H. K. Porter Co., Inc. v. Pennsylvania Ins. Guar. Assn.

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit

1-18-1996

H. K. Porter Co., Inc. v. Pennsylvania Ins. Guar.
Assn.
Precedential or Non-Precedential:

Docket 95-3182

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 UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 95-3182

H. K. PORTER COMPANY, INC., a Corporation
Appellant

v.

PENNSYLVANIA INSURANCE GUARANTY ASSOCIATION,
an unincorporated association

On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 93-0212)

Argued October 30, 1995

BEFORE: NYGAARD, ALITO and
SAROKIN, Circuit Judges

(Opinion filed January 18, 1996)

Frederick J. Francis (argued)
Meyer, Unkovic & Scott
1300 Oliver Building
Pittsburgh, PA 15222

Attorneys for Appellant

John W. Jordan IV (argued)
Gaca, Matis & Hamilton
300 Four PPG Place
Pittsburgh, PA 15222

Attorneys for Appellee

1
 OPINION OF THE COURT

SAROKIN, Circuit Judge:

Plaintiff H.K. Porter Company, Inc. ("Porter") filed suit in

federal district court against the Pennsylvania Insurance

Guaranty Association ("PIGA") seeking a declaration that PIGA was

legally obligated to indemnify Porter under the terms of three

insurance policies issued to Porter by an insolvent insurance

company. Porter claimed that each of the approximately 100,000

lawsuits filed against it constitutes a separate "covered claim"

for which Porter is entitled to the statutory limit of $300,000

on each claim, subject to the $5 million coverage limit of each

policy. The district court entered an order for partial summary

judgment in favor of PIGA, holding that Porter was only entitled

to indemnity for three covered claims -- one for each policy that

Porter held with the insolvent insurance company -- on the theory

that Porter, rather than those claiming against it, was the

claimant. We disagree and reverse.

I.

Beginning in 1958, H.K. Porter was engaged in the

manufacture and sale of various types of asbestos-containing

products. These products were sold for use in shipyards and the

ship-building industry across the country and around the world.

2
 In 1984, Porter began to be inundated with lawsuits by

individuals alleging bodily injury or death as a result of

exposure to asbestos-containing products. By 1991 Porter was

being sued at the rate of approximately 2,000 separate cases per

month. The sheer volume of these lawsuits eventually forced

Porter into Chapter 11 bankruptcy, by which time there had been

approximately 100,000 lawsuits filed against Porter. Porter

settled or disposed of many of these claims through payment of

$30 million of its own funds. At the time of the bankruptcy, the

estimated value of identified pending lawsuits against Porter was

approximately $590 million.

During its operational years, Porter had maintained several

different insurance policies, including three "commercial

catastrophe liability" policies issued by Integrity Insurance

Company. These policies had indemnity limits of $5 million per

occurrence/$5 million annual aggregate, resulting in a total

aggregate of $15 million under the three policies. All parties

agree that the policies cover liability and indemnity for bodily

injury arising from Porter's manufacture and sale of asbestos

products.

