Court Opinion

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Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

8-15-2005

Liberty Mutl Ins Co v. Treesdale Inc
Precedential or Non-Precedential: Precedential

Docket No. 04-4172

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                                           PRECEDENTIAL

         UNITED STATES COURT OF APPEALS
              FOR THE THIRD CIRCUIT

                         No: 04-4172

      LIBERTY MUTUAL INSURANCE COMPANY

                                  v.

       TREESDALE, INC.; PITTSBURGH METALS
              PURIFYING COMPANY,

                                  Appellants

         Appeal from the United States District Court
          for the Western District of Pennsylvania
                   (Civ. No. 02-cv-02179)
           District Judge: Hon. Arthur J. Schwab

      Submitted Pursuant to Third Circuit LAR 34.1(a)
                       May 5, 2005

     Before: McKEE, SMITH and VAN ANTWERPEN,
                     Circuit Judges

               (Opinion filed: August 15, 2005)

Frederick J. Francis, Esq.
Beth A. Slagle, Esq.

                              1
Gary A. Kern, Esq.
Meyer, Unkovic & Scott
1300 Oliver Building
535 Smithfield Street
Pittsburgh, PA 15222

Mark D. Shepard, Esq.
Babst, Calland Clements & Zomnir
Two Gateway Center
8 th Floor
Pittsburgh, PA 15222

      Attorneys for Appellants

John C. Sullivan, Esq.
Post & Schell
1600 John F. Kennedy Boulevard
Four Penn Center, 13 th Floor
Philadelphia, PA 19103

      Attorney for Appellee

                         OPINION

McKEE, Circuit Judge.

      Treesdale, Inc., and Pittsburgh Metals Purifying

                              2
Company (“PMP”) 1 appeal the district court’s grant of summary
judgment in favor of Liberty Mutual Insurance Company in this
declaratory judgment action to determine insurance coverage.
The district court adopted a Report and Recommendation that
recommended granting summary judgment to Liberty Mutual
based upon the Magistrate Judge’s conclusion that asbestos-
related personal injury claims asserted against Treesdale and
PMP are one occurrence under the terms of the disputed
insurance policies and that a Non-Cumulation provision in those
policies precludes stacking coverage. For the reasons that
follow, we will affirm.

                          I. FACTS

       From approximately 1966 to 1975, Treesdale
manufactured and sold a product known as “Soffelex,” which
contained asbestos. Several thousand asbestos exposure claims
have been filed against Treesdale to date. The asbestos claims
are typically filed by steel workers who worked in the open
hearth part of steel mills and others who claim to have had
contact with the open hearth. Treesdale contends that all of
those asbestos claims share a common feature – repeated
exposure to asbestos and at least one exposure to Treesdale’s
asbestos-containing product.

       Liberty Mutual issued primary liability policies to

       1
       PMP is a division of Treesdale. For purposes of
convenience, both will be referred to as “Treesdale,” as that is
how the parties define themselves in their briefs.

                               3
Treesdale from May 1, 1975 to February 1, 1985. Each of the
primary policies Liberty Mutual issued to Treesdale provided
policy limits of $500,000 per occurrence, and in the aggregate,
for bodily injury. Initially, Liberty Mutual defended and
indemnified Treesdale with regard to the asbestos claims
pursuant to the primary insurance policies. There is no dispute
that each of Liberty Mutual’s primary policies has been
exhausted by judgments and/or settlements, and that coverage
is no longer available under those primary policies.

       However, Liberty Mutual also issued Umbrella Excess
Liability (“UEL”) coverage to Treesdale during the same
period.2 Each of the UEL policies for the period May 1, 1975
to May 1, 1983 provided policy limits of $2,000,000 per
occurrence and in the aggregate. The UEL policies for the
period May 1, 1983 to February 1, 1985 provided policy limits
of $5,000,000 per occurrence and in the aggregate.

      When the primary policies were exhausted, Treesdale
demanded that Liberty Mutual defend and indemnify it under
the UEL policies. Liberty Mutual did so until the district court
awarded it summary judgment in this coverage dispute.

       The Limits of Liability section of each of the UEL
policies states, in relevant part:

        Regardless of the number of insureds under this
       policy or the number of persons or organizations

       2
           There are ten UEL policies in all.

                                  4
      who sustain personal injury, property damage,
      or advertising injury or damage,3 the
      company’s liability is limited as follows:

      Each Occurrence4 – The limit of liability stated in
      the declarations as applicable to “each
      occurrence” is the limit of the company’s liability
      for all damages, direct and consequential, because
      of all personal injury, property damage, or
      advertising injury or damage sustained by one
      or more persons or organizations as the result of
      any one occurrence.

                               ****

      For the purpose of determining the limits of the
      company’s liability:

      (1) all personal injury and property damage
      arising out of continuous or repeated exposure to
      substantially the same general conditions . . .

      3
          Defined terms appear in bold print in the UEL policies.
      4
          “Occurrence” is defined in the UEL policies as
“injurious exposure to conditions, which results in personal
injury, property damage or advertising injury or damage
neither expected nor intended from the standpoint of the
insured.”

                                 5
       shall be considered as the result of one and the
       same occurrence.

The Limits of Liability section of each of the UEL policies also
contains the following “Non-Cumulation of Liability – Same
Occurrence” provision:

       Non-Cumulation of Liability – Same Occurrence
       – If the same occurrence gives rise to personal
       injury, property damage or advertising injury
       or damage which occurs partly before and partly
       within any annual period of this policy, each
       occurrence limit and the applicable aggregate
       limit or limits of the policy shall be reduced by
       the amount of each payment made by the
       company with respect to each occurrence, either
       under a previous policy or policies of which this
       policy is a replacement, or under this policy with
       respect to previous annual periods thereof.

