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Port Auth. v. Affiliated FM Ins. Co.

United States Court of Appeals for the Third Circuit

September 9, 2002, Argued ; November 14, 2002, Filed

No. 01-2513

Opinion

 [*230]  OPINION OF THE COURT

WEIS, Circuit Judge.

The District Court held that unless asbestos in a building was of such quantity and condition as to make the structure unusable, the expense of correcting the situation was not within the scope of a first party insurance policy covering "physical loss or damage." We agree and will affirm.

Plaintiffs, the Port Authority of New York and New Jersey and its subsidiary, the Port Authority Trans-Hudson Corporation, own numerous facilities in New York and New Jersey that incorporated asbestos products in their construction. Alleging asbestos contamination, plaintiffs filed suit for damages in the New Jersey state courts against the defendants,  [**4]  a number of insurance companies that had first-party policies on the various structures. The case was removed to the United States District Court for the District of New Jersey.

Plaintiffs seek recovery for expenses incurred in conjunction with the abatement of asbestos-containing materials in their structures such as the World Trade Center complex in New York and Newark International Airport in New Jersey. The plaintiffs contend that physical damage has occurred in these structures as a result of the "presence of asbestos," "threat of release and reintrainment of asbestos fibers," and the "actual release and reintrainment of asbestos fibers."

To support their claims, plaintiffs point to the existence of friable asbestos in some of their buildings. Once an asbestos product reaches the friability stage, it may be crumbled by vibrations or hand pressure and it continues to deteriorate into separate fibers. In this condition, the asbestos becomes more susceptible to dispersion in the air and poses an increased risk to human health. Plaintiffs cite this as a documented problem at Newark Airport, where insulation had to be removed from pipes around the heating and ventilating units. In [**5]  other locations, asbestos fibers were actually released during the performance of routine building functions, the  [*231]  renovation of existing structures, and demolition projects.

In the mid-1980s, the plaintiffs undertook a renovation program to remove asbestos products from portions of the World Trade Center. Pursuant to OSHA regulations, plaintiffs augmented their abatement policy by conducting regular surveys of asbestos-containing materials and employing air monitoring procedures. During these activities, maintenance and construction workers were subjected to stringent safety requirements, including mandatory protective clothing and equipment. However, air samples taken in each location did not reveal the presence of asbestos fibers exceeding EPA standards.

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311 F.3d 226 *; 2002 U.S. App. LEXIS 23563 **; 60 Fed. R. Evid. Serv. (Callaghan) 384; 33 ELR 20108

