es s ent i al t o i t s onl yl egal cl ai m , a fe der al t r i al c o u rt m a ystrik e a ju ryd e m a n d w ith o u t o f f e n d in g th e S e v e n th A m e n d m e n t. D e sig n S tra teg y , In c . v. D a v is , 469 F. 3d 284 ( 2d C ir. 2 0 0 6 ) ( p la in tiff

n o t en tit led to a ju ryw h e re it fa iled to p ro v id e c o m p u tatio n a n d e v id e n c e o f d a m a g e s p u rsu a n t to R u le 2 6 , an d o n lyre m a in in g c laim s w e re e q u itab le) ; As tr aZe ne c a LP v. Tap P har m . P r ods

. , I nc. , 444 F. Supp. 2d 278 ( D

. D el

. 2006) (m o ti o n to stri k e juryg ran ted a fter C o u rtb arred d am ag e e x p ert test im o n yan d p artyd id n o t othe rw ise h av e d am ag e c ase ). 2abi l i t yt o r ecove rdamages on i t s C ountI I cl ai m s based on C o lu m b ia’ s re

jec tio n o f

th e a sb e sto s-r e late d c laim s te n d e re d to i ti n t he Fal l of 2001. A st e n ’s b rie f

in g b e f o re u s e x p re ss lya n d u n a m b ig u o u sly 3 ar gues t hatt he D i s t r i ctC our t err ed by deny i ng i ta j ur yt r i al on bot h i t s decl ar at or y j udgm ent cl ai m s and i t s br eac h of contr act cl ai m . I t s openi ng br i ef, forexampl e, devot es s epar at e s ect i ons t o t he dec l ar at or yj udgm ent juryt r i al i s s ue and the br eac h of contr act j ur y t r i al i s s ue. A t or al ar gum ent , how ever , couns el for A ste n a n sw e re d a q u e stio n o f th e C o u rt in a m a n n e r th a t co u ld r eas onabl ybe under s t ood t o deny t hat A s t en w as cl ai m i ng err or w it h r es pectt o t he deni al of a j ur yt r i al on t he dec l ar atory ju d g m e n t c laim s. G iv e n th is re sp o n se a n d th e c e n tra lityo f th is iss u e in th e b rie f

in g , the C o u rt a sk e d f

o r su p p lem e n ta l, p o star gum entm emora nda di r ect ed t o w hether couns el forA s t en i nt ended t o wai v e t h i s c l a i m o f e r r o r a n d , i f n o t , whe t h e rt he C our ts houl d r es ol ve th is a sp ectof the appe al bas ed on the br i efi ng. T he r es pons es m ade c l eart hatno w ai verw as i nt ended, butt hatC ol um bi a and A m er i can insis tt hata w ai ver nevert hel es s r es ul t ed. I n t he absence of pr ej udi ce t o t he o p p o sin g p a rty , w e p re f e r res o lu tio n o n th e m e rits o f a n iss u e to d isp o sitio n o f it b a se d o n a n u n in ten d e d w a iv e r b yc o u n se l. G iv e n th a t C o lu m b ia’ s a n d A m e ric a n ’s p o sitio n o n th e iss u e is ful l ydevel oped i n t he bri efi ng, w e per cei ve no pr ej udi ce t o t hem fr om our addr es s i ng i t on t he basi s of t hatbr i efi ng, and w e el ect 18 W e n o w turn to the issue o f w h ethe r th e d ec laratory j udgm ent cl ai m s t hat w ent t o t r i al w er e ones t hatent i t l ed A s t en to a ju rytrial. T h e c o n tro lli n g law is s e t f o rth in o u r o p in io n in 3th a t c o u rs e . See, e. g. , B akerv. C or cor an , 220 F. 3d 2 7 6 , 2 95, n . 1 6 (4th C ir

. 2 0 0 0 ). 19 O w ens - I l l i nois , I nc. v. Lake Shor e Land C o. , 610 F. 2d 1185 ( 3d C ir

. 1 9 7 9 ):
I n t hi s di ver s i t yact i on, t he pl ai nt i ff a s ked fora dec l ar at or yj udgm entes t abli s hi ng i t s r i ght underan opti on agr eementt o compel t he d e f e n d a n t’s c o n v e y a n c e o f c e r ta in re a lty[ a t a fut u r e d a t e ]

. As s e r t i n g t h a ti t s a n s werp r e s e n t ed leg a l issu e s, th e d e f

e n d a n t d e m a n d e d a ju rytrial, butt he di s t r i ct cour t det erm i ned t hatt he s ui tw as th e c o u n terp a rt o f a n e q u itab le a c tio n f o r sp e c if ic p e r f o r m a n c e a n d s t ru c k t h e r e q u e s tf o ra j u r y. * * *
D ecl arat oryj ud g m e n t s w ere cr eat ed as a rem ed yin th e f

ed era l cou rt s so m e f

o u r y ea rs b e f o re th e m e rg e r o f

law a n d e q u ityto o k e f f e c t. See 28 U

. S. C

. §§ 2201- 2202. T he r emedym aybe gr ant ed upon ei t herl egal orequi t abl e cl ai m s and i s su i g e n e ris

. . . . T o eff ectuat e t he st atut e’ s neutr al pos i t i on o n th e ju rytrial, p o stm e rg e r c o u rts h a v e f o u n d it nece s s ary t o pr es erve t he di s t i nct i on betw een l aw a n d e q u ity in th e d e c la ra to ry ju d g m e n t co n te x t. A w o rk a b le f

o rm u la th a t h a s b e e n d e v e lo p e d is to20 d e term i ne in w hat ki nd of suitt he clai m w o u ld h av e c o m e to c o u rt i f th ere w ere n o d ec laratory ju d g m e n t r e m e d y . See 9 C

