Products and Completed Operations Hazard Exclusion Doesn’t Bar Take-Home Asbestos Case

The Court of Appeals of South Carolina, applying South Carolina law, affirmed the circuit court’s order granting partial summary judgment to the insured, Covil Corporation, holding that the insurer, Pennsylvania National Mutual Casualty Insurance Company (“Penn”), owed coverage for take-home asbestos exposure claims. Covil, now defunct and acting through a Receiver, engaged in thermal insulation installation operations until 1991. The underlying plaintiff asserted that he developed mesothelioma due to exposure to asbestos dust at home from his stepfather, who worked at a job site where Covil installed thermal insulation between 1986 and 1988. Penn insured Covil under CGL policies during that period.

In early 2020, Covil’s receiver emailed Penn and requested the insurer attend a court-ordered mediation to settle the underlying matter. Though Penn attended the mediation and at the time expressed a willingness to contribute some amount to the settlement on behalf of Covil, it refused to in fact do so, citing policy exclusions to deny coverage.

In the instant appeal, Penn argued the grant of summary judgment was premature, that Covil’s late notice to Penn of the underlying lawsuit barred coverage, and that the policy’s product hazard and completed operations hazards exclusion barred coverage. The Court of Appeals dismissed all three arguments.

First, the Court of Appeals noted Penn had failed to file an affidavit setting forth the discovery it needed to conduct, and thus did not demonstrate that further discovery would uncover additional, relevant evidence. As such, the Court of Appeals held that the circuit court did not deny Penn a full and fair opportunity to complete discovery and that the grant of summary judgment was not premature.

Second, the Court of Appeals held Penn had effectively waived its argument as to late notice by willfully attending the court-ordered mediation in early 2020.

Third, the Court of Appeals found the exclusion for bodily injury arising out of the products hazard or the completed operations hazard did not preclude coverage. The products hazard exclusion applies if the injury occurs away from the premises owned by or rented to the named insured and after physical possession of such products has been relinquished to others. Similarly, the completed operations hazard exclusion applies if injury occurs after operations have been completed or abandoned and if the injury occurs away from the premises owned by or rented to the named insured. Because the underlying plaintiff’s stepfather was exposed to asbestos while Covil was installing it at the jobsite, the Court of Appeals held that Covil had neither completed operations nor relinquished possession of its products to others at the time of exposure. Therefore, the exclusion was inapplicable. As such, the Court of Appeals affirmed the circuit court’s grant of summary judgment in favor of coverage. Covil Corp. by and through Protopapas v. Pennsylvania Natl. Mut. Cas. Ins. Co., 2020-001239, 2022 WL 39170 (S.C. App. Jan. 5, 2022).