ASTENJOHNSON, INC. v. ALLSTATE INSURANCE COMPANY et al Complaint

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA ASTENJOHNSON, INC. 4399 Corporate Road Charleston, SC 29423-8001 Plaintiff, v. ALLSTATE INSURANCE COMPANY 3075 Sanders Road, Suite G2H Northbrook, ILL. 60062-7127 AMERICAN INSURANCE COMPANY 777 San Marin Drive Novato, CA 94998 CENTURY INDEMNITY COMPANY (as successor to CCI INSURANCE COMPANY, as successor to INSURANCE COMPANY OF NORTH AMERICA) Two Liberty Place 1601 Chestnut Street Philadelphia, PA 19103 CCI INSURANCE COMPANY (as successor to INSURANCE COMPANY OF NORTH AMERICA) Two Liberty Place 1601 Chestnut Street Philadelphia, PA 19103 INSURANCE COMPANY OF NORTH AMERICA Two Liberty Place 1601 Chestnut Street Philadelphia, PA 19103 Defendants. COMPLAINT Plaintiff, AstenJohnson, Inc. ("AstenJohnson"), by its undersigned counsel, as its JURY TRIAL DEMANDED Civil Action No.

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Complaint, alleges as follows: NATURE OF ACTION 1. This is an action for declaratory judgment, breach of contract, bad faith,

and breach of fiduciary duty arising out of the refusal of the insurance company defendants to provide insurance coverage to AstenJohnson for underlying asbestos and other bodily injury claims as required by the insurance policies that AstenJohnson's predecessors-in-interest purchased from them and other wrongful conduct. PARTIES 2. AstenJohnson is a corporation organized and existing under the laws of

the State of Delaware, with its principal place of business at 4399 Corporate Road, Charleston, South Carolina. AstenJohnson is the successor-in-interest to all of the entities listed as named insureds in the insurance policies discussed herein. 3. Defendant Allstate Insurance Company ("Allstate") is an insurance

company organized and existing under the laws of the State of Illinois with its principal place of business located at 3075 Sanders Road, Suite G2H, Northbrook, Illinois. At all times relevant hereto, Allstate is and was licensed to transact business in the Commonwealth of Pennsylvania, and Allstate does and did transact business in the Commonwealth of Pennsylvania. 4. Defendant American Insurance Company ("American") is an insurance

company organized and existing under the laws of the State of Nebraska with its principal place of business at 777 San Marin Drive, Novato, California 94998. At all times relevant hereto, American is and was licensed to transact business in the Commonwealth of Pennsylvania, and American does and did transact business in the Commonwealth of Pennsylvania.

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5.

Insurance Company of North America (“INA”) is an insurance company

organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business located at Two Liberty Place, 1601 Chestnut Street, Philadelphia, Pennsylvania. 6. CCI Insurance Company (“CCI”) is an insurance company organized and

existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business located at Two Liberty Place, 1601 Chestnut Street, Philadelphia, Pennsylvania. CCI is purported to be the corporate successor to INA. 7. Century Indemnity Company (“Century”) is an insurance company

organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business located at Two Liberty Place, 1601 Chestnut Street, Philadelphia, Pennsylvania. Century is purported to be the corporate successor to CCI. (INA, CCI and Century are collectively referred to herein as the “INA Defendants.”). 8. At all times relevant hereto, the INA Defendants are and were licensed to

transact business in the Commonwealth of Pennsylvania, and the INA Defendants do and did transact business in the Commonwealth of Pennsylvania. JURISDICTION AND VENUE 9. The subject matter jurisdiction of this Court is based upon 28 U.S.C. §

1332, in that there is complete diversity of citizenship among the parties, and the amount in controversy exceeds $75,000, exclusive of interest and costs.

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10.

Venue is proper in this District pursuant to 28 U.S.C. § 1391, in that a

substantial part of the events giving rise to this action occurred in this District and the INA Defendants, Allstate, and American all reside in this District. FACTUAL BACKGROUND Background Of AstenJohnson's Business 11. At all times relevant hereto, AstenJohnson engaged in the manufacture

and distribution of products, including dryer fabrics containing chrysotile asbestos, at least between the 1960s and 1980. Underlying Asbestos-Related Claims Against AstenJohnson 12. Since the late 1970s, tens of thousands of claimants (collectively, the

"Claimants") have named AstenJohnson as defendants in thousands of lawsuits filed in federal and state courts in approximately twenty-four states (the "Underlying Actions"). AstenJohnson is also continuing to be sued in thousands of similar actions. 13. Claimants in the Underlying Actions typically have sought and seek

damages for purported bodily injuries, diseases, and fear of contracting same, allegedly resulting from alleged exposure to chrysotile asbestos-containing products manufactured, sold, and distributed by AstenJohnson. 14. The Claimants in the Underlying Actions typically allege exposure to

asbestos over extended periods of time covering multiple years, with injuries purportedly occurring from the date of the first alleged exposure to the present.

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AstenJohnson's Insurance Program 15. From at least 1963 through at least the early part of 1981, AstenJohnson

was principally located in Philadelphia, Pennsylvania and Devon, Pennsylvania. 16. From at least 1963 through at least the early part of 1981, AstenJohnson,

through its insurance brokers, who were also located in Pennsylvania, purchased primary layer comprehensive general liability insurance policies from a number of entities who are not parties to this suit. 17. From at least 1963 until at least 1981, AstenJohnson, through its insurance

brokers, who were also located in Pennsylvania, purchased various umbrella liability insurance policies from, among others, the INA Defendants, Allstate, and American (collectively, the "First-Layer Umbrella Policies"). 18. The First-Layer Umbrella Policies were delivered to AstenJohnson at its

headquarters in Philadelphia and/or Devon, Pennsylvania. The INA Umbrella Policies The 1963-67 INA Umbrella Policies 19. Prior to November 1, 1963, AstenJohnson purchased INA Policy No.