. W ri g h t & A

. M il ler, supra § 2313. I f the dec l ar at or yj udgm entact i on d o e s n o t f

it i n to o n e o f th e e x istin g e q u itab le pat t erns buti s es s ent i al l yan i nver t ed l aw s ui t– an acti o n b r oughtbyone w ho w oul d have be en a defe ndantatcomm on l aw – t hen the part i es have a r i g h tt o a j u r y . Buti f t h e a c t i o n i s t he count erpar tof a s ui ti n equi t y , t h ere is no suc h ri g h t. See F . Ja m e s, Jr . an d G . H a z a rd , Jr., C iv il P roc ed u re § 8

. 1 0 , at 38 3 -84 (2d ed

. 1 9 7 7 ).
A p p ly ing this t est th e d istri ct co u rt pr oper l y char act er i zed t he ca s e atbaras equi t abl e. T h e c o m p lai n t cen tered o n the d ef en d an t’ s o b lig a tio n to c o n v e ytit le to th e p lain tiff a t a cert ai n t i m e i n t he futur e – t her e w as no cl ai m for damages oranyot her l egal r emedy

. A n act i on for s peci fi c per form ance w i t houta cl ai m fordamages i s p u r e l y e q u i t a b l e a n d h i s t o r i c a l l y h a s a l w a ys b e e n tr ie d to th e c o u rt

. See Kl ei n v. Shel lO i lC o. , 386 F. 2d 659 ( 8t h C i r . 1967) ; 5 M oor e’ s Feder al P r a c t i c e , ¶ 3 8

. 2 1 ( 2 d e d

. 1 9 7 9 ) ; 9 C. Wr i g h t& A. M ille r, supra § 2 3 0 9 . T h e p lain tiff ’s s u it, th e re f o re , is n o t a n in v e rte d law su it, b u t r a th e r is a cl ai m casti n d ecl arat oryj ud gm ent form becau se t he r i ght t o s peci fi c per form ance had notr i pened att he t i m e the ac t i on w as fi l ed. 3
* * *21 See, e. g. , Jam es v. P enn sylvan i a G eneral I ns. 3 C o. , 1 21 U

. S. A pp. D

. C

. 251, 253, 349 F. 2d 228, 2 3 0 ( D. C. Ci r . 1 9 6 5 ) ( q u e s t i o n i s “ whe t h e ran ac ti o n in equ ity co u ld be m aintaine d if d ec laratory ju d g m e n t w a s n o t a v a ila b le ” ). See a l so 9 C. W ri g h t & A . M ille r, s upra § 2 3 13 ( s ame)

. T he C our ti t s el f has not ed t hat t he factt hatt he ac t i on i s i n form a dec l ar at or yj udgm entcas e s houl d not o b s c u re th e e s s e n tia l n a tu re o f th e a c t i o n . See Si m l erv. C onner , supra at223, 83 S. C t

. 609.
I d. at 11 8 6 (fo o tno te 2 o m itted); 11 8 9 -90 (em p h asis su p p li ed ).
T he t eac hi ngs of O w e n s-I lli n o is r e f

l e c tt h e l a w g e n e ra l l y. See, e. g. , F is cherI

m agi ng C or

p. v. G en. E l ec. C o. , 187 F. 3d 1165, 1 1 7 1 ( 1 0 t h Ci r . 1 9 9 9 ) ( f i n d i n g a Se v e n t h Am e n d me nt r i ghtt o a j ur y t r i al i n a dec l ar at or yj udgm entact i on, i n w hi ch the p lai n tif f h a d n o t yet s u f

f e re d in ju ry, b e c a u s e , “ a b s e n t d ec laratory j u d g me n tp r o c e d u r e s , ” t h e p l a i n t i f f ’ s c l a i m w o u l d h a v e “ c o me to th e c o u rt” in a su it o n th e c o n tra c t); A m . Saf et y E qui p. C or p. v. J. P

. M

agui r e & C o. , 3 9 1 F .2 d 8 2 1 , 8 2 4 (2 d C ir

. 1 9 6 8 ) (to as s ess S eventh A m endmentcl ai m “court s have l ooked t o t he bas i c natur e of the s ui ti n w hi ch t he i s s ues i nvol ved w oul d have ar i s en i f C ongr es s h ad notcr eat ed the D ecl ar at or yJ udgm ent A c t” ).
O w e n s-I

lli n o is , li k e th is c a se , w a s n o t a n in v e rte d law su it s i tuat ion, and ourC our tt her efor e l ooked t o t he natur e of the cl ai m s etfor t h i n t he compl ai nt

. I tconclud ed t hata j ur yt r i al w as notr equi r ed becaus e the i s s ues r ai s ed i n t he compl ai nt w h ich al l ege the ri gh tt o co m pel a transferof real est at e to22 p lain tiff a t a late r d a te w o u ld c o m e to c o u rt in a su it fo r sp e c if ic p e r f o r m a n c e i f

th e r e w e r e n o d e c l a r a t o r y j u d g m e n tr e m e d y. If w e a sk “ in w h a t k in d o f su it [A ste n ’s] c laim [ s] w o u ld have come t o cour t i f t her e w er e no decl ar at or yjud g m ent r emedy , ” O w e n s-I

lli n o is , 610 F. 2d at1189, it see m s cl eart hat t he ans w eri s an ac t i on i n as s u m p si tfordamages cons i s t i ng, in tera lia , o f

re im b u rse m e n t o f

lit ig a tio n c o sts a n d a m o u n ts p a id to v ic tim s . S e e , e .g ., 9 C h arles A lan W ri g h t & A rth u r R

. M il ler, F e d e ra l P ra c tice a n d P ro c e d u re § 2 3 1 3 (2 d e d . 1 9 9 5 ). T h e re is n o p o ss ib ili tyth a t it w o u ld a rise in a su it fo r sp e c if ic per form ance beca us e an a ct i on i n as s um ps i ti s an ava i l abl e and ad eq u ate r em ed y at la w , s e e , e . g . , V a n d e r v e e n v . E r i e I

n d e m. C o. , 417 Pa. 607, 208 A

. 2d 837 ( Pa. 1965) , and “i n t he fe der al co u rt s eq u ityh as a lw ay s o n lyac ted w h e n lega l r em ed ies w ere i nadequa t e. ” B eacon Theatr es , I nc. v. W es t over , 359 U

