In a decision of first impression, the New York Supreme Court has found that victims who had been exposed to asbestos-containing products that were manufactured by a now-defunct company are owed the entire amount of an asbestos settlement negotiated by an insurer on behalf of the company. The case is Liberty Mutual Insurance Co v. Jenkins Bros et al, New York Supreme Court, New York County, No. 651980/2018.

The suit originated as actions brought by victims against Jenkins Bros., which had procured liability insurance coverage during the relevant time frames from Liberty Mutual Insurance Company. The  Jenkins Bros. company had been dissolved and bankrupt years prior to the litigation, so Liberty Mutual was found to be the real party in interest in the victims' claims. Liberty Mutual appointed counsel to defend Jenkins Bros. in the suits. Victims reached settlements of the claims, and Liberty Mutual funded only a portion of those settlements claiming that since it had only provided insurance coverage to Jenkins Bros. for certain periods of a long stretch of time during which the victims were exposed to asbestos, it was only responsible for that portion of the settlement based on the doctrine of pro rata allocation.

Liberty Mutual then filed suit against the victims to obtain a declaratory judgment that the insurer had no obligation to fund the rest of those settlements. The victims counterclaimed, arguing that the doctrine of pro rata allocation applied only to assign responsibility for liabilities between insurers and policyholders and did not apply to force victims to accept less than what they were owed, noting that the victims have no say in the policyholder's risk management decisions. Both sides moved for summary judgment.