When the flood of lawsuits began in the late 1980s, Porter

sought indemnity from Integrity for all amounts which Porter had

paid in the process of settling lawsuits or would become legally

obligated to pay in the future. In March of 1987, however,

Integrity Insurance Company was declared insolvent. Porter thus

turned to PIGA for indemnity. PIGA is an unincorporated

association created by statute for the purpose of providing means

3
for payment of covered claims when the insurance company

responsible for those claims has become insolvent, and for the

purpose of avoiding financial loss to claimants and policy

holders. See 40 P.S. § 1701.102(1) (repealed 1994).1

PIGA persistently refused to indemnify, defend, or in any

way become involved in Porter's asbestos lawsuits, despite

Porter's continual requests starting in 1987. As a result,

Porter filed suit against PIGA on February 12, 1993, seeking a

declaration that PIGA could be required to pay Porter up to $15

million -- the $5 million aggregate limit for each of the three

Integrity policies -- as well as counsel fees and expenses for

the defense of the lawsuits.2

The parties filed cross motions for summary judgment. One

of the issues presented in the motions was whether the $299,900

statutory limit3 set forth in section 201 of the PIGA Act for

each "covered claim" applied to three claims (one claim

supposedly made by Porter under each Integrity policy), or

1
The PIGA Act was repealed on December 12, 1994, see 1994, Dec.
12, P.L. 1005, No. 137, § 2, and replaced by the Pennsylvania
Property and Casualty Insurance Guaranty Association Act, 40 P.S.
§ 991.1801 et seq. The PIGA Act, however, applies in the instant
matter.
2
Porter has already paid approximately $30 million to defend and
settle lawsuits thus far, $18 million of which was for the cost
of defense, and the remaining $12 million for the actual
disposition and settlement of the claims. See H.K. Porter
Company, Inc. v. Pennsylvania Insurance Guaranty Association, No.
93-212, typescript at 2 (W.D. Pa. Jan. 3, 1995); Appellant's
Brief at 2. The issue of whether PIGA must indemnify Porter for
the $18 million dollars it paid for the defense of lawsuits is
before the district court and not at issue in this interlocutory
appeal.
3
The statutory limit is actually $300,000, subject to a $100
deductible. See 40 P.S. § 1701.201(b)(1)(i).

4
whether it applied to each separate, individual claimant lawsuit

submitted by Porter to PIGA. This section provides, in relevant

part, as follows:
(1) The association shall:

(i) Be obligated to make payments to the extent of the
covered claims of an insolvent insurer existing prior
to the determination of said insurer's insolvency, and
covered claims arising within thirty days after the
determination of the insolvency, or before the policy
expiration date if less than thirty days after such
determination . . . but such obligation shall include
only that amount of each covered claim which is in
excess of one hundred dollars ($100), and is less than
three hundred thousand dollars ($300,000). In no event
shall the association be obligated on a covered claim
in an amount in excess of the obligation of the
insolvent insurer under the policy under which the
claim arises.

40 P.S. § 1701.201(b)(1)(i).

The district court held that the $299,900 statutory limit

applied to each of the three claims it determined Porter had made

(one under each of the Integrity policies), for a total maximum

recovery of $899,700, far below Porter's $15 million indemnity

claim against Integrity. H.K. Porter Company, Inc. v.
Pennsylvania Insurance Guaranty Association, No. 93-212,

typescript at 11-12 (W.D. Pa. Jan. 3, 1995).

Porter filed a Motion for Reconsideration, but the district

court denied the motion. Porter then filed a motion requesting

that the district court amend its Order regarding the statutory

limit to acknowledge the existence of a controlling question of

law as to which there is substantial ground for difference of

opinion, which was granted. Subsequently, Porter filed a

Petition for Permission to Appeal from an Interlocutory Order,

5
pursuant to 28 U.S.C. § 1292(b). This court granted Porter's

Petition, and we now decide this appeal.

II.

The district court had jurisdiction over the instant action

under 28 U.S.C. § 1334(b), which provides federal district courts

with original and exclusive jurisdiction over all cases under

Title 11 of the United States Code. This court has jurisdiction

pursuant to 28 U.S.C. § 1292(b). Our review of a grant or denial

of summary judgment by the district court is plenary. See Rappa

v. New Castle County, 18 F.3d 1043, 1050 (3d Cir. 1994).

III.

In November of 1970, Pennsylvania adopted the Pennsylvania

Insurance Guaranty Association Act in order to provide insurance

policy holders with a means to receive payment of claims covered

against insolvent insurance companies. 40 P.S. § 1701.102(1).

The Act and the statutory creation of PIGA were based on a model

bill created by the National Association of Insurance

Commissioners in response to the social harm that results from

insurance companies becoming insolvent. See Sands v.

Pennsylvania Insurance Guaranty Ass'n, 423 A.2d 1224, 1225-26

(Pa. Super. Ct. 1980).

One of the stated purposes of Pennsylvania's Act is:
(1) To provide a means for the payment of covered
claims under certain property and casualty insurance
policies, to avoid excessive delay in payment of such
claims, and to avoid financial loss to claimants or

6
 policyholders as a result of the insolvency of an
insurer.