. S. 500, 5 0 9 (19 5 9 ).
C o lu m b ia a n d A m e ric a n in sis t th a t A ste n ’s C o u n t I is in the na ture of a clai m for speci fi c perform ance o r a bi ll q u ia t i m et , i. e. , “[a ] l egal doctr i ne thatal l ow s a per s on t o s eek equi t able rel i ef f

r om a futur e pr obabl e harm t o a s peci fi c r i ght ori nt er es t

. ” P enns

ylvani a N

at

. Mut

. C as . I

ns . C o . v. C it

y of P in e B lu ff , 354 F. 3 d 9 4 5 , 950, n. 4 ( 8t h C i r . 2004) ( quot i ng B l ack’ s L aw D i ct i onary1260 ( 7th ed

. 1999) )

. A s w e have i ndi cat ed, A s t en’ s cl ai m s coul d not be adj udi cat ed i n an ac t i on f o r sp e c if ic p e rf o rm a n c e b e c a u se it w o u ld h a v e a n a d e q u a te r emedyatl aw . W i t h r es pectt o bi l l s of q u ia t i m et , A m er i can c ites a strin g o f

c a se s w h ich sta te th a t a d e c lar a to ryju d g m e n t is “ana l ogous t o” or had “i t s genes i s i n” the equi t abl e bi l l of q u ia t i m et

. N one i nvol ved a s i tuat i on anal ogous t o t hi s cas e, and any23 su g g e stio n th a t qui a t i m et an d d ec laratoryjud g m en ts are sy no ny m ou s w ou l d p rove t oo m uch – itw ou l d resul ti n all decl ar at or yj udgm ent act i ons bei ng equi t abl e, and w e know t hat nott o be the ca s e. I ti s t rue thata bi l l of qui a t i m et al l ow s “a pe r s on t o s eek equi t abl e re l i ef fr om a futur e pr obabl e harm , ” id

. , t hathe ors he f e a rs. A s o n e w o u ld e x p e c t, ho w e v e r , it d o e s n o t u n d e r a ll ci r cumst ance s al l ow r el i ef f r om fea r ed harm t hat has noty et occurr ed. E s s ent i al t o qui a t i m et equi t yj ur i s di ct i on i s t he ab sen ce o f a n ad eq u ate rem ed yat l aw . A s the S u p rem e C o u rt expl ai ned i n D i G iova n n i v. C a m d en F ire Ins. A ss’n

. , 29 6 U. S. 6 4 , 6 8 (19 3 5 ):

T hi s C our thas recent l ypoi nt ed outt hat equi t yw i l l notcompel t he ca ncel l at ion and s ur r endero f an i ns ur ance pol i cypr ocur ed by fr aud w her e the l os s has occurr ed and a s ui tatl aw t o r ecove rt he amountof the l o ss i s pendi ng or th re a te n e d

. E nel ow v. N ew Y ork Li f e Insur ance C o. , 293 U

. S. 379. T he al l eged f r aud of pet i t i oner s , as w el l as t hei ral l eged de s t ruct i on of th e pro p e rtyin su re d a re d e f e n se s a v a ilab le in su its at l aw u p o n the p o li cies. W h il e eq u itym ayaf fo rd r el i ef qui a t i m et

byw ay o f cancel l at i on of a d o c u m e n t if th e re is a d a n g e r th a t th e d e f e n se to an act i on at l aw upon i t m ay be l os t orpr ej udi ced, n o su ch d an g er i s ap p are n t w h ere , as re sp o n d en t’ s bi l l aff i r m at i vel ys how s , t he l os s has occurr ed and s ui t s atl aw on t he pol i ci es are i m m i nent , and t her e i s no s how i ng t hatt he def ens es cannotbe s etA p p ell ee s’ qui a t i m et arg u m ent r el i es pr i m ar i l yon A etna 4 L ife In s. C o . v. H

a w o rth , 300 U

. S. 2 2 7 ( 1937)

. T her e, an in su re d c laim e d h e w a s d isa b led a n d th e re b yc o n tr a c tu a lly r el i eved of

hi s obl i gat i on t o pay pr emi um s unders ever al l i fe a nd di s abi l i t yi ns ur ance pol i ci es . T he i ns ur erdi s put ed and a s s er t ed th at th e p o li cies h ad laps ed fo r no n -pa ym en t of p rem ium s. It fi l ed a de cl ar at or yj udgm entact i on t o s ecur e a dec l ar at i on t hat t he i ns ur ed w as n o t di s abl ed. T he onl yi s s ue i n t he ca s e w as w hethert her e w as a “c as e orcontr over s y . ” In the cour s e of concl udi ng t hatt her e w as , how ever , t he C our tnot ed t h at t he i nsured “on repudiat i on by t he insur er of l i abil i t yi n such a case and i ns i s t ence byt he i ns ur ed thatthe re pudi at i on w as unj us t i fi ed beca us e of hi s di s abi l i t y , t he i n su red w oul d have ‘ s uch an i nt er es ti n t he pr es ervat i on of the contr act s t hathe mi ght m ai nt ai n a sui ti n equi t yt o decl ar e them st i l l i n bei ng. ’ ” I d. at 243- 44 ( quot i ng B u rn e t v. W e lls , 2 8 9 U

. S

. 6 7 0 , 6 8 0 (19 3 3 ). I n H a w o rth , t he i ns ur erhad r epudi at ed the pol i cy , and a p re se n t ad

ju d ica tio n th a t itw a s s til l in e f f e c t w a s n e c e ss a ryto 24 u p a n d lit ig a ted a s re a d ilyin a su it at la w a s in equi t y . See E nel ow v. N ew Y ork L if e Insur ance C o. , supra , 384, 385. See al s o I n r e Lockwood , 5 0 F .3 d 9 6 6 (F e d

. C ir . 1 9 9 5 ), vacated , 51 5 U

. S

. 11 82 (1995 ) ( “B i l l s qui a t i m et w e re g e n e ra lly appr opr i at e i f ther e w as a dange rt hat a def ens e atl aw m i ghtbe p re ju d ice d o r lo st if n o t trie d im m e d iate ly .”); 3 0 A C .J.S . E q u ity § 3 4 (2 0 0 8 ). (T he “o bject i ve [o f bil l s qui a t i m et ] i s t o pr event ant i ci pat ed mi s chi efs w hi ch coul d not aft er t hei roccurr ence be a d e q u a te ly re d re s s e d .) 4pr eventi r r epar abl e i nj ur ydur i ng t he pol i cyt erm . H er e, w e have a c o v e ra g e d isp u te, a n d A ste n h a s it w ith in its p o w e r to p u t it se lf i n a pos i t i on t o pur s ue a l egal r emedy agai ns tC ol um bi a and/ or A m er i can w hi ch equi t yw oul d r egar d as cl ear l yadequa t e.

