Courts on the east and west coast have come to different conclusions regarding whether insurance companies are responsible for payouts regarding the California lead paint lawsuit originally filed nearly 20 years ago.

As APC reported recently, a New York court found that Lloyds of London and other insurance companies were required to cover the $101.6 million liability meted out to NL Industries regarding Dutch Boy’s promotion and sale of lead paint nearly a century ago. The article published by Claims Journal stated that the New York ruling walked a fine line, saying that the litigants knew the lead paint “could” cause harm, but they didn’t know that it “would” cause harm. 

However, a California court took the opposite approach, finding that Lloyds of London and other insurance companies are NOT liable for covering the portion of the settlement involving W.P. Fuller, because Section 533 of the California Insurance Code prohibits insurers from paying for damages when they are a result of willful harmful acts. The court stated that the paint manufacturer “had actual knowledge of the harms associated with lead paint when it promoted lead paint for interior residential use,” and since that was the case, the insurance company could not be required to cover damages.

Since ConAgra had assumed the liabilities of Fuller through a series of acquisitions, the court ruled it is now responsible for the settlement even though it has never manufactured paint. As reported in an article published by Duane Morris Insurance Law, ConAgra argued that since it was not itself involved in the decision to promote and sell lead paint, it should not be held liable for the payment, however the court rejected that argument, stating that there is precedent that the knowledge of previous employees is transferred to the corporation in this type of case. 

The court wrote as follows:

“The underlying litigation established that Fuller—the corporate entity—had actual knowledge of the harms associated with lead paint when it promoted lead paint for interior residential use….[T]his actual knowledge finding necessarily means Fuller acted with knowledge that lead paint was ‘substantially certain’ or ‘highly likely’ to result in the hazard found to exist in the underlying litigation, and therefore established the willful act required to trigger section 533 prohibition against insurance coverage.”

See the full opinion at here.

For your reference, the earlier article published by APC is reprinted below:

Insurance Pays Up in Lead Paint Lawsuit

The legal fight over lead paint rages on. As it stands, a New York court orders insurance providers to pay up...

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