Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
Live Chat
January 18, 2022
Conspicuous, Plain and Clear Exclusinon of Injury Arising Out of Asbestos Removal is Effective

Read the full article at https://www.linkedin.com/pulse/injured-while-abating-asbestos-clearly-excluded-zalma-esq-cfe and at https://zalma.com/blog plus more than 4050 posts.

Injured While Abating Asbestos Clearly Excluded

Posted on January 18, 2022 by Barry Zalma

After a fire on one of its refineries injured two workers, killing one of them, appellant Motiva Enterprises LLC (Motiva) sought insurance coverage from the companies that insured the contractor that employed the workers. In Motiva Enterprises LLC v. National Fire & Marine Insurance Company, Axis Surplus Insurance Company et al., Maxum Indemnity Company, A159229, A159231, A159233, California Court of Appeals, First District, First Division (January 10, 2022) the Court of Appeal resolved the dispute.

The trial court concluded on summary judgment that because the workers had been abating asbestos, the relevant policies’ asbestos exclusions barred coverage. The Court of Appeal was asked to find coverage for Motiva.

FACTUAL BACKGROUND

Motiva is one of the world’s largest gasoline and diesel fuel refiners and suppliers and owns and operates the largest refinery in North America, located in Port Arthur, Texas. Under an agreement dated December 1, 2015, Motiva hired Excel Modular Scaffold and Leasing Corp. (Excel) to abate asbestos at the Port Arthur refinery. The agreement incorporated a broader “Framework Agreement.” Under the Framework Agreement, Motiva was to enroll Excel in its “Rolling Contractor Insurance Program.”

Excel also purchased insurance policies from AXIS Surplus Insurance Company (AXIS), Endurance American Specialty Insurance Company (Endurance), Maxum Indemnity Company (Maxum), and National Fire & Marine Insurance Company (National Fire). Each policy contained exclusions clauses, which “remove coverage for risks that would otherwise fall within the insuring clause.

Although all four policies included asbestos exclusions, the trial court disposed of the case by focusing on two of them: one in a primary policy issued by AXIS and one in the National Fire policy. The primary policy issued by AXIS excluded coverage for bodily injury “arising directly or indirectly” out of “the abating, … cleaning up, removing, . . . remediation or disposing of, or in any way responding to” asbestos. AXIS, Endurance, and Maxim all issued excess polices that adopted the asbestos exclusion in the AXIS primary policy. The National Fire policy excluded coverage for bodily injury “arising out of . . . [the] removal of . . . asbestos.”

An Excel crew was working to abate asbestos at the Port Arthur refinery from a section of a refinery line that was 60 feet in the air. After the asbestos was removed, the crew was lowered to the ground and started to wash the area with what they thought was water to remove any remaining asbestos from the scaffolding. But because of equipment or mechanical issues that are described in a sealed report, they actually sprayed a flammable liquid, causing an explosion and fire. One crew member suffered severe burns and later died, and his supervisor suffered neck injuries and posttraumatic stress disorder.

The supervisor and the deceased crew member’s survivors sued Motiva in Texas for the company’s alleged negligence. Motiva ultimately paid them as part of a settlement.

Motiva sued the insurers seeking indemnification for the settlement payment from Excel’s insurers. As amended, the complaint alleged causes of action for declaratory relief, breach of contract, and breach of the implied covenant of good faith and fair dealing.

The trial court issued orders separately granting the motions of Axis and Endurance, Maxum, and National Fire, all on the sole ground that the asbestos exclusion in either the AXIS or National Fire policy barred coverage.

DISCUSSION

The trial court relied on policy exclusions that barred coverage for any injuries “arising out of” asbestos abatement/removal. Insurance coverage is interpreted broadly to afford the insured the greatest possible protection, whereas exclusion clauses are to be interpreted narrowly against the insurer. But California courts have interpreted the terms “arising out of” or ‘arising from” broadly. It is settled that this language does not import any particular standard of causation or theory of liability into an insurance policy. Rather, it broadly links a factual situation with the event creating liability, and connotes only a minimal causal connection or incidental relationship.

It is undisputed that the victims who sued Motiva were working to abate asbestos on the date of the accident, and that their injuries were caused by a fire that occurred at the refinery at the end of their workday. Given these undisputed facts, it appears straightforward that the injuries arose out of asbestos abatement.

Motiva contends the asbestos exclusions did not apply because asbestos did not “cause” the accident under a “proximate causation” analysis. The California Supreme Court has construed Insurance Code section 530 as incorporating into California law the efficient proximate cause doctrine, an interpretive rule for first party insurance. The doctrine is the preferred method for resolving first party insurance disputes involving losses caused by multiple risks or perils, at least one of which is covered by insurance and one of which is not. The claims sought coverage, however, under a third party policy.