Col u mbi a a n d Am e r i c a n u n d e r s t a n d a b l y d o n o t a r gue t hat 5 t hey w er e ent i t l ed t o a di r ect ed ver di ct and, acc or di ngl y , t hatt he s t r i ki ng of the j ur ydemand w as harm l ess err or . I n t he thr ee w eeks of tr i al , t he C our thear d confl i ct i ng t es t i m onyaboutm any m at erial f

act s and r es ol ved t o cr edi tone fa ctw i t nes s over a n o th e r, as w e ll as o n e e x p e rt o v e r a n o th e r. A f ter d o in g so , it dr ew a hos t o f i nfer ence s conce r ni ng t he mot i vat i on of the par t i es atvar i ous s t ages . I n s hort , i texer ci s ed the func t i ons t hat A s t en w as ent i t l ed t o have a j ur yexer ci s e. 25 B a se d o n th e se a u th o rities , the iss u e p o se d to u s is w h e th e r a d e c la ra to ryju d g m e n t cla im b a se d o n a c o n tra c t, w hi c h wou l d o t h e r wi s e c l e a r l yb e a l e g a l c l a i m e n t i t l i n g t he p lain tiff to a ju ry , b e c o m e s a n e q u itab le c laim w h e n f iled in ant i ci pat i on of h arm butbefor e harm has been s uffe r ed. O ur a n sw e r i s “ n o ” u n les s s p e c ial c irc u m sta n c e s e x ist w h ich in d ica te th a t a s u it o n th e c o n tr a c t is lik e lyto b e in a d e q u a te w h e n it i s a v a ilab le. S in c e n o su c h c irc u m sta n c e s h a v e b e e n sh o w n to e x ist, w e c o n c lu d e th a t A ste n is e n tit led to a ju rytrial o n its declar at oryj ud gm ent cl ai m s. 5
I V

. L ache s T h e D istric t C o u rt h e ld th a t “A ste n ’ s c o v e ra g e su itA s t en does not cont es t t he D i s t r i ct C our t ’ s appl i cat i on of the 6 d o c tr in e o f

la c h e s to its “ c o v e ra g e s u it a g a in s t C o lu m b ia .”

26 a g a in s t C o lu m b ia [ w a s ] b a rr e d u n d e r t h e d o c t r i n e o f la c h e s ,” A I 0109, butt hatA s t en’ s cover age suitagai ns tA m er i can w as not

. C i t i ng ourdeci s i on i n C entr alP enn. Team s t ers P ens i on Fund v. McC or m i ck D r ay Li ne Inc. , 8 5 F

. 3 d 1 0 9 8 (3d C ir

. 1996) , t he D i s t r i ctC our tbegan i t s anal y s i s by r ecogni zi ng t hat t he “doctri n e o f l ache s cons i s t s of tw o es s ent i al el ement s : ( 1) i nexcus abl e del ay i n i ns t i tut i ng s ui t ; and (2) pr ej udi ce r es ul t i ng t o t he defenda nt fr om s uch del ay . ” I d. a t 1 1 0 8

. See a l

so C l ass of Tw o H undr ed Adm i n. Facul t

y Mem bers v. Scanl on , 5 0 2 P a. 275, 279, 466 A

. 2d 103, 105 ( 1983) ( a l ache s defe ns e pos es t he i s s ue of “ w hether , undert he ci r cumst ance s of the part i cul ar c a se , the c o m p lain in g p a rtyis g u ilty o f w a n t o f d u e d ili g e n c e in fai l i ng to i ns t i tut e hi s act i on t o another ’ s pr ej udi ce” ) ( quot i ng W i l s on v. K i ng of

P r us s i a E nt

. , I

nc. , 422 Pa. 128, 133, 221 A

. 2d 1 2 3 , 1 2 6 (19 6 6 )). 6
I n s uppor tof the fi r s tpr ong of i t s hol di ng, t he D i s t r i ct C our tci t ed ( 1) A s t en’ s fai l u re to j oi n C ol um bi a i n a cove r age a c tio n it b ro u g h t ag a in st o th e r in su re rs in 1 9 8 0 ; ( 2 ) its f a ilu re to no t i fyC olum bia o f “ i t s hun dreds of asbe st os-r el at ed clai m s” w hen theyw er e as s er t ed aga i ns tA s t en; and ( 3) it s t w o- y ear d e lay i n n o tify in g C o lu m b ia o f th e u n d e rly in g c laim s a f ter it “ac know l edged [ i n 1999] i t s bel i ef thatthe defe ndant s m ay di s put e the cons t ruct i on of t he A s bes t os i s E xcl us i on. ” A I 0110- 11.
A ste n’ s pr i m aryr es pons e t o t he D i s t r i ctC our t ’ s l ache s27 h o lding is ba sed o n the S u p re m e C o u rto f P en n sy lvan ia’s deci s i on i n J. H

. Fr ance Ref r act or i es C o. v. A l l

s tat e I ns . C o. , 534 Pa

. 2 9 , 6 2 6 A. 2 d 5 0 2 ( Pa

. 1 9 9 3 ) , a c a s e i n v o l v i n g a n i n s u r ed w i t h m ul t i pl e i ns ur ance pol i ci es cover i ng as b es t os - r el at ed in ju rie s. T h e C o u rt th e re e n d o rse d th e so -c a lled “ m u lti p le t ri gg er theo ryof li abil i t y ” and held as fol l ow s:

I n keepi ng w i t h t hi s anal y s i s , w e conc l ude t hateac h i ns ur er w hi ch w as on t he r i s k dur i ng t he dev el op m ent of an asbe st osi s- rel at ed d i sease i s a pr im ary i ns ur er . I n or dert o acc or d J

. H

. Fr ance t he co verage p rom i sed byt he i nsurance p oli ci es, J

. H

. Fr ance s houl d be fr ee t o s el ectt h e pol i cyor pol i ci es underw hi ch i ti s t o be i ndemni fi ed.

