On January 18, 2007, Judge McDonald of the Circuit Court for the County of Oakland, Michigan granted summary disposition to Royal & Sun Alliance USA, dismissing General Motors' insurance coverage action against Royal on statute of limitations grounds. GM had sought coverage for liabilities arising from thousands of asbestos and environmental liability claims, which, in its press statements, GM estimated at one billion dollars.
Commenced in January 2005, GM's lawsuit alleged that Royal owed GM "occurrence" coverage for GM's recent asbestos and environmental claims under general and product liability policies that Royal issued to GM prior to 1972. Key to the dispute was GM's and Royal's agreement in 1972 to convert their insurance program from occurrence-based coverage to claims-reported coverage. Royal contended that as a result of the 1972 change to claims-reported coverage, Royal and GM agreed to extinguish GM's occurrence coverage. Because GM elected not to renew its claims-reported coverage after 1993, Royal no longer owed any coverage to GM for its asbestos and environmental problems.
Instrumental to the Court's holding that GM slept on its alleged rights was the fact that Royal repeatedly told GM that its coverage was provided only on a claims-reported basis and administered all of GM's claims under the claims-reported coverage. Despite the fact that GM's own subsidiary insurance company, MIC, was responsible for up to 95% of the claims allocated to those claims-reported policies as a co-insurer with Royal, GM never challenged Royal's handling of GM's claims until the filing of the lawsuit. The Court also relied on GM's admissions in the 1980s both to personal injury plaintiffs in underlying asbestos cases and to the EPA that it did not have the very coverage it now sought. Accordingly, the Court found that "GM was not diligent in pursuing its asbestos and environmental claims… GM failed to act within the prescribed time period and thus its action is time barred."
The Firm's victory was a direct result of two years of team work and dedication by the Simpson Thacher team. The team took and defended over 100 fact and expert depositions, reviewed millions of pages of documents, and made numerous trips to Michigan for almost weekly hearings before Judge McDonald. The Simpson Thacher team included Partners Barry Ostrager, Mary Kay Vyskocil, and Mary Beth Forshaw, Senior Counsel David Elbaum and Associates Tyler Robinson, David LaRocca, Kyle Lonergan, Rob Pfister, Chris Lucht, Sarah Davis, Alex Key, Charles Kitcher, and Raj Parekh and Paralegals Doug Henderson, Joana DaSilva, and Kathryn Armstrong. Partners Chet Kronenberg and Lynn Neuner and Associates Charlton Rugg, Ann Marie Blaylock and Melissa Ganz and Paralegals Rosemarie Artale and Jennifer Ross also contributed to the team effort.
The dismissal has been reported in numerous publications around the world.
Business Insurance - Court Rules for RSA USA in Asbestos Dispute
Reuters UK - Royal & Sun Shares Rise on U.S. Court Verdict
Forbes - Royal & Sun Alliance Says GM Asbestos Claim Dismissed
Sharecast - RSA Gets US Asbestos Boost
Business Wire News Release: Royal & SunAlliance USA Wins Dismissal of GM Litigation