PORT AUTHORITY OF NEW YORK AND NEW JERSEY; PORT AUTHORITY TRANS-HUDSON CORPORATION (PATH); APPALACHIAN INSURANCE COMPANY v. AFFILIATED FM INSURANCE COMPANY, and all other Defendants; ICAROM, P.L.C., as Successor in interest to Insurance Corporation of Ireland (P.L.C.); AFFILIATE FM INSURANCE COMPANY; ALLIANZ INSURANCE COMPANY, as Successor in interest to Allianz Underwriters, Inc.; ALLSTATE INSURANCE CO., as Successor in interest to Northbrook Excess and Surplus Insurance Company; AMERICAN CENTENNIAL INSURANCE COMPANY; AMERICAN HOME ASSURANCE COMPANY; AMERICAN MOTORISTS INSURANCE COMPANY; AMERICAN PROTECTION INSURANCE COMPANY; APPALACHIAN INSURANCE COMPANY; ARKWRIGHT MUTUAL INSURANCE COMPANY, as Successor in interest to Arkwright Boston Mfgrs. Mutual Insurance Company; BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA; CALIFORNIA UNION INSURANCE COMPANY; CITIBANK, N.A., as Trustee of Lloyd's American Trust Fund; COLUMBIA CASUALTY COMPANY; CONTINENTAL INSURANCE COMPANY; COVENANT MUTUAL INSURANCE COMPANY; EMPLOYERS MUTUAL CASUALTY COMPANY; FEDERAL INSURANCE COMPANY; FIREMAN'S FUND INDEMNITY CORPORATION; HARTFORD ACCIDENT & INDEMNITY COMPANY; HARTFORD FIRE INSURANCE COMPANY; HOME INDEMNITY COMPANY, THE; INSURANCE COMPANY OF NORTH AMERICA; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA; LEXINGTON INSURANCE COMPANY; LUMBERMENS MUTUAL CASUALTY COMPANY; PENNSYLVANIA LUMBERMENS MUTUAL INSURANCE COMPANY; PROVIDENCE WASHINGTON INSURANCE COMPANY; RANGER INSURANCE COMPANY; TWIN CITY FIRE INSURANCE COMPANY; UNITED STATES FIRE & CASUALTY COMPANY; LONDON MARKET INSURERS SUBSCRIBING TO LLOYDS POLICIES INCLUDING THE FOLLOWING: ASSICURAZIONI GENERALI DI TRIESTE E VENEZIA; BALTICA INSURANCE COMPANY, (U.K.) LTD., as Successor in interest to Baltica-Skandinavia Insurance Company (U.K.) LTD.; BERMUDA FIRE & MARINE INSURANCE COMPANY LIMITED; BRITISH NATIONAL INSURANCE COMPANY, Individually and as Successor in interest to North Atlantic Insurance Company and as Successor in interest to British National Life Insurance Society; BRYANSTON INSURANCE COMPANY LIMITED; CNA REINSURANCE OF LONDON LIMITED; COMPAGNIE D'ASSURANCES MARITIMES, AERIENNES ET TERRESTRES, S.A. (C.A.M.A.T.I.); COMPAGNIE EUROPEENNE D'ASSURANCES INDUSTRIELLES, S.A.; EL PASO INSURANCE COMPANY LIMITED; ENGLISH AND AMERICAN INSURANCE COMPANY; EXCESS INSURANCE COMPANY LIMITED; FOLKSAM INTERNATIONAL INSURANCE COMPANY LIMITED; INSCO LIMITED; ICAROM, P.L.C., as Successor in interest to Insurance Corporation of Ireland (P.L.C.); LLOYDS SYNDICATES NUMBERED AS FOLLOWS, 2 (C.R. HILL), 4 (B.A. STEWART), 15 (T.W. OBRIEN), 17 (P.N. CHRISTMAS), 28 (D.K.L. WHITE), 31 (M.F. BAIRD), 33 (I.N. THOMSON), 34 (T.K. HARDING), 40 (A.P. BARTLEET), 42 (P. HUNT), 53 (R.F. ELIOT), 50 (D.A. BEAUMONT), 51 (A. TAYLOR), 52 (P. HUNT), 56 (M.P. MANNING), 65 (P.D. MOREY), 67 (P.D. MOREY), 79 (J.R.L. YOUELL), 80 (S.G. THOMPSON), 87 (A.M. GORSUCH), 89 (M.E. BROCKBANK), 90 (E.A. MOORE), 98 (B.F. BRUCE), 108 (S.R. FLETCHER), 109 (A.P. TARGETT), 123 (W.M. MICHELL), 127 (A.J. ARCHER), 142 (D.T. POTTER), 144 (P.M. JOHNSON), 145 (J.R. CHARMAN), 162 (M.D. SEABY), 174 (B.G. BRUCE), 176 (C.R. HILL), 179 (R.W.S. LARK), 180 (R.A.F. MACMILLAN), 182 (A. TAYLOR), 183 (M. ASHLEY), 185 (A.M. GORSUCH), 187 (C.R. HILL), 190 (R.D. HAZELL), 191 (R.D. HAZELL), 202 (R.G. BENNETT), 203 (S.C. WILMOT-SMITH), 204 (R.A. FIELD), 206 (M.J.H. MAUGHAN), 207 (S.R.P. EDWARDS), 209 (B.G. ADAMS), 210 (A.G. LEE), 212 (R.J. MC CARTHY), 219 (C.H.A. SICEY), 231 (J.M.H.P. WETHERELL), 232 (E. PIERI), 239 (S.I. COWLEY), 247 (D.A. POLLOCK), 250 (D.J. FLETT), 256 (G.M. WILLIAMS), 257 (K.R. SMITH), 264 (B.L. EVENS), 269 (M.H. COCKELL), 275 (J.H. CHAPPELL), 282 (M.J. MARCHANT), 284 (M.J. MARCHANT), 288 (K.A. LONG), 