Motiva has failed to establish the existence of a covered event other than the asbestos-removal activities that concurrently caused the accident. It relies on a series of cases where courts analyzed whether concurrent causes resulted in injury, but these cases are inapplicable because here there were no such concurrent causes of the fire. Here there is no dispute that there was a connection between asbestos removal and the victims’ injuries.

The deadly fire would not have happened but for the asbestos abatement.  It is simply not the case that Motiva’s alleged liability is completely divorced from asbestos or asbestos abatement.

It is established that an insurer cannot escape its basic duty to insure by means of an exclusionary clause that is unclear. Any exception to the performance of the basic underlying obligation to defend and indemnify must be so stated as clearly to apprise the insured of its effect. Thus, the burden rests upon the insurer to phrase exceptions and exclusions in clear and unmistakable language. The exclusionary clause must be conspicuous, plain and clear. This rule applies with particular force when the coverage portion of the insurance policy would lead an insured to reasonably expect coverage for the claim purportedly excluded.

The burden is on the insured to establish that the claim is within the basic scope of coverage and on the insurer to establish that the claim is specifically excluded.

Motiva focuses on AXIS’s primary policy. The policy included a section titled “EXCLUSION-ASBESTOS” that, as Motiva acknowledges, excluded coverage for bodily injury arising directly or indirectly out of, among other things, “[a]ny loss, cost or expenses arising out of the abating, testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing, remediation or disposing of, or in any way responding to, or assessing the effects of asbestos, asbestos fibers, or any other form of asbestos, by any insured or by any other person or entity.” It further excluded coverage for “[a]ny injury or damage caused or alleged to have been caused by the removal, eradication, detoxification, remediation or decontamination of asbestos or property containing asbestos.” Contrary to Motiva’s contention, this is hardly language that would leave an ordinary insured-much less one of the largest gasoline and diesel fuel refiners in the world-“hopelessly confused by its overlapping provisions and its arcane language.”

ZALMA OPINION

Since there was no dispute that the injured workers were abating asbestos, the Court of Appeal had no need to rely on any strained or absurd definitions of those terms to conclude that the exclusion applies. Insurance policies are contracts. When, as in this case, an exclusions is conspicuous, plain and clear a court has no option but to enforce the exclusion.

© 2022 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome.

You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, [email protected] and [email protected] . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma;  you can follow Mr. Zalma on Twitter at; you should  see Barry Zalma’s videos on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/ 

Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
20 hours ago
Allegations That Establish Breach of a Condition Defeats Suit

Notice of Claim Later than 60 Days After Expiration is Too Late

Post 5089

Injury at Massage Causes Suit Against Therapist

Read the full article at https://lnkd.in/gziRzFV8, see the full video at https://lnkd.in/gF4aYrQ2 and at https://lnkd.in/gqShuGs9, and at https://zalma.com/blog plus more than 5050 posts.

Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.

In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.

FACTUAL BACKGROUND

Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...

00:08:31
June 02, 2025
Zalma’s Insurance Fraud Letter – June 1, 2025

ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma

Post 5087

See the full video at and at

Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf

Zalma’s Insurance Fraud Letter – June 1, 2025

See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.

ZIFL – Volume 29, Issue 11

The Source for the Insurance Fraud Professional

Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...

00:08:42
placeholder
May 30, 2025
Plain Language of Policy Enforced

No Coverage if Home Vacant for More Than 60 Days

Failure to Respond To Counterclaim is an Admission of All Allegations

Post 5085

See the full video at https://lnkd.in/gbWPjHub and at https://lnkd.in/gZ9ztA-P, and at https://zalma.com/blog plus more than 5050 posts.

In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.

BACKGROUND

On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.

Plaintiff filed suit ...

00:06:50
May 15, 2025
Zalma's Insurance Fraud Letter - May 15, 2025

ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional

See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:

Health Care Fraud Trial Results in Murder for Hire of Witness

To Avoid Conviction for Insurance Fraud Defendants Murder Witness

In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...

May 15, 2025
CGL Is Not a Medical Malpractice Policy

Professional Health Care Services Exclusion Effective

Post 5073

See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.

This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.

In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:

Insurance Coverage Dispute:

Travelers issued a Commercial General Liability ...

April 30, 2025
The Devil’s in The Details

A Heads I Win, Tails You Lose Story
Post 5062

Posted on April 30, 2025 by Barry Zalma

"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime."

Immigrant Criminals Attempt to Profit From Insurance Fraud

People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.

The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...

post photo preview
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals