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?
September 20, 2022
Asbestos Plaintiffs Ran Out of Viable Insurers

Even the Eight Corners Rule Cannot Stretch a Policy to Provide Coverage
Barry Zalma

Read the full article at https://lnkd.in/g_VGi4eM and see the full video at https://lnkd.in/gJN7xsab and at https://lnkd.in/g7E4aWEA and at https://zalma.com/blog plus more than 4300 posts.

Brilliant National Services, Inc. (“Brilliant”) appealed a summary judgment rendered in favor of the defendant, Lexington Insurance Company (“Lexington”), which dismissed all of Brilliant’s claims against Lexington with prejudice and declared that Lexington has no duty to defend or indemnify Coastal Chemical Company, LLC (“CCC, LLC”).

In Brilliant National Services, Inc. v. The Travelers Indemnity Company And Lexington Insurance Company, No. 2021 CA 1471, Court of Appeals of Louisiana, First Circuit (September 7, 2022) the Louisiana Court of Appeals resolved the coverage dispute.
FACTS

Brilliant sued Lexington (among other defendants), seeking contribution for the costs of defending CCC, LLC in a number of asbestos exposure personal injury lawsuits filed in various state courts in Louisiana, beginning in 2011. Brilliant alleged that Lexington issued a general liability insurance policy to its insureds for the period of August 20, 1986, through August 20, 1987 (“Lexington policy”).

Brilliant alleged that certain plaintiffs in the asbestos lawsuits claimed that CCC, LLC was the successor to an insured entity under the Lexington policy that was alleged to have manufactured, distributed, marketed, or sold asbestos-containing products. Brilliant claimed that if CCC, LLC was found to be the successor to an insured entity under that Lexington policy, then the insured entity’s rights under the policy transferred to CCC, LLC by operation of law. Brilliant further alleged that regardless of whether CCC, LLC was the successor of an entity insured under the policy, Lexington owed CCC, LLC a duty to defend based on the allegations raised in the asbestos lawsuits and the terms and conditions of the Lexington policy.

Brilliant sought declaratory judgment that Lexington owed a duty to defend CCC, LLC in the asbestos lawsuits. Brilliant also sought judgment in its favor and against Lexington for 1/7 of all attorney’s fees and costs paid by Brilliant in defense of CCC, LLC in the asbestos lawsuits, together with legal interest, costs, and all other relief to which Brilliant may be entitled.

Lexington answered, raising numerous affirmative defenses and moved for summary judgment, seeking a judgment in its favor declaring that CCC, LLC has no rights under the Lexington policy; dismissing the claims asserted by Brilliant; and awarding judgment in favor of Lexington on itsdemand against Brilliant and CCC, LLC. Brilliant and CCC, LLC opposed the motion. The trial court granted Lexington’s motion for summary judgment; dismissed all of Brilliant’s claims against Lexington with prejudice; and declared that Lexington has no duty to defend or indemnify CCC, LLC.
SUMMARY JUDGMENT ON INSURANCE COVERAGE

Summary judgment declaring a lack of coverage under an insurance policy may not be rendered unless there is no reasonable interpretation under which coverage could be afforded when applied to the undisputed material facts shown by the evidence supporting the motion. Where the facts are undisputed and the matter presents a purely legal question, summary judgment is appropriate.
DISCUSSION

An insurer’s duty to defend its insured arises solely under contract. Generally, the insurer’s obligation to defend suits against its insured is broader than its liability for damage claims. An insurer’s duty to defend its insured is determined by the allegations of the plaintiffs petition, with the insurer obligated to furnish a defense unless from the petition, it is clear the policy unambiguously excludes coverage. An insurer’s duty to defend suits on behalf of an insured presents a separate and distinct inquiry from that of the insurer’s duty to indemnify a covered claim after judgment against the insured in the underlying liability case.
Lexington’s Insureds

In moving for summary judgment, Lexington argued that it had no duty to defend or indemnify CCC, LLC, nor its subrogee, Brilliant, because CCC, LLC is not and has never been one of Lexington’s “insureds.”

The Lexington policy defined “named insured” as: “‘named insured’ means the person or organization named in Item 1 of the declarations of this policy[.]” The policy lists the “named insured” as Coastal, Inc. and Coastal Chemical Co.