         II. DISTRICT COURT PROCEEDINGS

        Liberty Mutual filed the instant action in the district
court seeking a declaration that it has no further duty to defend
or indemnify Treesdale once it has paid $5 million; the highest
limit of liability under any of the UEL policies. Treesdale filed
an answer and counterclaim, asserting that Liberty Mutual is
obligated to defend or indemnify it under each and every UEL
policy until the limit of each and every UEL policy is reached;
a total of $26 million in coverage.

                               6
       Liberty Mutual and Treesdale agreed to resolve the
declaratory judgment action through cross-motions for summary
judgment based on a jointly filed Stipulation of Facts. The
Magistrate Judge recommended that summary judgment be
granted to Liberty Mutual, finding that the asbestos claims arose
from a single occurrence and that the Non-Cumulation
provision in the UEL policies precluded stacking policy limits.
 The district court adopted the R&R and granted summary
judgment to Liberty Mutual. This appeal followed.5

                      III. DISCUSSION

       Treesdale makes two arguments in support of its appeal.
Each is discussed separately.

                  A. A Single Occurrence.

        Liberty Mutual contends that all of the asbestos claims
arise from a single occurrence, and Treesdale argues that the
asbestos claims arise from multiple occurrences, i.e., each
claimant’s exposure to asbestos. The district court applied the

       5
        “Disposition of an insurance action on summary
judgment is appropriate, when, as here, there are no material
underlying facts in dispute.” J.C. Penney Life Ins. Co. v. Pilosi,
393 F.3d 356, 360 (3d Cir. 2004) (citation omitted). “The
interpretation of the scope of coverage of an insurance contract
is a question of law properly decided by the court, a question
over which this court exercises plenary review.” Id. (citation
and internal brackets omitted).

                                7
“cause of loss” test to resolve this dispute. It found that the
cause of the injury was “the manufacture and sale of the
asbestos-containing products.” The court held that “the policy
language is clear and unambiguous that the injuries arising from
this common source must be treated as a single occurrence.”
Treesdale claims that the district court’s holding that all of the
asbestos claims arise from a single occurrence was error, and
argues that the asbestos claims arise from multiple occurrences
– each claimant’s exposure to Treesdale’s asbestos-containing
product.6

        The essence of Treesdale’s argument is that the cause of
loss test does not apply to asbestos claims being asserted against
an insured in a coverage dispute regarding the number of
occurrences.

        We first applied the cause of loss test in Appalachian
Ins. Co. v. Liberty Mutual Ins. Co., 676 F.2d 56 (3d Cir. 1982).
There, a class action was filed against Liberty Mutual for sex
discrimination based upon certain employment practices
instituted Liberty Mutual had instituted in 1965. After the suit
was settled, Liberty Mutual sought indemnification from

       6
       Treesdale does not argue that the applicable policy
language is ambiguous and that it is therefore necessary to
remand to the district court to resolve that ambiguity. Rather,
Treesdale argues that its reading of the language is the only
reasonable reading and that Liberty Mutual’s reading is
unreasonable because the language cannot support Liberty
Mutual’s interpretation. Reply Br. at 2 n.1.

                                8
Appalachian, its insurer. Under the applicable policy,
Appalachian agreed to indemnify Liberty (subject to certain
limitations) for:

       [A]ll sums which the Assured (Liberty) shall be
       obligated to pay by reason of the liability
       (a) imposed upon the Assured by law.
              *****
       for damages on account of: –
       (I) Personal injuries
              *****
       caused by or arising out of each occurrence
       happening anywhere in the world.

Id. at 59 n.8. The policy defined “occurrence” as:

       [A]n accident or a happening or event or a
       continuous or repeated exposure to conditions
       which unexpectedly and unintentionally results in
       personal injury, property damage or advertising
       liability during the policy period. All such
       exposure to substantially the same general
       conditions existing at or emanating from one
       premises shall be deemed one occurrence.

Id. One of the crucial issues in the case was whether all of the
sex discrimination claims arose out of a single occurrence – the
discriminatory employment practices – or multiple occurrences
– the harm suffered by each plaintiff in the underlying
discrimination lawsuit. We wrote:
       The general rule is that an occurrence is

                               9
       determined by the cause or causes of the resulting
       injury. The majority of jurisdictions employ the
       cause theory. Using this analysis, the court asks
       if there was but one proximate, uninterrupted, and
       continuing cause which resulted in all of the
       injuries and damage.

       Applying the general rule to the facts of this case
       we agree with the district court’s finding that
       there was but one occurrence for purposes of
       policy coverage. The injuries for which Liberty
       was liable all resulted from a common source:
       Liberty’s discriminatory employment policies.
       Therefore, the single occurrence, for purposes of
       policy coverage, should be defined as Liberty’s
       adoption of its discriminatory employment
       policies in 1965.

       The fact that there were multiple injuries and that
       they were of different magnitudes and that
       injuries extended over a period of time does not
       alter our conclusion that there was a single
       occurrence. As long as the injuries stem from
       one proximate cause there is a single occurrence.
       Indeed, the definition of the term “occurrence” in
       the Appalachian policy contemplates that one
       occurrence may have multiple and disparate
       impacts on individuals and that injuries may
       extend over a period of time.

Id. at 61 (citations, internal quotations and bracket omitted).

