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E.R. SQUIBB & SONS v. ACCIDENT & CAS. INS. CO.

July 28, 1994

E.R. SQUIBB & SONS, INC., Plaintiff,
v.
ACCIDENT AND CASUALTY INSURANCE CO., et al., Defendants.


BRODERICK


The opinion of the court was delivered by: VINCENT L. BRODERICK

VINCENT L. BRODERICK, U.S.D.J.

 I

 This case concerns controversies between E.R. Squibb & Sons ("Squibb"), a pharmaceutical manufacturer, and a number of its insurers in connection with product liability claims against Squibb arising out of injuries incurred by users of the product diethylstilbestrol ("DES"). By memorandum order dated April 21, 1992, ER Squibb & Sons v. Accident & Cas Ins Co, 1992 WL 7327, 1992 U.S. Dist. LEXIS 6255 (SDNY 1992) (the "1992 order"), I granted partial summary judgment in favor of Squibb concerning criteria for liability for defense costs. By memorandum order dated May 20, 1994, ER Squibb & Sons v. Accident & Cas Ins Co, 853 F. Supp. 98, 1994 WL 201014 (SDNY 1994) (the "May 1994 order"), I granted partial summary judgment in favor of Squibb concerning several issues regarding liability for underlying indemnification. Familiarity with the 1992 and May 1994 orders is assumed.

 Several defendants have moved for reconsideration or clarification of some aspects of the May 1944 order. The motions are granted and the May 1994 order reaffirmed and adhered to in all respects, with the additions which follow.

 II

 One of the questions raised concerns the relationship between sequential events affecting persons who ingested DES, or their offspring or grandchildren. Under the May 1994 order, any event which leads to ill consequences, whether observed or diagnosed then or later, is an injury, occurrence causing injury or event described by similar language under the relevant policies. The occurrence of an event triggering coverage at one time does not prevent subsequent events from likewise triggering coverage, even though Squibb cannot of course recover twice for the same expenses incurred by it.

 Each underlying claim must be examined to determine when injury occurred. Any event constituting such injury as discussed in the May 1994 order is sufficient to trigger coverage. Where an event has continuing effects which continue to enhance the ill effects felt by the victim of the injury, as a result of amplification through otherwise normal bodily processes or otherwise, the injury will be continuing so long as such effects continue.

 These principles should be sufficiently clear to provide the necessary guidance to the parties without the need for the court to rule on each possible concatenation of events that can be conjured up.

 III

 Questions have also been raised concerning the relationship between an event triggering coverage as described above and in the May 1994 order, and settlements by initial level insurers. For an excess insurer to be liable to Squibb, the requirements of the insurance policy issued to Squibb by that carrier must be satisfied.

 The first requisite for such liability, since all relevant policies contain a requirement of injury (expressed in that way or by similar language), is that injury as defined in the May 1994 order as amplified in part II above must occur during a period of time covered by the excess insurer's policy.

 The second requisite is that any initial level insurance required by the excess carrier's policy to have been exhausted be in fact so exhausted. As set forth in the May 1994 order, such exhaustion may occur by payment or settlement, provided the settlement is noncollusive and at arm's length. As indicated in the May 1994 order, it has not been contended that any settlements involved in this case were collusive or other than at arm's length.

 The two requisites are separate and independent. Any limitation on triggers for coverage agreed upon between one insurer and Squibb for settlement purposes has no effect on whether or not another carrier is liable. By way of illustration, assume that insurer A agrees with Squibb in a settlement that in return for various immediate payments or other consideration, only manifestation or diagnosis will trigger that insurer's coverage. No other insurer, excess or ...


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