* * *
W hen the pol i cyl i m i t s of a gi ven i ns ur er are exhaust ed, J

. H

. Fr ance i s ent i t l ed t o s eek i ndemni fi cat i on fr om anyof th e r emai ni ng i ns ur er s w hi ch w as on t he r i s k du ri n g t he devel opm entof the di s eas e. A nypol i cyi n eff ect duri n g t he per i od fr om expos ur e thr ough m a n if e sta tio n m u st in d e m n if

y th e in su re d u n til its cover age i s exhaus t ed. W e bel i eve thi s r es ol ut i on of the al l ocati on of li abil i t yi ssue t o b e m ost cons i s t entw it h t he mul t i pl e- t r i ggert heoryof l i a b i l i t y. T hi s concl us i on does not al t er t he rul es of contri but i on ort he pr ovi s i ons of “otherC o lu m b ia a lso a rg u e s th a t J. H

. Fr ance w a s n o t d e c id e d u n til 7 1 9 9 9 , an d A ste n h a d a lre a d yu n re a so n a b lyd e layed in f ili n g su it p ri o r t o th a t d e c i s i o n . J. H

. Fr ance does notpurpor tt o be announci ng new l aw , how ever , and w e r ead i tas expl ai ni ng t he comm on l aw of Penns y l vani a w h ich w e mustacc eptas c o n tro lli n g a t all tim e s h e re re lev a n t. 28 i nsurance” clauses i n the app l i cable poli ci es. I d. at508, 509.
Ba s e d on J. H

. Fr ance , A s t en i ns i s t s t hat , undert he contr ol l i ng l aw of Penns y l vani a, i tw as ent it led t o s el ectt he or deri n w hi ch i tbr oughts ui tagai ns ti t s i ns ur er s and thati thad no dut yt o fi l e s ui t agai ns tC ol um bi a unt i l t he l i m i t s of i t s ot her p o licie s h a d b e e n e x h a u ste d . It stre ss e s th a t t h e c laim s it t ender ed t o C ol um bi a i n t he Fal l of 2001 and s ued upon her e on M arc h 3 , 2003, w er e fi l ed aga i ns ti ti n 2001 and thatear l i er c laim s h a d b e e n c o v e re d b yo th e r c a rrie rs. A ste n c o n c lu d e s th a t, w hen an i ns ur ed exer ci s es i t s r i ght t o del ayt r i gger i ng cover age un der som e po li ci es unti l i texh aust s ot hers, t hat del ay , as a m at t erof l aw , cannotbe found unr eas onabl e. W e agr ee. C ol um bi a’ s pr i m aryr es pons e t o J. H

. Fr ance is th a t it“ is a t end er case , nota not i ce c as e. ” A ppel l ant ’ s B r . at62 (e m p h a sis in o rig in a l). T h is is u n d e n iab ly tru e . C o lu m b ia f a ils 7 to e x p lain , h o w e v e r, h o w a p a rtyw h ich h a s n o t u n re a so n a b ly del ay ed i n t ender i ng a cl ai m and fi l i ng s ui t can be barr ed fr om goi ng forw ar d byl ache s bas ed on a f ai l ur e t o gi ve ear l i ernot i ce o f its c laim . C o lu m b ia h a s c ited n o a u th o rityf o r th isA m eric an, l i ke C ol um bi a, w as notj oi ned i n A s t en’ s 1980 8 cover age l i t i gat i on. 29 pr opos i t i on, and w e have found none. A s w e have ear l i ernot ed, l ache s s peaks t o “i nexcus abl e del ay i n i ns t i tut i ng s ui t ” and one w ho i s ent i t l ed t o del aybr i ngi ng s ui tundert he ap p l i cabl e l aw cannotbe found t o be barr ed byt hatdoctr i ne. T he D i s t r i ct C our t appar ent l y t ook t he s ame vi ew of J

. H. Fr ance , as C o lum b ia do es, also w ith o u t fu rth er e x p lana ti o n . It r ej ect ed A m er i can’ s lach es defe ns e, w hi l e s us t ai ni ng C ol um bi a’ s , bas ed on the fa ctt hat A m er i can, unl i ke C ol um bi a, had got t en not i ce of

t he cl ai m s s t ar t i ng i n 1979. 8
W e do not , of cour s e, s ugges t t hat t he hi s t or yo f n o ti ce gi vi ng i n t hes e m at t er s i s i r r el evant

. A s w e have ear l i ernot ed, t he pol i ci es cont ai n var i ous pr ovi s i ons r equi r i ng t hatnot i ce of cl ai m s be gi ven bythe insur ed and br eac hes of the dut i es i m po sed t here m ay , i nd eed, barA st en’s cove ra ge suitagainst C o lu m b ia, as w e ll a s A m e ric a n . B u t th e D istric t C o u rt e x p re ss ly d e c lin e d to ru l e o n C o l u m b i a ’ s “ l a t e n o t i c e a f f i r m a t i v e d e f

e n s e ,” fin d ing it“m o o t” an d n o ti n g that reso luti o n o f i t w o u ld req u ir e it “to u n n e c e ss a rilye x a m in e a n u n c e rta in a re a o f P e n n sy lv a n ia l a w. ” AI 0 1 4 4

. Wi t h o u t t h e b e n e f i t o f t h e Di s t r i c tCo u r t ’ s v i e ws r egar di ng t he appl i cat i on of t he var i ous not i ce pr ovi s i ons t o t he r ecor d of thi s cas e, w e, t oo, decl i ne t o addr es s t hi s i s s ue.