295 (M.E. SEABY), 299 (A.A. WILLARD), 303 (B.R. BRANCH), 309 (J.B. HINGHAM), 317 (R.H.M. OUTHWAITE), 321 (T.G. GREEN), 322 (R.D. ROBERTSON), 331 (R.H. GIBBS), 342 (R.J. BARRY), 358 (B.L. EVENS), 362 (R.J.R. KEELING), 363 (J.J.S. BIRRELL), 368 (A.D. PILCHER), 375 (R.D. HAZELL), 381 (M.J. HARRIS), 384 (S.J. EDWARDS), 404 (R.A. LISSENDEN), 406 (S.I. COWLEY), 411, 412 (A.D. PILCHER), 435 (D.P. MANN), 438 (T.R. ANSTEY), 441 (G.C.F. PALMER), 446 (D.A. BEAUMONT), 447 (D.A. BEAUMONT), 448 (A.M. ENGLAND), 457 (M.C. WATKINS), 469 (SIMMONDS), 471 (F.J. AUSTIN), 475 (R.J. BROMLEY), 483 (P.R. CHANDLER), 484 (R.E. THOMSON), 488 (J.R. CHARMAN), 489 (J.R. CHARMAN), 498 (A.B.W. PHILLIPS), 500 (T.J. PEPPER), 505 (A.J. ARCHER), 508 (J.R. PLANT), 510 (G.D. GILCHRIST), 512 (P.W. MURRAY), 522 (M.B. GRAY), 527 (L.C. TAYLOR), 529 (A.M.C. UNDERWOOD), 535 (G. DAVIES), 540 (P.F. FAGAN), 544 (A.A. PITT), 545 (T.O. PITRON), 552 (C.J. MANDER), 584 (C.W. HANKIN), 588 (M.E. BROCKBANK), 590 (R.F.DE L. WILLIS), 595 (C.D.D. GILMOUR), 602 (D.H. FORREST), 604 (T.G. HALLOWAY), 609 (M.E. DENBY), 613 (M.J. BONDS), 620 (A.M. ENGLAND), 623 (A.F. BEAZLEY), 635 (B. COLEMAN), 636 (J.D.P. BARNES), 640 (P.L. TOOMEY), 648 (B. COLEMAN), 653 (J.M.H.P. WETHERELL), 660 (J.L. DODSON), 662 (C.W. ROME), 672 (W.C. AGNEW), 685 (B.M. RODDICK), 694 (T.J. HAYDAY), 697 (A.E. BATHURST), 700 (J.R. CHARMAN), 701 (J.R. CHARMAN), 707 (J.K. SPICER), 722 (F.J. AUSTIN), 724 (S.A. HOLMES), 725 (T.J. KEMP), 727 (M.J. MEACOCK), 730 (E.A. MOORE), 735 (A.F. JACKSON), 741 (A.J. ARCHER), 744 (T.P. JOHNSON), 750 (A.C. ASHBY), 764 (N.P. COMPTON), 780 (B.F. CAUDLE), 782 (P.N. SLADE), 799 (R.A.G. JACKSON), 800 (J.A. WESTCOTT), 801 (J.H. DAVIES), 803 (G.W. HUTTON), 807 (R.F.H. WILSHAW), 812 (B.F. BRUCE), 823 (R.J.R. KNEELING), 829 (B.R. BRUCE), 836 (V.E. EMMES), 842 (B.F. BRUCE), 843 (S.G. THOMSON), 846 (A. TAYLOR), 850 (P.J. HUBERT), 855 (J.P.H. HARRISON), 860 (P.A. EDWARDS), 861 (M.E. BROCKBANK), 868 (A.J. ARCHER), 880 (M.E. BROCKBANK), 884 (R.W.S. LARK), 900 (B.F. BRUCE), 901 (H.W. GASCOINE), 904 (M.C. WATKINS), 908 (J.R. CHARMAN), 920 (G.C.F. PALMER), 923 (M.J. HARRIS), 926 (C.W. ROME), 927 (C.N. MACKINNON), 933 (J.R.L. YOUELL), 937 (J.R.L. YOUELL), 942 (A.J. AVERY), 947 (M.J. HARRIS), 950 (J.C. NEVITT), 960 (B.E. BEAGLEY), 972 (B.F. BRUCE), 984 (R.A. LISSENDEN), 987 (D.A. BEAUMONT), 990 (M.J. COX), 991 (M.J. COX), 994 (B.P.D. KELLETT), 1014 (G. MC CALL), 1023 (R.K. WEBB), 1027 (M. F. NEWTON); LIME STREET INSURANCE COMPANY, as Successor in interest to Louisville Insurance Company; LUDGATE INSURANCE COMPANY LIMITED; MUTUAL REINSURANCE COMPANY LIMITED; ORION INSURANCE COMPANY LIMITED; PEOPLES INSURANCE COMPANY OF CHINA; RIVER THAMES INSURANCE COMPANY LIMITED; SCANDINAVIAN REINSURANCE COMPANY LIMITED; SCOTTISH LION INSURANCE COMPANY; SIMCOE AND ERIE GENERAL INSURANCE COMPANY; SOCIETE DE REASSURANCES DES ASSURANCES MUTUELLES GRICOLES; SOREMA REINSURANCE COMPANY, as Successor in interest to Copenhagen Reinsurance Company (U.K.) Limited; ST. KATHERINE INSURANCE COMPANY; TERRA NOVA INSURANCE COMPANY LIMITED; TUREGUM INSURANCE COMPANY; UNIVERSAL REINSURANCE, as Successor in interest to Bellefonte Reinsurance Co.; WALBROOK INSURANCE COMPANY; "WINTERTHUR" SWISS INSURANCE COMPANY; YASUDA MARINE & FIRE INSURANCE COMPANY (U.K.) LIMITED; CERTAIN UNDERWRITERS AT LLOYD'S LONDON; CERTAIN COMPANIES IN THE LONDON MARKET; COLERIDGE AND LONDON MARKET COMPANIES (District Court No. 91-cv-02907); APPALACHIAN INSURANCE COMPANY v. PORT AUTHORITY OF NEW YORK AND NEW JERSEY, formerly "THE PORT OF NEW YORK AUTHORITY"; PORT AUTHORITY TRANS-HUDSON CORPORATION; (District Court No. 91-cv-01689); Port Authority of New York and New Jersey; Port Authority Trans-Hudson Corporation (PATH), Appellants