XBC 2467, which provided insurance coverage for the period between November 1, 1963 and April 1, 1967 (the "1963-67 INA Umbrella Policies," a copy of which is attached as Exhibit "A" hereto). 20. The 1963-67 INA Umbrella Policies was the first layer umbrella policy

over four consecutive one-year primary comprehensive general liability insurance policies sold to AstenJohnson by Pennsylvania Manufacturers' Association Casualty Insurance Company 5

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("PMA"), and each primary policy period ran from April 1 of one calendar year to April 1 of the next calendar year. 21. The 1963-67 INA Umbrella Policies provided annual indemnity limits of

$1 million per occurrence and in the aggregate in excess over the retained limit, which was defined as the greater of the primary policy limits ($1 million per occurrence and $1 million in the aggregate) or $10,000. 22. The 1963-67 INA Umbrella Policies was an "umbrella liability" insurance

policy, meaning that it provided excess liability coverage in cases where the primary policy provided coverage and it dropped down to provide primary coverage in cases where the primary insurance company did not provide insurance coverage or became exhausted. 23. Pursuant to the terms of the 1963-67 INA Umbrella Policies, INA agreed

to indemnify AstenJohnson for ultimate net loss in excess of a retained limit incurred as a result of bodily injury liabilities, such as was alleged in the Underlying Actions: The company agrees to indemnify the insured for ultimate net loss in excess of the retained limit hereinafter stated, subject to the limitations, conditions, and other terms of this policy, which the insured may sustain by reason of the liability imposed upon the insured by law, or assumed by the insured under contract … [f]or damages, including damages for care and loss of services, because of personal injury, including death at any time resulting therefrom, sustained by any person or persons.

24.

Pursuant to the terms of the 1963-67 INA Umbrella Policies, INA also had

a duty to defend, promising to defend AstenJohnson in underlying actions where, among other things, the underlying insurance was exhausted.

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25.

The defense obligations imposed by the 1963-67 INA Umbrella Policies

required INA to provide and pay for AstenJohnson's defense to claims in addition to and outside of the indemnity limits mentioned in paragraph 21 above. 26. The 1963-67 INA Umbrella Policies defined "personal injury" as, among

other things, "bodily injury, sickness, disease, disability, shock, mental anguish, and mental injury." 27. The 1963-67 INA Umbrella Policies defined "ultimate net loss" as "the

sum actually paid in cash in the settlement or satisfaction of losses for which the insured is liable either by adjudication or compromise with the written consent of the company … but excludes all loss expenses and legal expenses (including attorneys' fees, court costs and interest on any judgment or award." 28. The Underlying Actions aver claims and occurrences that are within the

scope of the coverage provided by the 1963-67 INA Umbrella Policies. The 1967-70 INA Umbrella Policies 29. Prior to April 1, 1967, AstenJohnson purchased a renewal umbrella

liability insurance policy from INA, INA Policy No. XBC 6830, which provided three years of insurance coverage for the period between April 1, 1967 and April 1, 1970 (the "1967-70 INA Umbrella Policies," a copy of which is attached as Exhibit "B" hereto). 30. The 1967-70 INA Umbrella Policies was the first layer umbrella policy

over three consecutive one-year primary comprehensive general liability insurance policies sold

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to AstenJohnson by PMA, and each primary policy period ran from April 1 of one calendar year to April 1 of the next calendar year. 31. The 1967-70 INA Umbrella Policies provided annual indemnity limits of

$1 million per occurrence and in the aggregate in excess over the retained limit, which was defined as the greater of the primary policy limits ($1 million per occurrence and $1 million in the aggregate) or $10,000. 32. The 1967-70 INA Umbrella Policies was an "umbrella liability" insurance

policy, meaning that it provided excess liability coverage in cases where the primary policy provided coverage and it dropped down to provide primary coverage in cases where the primary insurance company did not provide insurance coverage or became exhausted. 33. Pursuant to the terms of the 1967-70 INA Umbrella Policies, INA agreed

to indemnify AstenJohnson for ultimate net loss in excess of a retained limit incurred as a result of bodily injury liabilities, such as was alleged in the Underlying Actions: INA will indemnify the Insured for ultimate net loss in excess of the retained limit hereinafter stated which the Insured shall become legally obligated to pay as damages because of … personal injury … to which this policy applies, caused by an occurrence.

34.

Pursuant to the terms of the 1967-70 INA Umbrella Policies, INA also had

a duty to defend, promising to defend AstenJohnson in underlying actions where, among other things, the underlying insurance was exhausted.

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35.

The defense obligations imposed by the 1967-70 INA Umbrella Policies

required INA to provide and pay for AstenJohnson's defense to claims in addition to and outside of the indemnity limits mentioned in paragraph 31 above. 36. The 1967-70 INA Umbrella Policies defined "personal injury" as, among

other things, "bodily injury, sickness, disease, disability, shock, mental anguish, and mental injury." 37. The 1967-70 INA Umbrella Policies defined "ultimate net loss" as "the

sum actually paid in cash in the settlement or satisfaction of losses for which the Insured is liable either by adjudication or compromise with the written consent of INA … but excludes all loss expenses and legal expenses (including attorneys' fees, court costs and interest on any judgment or award." 38. The Underlying Actions aver claims and occurrences that are within the

scope of the coverage provided by the 1967-70 INA Umbrella Policies. The 1970-73 INA Umbrella Policies 39. Prior to April 1, 1970, AstenJohnson purchased a second renewal umbrella

liability insurance policy from INA, INA Policy No. XBC 7992, which provided three years of insurance coverage for the period between April 1, 1970 and April 1, 1973 (the "1970-73 INA Umbrella Policies," a copy of which is attached as Exhibit "C" hereto). 40. The 1970-73 INA Umbrella Policies was the first layer umbrella policy

over three consecutive one-year primary comprehensive general liability insurance policies sold

