ACandS, Inc. v. Travelers Casualty & Surety Co.

ACandS, Inc. (plaintiff) was an asbestos-insulation installer that had been involved in asbestos-related litigation since the early 1970s. Between 1976 and 1979, the predecessor of Travelers Casualty & Surety Company (Travelers) (defendant) issued ACandS four insurance policies. Each policy provided coverage up to $1 million per occurrence for claims arising from ACandS’s operations, but only $1 million total for products-liability claims. ACandS quickly exhausted its products-liability coverage on asbestos claims. ACandS and Travelers then agreed to allocate 55 percent of each asbestos claim as a products-liability claim, which Travelers would not pay, and 45 percent of each asbestos claim as an operations claim, which Travelers would pay, subject to the $1-million-per-occurrence restriction. In 2000, Travelers told ACandS that it would begin treating all the asbestos claims as arising from the same occurrence, thus limiting Travelers’ total liability to $1 million under each policy. ACandS sued Travelers in federal district court, seeking a declaration that each asbestos claim was a separate occurrence. In 2001, ACandS sought to increase the 45 percent operations allocation, and the matter went to arbitration. Travelers argued that the operations allocation should be reduced to 0 percent because ACandS had stopped installing asbestos before the insurance policies were issued. While the arbitration was ongoing, ACandS filed for Chapter 11 bankruptcy. The arbitration panel subsequently issued an award agreeing with Travelers and decreasing the operations allocation to 0 percent. ACandS asked the district court to vacate the award, arguing that the award violated the 11 U.S.C. § 362 automatic stay of proceedings against a debtor. The district court confirmed the award and dismissed ACandS’s earlier request for declaratory relief as moot. ACandS appealed.