                               10
        Here, applying Appalachian, the district court found that
the asbestos claimants’ “injuries stem from a common source,
that is, the manufacture and sale of the asbestos-containing
products.” App. 31. Accordingly, the district court held that
“the policy language is clear and unambiguous that the injuries
arising from this common source must be treated as resulting
from a single occurrence.” Id.

        Treesdale advances a number of arguments in support of
its contrary contention.7 Treesdale first argues that Appalachian
is not applicable because it was decided under Massachusetts
law, not Pennsylvania law.8 We disagree.

       7
        Treesdale suggests that Appalachian should not have
been applied by the district court because the policy in
Appalachian did not define “occurrence” and, therefore, we
applied the common law definition. However, says Treesdale,
here the policy in question defines that term and it was therefore
improper to rely upon the common law meaning of the term.
However, as is evident from the Appalachian opinion, the policy
there also defined “occurrence.” 676 F.2d at 59 n.8.
       8
      Treesdale and Liberty Mutual agree that Pennsylvania
law governs the interpretation of the UEL policies. Under
Pennsylvania law, the task of interpreting a contract, including
an insurance contract, is a matter of law for the court. Gene &
Harvey Builders, Inc. v. Pennsylvania Mfrs. Ass’n Ins. Co., 517
A.2d 910, 913 (Pa. 1986). Id. “The polestar of [the court’s]
inquiry . . . is the language of the insurance policy.” Madison
Constr. Co. v. Harleysville Mut. Ins. Co., 735 A.2d 100, 106

                               11
        Admittedly, the district court in Appalachian did find
that under Pennsylvania’s choice of law rules, Massachusetts
law governed the policy’s interpretation. 676 F.2d at 60 n.10.
However, we explained that we did not need to address that
ruling “because the principles we apply in this case are not
limited to Massachusetts.” Id. (citation omitted). We also noted
that the “majority of jurisdictions employ the cause theory.” Id.
at 61 (internal quotations omitted). More importantly, however,
the Pennsylvania Superior Court has adopted the Appalachian
cause of loss test to define occurrence. D’Auria v. Zurich Ins.
Co., 507 A.2d 857, 860 (Pa. Super. 1986); see also General
Accident Ins. Co. of America v. Allen, 708 A.2d 828, 834-35
(Pa. Super. 1998).9 Moreover, in Scirex Corp. v. Federal Ins.
Co., 313 F.3d 814 (3d Cir. 2002), a case decided under
Pennsylvania law, we also applied Appalachian’s cause of loss
test in determining the number of occurrences. See id. at 852
(“[T]he accepted purpose of defining ‘an occurrence or event’

(Pa. 1999). “Where a provision of a policy is ambiguous, the
policy provision is to be construed in favor of the insured. . . .
Where, however, the language of the contract is clear and
unambiguous, a court is required to give effect to that
language.” Gene & Harvey Builders, 517 A.2d at 913.

       9
        “In the absence of a controlling decision of the state’s
highest court, the decisions of intermediate state courts having
statewide jurisdiction are normally a strong indication of what
the state law is.” Hamme v. Dreis & Krump Manufacturing
Co., 716 F.2d 152, 155 (3d Cir. 1983) (citations omitted).

                               12
is to limit liability, and in the insurance industry ‘occurrence’ is
commonly understood to mean all loss caused by a single act or
related events.”) (citing, inter alia, Appalachian). Accordingly,
the district court properly allowed the Appalachian cause of
loss test to control its inquiry into whether there were multiple
occurrences here.

        Treesdale next argues the district court’s reliance on a
common source (the manufacture and sale of the asbestos-
containing product) is illogical because the court failed to
explain how the manufacture and sale of an asbestos-containing
product could ever be an “occurrence” as the term is defined in
the policy. As noted above, the policy defines an “occurrence”
as “injurious exposure to conditions” which result in personal
injury or “continuous or repeated exposure to substantially the
same general conditions.” Treesdale contends that manufacture
and sale of the asbestos-containing product is neither an
“exposure” to anything nor a “condition” to which a claimant
could be exposed.10
        Again, we disagree. Treesdale focuses on phrases that it
believes are favorable to its interpretation of the policy and
ignores all of the other language that runs counter to its
interpretation. It is clear that the “Limits of Liability” section
refers to limits on a per occurrence basis, and not a per claim or

       10
         Treesdale concedes that manufacture and sale of an
asbestos-containing product could be exposure if the claimants
were working in the factory that made the product. However,
none of the asbestos claimants in this case were. Treesdale’s Br.
at 15 n.4.

                                13
per person basis. The Limits of Liability provision begins by
saying that: “[r]egardless of the number of insureds . . . who
sustain personal injury . . . the company’s liability is limited as
follows.” Immediately following that statement is the
description of the limit of liability for “Each Occurrence.” That
limit is “the limit of the company’s liability for all personal
injury. . . sustained by one or more persons.” Thus, a single
occurrence can clearly result in injuries to multiple persons, and
it could hardly be otherwise given the structure of the policy.
It bears restating that subsequent language in the “Limits of
Liability” section states: “[f]or the purpose of determining the
limits of the company’s liability. . . all personal injury. . . arising
out of continuous or repeated exposure to substantially the same
general conditions. . . shall be considered as the result of one
and the same occurrence.”

       That section unambiguously addresses the situation
where, as here, many people allege personal injuries in different
years arising from one occurrence. Thus, we think that any fair
reading of the Limits of Liability provision establishes that all
injuries arising from the same source arise from one occurrence.