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to AstenJohnson by PMA, and each primary policy period ran from April 1 of one calendar year to April 1 of the next calendar year. 41. The 1970-73 INA Umbrella Policies provided annual indemnity limits of

$1 million per occurrence and in the aggregate in excess over the retained limit, which was defined as the greater of the primary policy limits ($1 million per occurrence and $1 million in the aggregate) or $10,000. 42. The 1970-73 INA Umbrella Policies was an "umbrella liability" insurance

policy, meaning that it provided excess liability coverage in cases where the primary policy provided coverage and it dropped down to provide primary coverage in cases where the primary insurance company did not provide insurance coverage or became exhausted. 43. Pursuant to the terms of the 1970-73 INA Umbrella Policies, INA agreed

to indemnify AstenJohnson for ultimate net loss in excess of a retained limit incurred as a result of bodily injury liabilities, such as was alleged in the Underlying Actions: INA will indemnify the Insured for ultimate net loss in excess of the retained limit hereinafter stated which the Insured shall become legally obligated to pay as damages because of … personal injury … to which this policy applies, caused by an occurrence.

44.

Pursuant to the terms of the 1970-73 INA Umbrella Policies, INA also had

a duty to defend, promising to defend AstenJohnson in underlying actions where, among other things, the underlying insurance was exhausted.

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45.

The defense obligations imposed by the 1970-73 INA Umbrella Policies

required INA to provide and pay for AstenJohnson's defense to claims in addition to and outside of the indemnity limits mentioned in paragraph 41 above. 46. The 1970-73 INA Umbrella Policies defined "personal injury" as, among

other things, "bodily injury, sickness, disease, disability, shock, mental anguish, and mental injury." 47. The 1970-73 INA Umbrella Policies defined "ultimate net loss" as "the

sum actually paid or payable in cash in the settlement or satisfaction of losses for which the Insured is liable either by adjudication or compromise with the written consent of INA … but excludes all loss expenses and legal expenses (including attorneys' fees, court costs and interest on any judgment or award." 48. The Underlying Actions aver claims and occurrences that are within the

scope of the coverage provided by the 1970-73 INA Umbrella Policies. The 1973-76 INA Umbrella Policies 49. Prior to April 1, 1973, AstenJohnson purchased a third renewal umbrella

liability insurance policy from INA, INA Policy No. XBC 8734, which provided three years of insurance coverage for the period between April 1, 1973 and April 1, 1976 (the "1973-76 INA Umbrella Policies," a copy of which is attached as Exhibit "D" hereto). 50. The 1973-76 INA Umbrella Policies was the first layer umbrella policy

over three consecutive one-year primary comprehensive general liability insurance policies sold

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to AstenJohnson by PMA, and each primary policy period ran from April 1 of one calendar year to April 1 of the next calendar year. 51. The 1973-76 INA Umbrella Policies provided annual indemnity limits of

$1 million per occurrence and in the aggregate in excess over the retained limit, which was defined as the greater of the primary policy limits ($1 million per occurrence and $1 million in the aggregate) or $10,000. 52. The 1973-76 INA Umbrella Policies was an "umbrella liability" insurance

policy, meaning that it provided excess liability coverage in cases where the primary policy provided coverage and it dropped down to provide primary coverage in cases where the primary insurance company did not provide insurance coverage or became exhausted. 53. Pursuant to the terms of the 1973-76 INA Umbrella Policies, INA agreed

to indemnify AstenJohnson for ultimate net loss in excess of a retained limit incurred as a result of bodily injury liabilities, such as was alleged in the Underlying Actions: INA will indemnify the Insured for ultimate net loss in excess of the retained limit hereinafter stated which the Insured shall become legally obligated to pay as damages because of … personal injury … to which this policy applies, caused by an occurrence. 54. Pursuant to the terms of the 1973-76 INA Umbrella Policies, INA also

had a duty to defend, promising to defend AstenJohnson in underlying actions where, among other things, the underlying insurance was exhausted: (1) With respects to any personal injury … not within the terms of the coverage of the underlying insurance but within the terms of coverage of this insurance; or (2) If the limits of liability of the underlying insurance are

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exhausted because of personal injury … during the period of this policy, INA will … have the right and duty to defend any suit against the Insured seeking damages on account of such personal injury … even if the allegations of the suit are groundless, false or fraudulent. 55. The defense obligations imposed by the 1973-76 INA Umbrella Policies

required INA to provide and pay for AstenJohnson's defense to claims in addition to and outside of the indemnity limits mentioned in paragraph 51 above. 56. The 1973-76 INA Umbrella Policies defined "personal injury" as, among

other things, "bodily injury." 57. The 1973-76 INA Umbrella Policies defined "occurrence" as an "accident,

including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the Insured." 58. The 1973-76 INA Umbrella Policies defined "ultimate net loss" as "the

sum actually paid or payable in cash in the settlement or satisfaction of losses for which the Insured is liable either by adjudication or compromise with the written consent of INA … but excludes all loss expenses and legal expenses (including attorneys' fees, court costs and interest on any judgment or award." 59. The Underlying Actions aver claims and occurrences that are within the

scope of the coverage provided by the 1973-76 INA Umbrella Policies.

