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EMONS INDUS. v. LIBERTY MUT. FIRE INS. CO.

October 18, 1979

EMONS INDUSTRIES, INC., Plaintiff
v.
LIBERTY MUTUAL FIRE INSURANCE COMPANY and Reserve Insurance Company, Defendants



The opinion of the court was delivered by: DUFFY

This action was commenced by Emons Industries, Inc. (hereinafter referred to as "Emons") against Liberty Mutual Fire Insurance Company (hereinafter referred to as "Liberty") and Reserve Insurance Company (hereinafter referred to as "Reserve"). The amended complaint charges Liberty and Reserve with having breached their respective contractual obligations to defend and indemnify Emons against product liability arising from its sale and distribution of pharmaceutical products. Emons seeks a declaration that Liberty and Reserve are contractually obligated to defend it in a number of suits now pending and those which may arise in the future together with reimbursement for costs previously incurred to defend these suits and amounts paid in settlement of one of these actions.

Beginning in 1945 and continuing through much of 1971, Emons *fn1" engaged in the wholesale distribution of prescription and non-prescription drugs. During much of this time, Emons distributed Diethylstilbestrol, a drug which has come to be known as DES. It is a synthetic estrogen which during the 1950's and 1960's was widely prescribed for use by pregnant women to prevent certain complications including miscarriages and spontaneous abortions. Tragically, however, subsequent medical research has revealed that DES may be a potential cause of cancer in those women who ingested it during pregnancy as well as in their female offspring. *fn2" As a result, numerous lawsuits were commenced throughout the United States. The parties have brought to my attention the following suits which to date have named Emons as a defendant:

In Abel v. Eli Lilly, et al. ("Abel") it was charged that between 1947 through 1964 DES was distributed to the mothers of the female plaintiffs during pregnancy. The plaintiffs charge that as a result of the drug they have, as teenagers, developed cancerous or pre-cancerous conditions;

 In Bevelhymer v. Grant Chemical Co., et al. ("Bevelhymer") the plaintiff charges that as a result of her mother having ingested DES during 1956-57, she later developed cancer. No date is given for when this cancerous condition either manifested itself or was diagnosed;

 In Collins v. Eli Lilly Co., et al. ("Collins") the plaintiff charges that as a result of her mother having ingested DES during her 1957-58 pregnancy, in August, 1975, she discovered she suffered from clear-cell adenocarcinoma of her reproductive organs;

 In Ferrigno v. Eli Lilly Co., et al. ("Ferrigno"), denominated as a class action, the representative charges that her mother ingested DES during a 1952-53 pregnancy and, as a result, the plaintiff subsequently developed cancer;

 In Sochanchak v. Eli Lilly Co., et al. ("Sochanchak"), denominated as a class action, the complaint charges that as a result of the ingestion of DES by pregnant women between the years 1947 through 1964, their offspring have developed cancer or pre-cancerous conditions;

 And in Spivey v. Amfre-Grant, Inc. ("Spivey") the plaintiff charges that as a result of the ingestion of the drug by her mother during a 1960 pregnancy, the plaintiff developed pre-cancerous lesions. This condition was first discovered in May, 1974.

 Liberty insured Emons against product liability under a series of policies between 1964 through 1970. There is some dispute, however, whether and to what extent Liberty may have insured Emons prior to 1965. *fn3" Reserve insured Emons against product liability for a one year period from November, 1970 through November, 1971.

 Upon commencement of the DES actions set forth above, Emons notified both Liberty and Reserve of the suits and requested that they defend it in these proceedings as provided in the contracts of insurance. Both Liberty and Reserve refused to provide a defense in these suits. Later, however, Liberty and Emons entered into an agreement, dated July 28, 1978, which provided that Liberty would reimburse Emons for all costs and expenses incurred in the defense of the DES actions. The agreement further provided that Liberty reserved the right to disclaim any liability for any judgments or settlements in these actions. Reserve, on the other hand, has consistently refused to defend or indemnify Emons with respect to these suits.

 None of the DES actions have yet gone to trial. The Abel action has been settled with respect to Emons for the sum of $ 40,000. *fn4" The Sochanchak action has been dismissed with respect to Emons for want of personal jurisdiction. The balance of these actions remain unresolved and occupy various stages within the pre-trial process.

 Plaintiff commenced this suit to establish the duty of Liberty and Reserve to defend it in these actions and to recover funds expended in the continuing litigation and settlement of these actions. Emons now moves for partial summary judgment insofar as its claims against Reserve are concerned and seeks leave to amend its complaint to include two recently filed suits in which it charges the defendants owe a duty to defend and indemnify. Liberty has also moved for summary judgment on three of its cross-claims lodged against Reserve which seek:

 
A declaration that Reserve is liable for all or part of the defense costs in the pending actions;
 
Judgment against Reserve for all or part of the $ 16,681.07 in past defense ...

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