Case: Vedros v. Northrop
Grumman Shipbuilding Inc., et al
U.S. District Court for the Eastern District of Louisiana
No. 2:11-cv-01198; 2015 U.S. Dist. LEXIS 78527 (E.D. La. June 17, 2015)
This litigation was initially brought by the mesothelioma victim and her children, then was carried on by her children after her death, against Northrop Grumman Shipbuilding, Inc. and Huntington Ingalls Incorporated, as ultimate successor of Avondale Shipyards, Inc. Secondary exposure was alleged to Sally Vedros, who had washed her father's clothing during the many years he worked for Avondale, 1943-76, as well as direct exposure during the three years she worked there, 1960-63.
Plaintiffs pursued Avondale, for its own legal liability, and in addition as de facto insurer for the personal liability of its executive officers in place of certain insurance policies. The policies were issued by Highlands Insurance Company, effective from 1970-71 and American Motorists Insurance Company, effective 1950-57. Both insurers became insolvent and were no longer subject to suit. Plaintiffs argued certain "buy-back" agreements between the insurers and the insured, through which the insurance policies were rendered void ab initio in exchange for lump sum payments, had the effect of putting the insured in the place of the carriers, such that the insured was liable as would have been the carriers and in their place for the liability of the executive officers.
After studying the "buy back" agreements, Judge Barbier found they did not evince an assumption of liabilities by Avondale, but rather voided the policies as though they had never been issued. Although there were indemnity provisions in the agreements, whereby Avondale would indemnify the carriers if they were sued on the bought out policies, as the carriers had not been and could not be brought into the litigation due to their insolvency, indemnity was not at issue.
In dismissing these claims, the Court noted Avondale still faced liability for its alleged tort liability and for its vicarious liability for the alleged tortious acts of its executive officers. Plaintiffs had argued they were third party beneficiaries under the policies, with their rights accruing at the time of the injurious exposure, such that the agreements could not divest their property rights in the policies. Plaintiffs contended the claims against Avondale were not brought under the Louisiana Direct Action Statute, but rather under jurisprudence holding that in asbestos cases there is a cause of action to enforce insurance contracts by third party beneficiaries, those injured or claiming as a result of the injury. Marcel v. Delta Shipbuilding Co,. 2010-ca-168 (La. App.4 Cir. 8/4/2010), 45 So. 3d 634,639. Plaintiffs' claims were based on Louisiana Civil Code Articles 1821-1823, dealing with solidary obligors. Nevertheless, many of the cases relied upon by Plaintiffs were Direct Action cases.
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