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The Allstate Umbrella Policies The 1976-77 Allstate Umbrella Policy 60. Prior to April 14, 1976, AstenJohnson changed umbrella liability

insurance companies and purchased an umbrella liability insurance policy from Allstate, Allstate Business Umbrella-Excess Liability Policy No. 28 818 978 EL UEL, which provided one year of insurance coverage for the period between April 14, 1976 and April 14, 1977 (the "1976-77 Allstate Umbrella Policy," a copy of which is attached as Exhibit "E" hereto). 61. The 1976-77 Allstate Umbrella Policy was the first layer umbrella policy

over a three-year primary comprehensive general liability insurance policy sold to AstenJohnson by Allstate, and the primary policy period ran from April 1, 1976 until April 1, 1979. 62. The 1976-77 Allstate Umbrella Policy provided $5 million in per

occurrence and aggregate umbrella liability limits in excess over the primary policy limits ($1 million per occurrence and $1 million in the annual aggregate), if applicable, or the retained limit of $10,000 in the event that the occurrence was not covered by primary insurance. 63. The 1976-77 Allstate Umbrella Policy was an "umbrella liability"

insurance policy, meaning that it provided excess liability coverage in cases where the primary policy provided coverage and it dropped down to provide primary coverage in cases where the primary insurance company did not provide insurance coverage or became exhausted. 64. Pursuant to the terms of the 1976-77 Allstate Umbrella Policy, Allstate

agreed to indemnify AstenJohnson for all sums AstenJohnson would become legally obligated to pay as ultimate net loss in excess of the primary policy limits or the retained limit as a result of bodily injury liabilities, such as was alleged in the Underlying Actions:

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Allstate will indemnify the Insured for all sums the Insured shall become legally obligated to pay as ultimate net loss, because of … Personal Injury … caused by an occurrence during the policy period anywhere in the world. 65. Pursuant to the terms of the 1976-77 Allstate Umbrella Policy, Allstate

also had a duty to defend, promising to defend AstenJohnson in underlying actions where, among other things, the underlying insurance was exhausted. 66. The defense obligations imposed by the 1976-77 Allstate Umbrella Policy

required Allstate to provide and pay for AstenJohnson's defense to claims in addition to and outside of the indemnity limits mentioned in paragraph 62 above. 67. The 1976-77 Allstate Umbrella Policy defined "personal injury" as, among

other things, "bodily injury, sickness, disease, disability, death, shock, mental injury, mental anguish." 68. The 1976-77 Allstate Umbrella Policy defined "occurrence" as an

"accident, or a happening or event, or a continuous or repeated exposure to conditions, which unexpectedly or unintentionally results in personal, property damage or advertising liability during the policy period." 69. The 1976-77 Allstate Umbrella Policy defined "ultimate net loss" as "the

sum actually expended or payable in cash to procure settlement or satisfaction of the Insured's legal obligation for damages either by (1) final adjudication or (2) compromise with the written consent of Allstate; however, ultimate net loss shall not include … expenses incurred by the Insured in investigation, adjustment or litigation."

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70.

The Underlying Actions aver claims and occurrences that are within the

scope of the coverage provided by the 1976-77 Allstate Umbrella Policy. The 1977-79 Allstate Umbrella Policies 71. Prior to April 1, 1977, AstenJohnson purchased umbrella liability

insurance policies from Allstate, Allstate Business Package Policy No. 28 838 050 BPPWC BP, which provided separate annual indemnity limits of insurance coverage for the period between April 1, 1977 and April 1, 1979 (the "1977-79 Allstate Umbrella Policies," a copy of which is attached as Exhibit "F" hereto). 72. The 1977-79 Allstate Umbrella Policies was the first layer umbrella policy

over the same three-year Allstate primary comprehensive general liability insurance policy that was the primary insurance underlying the 1976-77 Allstate Umbrella Policy, which had a primary policy period from April 1, 1976 until April 1, 1979. 73. The 1977-79 Allstate Umbrella Policies provided annual indemnity limits

of $5 million per occurrence and in the aggregate in excess over the primary policy limits ($1 million per occurrence and $1 million in the annual aggregate), if applicable, or the retained limit of $10,000 in the event that the occurrence was not covered by primary insurance. 74. The 1977-79 Allstate Umbrella Policies was an "umbrella liability"

insurance policy, meaning that it provided excess liability coverage in cases where the primary policy provided coverage and it dropped down to provide primary coverage in cases where the primary insurance company did not provide insurance coverage or became exhausted.

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75.

Pursuant to the terms of the 1977-79 Allstate Umbrella Policies, Allstate

agreed to indemnify AstenJohnson for all sums AstenJohnson would become legally obligated to pay as damages in excess of the primary policy limits or the retained limit as a result of bodily injury liabilities, such as was alleged in the Underlying Actions: Allstate will pay on behalf of Insured all sums which the Insured shall become legally obligated to pay as damages because of Personal Injury … caused by an occurrence. 76. Pursuant to the terms of the 1977-79 Allstate Umbrella Policies, Allstate

also had a duty to defend, promising to defend AstenJohnson in underlying actions where, among other things, the underlying insurance was exhausted. 77. The defense obligations imposed by the 1977-79 Allstate Umbrella

Policies required Allstate to provide and pay for AstenJohnson's defense to claims in addition to and outside of the indemnity limits mentioned in paragraph 73 above. 78. The 1977-79 Allstate Umbrella Policies defined "personal injury" as,

among other things, "bodily injury, sickness, disease, disability, death, shock, mental injury, mental anguish." 79. The 1977-79 Allstate Umbrella Policies defined "occurrence" as an

"accident, including continuous or repeated exposure to conditions, which results, during the period of insurance, in personal injury, property damage or advertising liability neither expected nor intended from the standpoint of the insured." 80. The 1977-79 Allstate Umbrella Policies defined "ultimate net loss" as "the

sum actually expended or payable in cash to procure settlement or satisfaction of the Insured's

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legal obligation for damages either by (1) final adjudication or (2) compromise with the written consent of Allstate; however, ultimate net loss shall not include … expenses incurred by the Insured in investigation, adjustment or litigation." 81. The Underlying Actions aver claims and occurrences that are within the

scope of the coverage provided by the 1977-79 Allstate Umbrella Policies. The American Umbrella Policies The 1979-80 American Umbrella Policy 82. Prior to April 1, 1979, AstenJohnson changed umbrella liability insurance

companies and purchased an umbrella liability insurance policy from American, American Blanket Excess Liability Policy No. 3-82 XLB 133 07 30, which provided one year of insurance coverage for the period between April 1, 1979 and April 1, 1980 (the "1979-80 American Umbrella Policy," a copy of which is attached as Exhibit "G" hereto). 83. The 1979-80 American Umbrella Policy was the first layer umbrella

policy over a one-year primary comprehensive general liability insurance policy sold to AstenJohnson by Commerce and Industry Insurance Company ("C&I"), and the primary policy period ran from April 1, 1979 until April 1, 1980. 84. The 1979-80 American Umbrella Policy provided $10 million in per

occurrence and aggregate umbrella liability limits in excess over the primary policy limits ($1 million per occurrence and $1 million in the aggregate), if applicable, or the retained limit of $10,000 in the event that the occurrence was not covered by primary insurance.