40 P.S. § 1701.102(1).

Under section 201 of the Act, PIGA is obligated to make

payments for each "covered claim" against the insolvent insurance

company, subject to a $299,900 statutory limit per "covered

claim." 40 P.S. § 1701.201(b)(1)(i). In no instance is PIGA

obligated to pay a covered claim in excess of the maximum amount

the insolvent insurance company would have paid under the terms

of the policy. Id.
The resolution of this case rests on the determination of

what, exactly, constitutes a "covered claim." The Act defines it

as follows:
"Covered claim" means an unpaid claim, including a
claim for unearned premiums, which arises under a
property and casualty insurance policy of an insolvent
insurer and is:

(i) The claim of a person who at the time of the
insured event resulting in loss or liability was a
resident of this Commonwealth, or

(ii) A claim arising from an insured event
resulting in loss or liability to property which
was permanently situated in this Commonwealth.

40 P.S. § 1701.103(5)(a).

The district court concluded that the "covered claims" for

which Porter was entitled to indemnity from PIGA included only

one claim under each Integrity policy, for a total of three

claims. H.K. Porter v. PIGA, No. 93-212, typescript at 11-12.

The district court's rationale focused upon the word "person" in

the phrase of the statutory definition of "covered claim" which

reads: "'Covered claim' means . . . [t]he claim of a person who

7
at the time of the insured event resulting in loss or liability

was a resident of this Commonwealth." 40 P.S. §1701.103(5)(a)(i)

(emphasis added). The district court noted that under the

statute "person" is defined as "an individual, a corporation, a

partnership, an association, or any other holder of or claimant

under a property and casualty insurance policy." H.K. Porter v.

PIGA, No. 93-212, typescript at 11 (citing 40 P.S. §

1703.103(8)). The court thus concluded that by "[a]pplying that

language to the claims of Porter, it is clear that the claims at

issue are the claims of a person (Porter) for indemnification

under the three Integrity policies," H.K. Porter v. PIGA, No.

93-212, typescript at 11, and therefore Porter is limited to

indemnification for only $899,700, or $299,900 for each of the

three Integrity policies.

Upon Porter's Motion for Reconsideration of this

determination, the Court succinctly clarified its position as

follows:
This Court is aware that "person" is defined by statute
as, among other things, a holder of or claimant under a
property and casualty insurance policy. However, that
is not the issue. The issue is who is the "person"
making the claim in this case. Clearly, the "person"
making the claim in this case is Porter. . . .

* * *

[T]he clear language of the PIGA Act dictates that the
covered claim is the claim of Porter for
indemnification. We find no support in either the
statute or the case law of this jurisdiction for
Porter's assertion that its claims somehow encompass
the claims of the underlying asbestos claimants. We
believe that the reading of such a concept into the
statute would violate the clear and express language of
the Act.

8
H.K. Porter v. PIGA, No. 93-212, typescript at 4-5 (W.D. Pa. Feb.

9, 1995).

Porter submits that the "salient question is not whether

Porter has 'covered claims' within the meaning of the PIGA Act,

but how many covered claims Porter is able to assert."

Appellant's Brief at 18 (emphasis in original). We agree.

The district court's analysis appears to rest on the faulty

premise that if the insured submits numerous claims of others,

such claims are to be treated as one covered claim per policy.

Such a position, however, is untenable. As clearly illustrated

by an analogy presented to the district court by Porter, there

are circumstances in which one person is entitled to receive

indemnity for more than one covered claim per policy:
Let's suppose, Your Honor, that you, yourself, are
insured with Acme Automobile Insurance Company and
that, unfortunately, in one month you have two separate
accidents, each magically causing a $300,000 damage to
each victim in each accident. Two lawsuits arrive at
your house on the same day. You tender them to your
insurance company. But on the same day your insurance
company goes insolvent. So you tender them to PIGA.

