Suit against insurer in asbestos-related case can proceed

A federal district court in Atlanta last week refused to dismiss a lawsuit that was filed against a Travelers Cos. Inc. unit because it would not defend a mineral production company in an asbestos case.

The complaint filed against The Phoenix Insurance Co. contends the insurer is contractually obligated to defend Chatsworth, Georgia-based United Minerals and Properties Inc., which does business as Cimbar Performance Minerals Inc., in an underlying state court lawsuit, according to the ruling by the district court in United Minerals Properties Inc. v. The Phoenix Insurance Co.

The underlying lawsuit alleges that a Cimbar talc product used in two medical procedures in 2014 and 2020 contained asbestos, which caused the underlying plaintiff to be diagnosed with malignant pleural mesothelioma. Cimbar says its talc product does not contain asbestos.

In both 2014 and 2020, Phoenix policies agreed to insure and defend Cimbar in lawsuits seeking damages for bodily injuries. However, it refused to defend the company in the underlying lawsuit because of asbestos exclusions in the policies. Cimbar sued, charging breach of contract.

“Phoenix argues that the asbestos exclusions unambiguously exclude the duty to defend whenever a plaintiff alleges that an injury is caused by asbestos. This Court disagrees,” the ruling said.

Phoenix pointed to policy language that states the insurance does not apply to bodily injury arising out of asbestos’ “actual or alleged presence,” the ruling said. “But this clause cannot be read in isolation,” it said.

“Notably, in both policies, the same sentence also provides that the exclusion applies ‘provided that the injury or damage is caused or contributed to by the hazardous properties of asbestos,’” the ruling says.

“The presence of the word ‘is’ in this clause implies that the asbestos must be present for the exclusion to apply. Therefore, at best, the clause is ambiguous and should be ‘resolved in favor of the insured,” the ruling said, in citing an earlier case and noting Cimbar has denied its talc products contain asbestos.

Attorneys in the case did not respond to requests for comment.