       Treesdale’s third argument is that the cause of loss test
does not apply when asbestos claims are asserted against an
insured and there is a dispute about whether the claims
constitute multiple occurrences. Treesdale cites a footnote in
Appalachian where we said that we would “not even speculate
as to how the principles applied in this case would apply, if at
all” to asbestos litigation. 676 F.2d at 62 n.14. However,
Treesdale reads too much into that footnote, and also takes it
out of context.

                                  14
       We had to resolve two issues in Appalachian. We first
had to determine the number of occurrences, and then decide
when the injurious effects of the occurrence took place. The
footnote pertains to the second issue. We explained that
“[w]hile the ‘cause’ test is appropriate for determining whether
there is a single occurrence or multiple occurrences, it is not
applicable in determining when an occurrence takes place.”
676 F.2d at 61. Rather, we stated that inquiry is governed by an
“effect” test. We held that “the determination of when an
occurrence happens must be made by reference to the time
when the injurious effects of the occurrence took place.” Id. at
61-62. Applying the “effect” test, we said “in this type of case,
the occurrence takes place when the injuries first manifest
themselves.” Id. at 62. We held that “the injuries to Liberty’s
employees occurred immediately upon the promulgation of
Liberty’s discriminatory employment policies.” Id.

        We were therefore referring to the “effect” test and not
the “cause of loss” test in footnote 14. Moreover, Treesdale has
taken the “we will not speculate phrase” out of context. The
entire footnote reads:

       This is not a case where an insured commits a
       tortious act and then after a lapse of time a
       claimant is injured by that act. Here, Liberty’s
       policy of sex discrimination had an immediate
       impact on its female employees in the claims
       department. Nor is this case akin to the litigation
       involving coverage of defendants involved in
       asbestos litigation. In those cases it is not at all
       clear when the alleged tortious acts of the

                               15
       defendants first impacted on the health of a
       victim of asbestosis. We do not even speculate as
       to how the principles applied in this case would
       apply, if at all, to cases of those types.

676 F.2d at 62 n.14.

        We would not speculate about how the “effect” test
would apply to asbestos litigation because asbestos in the lungs
constitutes three distinct kinds of injury: (1) initial exposure to
asbestos; (2) exposure-in-residence;11 and (3) manifestation of
asbestos-related disease. See, e.g., Air Products and Chemicals,
Inc. v. Hartford Accident and Indemnity Co., 707 F.Supp. 762,
768 (E.D. Pa. 1989), aff’d in part and vacated in part on other
grounds, 25 F.3d 177 (3d Cir. 1994) (“Air Products I”). We
could not speculate about the application of the “effect” test in
that context, and the issue was not before us. Thus, the dicta in
the footnote does not support Treesdale’s claim that the
Appalachian cause of loss test does not apply here.

      Undeterred, Treesdale argues that the Appalachian test
does not apply to asbestos litigation because the Pennsylvania
Supreme Court has recognized that asbestos in the lungs

       11
         “‘Exposure-in-residence’ constitutes the period between
exposure to asbestos and manifestation of asbestos-related
disease.” Air Products and Chemicals, Inc. v. Hartford Accident
and Indemnity Co., 707 F.Supp. 762, 769 (E.D. Pa. 1989)
(citation omitted), aff’d in part and vacated in part on other
grounds, 25 F.3d 177 (3d Cir. 1994).

                                16
constitutes three distinct injuries and has, therefore, adopted the
“triple-trigger” theory of insurance coverage, J.H. France
Refractories v. Allstate Ins. Co., 626 A.2d 502 (Pa. 1993).
However, that mixes apples and oranges. In J.H. France, the
Pennsylvania Supreme Court held that “all stages of the disease
process are bodily injury sufficient to trigger [an] obligation to
indemnify, as all phases independently meet the . . . definition
of bodily injury.” Id. at 507. Thus, J.H. France addressed only
the question of when a sufficient injury occurs to trigger the
insurer’s indemnification obligation. It had nothing to do with
the distinct “occurrence” question, and it does not support
Treesdale’s position here.

       Finally, Treesdale attempts to draw support from three
cases from other jurisdictions to advance its contention that
each claimant’s exposure to asbestos was a separate occurrence.
We are not persuaded.
       In Metropolitan Life Ins. Co. v. Aetna Casualty and
Surety Co., 765 A.2d 891 (Conn. 2001), a health insurer
brought a declaratory judgment action against its excess liability
insurer seeking a ruling that its alleged failure to warn of the
dangers of asbestos was a single occurrence satisfying the
threshold for coverage.12 The excess liability policies contained

       12
         The health insurer had engaged in studies concerning
asbestos. It had been sued by approximately 200,000 plaintiffs,
mainly industrial, shipyard and construction workers who were
not policyholders. Rather, they asserted that the health insurer
assumed a duty to warn the general public about the dangers of
asbestos when it undertook its research on asbestos.

                                17
the following “continuous exposure clause:”

       The total liability of the company for all damages,
       including damages for care and loss of services,
       as the result of any one occurrence shall not
       exceed the limit of liability stated in the
       declarations as applicable to “each occurrence.”
       For purposes of determining the limit of the
       company’s liability and the retained limit, all
       bodily injury and property damage arising out of
       continuous or repeated exposure to substantially
       the same general conditions shall be considered
       as arising out of one occurrence.