V

. R eform at i on W i t h r es pectt o t he def endant s ’ count er cl ai m s for30 reform at i on of theirpo l i ci es, the D i stri ctC ou rtheld as fol l ow s: B as ed on the s ame evi dence us ed t o i nt erpr ett he A s bes t os i s E xcl us i on ( cour s e of pe r form ance and t he cir cumst ance s s ur r oundi ng t he pl ace m entof the S u b ject P o li cies), and g iven that an “e x p o su re t o . . . as bes t os i s” is l i t er al l yi m pos s i bl e, an a l t e r n a t i v e g r o u n d f

o rt h i s c o u r tt o r e a c h t h e s a me c o n c lu sio n re g a rd in g th e sc o p e o f th e e x c lu sio n is t hr ough t he doctr i ne of r eform at i on. If the A sb e sto sis E x c lu sio n is i n terp re ted to b a r o n ly as bes t os i s cl ai m s t hen t hatcons t ruct i on fai l s t o s et for t h t he true agr ee m entof the part i es . T he par t ies bel i eved thatt he A s bes t os i s E xcl us i on excl uded al l as bes t os - r el at ed cl ai m s and re f o rm a tio n a llo w s m e to re f o rm th e e x c lu sio n to re f lec t th a t in ten t. A I 0149.
A s i s appar entfrom t hi s hol di ng, t he r eform at i on count er cl ai m and A sten ’s de clarato ryjud g m en tcl ai m s r egar di ng t he as bes t os i s excl u sion i nvol ve comm on i s s ues . W hen lit ig a tio n in v o lv e s b o th leg a l an d e q u itab le c laim s, e v e n if it i s t he pl ai nt i ff thatj oi ns s uch cl ai m s , t he r i ghtt o a j ur yt r i al on t he l egal cl ai m , i ncl udi ng al l i s s ues comm on t o bot h cl ai m s , m us tbe preserved byt ry i ng t he legal cl ai m t o a juryfi rs t , or atl east s i m ul t aneous l yw i t h t he equi t abl e cl ai m , and byacc ept i ng t he ju ry’s f in d in g s o n c o m m o n f

a c ts f o r a ll p u rp o s e s . Lyt l e v. H ous ehold M

f g. I nc. , 4 9 4 U .S . 5 4 5 (1 9 9 0 ); Tul lv. U ni t ed Stat es , 4 8 1 U .S

. 4 1 2 (1 9 8 7 ). It f o llo w s , a fort i ori , tha t A ste n ’s r ig h t to31 a j u r y t r i a l o n i t s d e c l a r a t o r y j u d g me n t c l a i ms c a n not be el i m i nat ed byt he fi l i ng of an e qui t abl e count ercl aim , l i ke one forr eform at i on. A ccor di ngl y , w e w il l va cat e the D i s t r i ct C our t ’ s j udgm enton t he def endant s ’ count er cl ai m for r eform at i on and r emand forfur t herpr ocee di ngs on t hat c o u n t e r c l a i m.

V I. D u tyto D e f

e n d a n d P a yD e f

e n se C o sts U n d e rt h e A m e r i c a n E x c e s s P o l i c y I n r es pons e t o A s t en’ s r eques tfora decl ar at or y j udgm ent r egar di ng A m er i can’ s dut yt o defe nd orpaydefe ns e cos t s under i t s 1982 exce s s pol i cy , t he D i s t r i ct C our t poi nt ed to t he f o l l o w i n g p r o v i s i o n s o f

t h a tp o l i c y: T h e C o m p a n ys h a ll n o t . . . b e c a lled u p o n to as s um e cha r ge of t he s et t l ement or defe ns e of a ny cl ai m s m ad e or s ui t s br ought , orpr ocee di ngs i ns t i tut ed aga i ns tt he I ns ur ed, buts hal l have the r i ghtand oppor tun it y t o be as s oci at ed w i t h t he I ns ur ed i n t he def

ens e and tr i al of anys uch cl ai m s , s ui t s orpr ocee di ngs r el at ive t o any occurr ence w hi ch, i n t he opi ni on of the C om pany m aycr eat e l i abi l i t yon t he partof the C om pany undert he t erm s of the pol i cy . If t he C om pany avai l s i t s el f of s uch r i ghtand oppor tuni t y , t he In su re d a n d th e C o m p a n ysh a ll co o p e ra te in a ll r es pect s s o as t o eff

ecta fi nal det erm i nat i on of the cl ai m or cl ai m s. * * *32 L o ss e xp en ses a n d lega l exp en ses, i n clud ing co u rt cos t s and i nt er es t , i f any , w hi ch m ay be incur r ed b yth e In su re d w ith th e c o n se n t o f th e C o m p a n yin t he adj us t m entordefe ns e of c l ai m s , sui t s or pr ocee di ngs s hal l be borne byt he C om panyand the In su red in the p rop o rt ion that ea ch p arty ’s share of l oss bears t o the t otal am ou nt of sai d loss

