Source: https://case-law.vlex.com/vid/790-f-2d-119-603136990
Timestamp: 2019-04-24 15:52:21+00:00

Document:
790 F.2d 119 (D.C. Cir. 1986), 85-5602, Abex Corp. v. Maryland Cas. Co.
Docket Nº: 85-5602, 85-5659 and 85-5660.
Party Name: ABEX CORPORATION v. MARYLAND CASUALTY COMPANY, et al. Liberty Mutual Insurance Company, Appellant. ABEX CORPORATION v. MARYLAND CASUALTY COMPANY, Appellant Liberty Mutual Insurance Company, et al. ABEX CORPORATION v. MARYLAND CASUALTY COMPANY, et al. Liberty Mutual Insurance Company, Appellant.
Nos. 85-5602, 85-5659 and 85-5660.
Margaret H. Warner, with whom Lawrence E. Carr, Jr., Washington, D.C., was on brief for Travelers Indem. Co., appellant in Nos. 85-5659, 85-5660 and 85-5602.
Gerald V. Weigle, Jr., Cincinnati, Ohio, with whom Frank W. Gaines, Jr., New York City, was on brief for Liberty Mut. Ins. Co., appellant in Nos. 85-5602, 85-5659 and 85-5660.
William A. Bradford, Jr., with whom Thomas W. Brunner and Jeffrey F. Liss, Washington, D.C., were on brief for Maryland Cas. Co., appellant in Nos. 85-5602, 85-5660 and 85-5659.
Jerold Oshinsky, with whom Robert H. Shulman and David M. Halbreich, Washington, D.C., were on brief for appellee in Nos. 85-5602, 85-5659 and 85-5660. Judith Hall Howard, Washington, D.C., also entered an appearance for appellee in Nos. 85-5602, 85-5659 and 85-5660.
Before WRIGHT, EDWARDS and BUCKLEY, Circuit Judges.
Abex Corporation, a brake-lining manufacturer whose products at one time contained asbestos, brought this action in the United States District Court for the District of Columbia seeking declaratory judgment that several insurance companies have obligations under the CGL policy to defend and indemnify Abex in over 200 pending asbestos tort actions. The parties have stipulated that this case is governed by New York law. The District Court granted Abex partial summary judgment and held that the insurers "are obliged to defend and pay for the asbestos claims and lawsuits against Abex and to pay its defense costs in accordance with" this circuit's decision in Keene Corp. v. Insurance Co. of North America. 4 Keene, however, did not specifically interpret the CGL policy under New York law. At issue on appeal is whether Keene is consistent with New York law.
As a starting point in our review of this case, we first consider the Second Circuit's opinion in American Home Products Corp. v. Liberty Mutual Insurance Co. 5 , in which the court construed the definition of "occurrence" under New York law. The New York Court of Appeals has yet to grapple with the issue; therefore, under general notions of comity within the federal judicial system, we are obliged to respect the Second Circuit's interpretation of New York law absent clear error. Because we can find no such clear error, and because Keene is inconsistent with both American Home Products and our own reading of the insurance contracts, we adopt the American Home Products, interpretation that the insurer's obligation to indemnify Abex arises when the asbestos causes real bodily injury during the policy period. Under this view, the injury need not be compensable or diagnosable during the policy period if its existence during that period can be proved in retrospect.
conclude that the insurers have a duty to defend Abex in all cases in which the complaint "permits proof" of facts establishing coverage. Only if the insurers establish as a matter of law that there is no possibility of coverage can they avoid their duty to defend Abex. We therefore hold that the insurers have an immediate duty to defend Abex in its asbestos cases until they present positive proof that no coverage is possible.
Finally, we hold that Maryland Casualty Company has no duty to indemnify or defend Abex until the District Court expressly determines that Abex was covered by Maryland Casualty Company policies.
Abex is a manufacturer engaged in the sale and distribution of brake-linings for railroad cars, automobiles, trucks and industrial machinery. These products once contained asbestos and, as a result, Abex is now a defendant in over 200 asbestos tort cases. Although Abex was insured between 1943 and 1974 by successive CGL policies issued by Maryland Casualty Company ("Maryland"), 6 Travelers Insurance Company ("Travelers"), and Liberty Mutual Insurance Company ("Liberty"), these insurers have refused to defend or indemnify Abex in all but one of Abex's asbestos cases.
Maryland does not contest that, if it insured Abex, its duty to indemnify is exactly the same as that arising from the version of the CGL policy applicable to Liberty and Travelers.

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