Prior History:  [**1]  APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY. (D.C. Civ. Nos. 91-cv-01689 & 91-cv-02907). District Judge: Honorable John W. Bissell.

Port Auth. v. Affiliated FM Ins. Co., 245 F. Supp. 2d 563, 2001 U.S. Dist. LEXIS 9285 (D.N.J., 2001)

Disposition: Affirmed.

CORE TERMS

asbestos, first-party, coverage, physical loss, insured, policies, contamination, structures, asbestos fiber, trigger, third-party, insurance policy, plaintiffs', imminent threat, abatement, occurring, summary judgment, quantity, parties, RISKS, air

Insurance Law, Coverage, Triggers, General Overview, Civil Procedure, Summary Judgment, Opposing Materials, Appeals, Summary Judgment Review, Burdens of Proof, Movant Persuasion & Proof, Nonmovant Persuasion & Proof, Motions for Summary Judgment, Commercial General Liability Insurance, Persons Insured, Real Property Law, Common Interest Communities, Condominiums, Environmental Law, Hazardous Wastes & Toxic Substances, Toxic Torts, Continuous Triggers, Claim, Contract & Practice Issues, Policy Interpretation, Business Insurance, Property Claims, Contracts Law, Enforcement, Duties & Liabilities of Parties, Property Insurance, All Risks, Fortuity Doctrine, Business & Corporate Compliance, Contracts Law, Types of Contracts, Adhesion Contracts, Contract Formation, Offer & Acceptance, Commercial Law (UCC), Sales (Article 2), Form, Formation & Readjustment, Ordinary & Usual Meanings, Plain Language