A choice of law ruling that an insured obtained in an earlier Rhode Island coverage action did not collaterally or judicially estop the insured from seeking coverage in a later California coverage action. (Textron, Inc. v. Travelers Casualty and Surety Company (2020) 45 Cal.App.5th 733)
Facts
Textron, Inc. is headquartered in Rhode Island and has manufacturing facilities in multiple states. From 1966 until 1987, Textron was insured under commercial general liability policies issued by Travelers Casualty and Surety Company. The CGL policies provided in relevant part that Travelers would indemnify Textron against damages because of bodily injury and property occurring “during the policy period,” and that Travelers would defend Textron against any suit seeking such damages.
During the 1980s, various governmental agencies and private parties filed lawsuits against Textron for property damage and possible bodily injury arising from environmental contamination in 19 states. The 19 states included California, but not Rhode Island. In response, Textron sought defense and indemnity from Travelers and 48 other insurers which had issued 258 policies to Textron from 1960 to 1986.
In 1987, Textron filed a declaratory relief action in Rhode Island against Travelers and the other 48 insurers, seeking defense and indemnification for the environmental contamination lawsuits. In 1991, during the Rhode Island declaratory relief action, Textron successfully moved for an order that Rhode Island law governed interpretation of the insurance policies Textron had purchased from Travelers and the other 48 insurers. In 1995, the Rhode Island declaratory relief action was settled and dismissed.
Carolyn Esters was a California resident. Between the 1960s and the 1980s, Esters was exposed to asbestos arising out of Textron’s operations in California. In 2010, Esters was diagnosed with mesothelioma, and in 2011, she filed suit against Textron in California. Travelers, under reservation of rights, defended Textron against Esters’ lawsuit and ultimately contributed $1.8 million to settle Textron’s alleged liability to Esters.
While Esters’ lawsuit was pending, Textron filed a declaratory relief action against Travelers in California. After Esters’ lawsuit was settled, Travelers cross-complained against Textron, seeking reimbursement of the defense and settlement costs Travelers had paid on behalf of Textron in connection with Esters’ lawsuit. Travelers moved for summary judgment, contending that under Rhode Island’s narrow “manifestation” trigger, Travelers did not owe coverage to Textron because Esters’ bodily injury was diagnosed (i.e., “manifested”) in 2010, long after the last Travelers policy expired in 1987. Travelers further contended that the choice of law ruling in the earlier Rhode Island declaratory relief action collaterally and judicially estopped Textron from seeking coverage under California’s more liberal “continuous injury” trigger of coverage. The trial court agreed and granted Travelers’ motion for summary judgment. Textron appealed.
Holding
The California Court of Appeal reversed. It held that Textron was neither collaterally nor judicially estopped from contending that California’s continuous injury trigger applied to Esters’ mesothelioma claim.
The appellate court observed that for collateral estoppel to apply, the issue decided in the earlier action must be “identical” to the issue to be decided in the current action. Here, the issue was which trigger – Rhode Island’s manifestation trigger or California’s continuous injury trigger – should apply to Esters’ lawsuit. That specific issue was not litigated and decided more than 24 years earlier in the Rhode Island declaratory relief action. Indeed, the Rhode Island trial court issued its ruling in 1991, but the California Supreme Court did not even adopt the continuous injury trigger until 1995. Thus, Textron was not collaterally estopped to seek a ruling that California’s continuous injury trigger rule applied to Esters’ lawsuit.
With respect to judicial estoppel, the fundamental basis of that doctrine is that the party to be estopped was successful in asserting a position in a prior case that is “totally inconsistent” with its position in the current case. Here, the issue presented in the Rhode Island declaratory relief action was not identical to the issue presented in the California declaratory relief action. Thus, Textron’s argument that California’s continuous injury trigger applied in the current California declaratory relief action was not totally inconsistent with Textron’s argument that Rhode Island law applied in the earlier Rhode Island declaratory relief action.
Absent collateral or judicial estoppel, Travelers failed to show that Rhode Island law applied in the instant case. Thus, California law and the continuous injury trigger governed determination of Travelers’ motion for summary judgment.
Comment
According to the California appellate court, the crucial factor was whether the choice of law issue in the earlier Rhode Island declaratory relief action was identical to the choice of law issue in the later California declaratory relief action. The appellate court concluded that it was not. Thus, neither collateral nor judicial estoppel applied. As such, California’s continuous injury trigger would determine whether Travelers was obligated to defend and indemnify Textron against Esters’ lawsuit.