765 A.2d at 300-01. However, the policies did not define
“occurrence.” Id. at 301.

         The health insurer argued that all of the asbestos claims
at issue had a single cause (a failure to warn of the dangers of
asbestos), and therefore there was but one occurrence. Id. at
303 (“Metropolitan contends that we must examine the cause of
its liability in the underlying claims. On that basis, it argues that
there is a single occurrence”) (emphasis in original). The
excess liability carrier argued that each claimant’s exposure to
asbestos was a separate occurrence. Id. at 301. For reasons not
relevant to our discussion, the Connecticut Supreme Court
found that there were multiple occurrences, i.e., that each
individual claimant’s exposure to asbestos was a separate
occurrence. However, Metropolitan doesn’t help Treesdale
because the court did not apply the cause of loss test required by
our precedent and Pennsylvania law.

                                 18
       In In re: Prudential Lines, Inc., 158 F.3d 65 (2d Cir.
1998), approximately 5,000 claimants alleged that they had
suffered asbestos-related injuries after being exposed to
asbestos while working aboard Prudential’s ships. Prudential
was insured by American Club. The deductible provision in
each policy provided that personal injury claims “are subject to
a deduction” in a stated amount “with respect to each accident
or occurrence.” Id. at 76. However, neither “accident” nor
“occurrence” was defined in the disputed policies. Under the
circumstances there, the court of appeals agreed that each
claimant’s exposure was a separate occurrence. However, In
re: Prudential Lines is in tension with Appalachian. The same
is true of Babcock & Wilcox Co. v. Arkwright-Boston
Manufacturing Mut. Ins. Co., 53 F.3d 762 (6th Cir. 1995).
There, the court also concluded that each boilerworker’s
exposure to asbestos was a separate occurrence and rejected the
manufacturer’s claim that its decision to use asbestos in its
boilers was the occurrence. The policies in question defined
“occurrence” as follows:

       The term “occurrence,” whenever used herein,
       shall mean any happening or series of
       happenings, arising out of or due to one event
       taking place during the term of this contract in
       respect to all the Assured’s operations.

Id. at 765. However, we can not accept the analysis in Babcock
& Wilcox Co., given our holding in Appalachian, and the

                              19
dictates of Pennsylvania law.13

        Accordingly, for all of the above reasons, we hold that
the district court’s conclusion that all of the asbestos claims here
arose from a single occurrence was correct.

 B. The Non-Cumulation Provision in the UEL Policies.

       As noted, after the district court found that there was but
one occurrence, it then found that the Non-Cumulation
provision in the UEL policies precluded stacking policy limits
and therefore limited Liberty Mutual’s coverage liability to $5

       13
           We also note that at least two district courts in this
circuit have applied the Appalachian cause of loss test in
asbestos litigation. See Air Products and Chemicals, Inc. v.
Hartford Accident and Indemnity Co., 707 F.Supp. 762, 768
(E.D. Pa. 1989), aff’d in part and vacated in part on other
grounds, 25 F.3d 177 (3d Cir. 1994) (“Air Products I”), and
Colt Industries Inc. v. Aetna Cas. & Sur. Co., 1989 WL 147615
(E.D. Pa. Dec. 6, 1989)
       We recognize that Treesdale cites a district court case
from this circuit in which the court held that the “‘cause’ of the
[asbestos] injuries . . . is the exposure of each individual to
asbestos.” Pittsburgh Corning Corp. v. Travelers Indemnity
Co., 1988 WL 5302 at *2 (E.D. Pa. 1988). There, the court was
interpreting the “Policy Period: – Territory” clause in a first
layer excess policy that Commercial Union Insurance Company
had issued to Pittsburgh Corning.

                                20
million – the highest limit of liability under any of the UEL
policies.

       The Non-Cumulation provision provides:
       Non-Cumulation of Liability – Same Occurrence
       – If the same occurrence gives rise to personal
       injury, property damage or advertising injury
       or damage which occurs partly before and partly
       within any annual period of this policy, then
       each occurrence limit and the applicable
       aggregate limit or limits of the policy shall be
       reduced by the amount of each payment made by
       the company with respect to each occurrence,
       either under a previous policy or policies of
       which this policy is a replacement, or under this
       policy with respect to previous annual periods
       thereof.

Liberty Mutual submits that the Non-Cumulation provision is
intended to prevent stacking or cumulation of policy limits of its
consecutive UEL policies that apply to the same occurrence.
The UEL policies treat all injury arising out of a continuous or
repeated exposure to substantially the same general conditions
“as the result of one and the same occurrence.” The Non-
Cumulation provision then states that if such a single
occurrence gives rise to injury during more than one policy
period, only one occurrence limit will apply. Put another way,
the Non-Cumulation provision ensures that if an occurrence has
been covered by one policy in a line of successive policies
issued by Liberty Mutual, then only one occurrence limit will

                               21
apply. Thus, claims paid by Liberty Mutual for one occurrence
under the 1975-1976 UEL policy would correspondingly reduce
the occurrence limit of the successive policies. The highest
liability Liberty Mutual had under any one UEL policy was
$5,000,000. Liberty Mutual claims that it has already paid
$5,000,000 in asbestos settlements and or judgments on behalf
of Treesdale under the UEL policies. Therefore, it contends
that it has no further duty to Treesdale.