. L os s expens e her eunders hal l noti ncl ude s al ar i es and expe ns e of t he Ins ur ed’ s empl oy ees i ncurr ed i n i nves t i gat i on, adj us t m entand l i t i gat i on. A V I 0002.
B as ed on t hes e pr ovi s i ons , t he D i s t r i ctC our tconcl uded as fol l ow s: A ccor di ng t o t he unambi guous t erm s of [the] 19 82 A m eri can E xp res s [ sic ] P o licy , A m e ric a n is n o t o b li gat ed t o pr ovi de orfund a de fens e for A st en. A m eri can i s on l y requi red t o rei m bu rs e A ste n f o r a n yd e f

e n se e x p e n se s it in c u rs w ith A m eri can’s cons ent

. A I01 5 6 (em p h asis in o ri g inal).
A s t en does notm ai nt ai n t hatt he above quot ed l anguage i s ambi guous . R ather , i t i ns i s t s ( 1) t hat a “fol l ow form cl aus e” of the pol i cyi ncorpor at es a dutyt o defe nd clau se fr om an under l y i ng pol i cy , and ( 2) t hati m pl i ed by l aw i n every“cons ent t o d efen d” clause of t his kind i s a prohi bit i on against unr eas onabl e r efus al s t o defe n d. A ccor di ngl y , A s t en agr eesW e reac h a diff ere n t co n clus ion w ith resp ec t to A sten ’s 9 d e c lar a to r yju d g m e n t cla im re g a rd in g th e a g g re g a te lia b ili ty lim it u n d e r A m e ric a n ’s 1 9 8 2 U m b re lla a n d E x c e ss L iab ili ty Pol i ci es . T he D i s t r i ctC our t hear d extr i ns i c evi dence r egar di ng this issu e w h ich is c o n fli cti n g in p art a n d p o rt ion s o f w h ich a re r el i ed upon byeac h s i de. T he D i s t r i ctC our t , forexampl e, not ed t h a t Gl o r i a Fo rb e s , a c t i n g i n h e r c a p a c i t y a s a p r o c u r i n g agent forA s t en, r eques t ed thatt he pol i ci es “ea ch be w r i t t en foran 18- m ont h t erm , ea ch for one pr emi um , and ea ch pr ovi di ng one aggr egat e l i m i tof $10, 000, 000. ” A I 103. A ccor di ngl y , i ti s not cl earat t hi s poi nt t hat t hi s i s s ue shoul d be r es ol ved w i t houtt he a ss ista n c e o f

a ju ry . In th e in ter e st of ju d icia l ef

f icie n c y , w e w ill sa yo n lyth a t th e tes tim o n yo f Je rryL e d d y , A m e ric a n ’s R u le 3 0 (b)(6 ) w itne ss, do es n o t r eso lve th e m att er in A sten ’s fa v o r. L eddy ’ s t es t i m ony i n r egar d t o t he aggr egat e l i m i t cont ai ned no fac tual admi s s i ons , nordi d i tdi s cus s t he i nt ent i on of the part i es w hen f o r mi n g t h e c o n t r a c t

. Ra t h e r , h e o f f e r e d o n l y hi s ow n in terp re tatio n o f

th e c o n tra c t b a se d o n h is re a d in g o f it at tria l. T hi s t ype of l egal concl us i on i s notbi ndi ng on A m er i can, and A m e ri c a n w a s e n title d to p ro d u c e c o n tr a ry e v id e n c e a t tr ia l. See R & B Appl i ance Part

s , I nc. , v. A m ana C o. , 258 F. 3d 783, 787 ( 8t h C i r . 2001) ( di s t i ngui s hi ng betw een mat ters o f fa ctand co n clus ion s o f law in reg ard to R u le 30 (b)(6 ) de p o sit ion s). 33 w i t h the D i stri ctC ou rt th a t this i ssue i s t o b e res olved as a m a tter o f

law f ro m th e f

a c e o f th e d o c u m e n ts. T h u s, w h ile A ste n w o u ld h a v e a rig h t to h a v e a ju ryd e ter m in e th is is s u e if t her e w er e mat er i al i s s ues of fa ctt o be r es ol ved, t he abs ence of a ju ryp re se n ts n o p ro b lem in th is c o n tex t. 9
A s t en i ns i s t s t hatt h e 1 9 8 2 A m er i can Exces s Pol i cy f o llo w s f o rm to th e 1 9 8 2 A m e ric a n U m b re lla P o licy , a n d th a t it acc or di ngl ycr eat es a dut y t o defe nd i dent i cal t o t hatcont ai ned in th e U m b re lla P o licy . T h e f o llo w -f o rm c lau se sta tes in re lev a n t p a rt:34 T h e in su ra n c e a f

f o rd e d b yth is p o licyis s u b jec t to t h e s a me wa r r a n t i e s , t e r ms ( i n c l u d i n g t h e t e r ms us ed t o des cr i be the a p p li cat i on of the l i m i t s of li ab il ity ), co n d it ion s an d ex clus ion s as a re c o n tain e d in th e u n d e rly in g in su ra n c e . . . ex c e p t, u n les s o th e rw ise sp e c if ica llyp ro v id e d in th is pol i cy , anys uch w arr ant i es , t erm s , condi t ion s or e x c lu s io n s re la tin g to p re m iu m , th e o b lig a tio n to i nves t igat e and def

end , t he amount an d l i m i t s of lia b ility, a n d a n yre n e w a l a g re e m e n t. A V I0 0 0 2 (e m p h a s is a d d e d ). Interp reti n g the a b o v e lan g u ag e, th e D istri ct C o u rt det erm i ned that any “‘ obl i gat i on t o i nves t i gat e or de fend’ w hi ch m a yb e c o n tain e d in th e u n d e rly in g 1 9 8 2 A m e ric a n U m b re lla P o l i c y , t o wh i c h t h e 1 9 8 2 Ame r i c a n Ex c e s s P o l i c yf o l l o ws f o r m, [ is] n o t i n co rpo rated into the 1 9 8 2 A m erican E x ce ss P o li cy .” A I1 0 7

