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Montana Supreme Court upholds $98m asbestos judgment

Insurer must cover payments to Libby residents
Asbestos Libby.jpg
Posted at 4:12 PM, Dec 07, 2021
and last updated 2021-12-07 18:12:59-05

HELENA — The Montana Supreme Court has mostly upheld an order that an insurer pay the state of Montana $98 million for asbestos-related injury claims from Libby, stemming from an insurance policy the state held almost 50 years ago.

In a 6-1 ruling late last month, the court said National Indemnification Co. is responsible for the claims because it failed in its “duty to defend” against them, after the state notified the company it might be liable.

“It so happened that this significant risk ripened, many years later, into state liability for bodily injury that undoubtedly occurred during the policy period, on National’s watch,” wrote Supreme Court Justice Jim Rice for the majority.

The years-long case involves liability for as many as 2,000 claims filed by former employees of the now-defunct W.R. Grace vermiculite mine near Libby and townspeople sickened with lung disease, caused by asbestos fibers in mine tailings. The tailings and other mine waste also were distributed in various locations around the town, such as local ball fields.

Hundreds of Libby-area residents have sued the state for damages, saying it knew of hazards at the mine since the 1950s but did nothing to warn workers or residents.

The state, in turn, sought coverage and payment from NIC, through a liability policy the state held from 1973-1975.

A state district judge in Bozeman ruled in 2019 that NIC owed the state $98 million, to cover the claims and costs of the litigation and interest on the judgment. Both NIC and the state appealed portions of the ruling to the Supreme Court.

The high court ruled Nov. 23 largely in the state’s favor, upholding most of the District Court order. It did reverse some elements of the order, sending it back for further proceedings that could make relatively small changes in the final amount of the judgment.

Most of the claims have been paid, by the state, to injured Libby residents. The case before the Supreme Court is over how much money the insurance company must pay the state, as part of its coverage.

Justice Laurie McKinnon was the sole dissent in the high court’s ruling last month.

She said NIC did not breach its duty to defend the case, and that the state should bear some responsibility for the claims. The state knew of hazards at the mine and the insurance policy does not cover injuries from known or intentional conduct by the insured, she said.

“I would apply the plain language of the policy and conclude that National was not obligated to defend and indemnify the state for the Libby mine claims,” McKinnon wrote.

She also said the state, which was self-insured from 1975 forward, should pay a pro-rata share of the damages that occurred during its coverage.