What's Your Issue, Textron?

Textron, Inc. v. Travelers Cas. & Sur. Co., No. B262933 (D2d4 Feb. 25, 2020)

Back in 1991, in connection with a large exposure for environmental contamination, Insured won a declaratory relief claim that a CGL policy with Insurer was governed by Rhode Island law. Thirty years later, Insured settled a mesothelioma case with an employee who was allegedly exposed to asbestos from 1950 to 1983. Insured now seeks coverage under the GCL policy.

The coverage question turns on the meaning of “occurrence” as applied to a continuous or progressively deteriorating personal injury. That question has different answers under California and Rhode Island law. Basically, under California law, coverage reaches back to any partial harm within the policy period, while Rhode Island law would cover only if the meso diagnosis was within the period. So the ultimate question on this appeal is whether the 1991 dec. relief ruling collaterally or judicially estops Insured from arguing that California law applies.

The trial court ruled that it didn’t, which resulted in denial of Insurer’s summary judgment motion. Insurer took a writ. A Palma notice issued. In response to which, a different trial court reversed course, finding that it does, which mooted the writ. That led to summary judgment for Insurer. 

Insured now appeals. The Court of Appeal reverses.

Collateral estoppel requires a the same issue to be actually litigated and decided in a prior action in which the party to be estopped was a party. The question here is whether the “issue” was same in 1991. The nature of an “issue” is a squishy topic. It’s basically a question of application of law to fact. On one hand, there can be estoppel on an issue even though specific factual or legal theories that could have been presented in the first case were not. On the other hand, there is no estoppel on an issue that could have been raised but wasn’t. As the Court explains, “[p]utting it as simply as we can, the factual predicate of the legal issue decided in the prior case must be sufficient to frame the identical legal issue in the current case, even if the current case involves other facts or legal theories that were not specifically raised in the prior case.” Satisfied?

That being said, the Court holds that, even though they facially answer the same basic question—what law applies to “occurrence”?—the cases nonetheless do not present the same issue. That is because the factual framing behind the choice of law question is so different. The dispute in the 1991 case was over 258 different insurance policies issued by 49 different carriers arising from environmental contamination in 19 different states. On the other hand, the 2011 meso case entailed an ongoing injury to a single plaintiff who lived in California.

Looking at California’s “government interest analysis” for choice of law—which the court assumes is the same as Rhode Island’s test—the inputs that go into that analysis are totally different. That was borne out by an analysis of the 1991 decision. Nowhere did that decision address, for instance, whether there was an actual conflict of law between Rhode Island and California. Nor did it look to California’s interest in defining “occurrence” to a Californian injured by conduct that occurred in California. Thus, despite the superficial similarity, the cases do not entail litigation of the same issue, so collateral estoppel can’t apply.

Reversed.