In a unanimous opinion issued January 19, 2006, the
United States Court of Appeals for the Third Circuit overturned a 2003
arbitration award that purported to relieve St. Paul Travelers of its
obligation to provide insurance coverage for so-called non-products
asbestos claims against ACandS, Inc., according to Gilbert Heintz &
Randolph.
ACandS, which currently is in bankruptcy, has been named as a defendant in thousands of asbestos suits and faces billions of dollars in potential liability.
The Third Circuit's opinion, written by Judge Samuel Alito, ruled that the arbitration award violated the bankruptcy code, and was "therefore void ab initio." In so doing, the court vacated the order of the United States District Court that had upheld the arbitration ruling.
The Third Circuit held that ACandS "is still entitled to a 45 percent allocation of claims to the policies' operations (non-products) coverage," which, the Court noted, "is limited by a $1 million per occurrence limit but has no aggregate cap, meaning that Travelers' exposure to asbestos claims arising from ACandS's operations during the years 1976-79 was potentially unlimited."
"This is an important victory for ACandS and its creditors," said David B. Killalea, partner with Gilbert Heintz & Randolph LLP, counsel for ACandS. "The Travelers insurance coverage is the most important asset of ACandS's bankruptcy estate, and the Third Circuit's decision is critical to assuring that Travelers honors its substantial policy obligations. We have great confidence that ACandS will prevail in any further attempts by Travelers to deny coverage."
Although ACandS's total liability has not been estimated, the court noted that ACandS already has pending more than $2.6 billion in settlements.
ABOUT GILBERT HEINTZ & RANDOLPH
Based in Washington, DC, Gilbert Heintz & Randolph specializes in four primary areas of law: Complex Dispute Resolution, Insurance Recovery, Strategic Risk Management, and Bankruptcy Representation.
ACandS, which currently is in bankruptcy, has been named as a defendant in thousands of asbestos suits and faces billions of dollars in potential liability.
The Third Circuit's opinion, written by Judge Samuel Alito, ruled that the arbitration award violated the bankruptcy code, and was "therefore void ab initio." In so doing, the court vacated the order of the United States District Court that had upheld the arbitration ruling.
The Third Circuit held that ACandS "is still entitled to a 45 percent allocation of claims to the policies' operations (non-products) coverage," which, the Court noted, "is limited by a $1 million per occurrence limit but has no aggregate cap, meaning that Travelers' exposure to asbestos claims arising from ACandS's operations during the years 1976-79 was potentially unlimited."
"This is an important victory for ACandS and its creditors," said David B. Killalea, partner with Gilbert Heintz & Randolph LLP, counsel for ACandS. "The Travelers insurance coverage is the most important asset of ACandS's bankruptcy estate, and the Third Circuit's decision is critical to assuring that Travelers honors its substantial policy obligations. We have great confidence that ACandS will prevail in any further attempts by Travelers to deny coverage."
Although ACandS's total liability has not been estimated, the court noted that ACandS already has pending more than $2.6 billion in settlements.
ABOUT GILBERT HEINTZ & RANDOLPH
Based in Washington, DC, Gilbert Heintz & Randolph specializes in four primary areas of law: Complex Dispute Resolution, Insurance Recovery, Strategic Risk Management, and Bankruptcy Representation.