Riverwood International Corp. v. Employers Insurance

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED AUGUST 25, 2005
August 4, 2005
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk

No. 04-30608

RIVERWOOD INTERNATIONAL CORP; ET AL

Plaintiffs,

GRAPHIC PACKAGING INTERNATIONAL INC, formerly known as
Riverwood International Corp

Plaintiff - Appellant

v.

EMPLOYERS INSURANCE OF WAUSAU; ET AL

Defendants

EMPLOYERS INSURANCE OF WAUSAU

Defendant - Appellee

Appeal from the United States District Court
for the Western District of Louisiana

Before KING, Chief Judge, and BENAVIDES and STEWART, Circuit
Judges.

KING, Chief Judge:

This appeal concerns whether an asbestos-related disease is

a “bodily injury by accident” as that term is interpreted under

several workers’ compensation and employers’ liability insurance

policies. Because we agree that the policies are subject to only

one reasonable interpretation--that an asbestos-related injury is
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not a “bodily injury by accident” under the policies in question-

-we AFFIRM the district court’s entry of summary judgment in

favor of Defendant-Appellee Employers Insurance of Wausau.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff-Appellant Graphic Packaging International, Inc.,

formerly known as Riverwood International Corp. (“Riverwood”),

owns and operates a paperboard manufacturing facility in West

Monroe, Louisiana. Riverwood purchased a series of Excess

Workers’ Compensation and Employers’ Liability policies

(collectively, the “Policies”) from Employers Insurance of Wausau

(“Wausau”), which provided coverage from May 1974 to January

1984.1 Beginning in early 2000, numerous present and former

employees sued Riverwood, seeking damages for injuries, including

asbestosis and other asbestos-related diseases, allegedly caused

by exposure to asbestos while working at the West Monroe

facility. Riverwood settled 260 employee claims for a lump sum

of $1.513 million.

Riverwood sent notice letters to its multiple insurers,

including Wausau, advising them of the asbestos-related claims.

The notice letters identified the employees’ claims as “bodily

injury by disease” claims. Wausau denied coverage based on the

thirty-six month exclusion provision in the Policies, which

1
Riverwood also purchased standard workers’ compensation
and employers’ liability policies, but limited coverage under
those policies to loggers.
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provides that “bodily injury by disease” claims are excluded from

coverage if not brought within thirty-six months after the end of

the policy period.2 Wausau also denied coverage on the basis

that Riverwood could not meet the self-insured retention (“SIR”)

requirements in the Policies.3 Accordingly, Wausau refused to

contribute to the $1.513 million settlement.

On March 12, 2000, Riverwood filed a suit seeking indemnity

from Wausau under, inter alia, the Policies for the underlying

2
The pertinent provision reads:

EXCLUSIONS
This policy does not apply . . . .
(e) under paragraph B of Insuring
Agreement I, to bodily injury by disease
unless prior to thirty-six months after
the end of the policy period written
claim is made or suit is brought against
the insured for damages because of such
injury or death resulting
therefrom . . . .
3
The SIR provision reads:

III. RETENTION AND INDEMNITY. The insured
shall retain as its own net retention loss in
the amount of the retention stated in the
declarations and the company hereby agrees to
indemnify the insured against loss in excess
of such retention, subject to the limit of
indemnity stated in the declarations;
provided, that the retention and limit of
indemnity apply as respects:
(a) bodily injury by accident, including
death resulting therefrom, sustained by
one or more employees in each accident,
or
(b) bodily injury by disease, including
death resulting therefrom, sustained by
each employee.
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asbestos claims.4 On January 22, 2002, Wausau filed a motion for

partial summary judgment, seeking enforcement of the thirty-six

month exclusion provision. It is undisputed that none of the

asbestos claims was asserted against Riverwood within thirty-six

months of the Policies’ expiration. The district court, however,

denied the motion, relying on the recommendation of the

magistrate judge, who reasoned that the Policies’ language was

ambiguous because an issue of fact existed regarding whether an

asbestos-related disease is a “bodily injury by disease” or a

“bodily injury by accident” under the Policies.

On October 14, 2003, Wausau filed another motion for summary

judgment, arguing that: (1) the employees’ claims were “bodily

injury by disease” claims barred by the thirty-six month

exclusion provision; and (2) Riverwood could not satisfy its SIR

requirements as required to trigger coverage under the Policies

regardless of whether the claims were treated as “bodily injury

by disease” or “bodily injury by accident” claims. On February

13, 2004, based on the magistrate judge’s recommendation, the

court granted Wausau’s motion.