* * *

Now, let's suppose that . . . PIGA does not step up to
the plate to defend Your Honor and to indemnify Your
Honor. . . . Your Honor then is left at the plate. Your
Honor will have to reach into your pockets to pay each
$300,000 claim. Now Your Honor is out $600,000 and
Your Honor files a lawsuit against PIGA. Under Your
Honor's construction of the statute, you would only be
entitled to $300,000. But aren't the two claims that
Your Honor has presented to PIGA separate covered
claims? If they are separate covered claims and if
PIGA has to pay out $300,000 on each claim, it doesn't
make sense to reward PIGA for refusing to pay each of
those claims, wait for PIGA to be sued, and then for
PIGA to assert in the lawsuit that Your Honor brought,

9
 ah ha, there is only one covered claim here because
Your Honor is the "person" who's making the claim.

Appendix at 145-46. Unlike the district court, we find this

analogy instructive and persuasive.

Accordingly, we reject the district court's conclusion that

the PIGA Act only allows insureds to receive indemnity for one

covered claim per policy. Rather, we conclude that the PIGA Act

must be read to provide insureds with indemnity for each claim

raised by underlying claimants. Each "covered claim" to which

the $299,900 statutory cap applies is appropriately read to

encompass the claims of the underlying tort victims, i.e. the

underlying claimants. There are four bases upon which we reach

our conclusion.

First, contrary to the district court's conclusion, the

plain language of the PIGA Act militates that the "covered

claims" to which the statutory cap applies include the claims of

underlying claimants. Under the PIGA Act, a "covered claim" is

"[t]he claim of a person who at the time of the insured event
resulting in loss or liability was a resident" of Pennsylvania.

40 P.S. § 1701.103(5)(a)(i) (emphasis added).4 A "person" is

defined as "an individual, a corporation, a partnership, an

association, or any other holder of or claimant under a property
and casualty policy." 40 P.S. § 1701.103(8) (emphasis added).

Therefore in Pennsylvania a "covered claim" for which PIGA must

pay up to $300,000 is:

4
There is an additional debate as to whether PIGA must pay the
underlying claims of asbestos victims who are not residents of
Pennsylvania. That issue is not before us on this appeal and we
do not address it here.

10
 The claim of a [holder of or claimant under a property
and casualty insurance policy] who at the time of the
insured event resulting in loss or liability was a
resident of [Pennsylvania].

40 P.S. § 1701.103(5)(a)(i) (emphasis added).

Second, as stated above, the intent of the Pennsylvania

legislature in passing the PIGA Act was to "provide a means for

payment of covered claims . . . , to avoid excessive delays in

payment of such claims, and to avoid financial loss to

policyholders as a result of the insolvency of an insurer." 40

P.S. § 1701.102(1). While we recognize that the Pennsylvania

legislature did not intend for all insureds in all cases to be

placed in the same position they would have been if their insurer

had not become insolvent, see Blackwell v. Pennsylvania Insurance
Guaranty Ass'n, 567 A.2d 1103, 1106 (Pa. Super. Ct. 1989), the

result that the district court's decision would bring, whereby

Porter could only recover $899,700 -- a mere 6% of the $15

million Porter would have been able to obtain from Integrity --is

inconsistent with the stated policy goals of the legislation.

Third, it is only logical that the covered claims for which
Porter seeks indemnity be viewed as comprised of the individual

claims of the underlying tort victims. When multiple persons

have been injured in an accident, each injured person has a

separate covered claim even if their individual claims are

asserted by the insured -- in this case Porter -- rather than the

individuals themselves. Indeed, under Pennsylvania's "direct

action" statute, tort victims may sue an insurer directly if the

11
insured has gone bankrupt or become insolvent.5 Therefore,

provided the relevant residency requirements are met, it makes

logical sense that PIGA indemnify Porter for each claim of the

injured tort victims, given that these tort victims could have

instituted claims against Integrity themselves.

Finally, the district court's conclusion that PIGA need only

indemnify Porter once for each of the three policies would have

grave policy consequences if allowed to stand. The district

court's conclusion would encourage PIGA or a carrier insuring

"covered claims" to limit its liability by wrongly refusing to

honor the individual injury claims presented by the insured. When

the insured filed suit to compel payment, the numerous claims of

those injured suddenly would be converted into a single claim by

the insured and be subject to the maximum limit. As a result,

5
This statute reads as follows:
No policy of insurance against loss or damage resulting
from accident to or injury suffered by an employee or
other person and for which the person insured is liable
. . . shall hereafter be issued or delivered in this
State by any corporation, or other insurer, authorized
to do business in this State, unless there shall be
contained within such policy a provision that the
insolvency or bankruptcy of the person insured shall
not release the insurance carrier from payment of
damages for injury sustained or loss occasioned during
the life of such policy, and stating that in case
execution against the insured is returned unsatisfied
in an action brought by the injured person, or his or
her personal representative in case death results from
the accident, because of such insolvency or bankruptcy,
then an action may be maintained by the injured person,
or his or her personal representative, against such
corporation, under the terms of the policy, for the
amount of the judgment in the said action, not
exceeding the amount of the policy.
40 P.S. § 117.

12
insureds would receive virtually no coverage for their claims

and, even if the victims were ultimately able to obtain coverage

through the direct action statute, extensive delays and

litigation would result.

Our conclusion that the "covered claims" at issue encompass

the claims of the underlying tort victims finds further support

from several cases which present a similar issue and which

interpret insurance statutes from other states that, like

Pennsylvania's Act, are based upon the model bill.

A.

The case which most closely parallels this action is the

Connecticut Supreme Court case, Connecticut Insurance Guaranty

Association v. Union Carbide Corp., 585 A.2d 1216 (Conn. 1991).

Union Carbide grew out of the 1984 chemical disaster in Bhopal,

India, which resulted in the deaths of 2,300 people and injuries

to more than 200,000 others. Id. at 1219. Union Carbide brought

a declaratory judgment action against the Connecticut Insurance

Guaranty Association (CIGA) to resolve numerous issues relating

to CIGA's obligation to reimburse Union Carbide for claims

arising out of the disaster. Union Carbide had reached a

settlement agreement with the Indian government and had then

approached its insurance companies for reimbursement. The

insurance companies had become insolvent, and Union Carbide thus

approached CIGA for indemnity. Id.

One of the primary claims raised in Union Carbide was

whether a "covered claim" referred to the claim of each victim

who filed an action against Union Carbide or whether Union

13
Carbide presented only one covered claim which was subject to the

$300,000 limit. Just as PIGA argues in the instant action, CIGA

argued that the only covered claims were Union Carbide's six

claims, each under one of six insurance policies issued by the

insolvent insurers, limiting Union Carbide to a maximum recovery

of $1,800,000. Id. at 1220.

The Connecticut Supreme Court disagreed and held that CIGA

was required to pay the claims presented up to the total limits

of the underlying policies. The Supreme Court based its

conclusion on several grounds, each of which is equally

applicable in the instant case.

First, the Connecticut Supreme Court concluded that, under

the Connecticut statute, the Bhopal victims could sue Union

Carbide's insolvent insurance companies directly under a

Connecticut statute. Id. This direct action statute allows a

tort victim to file an action directly against an insurer if the

victim has obtained a judgment against an insured that remains

unsatisfied for thirty days. Id.; see also C.G.S.A. § 38-175.

Thus, sheer logic dictated that CIGA be held liable for the

claims of the individual tort victims. As explained above,

Pennsylvania also has a "direct action" statute allowing tort

victims to sue an insurer directly if the insured has become

bankrupt or insolvent. 40. P.S. § 117. Therefore, the

Connecticut Supreme Court's reasoning applies to the instant

action.

Second, the Connecticut Supreme Court rejected CIGA's

argument that the definition of "covered claim" only encompassed

14
the claim of the insured Union Carbide, rather than the claims of

the underlying tort victims. Union Carbide, 585 A.2d at 1221.

The Court recognized that under the statute a "covered claim"

encompasses the claims of "the claimant or insured." C.G.S.A.

§38-275(4) (emphasis added). The Court thus concluded that under

this language either the insured resident of Connecticut or the

underlying claimant, in that case the Bhopal victims, might

present a "covered claim" to CIGA. Id.