Coastal, Inc. and Coastal Chemical Co. were the “Persons Insured” under the Lexington Policy. The parties do not dispute that the Lexington policy expired prior to the formation of CCC, LLC’s predecessor, the second Coastal Chemical Co., Inc., which was incorporated on December 8, 1987. Because neither CCC, LLC nor its predecessor was a party to the Lexington policy, CCC, LLC cannot be a “named insured” under the Lexington policy. Furthermore, neither CCC, LLC nor its predecessor falls into the definition of “Persons Insured” under the Lexington Policy.
Successor Liability

Lexington argued that CCC, LLC could only be entitled to defense and indemnity under the Lexington policy if CCC, LLC or its predecessor acquired the named insureds’-Coastal, Inc. or Coastal Chemical Co.-rights and interests in the Lexington policy. Lexington explained that its policy has never been transferred to CCC, LLC or its predecessor. In 1987, Coastal Chemical Co., Inc. acquired the chemical distribution business of Lexington’s insured, Coastal, Inc. Brilliant and CCC, LLC identified the 1987 asset transfer agreement as the only documents through which the Lexington policy could have been conveyed, sold, or otherwise transferred from Lexington’s insured to Coastal Chemical Co., Inc. The 1987 asset transfer agreement documents shows a list of transferred assets and the Lexington policy is not listed nor referenced in the asset transfer agreement.

Lexington avers that because its policy was not transferred from its insureds to Coastal Chemical Co., Inc. in the 1987 asset transfer agreement, CCC, LLC never acquired the policy nor any rights thereunder from its predecessor. Accordingly, Lexington argued it has no obligation to defend or indemnify CCC, LLC or its subrogee, Brilliant.

The key consideration is whether the successor is in fact a “continuation” of the predecessor. The threshold requirement to trigger a determination of whether successor liability is applicable under the “continuation” exception is that one corporation must have purchased all or substantially all the assets of another. In the instant case, CCC, LLC admits that Coastal Chemical Co., Inc. did not purchase all the assets of Coastal, Inc., only all the assets “necessary to operate a chemical distribution business.” There is no dispute that Coastal, Inc. retained assets and remained in business after the 1987 asset transfer.

Since the 1987 asset transfer agreement excluded the Lexington policy from the list of assets acquired by CCC, LLC’s predecessor from Lexington’s insured. To conclude that CCC, LLC acquired the Lexington policy, the appellate court would have to ignore the parties’ contract.
The Eight-Corners Rule

Lexington contended that the appellants could not point to any factual allegations made by the plaintiffs in the underlying asbestos lawsuits which, if assumed true, transforms CCC, LLC into a “Persons Insured” under the Lexington policy.

Cases applying the “eight-comers rule” hold that an insurer owes a duty to defend if, assuming the factual allegations are true, there would be both (1) coverage under the policy, and (2) liability to the plaintiff.

The allegations of the petition are liberally interpreted in determining whether they set forth grounds that bring the claims within the scope of the insurer’s duty to defend. An insurer’s duty to defend arises whenever the pleadings against the insured disclose even a possibility of liability under the policy. Although the allegations of the petition may ultimately turn out to be incorrect or untrue, the insurer would still be obligated to provide a defense.

Even though the asbestos plaintiffs allege that CCC, LLC “negligently and defectively designed, manufactured, marketed, distributed, supplied, sold and used” the “asbestos products,” those allegations do not trigger coverage under the four comers of the Lexington policy. The pertinent Lexington policy provision clearly defines “Persons Insured” and includes only specific individuals. None of the asbestos plaintiffs’ allegations could, even if proven, transform CCC, LLC into an individual defined as a “Persons Insured” under the Lexington Policy-i.e., an executive officer, director, or stockholder of the “named insured” Coastal, Inc. or Coastal Chemical Co.

The Court of Appeal affirmed the trial court’s judgment.
ZALMA OPINION

Asbestos claims have destroyed or bankrupted multiple insurers. As a result those insurers still viable are, like Lexington in this case, the targets of defendants seeking defense and indemnity for claims of injury by exposure to asbestos. In this case the Louisiana Court of Appeal could find no coverage because there was no way that they could stretch the language of the policy to make the plaintiffs fit within the definition of “insured” in the Lexington policy. No stranger to a liability insurance policy can be allowed defense or indemnity.