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85.

The 1979-80 American Umbrella Policy was an "umbrella liability"

insurance policy, meaning that it provided excess liability coverage in cases where the primary policy provided coverage and it dropped down to provide primary coverage in cases where the primary insurance company did not provide insurance coverage or became exhausted. 86. Pursuant to the terms of the 1979-80 American Umbrella Policy,

American agreed to indemnify AstenJohnson for all sums AstenJohnson would become legally obligated to pay as damages in excess of the primary policy limits or the retained limit as a result of bodily injury liabilities, such as was alleged in the Underlying Actions: THE COMPANY Agrees with the insured …. To pay on behalf of the insured all sums which the insured shall become obligated to pay as damages by reason of liability imposed on the insured by law or assumed by the insured under contract on account of … bodily injury, sickness, or disease, shock, mental anguish or emotional upset. 87. Pursuant to the terms of the 1979-80 American Umbrella Policy,

American also had a duty to defend, promising to defend AstenJohnson in underlying actions where, among other things, the underlying insurance was exhausted: The company shall assume charge of the settlement or defense of any claim or suit against the insured seeking damages on account of personal injury, property damage or advertising liability covered by this policy and to which no primary insurance applies or on account of exhaustion of the aggregate limits of liability of the primary policies. 88. The defense obligations imposed by the 1979-80 American Umbrella

Policy required American to provide and pay for AstenJohnson's defense to claims in addition to and outside of the indemnity limits mentioned in paragraph 84 above.

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89.

The 1979-80 American Umbrella Policy defined "personal injury" as,

among other things, "bodily injury, sickness, or disease, shock, mental anguish or emotional upset…." 90. The 1979-80 American Umbrella Policy defined "occurrence" as an

"accident including continuous or repeated exposure to conditions, which results in personal injury or property damage neither expected nor intended from the standpoint of the insured." 91. The Underlying Actions aver claims and occurrences that are within the

scope of the coverage provided by the 1979-80 American Umbrella Policy. The 1980-81 American Umbrella Policy 92. Prior to April 1, 1980, AstenJohnson renewed the 1979-80 American

Umbrella Policy, purchasing American Blanket Excess Liability Policy No. 3-82 XLB 142 69 78, which provided one year of insurance coverage for the period between April 1, 1980 and April 1, 1981 (the "1980-81 American Umbrella Policy," a copy of which is attached as Exhibit "H" hereto). 93. The 1980-81 American Umbrella Policy was the first layer umbrella

policy over a one-year primary comprehensive general liability insurance policy sold to AstenJohnson by Argonaut Insurance Company ("Argonaut"), and the primary policy period ran from April 1, 1980 until April 1, 1981. 94. The 1980-81 American Umbrella Policy provided $10 million in per

occurrence and aggregate umbrella liability limits in excess over the primary policy limits ($1

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million per occurrence and $1 million in the aggregate), if applicable, or the retained limit of $10,000 in the event that the occurrence was not covered by primary insurance. 95. The 1980-81 American Umbrella Policy was an "umbrella liability"

insurance policy, meaning that it provided excess liability coverage in cases where the primary policy provided coverage and it dropped down to provide primary coverage in cases where the primary insurance company did not provide insurance coverage or became exhausted. 96. Pursuant to the terms of the 1980-81 American Umbrella Policy,

American agreed to indemnify AstenJohnson for all sums AstenJohnson would become legally obligated to pay as damages in excess of the primary policy limits or the retained limit as a result of bodily injury liabilities, such as was alleged in the Underlying Actions: THE COMPANY Agrees with the insured …. To pay on behalf of the insured all sums which the insured shall become obligated to pay as damages by reason of liability imposed on the insured by law or assumed by the insured under contract on account of … bodily injury, sickness, or disease, shock, mental anguish or emotional upset. 97. Pursuant to the terms of the 1980-81 American Umbrella Policy,

American also had a duty to defend, promising to defend AstenJohnson in underlying actions where, among other things, the underlying insurance was exhausted: The company shall assume charge of the settlement or defense of any claim or suit against the insured seeking damages on account of personal injury, property damage or advertising liability covered by this policy and to which no primary insurance applies or on account of exhaustion of the aggregate limits of liability of the primary policies.

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98.

The defense obligations imposed by the 1980-81 American Umbrella

Policy required American to provide and pay for AstenJohnson's defense to claims in addition to and outside of the indemnity limits mentioned in paragraph 84 above. 99. The 1980-81 American Umbrella Policy defined "personal injury" as,

among other things, "bodily injury, sickness, or disease, shock, mental anguish or emotional upset." 100. The 1980-81 American Umbrella Policy defined "occurrence" as an

"accident including continuous or repeated exposure to conditions, which results in personal injury or property damage neither expected nor intended from the standpoint of the insured." 101. The Underlying Actions aver claims and occurrences that are within the

scope of the coverage provided by the 1980-81 American Umbrella Policy. The Insurance Company Defendants' Obligations To AstenJohnson 102. By operation of Pennsylvania law, and as a result of the INA Defendants',

Allstate's, and American's position as AstenJohnson's insurer, which, as stated above, included the assumption of responsibility, among other things, for the defense of certain third-party claims, Allstate, American, and the INA Defendants are fiduciaries of AstenJohnson. 103. In connection with their role as AstenJohnson's insurance companies,

Allstate, American, and the INA Defendants each owe AstenJohnson a duty of good faith and fair dealing in all aspects of their dealings, such that AstenJohnson's interests are always placed ahead of those of Allstate, American, and/or the INA Defendants.