While the language in Pennsylvania's statute is not

identical to that in Connecticut's statute,6 it, too, suggests

the same conclusion. As explained above, when the definition of

"person" from 40 P.S. § 1701.103(8) is inserted in the definition

of "covered claim" the resulting definition makes clear that the

Connecticut Supreme Court's conclusion that a "covered claim" may

be presented by either the insured or a claimant is equally true

in Pennsylvania:
The claim of a [holder of or claimant under a property
and casualty insurance policy] who at the time of the
insured event resulting in loss or liability was a
resident of [Pennsylvania].

6
We recognize that the definition of a "covered claim" in the
Connecticut statute at issue in Union Carbide differs in some
respects from the definition in the Pennsylvania statute at issue
here. For example, under the Connecticut statute, a claim
against a Connecticut resident insured could qualify as "covered"
even if asserted by a non-resident based on an event occurring
outside of the state of Connecticut. See Union Carbide, 585 A.2d
at 1220. Under the Pennsylvania statute, by contrast, a claim can
qualify as "covered" only if it is either "(i) The claim of a
person who at the time of the insured event resulting in loss or
liability was a resident of this Commonwealth, or (ii) A claim
arising from an insured event resulting in loss or liability to
property which was permanently situated in this Commonwealth."
46 P.S. §1701.103(5)(a). This difference, however, is not
significant for present purposes.

15
40 P.S. § 1701.103(5)(a)(i) (emphasis added).

Third, the Connecticut Supreme Court ruled as it did because

it concluded that such a ruling was consistent with the intent of

the legislature:
Apart from our conclusion that the text of the act does
not support the imposition of a $300,000 limit upon
[Union Carbide's] claim for indemnification under each
of the six policies whose insurers have become
insolvent, we are also persuaded that the remedial
purpose of this legislation would be largely defeated
by such a restriction. Although this case involves a
substantial indemnification claim of $32,500,000
presented by a large corporate enterprise, it is not
exceptional today for individuals to carry liability
insurance with limits far in excess of $300,000. The
recovery of $300,000 by a single victim of an
automobile accident is not extraordinary, and when
there are multiple victims the total liability of the
insured can readily exceed that amount. If we were to
accept CIGA's argument that only an insured may present
a covered claim and that such a claim for
indemnification from a single occurrence is limited to
$300,000, the protection of Connecticut residents
against losses resulting from insolvency of insurance
carriers, which the legislature intended to provide,
would often prove illusory.

Union Carbide, 585 A.2d at 1222-23. There can be no doubt that

this same rationale applies in the context of Pennsylvania. As
mentioned above, Connecticut's Insurance Guaranty Act is based

upon the same model bill as the Act in Pennsylvania, and the

purpose of Pennsylvania's Act is to "provide a means for the

payment of covered claims . . . and to avoid financial loss to

claimants or policyholders as a result of the insolvency of an

insurer." 40 P.S. § 1201.102(1).

A case recently decided by this court involving a similar

issue suggests that the reasoning in Union Carbide may be

16
appropriately adopted by this court. In T & N v. Pennsylvania

Ins. Guaranty Ass'n, 44 F.3d 174 (3d Cir. 1994), we were

presented with the question of whether an insured company who had

entered into one settlement agreement for all underlying claims

with its now-insolvent insurer and sought recovery from PIGA,

presented one covered claim for recovery or multiple covered

claims. T & N argued that under the reasoning of Union Carbide

it presented separate covered claims for each of the underlying

claimants. We considered Union Carbide and determined that the

facts of Union Carbide were different from T & N's scenario:
Union Carbide settled with the underlying claimants.
The settlement agreement can thus be viewed as the
embodiment of each claim which was filed against Union
Carbide. However, in the present case, T & N settled
with the insurance company. The settlement agreement
is not the embodiment of claims filed by the underlying
claimants . . . . Payment was not related to the
individual claims which had been filed. As a result,
we find that in light of the fact that T & N had
entered into a single settlement agreement with [its
insurer] which encompassed all of its claims against
the insurance company, it only has one covered claim
which is subject to the $300,000 statutory limit.

Id. at 184 (emphasis added). We did not discredit Union
Carbide's reasoning in any way. To the contrary, this court's

language in T & N indicates that, had T & N entered into a

settlement agreement with the underlying claimants rather than

the insurance company, we would have followed Union Carbide's

lead.

