Irell & Manella knows how to make an insurance policy work in a client’s favor.
A team of litigators at Irell & Manella lent a hand in six years of asbestos litigation for The Flintkote Co. that ended in a $150 million settlement with Aviva Insurance Co. of Canada in July. The former maker of building materials had filed for bankruptcy protection in 2004, citing spiraling expenses for asbestos claims. It is facing hundreds of thousands of claims tied to asbestos injuries. A bankruptcy court OK'd the settlement with Aviva in late July. With the appeal period recently lapsed, Irell & Manella partner and lead trial counsel Marc Maister said: “It’s final now. The company received money last week.”
Flintkote had originally paid a premium of about $7,000 back in the 1950s for a policy that covered $100,000 “per occurrence” of injury per person. With no aggregate limit on the policy, it didn’t matter how many “occurrences” there were, Maister said, but Aviva argued to reduce the avalanche of claims to just one.
Aviva didn’t defend any claims against Flintkote so other insurers picked up the tab, he said. That depleted their limits and prematurely exhausted those policies.
“We argued, and the judge agreed, that had Aviva paid the prior claims Flintkote would today have had more insurance available to pay future claims,” Maister said. “The fact that the earlier policies had to be prematurely depleted was found to be a damage to Flintkote, assuming the policies that should not have been depleted would have responded to claims in the future.”
In a detailed opinion from 2008 (.pdf), Judge Marilyn Hall Patel of Northern District of California, endorsed what she described as Flintkote’s novel damages theory, “one that apparently has been neither adopted nor rejected by any court.” She added that the court had concluded Flintkote was harmed by Aviva's breach, and that it should pay future claims follows from straightforward application of general principles of contract law.
The recovery will nearly double Flintkote’s current estate and help pay for asbestos bodily injury claims, said John Bay, the company’s in-house counsel who oversaw the litigation in a press statement. He praised Irell’s trial team, which also included Mike Fehner, Laura Seigle, Bruce Wessel, Chris Fromherz, Cathy Moses, Debra Deardorff, Lori Hiles, Kathie Brozzo, Brian Bark, and Wendy Sugg, among others. “Their ability to make complex issues simple was instrumental in securing victory after victory in this case,” Bay said in the statement. “They literally won everything put before the court.”
Aviva was represented by San Jose's Robinson & Wood, with partner Jesse Ruiz as lead counsel and partners Bonnie Ross and Archie Robinson rounding out the team.