4
Riverwood also filed suit seeking indemnity under
various standard workers’ compensation and employers’ liability
policies and blanket liability policies it had purchased. The
claims regarding the blanket liability policies were voluntarily
dismissed. Furthermore, the court granted summary judgment
against Riverwood on the standard policies because they did not
cover any of the employees’ claims at issue. Riverwood does not
appeal as to that determination. Initially, Riverwood had also
sought coverage for claims asserted by non-employees, but those
claims were also voluntarily dismissed.
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 With respect to the thirty-six month exclusion provision,

the court reconsidered its determination of ambiguity and

concluded that, based on the evidence, “[t]he only reasonable

conclusion is that the underlying claims in question in this

lawsuit involve bodily injury by disease. Therefore, the 36-

month exclusion applies and should be enforced as written.” The

court reasoned, inter alia, that the “vast majority of courts

considering the issue have also treated asbestos-related claims

as injury by disease under excess [w]orker’s

[c]ompensation/[e]mployer [l]iability policies with the same or

nearly the same policy definitions.” (citing Hamilton v. Anco

Insulation, Inc., 844 So. 2d 893 (La. Ct. App. 1st Cir. 2003),

Hubbs v. Anco Insulations, Inc., 747 So. 2d 804 (La. Ct. App. 1st

Cir. 1999), Rareshide v. Mobil Oil Corp., 719 So. 2d 494 (La. Ct.

App. 4th Cir. 1998), Laurendine v. Fischbach & Moore, Inc., 398

So. 2d 1220 (La. Ct. App. 4th Cir. 1981), and Froust v. Coating

Specialists, Inc., 364 F. Supp. 1154 (E.D. La. 1973)).

With respect to the SIR issue, the court noted that because

the claims were “bodily injury by disease” claims, a separate SIR

had to be met for each claim. However, no individual claim

exceeded the smallest per-employee SIR ($100,000), much less the

$500,000 SIR on the later policies.5 The court also noted that

5
The SIR amount for the years covered by the Policies
were: (1) $100,000 per year for 1974-1977; (2) $250,000 per year
for 1977-1980; and (3) $500,000 per year for 1980-1984. The
court noted that for the settled claims, only Walter Graves’s
$400,000 claim could possibly satisfy the SIR, but Graves’s last
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even if the claims were “bodily injury by accident” claims,

Riverwood would have to meet its SIR requirement for each

accident. However, Riverwood failed to present any evidence to

show it could meet its SIR requirement for each accident. In

addition, the court stated that because Riverwood was seeking to

trigger coverage under multiple policies for damages stemming

from multiple years of exposure, the plaintiffs’ losses had to be

allocated on a pro rata basis across all the years of exposure.

Under this method, the court concluded that Riverwood could not

satisfy a single SIR for any employee in any policy year. The

court rejected Riverwood’s argument that all the claims should be

construed as arising out of a single accident because Riverwood

did not present any evidence that all of the claimants were

exposed by one specific accident at the same time and at a common

location.

On appeal, Riverwood argues that a genuine issue of fact

remains as to whether it is entitled to coverage under the

Policies. Specifically, Riverwood argues that the language of

the Policies at issue is ambiguous. With regard to the SIR

issue, Riverwood argues that there is sufficient evidence to

support a jury finding that it could satisfy at least one SIR

under the Policies. Riverwood further argues that under Fifth

Circuit precedent, its SIRs should be apportioned pro rata.

II. STANDARD OF REVIEW

exposure was in 1986, a date not within the policy period.
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 This court reviews a grant of summary judgment de novo,

applying the same standards as the district court. Burch v. City

of Nacogdoches, 174 F.3d 615, 618 (5th Cir. 1999). Summary

judgment is proper if the record, taken as a whole, shows that

there is no genuine issue of material fact and that the movant is

entitled to judgment as a matter of law. FED. R. CIV. P. 56(c);

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). To overcome

summary judgment, “the nonmoving party must come forward with

specific facts showing that there is a genuine issue for trial.”

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986) (internal quotation marks and emphasis omitted). The

court must view the evidence in the light most favorable to the

nonmovant, drawing all reasonable inferences in the nonmovant’s

favor. King v. Chide, 974 F.2d 653, 656 (5th Cir. 1992).

III. ANALYSIS

Riverwood argues that a genuine issue of material fact

exists as to whether the underlying asbestos claims are “bodily

injury by disease” or “bodily injury by accident” claims under

the Policies.

Under Louisiana law, an insurance policy is a contract

between the parties, and it should be construed according to the

general rules of contract interpretation set forth in the Civil

Code. La. Ins. Guar. Ass’n v. Interstate Fire & Cas. Co., 630

So. 2d 759, 763 (La. 1994). A contract is ambiguous if, after

applying the established rules of contract interpretation, the
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contract is uncertain as to the parties’ intent and susceptible

to more than one reasonable interpretation under the

circumstances. Shocklee v. Mass. Mut. Life Ins. Co., 369 F.3d

437, 440 (5th Cir. 2004) (quoting In re Liljeberg Enters., Inc.,

304 F.3d 410, 440 (5th Cir. 2002)). Applying the rules of

contract interpretation, we conclude that the district court

properly determined that the Policies are subject to only one

reasonable interpretation--that an asbestos-related injury is not

a “bodily injury by accident” under the policies in question.