The facts in this case are very similar to those in Union

Carbide. Porter has entered into settlement agreements with

underlying claimants, and those settlements "can thus be viewed

17
as the embodiment of each claim which was filed," id., against

Porter.

B.

Our construction of the statute is supported by cases from

other jurisdictions as well. These cases all grow out of

insurance disputes involving state Guaranty Agencies and statutes

that are based on the model bill, and their reasoning is very

much applicable to the instant case. See, e.g., Plymouth Rubber

Co. v. Massachusetts Insurers Insolvency Fund, No. 87-440, slip

op. (Mass. Super. Ct. May 24, 1988); Commercial Union Insurance

Company v. Sepco Corp. 1989 U.S. Dist. LEXIS 18378 (S.D. Alab.

1989), aff'd, 918 F.2d 920 (11th Cir. 1990); Oglesby v. Liberty

Mutual Insurance Company, 832 P.2d 834 (Okla. 1992).

For example, in Plymouth Rubber Co., the Massachusetts

Superior Court held that each underlying claim raised against

Plymouth Rubber Company, for which Plymouth Rubber sought

indemnification from Massachusetts's Guaranty Fund, was a covered

claim separately subject to the statutory $300,000 limit.

Plymouth Rubber Co., No. 87-440, slip op. at 5. The court

explained as follows:
Under the Ideal Mutual insurance policy . . . the
covered claims which arose out of the policy were the
obligations to "indemnify the insured for all sums
which the insured shall become legally liable to pay as
damages arising out of claims made" against the insured
in excess of the policy's $250,000.00 aggregate annual
deductible. According to this language in the policy,
Ideal Mutual was obligated to indemnify the plaintiff
for all customer claims. . . . As such, every demand
for indemnification was a covered claim.

18
Id. The language of the insuring obligations in the policies

issued by Integrity to Porter is substantially similar to the

above quoted language in Plymouth Rubber's policy:
. . . [Integrity Insurance] Company hereby agrees . . .
to pay all sums, as more fully defined by the term
ultimate net loss, for which the insured shall become
obligated to pay by reason of liability
(a) imposed upon the insured by law or
(b) assumed under contract or agreement by
the insured
arising out of personal injury, property damage or
advertising liability caused by an occurrence.

App. at 29. Therefore, the reasoning of Plymouth Rubber applies
in the instant case as well.

Guidance in this area is also offered by Sepco Corp. There

the district court analyzed the purpose of the Alabama Insurance

Guaranty Association Act, which is substantially the same as

Pennsylvania's Act, and it concluded that the Alabama Insurance

Guaranty Association (AIGA) was responsible for paying each of

the underlying 2,000 claims made against Sepco by persons

claiming bodily injury from exposure to Sepco's asbestos-

containing products:
AIGA argues there is one aggregate claim, limiting
AIGA's liability to $149,900.00. This argument is
without merit. Each of the over 2,000 underlying cases
produces a separate claim. To accept this specious
argument would defeat the intent of the liability
policy which [the insolvent insurer] issued Sepco and
would leave Sepco substantially without insurance for
the year's time during which [the insolvent insurer]
supposedly covered its liability. . . . This
interpretation would defeat the intent of the Alabama
Legislature when it enacted "The Act" to protect the
public against insolvency of insurance carriers.

Sepco Corp., 1989 U.S. Dist. LEXIS 18378 at *13 (footnote
omitted) (emphasis added). When the Eleventh Circuit reviewed

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and affirmed this case on appeal, it declined to even address

this specific claim by AIGA, noting it was "without merit and

warrant[s] no discussion." Sepco Corp., 918 F.2d at 923 n.3.