(c) 2022 Barry Zalma & ClaimSchool, Inc.
This image has an empty alt attribute; its file name is Books-by-Barry-Zalma-Esq.-CFE-1024x576.jpg

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 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. He is available at http://www.zalma.com and [email protected].

Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.

Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.
This image has an empty alt attribute; its file name is TORTOFBAD-FAITH.png

Now available Barry Zalma’s newest book, The Tort of Bad Faith, available here.

The new book is available as a Kindle book, a paperback or as a hard cover.

Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/

00:14:44
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
September 26, 2025
No Way Out After Murder Conviction

Intentionally Shooting a Woman With A Rifle is Murder

Post 5196

See the full video at and at and at https://zalma.com/blog and more than 5150 posts.

You Plead Guilty You Must Accept the Sentence

In Commonwealth Of Pennsylvania v. Mark D. Redfield, No. 20 WDA 2025, No. J-S24010-25, Superior Court of Pennsylvania (September 19, 2025) the appellate court reviewed the case of Mark D. Redfield, who pleaded guilty to third-degree murder for killing April Dunkle with malice using a rifle.

Affirmation of Sentence:

The sentencing court’s judgment was affirmed, and jurisdiction was relinquished, concluding no abuse of discretion occurred.

Reasonable Inference on Trigger Pulling:

The sentencing court reasonably inferred from the guilty plea facts that the appellant pulled the trigger causing the victim’s death, an inference supported by the record and consistent with the plea.

Guilty Plea Facts:

The appellant admitted during the plea hearing...

00:07:16
placeholder
September 25, 2025
Prelitigation Communications Privileged

The Judicial Proceedings Privilege
Post 5196

Posted on September 25, 2025 by Barry Zalma

See the full video at and at

Judicial Proceeding Privilege Limits Litigation

In David Camp, and Laura Beth Waller v. Professional Employee Services, d/b/a Insurance Branch, and Brendan Cassity, CIVIL No. 24-3568 (RJL), United States District Court, District of Columbia (September 22, 2025) a defamation lawsuit filed by David Camp and Laura Beth Waller against Insurance Branch and Brendon Cassity alleging libel based on statements made in a letter accusing them of mishandling funds and demanding refunds and investigations.

The court examined whether the judicial proceedings privilege applieD to bar the defamation claims.

Case background:

Plaintiffs Camp and Waller, executives of NOSSCR and its Foundation, sued defendants Insurance Branch and Cassity over a letter alleging financial misconduct and demanding refunds and audits. The letter ...

00:07:56
placeholder
September 24, 2025
Untrue Application for Insurance Voids Policy

Misrepresentation or Concealment of a Material Fact Supports Rescission

Post 5195

Don’t Lie to Your Insurance Company

See the full video at and at https://rumble.com/v6zefq8-untrue-application-for-insurance-voids-policy.html and at https://zalma.com/blog plus more than 5150 posts.

In Imani Page v. Progressive Marathon Insurance Company, No. 370765, Court of Appeals of Michigan (September 22, 2025) because defendant successfully established fraud in the procurement, and requested rescission, the Court of Appeals concluded that the Defendant was entitled to rescind the policy and declare it void ab initio.

FACTS

Plaintiff's Application:

Plaintiff applied for an insurance policy with the defendant, indicating that the primary use of her SUV would be for "Pleasure/Personal" purposes.

Misrepresentation:

Plaintiff misrepresented that she would not use the SUV for food delivery, but records show she was compensated for delivering food.

Accident:

Plaintiff's SUV was involved in an accident on August ...

00:07:48
September 09, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help 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.

How Elderly Doctors Fund their ...

placeholder
September 08, 2025
The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma

See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.

The Dishonest Chiropractor/Physician

How a Need for Profit Led Health Care Providers to Crime

See the full video at and at

This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help 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.

How Elderly Doctors Fund their ...

placeholder
September 03, 2025

Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit

© 2025 Barry Zalma, Esq., CFE

When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.

On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...

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