       Treesdale, while contending that there are multiple
occurrences argues in the alternative that even if there is a
single occurrence, the Non-Cumulative provision does not
apply14 because it may access the UEL policies in reverse
chronological order. That, argues Treesdale, precludes there
ever being a “payment made . . . under a previous policy.”
Under this theory of accessing the policies, Treesdale contends

       14
         Treesdale does not argue that the Non-Cumulation
provision is void under Pennsylvania law. It does say, however,
that the New Jersey Supreme Court has found that the Non-
Cumulation provision is unenforceable. Spaulding Composites
Co. v. Aetna Cas. & Sur. Co., 819 A.2d 410, 422 (N.J. 2003).
Liberty Mutual concedes that no Pennsylvania state court has
addressed the Non-Cumulation provision. However, Liberty
Mutual notes that under Pennsylvania law anti-stacking
provisions in automobile insurance policies are enforceable as
long as the language prohibiting stacking is clear and
unambiguous. Bishop v. Washington, 480 A.2d 1088 (Pa.Super.
1984); Equibank v. State Farm Mut. Auto. Ins. Co., 626 A.2d
1243 (Pa.Super. 1993).

                              22
that Liberty Mutual’s coverage obligation is not limited to
$5,000,000 – the highest liability Liberty Mutual had under any
one UEL policy – but is $26,000,000 – Liberty Mutual’s total
liability under all ten of the UEL policies.

       Although Treesdale’s alternative position is very
creative, it is not very meritorious. To explain it, we must set
forth Treesdale’s interpretation of the Pennsylvania law of
insurance coverage “triggers.”15 Treesdale contends that every
Liberty Mutual UEL policy has been triggered16 and to support
that contention it       quotes liberally from J.H. France
Refractories Co. v. Allstate Insurance Co., 626 A.2d 502 (Pa.
1993), which it refers to as France III. It writes:

       All stages of the disease process [relating to
       asbestos injury, including exposure, progression,
       and manifestation] are bodily injury sufficient to
       trigger [a]n obligation to indemnify, as all phases
       independently meet the . . . definition of bodily
       injury. Thus, every insurance policy on the risk
       at any time during the development of a
       claimant’s asbestos-related disease has an
       obligation to indemnify” the insured and [a]ny

       15
            Treesdale’s discussion seems to be unique to asbestos
injuries.
       16
         Liberty Mutual’s brief is silent with regard to the
question of whether all ten of its UEL policies have been
triggered.

                                 23
       policy in effect during the period from exposure
       to manifestation must indemnify the insured until
       its coverage is exhausted. This method of
       invoking coverage is otherwise known as the
       “continuous” or “multiple” trigger.

       Here, the underlying Asbestos Claimants allege
       injuries – exposure, exposure in residence, or
       manifestations – which trigger all of the Liberty
       Mutual policies. Liberty Mutual does not contest
       this point as it has already provided coverage
       under the ten CGL Policies underlying the UEL
       Policies.

Treesdale’s Br. at 42-43 (some internal quotation marks and
citations omitted). In addition to claiming that all ten UEL
policies have been triggered, Treesdale contends that it is free
to select the order in which the UEL policies are accessed. It
argues:

       In order to accord [the insured] the coverage
       promised by the insurance policies, [the insured]
       should be free to select the policy or policies
       under which it is to be indemnified. When the
       policy limits of a given [policy] are exhausted,
       [the insured] is entitled to seek indemnification
       from any of the remaining [policies] which was
       on the risk during the development of the disease.
       Any policy in effect during the period from
       exposure to manifestation must indemnify the
       insured until its coverage is exhausted. Under

                              24
       [France III], if more than one policy is triggered,
       the insured ‘should be free to select the policy or
       policies under which it is indemnified.’ When
       the policy limits of the chosen policy are
       exhausted, then the insured is entitled to choose
       again from the triggered policies and continue to
       do so until fully indemnified for the claims.
       (emphasis in original, internal citations omitted).

Treesdale’s Br. at 43-44. Treesdale thus submits that it can
choose which of the ten triggered UEL policies should provide
coverage first. Under Treesdale’s approach, if the first UEL
policy is exhausted, Treesdale may then choose another, and so
on, until all of the UEL policies are exhausted.

        Treesdale then argues that if it selects the last issued
UEL policy – the 1984-1985 policy – the Non-Cumulation
provision becomes inoperative. Thus, instead of the $5,000,000
obligation that Liberty Mutual says it owes under the UEL
policies, Liberty Mutual’s obligation would be $26,000,000 –
the total obligation under all ten of the UEL policies.

       The district court rejected Treesdale’s “reverse
chronological order” theory based, in part, on O-I Brockway
Glass Container, Inc. v. Liberty Mutual Ins. Co., 1994 WL
910935 (D.N.J. Feb. 10, 1994). That case involved a Non-
Cumulation provision almost identical to the one here, and O-I
Brockway argued a “reverse chronological order” theory to
avoid the Non-Cumulation provision. The district court found
that the provision,“in both content and title,” prevents an
insured from stacking the policy limits. Id. at *3. It concluded

                               25
the provision provides that an “insured shall not recover more
than the per occurrence limit by invoking coverage under
several policies for the same occurrence.” Id. The district
court there also rejected the “reverse chronological order”
theory explaining:

      Brockway’s interpretation of the Non-Cumulation
      clause is incorrect because it relies on an obtuse
      reverse-chronology rather than the clear intention
      of the clause. If one asked a reasonable person
      whether the Non-Cumulation clause would allow
      an insured to recover the $250,000 limit under all
      of the 1975, 1976, 1977, 1978, 1979, 1980, 1981,
      1982 and 1983 policies for the same occurrence,
      the answer would most certainly be “no.” It is
      only when Brockway strains the construction of
      the clause to hinge on some abstract sequence in
      which Brockway taps the policies that ambiguity
      is allegedly created. An insured would have the
      reasonable expectation that the Non-Cumulation
      clause prohibits the recovery of more than the per
      occurrence limit for each occurrence, not that the
      Non-Cumulation clause’s applicability depends
      on the sequence chosen to tap each policy.