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104.

As a result of these duties, the INA Defendants, Allstate, and American

owe AstenJohnson a fiduciary duty to act at all times in AstenJohnson's best interests with undivided loyalty and fidelity. 105. The 1963-67 INA Umbrella Policies, the 1967-70 INA Umbrella Policies,

the 1970-73 INA Umbrella Policies, the 1973-76 INA Umbrella Policies, the 1976-77 Allstate Umbrella Policy, the 1977-79 Allstate Umbrella Policies, the 1979-80 American Umbrella Policy, and the 1980-81 American Umbrella Policy provide insurance coverage for the Underlying Actions, which requires each of the insurance company defendants to honor the foregoing obligations in all aspects of their dealings with AstenJohnson concerning the Underlying Actions. Primary Insurance Policy Exhaustion 106. Since being served first with the first Underlying Action complaint,

AstenJohnson submitted all of the Underlying Actions to its primary comprehensive general liability insurance companies, including those companies that sold primary comprehensive general liability insurance policies underlying the First-Layer Umbrella Policies. 107. AstenJohnson's primary general liability insurance companies initially

refused to provide insurance coverage for the Underlying Actions, but subsequently provided defense and indemnity for all Underlying Actions. 108. AstenJohnson's primary general liability insurance companies have

provided defense and indemnification for the Underlying Actions until the last one notified AstenJohnson of exhaustion of its primary policy limits on or about October, 2002.

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AstenJohnson's Dealings With The First-Layer Umbrella Insurance Companies 109. In the fall of 2001, AstenJohnson was informed by its primary general

liability insurance companies of likely upcoming exhaustion of their policy limits. 110. Thereafter, AstenJohnson placed the INA Defendants, Allstate, and

American on notice of the imminent upcoming exhaustion. 111. AstenJohnson timely notified the INA Defendants, Allstate, and American

of the Underlying Actions and of the exhaustion of underlying insurance. 112. As it became aware of actual exhaustion of the primary insurance policies,

AstenJohnson informed the INA Defendants, Allstate, and American that AstenJohnson had exhausted the underlying primary insurance, whose coverage amounts are directly below the level of the coverage afforded by the first-layer umbrella policies sold by the INA Defendants, Allstate, and American, that provides coverage for the Underlying Actions. 113. The INA Defendants and Allstate have been tendered the currently active

Underlying Actions, and they refuse to defend and/or indemnify AstenJohnson for such Underlying Actions in accordance with the terms of their first-layer umbrella liability insurance policies. 114. Before actual exhaustion of the limits of the primary policies,

AstenJohnson met with representatives of the INA Defendants, Allstate, and American to discuss insurance coverage under these insurance company defendants' first-layer umbrella liability insurance policies.

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115.

Hoping to have a smooth transition from the primary insurance companies

to the first-layer umbrella insurance companies, AstenJohnson, in May, 2002, during the pendency of exhaustion of AstenJohnson's primary coverage, contacted the INA Defendants, Allstate, and American with requests that they confirm their coverage obligations and agree to participate in the orderly transition of open Underlying Actions, whereby the INA Defendants, Allstate, and American would jointly administer, defend, and indemnify AstenJohnson in and for settlements reached in the Underlying Actions. 116. The INA Defendants, Allstate, and American did not respond to

AstenJohnson's efforts to confirm coverage and consummate an orderly transition of the handling of the Underlying Actions until October, 2002, after all primary limits had been exhausted. As a result of this delay, AstenJohnson had lost the organized claims handling procedure it had in place during the years preceding exhaustion of the primary insurance policy limits. 117. On August 27, 2002, AstenJohnson formally notified the INA Defendants,

Allstate, and American of the apparent exhaustion of its primary limits, again seeking a seemless transfer of coverage obligations from the primary insurance companies to the first-layer umbrella insurance companies and confirmation of their coverage obligations. 118. Thereafter, in light of their failure to confirm their coverage obligations,

AstenJohnson tendered different groups of Underlying Actions to different first-layer umbrella insurance companies.

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Allstate 119. During AstenJohnson's meeting with Allstate representatives in March,

2002, Allstate representatives confirmed that limits of indemnity to be $15 million and that Allstate owed AstenJohnson a separate duty to defend, outside of limits, for the Underlying Actions. 120. Subsequently, on September 19, 2002, Allstate changed its position,

claiming it owed no duty to defend, and that any defense costs paid by Allstate would operate to reduce the indemnity limits of the 1976-77 and 1977-79 Allstate Umbrella Policies. 121. On September 19, 2002, Allstate representatives also informed

AstenJohnson that the first-layer umbrella liability insurance companies, including Allstate, would soon respond with comments on the claims handling agreement. 122. In October 2002, Allstate objected to AstenJohnson's tendering of specific

claims to specific umbrella insurance companies, despite AstenJohnson's clear right to "pick and choose" under Pennsylvania law. 123. On October 30, 2002, Allstate formally provided AstenJohnson with a

coverage determination, stating that it owed no separate defense obligation or that defense costs count against the $15 million in aggregate limits available under the 1976-77 Allstate Umbrella Policy and the 1977-79 Allstate Umbrella Policy. 124. From the first notice of primary limit exhaustion, Allstate has continued to

fail to honor certain aspects of its coverage obligations, which prejudice AstenJohnson's interests.