Finally, Porter's position is supported by the Oklahoma

Supreme Court's decision in Oglesby v. Liberty Mutual. There,

the Oklahoma Supreme Court held that the wife and two minor

children of a man killed in an industrial accident each presented

their own separate covered claim for which they were entitled to

Oklahoma's $150,000 statutory cap of recovery from the Oklahoma

Guaranty Association. The Court noted that the portion of

Oklahoma's statute in which the obligations of the Oklahoma

Guaranty Association are laid out requires that "such obligations

shall include the amount of each covered claim which is less than

One Hundred Fifty Thousand Dollars ($150,000.00) . . . ." 36

Okla. Stat. § 2007 (emphasis added). The Court explained, "[t]he

Legislature's use of the word 'each' rather than 'all' covered

claims indicates that it anticipated the possibility of multiple

recoveries." Oglesby, 832 P.2d at 840. The same logic applies

in the context of Pennsylvania where the statute explains that

PIGA's "obligation shall include only that amount of each covered

claim which is in excess of one hundred dollars ($100), and is

less than three hundred thousand dollars ($300,000)." 40 P.S.

§1701.201(b)(1)(i) (emphasis added).

We find that the rationale applied by these other courts is

equally applicable to the facts of the instant case. We find it

all the more persuasive and compelling because PIGA has not

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pointed to any case in any other court, nor have we found any, in

which this issue was decided differently.

IV.

We now briefly address PIGA's argument that Porter is only

entitled to recover $299,900 for each of its three Integrity

policies because the policies cover liability per "occurrence,"

and injuries caused by the ongoing manufacture and sale of

asbestos are all deemed to be part of the same "occurrence."

PIGA asserts that when two Pennsylvania superior court

cases, Vickodil v. Pennsylvania Insurance Guaranty Ass'n, 514

A.2d 635 (Pa. Super. Ct. 1986), allocatur denied, 523 A.2d 346

(1987), and Donegal Mutual Insurance Co. v. Long, 564 A.2d 937

(1989), aff'd, 597 A.2d 1124 (1991), are read together a rule

emerges requiring that in instances where an insurance policy has

a "per occurrence" limit but has no "per person" limit, the

statutory limit of $299,900 applies to and substitutes for the

occurrence limit, thus entitling the insured to only one covered

claim under the policy. We have reviewed both of these cases at

length and conclude there is no merit to PIGA's argument

whatsoever.

Furthermore, there is no support in the language of the Act

itself that suggests that it is appropriate for PIGA to consider

a "covered claim" to be all claims arising out of one occurrence.

The language of the statute provides that PIGA's "obligation

shall include only that amount of each covered claim" up to the

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statutory limit. 40 P.S. § 1701.201(b)(1)(i). The legislature

used the phrase "each covered claim," not "each occurrence." This

plain language in and of itself indicates that PIGA is obligated

to pay up to the statutory cap on a per claim basis, not a per

occurrence basis. See, e.g., Ramage v. Alabama Insurance

Guaranty Association, 919 F.2d 1010, 1012 (5th Cir. 1990)

(holding that "the statutory language places a limit on the

liability amount for a claim . . . but does not limit the number

of claims which can be asserted from a particular occurrence");

Union Carbide, 585 A.2d at 1222 (holding that in context of

Connecticut statute "[t]here is no basis for substituting the

word 'occurrence' for the word 'claim'"); Florida Insurance

Guaranty Association v. Cole, 573 So.2d 868, 870 (Fla. Dist. Ct.

App. 1990) (holding that each injured person is entitled to file

a claim regardless of whether injuries arose from the same

occurrence); Trans Louisiana Gas Company v. Louisiana Insurance

Guaranty Association, 652 So.2d 686, 691 (La. Ct. App. 1st Cir.

1995) (holding that the claims of two injured children arising

from one occurrence constituted two covered claims for which LIGA

was responsible to the statutory limit).

V.

One might well argue that the Pennsylvania legislature never

intended to compensate claims of this magnitude. Mass tort

claims may not have been considered or contemplated. However,

the statute makes clear that individual claims are subject to the

statutory limitations and those limitations are not further

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limited when asserted by the insured seeking indemnification for

claims paid to or pending by others entitled to assert them.

Our interpretation carries out the legislative policy of

protecting the insured and other claimants when an insurance

carrier becomes insolvent and is unable to honor its commitments.

For the foregoing reasons, we hereby reverse the order of

the district court granting partial summary judgment in favor of

PIGA.

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