Id. (emphasis added).

       Treesdale contends that O-I Brockway has been
discredited because the New Jersey Supreme Court has since
found that Liberty Mutual’s Non-Cumulation provision is
unenforceable. See n.14, supra. However, even if Treesdale is

                             26
correct and the Non-Cumulation provision is unenforceable in
New Jersey, anti-stacking clauses, at least in automobile
policies, are enforceable under Pennsylvania law as long as they
are clear and unambiguous. Id. The clause here is clear and
unambiguous absent Treesdale’s imaginative, but strained and
result-oriented interpretation of the plain language of Liberty
Mutual’s policies.

       As the court correctly noted in O-I Brockway, it is simply
not reasonable to think that the Non-Cumulation provision
would allow recovery under all of the UEL policies for the same
occurrence simply by allowing an insured to engage in an
alchemistic manipulation of the relevant chronology. Such an
interpretation violates the provision’s very purpose and allows
it to be read entirely out of the policy by an illogical and
tortured reading of the policy’s provisions. We are hard-
pressed to think that an insurance company would issue a policy
with an anti-stacking provision, but intentionally include a
provision that would void that anti-stacking provision by
allowing the insured to invoke coverage in reverse
chronological order. It is clear from the way the provision is
written, that it applies without regard to the order in which the
policies are chosen. It provides that the each occurrence limit
“shall be reduced by the amount of each payment made by the
company with respect to each occurrence, either under a
previous policy or policies of which this policy is a
replacement, or under this policy with respect to previous

                               27
annual periods thereof.” (emphasis added).17

        Treesdale also attempts to rest its argument partly upon
Air Products and Chemicals, Inc. v. Hartford Accident and
Indemnity Co., 1989 WL 73656 (E.D. Pa. June 30, 1989) (“Air
Products II”), and that opinion does have language that
supports Treesdale’s theory. One of the issues before the court
there was the effect of the Non-Cumulation provision in Liberty
Mutual’s insurance policies with Air Products. The provision
was identical to the provision in this appeal. In a footnote, the
district court wrote:

       The limit of Liberty’s maximum per-occurrence
       liability depends upon the sequence of the claims
       against both policies. For example, if all asbestos
       claims initially trigger the 1972-1975 policy, and
       the payments are made under that policy up to the
       $500,000 occurrence limit, the $1,000,000 per
       occurrence limit of the 1975-1978 policy would
       be reduced to $500,000, leaving plaintiff with
       total coverage of $1,000,000. In the unlikely
       event that the first million dollars of asbestos
       claims are paid under the 1975-1978 policy, then
       the plaintiff would have $1,500,000 in coverage.
       In that case, the initial payout on the 1975-1978
       policy would not reduce the $500,000 per
       occurrence limit of the 1972-1975 policy.

       17
       The “under this policy” sentence was not in the Non-
Cumulation provision in O-I Brockway.

                               28
1989 WL 73656 at *3 n.4 (emphasis in original).

        Treesdale contends that this footnote supports its
“reverse chronological order” theory, and we agree that it does.
However, the case is not controlling and the footnote is dicta.
It had nothing to do with the disposition of the case. Moreover,
for the reasons we have already discussed, we believe the
footnote is wrong.

       Alternatively, Treesdale argues that the Non-Cumulation
provision does not apply because each of the UEL policies has
only one annual period and none is a replacement for any other
UEL policy. Treesdale notes that the Non-Cumulation
provision states that payments made with respect to a given
occurrence will reduce “each occurrence limit and the
applicable aggregate limit or limits of [a given UEL policy]”
only if those payments were made “either under a previous
policy or policies of which [the given UEL policy] is a
replacement, or under [the given UEL] policy with respect to
previous annual periods thereof.”          Therefore, contends
Treesdale, for a payment to reduce the amount available under
a given UEL policy, that payment must be made (1) under a
previous annual period of that policy or (2) under a “previous
policy or policies of which [the] policy is a replacement.”

      However, Treesdale submits that there are “no annual
periods” for any of the UEL policies because each of the ten
UEL policies has a different policy number, and the premiums
and coverages varied. Therefore, concludes Treesdale, rather
than one continuous policy covering the period from May 1,
1975 until February 1, 1985, Liberty Mutual issued ten

                              29
independent policies and each of those policies was in effect for
a one year period from May 1st of a given year until May 1st of
the succeeding year. Accordingly, Treesdale submits that
because each policy is independent and distinct, there can be no
“previous annual period” for any given UEL policy. Treesdale
further submits that there can be no “previous annual period”
for any of the ten UEL policies because none of them was a
multi-year policy, e.g., a three-year policy. Consequently, the
Non-Cumulation provision is inapplicable because any payment
made under any UEL policy that came before a given UEL
policy is not a payment under the policy with respect to
previous annual period.

       Treesdale also claims that none of the UEL policies is a
replacement of a previous policy or policies.        Treesdale
contends that the term “replacement” is a term of art in the
insurance industry and is distinct from “renewal.” Treesdale’s
Br. at 53 (citation omitted). Treesdale submits that the
generally accepted meaning of replacement in the insurance
industry is “conduct effecting cancellation of a policy in one
company and the sale and issuance of a correlative policy,
usually, but not necessarily, in another company.” Id. (citation
omitted). Based on these “authorities,” Treesdale argues that
none of the UEL policies was a replacement of any prior UEL
policy because each UEL policy was a separate and independent
policy covering the same risks during different periods

       Liberty Mutual responds by conceding that the UEL
policies were renewal policies, but that, in common sense
parlance, “renewal” and “replacement” mean essentially the
same thing. For example, Liberty Mutual cites to Webster’s

                               30
dictionary where “renew” is defined as meaning: “to replace as
by a fresh supply of [to renew provisions].” It also cites to
Black’s Law Dictionary which defines “renew” as including “to
replace.”

