Asbestos Judgment Final: Second Circuit confirms asbestos judgment against Travelers

Insurer must finally pay $500 million in asbestos-related settlements 

Today the U.S. Court of Appeals for the Second Circuit, by denying a request for rehearing and a rehearing en banc, confirmed that the Settlement Agreements Travelers agreed to in 2004 were binding and enforceable contracts between the parties, that all conditions had been satisfied, and that, in an attempt to avoid its obligation to thousands of asbestos victims, whatever Travelers’ “private hopes and dreams were,”  they were not supported by the language of the agreement.

“Travelers now has to finally live up to its commitment and provide rightful compensation to asbestos victims who waited more than a decade for this to be settled and done with,” says Motley Rice co-founder Joe Rice. “We are gratified that perseverance by all involved has resulted in this positive, and now, final ruling.”

Attorneys with Motley Rice LLC have played a central role in the litigation against Travelers for its alleged breach of duty to the injured asbestos victims for more than 20 years. This litigation was spearheaded out of the consolidated asbestos litigation in West Virginia State Court and then transferred to the U.S. Bankruptcy Court for the Southern District of New York, which supervised the Johns-Manville bankruptcy starting in 1982. After years of litigation, Motley Rice led negotiations of a settlement structure that resulted in a $360 million settlement for the victims in states that had statutory provisions governing the action of insurers such as Travelers. Later, a common law settlement fund of $70 million was created by other attorneys. The firm has continued to manage the settlement approval process in the decade-long appellate proceedings surrounding these cases.

Travelers had sought to avoid paying these settlements, arguing that certain items were a condition precedent to the obligation to make payments. In July 2014, the Second Circuit disagreed with the company’s arguments and found that “. . . Travelers’ interpretation amounts to a contractual term that is incapable of ever being fulfilled . . . such an impossible condition – with no support in contractual language and clearly not intended by the parties – would have rendered the contract a nullity from its inception.” The Second Circuit cited its 1997 opinion in Klos v. Lotnicze, stating “undoubtedly, that that is the reason why no such requirement is found in the Agreement’s terms or Exhibit As, whatever Travelers’ ‘secret and subjective intent.’”

“Travelers tried and now has failed to avoid its contractually agreed to compensation plan,” added Rice. “It’s a theme that we have unfortunately seen since then by companies in other major settlements but thankfully our justice system isn’t letting companies get away with it.”

The case is Common Law Settlement Counsel, Statutory and Hawaii Direct Action Settlement v. Travelers Indemnity Co et al, 2nd U.S. Circuit Court of Appeals, Nos. 12-1094, 12-1140 and 12-1205.