Wade Clark Mulcahy LLP

In Ironshore Specialty Insurance Company v. Color Techniques, Inc., CTI was named as a defendant in ten asbestos exposure lawsuits.  2024 WL 3634860 (S.D.N.Y. Aug. 1, 2024).  The lawsuits broadly alleged CTI engaged in the sale, manufacture, installation, and contracting of asbestos-containing products. Id. at *2.

CTI requested defense from Ironshore, its insurer, for these actions.  Id.  Coverage C of the Policy covered claims of bodily injury caused by exposure to an insured’s products which “occur[ed] away from a location [the insured] own[s] or operate[s].”  Id. at 1.  In contrast, Coverage G of the Policy covered claims of injury arising out of a pollution incident caused by the insured’s “work,” defined as “operations performed by you” or “materials … furnished in connection with such work.”  Id.  Ironshore disclaimed under Coverage C based on an asbestos exclusion but agreed to defend CTI subject to a reservation of rights under Coverage G.  Id. at 2.  Ironshore further opined that only some of the alleged activities—like installation and contracting—fell under Coverage G.  Id.  In response, CTI argued that Coverage G encompassed other conduct—such as designing, sale, and manufacturing.  Id. at *5.

On review, the Court first considered the extent of coverage under the Policy for the underlying actions.  Id. Evaluating Coverages C and G together, the Court concluded that Coverage C related to “product-related injuries occurring away from CTI’s worksite,” while Coverage G applied to “injuries caused by CTI’s work operations in progress.”  Id. at 6.  The Court therefore concluded the “work” referenced in Coverage G could not include claims of designing, selling, and manufacturing without rendering Coverage C meaningless.  Id. at 7.

Second, the Court considered whether extrinsic evidence relieved Ironshore of its duty to defend.  Id.  Ironshore’s evidence indicated the underlying actions raised product-liability claims against CTI as a manufacturer—not claims based on CTI’s installation work.  Id.  Under an exception to New York’s four-corners rule, extrinsic evidence unrelated to the underlying merits could be used to show no possibility of coverage.  Id. at 4.  Applying this principle, the Court concluded most of Ironshore’s evidence did not concern the merits of the underlying actions; rather, it sought to show the claims against CTI were not subject to Coverage G of the Policy.  Id. at 8.