Federal-Mogul U.S. Asbestos Personal Injury Trust v. Continental Casualty Co. (6th Cir., Jul. 8, 2011)
The Sixth Circuit held that an umbrella insurer had no duty to defend because the underlying insurance had not been exhausted.
There, Federal-Mogul U.S. Asbestos Personal Injury Trust (‘the Trust"), an asbestos personal injury trust created through a bankruptcy plan, held three primary insurance policies that had provided liability and defense costs for the asbestos personal injury claims. The trust also had an umbrella policy through Continental Insurance Company ("Continental"). The case arose when the trust sought declaratory judgment that Continental had a duty to defend certain asbestos claims alleging personal injury because one of the primary policies had been exhausted. Continental argued that the duty to defend was not triggered until all three primary policies had been exhausted. The Sixth Circuit agreed with Continental, reasoning that Continental was not obligated to defend actions where underlying insurance exists, and because the terms referred specifically to "any other underlying insurance", all underlying primary level insurance policies must be exhausted before the umbrella policy was triggered. The court was not persuaded by the fact that the Continental Policy listed only one of the three primary policies in the Underlying Insurance Schedule.