The 4th U.S. Circuit Court of Appeals on Thursday reversed a trial judge’s ruling that a specialty insurer was not obligated to defend a New York-based chemical company against a man’s lawsuit claiming he developed cancer from exposure to a wood preservative.
The three-judge appellate court panel in Koppers Performance Chemicals Inc. v. Argonaut-Midwest Insurance Co. et al. ruled that the insurer wrongfully disclaimed its duty to defend or indemnify the company.
Philip H. Riley and his wife sued Koppers in South Carolina state court in 2014, claiming his exposure to a wood preservative made by the company’s Honolulu, Hawaii-based predecessor, Osmose Wood Preserving Co. of America Inc., contained chromated copper arsenate which caused him to develop cancer.
Argo Group unit Argonaut sought additional information from Koppers after it tendered the lawsuit to the insurer. Koppers responded by providing Mr. Riley’s deposition testimony, which stated that he grew up in a family that owned a fence building business that used wood treated with Osmose’s product. He said during his deposition that he was exposed to the chemical from birth until his family stopped working with the chemical in 1992, court records show.
Argonaut refused to provide a defense or indemnification, saying policies issued to Osmose between 1979 and 1982 only provided coverage for its Hawaii-based operations.
Koppers later settled Mr. Riley’s suit and sued Argonaut in federal court in Charleston, South Carolina, for allegedly breaching its coverage obligations. Argonaut won summary judgment after the trial judge found that the policies were limited to Osmose’s Hawaii operations and that the insurer did not have to consider the additional information it sought from Koppers about the details of Mr. Riley’s allegations.
The panel, applying Hawaii law, said Argonaut should have considered the deposition testimony when making its coverage determination because it requested the additional information from Koppers.
The appeals court also found that policies in effect between 1979 and 1982 did not clearly say that coverage was limited to the Osmose’s Hawaii operations.
Representatives for the parties did not respond to requests for comment.