. T h e D istric t C o u rt’s d e ter m in a tio n w a s b a se d o n a p lain r e a d i n g o f t h e c o n t r a c tu a l l a n g u a g e , whi c h c l e a r l y c a r ves out any obl i gat i on t o defe nd. W e fi nd no err or i n the D i s t r i ct C our t ’s a n al y s i s and, acc or di ngl y , aff i r m i t s hol di ng t hatno o b lig a tio n to d e f

e n d a ri s e s f

ro m th e f o llo w -f o rm c la u s e . W e ar e l i kew i s e unconvi nced byA s t en’ s ar gum entt hat every“cons entt o defe nd” cl aus e cont ai ns byi m pl i cat i on a pr ohi bi t i on agai ns tt he unr eas onabl e ref us al s t o defe nd. T he D i s t r i ctC our tnot ed thatt he A m er i can Exce s s Pol i cyr equi r es A m eri can t o i nd em nify A st en for i t s “ult i m at e net l oss” in exce s s of i t s under l y i ng i ns ur ance , and t hatt he pol i cydefi nes ul t i m at e netl os s t o i ncl ude “al l s um s actual l ypai d orw hi ch the I ns ur ed i s l egal l yobl i gat ed t o payas damage s in sett l ementof s at i s fac t i on of cl ai m s or s ui t s for w hi ch i ns ur ance i s aff or ded by t hi s pol i cy . . . . ” A I 0105. N ot abl y , defe ns e cos t s ar e not in c lu d e d w ith in th is la n g u a g e .35 In d e te rm in in g th a t A m e ric a n h a d n o o b lig a tio n to defe nd, t he D i s t r i ctC our t stat ed the unr emar kabl e pr opos i t i on t hat“the dutyt o defe nd i s contr actual and i f t her e i s no contr act t o d e f end t han [ sic ] t her e i s no dut yt o defe nd. ” A I 156 ( ci t i ng 7C A ppl eman, I ns ur ance L aw and Pr act i ce § 4682 (19 7 9 & S u p p . 1 9 9 5 ); C ity o

f B u r lin g to n v . A r th u rJ . G a lla g h e r& C o ., 944 F. Supp. 333, 335- 36 ( D

. V t

. 1996) )

. W e agr ee w i t h t he D i s t r i ctC our t ’ s det erm i nat i on t hatA m er i can ha s no obl i gat i on t o defe nd A s t en i n t he abse nce of contr actual l anguage cr eat i ng s uch an obl i gat i on. See al s o St onew al lI

ns . C o. v. A s b estos C la im s M

g m t. C o r p ., 73 F. 3d 1178, 1219 ( 2d C i r . 1995) ( “[T] he i ns ur erhas no dut yt o defe nd orpaycos t s , but onl yhas t he r i ght to d o so at i ts ow n elec ti o n . T h e ins u rer ca n p erm itthe in su red ’s defe ns e t o pr ocee d and t ake the cha nce thatt he i ns ur ed mi ght exce ed the l i m i t s of other l i abi l i t y cover age, orpar t i ci pat e i n t he d e f e n se a n d a g re e to p a ya ll o r p a rt o f th e d e f e n se c o sts in c u rre d .”); C i t

y of B ur l i ngt on , 9 4 4 F .S u p p . a t 3 3 7 (“ C o u rts acr os s t he countr yhave c ons t rued pol i cy l anguage r equi r i ng t he c o n se n t o f th e in su re r a s c re a tin g a n o p tio n , b u t n o t a d u ty , to d e f e n d .”); C r ow n C tr . R edev

. C or p. v. O cc ide ntalF i r e & C as ual t y C o. , 716 S. W

. 2d 348, 357 ( M o. C t. A pp. 1986) ( i nt erpr et i ng t he s ame l anguage ati s s ue her e and hol di ng “the obl i gat i on of A m er i can t o paydefe ns e cost s i s nei t herfi xed nor abs ol ut e . . . t he ent i r e obl i gat i on i s condi t i oned on the cons ent of A m er i can and not s i m pl yt he pr ocedur e byw hi ch the o b li g ati o n is carri ed o u t. ”).
I n as s er t i ng t hat t he cons ent t o defe nd cl aus e cont ai ns an im p lied p ro h ib iti o n a g a in st u n re a so n a b le re f u sa ls, A ste n c ites to cons entt o s et t l ementcas es . C our ts have ge ner al l yr equi r ed i ns ur er s t o cons entt o r eas onabl e s et t l emen ts beca us e of the pot ent i al for a confl i ct of i nt er es t betw een t he i ns ur ed part yand t he i ns ur er , w hi ch coul d r es ul ti n i ns ur er s w r ongful l ydeny i ng insu red p arti es a c c e s s to co v era g e the yh av e p aid f o r an d are e n title d to re c e iv e . S ee 14 L ee R. R us s & T hom as F. Segal l a,36 C ouch on I ns ur ance § 203. 13 ( 3d ed. 2005) ( “W hi l e the i ns ur ed m aypr efe rt o s et t l e w i t hi n pol i cyl i m i t s and avo id t he r i s k of t r i al , t he i ns ur erm ayhave a n i ncent i ve t o r ej ect o ff ers ator cl os e t o pol i cyl i m i t s and pr ocee d to tr ial w i t h t he hope of a lo w e r ju d g e m e n t o r a v e rd ict in its f a v o r.”) ; N

a tio n w id e Mu t. I ns . C o. v. Lehm an , 743 A

. 2d 933, 941 ( Pa. Super

. C t

. 1999) ( an i ns ur ed part yi s l egi t i m at el y ent i t l ed t o cl ai m benef i t s fr om t he i ns ur erunl es s t he i ns ur ercomes forw ar d and pr oves thatt he s et t l ement pr ej udi ced i t s i nt er es t s )

. W e fi nd no s i m i l arconfl i ct o f i n t e r e s ti n t h e c o n t e x t o f d e f e n d i n g i n s u r a n c e c l a i ms , a n d we decl i ne to r ead i nt o t he contr actual l anguage a pr ohi bi t i on againstun reas on able r efusals w here no ne ex i st s.

V I I I

. C oncl us i on W e w i l l aff

i r m t he j udgm entof the D i s t r i ctC our ti ns ofar as i tdecl ar ed the obl i gati ons of A m er i can w i t h r es pectt o the dut yt o defe nd or p aydefe ns e cos t s undert he 1982 A m er i can E xces s Pol i cy . A s ten w as ent i t l ed t o a j uryt r i al on i t s ot her d e c lar a to ryju d g m e n t cla im s, h o w e v e r, an d in a ll o th e r re sp e c ts t he judgm ent of t he D i stri ctC ou rtw i l l be reversed, and t his case w ill b e re m a n d e d f

o r f u rth e r p ro c e e d in g s c o n sis ten t w ith th is opi ni on.