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The INA Defendants 125. During AstenJohnson's initial meeting with the INA Defendants, in April,

2002, the INA Defendants raised an issue as to a separate duty to defend the Underlying Actions under each of the four the INA umbrella liability insurance policies. 126. In August, 2002, representatives of INA acknowledged to representatives

of PMA, a primary comprehensive general liability insurance company whose policies sit below the first-layer umbrella policies of INA, that INA had some separate defense obligation but expressed reservations about the availability of all indemnification limits. 127. The INA Defendants subsequently raised to AstenJohnson the issue as to

whether the full aggregate limits of its four first-layer umbrella policies would be available to indemnify AstenJohnson for judgments and settlements of the Underlying Action. 128. In particular, on October 29, 2002, the INA Defendants formally notified

AstenJohnson of their coverage position, stating that some of the INA first-layer umbrella policies do not require INA to pay defense costs to Underlying Action defense counsel and that a purported "telescoping" clause limits to $6 million the total aggregate indemnity limits available to AstenJohnson. 129. To the extent that the INA Defendants prevail on the purported

"telescoping" clause issue discussed in the immediately preceding paragraph, such conduct would constitute a misrepresentation of policy provisions relating to coverages at issue, inasmuch as the purchase of consecutive INA policies by AstenJohnson would actually reduce, rather than expand, AstenJohnson's available insurance coverage, even though paying additional premiums.

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American 130. American has acknowledged the $20 million in indemnity limits and a

separate duty to defend under the 1979-80 American Umbrella Policy and the 1980-81 American Umbrella Policy. 131. Despite American's acknowledgement of coverage, American still is

operating under a reservation of rights with respect to insurance coverage under its umbrella policies for the Underlying Actions. Allstate's And The INA Defendants' Wrongful Refusal To Honor Their Coverage Obligations 132. The INA Defendants and Allstate are avoiding their coverage obligations

under the first-layer umbrella insurance policies they sold to AstenJohnson. 133. The INA Defendants' and Allstate's conduct is wrongful because the

Underlying Actions include allegations of bodily injury, which are covered by the terms of the First-Layer Umbrella Policies. 134. AstenJohnson has complied with all conditions precedent to receive

coverage under the First-Layer Umbrella Policies. 135. The other conduct described above is improper, and violates well-

established Pennsylvania law and industry standards. 136. The INA Defendants and Allstate refuse to acknowledge their insurance

coverage obligations and have breached the terms of the First-Layer Umbrella Policies. If the INA Defendants and Allstate refuse to acknowledge their insurance coverage obligations, there will be further breaches of the terms of the First-Layer Umbrella Policies. 28

PHIDOCS-32623.1

COUNT I (Declaratory Judgment Versus All Defendants) 137. AstenJohnson repeats and re-alleges the averments of paragraphs 1-136, as

if the same were set forth at length herein. 138. As set forth above, the INA Defendants, Allstate, and American sold

AstenJohnson the First-Layer Umbrella Policies covering, among other things, after exhaustion of the aggregate limits of the primary comprehensive general liability insurance policies, liabilities arising from asbestos-related bodily injury claims asserted against AstenJohnson, such as those asserted in the Underlying Actions. 139. The INA Defendants and Allstate have breached and continue to breach

their promises, as set forth in the First-Layer Umbrella Policies, by failing and refusing to honor their promises to defend, conduct settlement negotiations, and indemnify AstenJohnson for and in the Underlying Actions. 140. American continues to reserve its rights to deny coverage under its First-

Layer Umbrella Policies, and has not unconditionally agreed to provide coverage for the Underlying Actions. 141. As a direct and proximate result of the INA Defendants' and Allstate's

breaches of contract and American's refusal unconditionally to agree to provide coverage for the Underlying Actions, AstenJohnson has suffered and will continue to suffer serious harm in an amount in excess of $75,000, exclusive of interest and costs.

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142.

An actual and justifiable controversy exists between AstenJohnson and the

INA Defendants, Allstate, and American regarding the interpretation, application, and meaning of the First-Layer Umbrella Policies. 143. Accordingly, AstenJohnson is entitled to declaratory judgment of this

Court of its rights and of the obligations of the INA Defendants, Allstate, and American under the First-Layer Umbrella Policies. 144. Declaratory relief from this Court will resolve all outstanding issues

between AstenJohnson and the INA Defendants, Allstate, and American regarding the obligations of the INA Defendants, Allstate, and American under the First-Layer Umbrella Policies. WHEREFORE, pursuant to 28 U.S.C. §§ 2201-02, AstenJohnson seeks judgment in its favor as to Count I as follows: (a) The entry of an Order judicially declaring that the INA Defendants,

Allstate, and American are obligated to pay for AstenJohnson's defense of the Underlying Actions, outside of the aforementioned policies' indemnity limits, and to reimburse AstenJohnson for, or pay on behalf of AstenJohnson, any and all judgments or settlements reached in the Underlying Actions, until such time as the total aggregate limits of each of the First-Layer Umbrella Policies have been exhausted; and (b) appropriate. The award of such additional relief as the Court deems just and

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COUNT II (Breach of Contract Versus Allstate And The INA Defendants) 145. AstenJohnson repeats and re-alleges the averments of paragraphs 1-144, as

if the same were set forth at length herein. 146. As set forth above, the INA Defendants and Allstate sold AstenJohnson

the First-Layer Umbrella Policies covering, among other things, after exhaustion of the aggregate limits of the primary comprehensive general liability insurance policies, liabilities arising from asbestos-related bodily injury claims asserted against AstenJohnson, such as those asserted in the Underlying Actions. 147. The Underlying Actions were covered by the primary comprehensive

general liability insurance policies of AstenJohnson. 148. The Underlying Actions trigger the INA Defendants' and Allstate's duties

to defend and indemnify AstenJohnson, under the terms of the first-Layer Umbrella Policies. 149. AstenJohnson has exhausted all of the limits of the primary

comprehensive general liability insurance policies underlying the First-Layer Umbrella Policies. 150. AstenJohnson has timely demanded that the INA Defendants and Allstate

provide AstenJohnson with the insurance coverage it purchased under the First-Layer Umbrella Policies. 151. The INA Defendants and Allstate have refused to honor all of their

obligations to provide AstenJohnson with a defense or indemnification in and for the Underlying Actions, under the terms of the First-Layer Umbrella Policies.