The Policies provide:

I. COVERAGE. This policy applies to loss sustained by
the insured on account of . . .
B. sums which the insured shall become legally obligated
to pay as damages because of bodily injury by accident or
disease . . . .

II. APPLICATION OF POLICY. This policy applies only to injury
(1) by accident occurring during the policy period,
or
(2) by disease caused or aggravated by exposure of
which the last day of the last exposure, in the
employment of the insured, to conditions causing
the disease occurs during the policy period. . . .

V. DEFINITIONS. . . .
(C) Bodily Injury by Accident; Bodily Injury
by Disease. The contraction of disease is not
an accident within the meaning of the word
“accident” in the term “bodily injury by
accident” and only such disease as results
directly from a bodily injury by accident is
included within the term “bodily injury by
accident.” The term “bodily injury by
disease” includes only such disease as is not
included within the term “bodily injury by
accident.”

Riverwood asserts that the language is ambiguous because the

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policy itself does not define the word “accident.” The fact that

a term is not defined in a policy, however, does not alone make

it ambiguous. McKittrick v. La. Health Serv. and Indem. Co., 843

So. 2d 577, 580 (La. Ct. App. 2003). Instead, the term

“accident” must be given its plain meaning. LA. CIV. CODE ANN.

art. 2047 (West 1987). Riverwood contends that the common

understanding of the undefined term controls, and it asserts that

the word “accident” is defined in the dictionary as, inter alia,

an unforseen and unplanned event or circumstance. Because the

exposure giving rise to the asbestos claims can reasonably be

described as an unforseen and unplanned event or circumstance,

Riverwood concludes the definition of “accident” encompasses the

exposure to asbestos that occurred in this case. However, if the

term we are seeking to define is a technical term, it must be

given its technical meaning. LA. CIV. CODE ANN. art. 2047 (West

1987); McKittrick, 843 So. 2d at 580. Wausau asserts, and

Riverwood does not dispute, that the Policies import workers’

compensation law.6 In addition, under Louisiana contract law,

“[w]ords susceptible of different meanings must be interpreted as

having the meaning that best conforms to the object of the

contract.” LA. CIV. CODE ANN. art. 2048 (West 1987). The object

of the Policies at issue is to provide workers’ compensation and

employers’ liability insurance. Under workers’ compensation law,

6
The Policies do not state affirmatively that workers’
compensation law will govern the terms. However, workers’
compensation law is referenced throughout the Policies.
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“accident” is defined as “an unexpected or unforeseen actual,

identifiable, precipitous event happening suddenly or violently,

with or without human fault, and directly producing at the time

objective findings of an injury which is more than simply a

gradual deterioration or progressive degeneration.” LA. REV. STAT.

ANN. § 23:1021(1) (West 1998). This definition suggests that an

asbestos-related disease cannot be considered an “accident” since

exposure to asbestos is normally not violent and does not, at the

time of exposure, produce objective findings of an injury.

Rather, an asbestos-related disease has a long latency period and

normally manifests itself after continued exposure. See

Hamilton, 844 So. 2d at 897.

Riverwood asserts, however, that even if an asbestos-related

disease is considered a “bodily injury by disease,” it may also

reasonably be construed as a “bodily injury by accident” because

a disease that results from an accident can constitute a “bodily

injury by accident.” As Wausau notes, however, when the plain

terms of the Policies are viewed as a whole, it is clear that an

asbestos-related disease is not a “bodily injury by accident,”

and any other conclusion would render the “bodily injury by

disease” provision meaningless. Louisiana contract

interpretation rules provide that every provision in a policy

must be construed in the context of the policy as a whole; one

policy provision is not to be construed separately. LA CIV. CODE

ANN. art. 2050 (West 1987). In addition, if a provision is

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susceptible to different meanings, it must be interpreted to have

a meaning that renders it effective. LA. CIV. CODE ANN. art. 2049

(West 1987). According to the Policies, coverage for a “bodily

injury by disease” claim is triggered if the last exposure

occurred during the policy period and the claim is asserted

within thirty-six months of the policy’s expiration. Since an

exposure is required to trigger coverage for a “bodily injury by

disease” claim, a disease caused by an exposure should be

considered a “bodily injury by disease.” If an exposure equates

to an accident, then a claim resulting from an exposure could be

considered a “bodily injury by accident” claim. To interpret the

Policies in this way would render the provision providing for

“bodily injury by disease” claims (and the provision providing

that disease claims are triggered by an exposure during the

policy period) superfluous. Indeed, the Louisiana First Circuit

Court of Appeal has recognized that “to find that disease that

results from accidental contact with a foreign body, such as an

asbestos fiber, is bodily injury by accident would be to subsume

the definition of bodily injury by disease into the definition of

bodily injury by accident.” Hubbs, 747 So. 2d at 807-08.