       Liberty Mutual also cites Little v. Progressive Ins. Co.,
783 N.E.2d 307, 314 (Ind.App. 2003) in claiming that courts
have given “replacement” and “renewal” meanings that are
consistent with the common understanding of those words.
There, the court stated “a renewal policy is issued to replace the
preceding policy governing relations between insurer and
insured” and a “renewal policy . . . is a replacement policy
issued at the end of a policy period.”

       Finally, Liberty Mutual says that its interpretation of
replacement as encompassing renewal is supported by insurance
statutory law in at least sixteen states which have defined
“renewal” as “the issuance and delivery by an insurer of a
policy replacing at the end of the policy period a policy
previously issued and delivered by the same insurer.” Liberty
Mutual’s Br. at 52 (citations omitted).

      Although Treesdale’s argument as to this issue is not
without force, we are persuaded by Liberty Mutual’s rejoinder.

       Treesdale next argues that the Non-Cumulation provision
is unenforceable because it is an escape clause. “[A]n ‘escape’
clause . . . is generally defined as a clause providing that there
shall be no coverage where there is other valid and collectible
insurance.” Auto. Underwriters, Inc. v. Fireman’s Fund Ins.
Co., 874 F.2d 188, 191 (3d Cir. 1989). Treesdale argues that

                               31
the provision operates as an escape clause because Liberty
Mutual issued ten consecutive UEL policies but seeks to avoid
its obligations under nine of those policies by relying upon the
non-cumulation clause in any one of them.

        However, the Non-Cumulation provision, like all anti-
stacking provisions, does not eliminate coverage. It simply
provides that if a single occurrence gives rise to an injury
during more that one policy period, only one occurrence limit
will apply. The provision limits the dollar amount recoverable
under the policies, but it does not eliminate coverage. In Air
Products and Chemicals, Inc. v. Hartford Accident and
Indemnity Co., 1989 WL 73656 (E.D. Pa. June 30, 1989), the
district court rejected the exact same argument Treesdale makes
here. The district court there stated:

       the non-cumulation . . . provisions do not
       constitute escape clauses, as the provisions seek
       only to limit, rather than preclude, Liberty’s
       liability for claims against its insured. Thus, there
       is no basis . . . for failing to enforce the terms of
       those provisions.

1989 WL 73656 at *2. Not surprisingly, Treesdale has offered
no authority to support its claim that an anti-stacking provision
is an unenforceable escape clause.

      Treesdale’s final argument restates this contention by
suggesting that the Non-Cumulation provision is unenforceable
because it frustrates Treesdale’s reasonable expectations.
Treesdale says that it purchased ten separate UEL policies from

                                32
Liberty Mutual and paid ten separate premiums for those ten
separate policies. Nonetheless, claims Treesdale, Liberty
Mutual now seeks to disclaim coverage under the first nine of
those policies because it provided coverage under the tenth.
Treesdale argues that in purchasing and paying for ten policies,
it reasonably expected that it would receive coverage under all
ten policies. In other words, Treesdale argues that it had a
reasonable expectation it could stack coverage under the UEL
policies.

        “Pennsylvania case law . . dictates that the proper focus
for determining issues of insurance coverage is the reasonable
expectations of the insured.” Reliance Ins. Co. v. Moessner,
121 F.3d 895, 903 (3d Cir. 1997) (citations omitted). “In most
cases, the language of the insurance policy will provide the best
indication of the content of the parties’ reasonable
expectations.” Id. (citation and internal quotations omitted).
“Courts, however, must examine the totality of the insurance
transaction involved to ascertain the reasonable expectations of
the insured.” Id. (citations and internal quotations omitted).
“As a result, even the most clearly written exclusion will not
bind the insured where the insurer or its agent has created in the
insured a reasonable expectation of coverage.” Id. (citations
omitted). However, this aspect of the doctrine is only applied
“in very limited circumstances” to protect non-commercial
insureds from policy terms not readily apparent and from
insurer deception. Madison Construction Co. v. Harleysville
Mut. Ins. Co., 735 A.2d 100, 109 (Pa. 1999) n.8. Absent
sufficient justification, however, “an insured may not complain
that his or her reasonable expectations were frustrated by policy
limitations that are clear and unambiguous.” Frain v. Keystone

                               33
Ins. Co., 640 A.2d 1352, 1354 (Pa. Super. 1994).

       Here, Treesdale is not contending that the Non-
Cumulation provision is ambiguous. Indeed, Liberty Mutual
contends that Treesdale conceded that the language was clear
and unambiguous in the district court. Thus, the reasonable
expectations canon of insurance law does not assist Treesdale’s
attempt to argue an expectation that is contrary to the coverage
clearly set forth in the insurance policy.18 Accordingly, it
cannot invoke the reasonable expectations doctrine.

                         IV. CONCLUSION

         For all of the above reasons, we will affirm the district
court.

         18
              For purposes of our discussion, we ignore the fact that
Treesdale is hardly a “non-commercial” insured and that the
doctrine of reasonable expectations has extremely limited
relevance to our discussion if it applies at all.

                                   34