AIG Subsidiary Must Pay Asbestos Suit Costs After Punted Appeal

An AIG Commercial Insurance Group Inc. subsidiary effectively lost an insurance appeal over asbestos litigation costs after a Third Circuit panel declined to rule on the case Friday, citing lack of jurisdiction.

AIG’s American Home Assurance Co. had appealed a Pennsylvania federal judge’s ruling that it “must pay defense costs in addition to policy limits” for plumbing product manufacturer Zurn Industries LLC over its asbestos-related litigation to the US Court of Appeals for the Third Circuit.

“We lack the power to review its appeal,” Circuit Judge D. Michael Fisher wrote in the opinion. “American Home does not challenge orders that are functionally equivalent to an injunction.”.

Zurn has faced a series of asbestos lawsuits alleging its products caused bodily injury or wrongful deaths. The company initially used primary and umbrella insurance policies to cover litigation costs, later seeking excess policy insurers, including American Home, after it exhausted the coverage limits. This resulted in lawsuits between the manufacturer and the insurer, according to the filing.

The panel found that the lower court’s orders “effectively defin[ed]” at least some of American Home’s duties under the contract.

“Far from directing American Home to act now and pay Zurn’s defense costs or take up Zurn’s defense, the orders simply clarify the scope of American Home’s potential future duty, if and when that duty is triggered,” the filing said.

The parties didn’t immediately respond to requests for comment.

This case is Zurn Industries, LLC v. Allstate Insurance Company, 3d Cir. App., No. 21-3032, 7/28/23