Importantly, the terms of the Policies suggest that a “bodily

injury by disease” is mutually exclusive from a “bodily injury by

accident.” As Wausau points out, the Policies apply different

trigger, reporting, and SIR requirements to “bodily injury by

disease” and “bodily injury by accident” claims. Coverage for

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“bodily injury by disease” claims is triggered by an injurious

exposure during the policy period, the assertion of a claim

within thirty-six months of the policy’s expiration, and payment

of the SIR for each employee. Coverage for “bodily injury by

accident” claims, on the other hand, is triggered by an accident

occurring during the policy period and payment of the SIR for

each accident. Thus, we disagree with Riverwood’s contention

that an asbestos-related disease can also be construed as a

“bodily injury by accident.”

Our conclusion that an asbestos-related disease does not

constitute a “bodily injury by accident” under the Policies is

supported by Louisiana case law interpreting the exact same

policy language. In Hubbs, the Louisiana First Circuit Court of

Appeal concluded that asbestosis was a “bodily injury by disease”

when confronted with the policy language before us. In Hubbs,

the issue was whether asbestosis was a bodily injury by accident

or by disease. 747 So. 2d at 806. The court found that “the

contraction of asbestosis is not an accident within the meaning

of the policy, and thus the thirty-six month exclusion applies.”

Id. at 808. The court reasoned that the “[p]olicy clearly states

that the contraction of disease is not an accident within the

meaning of the policy.” Id. Riverwood, however, points to

Faciane v. S. Shipbuilding Corp., 446 So. 2d 770 (La. Ct. App.

1984), for its contention that the Policies are subject to more

than one reasonable interpretation. In Faciane, the Louisiana

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Fourth Circuit Court of Appeal held that a genuine issue of

material fact existed as to whether the appellant’s injury,

silicosis,7 was a bodily injury by disease or by accident. Id.

The court, faced with the same policy language in this case (the

definition section of bodily injury by disease and accident),

found the provision to be unclear because it seemed to exclude

the contraction of a disease as a “bodily injury by accident” but

also seemed to allow the contraction of some diseases to be

classified as diseases by accident. Id. at 774. The court

specifically stated:

[t]o say the least this definition is unclear. On one
hand it seems to exclude contraction of disease as an
injury by accident. However, the next clause of the same
sentence seems to allow the contraction of some diseases
to be classified as accidental injury. Given these
circumstances it seems that a genuine issue of material
fact as to the classification of appellant’s injury
existed.

We are, however, unconvinced by the reasoning in Faciane and

conclude that the reasoning in Hubbs, a more recent case, is more

in line with the rules of contract interpretation espoused above.

In addition, other courts have treated silicosis and asbestos-

related injuries as bodily injuries by disease under policies

containing the same language at issue here. See Froust, 364 F.

7
Silicosis is similar to asbestosis and asbestos-related
injuries. Silicosis results from exposure to silica, and the
disease develops over time. Courts have not found any meaningful
difference between silicosis and asbestosis that would merit
distinction for present purposes between the two. See, e.g.,
Quick v. Murphy Oil Co., 446 So. 2d 775 (La. App. 4th Cir. 1982).

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Supp. at 1154 (concluding that silicosis was a “bodily injury by

disease”); Hamilton, 844 So. 2d at 893 (treating an asbestos-

related disease, mesothelioma, as a “bodily injury by disease”).

We therefore hold that the district court properly concluded

that the only reasonable interpretation of the Policies is that

an asbestos-related disease is not a “bodily injury by accident”

but is rather a “bodily injury by disease.” Accordingly, the

thirty-six month exclusion provision applies.8 Because Riverwood

is not entitled to coverage under the thirty-six month exclusion

provision, we need not address its arguments with regard to the

SIR issue.

IV. CONCLUSION

For the foregoing reasons, we conclude that the district

court properly granted Wausau’s motion for summary judgment.

Accordingly, the judgment of the district court is AFFIRMED.

8
In light of our conclusion, we find it unnecessary to
address Riverwood’s arguments that the district court erred in
relying on extrinsic evidence and in failing to acknowledge,
address, or view in the most favorable light evidence it
presented. To the extent that the district court erred, if it
erred at all, we hold that summary judgment was proper according
to the rules of contract interpretation and the case law
discussed above. Holtzclaw v. DSC Communications Corp., 255 F.3d
254, 258 (5th Cir. 2001) (stating that the court may affirm
summary judgment on any ground supported by the record, even if
it is different than that of the district court).
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