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152.

By reason of the foregoing, the INA Defendants and Allstate have

breached their contractual obligations to AstenJohnson under the First-Layer Umbrella Policies. 153. As a direct and proximate result of the INA Defendants' and Allstate's

breaches, AstenJohnson has suffered damages. WHEREFORE, AstenJohnson seeks judgment in its favor as to Count II as follows: (a) The entry of an award requiring the INA Defendants and Allstate to pay

AstenJohnson all monetary damages suffered by AstenJohnson caused by their breaches, including, without limitation, compensatory damages, consequential damages, prejudgment interest, post-judgment interest, and attorneys’ fees and costs; and (b) appropriate. COUNT III (Bad Faith In Violation of 42 Pa. Cons. Stat. Ann. § 8371 Versus The INA Defendants And Allstate) 154. AstenJohnson repeats and re-alleges the averments of paragraphs 1-153, as The award of such additional relief as the Court deems just and

if the same were set forth at length herein. 155. The INA Defendants' and Allstate's conduct as described above and set

forth below constitutes bad faith actions prohibited by 42 Pa. Cons. Stat. Ann. § 8371. 156. Moreover, the INA Defendants and Allstate have repeatedly violated and

continue to violate the Pennsylvania Unfair Insurance Practices Act, 40 Pa. Cons. Stat. Ann. §§ 1171.1 et seq.

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157.

The INA Defendants' and Allstate's wrongful denial of coverage to

AstenJohnson is part of an ongoing scheme to deprive policyholders like AstenJohnson of the insurance coverage provided to them under liability insurance policies sold by them. 158. Among other acts or failures to act, the INA Defendants and Allstate have

acted in bad faith with respect to AstenJohnson by their: a. Failure to deal fairly with AstenJohnson and failure to give equal

consideration in all matters to AstenJohnson's interests; b. Engagement in unreasonable, frivolous, or untenable denial of policy

benefits to AstenJohnson; c. coverages at issue; d. Asserting inconsistent positions regarding the meaning of its policy Misrepresentation of pertinent facts or policy provisions relating to

provisions and adopting the coverage-defeating interpretation as the correct one; e. Failing to acknowledge and act promptly upon written or oral

communications with respect to claims arising under the First-Layer Umbrella Policies; f. Compelling AstenJohnson to institute, continue, or submit to litigation to

recover amounts due under the First-Layer Umbrella Policies by offering amounts far less than the amounts they know to be due and owing under the first-Layer Umbrella Policies; g. Failing promptly to settle claims where liability has become reasonably

clear in order to influence settlements where liability is not as clear; and

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h.

Failing promptly to provide a reasonable explanation of the basis for their

insurance coverage positions. 159. In all of the instances set forth above, the INA Defendants' and Allstate's

persistent and systematic actions and failures to act amount to bad faith conduct towards AstenJohnson. 160. In all of the instances set forth above, the INA Defendants' and Allstate's

persistent and systematic actions and failures to act were done purposefully, intentionally, maliciously, and/or recklessly. 161. As a result of the INA Defendants' and Allstate's bad faith actions,

AstenJohnson has suffered, and will continue to suffer, substantial damages. 162. As a result, the INA Defendants and Allstate are liable for compensatory

damages, consequential damages, interest, attorneys' fees and costs, and punitive damages pursuant to 42 Pa. Cons. Stat. Ann. §8371. WHEREFORE, AstenJohnson seeks judgment in its favor as to Count III as follows: (a) The entry of an award requiring the INA Defendants and Allstate to pay

AstenJohnson all monetary damages suffered by AstenJohnson caused by their breaches, including, without limitation, compensatory damages, consequential damages, prejudgment interest, post-judgment interest, and attorneys’ fees and costs; (b) The award of punitive damages; and

PHIDOCS-32623.1

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(c) appropriate.

The award of such additional relief as the Court deems just and

COUNT IV (Breach of Fiduciary Duty Versus The INA Defendants And Allstate) 163. AstenJohnson repeats and re-alleges the averments of paragraphs 1-162, as

if the same were set forth at length herein. 164. Through the defense and indemnity provisions contained in the First-

Layer Umbrella Policies and Pennsylvania law, the INA Defendants and Allstate owe fiduciary duties towards AstenJohnson, which obligates the INA Defendants and Allstate to act reasonably, in good faith, and with due care in interpreting, administering and resolving all policy issues involving AstenJohnson. 165. The INA Defendants and Allstate have breached their fiduciary duties

owed to AstenJohnson, by failing and refusing unreasonably to acknowledge its obligations to AstenJohnson under the First-Layer Umbrella Policies and asserting positions that are contrary to the policy provisions and Pennsylvania law. 166. As a result of the INA Defendants' and Allstate's breaches of their

fiduciary duties, AstenJohnson has suffered and continues to suffer serious damages. WHEREFORE, AstenJohnson seeks judgment in its favor as to Count IV as follows: (a) The entry of an award requiring the INA Defendants and Allstate to pay

AstenJohnson all monetary damages suffered by AstenJohnson caused by their breaches, including, without limitation, compensatory damages, consequential damages, prejudgment

PHIDOCS-32623.1

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interest, post-judgment interest, and attorneys’ fees and costs; and (b) appropriate. The award of such additional relief as the Court deems just and

Dated: March 13, 2003 John N. Ellison (I.D. No. 51098) Robert E. Frankel (I.D. No. 67962) Anderson Kill & Olick, P.C. 1600 Market Street, Suite 2500 Philadelphia, PA 19103 Telephone: 215-568-4202 Attorneys for Plaintiff AstenJohnson, Inc.

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