Texas Court Allows Legal Expense Claim in Asbestos Case to Continue

Fireman’s Fund Insurance Company (FFIC) has been denied a motion in a Texas state court that would have established that the company could control whether or not it would pay legal expenses in an asbestos-related case, according to the law firm of Anderson Kill & Olick PC.

The law firm reported that ASARCO LLC is now able to pursue a claim for recovery of millions of dollars in legal expenses stemming from asbestos claims. The ruling came in ASARCO LLC, et al. v. Fireman’s Fund Ins. Co., et al., No. 01-2680-D (105th Jud. Dist. Ct. Nueces County Tex., June 20, 2009).

FFIC’s motion argued that the policy language “unambiguously” gave it sole discretion to decide if it wished to pay any legal expenses at all, the Anderson Kill announcement stated. FFIC had maintained that legal expenses “incurred by the policyholder will be borne by FFIC only if they are incurred with FFIC’s consent.”

Judge J. Manuel Bañales of the 105th Judicial District Court of Nueces County, Texas, ruling from the bench, denied the motion.

The ruling preserves for trial the issue of FFIC’s obligation to pay ASARCO’s legal expenses, enabling ASARCO to pursue its claim for recovery of legal expenses in excess of policy limits. It may mean the recovery for ASARCO of millions of dollars of insurance coverage in addition to the $60 million combined limits of the insurance policies that FFIC sold to ASARCO.

The ruling follows a March 11, 2009, ruling from the same court granting partial summary judgment to ASARCO. In that motion, ASARCO had taken the position that an “asbestosis” exclusion in FFIC’s policies bars coverage only for asbestosis claims and does not bar coverage for claims involving mesothelioma, lung cancer, pleural plaques or any other asbestos-related disease.

ASARCO, a copper company based in Tucson, Ariz., declared bankruptcy in 2005. At issue in the coverage action is a determination of insurance coverage for past, present and future asbestos liabilities.

Source: Anderson Kill & Olick, P.C., www.andersonkill.com